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The National Human Development Report (NHDR) 2014 launched today highlights the role of the private sector in Moldova’s human development. It reveals that a strong private sector is key to the country’s sustainable human development and that companies are able to thrive only in a society that enjoys welfare.

The Report, entitled “Good Corporate Citizens: Public and private goals aligned for human development”, develops the metaphor of the “tree of modernization” that was first used in the 2012 Report and states that “the private sector offers the tools to ensure a faster ascent on the tree of modernization”.

In the foreword to the Report, Nicola Harrington-Buhay, UNDP Resident Representative and UN Resident Coordinator in the Republic of Moldova, states that “sustainable and inclusive development in the Republic of Moldova, which benefits all citizens, can be ensured only through joint efforts of the Government, private sector and society in general”. “I trust this edition will also inspire all the partners from each sector, while helping them to ensure the Future that Moldova Wants”, she said.

The 2014 NHDR formulates a series of actions for the Government, companies and society as a whole in order to ensure a closer link between private sector development and human development in Moldova. It also seeks to inspire the private sector, providing examples of good practices to promote corporate citizenship among companies in the country.

“Human development in the Republic of Moldova still needs to advance, and this must occur rapidly”, the 2014 NHDR states. In the chapter “Sustainable human development in the Republic of Moldova: Achievements and Challenges”, the authors argue that while the human development level is improving each year, the progress achieved is not sufficient to reduce the gap between rural and urban areas and inequality of opportunities between men and women. In this respect, the private sector in Moldova – as employer, investor, taxpayer and generator of technology – must act as a development partner, contributing through well-paid jobs, generous social benefits, payment of taxes, implementation of new technologies, public–private partnerships, making donations to social and community causes, and transfer of practice expertise.

Thus, private sector can have a transformative impact not only on the economic sectors but also on social dynamics and the quality of people's lives which has become part of the modus operandi of many visionary companies worldwide. These aspirations have also driven the establishment in 2000 of the UN Global Compact, the world’s largest voluntary corporate sustainability initiative, with nearly 8,000 corporate participants in over 140 countries seeking to align business operations and strategies everywhere with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption. The national network in Moldova joined the Global Compact in 2006.

The Report states that the private sector and its allies must combine their efforts to achieve human development in the Republic of Moldova since “the private sector provides about 80 per cent of the tax revenues to the national public budget” and “two-thirds of the jobs created in the economy”. The private sector should participate in the educational system to a larger extent. Also, the Report’s authors highlight that the benefits that companies can bring within the health sector – through technological progress and innovation – can improve the quality and increase the volume of services provided. In addition, the authors emphasize that “social entrepreneurship can produce numerous positive impacts on human development in Moldova”.

The assessment of the business environment in Moldova and its importance for human development presented in the 2014 NHDR reveals that Moldova has achieved only 64 per cent of a best practices road map regulating private sector activities called by the Report “agent of change” and “the technological progress drive”, compared to the Baltic states which have fulfilled almost 74 per cent of this road map. The Report has a message to all stakeholders in Moldova that “all business development constraints ultimately hinder human development”.

In the chapter entitled “Private sector and human development: empirical evidence for the Republic of Moldova”, the 2014 NHDR states that the relationship between private sector development and human development is bidirectional. Thus, “companies paying salaries and taxes contribute to improving the health and education level of the population” and “a healthier and better educated population has increased productivity and stimulates private sector development”.

In this context, the authors of the Report ask: “Who exerts a bigger influence: the private sector over human development or human development over the private sector?” The findings of the Report reveal that the private sector benefits most from human development, and not vice versa. As the Report explains, this situation is “generated by the reduced effect of the business environment on education, while the mutual influences between the private sector and public health are relatively equal”.

Advocating for strengthening the private sector’s role as an agent of change, the 2014 NHDR highlights some necessary key actions: strengthening the role of the private sector as an agent of change; ensuring a  pro-human development fiscal policy; empowering companies to create more decent jobs; providing the conditions for greater involvement of the private sector in the education system and workforce development; the effective management of the balance of benefits and risks within public–private projects in the health sector; affirming the private sector in Moldova as an engine for technological progress and innovation; advancing corporate social responsibility; encouraging social entrepreneurship; increasing public–private dialogue; women’s economic empowerment; and capitalizing on the financial savings of migrants and social remittances.

The 2014 NHDR is an independent publication commissioned by UNDP and developed by Expert-Grup Independent think tank, which specializes in economic and public policy research. Contributions were also made by individuals and organizations, reviewers, contributors and members of the Report’s Advisory Board.