Transforming the Old into a Foundation for the New : Lessons of the Moldova Aria Project

This paper is a case study of what is recognized as one of the more successful projects in any country in the Europe and Central Asia region, not to mention in the poorest country of the region - Moldova. The ARIA project shows new ways to attack some of the most intractable problems of private sector development in Europe and Central Asia: how to facilitate reorganization and liquidation bankruptcies; how to promote small and medium enterprise spin-offs and new start-ups; and how to promote new learning at the enterprise level, both in the form of quot;Marshall Planquot; programs with more advanced post-socialist countries, as well as continuous improvement programs (such as those adapted from Japanese programs). The prime mover for these programs is the quasi-public restructuring agency, ARIA, which was established as part of the Moldova Private Sector Development I loan. ARIA was structured to try to combine private sector entrepreneurship with a public function in the process of restructuring and bankruptcy. The study tries to account for the strategies and innovations that lead to results. And it tries to connect the ARIA strategy to past development literature by viewing the study through Albert Hirschman's work on social learning and change.This paper - a joint product of the Office of the Senior Vice President and Chief Economist, Development Economics, and the Private and Financial Sectors Development Unit, Europe and Central Asia Region - is part of a larger effort in the Bank to draw and interpret lessons from best practices. The authors may be contacted at dellerman@worldbank.org or vkreacic@worldbank.org