Moldova’s science and technology community may begin to look attractive as neighboring Romania pulls in more foreign companies and faces rising wages and a labor shortage.

Moldova, population 3.4 million, is close to Romania in language and culture and has qualified researchers and engineers for low salaries, said Victor Sibirschi, a professor at the Institute of Mathematics and Computer Science in the capital Kishinev (Chisinau).

Moldova graduates about 1000 science and technology graduates annually with specialties in software, semiconductors, IT and telecom, he estimated.

The country’s average monthly salary was $254, according to the National Statistic Bureau. The figure is about half that of Romania’s average salary.

In Soviet times, Moldova had a microelectronics industry producing for the defense industry. A few companies are still around.

InformInstrument, based in Kishinev, has experience with gallium arsenide semiconductors. Today it develops measurement and control systems.

Mezon Semiconductor is another survivor. Also based in Kishinev, Mezon in 2004 entered into a project funded by the US government to co-develop with US-based Neosource Inc, circuit cells to aid mixed-signal IC design work.

Others engineers have set up software firms. Mediasoft, for example, develops custom software and handles outsourcing work. ICT development is a government priority and software development firms receive five-year tax holidays.

Sibirschi said Moldova today has a science and research community of around 3000. During Soviet times, the figure was 30,000.

The biggest challenge is funding. “We don’t have equipment for our research and receive small salaries,” Sibirschi said. As a result, skilled personnel typically emigrate to work for foreign companies.

Moldova, which attracted only $200M in FDI in 2007, faces many challenges including a poor infrastructure, thick bureaucracy and corruption.

However, the country has implemented preliminary steps to prepare it for membership consideration in the European Union and is getting investment and assistance from organizations such as the EBRD.