Methodological Note: The Composite Inequality Index

Socio-economic inequalities hinder sustainable development, and the note describes a negative relationship between inequality and economic dynamics. Rising inequality means the benefits of growth do not reach all groups, concentrates decision-making power among the most privileged, discourages disadvantaged people from investing in their human capital, and leaves the economy prone to crises and a suboptimal allocation of production factors. Countries with high inequity therefore record weaker long-term economic performance than fairer societies.

Inequality is usually measured only within separate areas such as income, gender or place of residence. This fragments the overall picture, since progress in one area can offset regression in another. The note therefore proposes a composite index covering as many areas as possible. Besides setting out the calculation method, it aims to measure Moldova's progress, monitor how inequalities evolve and identify the most critical areas for public intervention.