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Export Opportunity, Economic Growth and Structural Change: A Case for Industrial Policy in the Republic of Macedonia

By Darko Lazarov and Goce Petreski


Economic theory and empirical studies assert that export diversification and structural transformation is a powerful engine of long-run economic growth. Industrial structure is endogenous to endowment structure. In that context, the aim of this chapter is to analyse the export structure and export performance of Macedonian economy, as less developed transitional CEE country, in order to identify the main export opportunities for future economic growth, by applying new structural economics and product space theory. The analysis is based on data at 6-digit product classification according to UN database for the period 1995-2015. The analysis shows that the country is facing the process of (premature) de-industrialization hinged with decreasing export diversification and sophistication. The evidence shows that the manufacturing added value is on decreasing trend, from 23 percent in 1996 to 12 percent in 2015, while the export data show that the total number of exporting products with comparative advantage has fallen from 696 product in 1996 to only 460 in 2015. Moreover, there are not any significant structural changes in the export structure (the country is still stuck in the traditional sectors such as textile, garments, agricultural and metal industry). The previous economic policies for attracting FDI did not produce any significant positive effects in improving export competitiveness, while the industrial policy does not exist at all. The country relies upon noncompetitive education system and undeveloped national innovation system

Topics: Economics and business
Publisher: Nova Science Publishers
Year: 2018
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