Competitiveness in South East Europe 2021

A Policy Outlook

image of Competitiveness in South East Europe 2021

The future sustainable economic development and well-being of citizens in South East Europe depend on greater economic competitiveness. Reinforcing the region’s economic potential in a post-COVID-19 context requires a holistic, inclusive and growth‑oriented approach to policy making. Against the backdrop of enhanced European Union (EU) accession prospects and a drive towards deeper regional integration, the governments of the six Western Balkan (WB6) economies have demonstrated a renewed commitment to enacting policy reforms.

The third edition of Competitiveness in South East Europe: A Policy Outlook comprehensively assesses policy reforms in the WB6 economies across 16 policy dimensions crucial to their competitiveness. It leverages a highly participatory assessment process, which brought together the views of OECD experts, WB6 policy makers and local non-governmental stakeholders to create a balanced and realistic depiction of their performance. The report seeks to provide WB6 policy makers with a multi-dimensional benchmarking tool, enabling them to compare performance against regional peers as well as OECD good practices, and to design future policies based on rich evidence and actionable policy recommendations.

Economy-specific profiles complement the regional assessment for the first time in this edition of Competitiveness in South East Europe: A Policy Outlook, and provide each WB6 economy with an in-depth analysis of their competitive potential as well as policy recommendations tailored to their specific challenges to inform their structural economic reforms and sustainable development agenda.


North Macedonia profile

The Republic of North Macedonia is a small, open economy with a sizable and diversifying service sector and an expanding manufacturing base. The economy is dominated by services, which account for 54.5% of gross domestic product (GDP) (World Bank, n.d.[1]) and 55% of employment (ILOSTAT, 2021[2]). The largest contributions among services come from wholesale and retail trade, ICT, transport, and logistics (MAKStat, 2019[3]). Industry, including construction, has expanded significantly over the past decade and now accounts for 23.9% of GDP (World Bank, n.d.[4]) and 31.1% of employment (ILOSTAT, 2021[2]). The most notable expansion in the industrial sector has been the increase in manufacturing from 8.8% of GDP in 2009 to 13.3% in 2019 (MAKStat, 2020[5]) on the back of significant inflows of export-oriented foreign direct investment (FDI). There has also been a considerable increase in public and private construction activity. The contribution of agriculture, forestry and fishing has been declining continuously since the 1990s and now accounts for only 4% of GDP (World Bank, n.d.[6]). However agriculture still accounts for nearly 14% of total employment (ILOSTAT, 2021[2]) and there is considerable scope to increase the growth and productivity of this sector.



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