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A Diagnostics Approach To Economic Growth In Small Open Economies: The Case Of The Republic Of Macedonia

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  • Dragan TEVDOVSKI

    (Dragan TEVDOVSKI, Ss. Cyril and Methodius University in Skopje, Faculty of Economics – Skopje, Skopje, Republic of Macedonia)

  • Vladimir FILIPOVSKI

    (Vladimir FILIPOVSKI, Ss. Cyril and Methodius University in Skopje, Faculty of Economics – Skopje, Skopje, Republic of Macedonia)

  • Igor IVANOVSKI

    (Igor IVANOVSKI, Ss. Cyril and Methodius University in Skopje, Faculty of Economics – Skopje, Skopje, Republic of Macedonia)

Abstract

Macedonia’s economy is under-performing. The unemployment rate is constantly one of the largest in Europe; and, almost one third of the population lives below the poverty line. Reforms have been put in place, but they have not done enough to solve the key problems. The present paper applies the growth diagnostics’ methodology, proposed by Hausmann et al. (2005), in order to identify the most binding constraints on economic activity. We emphasize institutional framework and distortions of the legal system and the rule of law as the key binding constraint for growth. Especially, we point out to: large informal economy, dependence of the judicial system on the political elite, political patronage and legal and regulatory uncertainties. In addition, we find infrastructure, human capital and information externalities as possible binding constraints in the near future.

Suggested Citation

  • Dragan TEVDOVSKI & Vladimir FILIPOVSKI & Igor IVANOVSKI, 2014. "A Diagnostics Approach To Economic Growth In Small Open Economies: The Case Of The Republic Of Macedonia," Review of Economic and Business Studies, Alexandru Ioan Cuza University, Faculty of Economics and Business Administration, issue 13, pages 47-68, June.
    • Handle: RePEc:aic:revebs:y:2014:i:13:tevdovskid
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    Cited by:

    1. Meerim Sydykova, 2015. "Diagnosing Growth Constraints in Central Asia: The Case of the Kyrgyz Republic," ERSA conference papers ersa15p1626, European Regional Science Association.

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    More about this item

    Keywords

    economic development; growth diagnostics; economic reform; Macedonia;
    All these keywords.

    JEL classification:

    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development

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