Evaluating foreign trade specialization and qualitative competitiveness of a transition economy: the case of Macedonia

Kostoska, Olivera and Mitrevski, Pece (2016) Evaluating foreign trade specialization and qualitative competitiveness of a transition economy: the case of Macedonia. Empirica, 43 (3). pp. 633-655. ISSN Print ISSN 0340-8744; Online ISSN 1573-6911

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A certain country can increase production and welfare only if it produces in industries in which price is not the single factor explaining the competitive edge. This paper attempts to assess the qualitative competitiveness of Macedonia as a candidate country for European Union (EU) accession. EU remains a main trading partner of the country, making up around two-thirds of its foreign trade. Having a small economy implies that Macedonia has to rely mainly on export-led growth. As such, addressing external competitiveness has become a more prominent issue than ever before, while improving the competitiveness is quite important in terms of EU accession. We calculate unit values to signal the Macedonia’s quality position, and then perform a country-specific segmentation of markets according to the revealed price elasticity concept (REVELAST 1). The findings suggest that Macedonia exhibits low export unit values due to the country’s specialization mostly in industries at the lower end of the quality spectrum. The analysis of product groups indicates a certain weakening—inadequate position prevails both for the levels and the type of competitive performance. The rising number of product groups in the segment with structural problems is particularly worrisome, and specifically for sectors which are the most important for achieving competitiveness with dynamic potentials. The only way for Macedonia to establish an adequate structure of foreign trade and higher levels of competitiveness is to create an appropriate environment, so that some product groups of this segment move into the segments of successful quality—and/or price competition.

Item Type: Article
Subjects: Scientific Fields (Frascati) > Social Sciences > Economics and Business
Divisions: Faculty of Economics
Depositing User: Mr Dimitar Risteski
Date Deposited: 24 Sep 2019 09:35
Last Modified: 24 Sep 2019 09:35
URI: https://eprints.uklo.edu.mk/id/eprint/1959

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