UACS Review of The Foreign Trade 2011

Skopje, 2011
Skopje, 2011
Editors-in-chief
- Tome Nenovski, PhD
- Nikica Mojsoska-Blazevski, PhD
Project coordinator
- Marjan Petreski, PhD
Analysts
- Marjan Petreski, PhD
- Elena Makrevska, MSc
Translation
- Marija Todorova, MSc
Translation editing and proofread
Christopher James Henson, MA
Print
- BoroGrafika-Skopje
CIP ". ",

339.5(497.7)"2010"
/[,;
; , ;
]=ReviewoftheforeigntradeofMacedonia/editorsinchiefTomeNenovski,NikicaMojsoskaBlazevski;project
coordinator Marjan Petreski ; analysts Marjan Petreski, Elena Makrevska ; translation Marija Todorova]. :
UniversityAmericancollege,2011.164.:.;24...
.
ISBN9786084607083
1....I.Nenovski,Tome,.II.MojsoskaBlazevski,Nikica,
)2010
COBISS.MKID89420810
Skopje, 2011
Skopje, 2011
2
REVIEW
OFTHEFOREIGN
TRADE
OFMACEDONIA
2011 2011
1: 2010 ........................ 7
1.
2.
3.
4.
5.
6.
2010 ...................................................................................... 9
....................................................... 10
....................................................................... 11
......................................................................... 17
................................................................................................................................. 22
............................................................................................................. 24
2: - ........................................................................................ 27
: ? ............................... 29
............................................................................... 39
M ................................ 49
: .............................................. 57
3:
2010 ........................................................................................................ 61
................................................................................ 63
M
................................................................................................................................................................. 67
4: .................................................................................................................. 71
Contents
PART 1: TRENDS IN MACEDONIAS FOREIGN TRADE IN 2010 ............................................................ 89
1.
2.
3.
4.
5.
6.
TRENDS IN THE GLOBAL TRADE OF 2010 .................................................................................................... 91

GENERAL TRENDS OF MACEDONIAS FOREIGN TRADE............................................................................... 92
TRENDS AND STRUCTURAL CHARACTERISTICS OF EXPORT ........................................................................ 93
TRENDS AND STRUCTURAL CHARACTERISTICS OF IMPORTS....................................................................... 99
TERMS OF TRADE ....................................................................................................................................... 103
ANALYSIS OF THE TRADE BALANCE .......................................................................................................... 105
PART 2: RESEARCH PAPERS ......................................................................................................................... 109

SPECIALIZATION PATTERNS IN MACEDONIA: WHAT ARE THE CONSEQUENCES ON TRADE? .............................. 111
INVESTIGATING TWIN DEFICITS IN MACEDONIA ................................................................................................ 119
EXPORT DEMAND FUNCTION AND EXCHANGE RATE VOLATILITY IN MACEDONIA .......................................... 127
A NOTE ON THE PURCHASING POWER PARITY: THE CASE OF MACEDONIA ...................................................... 135
PART 3: ACTIVITIES OF THE MINISTRY OF ECONOMY IN THE FOREIGN TRADE DOMAIN IN
2010......................................................................................................................................................................... 139
EXPORT PROMOTION ACTIVITIES IN MACEDONIA.............................................................................................. 141
FREE MOVEMENT OF SERVICES AND MACEDONIAS INTEGRATION INTO THE EU SINGLE MARKET FOR SERVICES
............................................................................................................................................................................ 145
PART 4: STATISTICAL TABLES .................................................................................................................... 149
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35

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36
1:
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46

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K.,
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Exchange Rate: Implications for International Risk Sharing. Working Paper, Universita
Bocconi.
Morgan, N., (1999). Twin Deficits, What Twin
Deficits?
Web
Site:
Normandin M., (1994). Budget Deficit Persistence and the Twin Deficits Hypothesis.
Center for Research on Economic Fluctuations and Employment. Universite du Quebec,
Montreal. Working Paper. No. 31.
Reynolds, A., (2004). The Conventional Hypothesis: Deficit Estimates, Savings
Rates, Twin Deficits and Yield Curves. Publications of the US Treasury Department. Paper
presented at the Treasurys Roundtable on the Federal Budget, Taxes and Economic Growth.
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47
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.
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(eds.), The Economics of Monetary Integration, Oxford University Press, New York.
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55
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Trade: a VAR Approach, The Review of Economics and Statistics 71, 708-712.
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56
M-
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dusko.josevski@ugd.edu.mk
D-
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on Emerging Economies, IESR, Staffordshire University, UK.
Bogoev, J., Terzijan, BS, gert, B., Petrovska, M. (2008) Real Exchange Rate Dynamics in
Macedonia: Old Wisdoms and New Insights. Economics: The Open-Access, OpenAssessment E-Journal, Vol. 2, 2008-18.
Borsic, Beko, Kavker, (2008) Investigating Purchasing Power Parity In Central And Eastern
European Countries: A Panel Data Approach, University of Maribor, Faculty of Economics
and Business.
60
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5.1
0.0
3.0
12.0
3.7
680.0
0.8
0.3
2.8
8.0
36.3
56.1
532.5
6.4
36.7
94.5
1.3
4.1
1.0
9.0
1.7
0.9
47.4
21.3
7.8
487.4
5.3
10.6
0.4
411.1
45.4
0.9
0.3
13.4
2.4
0.0
13.9
40.4
6.5
0.0
5.0
18.3
4.8
1,104.1
0.6
0.4
4.5
12.7
36.8
70.8
925.6
6.9
45.7
110.6
1.9
7.8
1.2
12.1
2.1
2.0
50.4
24.5
8.7
583.9
5.9
17.3
0.3
478.6
62.2
1.4
0.5
17.6
1.3
0.0
15.6
51.2
6.8
0.1
7.3
28.2
5.3
1,089.7
0.9
0.5
4.3
10.4
38.0
78.7
881.5
5.3
70.1
126.7
2.2
10.4
1.2
11.5
2.6
5.4
61.0
24.1
8.4
607.0
5.3
23.7
0.2
485.9
62.2
8.6
0.5
20.6
1.0
0.0
13.3
52.0
6.7
0.0
6.2
27.1
9.2
552.7
1.0
0.7
3.8
8.4
32.6
65.5
382.9
5.0
52.8
102.3
3.6
9.1
0.5
14.9
3.2
3.0
47.5
16.1
4.4
530.7
4.6
23.0
0.2
417.7
56.7
9.6
0.3
18.5
0.6
0.0
11.1
57.7
6.9
0.0
8.1
22.6
173.0
747.5
1.2
0.5
3.6
9.3
42.6
54.4
587.3
6.1
42.4
115.3
1.2
8.2
1.6
33.3
2.7
3.7
36.5
22.3
5.9
539.9
4.5
25.8
0.2
424.7
56.4
9.0
0.3
19.0
1.8
0.0
.1.3.

, %

,
.

2002
9.1%
-2.6%
-10.4%
2003
2.9%
-8.3%
-5.9%
2004
24.2%
-15.2%
0.6%
2005
33.1%
27.6%
53.6%
2006
14.2%
17.7%
66.1%
2007
19.0%
-0.8%
37.6%
2008
14.8%
-2.7%
48.5%
2009
-3.1%
-5.1%
-33.0%
-45.3%
145.8%
-3.4%
108.8%
36.3%
-32.7%
77.2%
-31.9%
32.3%
-74.5%
679.9%
-59.1%
-25.4%
4.7%
370.1%
-30.7%
8.5%
-15.4%
-4.9%
23.7%
9.8%
21.1%
26.8%
0.3%
-19.6%
5.2%
26.3%
23.5%
23.9%
62.4%
-1.3%
-49.3%
-7.9%
-9.6%
4.4%
18.7%
6.9%
17.0%
14.6%
-19.2%
-2.1%
1.4%
10.0%
3.4%
2.7%
19.8%
4.0%
-12.6%
49.9%
-39.8%
16.6%
6.5%
-21.6%
-44.9%
-25.9%
-38.2%
149.0%
-71.3%
29.9%
-39.0%
-95.2%
-77.0%
-70.9%
-100%
2010
22.1%
8.3%
58.4%
33.6%
45.8%
133.4%
35.2%
12.7%
1.7%
199.2%
0%
.1.4.

,
.

2001
5.6%
10.5%
2002
6.7%
11.2%
2003
6.7%
10.0%
2004
7.5%
7.6%
2005
8.2%
8.0%
2006
8.0%
8.0%
2007
7.4%
6.2%
2008
7.7%
5.5%
2009
10.5%
7.3%
2010
10%
6.1%
3.2%
3.2%
2.9%
2.6%
3.3%
4.7%
5.0%
6.8%
6.4%
7.9%
3.7%
2.2%
5.4%
4.7%
8.0%
9.3%
4.9%
7.9%
7.5%
7.8%
0.2%
0.2%
0.1%
0.4%
0.1%
0.1%
0.1%
0.3%
0.3%
0.3%
5.2%
6.2%
5.1%
4.4%
4.4%
4.2%
3.9%
4.5%
6.4%
11.6%
32.2%
28.3%
29.1%
33.0%
33.4%
35.4%
44.5%
40.2%
28.6%
30%
6.6%
6.7%
5.9%
5.5%
5.4%
4.9%
4.5%
4.7%
5.3%
4.6%
32.5%
34.8%
34.5%
34.0%
28.9%
25.3%
23.5%
22.4%
27.5%
21.7%
0.2%
0.3%
0.2%
0.2%
0.2%
0.1%
0.1%
0.0%
0.0%
0.1%
0.1%
0.2%
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
0.0%
76
.1.5.

,
, ,

,

, .

-

-
-

2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
1,891.02
216.62
1.15
68.90
11.96
7.15
34.94
18.26
19.81
21.52
18.26
14.66
20.18
5.23
14.95
52.56
2.82
5.24
1.36
11.81
1.32
10.32
8.52
4.12
7.06
261.55
15.57
215.23
19.20
11.54
17.96
192.50
17.91
9.87
8.96
2,109.94
260.68
3.15
75.01
13.45
9.33
48.33
26.36
26.23
23.94
16.51
18.36
19.03
7.05
11.98
52.93
1.83
6.02
1.26
15.35
0.47
8.87
9.58
3.03
6.51
278.36
13.26
217.52
18.08
29.51
21.06
223.89
19.40
12.08
11.28
2,038.86
239.73
1.42
62.16
14.63
8.74
41.22
30.33
23.32
24.42
12.38
21.10
21.38
9.20
12.18
53.07
1.67
4.30
0.93
14.57
0.40
8.88
7.26
9.03
6.02
285.59
20.69
228.94
16.00
19.97
21.63
225.31
15.67
9.31
12.56
2,356.80
271.30
1.72
69.80
17.23
9.14
53.70
36.17
17.92
27.68
12.93
25.00
22.49
10.40
12.09
62.19
3.30
5.54
1.28
13.14
0.25
9.29
5.97
16.13
7.30
319.79
17.99
254.28
16.25
31.27
42.52
225.86
14.89
8.78
15.43
2,598.53
275.87
1.41
71.04
21.16
10.41
41.20
34.84
21.40
31.54
12.30
30.57
25.00
12.52
12.47
85.77
2.42
5.62
1.03
12.16
0.33
9.75
6.87
39.16
8.42
497.75
23.08
396.05
22.32
56.30
24.14
268.46
15.60
8.78
18.35
2,988.42
288.62
1.84
71.40
23.47
14.62
33.62
34.99
26.17
34.42
12.16
35.92
25.36
14.32
11.04
106.34
1.46
5.59
0.79
12.70
0.77
11.69
6.59
57.73
9.02
604.43
23.80
499.62
31.22
49.79
24.97
290.34
16.66
7.48
22.27
3,853.03
378.17
1.39
87.96
26.51
16.30
70.83
46.25
29.60
39.49
16.68
43.17
27.93
18.71
9.22
217.55
1.50
6.51
0.86
12.23
2.01
11.40
13.29
159.46
10.30
711.91
27.91
457.91
41.49
184.60
34.26
357.66
26.17
9.39
27.40
4,679.53
422.15
1.52
94.92
29.38
18.20
79.37
52.28
31.11
45.44
20.34
49.58
34.78
22.57
12.21
238.68
1.41
8.19
1.38
13.75
0.47
11.17
12.96
176.12
13.23
964.97
34.37
635.43
59.17
236.00
45.85
417.55
29.71
11.40
29.78
3,615.65
401.76
1.24
101.22
29.87
17.07
58.20
50.20
32.36
46.19
17.59
47.81
37.07
23.96
13.11
141.47
1.32
6.95
1.02
17.89
0.64
8.78
9.97
80.83
14.08
580.55
8.53
445.29
40.06
86.67
32.74
407.77
26.36
16.10
27.82
4,115.6
421.4
0.9
94.9
33.0
15.7
59.9
51.1
45.5
50.9
18.7
50.8
43.5
24.9
18.6
217.5
1.9
8.6
1.0
16.1
0.6
10.1
10.8
154.6
13.8
730.0
23.8
562.4
56.4
87.3
39.1
500.3
21.1
97.0
29.7
77
.

,

.

, -.

, .
51.76
37.09
9.47
22.84
14.18
20.42
231.10
1.53
14.46
16.00
46.24
25.70
30.75
38.87
17.94
39.61
316.34
5.58
57.47
5.33
49.33
33.62
40.48
53.24
69.46
1.85
122.32
11.33
13.07
1.42
15.30
6.42
22.80
3.98
48.01
459.90
5.06
58.72
42.62
11.06
27.49
19.03
22.21
280.04
0.86
18.14
21.35
53.23
25.92
43.10
47.11
24.94
45.38
431.44
9.18
56.61
5.14
52.00
35.08
53.55
75.02
138.50
6.36
119.79
8.22
14.61
1.56
14.87
7.32
28.60
4.87
39.75
422.71
4.23
60.78
46.43
8.22
27.34
20.35
24.63
294.56
0.86
17.94
20.89
51.86
23.92
47.10
67.18
18.48
46.33
383.88
13.66
43.83
4.82
53.12
30.87
79.19
67.21
90.13
1.06
113.78
6.17
14.38
1.36
18.99
7.72
17.81
5.16
42.18
399.92
2.36
78
62.84
45.80
11.09
35.51
23.48
26.51
595.51
5.43
20.32
23.86
58.57
85.86
49.34
240.12
31.86
45.93
405.54
10.67
49.65
5.69
64.28
34.90
59.31
65.74
148.32
1.20
138.16
6.76
15.13
1.43
22.66
10.36
22.66
5.63
53.53
273.43
1.84
60.28
50.16
14.15
42.43
27.92
30.79
764.02
25.63
22.11
24.60
61.14
257.01
51.78
231.92
35.89
53.95
452.59
9.17
49.90
8.47
70.21
41.61
63.87
71.79
127.21
10.37
203.25
7.67
17.63
1.59
56.24
14.65
26.62
6.06
72.79
1.69
1.69
63.00
54.90
13.53
46.13
33.11
33.26
892.78
27.07
22.98
26.95
66.41
275.35
60.34
293.12
53.82
66.76
548.62
10.10
69.36
10.44
76.23
50.31
65.33
82.83
162.20
21.83
205.26
10.57
19.63
1.80
47.22
17.32
24.67
6.24
77.80
1.69
1.66
74.55
62.21
17.83
58.58
40.86
40.66
1,101.17
28.01
27.44
33.38
77.15
322.42
68.59
398.34
62.00
83.85
763.43
18.79
96.57
16.02
101.30
58.68
115.34
118.68
235.42
2.62
259.66
12.00
24.18
2.61
56.94
22.71
35.95
7.20
98.06
1.30
1.23
88.51
70.27
22.03
67.23
49.46
49.16
1,266.61
30.09
29.14
40.30
89.63
324.50
82.34
514.92
58.23
97.46
980.69
61.10
101.39
17.23
140.69
71.60
140.49
134.17
303.21
10.81
307.07
15.43
31.83
3.58
60.55
27.43
45.03
8.41
114.81
1.17
1.08
104.97
69.35
18.45
53.35
48.05
43.32
861.44
22.62
29.38
32.25
81.69
277.73
81.09
216.31
36.88
83.48
867.00
55.02
87.16
14.35
122.55
70.88
127.70
130.97
212.03
46.34
281.66
11.93
28.02
3.29
53.19
25.08
45.24
7.29
107.61
4.20
0.00
104.9
73.1
19.8
56.1
50.8
47.9
1,037.6
23.1
28.1
31.5
85.3
304.5
95.4
267.8
127.3
74.5
823.6
25.1
82.5
9.8
97.1
60.1
112.0
141.4
278.9
16.6
298.7
11.0
29.6
3.4
48.8
25.0
48.2
7.6
125.0
3.8
0.0
.1.6.

, %

,
.

2002
20.3%
-5.7%
0.7%
2003
-8.0%
12.4%
0.3%
2004
13.2%
5.2%
17.2%
2005
1.7%
11.1%
37.9%
2006
4.6%
1.5%
24.0%
2007
31.0%
10.1%
104.6%
2008
11.6%
24.6%
9.7%
2009
-4.8%
6.6%
-40.7%
2010
4.9%
17.3%
53.8%
6.4%
2.6%
12.0%
55.7%
21.4%
17.8%
35.5%
-39.8%
25.7%
17.3%
2.7%
96.6%
-43.2%
3.5%
37.2%
33.8%
-28.6%
19.6%
16.3%
0.6%
0.2%
18.9%
8.1%
23.2%
16.7%
-2.3%
22.7%
21.2%
5.2%
102.2%
28.3%
16.9%
23.3%
15.0%
-32.0%
20.4%
36.4%
-11.0%
5.6%
11.6%
21.2%
39.2%
28.5%
-11.6%
-5%
-2.1%
-5.0%
21.4%
47.1%
1.0%
26.5%
18.3%
-8.3%
6.1%
-8.1%
-5.4%
-31.6%
-99.4%
0.0%
-22.7%
-10.5%
259.2%
-9.6%
-16.3%
-44.1%
-22.0%
-8.4%
-1.6%
-25.8%
-12.1%
-100%
0%
.1.7.

,
.

2001
11.4%
1.1%
2.8%
2002
12.3%
0.9%
2.5%
2003
11.7%
1.0%
2.6%
2004
11.5%
1.0%
2.6%
2005
10.6%
1.0%
3.3%
2006
9.7%
0.8%
3.6%
2007
9.8%
0.7%
5.6%
2008
9.0%
0.7%
5.1%
2009
11.1%
1.0%
3.9%
2010
10.2%
1.1%
5.3%
13.8%
13.2%
14.0%
13.6%
19.1%
20.2%
18.5%
20.6%
16.1%
17.7%
0.9%
1.0%
1.1%
1.8%
0.9%
0.8%
0.9%
1.0%
0.9%
1.0%
10.2%
10.6%
11.0%
9.6%
10.3%
9.7%
9.3%
8.9%
11.3%
12.2%
12.2%
13.2%
14.4%
25.2%
29.4%
29.9%
28.6%
27.1%
23.8%
25.2%
16.7%
20.4%
18.8%
17.2%
17.4%
18.3%
19.8%
21.0%
24.0%
20%
6.5%
5.7%
5.6%
5.9%
7.8%
6.9%
6.7%
6.6%
7.8%
7.3%
24.3%
20.0%
19.6%
11.6%
0.1%
0.1%
0.0%
0.0%
0.1%
1.0%
0.3%
0.2%
0.1%
0.1%
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
79
.1.8.
,

,
.

2001
33.4%
672.3%
2002
30.3%
694.3%
2003
33.9%
566.7%
2004
37.2%
456.7%
2005
48.7%
524.3%
2006
53.2%
608.0%
2007
48.3%
547.7%
2008
49.7%
427.7%
2009
50.6%
381.0%
2010
78.0%
465.9%
79.6%
70.8%
66.5%
57.0%
63.5%
85.1%
57.2%
77.5%
87.6%
119.5%
18.5%
9.5%
22.8%
19.7%
26.4%
29.7%
16.9%
22.1%
25.1%
35.3%
11.9%
35.1%
13.4%
32.8%
3.3%
27.5%
13.2%
26.1%
9.5%
27.2%
6.9%
27.6%
5.2%
27.2%
18.4%
29.5%
17.9%
30.3%
28.9%
76.3%
180.0%
119.4%
119.5%
74.6%
71.8%
76.2%
100.3%
86.0%
64.2%
95.4%
27.0%
18.3%
18.6%
18.4%
19.5%
17.2%
14.5%
12.9%
11.8%
18.5%
343.5%
343.3%
366.6%
332.1%
233.5%
237.5%
224.9%
197.7%
188.4%
239.4%
0.6%
22.8%
0.9%
67.9%
0.6%
34.9%
1.0%
58.2%
177.6%
38.8%
139.3%
1.9%
99.2%
0.6%
82.1%
0.2%
14.1%
0.0%
61.9%
100.0%
80
2. -
.2.1.

(
)
2001
266.4
2002
248.1
2003
247.2
2004
254.3
2005
292.1
2006
298.7
2007
365.7
2008
381.9
2009
323.8
2010
522.90
298.6
259.7
242.1
279.3
372.0
442.3
469.2
631.4
113.0
101.9
23.3
65.4
18.1
11.2
50.8
29.9
9.7
24.2
8.4
23.4
123.3
87.5
23.0
62.2
19.2
14.4
47.5
30.2
9.0
15.8
11.0
22.8
159.2
84.9
22.8
58.4
20.9
15.3
41.9
30.9
28.9
18.8
8.5
18.8
184.0
107.9
41.3
64.6
26.7
18.9
38.0
34.2
43.4
18.6
12.0
22.0
252.0
136.6
61.7
65.1
40.9
22.4
35.8
34.7
36.9
11.2
28.1
25.5
286.6
188.5
103.1
98.9
51.4
32.2
44.1
29.0
44.0
39.4
65.7
32.7
15.3
1.0
6.8
28.4
25.5
12.1
1.2
6.8
17.4
48.3
15.8
1.5
6.8
5.1
62.1
17.3
3.4
7.2
6.1
15.6
20.3
10.5
11.9
8.2
8.2
0.9
3.1
111.0
52.8
0.5
3.8
81.5
41.8
1.6
5.0
63.8
52.2
1.7
4.7
57.9
45.1
1.7
6.8
35.9
135.4
1.4
15.4
17.9
55.7
357.5
219.3
253.5
155.5
71.1
72.6
47.9
47.9
21.2
51.3
75.1
43.8
0.6
26.1
13.9
22.6
22.4
15.2
10.9
16.4
8.1
47.9
2.0
6.4
7.6
59.3
225.95
327.16
185.06
177.12
222.01
93.34
64.14
54.65
53.04
44.77
38.44
55.63
60.98
52.17
15.6
1.1
6.9
39.8
17.9
309.6
255.3
177.3
119.7
64.7
53.3
53.6
55.6
39.1
128.1
130.1
50.5
0.4
20.3
7.0
17.2
14.0
14.6
7.9
11.8
4.4
9.9
1.5
11.2
38.0
47.1
246.4
219.3
208.3
155.5
154.1
110.0
61.9
60.0
44.0
30.5
29.4
27.4
25.8
24.4
24.0
17.8
17.6
16.0
14.1
13.6
12.3
9.0
8.6
7.5
7.4
6.8
6.7
43.0
81
20.19
41.01
27.92
14.16
10.47
16.06
9.94
10.75
50,0
.2.2.

, %
(
)
2001
-4.6%
2002
-6.9%
2003
-0.4%
2004
2.8%
2005
14.9%
2006
2.3%
2007
22.5%
2008
4.4%
2009
-15.2%
2010
61.49%
-18.2%
-13.0%
-6.8%
15.4%
33.2%
18.9%
6.1%
34.6%
-61.0%
23.3%
3.9%
-20.5%
24.6%
-28.1%
-21.6%
30.1%
9.1%
-14.2%
-1.3%
-5.0%
6.1%
29.4%
-6.5%
29.2%
-3.0%
-0.7%
-6.1%
8.9%
6.1%
-11.8%
15.5%
27.2%
81.0%
10.6%
27.7%
23.1%
-9.3%
37.0%
26.5%
49.5%
0.9%
53.0%
18.6%
-5.9%
13.7%
38.0%
67.0%
51.9%
25.5%
43.8%
23.2%
8.0%
35.5%
72.0%
21.0%
26.0%
65.4%
21.5%
15.5%
-14.1%
43.0%
29.9%
9.8%
36.4%
-10.7%
-41.7%
-29.1%
-39.2%
-29.2%
-13.0%
-17.3%
-8.0%
-8.32%
49.17%
-11.15%
13.93%
44.11%
-15.18%
3.70%
-8.99%
20.50%
1.6%
-14.2%
66.8%
-67.3%
-18.5%
1.1%
-6.9%
-34.6%
31.4%
-2.6%
2.3%
221.9%
19.2%
-23.1%
-17.6%
10.7%
50.2%
-1.2%
42.0%
16.7%
1.6%
-15.0%
-39.9%
134.0%
16.2%
-16.6%
19.2%
252.3%
133.8%
28.4%
91.9%
-11.1%
225.3%
97.9%
54.1%
-1.8%
-3.1%
-1.4%
-28.7%
42.3%
-20.9%
16.9%
-0.9%
-38.6%
89.2%
30.6%
20.5%
-0.2%
-70.5%
28.6%
9.0%
131.4%
7.0%
17.7%
-74.9%
17.9%
209.8%
64.5%
36.1%
-47.6%
-15.4%
33.5%
22.7%
-4.6%
43.7%
72.1%
11.3%
-37.7%
-40.3%
23.1%
-26.6%
201.7%
31.0%
-21.8%
10.7%
-6.5%
-9.1%
-4.4%
45.5%
-38.1%
-14.2%
128.0%
-50.0%
4.2%
-27.6%
111.7%
-36.2%
38.9%
-46.6%
-65.6%
-44.1%
3839.8%
-31.8%
26.6%
-29.3%
-37.1%
-10.8%
12.8%
-45.2%
5.7%
-84.3%
271.9%
5.5%
-10.7%
46.71%
30.57%
102.94%
135.98%
113.45%
38.3%
-9.7%
-34.7%
5.0%
10.9%
-14.0%
-45.8%
-60.0%
-42.3%
-13.3%
42.3%
28.2%
97.9%
31.4%
59.5%
4.4%
38.3%
39.8%
83.6%
383.0%
34.1%
-42.6%
-80.1%
-28.9%
-21.0%
25.0%
-13.7%
200.5%
-58.9%
-15.5%
26.0%
-27.6%
180.03%
82
26.31%
191.02%
105.34%
15.39%
16.25%
118.16%
46.94%
59.26%
.2.3.

, %
(
)
2001
20.6%
2002
21.1%
2003
20.5%
2004
18.9%
2005
17.8%
2006
15.7%
2007
14.8%
2008
14.2%
2009
16.8%
2010
20.97%
23.1%
0.0%
8.7%
7.9%
1.8%
5.1%
1.4%
0.9%
3.9%
2.3%
0.7%
1.9%
0.6%
1.8%
0.0%
0.0%
0.0%
1.2%
0.1%
0.5%
3.1%
1.4%
0.0%
0.0%
0.1%
0.2%
8.6%
4.1%
22.0%
0.0%
10.5%
7.4%
1.9%
5.3%
1.6%
1.2%
4.0%
2.6%
0.8%
1.3%
0.9%
1.9%
0.0%
0.0%
0.0%
1.3%
0.1%
0.6%
2.4%
2.2%
0.0%
0.0%
0.0%
0.3%
6.9%
3.5%
20.1%
0.0%
13.2%
7.0%
1.9%
4.8%
1.7%
1.3%
3.5%
2.6%
2.4%
1.6%
0.7%
1.6%
0.0%
0.0%
0.0%
1.0%
0.1%
0.6%
1.4%
4.0%
0.0%
0.0%
0.1%
0.4%
5.3%
4.3%
20.8%
0.0%
13.7%
8.0%
3.1%
4.8%
2.0%
1.4%
2.8%
2.5%
3.2%
1.4%
0.9%
1.6%
0.0%
0.0%
0.0%
1.2%
0.1%
0.5%
0.4%
4.6%
0.0%
0.0%
0.1%
0.3%
4.3%
3.3%
22.6%
0.0%
15.3%
8.3%
3.8%
4.0%
2.5%
1.4%
2.2%
2.1%
2.2%
0.7%
1.7%
1.6%
0.0%
0.0%
0.0%
1.0%
0.2%
0.4%
0.4%
0.9%
0.0%
0.0%
0.1%
0.4%
2.2%
8.2%
23.2%
0.0%
15.0%
9.9%
5.4%
5.2%
2.7%
1.7%
2.3%
1.5%
2.3%
2.1%
3.4%
1.7%
0.0%
0.0%
0.0%
1.1%
0.6%
0.6%
0.4%
0.4%
0.0%
0.0%
0.1%
0.8%
0.9%
2.9%
18.9%
0.0%
12.5%
10.3%
7.2%
4.8%
2.6%
2.2%
2.2%
2.2%
1.6%
5.2%
5.3%
2.0%
0.0%
0.8%
0.3%
0.7%
0.6%
0.6%
0.3%
0.5%
0.2%
0.4%
0.1%
0.5%
1.5%
1.9%
23.5%
0.0%
13.3%
8.2%
9.4%
5.8%
2.6%
2.7%
1.8%
1.8%
0.8%
1.9%
2.8%
1.6%
0.0%
1.0%
0.5%
0.8%
0.8%
0.6%
0.4%
0.6%
0.3%
1.8%
0.1%
0.2%
0.3%
2.2%
12.8%
11.4%
10.8%
8.1%
8.0%
5.7%
3.2%
3.1%
2.3%
1.6%
1.5%
1.4%
1.3%
1.3%
1.2%
0.9%
0.9%
0.8%
0.7%
0.7%
0.6%
0.5%
0.4%
0.4%
0.4%
0.4%
0.4%
2.2%
9.06%
13.12%
7.42%
7.10%
8.91%
3.74%
2.57%
2.19%
2.13%
1.80%
1.54%
2.23%
2.45%
2.09%
0,0%
0,0%
0.0%
0.81%
1.64%
1.12%
0.57%
0.42%
0,0%
0,0%
0.64%
0.40%
0.43%
2.01%
83
.2.4.

2001
240.0
156.0
206.2
2002
301.1
132.6
251.6
2003
269.4
158.2
265.7
2004
296.0
217.9
227.2
2005
270.2
341.8
239.3
2006
296.5
453.8
244.0
2007
389.0
465.7
303.7
2008
443.9
633.7
347.9
2009
371.0
354.9
314.9
2010
460.7
417.2
338.8
176.4
120.4
20.8
52.0
115.4
132.8
26.0
51.8
57.6
14.7
49.0
33.8
96.3
17.2
51.1
11.9
29.3
18.8
13.0
19.5
11.1
195.8
125.4
25.9
62.7
135.9
137.1
29.9
58.4
62.1
10.3
56.4
56.1
76.9
23.0
54.8
24.5
34.7
23.9
9.6
30.4
13.4
188.1
108.8
42.7
69.7
131.9
122.9
24.1
56.2
50.0
12.7
49.7
45.5
77.8
23.4
43.9
20.6
34.9
17.1
10.6
25.8
21.8
195.9
135.7
65.9
76.3
168.6
112.8
36.7
52.9
38.6
90.9
55.4
54.3
59.6
63.0
45.9
33.0
44.0
19.6
14.0
24.9
24.9
212.4
156.0
92.7
91.6
188.4
102.9
51.3
60.5
36.3
52.2
55.6
49.0
58.0
76.1
42.9
30.3
35.5
18.3
18.8
29.2
26.0
225.7
181.8
110.4
97.6
200.2
103.2
47.1
62.9
32.1
73.2
64.2
53.1
84.2
93.9
47.9
30.4
30.4
21.5
26.2
30.0
41.3
332.6
228.6
179.2
144.8
197.8
113.9
83.7
80.9
57.3
70.5
75.0
66.2
76.2
118.7
55.0
55.0
38.6
30.1
47.1
40.3
38.0
363.3
265.3
214.6
185.0
223.0
138.3
199.1
93.7
69.1
80.0
81.5
84.8
138.0
180.4
64.0
82.8
48.0
39.5
44.6
54.8
37.8
285.9
259.3
207.5
179.8
174.0
136.9
88.3
84.8
79.4
77.3
71.9
65.5
60.6
59.7
50.5
45.1
44.8
39.0
37.2
36.5
34.7
317.0
247.1
217.0
196.6
227.7
124.7
73.6
85.5
77.3
95.3
70.7
64.2
88.0
52.7
51.7
45.0
214.1
34.1
38.8
36.0
45.6
4.6
7.5
16.1
21.0
1.5
119.3
15.1
9.4
16.6
18.7
1.2
116.3
10.4
12.4
14.8
17.8
3.5
108.6
13.1
18.8
17.8
20.2
5.1
127.8
19.0
27.1
21.9
16.1
7.3
172.0
21.1
33.0
21.5
23.6
9.3
228.4
25.5
40.2
23.6
40.2
14.4
421.4
35.8
39.2
28.6
36.4
24.2
402.4
33.4
27.5
24.0
22.7
17.3
331.5
37.1
32.7
23.8
25.5
17.3
316.3
84
.2.5.

, %
2001
-12.5%
-24.9%
-5.6%
-14.4%
0.1%
42.6%
-8.3%
9.1%
-14.9%
-10.2%
-17.3%
-35.9%
-3.1%
8.5%
-19.1%
-56.8%
-23.9%
4.1%
-7.9%
-15.5%
-21.2%
-9.4%
-42.8%
-9.4%
2002
25.5%
-15.0%
22.0%
11.0%
4.2%
24.5%
20.4%
17.8%
3.3%
15.2%
12.8%
7.7%
-30.0%
15.1%
65.8%
-20.1%
34.0%
7.3%
105.8%
18.3%
27.3%
-26.3%
56.0%
21.1%
2003
-10.5%
19.3%
5.6%
-3.9%
-13.2%
65.1%
11.2%
-2.9%
-10.3%
-19.5%
-3.8%
-19.5%
23.3%
-11.9%
-18.8%
1.2%
1.4%
-20.0%
-16.3%
0.7%
-28.6%
10.6%
-15.1%
62.4%
2004
9.9%
37.7%
-14.5%
4.2%
24.7%
54.4%
9.5%
27.8%
-8.2%
52.7%
-5.9%
-22.9%
615.1%
11.4%
19.3%
-23.4%
169.5%
4.7%
60.6%
26.1%
14.5%
32.9%
-3.3%
14.5%
2005
-8.7%
56.9%
5.3%
8.4%
15.0%
40.5%
20.0%
11.7%
-8.8%
39.7%
14.4%
-5.7%
-42.6%
0.5%
-9.7%
-2.7%
20.8%
-6.7%
-8.3%
-19.3%
-6.6%
33.6%
17.1%
4.4%
2006
9.7%
32.8%
2.0%
6.3%
16.5%
19.1%
6.6%
6.2%
0.3%
-8.2%
4.1%
-11.6%
40.3%
15.3%
8.3%
45.3%
23.4%
11.8%
0.4%
-14.3%
17.3%
39.7%
2.7%
58.8%
2007
31.2%
2.6%
24.5%
47.4%
25.7%
62.4%
48.4%
-1.2%
10.3%
77.5%
28.5%
78.2%
-3.7%
16.9%
24.8%
-9.5%
26.5%
14.7%
80.9%
26.8%
40.2%
79.8%
34.5%
-8.0%
2008
14.1%
36.1%
14.5%
9.2%
16.1%
19.7%
27.8%
12.7%
21.4%
138.0%
15.8%
20.6%
13.5%
8.7%
28.0%
81.2%
52.0%
16.5%
50.5%
24.5%
31.3%
-5.5%
36.0%
-0.5%
2009
-16.4%
-44.0%
-9.5%
-21.3%
-2.2%
-3.3%
-2.8%
-22.0%
-1.0%
-55.7%
-9.4%
15.0%
-3.4%
-11.8%
-22.7%
-56.1%
-66.9%
-21.1%
-45.5%
-6.7%
-1.3%
-16.5%
-33.4%
-8.4%
2010
24.2%
17.6%
7.6%
10.9%
-4.7%
4.6%
9.3%
30.9%
-8.9%
-16.6%
0.8%
-2.6%
23.3%
-1.6%
-2.1%
45.4%
-11.6%
2.4%
-0.2%
377.8%
-12.5%
4.2%
-1.5%
31.5%
-19.8%
-40.8%
9.8%
-38.8%
-56.4%
-5.5%
226.3%
25.4%
3.5%
-10.9%
-18.3%
-2.5%
-31.3%
31.4%
-11.3%
-4.7%
194.0%
-6.7%
26.2%
51.7%
20.3%
13.1%
45.6%
17.7%
44.6%
44.0%
23.4%
-20.1%
43.0%
34.6%
11.4%
21.8%
-1.8%
46.4%
28.0%
32.8%
20.7%
21.9%
9.8%
70.2%
53.7%
84.5%
40.3%
-2.4%
21.1%
-9.3%
68.9%
-4.5%
-6.7%
-29.9%
-16.1%
-37.7%
-28.7%
-17.6%
11.2%
19.0%
-1.1%
12.6%
0.1%
11.2%
85
.2.6.

, %
2001
12.7%
8.2%
10.9%
9.3%
6.4%
1.1%
2.8%
6.1%
7.0%
1.4%
2.7%
3.0%
0.8%
2.6%
1.8%
5.1%
0.9%
2.7%
0.6%
1.5%
1.0%
0.7%
1.0%
0.6%
2002
14.3%
6.3%
11.9%
9.3%
5.9%
1.2%
3.0%
6.4%
6.5%
1.4%
2.8%
2.9%
0.5%
2.7%
2.7%
3.6%
1.1%
2.6%
1.2%
1.6%
1.1%
0.5%
1.4%
0.6%
2003
13.2%
7.8%
13.0%
9.2%
5.3%
2.1%
3.4%
6.5%
6.0%
1.2%
2.8%
2.5%
0.6%
2.4%
2.2%
3.8%
1.1%
2.2%
1.0%
1.7%
0.8%
0.5%
1.3%
1.1%
2004
12.6%
9.2%
9.6%
8.3%
5.8%
2.8%
3.2%
7.2%
4.8%
1.6%
2.2%
1.6%
3.9%
2.3%
2.3%
2.5%
2.7%
1.9%
1.4%
1.9%
0.8%
0.6%
1.1%
1.1%
2005
10.4%
13.2%
9.2%
8.2%
6.0%
3.6%
3.5%
7.3%
4.0%
2.0%
2.3%
1.4%
2.0%
2.1%
1.9%
2.2%
2.9%
1.6%
1.2%
1.4%
0.7%
0.7%
1.1%
1.0%
2006
9.9%
15.2%
8.2%
7.6%
6.1%
3.7%
3.3%
6.7%
3.5%
1.6%
2.1%
1.1%
2.5%
2.1%
1.8%
2.8%
3.1%
1.6%
1.0%
1.0%
0.7%
0.9%
1.0%
1.4%
2007
10.1%
12.1%
7.9%
8.6%
5.9%
4.7%
3.8%
5.1%
3.0%
2.2%
2.1%
1.5%
1.8%
1.9%
1.7%
2.0%
3.1%
1.4%
1.4%
1.0%
0.8%
1.2%
1.0%
1.0%
2008
9.5%
13.5%
7.4%
7.8%
5.7%
4.6%
4.0%
4.8%
3.0%
4.3%
2.0%
1.5%
1.7%
1.7%
1.8%
2.9%
3.9%
1.4%
1.8%
1.0%
0.8%
1.0%
1.2%
0.8%
2009
10.3%
9.8%
8.7%
7.9%
7.2%
5.7%
5.0%
4.8%
3.8%
2.4%
2.3%
2.2%
2.1%
2.0%
1.8%
1.7%
1.7%
1.4%
1.2%
1.2%
1.1%
1.0%
1.0%
1.0%
2010
11.2%
10.1%
8.2%
7.7%
6.0%
5.3%
4.8%
5.5%
3.0%
1.8%
2.1%
1.9%
2.3%
1.7%
1.6%
2.1%
1.3%
1.3%
1.1%
5.2%
0.8%
0.9%
0.9%
1.1%
0.2%
0.4%
0.9%
1.1%
0.1%
6.3%
0.7%
0.4%
0.8%
0.9%
0.1%
5.5%
0.5%
0.6%
0.7%
0.9%
0.2%
5.3%
0.6%
0.8%
0.8%
0.9%
0.2%
5.4%
0.7%
1.0%
0.8%
0.6%
0.3%
6.6%
0.7%
1.1%
0.7%
0.8%
0.3%
7.6%
0.7%
1.0%
0.6%
1.0%
0.4%
10.9%
0.8%
0.8%
0.6%
0.8%
0.5%
8.6%
0.9%
0.8%
0.7%
0.6%
0.5%
9.2%
0.9%
0.8%
0.6%
0.6%
0.4%
7.7%
86
REVIEW
OFTHEFOREIGNTRADE
OFMACEDONIA
2011
87
88
PART1
TRENDS
INMACEDONIASFOREIGNTRADE
IN2010
Part1:TRENDSINMACEDONIASFOREIGNTRADEIN2010
89
90
The aim of this analysis is to present the most important trends and structural
characteristics of Macedonias foreign trade in 2010 and put them into context with the
general domestic and global economic movements which marked that year. Therefore, the
analysis begins with a review of trends in the global trade and general movements in the
foreign trade of Macedonia, and then two sections separately deal with developments and
structural changes in exports and imports. In a separate section, emphasis is put on the terms
of trade and trends in prices of some major trade products, primarily metals and energy.
Finally, the analysis focuses on the trade balance.
1. TrendsintheGlobalTradeof2010
In 2010, the world trade started to show signs of recovery from the global economic
crisis. Moreover, the growth in 2010 compared to 2009 was 22% (in dollar value) and 14.6%
(in quantity). The growth of 14.6% of the world trade is the biggest annual growth of the
world trade since 1950. It, above all, is due to the export growth in developing countries in
2010 of 16.7%, compared to developed economies, where external trade had 12.9% growth.
The boost of trade was aided by the Government measures for encouraging exports in 2009
and the beginning of 2010. Such measures were necessary as a result of the continued effects
of the crisis which has spilled over from the financial sector, through the real sector and into
the social sector. Many of the economies are faced with growing unemployment and reduced
fiscal spending due to high budget deficits. Therefore, in order to bring the economy back to
life, economists implemented protectionist measures in foreign trade. Such measures include:
subsidies, cheap access to credit, tax relief /cuts for exporters and the like.
Figure 1 World Trade (2000-2010)
35
trillion dollars
30
25
20
15
10
5
0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Total world trade
Source: Direction of trade statistics of IMF

On a regional basis, foreign trade recorded synchronized growth in 2010 in all regions
of the world (Figure 2). The biggest growth was recorded in the countries of the Middle East
and Asia, with annual growth rates of 37% and 32% respectively. Such leading growth rates
of trade, growth rates of over 30% of the countries of the Western Hemisphere and the
91
Commonwealth of Independent States (CIS) is due to soaring fuel prices and other raw
materials in 2010, which present a major export product of the emerging economies of Asia
and the Middle East. The lowest annual growth of 12% in trade was observed in the
Eurozone countries, followed by Central and Eastern Europe (CEE) with 21%.
Figure 2 Annual Trade Growth by Regions
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
-50%
2001
2002
2003
2004
2005
Africa
CIS
Euro zone
Total world trade
2006
2007
2008
2009
2010
SEE
Asia (excl. CIS)
Western Hemisphere
Source: Direction of trade statistics of IMF
2. GeneralTrendsofMacedoniasForeignTrade
The total trade between Macedonia and the rest of the world in 2010 increased by
13.4% compared to 2009 (2009/2008 trade was reduced by 27.6%), and reached 95.9% of the
gross domestic product (GDP). The size of trade openness is still below the maximum
volume of trade openness in 2008, when it was 110.1%.
The increased trade openness (volume of trade) is a result of the gradual recovery of
the economies and the renewed trust of economic agents. In addition, the imports and exports
have gradually increased, reaching values that were achieved in the pre-crisis period. The
value of imports increased by 14%, while the value of exports by 29%. Such movements had
positive impact on reducing the trade deficit, which at the end of the year was 23.5% of the
GDP. The trade deficit declined slightly compared to 2009 (25.2%), but compared with 2008,
the decline was 6.2 percentage points. Hence, the indicator for the coverage of imports by
exports (60.6%) shows an increase of 7.4 percentage points compared to 2009.
92
Figure 3 Foreign Trade and Trade Openness of Macedonia (1999-2010)

4000
120%
3000
100%
2000
80%
0
60%
-1000
40%
-2000
20%
% of BDP
million eur
1000
-3000
0%
-4000
2010
2009
2008
2007
2006
2005
2004
2003
2002
-40%
2001
-6000
2000
-20%
1999
-5000
Import (lhs)
Export (lhs)
Trade balance (rhs)
Trade openness (rhs)
Import coverage with export (rhs)
Source: State Statistical Office and calculations based on SSO data
3. TrendsandStructuralCharacteristicsofExport
Exports in 2010 showed positive trends and had an impact on increasing the value of
the GDP. On an annual basis, export growth was 29%, which reached a record growth rate of
exports recorded in 2007 (Figure 4). In the total gross domestic product, the share of exports
rose to 36% from 29% in 2009. Such positive trends are expected to continue in the future,
mainly because of expected higher prices of metals and food, which are major export
products of Macedonia, but also because of the general recovery of the global economy.
Exports increased in all components, with the exception of investment goods, based
on economic purpose (Figure 5). The decline in exports of investment goods in 2010 was
0.1%, which has slightly improved compared to the previous year (0.4%). Of the total
increase in exports in 2010, the export of industrial products had the largest share (82.5%).
93
50%
45%
40%
35%
30%
25%
20%
15%
10%
5%
0%
3000
million eur
2500
2000
1500
1000
500
Export (lhs)
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
% of GDP
Figure 4 Macedonias Total Exports (1999-2010)
Export/GDP (rhs)
Figure 5 Contribution of Various Sectors (based on economic purpose) to Export

Growth
40%
30%
20%
Energy
10%
Industry
0%
Investment
Household consumption
-10%
-20%
-30%
2007
2008
2009
2010
Source: Calculations based on SSO data
94
The total value of export products for personal consumption and investment goods has
reduced its participation at the expense of the increase in energy goods (insignificant increase
of 0.5 percentage points) and industry that created 51% of the total exports (Figure 6).
Figure 6 Total Export in RM Based on Economic Purpose
2009
2010
Energy
7.5%
Energy
8%
Household
consumption
44.9%
Household
consumption
38%
Industry
43.3%
Industry
51%
Investment
3%
Investment
4.3%

The main export products in 2010 were iron and steel (587.3 million), which
superceded again the total value of exports above clothes (424.7 million), which in 2009 had
the highest participation, followed by oil and oil products (154.7 million), ore (153.6 million)
and fruit and vegetables (136.7 million) (Figure 7).
Iron and steel have been the major export products of Macedonia for years. In 2009,
influenced by the developments in the global economy, their share in total exports dropped
(annual decline of 56.6%). However, with the revival of economic activity, it again assumed
the primacy of the most important export product - an increase of 53.4% in 2010. The
increase in exports is due to: 1) increasing demand for iron and steel of trade partners,
especially western European countries that have begun to show positive rates of economic
growth, and 2) the increase in metal prices on world markets. These factors, simultaneously,
affected the substantial increase in the share of metal ore in the total value of exports
(increase of 65.2% in 2010 compared to 2009) as well as oil and oil products (annual growth
of 20.1%). Only clothing showed stagnant rates, with an insignificant increase of 1.7% over
the previous year.
95
million eur
Figure 7 The Five Goods with Greatest Share in Macedonias Export (2003-2010)
1,000
900
800
700
600
500
400
300
200
100
0
2003
2004
2005
2006
Clothing
Steel and iron
Vegetables and fruits
Metal ore
2007
2008
2009
2010
Oil and oil products
Source: SSO
According to these trends, product concentration of exports in 2010 recorded a slight
deterioration (Figure 8). According to the indicator for the five products with the highest
export share in total exports, CR-5, the concentration increased from 58.5% in 2009 to 60.5%
in 2010. The same tendency is observed in the Herfindahl-Hirschman index, which has a
slight annual increase of 18 index points in 2010 and is positioned at 1068 points.
Concentration according to this indicator remains in the zone of medium product
concentration (1000-1800 index points), although it is close to the upper limit of low
concentration (1000 points).
Figure 8 Production Concentration of Exports (2004-2010)
72%
2,000.0
70%
1,800.0
68%
1,600.0
66%
1,400.0
64%
1,200.0
62%
1,000.0
60%
800.0
58%
600.0
56%
400.0
54%
200.0
52%
0.0
2004
2005
2006
2007
2008
CR-5 (lhs)
HH-index (rhs)
2009
96
2010
In 2010, the biggest export partner of Macedonia was Germany (523 million euros),
followed by Kosovo (327 million euros), Serbia (226 million euros), Bulgaria (222 million
euros) and Greece (185 million euros) (Figure 9). Over the past few years (before the
independence of Kosovo), the leading position in exports belonged to Serbia, but Kosovo was
included in the statistics of trade with Serbia. After the independence of Kosovo, it was
evident that more than half of total exports to the former Serbia referred to Kosovo.
In 2010, a different dynamic of export growth towards all economic partners is noted.
The increase of exports was notable towards Germany (61%) and Kosovo (49%). The exports
to Serbia decreased 8%, as did the exports to Greece by 11% compared to 2009. The severe
economic crisis with which Greece has been faced in the past few years resulted in export
decline to a new low in the past five years.
Figure 9 Macedonias Exports to the Largest Trading Partners (2003-2010)
700
600
million eur
500
400
300
200
100
0
2004
2005
2006
2007
Serbia (incl. Kosovo and Montenegro)
2008
Germany
Greece
2009
Serbia
2010
Kosovo
Source: SSO
If we consider the economic blocks (Figure 10), EU-27 continues to be a leading
export partner taking over two thirds (-71%) of RMs export in 2010. The exports to CEFTA
have decreased by 16 percentage points compared to the previous year and it is 20.7% in
2010.
According to two indicators of concentration, Macedonias export has low to medium
geographic concentration (Figure 11). The indicator for the concentration of five major
export partners (CR-5) noted a slight annual increase of two percentage points in 2010 and
positioned at 62%, which is a significant improvement of geographic concentration to
previous years, when this index reached up to 70%. However, it must be considered that this
movement is partly due to the separation of Kosovo from Serbia. The same tendency is
present in the Herfindahl-Hirschman index, which is positioned at 1052 index points, which
is almost on the border between low and medium concentration (1000 points). These
observations of the geographical concentration of exports are important for assessing the
sensitivity of exports of individual and regional shocks (such as the economic shock in
Greece, which is the fourth export partner of Macedonia).
97
Figure 10 Macedonias Export to Economic Blocks in 2010
Switzerland Rest
Russia
Turkey
CEFTA
EU
Source: SSO
Figure 11 Geographic Concentration of Exports (2004-2010)

100%
1400
90%
1200
80%
70%
1000
60%
800
50%
40%
600
30%
400
20%
200
10%
0%
0
2004
2005
2006
2007
CR-5 (lhs)
2009
HH-index (rhs)
2008
98
2010
4. TrendsandStructuralCharacteristicsofImports
Upon the recovery of the world economy, imports in Macedonia have increased by
14% in 2010 compared to the previous year. However, imports increased at a slower pace
than exports. Participation of imports in GDP rose to 60%, an increase of 6 percentage points
compared to the previous year (Figure 12).
Such a growth rate of imports in 2010 exceeds the average annual growth rate of
imports from 2000 to 2009, which was 10%. In addition, the largest increase in values of
imports was realized in 2000 (36%), 2007 (29%) and 2008 (21%). Negative values that
reduce the average were observed in 2001 (-17%) and 2009 (23%).
5000
4500
4000
3500
3000
2500
2000
1500
1000
500
0
80%
70%
60%
50%
40%
30%
% of GDP
million eur
Figure 12 Macedonias Total Imports (1999-2010)
20%
10%
0%
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Import (lhs)
Import/GDP (rhs)

Analyzed through economic purpose, imports grew in all components except for
investment goods. The fall in imports of investment goods is greater than that of the prev ious
year and amounted to 21.4%. All other components show an increase (Figure 13).
Figure 13 Contribution of Different Sectors (based on economic purpose) in Import
Increase
40%
30%
20%
Energy
10%
Industry
0%
-10%
Investment
-20%
Household
consumption
-30%
2007
2008
2009
2010
99
Imports of investment goods had the smallest share (11.5%) in 2010, at the expense of
increasing the share of imports of industry and energy products (Figure 14). It is the result of
low confidence amongst investors in the state the global economy is in.
Figure 14 RMs Total Imports Based on Economic Purpose
2009
2010
Energy
15.5%
Household
consumption
26.2%
Energy
17%
Household
consumption
25%
Investment
16.6%
Industry
41.7%
Investment
12%
Industry
46%
Source: SSO and calculations based on SSO data

In 2010, the main import products of Macedonia remained oil and oil products (562
million), followed by textiles (304 million), road vehicles (268 million), iron and steel (216
million) and electric machines (212 million) (Figure 15). Such a structure of imports, which
has no development elements emphasizes three structural features of the Macedonian
economy: 1) high dependence on imported energy, 2) low level of development of the textile
industry, which still dominates the loan production, and 3) low level of finalization of the
products.
Figure 15 RMs Imports Based on Five Products with Greatest Share in 2010 (20032010)
700
600
million eur
500
400
300
200
100
0
2003
2004
2005
2006
2007
oil and oil products
textile
road vehicles
electric machines, parts
2009
steel and iron
Source: SSO
2008
100
2010
Given that imports are beyond the manufacturing base of exports, their product
concentration is relatively low, but 2010 recorded a slight increase (Figure 16). The indicator
for the five products with the highest share in total imports, CR-5, shows that the
concentration increased from 35.5% in 2009 to 38.5% in 2010. The same tendency is
observed with the Herfindahl-Hirschman index, which increased by 50 index points in 2010
and is positioned at 464 points, which still indicates a low product concentration.
Figure 16 Production Concentration of imports (2004-2010)
50%
700.0
45%
600.0
40%
35%
500.0
30%
400.0
25%
20%
300.0
15%
200.0
10%
100.0
5%
0%
0.0
2004
2005
2006
2007
CR-5 (lhs)
2008
2009
2010
HH-index (rhs)

In 2010, the largest importing partner of Macedonia is still Germany (461 million),
followed by Russia (417 million), Greece (339 million), Serbia (317 million) and Italy (247
million). In recent years, the leading place belonged to Russia, but imports from this country
in 2009 saw a significant decline of 44% as a result of reduced imports of energy. In 2010,
energy imports from Russia increased, but not enough to take the place of the largest
importing partner.
Analyzed by economic blocks (Figure 18), EU-27 still remains a partner which has
about half of the Macedonian imports (52% in 2010). Unlike exports, imports from CEFTA
constitute only 11% of the total Macedonian export, which is a relatively favorable trend and
indicates the position of Macedonia in the framework of the regional group for several years
now. The participation of Russia and China in total imports is notable (10% and 5%
respectively), despite their negligible share in total exports to Macedonia. Such a position has
deteriorated the terms of trade of Macedonia in trading with these countries.
The two indicators of concentration show that Macedonian imports have low
geographic concentration (Figure 19). The indicator for concentration of the top five
importing partners (CR-5) has not seen drastic changes, but over the years a slight decline has
been evident. The 2010 CR-5 is 43%. A similar tendency is present in the HerfindahlHirschman index, which was positioned in 2010 at 545 index points, after a decline of 49
index points, which is far below 1000 points.This geographic concentration is considered
medium.
101
Figure 17 Macedonias Imports from the Four Largest Trading Partners (2003-2010)
700
600
million eur
500
400
300
200
100
0
2003
2004
Germany
2005
Russia
2006
Greece
2007
2008
2009
Serbia and Montenegro
Source: SSO
Figure 18 Macedonias Imports in 2010 (based on economic blocks)
Switzerland
Other
Turkey
China
Russia
EU
CEFTA
Source: SSO
102
2010
Figure 19 Concentration of imports (2004-2010)

100.00%
1000
90.00%
900
80.00%
800
70.00%
700
60.00%
600
50.00%
500
40.00%
400
30.00%
300
20.00%
200
10.00%
100
0.00%
0
2004
2005
2006
2007
CR-5 (lhs)
2008
2009
2010
HH-index (rhs)
5. TermsofTrade
Equivalent to the intensification of the economic activity in the period 2004-2007,
trade conditions, defined as the ratio between export and import prices, are improving.
Conversely, the terms of trade in 2008-2010 deteriorated. In 2010, terms of trade deteriorated
by about 6%.
Figure 20 Terms of Trade (2004-2010)
115
export/import prices
110
105
100
95
90
85
2004
2005
2006
2007
2008
2009
2010

Deteriorating terms of trade were due primarily to the high prices of oil, which is the
main imported product of Macedonia (Figure 15, Chapter 4). The average price of Brent oil
on the London Stock Exchange in 2010 amounted to 79.63 dollars per barrel, representing a
significant increase of 28.7% compared to the average level of 2009 (Figure 21). The oil
103
price has gradually increased in the first half of 2010 and reached high values in mid-2010.
Although a brief decline in prices followed, due to increased demand, at the end of the year
the price started to reach record highs that are closer to the values of 2008 (when such a
phenomenon was popularly called the third oil shock).
A similar trend is marked with metal prices, which in 2010 increased by 25% (for
lead) to 49% (for nickel, Figure 22). The increase in the price of metals, acts to improve the
conditions of exchange, because as already mentioned (Figure 7, Chapter 3), iron and steel
have been the main export products of Macedonia for years.
Figure 21 Prices of Brent Oil (2003-2010)
120
US dollars per barrel
100
80
60
40
20
0
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Source: International monetary statistics of IMF
8000
40000
7000
35000
6000
30000
5000
25000
4000
20000
3000
15000
2000
10000
1000
5000
Copper
Lead
Zinc
Source: International monetary statistics of IMF
104
2010
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
Nikkel (rhs)
US dollars per metric tone
US dollars per metric tone
Figure 22 Prices of Metals (2003-2010)
6. AnalysisoftheTradeBalance
Trends in exports and imports, and in terms of trade, contributed to a slight
improvement of trade deficit in 2010 and retained the trend that was present in the previous
year. Decline in the trade balance in 2010 was 1.7 percentage points (Figure 3). The drop of
the trade deficit is smaller than the previous year (4.5 percentage points), which is clearly a
result of increased imports compared to exports.
Analyzed by products (Figs 23 and 24), reduced trade deficit resulted from the
reduced deficit of the balance of industrial machines for general use (reducing the deficit by
41%) and trade in electricity (25.3%). Adverse trends in the overall trade deficit were caused
by the growing deficit in trade in iron and steel (increasing the deficit from 91.8%), fruits and
vegetables (65%), road vehicles (31%) and oil (29%).
Figure 23 Trends in Five Products with the most Positive Balance in 2010 (2003-2010)
2010
2009
2008
2007
2006
2005
2004
2003
0
200
million eur
garments
400
600
800
1,000
1,200
steel and iron
tobacco and products
fruits and vegetables
beverages
Source: SSO
Figure 24 Trends in Five Products with the most Negative Balance in 2010 (2003-2010)
2010
2009
2008
2007
2006
2005
2004
2003
-1,600
-1,400
-1,200
-1,000
-800
-600
-400
-200
million eur
telecom devices
road vehicles
textile
electric energy
Source: SSO
105
Analysis by trading partners (Figs 25 and 26) trends in total trade balance in 2010
were mainly determined by the increasing trade deficit with Russia (55% or 187 million euros
on an annual basis), and Serbia (104 million) due to imports of crude oil. Increase in deficit is
reported in trading with Greece (97 million), Turkey (59 million), Hungary (62 million) and
Ukraine (42 million).
Reduction of the deficit is noted in trade with Slovenia (16 million), Italy (10 million),
Poland (8 million) and China (6 million). In trade relations with Germany in 2010, the deficit
is replaced with a surplus (improvement of trade balance of 131m euros).
Figure 25 Trends in five trading partners with the most positive balance in 2010
(2003-2010)
2010
2009
2008
2007
2006
2005
2004
2003
0.00
50.00
100.00
150.00
200.00
250.00
300.00
million eur
Alba nia
Bosnia
Croatia
Montenegro
Belgium
Source: SSO
Figure 26 Trends in five trading partners with the most negative balance in 2010
(2003-2010)
2010
2009
2008
2007
2006
2005
2004
200.00
0.00
-200.00
-400.00
-600.00
-800.00
-1,000.00
-1,200.00
-1,400.00
2003
million eur
Greece
Slovenia
Turkey
China
Russia
Source: SSO
106
Macedonia had a deficit in trade with all (observed) regions. The highest increase was
observed in the deficit in trade relations with Russia (for 187 million euros), followed by the
EU (about 152 million euros) and other countries (85 million). Surplus in trade with CEFTA
is noted in 2008 and 2009, which in 2010 went into a trade deficit by reducing trade traffic by
95 million.
Figure 27 Trends in trade balance on regional basis
1000
500
CEFTA
CEFTA
EU
EU
EU
Russia
CEFTA
million eur
-500
-1000
Russia
Russia
Other
-1500
Other
Other
-2000
-2500
-3000
2008
2009
Source: SSO
107
2010
108
PART2
RESEARCH
PAPERS
Part2:RESEARCHPAPERS
109
110
SpecializationpatternsinMacedonia:Whataretheconsequencesontrade?
Raphael CHIAPPINI
Universit Bordeaux IV Montesquieu, LAREFI
Avenue Lon Duguit
33608 Pessac, France
1. Introduction
Over the past decade, international trade has experienced an unprecedented growth following
the emergence of new global actors such as China or India. The same fact can be recorded for
the central and eastern European countries such as Czech Republic or Poland. Since the
beginning of the nineties and the burst of Yugoslavia, several countries have merged in
international trade. Nevertheless, their share in world trade is still relatively low. Indeed in
2008, Former Yugoslav countries16 represent only 0.36 % of world exports against 0.30 % in
1993. In this area, the Republic of Macedonia has an important place. Besides, between 1992
and 2008, its export market share among former Yugoslav countries has seriously decreased
from 11.6 % to 6.6 %. But if we focus on the recent period, we can notice that Macedonian
exports marked a huge increase of 28 % on average between 2002 and 200817. In fact, the
political crisis of 2001 worsened export performance and growth of Macedonia and it
resulted in a severe contraction in output and exports that lasted until 2001 (Gutierrez, 2007).
In both theoretical and empirical literature, export performance is affected by competitiveness
and specialization patterns. Indeed, new trade theories (Krugman, 1989; Grossman and
Helpman, 1991) emphase the fact that specializations are not equivalent in terms of potential
growth for the economy. Indeed, empirical literature on international trade (Lucas, 1988;
Young, 1991) has shown that a wrong specialization can durably decrease countries export
growth and performances. This problem can concern both sectors (industrial specialization)
and target countries (geographical specialization). So, in simple terms, if a country is more
specialised in export products and destination markets where demand is strong in comparison
to other products and markets, then the countrys aggregate export market share will tend to
increase.
Is the recent growth of Macedonian exports a result of better competitiveness or goods
specialization? Have the specialization patterns of Macedonia changed since 1993?
A common method used in the empirical literature (Milana, 1988; Cheptea et al., 2005; BCE,
2005, Amador et Cabral, 2008) to assess the impact of both competitiveness and
specialization on export performances of a country is the Constant Market Share Analysis
(CMSA). This statistical method decomposes the absolute variation of the export market into
two terms which represents competitiveness and specialization.
Therefore, our paper is divided into three different sections. In the first one, we evaluate the
industrial and geographical specialization of Macedonia using the revealed comparative
advantage (RCA). In the second one, we evaluate the impact of competitiveness and
specialization on Macedonian export performances between 1993 and 2008 using the CMSA
method. Finally, we conclude in a third section.
16
17
Bosnia and Herzegovina, Croatia, Macedonia, Serbia and Montenegro and Slovenia.
See appendix 1.
111
2. Specialization Patterns of Macedonia

The empirical literature distinguishes two different specializations: the industrial
specialization and the geographical specialization. The first one evaluates products where a
country has a comparative advantage. The second one studies the geographical breakdown of
a countrys exports.
a. Industrial Specialization
The traditional measure of a countrys trade specialization is given by the Revealed
Comparative Advantage index proposed by Balassa (1965). Despite its popularity, this index
has been severely criticized in the literature. Indeed, the Balassa index only focuses on export
flows data and does not take into account import flows data. This index is thus just a
comparison of the national export structure of a given country with respect to the world
export structure.
In our empirical study, we evaluate Macedonian specialization focusing on both import and
export flows. We then rely on the Revealed Comparative Advantage (RCA) index computed
by the Centre d'Etudes Prospectives et d'Informations Internationales (CEPII) and based on
previous indices developed by Lafay (1987, 1990, 1992). Indeed, this index captures intraindustry trade and allows a better understanding of a countrys trade specialization within
sectors than the Balassa index.
For a given country i, and for any given sector (or product), k, the RCA index
computed by the CEPII is defined as:
1000
,
,
.
.
.
(1)
Where , and , are exports and imports of product k of country i, to and from the rest of
and , are the total of exports and imports of country i and is
the world, respectively,
the Gross Domestic Product (GDP) of country i. The index takes values in between - and
+. Positive values of the RCA index indicate the existence of a comparative advantage
whereas negative values represent a comparative disadvantage. In short, the larger the value
of the RCA, the higher the degree of specialization is. Finally, the RCA index has been
computed for 144 products at the 3-digit level of disaggregation from the Standard
International Trade Classification (SITC) for Macedonia. Table 1 summarizes the results
concerning the main sectors.
Our results suggest that Macedonia is mainly specialized in low and medium-low technology
sectors. Indeed, Macedonia seems to have developed comparative advantages in those sectors
since 1993 and increased its comparative disadvantages in high and high-medium technology
sectors. If we now focus on sectors, we notice that Macedonia is mainly specialized in steel,
textile, non-ferrous and food industry.
112
Table 1: RCA index in the main sectors

1993
2000
2008
-91,5
-113,0
-64,4
Food industry
8,3
-10,6
4,5
Textile
72,9
60,9
65,5
Wood, paper
-1,3
-15,8
-16,9
Chemistry
-48,9
-30,4
-26,0
Steel
42,0
107,9
110,0
Non-ferrous
56,7
50,4
8,5
Mechanical
-26,5
-16,0
-23,0
Vehicles
-14,0
-17,1
-26,4
Electrical
17,0
-0,7
-8,4
Electronics
-14,6
-15,7
-23,3
High Tech
3,4
-16,9
-23,9
High-Medium Tech
4,3
-53,6
-85,8
Medium-Low Tech
-0,9
100,8
99,5
Low Tech
-1,1
31,8
39,5
Energy
Source: Chelem
Since 1993, Macedonia has increased its comparative advantage in steel which is the first
specialization of the country in 2008 and was just the second in 1993 behind textile. Besides,
Macedonia has a comparative advantage in electrical which was a high technology sector in
1993, but it became a comparative disadvantage in 2008. Therefore, Macedonia has
abandoned this sector in order to increase its specialization in low and medium-low
technology sectors.
Finally, our results suggest that Macedonia remains in sectors with a low value added which
can affect its export performance on the world market.
b. Geographic Specialization
We calculate the weight of different countries or areas in order to evaluate the geographical
specialization of Macedonia. Our results are summarized in the graphic 1. We find the
geographical specialization of Macedonia has slightly changed between 1993 and 2008. In
fact, Macedonian exports mainly to other former Yugoslav countries (20 % in 1993 and 25 %
in 2008) and particularly to Serbia (14 % in 2008) and Croatia (7 % in 2008). Macedonian
exports are also oriented to Germany and Italy (17 % and 10 % in 2008, respectively).
Central European countries like Czech Republic or Poland are also Macedonian important
trade partners. Besides, the share of USA in Macedonian exports has seriously decreased with
only 2 % in 2008 against 8 % in 1993. On the contrary, Macedonian exports have strongly
increased to Greece with a share of 14 % in 2008 against only 2 % in 1993.
Finally, our results show that, in a perspective of an accession, Macedonia has developed its
trade with European Union members to the detriment of the USA.
113
Graphic 1: Geographical breakdown of Macedonian exports in 1993 and 2008
Source: Chelem, author calculation

3. Constant Market Share Analysis (CMSA)
a. Methodology
The Constant Market Share Analysis (CMSA) is an accounting method that enables one to
decompose ex-post variation of a countrys market share during a given period. This method
is able to separate and quantify the contribution of trade specialization (industrial or
geographic) contributions from other factors. The advantage of this method lies mainly in its
simplicity and ease of use when identifying the determinants of variation in market share of a
given country. This technique was initially used to study variables such as employment or
labor productivity through regional studies known as the "shift-share analysis". It is
Tyszynski (1951) who first introduced this technique to the study of international trade flows.
The main idea behind this method is that the export structure of a country affects its overall
export performance, despite changes in other factors associated with the country's external
competitiveness. According to Magee (1975), even if a country is able to maintain the share
of each product for each destination country, it can still record a decline in its market share if
the target countries are less dynamic in terms of growth than the global average.
According to Nyssens and Pouliot (1990), the total change in market share of a country can
be approximated by the difference between the growth rate of countrys exports (g) and the
growth rate of the rest of the worlds exports (g*). The equation used to model the CMSA is
(ECB, 2005, Amador and Cabral, 2008):
,
With g and g* representing the growth rate of country i and the rest of the world exports
between the two periods. i,j and *i,j represent the share of product i to country j in the total
exports of country i and the rest of the world in the initial year.
114
The first term of the equation in brackets evaluates the effect of the initial structure. It is
positive when the export structure of the country is more focused on dynamic countries
and/or dynamic markets than the rest of the world. This effect can itself be decomposed into
three separate effects:
A product effect measured by the sum
A market effect measured by the sum
A mixed structure effect which is calculated as follows :

,
And i and i* represent the share of commodity i in total exports of Macedonian exports and
j and j*, the share of market j in total exports of Macedonia, gi and gi*, the growth rate of
total exports of product i of Macedonia and gj and gj*, the growth rate of total exports from
Macedonia to country j. Note that the interpretation of mixed effect structure is difficult.
Indeed, it is impossible to completely separate both effects of product and geographical
structure; the residual represents the interaction between both effects. Finally, the second
term of the equation in brackets evaluates the competitiveness or the "pure" market share
effect.
b. Results
We apply the CMSA to Macedonian exports between 1993 and 2008 which concerns 72
products and 34 countries or geographical areas. We, first, focus on the period before the
political unrest (1993-2000) and, then on the export performances after the unrest (20002008). Table 2 summarizes our results.
Table 1: Constant Market Share Analysis: results
1993-2008
1993-2000
2000-2008
Total
-1,05
-0,71
0,58
Competitiveness
-1,52
-0,56
0,31
Specialization
0,46
-0,15
0,27
Market effect
0,65
0,01
0,17
Product effect
-0,29
-0,18
0,17
Mixed effect
0,10
0,02
-0,04
Source: Chelem, author calculation

Starting with the total effect, sharp differences exist between periods. Macedonian exports
have increased less than the average growth of the rest of the world between 1993 and 2008
and especially between 1993 and 2000.
If we focus on the global result concerning the period 1993-2008, we can identify the main
explanation of the bad export performances of Macedonia. Indeed, we find that the
competitiveness effect has a negative impact on Macedonian export performances, whereas
the structure effect is positive. It means that during this period the price competitiveness of
115
Macedonian exports decreased its exports. On the contrary, it had benefit from its good
specialization. Besides, this effect is entirely due to the good geographical specialization of
Macedonian exports. Indeed, we find that the product effect is negative. During the period
1993-2008, Macedonia has therefore suffered from a bad industrial specialization which is
still based on low technology products and a lack of competitiveness.
However, results are different according to the sub-periods considered. Indeed results
concerning 1993-2000 suggest that competitiveness and specialization effects are negative.
Before the political unrest, Macedonian exports have been affected by weak competitiveness
and weak industrial specialization. Furthermore, the geographical effect is near zero and
cannot compensate the high negative value of the product effect, which entails a negative
effect on total specialization.
Results are quite different if we look at the recent period. First, note that Macedonian exports
are more dynamic than the world average. This result is seen in the values of 53% by the
competitiveness effect (0.31/0.58) and at 47 % by the specialization effect (0.27/0.58). So,
Macedonia has now become more competitive than the rest of the world on the export
market. Furthermore, the product effect which was negative between 1993 and 2000 is now
positive and as high as the market effect. Macedonia combined a better industrial and
geographical specialization. Those results are linked with the increase in the revealed
comparative advantages, especially in steel whereby the growing demand has allowed better
exports for Macedonia. Macedonian exports are still oriented toward dynamic markets (with
an increasing demand) such as Eastern and Central European Countries (CEEC).
Finally, our results suggest that Macedonia has increased its price competitiveness and its
industrial specialization. This phenomenon has entailed better export performances on the
world market.
4. Conclusion
In a context of deep reorganization of global flows of trade since the early 1990s, Macedonia
has merged on the world market. Given the structural changes in the country and the political
unrest in 2001, Macedonian exports exhibited troubles during the period 1993-2008.
Nevertheless, they have recorded huge growth since the end of the unrest.
Using a Constant Market Share Analysis, we identify the factors which have affected
Macedonian export performance. We find that, during the pre-unrest period, the Macedonian
export market has been severely penalized by its competitiveness and its weak comparative
advantages. On the contrary, the recent period is characterized by improved external
competitiveness and an increase in the RCA index, especially in steel and textile industry.
The competitiveness of Macedonia is no longer a burden to its export performance on the
global market. Combined with high comparative advantage in high-demand areas such as
steel, Macedonia was able to improve its performance on export markets. However, the
strong competition from China, especially in textiles, could strongly affect the growth of
Macedonian exports. It is therefore important for Macedonia to develop new comparative
advantages, especially in medium-technology sectors such as the automotive industry.
Therein, Macedonia could begin its ascent.
116
References
BALASSA, B. (1965). Trade Liberalization and Revealed Comparative Advantage, The
Manchester School of Economic and Social Studies, 33, no. 2, pp. 99-123.
CHEPTEA, A., GAULIER, G., & ZIGNAGO S. (2005). World Trade Competitiveness: A
Disaggregated View by Shift-Share Analysis. CEPII Working Papers, 2005-23.
EUROPEAN CENTRAL BANK (2005). Competitiveness and the Export Performance of the Euro
Area. Occasional Paper Series, June, no. 30.
FAGERBERG, J., & SOLLIE, G. (1987). The method of constant market shares analysis
reconsidered. Applied Economics, 19, no 12, pp. 1571-1583.
GUTIERREZ, E. (2007). Export Performance and External Competitiveness in the
former Yugoslav Republic of Macedonia. South-Eastern Europe Journal of Economics, 2,
pp. 203-224.
GROSSMAN, G.M., & HELPMAN, E. (1991). Quality ladders in the theory of growth. Review of
Economic Studies, 58, no. 1, pp. 43-61.
KRUGMAN, P. (1989). Differences in Income Elasticities and Trends in Real Exchange
Rates. NBER Working Papers, November, no. 2761.
LAFAY, G. (1987). Avantage comparatif et comptitivit. Economie Prospective
Internationale, 23, pp. 39-53.
LAFAY, G. (1987). La mesure des avantages comparatifs rvls. Economie Prospective
Internationale, 41, pp. 27-43.
LAFAY, G. (1987). The Measurement of Revealed Comparative Advantage., in M.G.
Dagenais & P.-A. Muet, eds., International Trade Modelling, London: Chapman & Hill.
LUCAS, R. (1988). On the mechanics of economic development, Journal of Monetary
Economics, 22, no. 1, pp. 3-22.
MAGEE, S.P. (1975). Prices, incomes and foreign trade, in P.B. Kenen, ed., International
Trade and Finance: Frontiers of Research, Cambridge University Press.
MILANA, C. (1988). Constant market share analysis and index number theory. European
Journal of Political Economy, 4, no. 4, pp. 453-478.
NYSSENS, A., & POULLET, G. (1990). Parts de march des producteurs de lUEBL sur les
marches extrieurs et intrieurs. Cahiers 7, Banque Nationale de Belgique.
RICHARDSON, J. (1971). Constant market share analysis of export growth. Journal of
International Economics, 1, no. 2, 227-239.
TYSZYNSKI, H. (1951). World trade in manufactured commodities, 1899-1950, The
Manchester School of Economic and Social Studies, 19, no. 2, pp. 272-304.
YOUNG, A. (1991). Learning-by-doing and dynamic effects of international trade. Quarterly
Journal of Economics, 106, no. 2, pp. 396-406.
117
Appendix
Appendix 1: Exports of Macedonia between 1993 and 2008 (million dollars)
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Macedonia
118
InvestigatingTwinDeficitsinMacedonia
Milan Eliskovski18
Advisor for Specific Issues at Risk Management Division
Stopanska Banka AD Skopje
Abstract
This study aims to investigate whether the Twin Deficits phenomenon is valid for Macedonia.
The theory of Twin Deficits asserts that deterioration in budget deficit causes deterioration in
the current account deficit. In order to investigate whether there is evidence of Twin Deficits
in Macedonia, an Engle-Granger cointegration technique has been employed encompassing
the period from 2003Q1 to 2010Q3. The results obtained imply that this phenomenon is not
valid for Macedonia and hence by reducing the budget deficit the current account balance
would not improve. Having found this, policy recommendations to policy makers are given,
aiming to use the budget deficit appropriately for structural reforms and by this way to
improve the competitiveness of the Macedonian economy and consequently to improve the
Current Account Balance.
Keywords: Twin Deficits, Budget Deficit, Current Account Deficit, Engle-Granger
Cointegration.
Introduction
Modern economies often incur budget deficit in order to achieve growth as well as to provide
certain services to the population. When fiscal deficits are appropriately used, they can
induce economic growth and reduce the unemployment (Friedman, 2000). However, the
budget deficit can have an adverse impact on the economies. Namely, as economists argue,
that budget deficits contribute to higher inflation and misallocation of resources (Fischer and
Easterly, 1990). Moreover, higher budget deficit can result in deterioration of the current
account balance which could cause a reduction in economic output and lower employment.
The theory that asserts this relationship is known as the Twin Deficits theory (Darrat, 1988).
What is following in this study is firstly a theoretical explanation of twin deficits
phenomenon and review of the relevant literature that deals with this issue. Secondly, a
cointegration analysis will be conducted in order to see whether budget deficit induces a
higher current account deficit for Macedonia.
Exploring the twin deficits issue has important policy implications. If there is evidence that
rising budget deficit is stimulating the current account deficit, then policymakers should
pursue restrictive fiscal policy in order to decrease the budget deficit and consequently reduce
current account deficit. But, if there is no evidence provided for the twin deficits relationship,
then policymakers should focus on structural reforms in order to make domestic producers
more competitive and increase their production. If this is the case, i.e. the budget deficit does
not imply adverse movements in the current account, then fiscal policymakers could help
exporters, for example, by subsidies, in order to boost the exporters and non-exporters to
18
The opinions expressed are those of the authors and do not reflect views of the Stopanska Banka AD Skopje.
119
increase their production; this would lead to lowering imported goods that could be
domestically produced.
The Theory of Twin Deficits
In order to explain the relationship between budget deficit and current account deficit, some
national income accounting identities will be considered. Individual economic agents dispose
the income (Y) as consumption (C), saving (S) and taxes (T);
Y=C+S+T
(1)
Another equation defining income and resulting in the same value is the following:
Y = C + I + G + (X - M)
(2)
The equation (2) states that national income arises from consumption (C), investment (I),
government spending (G) and net exports (X-M). When combined these two equations give
the following identity:
C + S + T = C + I + G + (X M)
(3)
From this identity, the following equation is obtained:

(X M) = (T G) + (S I)
(4)
The last identity means that under the assumption that (S I) remains the same, an increase in
government spending (G) or decrease of taxes (T) will result in budget deficit and will
influence the import to be higher than export and, thus, the external position of the economy
worsens.
Other clarification of twin deficits offer Keynesians, based on the Mundell-Fleming model,
where an increase in the budget deficit triggers upward changes in the real interest rate.
Consequently, capital inflows enlarge and the exchange rate appreciates. The appreciated
exchange rate makes importing more attractive and exporting less attractive and subsequently
the current account balance deteriorates under an assumption of a flexible exchange rate. In
the case of a fixed exchange rate, the budget deficit stimulates higher real income and this
means that individuals can spend more on imported goods which will lead to an increase of
import and a deficit in the current account.
In contrast to the previously given explanations, the Ricardian Equivalence theory theorizes
that due to the intertemporal shift between taxes, budget deficit does not affect the current
account balance. This theory states that in the case of a budget deficit, individual economic
agents will save more today in order to compensate for the anticipated higher taxes in the
future, in order for the government to pay off the large debts. If this is the case, then
according to equation (4), higher budget deficit (negative value of (T G)) is compensated by
the private saving (positive value of (S I)) and, consequently, there is no effect on the
current account balance.
Literature Review
It has been explained above that the twin deficit theory offers opposing explanations
regarding validity of the twin deficits. In compliance with this, economic researchers are
conflicted as well: some researchers provide evidence on twin deficits and others do not.
Leachman and Francis (2002) explored twin deficits for the US economy for the period from
1948 to 1992. The authors separated this period into two subperiods and find that for the
120
period from 1948 to 1975 there is no evidence of twin deficits in the US. Unlike the first
subperiod, the econometric results for the second subperiod spanning from 1976 to 1992
indicate a positive coefficient in front of the budget balance variable. Another study made by
Darrat (1988), by employing the Granger causality technique, between budget balance and
trade balance, one finds that there is an existence of bidirectional causality between these two
variables for the US economy. The explanation offered by Darrat for the finding that trade
deficit results in budget deficit is that policymakers facing deteriorating trade balance which
leads to lower economic growth responded by increasing budget deficit. Vamvoukas (1997,
1999) tested twin deficits relationship for Greece by utilizing a cointegration technique with
annual data and found that budget deficit positively affected the current account balance.
Akhtar (1994) found evidence that the significant rise in the US current account deficit during
the 1980s was largely driven by the budget deficit. In addition to Akhtars findings, Morgan
(1999) finds support for the existence of twin deficits in the US for the period from 1980 to
1989, but from 1990 onward, the budget balance started to record surplus while the current
account continued with deficits and hence the two variables went in the opposite direction.
Thus, the authors indications are that the US budget balance after 1990s was not a factor
that determines the current account deficit. From more recent studies, Monacelli and Perotti
(2007) find that, following an increase in real government consumption, GDP, the trade
balance stayed around trend initially, but improved after about three years for the US. They
find stronger evidence in support of the twin deficits hypothesis in the United Kingdom,
Australia, and Canada. Corsetti and Muller (2006) report that the impact of fiscal shocks on
the current account seems to be greater and longer-lasting in economies where total trade is
higher as a share of GDP (Canada and the United Kingdom) than in economies where trade is
a smaller share of GDP (US and Australia).
Unlike the studies mentioned in the previous paragraph, Normandins study (1994) used a
sophisticated model to explore twin deficits. Normandin tested the relationship between
budget and current account balance by using Blanchards Overlapping Generations Model.
The models key assumption is that economic agents are rational and they expect higher
current account deficit when budget deficit rises. Having in mind this assumption, Normandin
tested economic agents planning horizons. Namely, the author finds that the planning horizon
of American and Canadian economic agents is 83 years. This finding that American and
Canadian economic agents are expecting current account deficit in the period of 83 years in
the future contributed to finding a weak relationship between the mentioned two variables.
Some studies do not find evidence for the validity of twin deficits, though, due to the
relevance of Ricardian Equivalence. Reynolds study (2004) indicates that in Japan, even
though budget deficit is at a record average level of 7% since the 1990s, this situation does
not correspond with the Mundell-Fleming theoretical framework. Namely, the relatively
higher budget deficit does not result in higher interest rates, an appreciated currency and
hence current account deficit. What Reynolds found is a relevance of the Ricardian
Equivalence theory since Japans private savings remained relatively high. Also, Evans
(1986, 1989) concluded that there is no clear relationship between budget and current account
deficit for France, Canada, West Germany, Italy, Japan, United Kingdom and the United
States.
Descriptive Analysis of Twin Deficits, Methodology, Data and Results
Figure 1 indicates that Macedonia maintained relatively low budget and current account
deficit as a percentage of GDP compared to other selected economies. During the period from
2007 to 2010, almost all countries have spotted both budget and current account deficits.
121
Bosnia and Herzegovina, Bulgaria, Macedonia and Montenegro recorded budget surplus
during 2007 and 2008 (Bosnia and Herzegovina and Macedonia had relatively small budget
surplus only for 2007), but in contrast to the theory of twin deficits, no surplus was recorded
in the current account. However, this analysis is only a description of the movements of the
two variables relevant for twin deficits and a comparison of Macedonias figures to other
countries figures. Econometric techniques will be pursued to consider whether budget deficit
affects the current account deficit. This will be done by employing an Engle-Granger
cointegration technique.
Figure 1: Budget and Current Account Balance for Selected Economies
Budget Balance for Selected Economies
10,0%
5,0%
2007
0,0%
2008
2009
5,0%
2010
10,0%
15,0%
Current Account Balance for Selected Economies

0,0%
10,0%
20,0%
2007
2008
30,0%
2009
2010
40,0%
50,0%
60,0%
Source: Ministry of Finance of Macedonia and International Monetary Fund, World

Economic Outlook Database, April 2011
The variables considered - budget balance and current account balance - are expressed as a
percentage of GDP. The quarterly data for these two variables are taken from the Ministry of
122
Finance and National Bank of the Republic of Macedonia spanning the period from 2003Q1
to 2010Q3. Before the cointegration technique is applied, both variables will be tested for
stationarity. A time-series is considered as stationary if its mean and variance are constant
over time and the value of the covariance between the two time periods depends only on the
distance, or gap, or lag, between the two time periods and not the actual time at which the
covariance is computed (Gujarati, 2003, p 797). A stationarity test will be tested by using
Dickey-Fuller (DF) and Augmented Dickey-Fuller (ADF) test. This test sets the hypothesis
that the time-series are non-stationary i.e. they contain unit root.
Table 1. DF and ADF Test Results for Budget and Current Account Balance
DF
ADF (1)
ADF (2)
ADF (3)
ADF (4)
Test Statistic
Test Statistic
for Current
for Budget
Account Balance
Balance
-6,65
-3,34
-3,29
-2,49
-3,32
-2,28
-1,22
-1,16
-0,82
-1,98
Critical Value 95%

Confidence Level
-2,98
-2,98
-2,98
-2,98
-2,98
The DF and ADF tests give conflicting results. The DF test results indicate that both variables
are stationary in the level i.e. the null hypothesis of containing unit root is rejected. The ADF
tests for the Budget Balance with one and two lags also indicate that this time series is
stationary in the level while ADF with three and four lags indicate nonstationarity. Regarding
the Current Account Balance, all the ADF tests indicate nonstationarity in the level. After
being differentiated the two variables, the unit root tests are presented in the table 2. The
ADF tests with one and two lags clearly indicate that Budget and Current Account Balance
become stationary after the first differentiation.
Table 2. DF and ADF Test Results for the First Difference of Budget and Current
Account Balance
DF
ADF
ADF
ADF
ADF
(1)
(2)
(3)
(4)
Test Statistic
for First
Difference of
Budget
Balance
-11,49
-5,16
-8,19
-5,10
-2,79
Test Statistic
for First
Difference of
Current
Account
Balance
-7,12
-4,73
-6,28
-2,45
-1,98
123
Critical Value
95%
Confidence
Level
-2,98
-2,98
-2,98
-2,98
-2,98
Since both variables become stationary after the first differentiation, both variables can be
further tested for existence of a cointegration relationship. The test for a cointegration
relationship will be performed by using the Engle-Granger technique. Cointegration means
that budget and current account balance have a long-term relationship. The Engle-Granger
cointegration technique provides an estimation of the coefficients of the long-run equilibrium
relationship between the variables subject to interest. In order to conduct the Engle-Granger
cointegration, the following regression will be specified:
CAt = C + 1*BBt + t1
(5)
where
CAt is the current account balance as a percentage of GDP (increase means surplus);
BBt is the budget balance as a percentage of GDP (increase means surplus);
t1 is the error term;
C is the constant and 1 is the coefficient to be estimated by using Engle-Granger
cointegration technique.
The Engle-Granger cointegration technique is based on the Ordinary Least Squares
estimation approach. In such a manner, the 1 coefficient will be estimated and then residuals
will be obtained and tested for a unit root. If the hypothesis of unit root is rejected, then there
is a cointegration i.e. a long-term relationship exists between the budget balance and the
current account balance; and, hence, the 1 coefficient reveals how the budget balance affects
the current account balance. The OLS results are the following:
^CAt = -0.07 + 0.96*BBt
t value (-4.09) (3.44)
r2 = 29%
these results imply a positive relationship between budget and current account balance.
Namely, the interpretation of the coefficient 1 is that a rise of budget balance by 1
percentage point (budget surplus), on average improves the current account balance (surplus)
by 0.96 percentage points, holding all other factors constant. The meaning of the constant is
that when the budget is balanced (i.e. zero), the current account records average deficit of
0.07% under the assumption that everything else remains unchanged. However, as it has been
mentioned above, in order for these results to be valid, it is necessary to conduct a unit root
test on the residuals. The results of the unit root test of residuals are given in the Table 3.
Table 3. Unit Root Test Results on the Residuals
DF
ADF (1)
ADF (2)
ADF (3)
ADF (4)
Test Statistic Critical Value 95%

for Residuals Confidence Level
-2,71
-3,58
-2,08
-3,58
-1,68
-3,58
-1,39
-3,58
-1,96
-3,58
124
The results of Table 3 imply that there is no sufficient evidence to reject the null hypothesis
of a presence of unit root in the residuals. Thus, the finding of this analysis is that there is no
long-term relationship between budget and current account balance i.e. the twin deficits
phenomenon does not hold for Macedonia.
Conclusion and Policy Recommendations
Having found that the budget balance does not affect the current account balance in
Macedonia likely means that the existence of deficit in the current account is a result of other
factors. Those other factors might be variables which were not included in equation (5) such
as: interest rate, real exchange rate, inflation, private savings, domestic GDP and other
trading-countries GDP. Since this analysis implied non validity of twin deficits, the
recommendations for the policymakers would be that they can use budget deficit in order to
conduct structural reforms to increase the competitiveness of domestic exporters and to
increase domestic production that could compensate for imported products, and,
consequently, there would be an improvement in the current account balance. In such a
manner, for instance by offering fiscal subsidies to domestic agricultural producers, the
Macedonian economy could produce, for example, more food, like wheat, sugar, vegetable
oil or milk, and, by doing this, its import would decrease and the current account balance
would improve. Regarding the exporters, policymakers can encourage them by a fiscal
stimulus to produce and export final goods and not raw materials, which would be eventually
remanufactured in foreign countries and imported in Macedonia as a final product, and again
by supporting exporters, the current account balance would eventually improve.
References
Akhtar, A. M. (1994). Perspectives on US External Deficits. Federal Reserve Bank of New
York, Research Paper, No. 9505.
Corsetti, G.,& Muller, G. (2006). Twin deficits: Squaring Theory, Evidence and Common
Sense. Economic Policy, 48, 597638.
Darrat, A. F. (1988). Have Large Budget Deficits Caused Rising Trade Deficits?. Southern
Economic Journal, 54, 879-887.
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Evans, P. (1988). Is the Dollar High Because of Large Budget Deficits?. Journal of Monetary
Economics, 18, 227-249.
Evans, P. (1989). Do Budget Deficit Affect the Current Account?. Ohio State University,
Working Paper, No. 2.
Fischer, S., & Easterly, W. (1990). The Economics of the Government Budget Constraint.
The World Bank Research Observer, 5, No. 2, 127-142.
Friedman, B. (2000). What Have We Learned from the Reagan Deficits and Their
Dissapearance?. National Bureau of Economic Research, Working Paper No. 7647.
Gujarati, D. (2003). Basic Econometrics. McGraw Hill, Fourth Edition.
Leachman, L., &Francis, B. (2002). Twin Deficits: Apparition or Reality?. Journal of
Applied Economics, 34 (9), 1121-1133.
125
Monacelli, T., & Perotti, R. (2006). Fiscal Policy, the Trade Balance and the Real Exchange
Rate: Implications for International Risk Sharing. Working Paper, Universita Bocconi.
Morgan, N. (1999). Twin Deficits, What Twin
Deficits?
Retrieved
from
Normandin, M. (1994). Budget Deficit Persistence and the Twin Deficits Hypothesis. Center
for Research on Economic Fluctuations and Employment. Universite du Quebec, Montreal.
Working Paper. No. 31.
Reynolds, A. (2004). The Conventional Hypothesis: Deficit Estimates, Savings Rates, Twin
Deficits and Yield Curves. Publications of the US Treasury Department. Paper presented at
the Treasurys Roundtable on the Federal Budget, Taxes and Economic Growth.
Vamvoukas, G. A. (1997). A Note on Budget Deficits and Interest Rates: Evidence from a
Small Open Economy. Southern Economic Journal, 63, 803-811.
Vamvoukas, G. A. (1999). The Twin Deficits Phenomenon: Evidence from Greece, Applied
Economics, 31, 1093-1100.
126
ExportDemandFunctionandExchangeRateVolatilityinMacedonia
Zeynep Kaplan
Yildiz Technical University
Department of Economics
34349 Besiktas Istanbul/Turkey
Abstract
The paper aims to estimate the short and long-term export demand function of a small
country like Macedonia. The paper finds that income and relative price elasticity are
extremely high in the long-term. Another important result of the paper is that the exchangerate volatility has a significant effect on exports both in the short and long-term. However,
while its long-term effect is positive, its short-term effect is negative.
1. Introduction and a Literature Review
For many countries the export is the most relevant factor for a successful economy. Some
countries even identify their economic strength through their export-performance (like
Germany and China). In recent years, a significant volume of studies has empirically
investigated the determinants of export demand in developing and developed countries. In
the same strand, this paper tries to estimate the short-term and long-term export demand of a
small country like Macedonia. Hence, the policy implications of the paper can help
policymakers in Macedonia.
Various studies have estimated the export demand function for developed and developing
countries, as a means of clarifying the effects of trade flows. Kabir (1988) used a standard
regression model to estimate import and export demand functions for Bangladesh during the
period 1973-1983. He found that the impact of the exchange rate was greater on export
elasticity than on import elasticity. Khan (1974) estimated export and import demand
functions for the period 1951-1969 and showed that prices did play an important role in the
determination of exports and imports of developing countries. Goldstein and Khan (1985)
showed that relative price plays an important role in the export demand function for
developing countries. The price elasticity was high for both total export and disaggregated
exports. Arize (2001) examined the export demand function in Singapore over the period
1973-1997 by using cointegration, and results reported evidence of a long-term and stable
equilibrium relationship between exports and its determinants.
Exports are generally defined as a function of the income of the importing country, the
relative prices and the volatility of the exchange rate. Exports are a component of foreign
demand and it is determined by the income of the trade partners. The higher income of the
importing country, measured by GDP, the higher the demand for exports. Export demand is
also a function of the changes in relative prices, which determines the competitiveness of the
country. As for the volatility of the exchange rate, it is widely accepted that its effect on
foreign trade is ambiguous - it may have a positive or negative effect on exports depending
on the assumptions made with respect to risk preferences (Cote, 1994; McKenzie, 1999). The
email:zkaplan@yildiz.edu.tr
127
standard theoretical argument states that exchange rate volatility may hinder the flow of
international trade since exchange rate volatility represents uncertainty and will impose costs
on risk averse commodity traders.
The relationship between exchange rate volatility and trade flows has been analyzed in a
significant amount of theoretical and empirical literature, both for industrialized and
developing countries. McKenzie (1999), Cote (1994) and Clark et al. (2004) provide detailed
surveys of the literature on this issue. For instance, while the survey by McKenzie (1999)
includes literature on the evidence from the less developed countries, the literature survey by
Cote (1994) and Kenen and Rodrick (1986) focuses on the experience in industrialized
countries. Ethier (1973), Hooper and Kohlhagen (1978), Akhtar and Hilton (1984), Kenen
and Rodrick (1986) and Fountas and Bredin (1998) show that exchange rate volatility might
hamper trade flows. On the contrary, numerous studies including Franke (1991), De Grauwe
(1988), Giovannini (1988), Kroner and Lastrapes (1993) and Sercu and Vanhulle (1992)
point out that exchange rate volatility may actually stimulate trade flows.
In the context of Macedonias economy, few studies have estimated the export demand
function for the country (e.g., Gutierrez (2006), Kadievska-Vojnovic and Unevska (2007) and
Petreski and Kostoska (2009)). This issue is of particular salience to contemporary economic
policy in transition economies heavily dependent on international trade. Macedonia is a small
open economy which has been transformed during the past two decades. The rapid structural
change in the economy can be attributed to the shift from a centrally planned to a free market
economy. Through its increased integration into the international economy, Macedonias total
trade amounts to about 85% of its GDP recently.
Sustaining faster economic growth and reducing unemployment in a small open economy like
Macedonia, critically depends on improving export competitiveness. For example, Gutierrez
(2006) finds that export competitiveness is associated with the level of the real exchange rate
that ensures both internal and external balance of Macedonia. However he shows that while a
more competitive exchange rate might increase short-term export performance, structural
factors (i.e., increased productivity and resource reallocation) are very important in
improving the export performance of Macedonia. In a similar context, Kadievska-Vojnovic
and Unevska (2007) estimate the price and income elasticities based on export and import
demand functions for Macedonia. They find that while Macedonian exports are very sensitive
to income, they are not so sensitive to relative price changes. They show that the import price
elasticity is higher than that of exports. Thus domestic economic agents are more sensitive to
price changes than foreigners. Hence, given the low price elasticity of exports, it seems that
the foreign buyers do not take into account the price of the Macedonian products when
making their decisions. This implies that non-price aspects of exports are crucial. Therefore
macroeconomic environment or structural factors as expressed in Gutierrez (2006) should be
managed to spur the export performance of Macedonia. Similarly Petreski and Kostoska
(2009) also address the vulnerability of the external sector along with the price and trade
liberalization. The set of analyses is to be carried out to explore the foreign trade structure,
current account developments, as well as the major aspects of qualitative competitiveness
using a dynamic model. They find that exports are also dependent upon the real exchange rate
movements, unlike imports which are responsive to certain shifts of the openness indicator.
In a similar manner to the findings of the previous two studies mentioned above, they also
show that a macroeconomic structure is essential in the development of exports in addition to
price movements.
This paper is organized as follows. The econometric model is introduced in Section 2. In
Section 3, data and the estimation results are given. Section 4 concludes.
128
2. Econometric Methodology
Economic theory argues that there are some fundamental variables that determine a countrys
export demand. Although econometric models emphasize various variables, we restrict our
focus to some variables due to their availability and to ensure the models parsimony. We
specify an econometric model for the export demand function as follows:
ln X t 0 1 ln Yt 2 ln Pt 3 Z t ,
r
(1)
where X t is real exports, Yt is foreign income (Germany), Pt r is relative price and Z t is

exchange rate volatility. In equation (1), the first variable ( Yt ) on the right side is foreign
income denoted by the GDP index of Germany, which is the largest destination of the
Macedonian exports. It is assumed that an increase in foreign income leads to an increase in
demand for Macedonian products. The second variable in equation (1) is relative price level,
r
f
Pt . We express the relative price as the ratio of general price level of Germany ( Pt ) to
general price level of Macedonia ( Pt ), thus Pt r Pt f / Pt . When the relative price rises, it is
expected that Macedonia becomes more competitive with respect to Germany. Finally, the
most important variable in the model, which most econometric models ignore in defining
export supply function, is volatility of the real exchange rate.
To capture the competitiveness of the Macedonian exports with respect to Germany, we use
the real exchange rate E t r , which is mainly obtained by the following formula:
f
P
Et E t t ,
Pt
r
(2)
where E t r , Pt f and Pt denote nominal exchange rate, foreign price level and domestic price
level respectively. As a measure of exchange rate volatility, we use the moving average
standard deviation of the growth rate of the real exchange rate ( E t r ):
n
Z t [(1 / n) ( E r t i 1 E r t i 2 ) 2 ]1 / 2 ,
(3)
i 1
where n is the order of moving average, which we set equal to 4. This measure of exchange
rate volatility is adopted by Fountas and Bredin (1998). This is a simple measure but it is
sufficiently analytical to observe the effect of uncertainty in the real exchange rate on export
performance.
In order to estimate a long-term and short-term export demand function for Macedonian
exports to Germany, we use cointegration analysis. Hence, we first test the stationarity of the
variables defined in equation 1, using the standard Augmented Dickey-Fuller (ADF) test. If
cointegration is found among relevant variables, then we can construct an error-correction
method (ECM) to set up the short-run export demand equation. The ECM is defined formally
as
n
InX t a 0 a1et 1 i InX t i i InYt i i InP r t i i Z t i t , (4)

i 1
where et 1 is the error-correction term.
129
3. Data and Estimation

The data set consists of quarterly data and covers the period from 1997Q1 to 2010Q3. The
data for Macedonia is obtained from the National Bank of the Republic of Macedonia and
Eurostat, while the data for Germany is obtained from Bundesbank and Eurostat.
Our first explanatory variable in the export demand function is quarterly foreign demand
proxied by quarterly real GDP index of Germany. Since our data starts as of 1997:Q1, we use
nominal foreign exchange rate as units of domestic currency (Denars) units per one unit of
the Ecu until 1999. However since then Denar/Euro is used as a nominal exchange rate.
Accordingly, export value is expressed in Ecu and Euro units.
The first stage in our analysis is to find the order of integration of the variables in equation 1.
For this we use the ADF test including up to four lagged differences. The unit root test results
are shown in Table 1. The length of lag is chosen on the basis of AIC. The ADF test fails to
reject unit root of all variables in level. Thus it seems that all variables are integrated of order
one, I(1).
Table 1. Unit Root Tests
(A) Variables in Levels
ADF(L)
Real exports log X
-0.142 (4)
Real foreign income log Y
r
Relative price log P
-2.071 (4)
0.192 (4)
Exchange rate volatility Z
-2.705 (4)
(B) Variables in Levels
ADF(L)
log X
-11.66* (0)
log Y
-12.54* (0)
log P r
-3.74* (0)
-4.96* (0)
Note: Lags (L) are determined on AIC. (*) means significant at 5 % level.
Since all variables are integrated of order one, I(1), we can proceed to the cointegration test.
The cointegration test results are shown in Table 2. Both maximum eigenvalue and trace
indicate one cointegrating vector.
130
Table 2. Cointegration Test Results
H0 :
Maximum Eigenvalue Test
Trace Test
r=0
47.08*
73.16*
r=1
18.33
26.08
r=2
6.69
7.74
r=3
1.05
1.05
Note: * denotes rejection of the hypothesis at 5 % level.

The cointegrating vector (normalized on exports) and t-values of estimated coefficients are
given by
InX t 38.19InYt 8.80InPt 276.44Z t ,

(5.99*)
(5.60*)
(5)
(6.64*)
Note: * denotes rejection of the hypothesis at 5 % level.

Equation (5) indicates that the variables of income and relative price have theoretically
expected signs and are statistically significant. It seems that Macedonian exports are
extremely sensitive to foreign demand (Germany), that is, income response of exports is high.
The coefficient, as expected, is positive and significant. Since the relative price is defined as (
r
f
Pt Pt / Pt ), it is reasonable to expect a positive sign. Its elasticity is very high: when one
percentage of increase in relative prices leads to about 8.8 percentages of increase in real
exports. What is striking here is that the export performance of Macedonia is extremely
affected by exchange rate volatility. However it has a positive sign, which is contrary to what
was expected.
Finally we set up an error correction model (ECM) to estimate the short-term export demand
function. The results are given in equation 6. We include the most significant lagged
differences into the model. The error-correction term has a negative sign although it is not
significant and very small. This implies that exports restore the long-term equilibrium, thus
long-term equilibrium most likely takes place through the change in exports rather than
competitiveness. Although both income and relative prices are theoretically of reasonable
signs, only relative price is statistically significant. It seems that the relative price coefficient
is larger than the income coefficient. This suggests that Macedonian exports to Germany are
more responsive to changes in relative prices than to changes in income in Germany in the
short-term.
InX t 0.015 0.0028et 1 0.129X t 1 0.1002Yt 1 1.327Pt 1 9.562Z t 1 ,

(1.19) (0.38)
(0.85)
(0.16)
(2.05*)
(6)
(2.06*)
Note: Figures in parenthesis are t-statistics. * denotes significance at 5% level.

Finally but most importantly, ECM shows that the volatility parameter has a negative sign
and is statistically significant. This implies that exchange volatility affects Macedonian
131
exports to Germany negatively in the short term, which is opposed to what we find out in the
long term. This may be mainly due to the fact that the Macedonian firms are more optimistic
in the long term, thus they are disposed to tackle the problem of short term uncertainty arising
from volatility in exchange rate in the long term.
4. Conclusion
In this paper, we used the Macedonian data to empirically analyze the determinants of the
export demand for the period 1997Q1-2010Q3. To estimate the demand for Macedonian
exports, the traditional long-term and short-term specification of export demand function is
estimated. The empirical results obtained show that real exports, relative price, real foreign
income, and real exchange rate are cointegrated and that the cointegrating vector is unique.
Macedonian exports are very sensitive to foreign demand (Germany), relative price and real
exchange volatility, in particular in the long term. However, Macedonian exports to Germany
are more responsive to changes in relative prices than to changes in income in Germany.
Regarding the effect of reel exchange rate volatility on exports, the paper shows that the
effect is both significant both in the short term and long term. However, while its long term
effect is positive, its short term effect is negative.
BIBLIOGRAPHY
Akhtar, M., & Hilton, R. S. (1984). Effects of Exchange Rate Uncertainty on German and
U.S. Trade, Federal Reserve Bank of New York Quarterly Review, 9, 7-16.
Arize, A.C. (2001). Traditional Export Demand Relation and Parameter Instability: An
Empirical Investigation. Journal of Economic Studies, 28, 378-398.
Cote A. (1994). Exchange Rate Volatility and Trade: A Survey. Bank of Canada Working
Paper 94-5; 1-28.
Clark, P., Tamirisa, N., Wei, S.J. (2004). Exchange Rate Volatility and Trade Flows: Some
New Evidence, IMF WorkingPaper, May 2004, International Monetary Fund.
De Grauwe, P. (1992). The Economics of Monetary Integration, Oxford University Press,
New York.
Ethier, W. (1973). International Trade and the Forward Exchange Market. American
Economic Review, 63, 494-503.
Fountas, S., & Bredin, D. (1997). Exchange Rate Volatility and Exports: The Case of Ireland.
Applied Economics Letters, 5, (1998): 3014.
Franke, G. (1991). Exchange rate volatility and international trading strategy. Journal of
International Money and Finance, 10, 292-307.
Giovannini, A. (1988). Exchange Rates and Traded Goods Prices. Journal of International
Economics, 24 (1/2):45-68.
Goldstein, M. & Khan, M.S. (1985). Income and Price Elasticities in Foreign Trade. in R.
Jones and P. Kenen, (eds.) Handbook of International Economics, Vol. 2, Amsterdam, North
Holland.
132
Gutierrez, E. (2006). Export Performance and External Competitiveness in the former

Yugoslav Republic of Macedonia. IMF Working Paper WP/06/261.
Hooper, P., & Kohlhagen, S. W. (1978). The Effects of Exchange Rate Uncertainty on the
Price and Volume of International Trade. Journal of International Economics, 8, 483-511.
Kabir, R. (1988). Estimating Import and Export Demand Functions: The Case of Bangladesh.
The Bangladesh Development Studies Vol. 14, No. 4: 115-27.
Kadievska-Vojnovic, M., & Unevska, D. (2007). Price and Income Elasticities of Export and
Import and Economic Growth in the case of the Republic of Macedonia. Working Paper,
National Bank of the Republic of Macedonia.
McKenzie, M. D. (1999). The Impact of Exchange Rate Volatility on International Trade
Flows. Journal of Economic Surveys, 13, 71-106.
Kenen, P. T., & Rodrick, D. (1986). Measuring and Analyzing the Effects of Short Run
Volatility in Real Exchange Rates. The Review of Economics and Statistics, 68, 311-315.
Khan, M. S. (1974). Import and Export Demand in Developing Countries. IMF Staff Papers,
21, pp. 678-693.
Koray, F., & Lastrapes, W. (1989). Real Exchange Rate Volatility and US Bilateral Trade: a
VAR Approach. The Review of Economics and Statistics, 71, 708-712.
Kroner, K.F., & Lastrapes, W.D. (1993). The Impact of Exchange Rate Volatility on
International Trade: Reduced Form Estimates Using the GARCH-in-mean Model. Journal of
International Money and Finance, 12, 298318.
Petreski, G., & Kostoska, O. (2009). Modelling the Determinants of Exports and Imports:
Assessment of Macedonian Competitive Performances, University of Craiova, Faculty of
Economics and Business Administration, Management and Marketing Journal, 01/2009.
Sato, K. (1977). The Demand Function for Industrial Exports: A Cross-Country Analysis,
The Review of Economics and Statistics, 59 No.4, Nov., 456-464.
Sercu, P., & Van Hulle, C. (1992). Exchange Rate Volatility, International Trade and the
Value of Exporting Firms, Journal of Banking and Finance, 16, 155182.
133
134
ANoteonthePurchasingPowerParity:TheCaseofMacedonia
Dushko Josheski, MSc
Teaching asistant
University Goce Delcev - Stip
dusko.josevski@ugd.edu.mk
Cane Koteski, PhD
Teaching assistant
University Goce Delcev - Stip
cane.koteski@ugd.edu.mk
Abstract
This paper examines purchasing power parity theory with data for Macedonia. We test the
empirical consensus in this literature that real exchange rates tend towards PPP over long
periods of time. We find limited evidence that this holds for Macedonia.
Key words: PPP, Exchange rate, Co-integration, unit root, stationarity
Introduction and theoretical basis
The theory of purchasing power parity (PPP) constitutes one of the basic elements of
exchange rate determination. In the case of absolute PPP, the exchange rate equals the
relative price levels between the countries, whereas in the case of the relative PPP, the
exchange rate movement equals the difference between the inflation rates (Bori, Beko,
Kavkler, 2008). The purchasing power parity theory uses the long-term equilibrium exchange
rate of two currencies to equalize their purchasing power. This theory was developed by
Gustav Kassel in 1920, and it is based on the law of one price. It states that a commodity in
two different locations should have the same price, regardless of the location (Zheng, 2009).
While few economists take PPP seriously as short-term proposition, they believe in it as an
anchor for the long-term exchange rate (Rogof, 1996). Empirical literature in this field has
established consensus on a few facts. First, real exchange rates (nominally adjusted for
inflation) tend towards purchasing power parity in the long term. This is the hypothesis we
set here and we are going to test it with Macedonian data. Second, short-term deviations from
purchasing power parity are large and volatile.
The Balasa-Samuelson effect also is one of the most well known channels through which real
convergence leads to higher inflation rates. According to this concept, higher productivity
growth in the sector of tradable goods, contrary to the non-tradable goods sector of one
country, will lead to a positive inflationary differential and will lead to real appreciation through the price growth of non-tradable goods on the market (Bogoev, 2008). Following
relative PPP, the movements in nominal exchange rates are expected to compensate for price
level shifts. So, the real exchange rate should be constant over the long run and their time
series should be stationary (Parikh and Wakerly, 2000). This is part or a whole second
hypothesis that we are testing here.
Real exchange rates are calculated from nominal using CPIs:
REt = Et (Pt*/ Pt)
(1)
135
where REt stands for the real exchange rate, Et is the nominal exchange rate, and Pt* and Pt
represent the foreign price index and the domestic price index, respectively (Bori, Beko,
Kavkler, 2008). In logs this yields:
log(REt) =log(Et)+log(Pt*)-log(Pt)
(2)
In what follows, we will pursue this model for Macedonia.

Data
To estimate the model for Macedonia, we define the following set of variables:
Variable
PPP
Definition
Purchasing power parity conversion factor is the number of units of a country's
currency required to buy the same amounts of goods and services in the domestic
market as U.S. dollars would buy in the United States. This conversion factor is
for GDP.
ER
Official exchange rate refers to the exchange rate determined by national

authorities or to the rate determined in the legally sanctioned exchange market. It
is calculated as an annual average based on monthly averages (local currency
units relative to the U.S. dollar)
DLER
First difference of the natural logarithm of the exchange rate
DLPPP
First difference of the natural logarithm of purchasing power parity
DDLER
Second difference of the natural logarithm of the exchange rate
DDLPP
Second of the natural logarithm of purchasing power parity
Testing for unit roots

We start our investigation by testing for unit roots first. Graphic tests suggest that LNPPP and
DLNPPP are non-stationary; also LER and DLER are non-stationary.
The Dickey-Fuller
test regression
including intercept
but not trend
Critical
values
The Dickey-Fuller
regressions include an
intercept and a linear trend
Critical
values
0.038015
-3.0819
-1.4935
-3.7612
DLPPP
-2.6955
-3.1004
-2.6193
-3.7921
DDLPPP
-4.1615
-3.1223
-3.9436
-3.8288
Variable
s
LPPP
136
Co-integration Engle Granger method for Macedonia

Engle-Granger method for cointegration, implies a check if the residuals of the cointegrating
regression are stationary.
The estimated equation is:
DL E R 0 .0086 - 0.41DLPPP
p= [.816]
[.602]
Intercept is in the regression because it ensures that error term has zero mean and it is
included for statistical purposes only. A DLER variable is a first difference of natural
logarithm of exchange rate. If DLPPP or first difference of the log of relative inflation
increases by 1% on average the ER will result in downward change (depreciation) by 0.41%.
Unit root test of the residuals from this regression suggests that no long-run relationship
exists between these variables. Estimated value of the test of -1.4920 is higher than critical
value -4.1109, suggesting that the null that the residual is non-stationary cannot be rejected at
the conventional levels of significance.
The short run relationship between variables is captured by the coefficient of the independent
variable, whereas the adjustment toward the long run equilibrium is given by the coefficients
of the EC mechanism (Harris and Sollis, 2003). ECM uses second differences of these
variables as they appear to be stationary.
DDLE R -0.0052 0 .297DDLPPP 0.50958u t -1
p=
[.860]
[.653]
[.088]
In the short term, 1% relative change will influence change in ER by 0.29%, while in the long
term 50,95% of the disequilibrium in the last year between change in ER and inflation will be
eliminated in the current year. The short term coefficient is insignificant while the long-term
coefficient is significant. According to the diagnostics (available on request), the model is
well specified. As the variable DDLPPP is not statistically significant, this is consistent with
Rogoff (1996), who states that PPP does not hold in the long-term. So we can rewrite the
model and estimate as follows
DDLE R -0.0072 0.515u t -1
p=
[.798]
[.072]
This model suggests that on average 51,5% of the departure of ER from its equilibrium level
will be offset in the next period. In summary the model provides some evidence of long-term
PPP at the 10% level.
Conclusion
The paper tested the purchasing power parity theory for the case of Macedonia, through using
the Engle-Granger methods. We find limited support for the long-term relationship between
relative prices and the exchange rate, hence lending limited evidence that PPP holds in the
Macedonian case.
137
References
Besimi F., Pugh G. & N. Adnett (2006) The Monetary Transmission Mechanism in
Macedonia: Implications for Monetary Policy. Working Paper 02-2006, Centre for
Research on Emerging Economies, IESR, Staffordshire University, UK.
Bogoev, J., Terzijan, B.S., gert, B., & Petrovska, M. (2008) Real Exchange Rate Dynamics
in Macedonia: Old Wisdoms and New Insights. Economics: The Open-Access,
Open-Assessment E-Journal, Vol. 2, 2008-18.
Borsic, Beko, & Kavker, (2008) Investigating Purchase Power Parity In Central And Eastern
European Countries: A Panel Data Approach, University of Maribor, Faculty of
Economics and Business.
138
PART3
ACTIVITIES
OFTHEMINISTERYOFECONOMY
INTHEFOREIGNTRADEDOMAIN
IN2010
Part3:ACTIVITIESOFTHEMINISTRYOFECONOMYINTHEFOREIGNTRADEDOMAININ2010
139
140
ExportPromotionActivitiesinMacedonia
Anastasija Jovanovska
Department of International Trade Cooperation
Ministry of Economy
1. Bilateral, Regional and Multilateral Free Trade Agreements
The activities Macedonia is undertaking for export promotion are aimed at exploiting the
potential offered by bilateral, regional and multilateral free trade agreements. Further
development of the country requires the creation of conditions for promotion of foreign trade
through already existing agreements, as well as signing new free trade agreements. Therefore,
in the past decade, Macedonia has made the following steps: (1) signed a Free Trade
Agreement with Turkey in September 200019, (2) was the first country in the region to sign a
Stabilization and Association Agreement with EU 20 in April 2001; (3) trade with the EU has
been regulated by a separate Interim agreement on trade and trade issues with EU21 in June
2001, (4) signed a free trade agreement with Ukraine,22 in September 2001, (5) signed an
FTA with EFTA countries 23 in November 2002, (6) joined the World Trade Organization 24
in April 2003, (7) gained the status of candidate country for EU membership in December
2005, confirming the expectation given in the preamble to the document prepared by the
European Commission, "European perspective for Western Balkans countries", and (9) has
signed the Free Trade Agreement CEFTA 2006 25 in August 2006. In 2010, the Macedonian
side initiated new free trade agreements with Russia and Israel.
The agreements provide a framework for developing regional cooperation, promotion and
expansion of markets, and developing political and economic integration with the EU. Most
free trade agreements include symmetrical opening of markets, i.e. approximate balance in
the covered products, anticipated reductions in tariff rates, anticipated transitional periods for
liberalization and derogations granted in agriculture. The dynamics of liberalization are
different for agricultural and industrial products.
According to data on Macedonias trade in 2010, exports to these countries amount to around
93% of total trade, while imports from them are about 66%. Ranked the highest are exports
and imports in the EU (61.3% and 53.1%), followed by exports to the Western Balkans
(30.8%) and imports from developing countries (27.7%). Imports from Western Balkan
19
Free trade agreement between the Republic of Macedonia and the Republic of Turkey, Official Gazette of RM
no.83/1999.
20
Stabilization and Association Agreement between the Republic of Macedonia and the EU, Official Gazette of
RM no.28 /2001.
21
Interim agreement on trade and trade-related issues between Republic of Macedonia and the EC, Official
Gazette of RM no. /2001.
22
Free trade agreement between the Republic of Macedonia and Ukraine, Official Gazette of RM no.53/2001.
23
Free trade agreement between the Republic of Macedonia and EFTA countries, Official Gazette of RM
.89/2001, no.62/2003.
24
Protocol for accession of the Republic of Macedonia to the WTO, Official Gazette of RM no.7/2003.
25
Agreement for amendment and accession to the Central European Free Trade Agreement CEFTA 2006,
Official Gazette of RM, no.69/2007.
141
countries are significantly lower, in the amount of 11.5%, and are ranked third in terms of
their importance.
Four years after the normalization of CEFTA in 2006, the level of regional trade has not
increased, contrary to predictions. The trade balance remains negative for most countries. It
goes to show that the countries of the region, despite the established free trade agreements,
trade more with the EU than between themselves. This is explained by the fact that after the
market liberalization and the abolition of the previous customs protection, in order to protect
its domestic market CEFTA countries started to apply non-trade barriers such as technical
barriers, lack of transparency in the regulation of trade, customs formalities and arbitrary
customs rate calculations. For timely prevention of the use of non-trade barriers, enterprises
should immediately inform the competent authorities (Ministry of Economy, Ministry of
Finance or other appropriate ministry depending on the occurred barrier), directly or through
the chambers, in order to undertake activities within the Joint Subcommittees.
Macedonias trade in 2010 by economic groupings of countries
Exports (in Indexes Exports Imports (in Imports Indexes
billion US$) 2010/2009 in%
billion US$) in
2010/2009
%
Total
3301.8
122.7
100.0
5450.7
100.0
108.1
Developed
Countries
2072.7
132.4
62.8
3259.7
59.8
107.1
EU (27)
2025.2
133.9
61.3
2896.9
53.1
110.1
EFTA
5.20
107.1
0.6
100.6
1.8
79.7
Other developed 28
countries
80.5
0.8
262.1
4.8
91.8
Underdeveloped
countries
3.9
1.11
0.1
56.5
1.0
105.4
Developing
countries
206.2
230.1
6.2
1507.2
7.27
111.8
Western Balkans
1017.9
101.8
8.30
627.2
5.11
105
Source: State Statistical Office

2. Harmonization of Legislation in accordance with EU Rules (NPAA chapters)
After receiving the status of candidate country for EU membership (December 2005),
Macedonia began a process of harmonization of national legislation with EU legislation.
During the harmonization process, the legislation is brought in line with EU law and
institutions in charge of enforcement of legislation are developed and strengthened. The
dynamics of alignment are shown in a document called the National Programme for Adoption
142
of the Acquis Communautaire of the European Union 26 - NPAA. The next stage in the EU
accession process is a date for negotiations and the launch of negotiations. The negotiation
process takes place with different dynamics depending on the area under consideration.
The National Programme for Adoption of the Acquis Communautaire of the European Union
is a long-term and comprehensive document that defines the strategic directions, policies,
reforms, structures, resources and deadlines to be implemented in order for Macedonia to
meet the requirements for membership in the European Union.
NPAA chapters related to the creation of export policy and harmonization of regulations and
which should be followed by companies include the following: Chapter 1 - Free movement of
goods; Chapter 3 - Right of establishment and freedom to provide services; Chapter 7 Right
to Intellectual Property; Chapter 12 - Food safety, veterinary and phytosanitary policy;
Chapter 20 - Enterprises and Industrial Policy; Chapter 29 - Customs Union; and Chapter 30 External relations.
3. Export Support in Macedonia (measures and activities)
Macedonia has undertaken various measures and activities to support the competitiveness and
promotion of the export of Macedonian products. To that end, in June 2009 the Industrial
Policy of the Republic of Macedonia for the period 2009-2020 was developed. The main
purpose of this document is to increase the competitiveness of the domestic industry by
producing products and services based on knowledge, innovation and research, and one of the
five areas covered by the Industrial policy is international cooperation and encouraging
foreign direct investment. Furthermore, in July 2010 a specialized institution in charge of
export promotion was established the Agency for foreign investment and export
promotion.27
In December 2010, with technical assistance from the BERIS Project of the World Bank, a
Strategy for export promotion and recommendations for reorganizing the Agency was
developed. With the help of the new USAID Project to promote investments and exports
(IDEAS-Investment Development and Export Advancement Support), in June 2011 a
Strategic framework and a business model for organization and operation of the Agency for
foreign investment and promoting exports were developed.
The Ministry of Economy also developed an Action plan for promotion of exports in 2011
showing the project activities that help build capacity for export promotion and government
measures aimed at increasing the competitiveness of the domestic industry. The measures are
implemented through activities that are part of the sectoral programs (Program for
implementation of industrial policy, Program for development of entrepreneurship,
innovation and competitiveness of small and medium enterprises, Program for support of
clusters, etc.).
26
National Programme for Adoption of the Acquis Communautaire 2011, Government of the Republic of
Macedonia, Skopje, December 2010,
http://www.sep.gov.mk/Default.aspx?ContentID=158&ControlID=NpaaIzvestai.ascx
27
Law on the establishment of the Agency for Foreign Investment and Export Promotion of the Republic of
Macedonia, Official Gazette of RM no. 57/2010.
143
144
FreeMovementofServicesandMacedoniasIntegrationintotheEUSingle
MarketforServices
Snezana Nikolovska
Department of International Trade Cooperation
Ministry of Economy
Trade in Services in Macedonia

The overall economic development of a country is closely related to the development of the
service sector. Services are part of all areas of the modern economy, including traditional
sectors of production. Trade in services is an important and still under-used source for
creating new jobs.
In the past period, the development of trade in services in Macedonia has experienced slow
but steady growth. Its share in the total foreign trade of the country fluctuated in the period
2000-2008: from 16.2% in 2000 to 21.2% in 2008. Compared with 2009, in 2010 exports of
services grew by 12.0% and imports by 7.2%. From a net importer of commercial services in
the period 2001 - 2005, starting from 2006 onwards Macedonia has become a net exporter,
i.e. it has more exports than imports of services in the trade balance. Transport, tourism and
professional services have the biggest share in the overall structure of exports and imports of
services.
The Service Sector as an Incentive for Development
The contribution of services in fostering economic development is closely related to the
expansion of service activities beyond the borders of the countries and their free movement.
Although the countries in the wider region are rapidly implementing reforms in their service
sectors, trade in services between the countries is progressing slowly. One reason is that it is
usually subject to greater regulatory control. The delivery of services is subject to numerous
rules and restrictions in the form of requirements that vary from country to country.
Therefore, liberalization of the trade in services is more complex than trade in goods.
Role of the EU Services Directive
The existence of undue and inappropriate administrative barriers to the start of economic
activity and cross-border provision of services in EU member states were the reasons for
adopting an ambitious program of regulatory reform in the service sector in the European
Union. In December 2006, the European Parliament and Council of the European Union
passed the Directive on Services in the Internal EU market 2006/123/EC (hereinafter Services
Directive).
The aim of the Services Directive is to ensure smooth movement of services in the single EU
market. It is based on four main elements: the removal of legal and administrative constraints
to service delivery; establishing a Point of Single Contact through which providers can apply
electronically for the necessary procedures for permits; improving the cooperation between
regulators from different countries, and improving the quality of services.
145
In order to establish a genuine single market for services it is necessary to eliminate

restrictions on freedom of establishment and provision of services. As to the difference
between freedom of establishment and provision of services, a key element is whether the
economic operator is established in the Member State where it provides a specific service. If
the operator is established, it should be covered by the scope of application of the freedom of
establishment. If, on the other hand, the operator is not established in the Member State, its
activities should be covered by the freedom of provision of services.
Freedom of establishment is based on the principle of equal treatment, which entails the
prohibition not only of any discrimination based on nationality but also of any indirect
discrimination on other grounds, which can achieve the same result.
Experiences of EU Member States in Implementing the Services Directive
Implementation of the Services Directive in the EU Member States is conducted by:
Adopting a horizontal framework legislation which transposes the provisions of the

Directive and
Eliminating or simplifying the provisions of special laws in the service sector that do
not comply with the Directive.
Establishing a Point of Single Contact through which requests for permits required to
perform a certain activity will be submitted and they will be received in electronic
format.
In order to identify and assess regulatory requirements that affect the right to establishment of
service providers and cross-border provision of services within the EU, Member States
conducted a comprehensive analysis of their national legislations. It is a complex process of
analysis of the legislation at a central, regional and local level that requires coordination and
cooperation between Member States.
Macedonias Activities for Compliance with the EU Services Directive
The National Program of the Republic of Macedonia for compliance with EU legislation
envisages activities in Chapter 03 - Right of establishment and freedom to provide services,
to comply with the Services Directive.
The analysis of compliance of laws and regulations of the Republic of Macedonia governing
market access to foreign service providers was the basis for the Ministry of Economy to
prepare an Action Plan for Compliance with the Services Directive (September 2009). The
Action Plan defines goals and actions, actual deadlines for implementation of activities and
administrative bodies responsible for implementing the planned activities. The
implementation of activities in the Action Plan will enable compliance with the requirements
of the Services Directive and will allow free movement of services after Macedonias
accession into the EUs internal market.
The planned measures in the Action Plan for compliance with the Services Directive are
being realized according to the projected dynamics. The Action Plan identified a total of 12
legal acts containing provisions that constitute barriers in accordance with the Directives
requirements. From the identified 12, 6 have been modified, thus completely or partly
removing any restrictions that are contrary to the Services Directive. Amendments to legal
acts are aimed at:
146
Elimination of prohibited requirements of nationality and citizenship and demands for

reciprocity (Law Amending the Law on Construction, Official Gazette 124/2010; Law
Amending the Law on Real Estate Cadastre, Official Gazette 158/2010; and bylaws
arising from the two laws).
Compliance with the provisions of the Services Directive related to procedures for
obtaining licenses (Law Amending the Law on Tourism, Official Gazette 17/2011;
Law Amending the Law on Trade, Official Gazette 158/2010; Law Amending the
Law on Construction, Official Gazette 124/2010).
Enabling cross-border provision of services with a transitional provision which will

come into force after Macedonias accession into the EU (Law Amending the Law on
Real Estate Cadastre, Official Gazette of RM 158/2010; Law on Appraisors, Official
Gazette 115/2010 ).
The amendments allowed for simplification of administrative procedures for obtaining

licenses by reducing the required documents, the deadlines required for issuance and the fee
for receiving them. These changes contributed to reducing the operating costs of the
economic operators.
Furthermore, for those regulations where the Action Plan called for reevaluation measures,
explanations for the retention of the measures in accordance with the Directive have been
received. Other regulations will be harmonized during the course of 2011 and 2012 according
to the estimated dynamics.
There are ongoing activities for the preparation of a horizontal framework legislation which
will transfer the basic principles and rules of the Directive. The Law on Services will
contribute to the establishment of a legislative framework for implementation of the
Directives requirements and will facilitate the implementation of the Action Plan.
Conclusion
The implementation of the Services Directive is expected to promote the true functioning of
the single EU market for services. This is particularly important because trade in services
within the EU amounts to more than half of the total trade in services. The fact that the
services covered by the Directive recruit about 40% of all employees further increases the
importance of full implementation of the Directive.
A year after the end of the deadline for implementation of the Services Directive (December
2009), it can be concluded that significant efforts have been made in EU Member States to
realize the benefits of the Directive for both the business community and the consumers.
Although the process of implementation is still ongoing, results have been achieved in the
removal of unjustified administrative barriers and modernization of the regulatory framework
in the field of services.
The obligation of Member States to implement the directive is not yet completed. Further
efforts are needed to finalize amendments to existing legislation on the part of member
countries, to fully operationalize the PSC and further advance the network for administrative
cooperation among the members. Given the importance of efficient functioning of the single
market for services in the EU in creating new jobs and additional economic growth, the
European Commission regularly monitors the activities of Member States and candidate
countries for EU membership in order to ensure proper implementation of the Services
Directive.
147
As a candidate for membership in the European Union, the Republic of Macedonia is actively
involved in this process in order to ensure a fully functioning market for services, and thus
increase the overall economic development of the country.
Sources:
1. Directive 2006/123/EC of the European Parliament and the Council of 12.12.2006 on
services in the internal market, Official Gazette no.
2. Annual and Quarterly Reports of the National Bank of RM.
3. Reports and Information by the Ministry of Economy on activities for harmonization
with the Services Directive.
148
PART4
STATISTICAL
TABLES
Part4:STATISTICALTABLES
149
150
1. Structure of foreign trade of Macedonia by products
Table .1.1.
Trade of Macedonia
Export
Import
Trade
balance
(% of
GDP)
Total
trade
Trade
openness
(% of
GDP)
Import
coverage
with export
(%)
Export
1999
1122.65
-1666.49
3398.54
2789.14
-16.0%
82.1%
67.4%
2000
1436.70
-2267.08
3843.72
3703.78
-21.6%
96.4%
63.4%
2001
1293.30
-1891.02
3802.29
3184.33
-15.7%
83.7%
68.4%
2002
1178.35
-2109.94
3966.99
3288.29
-23.5%
82.9%
55.8%
2003
1207.13
-2038.86
4089.20
3245.98
-20.3%
79.4%
59.2%
2004
1345.91
-2356.80
4313.12
3702.72
-23.4%
85.8%
57.1%
2005
1644.35
-2598.53
4660.47
4242.89
-20.5%
91.0%
63.3%
2006
1917.51
-2988.42
5055.53
4905.92
-21.2%
97.0%
64.2%
2007
2477.14
-3853.03
5934.78
6330.17
-23.2%
106.7%
64.3%
2008
2689.17
-4679.53
6694.76
7368.70
-29.7%
110.1%
57.5%
2009
1925.24
-3615.65
6720.60
5540.89
-25.2%
82.4%
53.2%
2010
2493.08
-4115.58
6892.07
6608.65
-23.5%
95.9%
60.6%
151
Table .1.2.
Export by products of Macedonia
In million Euros
TOTAL EXPORTS
Food Products
live animals
meat and meat products
dairy products and eggs
fish and fish preparations
cereals and cereal preparations
sugar, sugar preparations and honey
coffee, tea, cocoa and spices
feed
various foods
Beverages and tobacco
beverages
tobacco and tobacco manufactures
Raw materials except fuel
hides and furs
oil seeds and fruits
raw rubber
wood, lumber and cork
pulp and waste paper
textile fibers and waste
crude fertilizers and minerals
metal ores and metal scrap
animal and plant resources
Mineral fuels, lubricants and so on.
coal, coke and briquettes
gas - natural or industrial
electricity
Animal and vegetable oils
Chemical products
organic chemical products
inorganic-chemical products
2001
1,292.4
72.5
0.6
17.0
1.4
0.2
4.5
33.6
4.5
5.9
0.5
4.3
135.7
52.0
83.7
41.8
8.0
0.3
0.0
4.0
0.1
1.2
9.7
16.1
2.3
48.5
0.0
47.3
1.2
0.0
2.1
67.6
3.3
4.6
2002
1,179.7
79.0
0.4
15.5
1.2
0.0
4.4
38.1
7.9
5.3
0.1
6.0
132.1
51.5
80.6
37.5
5.9
1.6
0.0
3.2
0.0
1.0
11.8
10.6
3.3
26.5
0.0
25.9
0.6
0.0
2.8
73.3
3.6
5.8
2003
1,208.4
81.3
0.2
16.9
2.0
0.1
6.3
37.5
6.3
5.3
0.2
6.5
121.2
49.3
71.9
35.3
4.8
0.7
0.0
3.6
0.1
1.1
14.0
6.4
4.6
65.2
0.2
63.1
1.8
0.0
0.7
62.0
2.5
4.0
152
2004
1,347.3
101.0
0.1
16.2
3.0
3.7
8.8
51.0
6.1
5.2
0.2
6.7
102.7
44.2
58.5
35.5
3.6
1.0
0.0
3.9
0.5
1.0
12.7
8.3
4.4
63.0
0.9
60.7
1.4
0.0
5.6
59.0
0.9
3.5
2005
1,641.6
134.4
0.1
15.6
6.1
4.6
13.1
69.9
7.4
6.8
0.2
10.6
131.1
49.2
81.9
54.5
3.8
0.5
0.0
3.3
0.5
0.7
14.8
26.4
4.6
131.5
2.3
127.2
2.1
0.0
2.3
73.0
1.2
5.2
2006
1,923.5
153.5
0.1
15.3
4.8
6.3
16.3
87.8
4.5
7.8
0.2
10.3
154.2
64.2
90.0
90.5
4.0
0.6
0.0
3.8
0.3
1.1
13.7
61.6
5.3
179.2
2.0
162.1
3.3
11.8
1.7
80.2
1.7
6.9
2007
2,479.6
182.7
0.3
17.7
4.6
6.1
22.1
104.9
6.2
9.2
0.1
11.5
152.9
74.8
78.1
124.5
4.4
1.0
0.0
5.5
0.5
1.2
13.5
92.7
5.5
120.6
2.1
115.4
1.5
1.5
1.8
97.1
2.4
5.7
2008
2,713.2
209.8
2.4
23.0
6.6
7.3
28.0
112.7
6.9
9.5
0.2
13.3
148.8
65.0
83.8
184.9
3.2
1.3
0.0
4.0
0.5
0.7
16.0
153.3
5.8
213.7
0.7
207.9
4.6
0.6
8.5
123.1
1.2
7.4
2009
1,929.7
203.3
4.5
25.7
4.6
7.0
30.7
102.2
7.1
8.5
0.6
12.3
141.3
61.7
79.6
123.9
2.2
0.8
0.0
3.0
0.4
0.4
20.0
93.0
4.2
145.5
0.9
137.2
3.4
4.0
5.9
123.5
1.2
7.7
2010
2,493.1
248.2
3.1
27.9
6.0
6.9
36.3
136.7
8.2
10.1
0.4
12.7
152.9
59.7
93.3
196.3
4.2
1.8
0.0
2.3
0.7
1.2
27.0
153.6
5.3
194.3
1.4
164.7
2.6
25.6
8.5
288.3
1.2
7.6
colors and materials for tanning

medical and pharmaceutical products
ether oils and cosmetics
fertilizers
plastics in primary forms
plastics in other forms
chemical substances and products
Products classified by the material
leather and manufactures, leather and fur
manufactures rubber
wood and cork
paper and paper manufactures
textile yarns, etc.
non-metallic mineral manufactures
iron and steel
non-ferrous metals
manufactures of metal
Machinery and transport equipment
propulsion machinery and equipment
special machines for industry
machines for metal processing
industrial machines for general use
office machines AOP
telecommunications apparatus
electrical machinery, parts - not mentioned
road vehicles
other vehicles
Miscellaneous manufactured articles
sanitary appliances and fittings
furniture
passenger, various bags and so on.
apparel
footwear
instruments and other products
photographic cameras, watches
various finished products
Transactions and nespomnata goods
Unallocated
3.9
26.5
7.2
7.5
2.7
9.0
2.9
416.0
2.2
1.1
0.9
6.4
41.7
40.0
218.6
81.9
23.3
85.5
1.7
2.6
0.8
3.8
0.5
0.8
52.3
19.0
4.1
420.1
6.5
6.2
0.3
357.9
41.8
1.8
0.2
5.5
2.7
1.2
4.8
29.5
7.2
7.2
3.1
8.8
3.1
334.4
3.2
0.8
0.8
6.0
37.9
36.5
165.1
65.5
18.5
78.8
1.4
3.2
0.9
4.1
1.0
1.3
44.4
19.1
3.2
411.2
5.7
5.3
0.3
353.4
37.9
2.8
0.3
5.6
4.0
2.9
5.3
26.7
6.1
2.5
3.0
8.9
3.0
351.9
1.2
0.2
0.9
5.5
37.5
32.5
221.9
36.0
16.3
71.3
1.0
2.5
0.6
4.2
1.1
1.0
39.2
17.5
4.2
417.1
4.6
4.8
0.3
363.1
36.6
0.8
0.2
6.7
2.4
0.8
153
6.4
31.2
6.3
0.3
2.5
10.0
2.9
444.3
3.0
0.4
1.3
5.5
42.3
35.2
325.9
5.8
19.7
74.4
1.3
3.3
0.7
4.6
1.9
0.8
39.8
19.1
8.1
458.9
5.2
6.5
0.1
394.2
40.4
1.1
0.2
11.1
2.8
1.1
9.9
33.3
6.0
0.2
2.6
11.2
3.4
548.8
1.5
0.3
1.8
6.2
40.6
40.8
430.2
4.2
23.3
88.4
1.4
3.8
0.9
6.5
1.4
1.5
41.1
22.7
9.1
474.7
5.1
8.2
0.1
400.7
47.0
0.8
0.2
12.6
3.0
0.7
12.6
35.2
5.1
0.0
3.0
12.0
3.7
680.0
0.8
0.3
2.8
8.0
36.3
56.1
532.5
6.4
36.7
94.5
1.3
4.1
1.0
9.0
1.7
0.9
47.4
21.3
7.8
487.4
5.3
10.6
0.4
411.1
45.4
0.9
0.3
13.4
2.4
0.0
13.9
40.4
6.5
0.0
5.0
18.3
4.8
1,104.1
0.6
0.4
4.5
12.7
36.8
70.8
925.6
6.9
45.7
110.6
1.9
7.8
1.2
12.1
2.1
2.0
50.4
24.5
8.7
583.9
5.9
17.3
0.3
478.6
62.2
1.4
0.5
17.6
1.3
0.0
15.6
51.2
6.8
0.1
7.3
28.2
5.3
1,089.7
0.9
0.5
4.3
10.4
38.0
78.7
881.5
5.3
70.1
126.7
2.2
10.4
1.2
11.5
2.6
5.4
61.0
24.1
8.4
607.0
5.3
23.7
0.2
485.9
62.2
8.6
0.5
20.6
1.0
0.0
13.3
52.0
6.7
0.0
6.2
27.1
9.2
552.7
1.0
0.7
3.8
8.4
32.6
65.5
382.9
5.0
52.8
102.3
3.6
9.1
0.5
14.9
3.2
3.0
47.5
16.1
4.4
530.7
4.6
23.0
0.2
417.7
56.7
9.6
0.3
18.5
0.6
0.0
11.1
57.7
6.9
0.0
8.1
22.6
173.0
747.5
1.2
0.5
3.6
9.3
42.6
54.4
587.3
6.1
42.4
115.3
1.2
8.2
1.6
33.3
2.7
3.7
36.5
22.3
5.9
539.9
4.5
25.8
0.2
424.7
56.4
9.0
0.3
19.0
1.8
0.0
Table .1.3.
Annual change of export
Growth, in %
Food Products
Mineral fuels, lubricants
and so on.
Chemical products
Products classified by the
material
Machinery and transport
equipment
Miscellaneous
manufactured articles
Transactions and nonmentioned goods
Unallocated
2002
9.1%
-2.6%
-10.4%
2003
2.9%
-8.3%
-5.9%
2004
24.2%
-15.2%
0.6%
2005
33.1%
27.6%
53.6%
2006
14.2%
17.7%
66.1%
2007
19.0%
-0.8%
37.6%
2008
14.8%
-2.7%
48.5%
2009
-3.1%
-5.1%
-33.0%
-45.3%
145.8%
-3.4%
108.8%
36.3%
-32.7%
77.2%
-31.9%
32.3%
8.5%
-74.5%
-15.4%
679.9%
-4.9%
-59.1%
23.7%
-25.4%
9.8%
4.7%
21.1%
370.1%
26.8%
-30.7%
0.3%
-19.6%
5.2%
26.3%
23.5%
23.9%
62.4%
-1.3%
-49.3%
-7.9%
-9.6%
4.4%
18.7%
6.9%
17.0%
14.6%
-19.2%
-2.1%
1.4%
10.0%
3.4%
2.7%
19.8%
4.0%
-12.6%
49.9%
-39.8%
16.6%
6.5%
-21.6%
-44.9%
-25.9%
-38.2%
149.0%
-71.3%
29.9%
-39.0%
-95.2%
-77.0%
-70.9%
-100%
2010
22.1%
8.3%
58.4%
33.6%
45.8%
133.4%
35.2%
12.7%
1.7%
199.2%
0%
Table .1.4.
Export structure
Share in total export
Food Products
Raw materials except
fuel
Mineral fuels,
lubricants and so on.
Animal and vegetable
oils
Chemical products
Products classified by
the material
Machinery and
transport equipment
Miscellaneous
Unallocated
2001
5.6%
10.5%
2002
6.7%
11.2%
2003
6.7%
10.0%
2004
7.5%
7.6%
2005
8.2%
8.0%
2006
8.0%
8.0%
2007
7.4%
6.2%
2008
7.7%
5.5%
2009
10.5%
7.3%
3.2%
3.2%
2.9%
2.6%
3.3%
4.7%
5.0%
6.8%
6.4%
3.7%
2.2%
5.4%
4.7%
8.0%
9.3%
4.9%
7.9%
7.5%
0.2%
0.2%
0.1%
0.4%
0.1%
0.1%
0.1%
0.3%
0.3%
5.2%
6.2%
5.1%
4.4%
4.4%
4.2%
3.9%
4.5%
6.4%
32.2%
28.3%
29.1%
33.0%
33.4%
35.4%
44.5%
40.2%
28.6%
6.6%
6.7%
5.9%
5.5%
5.4%
4.9%
4.5%
4.7%
5.3%
32.5%
34.8%
34.5%
34.0%
28.9%
25.3%
23.5%
22.4%
27.5%
0.2%
0.3%
0.2%
0.2%
0.2%
0.1%
0.1%
0.0%
0.0%
0.1%
0.2%
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
0.0%
154
2010
10%
6,1%
7,9%
7,8%
0,3%
11,6%
30%
4,6%
21,7%
0,1%
0,0%
Table .1.5.
Import by products of Macedonia
In million Euros
TOTAL EXPORTS
Food Products
live animals
meat and meat products
dairy products and eggs
fish and fish preparations
cereals and cereal preparations
sugar, sugar preparations and honey
coffee, tea, cocoa and spices
feed
various foods
beverages
tobacco and tobacco manufactures
hides and furs
oil seeds and fruits
raw rubber
wood, lumber and cork
pulp and waste paper
textile fibers and waste
crude fertilizers and minerals
metal ores and metal scrap
animal and plant resources
Mineral fuels, lubricants and so on.
coal, coke and briquettes
gas - natural or industrial
electricity
Chemical products
organic chemical products
inorganic-chemical products
colors and materials for tanning
2001
1,891.02
216.62
1.15
68.90
11.96
7.15
34.94
18.26
19.81
21.52
18.26
14.66
20.18
5.23
14.95
52.56
2.82
5.24
1.36
11.81
1.32
10.32
8.52
4.12
7.06
261.55
15.57
215.23
19.20
11.54
17.96
192.50
17.91
9.87
8.96
2002
2,109.94
260.68
3.15
75.01
13.45
9.33
48.33
26.36
26.23
23.94
16.51
18.36
19.03
7.05
11.98
52.93
1.83
6.02
1.26
15.35
0.47
8.87
9.58
3.03
6.51
278.36
13.26
217.52
18.08
29.51
21.06
223.89
19.40
12.08
11.28
2003
2,038.86
239.73
1.42
62.16
14.63
8.74
41.22
30.33
23.32
24.42
12.38
21.10
21.38
9.20
12.18
53.07
1.67
4.30
0.93
14.57
0.40
8.88
7.26
9.03
6.02
285.59
20.69
228.94
16.00
19.97
21.63
225.31
15.67
9.31
12.56
155
2004
2,356.80
271.30
1.72
69.80
17.23
9.14
53.70
36.17
17.92
27.68
12.93
25.00
22.49
10.40
12.09
62.19
3.30
5.54
1.28
13.14
0.25
9.29
5.97
16.13
7.30
319.79
17.99
254.28
16.25
31.27
42.52
225.86
14.89
8.78
15.43
2005
2,598.53
275.87
1.41
71.04
21.16
10.41
41.20
34.84
21.40
31.54
12.30
30.57
25.00
12.52
12.47
85.77
2.42
5.62
1.03
12.16
0.33
9.75
6.87
39.16
8.42
497.75
23.08
396.05
22.32
56.30
24.14
268.46
15.60
8.78
18.35
2006
2,988.42
288.62
1.84
71.40
23.47
14.62
33.62
34.99
26.17
34.42
12.16
35.92
25.36
14.32
11.04
106.34
1.46
5.59
0.79
12.70
0.77
11.69
6.59
57.73
9.02
604.43
23.80
499.62
31.22
49.79
24.97
290.34
16.66
7.48
22.27
2007
3,853.03
378.17
1.39
87.96
26.51
16.30
70.83
46.25
29.60
39.49
16.68
43.17
27.93
18.71
9.22
217.55
1.50
6.51
0.86
12.23
2.01
11.40
13.29
159.46
10.30
711.91
27.91
457.91
41.49
184.60
34.26
357.66
26.17
9.39
27.40
2008
4,679.53
422.15
1.52
94.92
29.38
18.20
79.37
52.28
31.11
45.44
20.34
49.58
34.78
22.57
12.21
238.68
1.41
8.19
1.38
13.75
0.47
11.17
12.96
176.12
13.23
964.97
34.37
635.43
59.17
236.00
45.85
417.55
29.71
11.40
29.78
2009
3,615.65
401.76
1.24
101.22
29.87
17.07
58.20
50.20
32.36
46.19
17.59
47.81
37.07
23.96
13.11
141.47
1.32
6.95
1.02
17.89
0.64
8.78
9.97
80.83
14.08
580.55
8.53
445.29
40.06
86.67
32.74
407.77
26.36
16.10
27.82
2010
4,115.6
421.4
0.9
94.9
33.0
15.7
59.9
51.1
45.5
50.9
18.7
50.8
43.5
24.9
18.6
217.5
1.9
8.6
1.0
16.1
0.6
10.1
10.8
154.6
13.8
730.0
23.8
562.4
56.4
87.3
39.1
500.3
21.1
97.0
29.7
medical and pharmaceutical products

ether oils and cosmetics
fertilizers
plastics in primary forms
plastics in other forms
chemical substances and products
Products classified by the material
leather and manufactures, leather and fur
manufactures rubber
wood and cork
paper and paper manufactures
textile yarns, etc.
non-metallic mineral manufactures
iron and steel
non-ferrous metals
manufactures of metal
Machinery and transport equipment
propulsion machinery and equipment
special machines for industry
machines for metal processing
industrial machines for general use
office machines AOP
telecommunications apparatus
electrical machinery, parts - not mentioned
road vehicles
other vehicles
Miscellaneous manufactured articles
sanitary appliances and fittings
furniture
passenger, various bags and so on.
apparel
footwear
instruments and other products
photographic cameras, watches
various finished products
Transactions and nespomnata goods
Unallocated
51.76
37.09
9.47
22.84
14.18
20.42
231.10
1.53
14.46
16.00
46.24
25.70
30.75
38.87
17.94
39.61
316.34
5.58
57.47
5.33
49.33
33.62
40.48
53.24
69.46
1.85
122.32
11.33
13.07
1.42
15.30
6.42
22.80
3.98
48.01
459.90
5.06
58.72
42.62
11.06
27.49
19.03
22.21
280.04
0.86
18.14
21.35
53.23
25.92
43.10
47.11
24.94
45.38
431.44
9.18
56.61
5.14
52.00
35.08
53.55
75.02
138.50
6.36
119.79
8.22
14.61
1.56
14.87
7.32
28.60
4.87
39.75
422.71
4.23
60.78
46.43
8.22
27.34
20.35
24.63
294.56
0.86
17.94
20.89
51.86
23.92
47.10
67.18
18.48
46.33
383.88
13.66
43.83
4.82
53.12
30.87
79.19
67.21
90.13
1.06
113.78
6.17
14.38
1.36
18.99
7.72
17.81
5.16
42.18
399.92
2.36
156
62.84
45.80
11.09
35.51
23.48
26.51
595.51
5.43
20.32
23.86
58.57
85.86
49.34
240.12
31.86
45.93
405.54
10.67
49.65
5.69
64.28
34.90
59.31
65.74
148.32
1.20
138.16
6.76
15.13
1.43
22.66
10.36
22.66
5.63
53.53
273.43
1.84
60.28
50.16
14.15
42.43
27.92
30.79
764.02
25.63
22.11
24.60
61.14
257.01
51.78
231.92
35.89
53.95
452.59
9.17
49.90
8.47
70.21
41.61
63.87
71.79
127.21
10.37
203.25
7.67
17.63
1.59
56.24
14.65
26.62
6.06
72.79
1.69
1.69
63.00
54.90
13.53
46.13
33.11
33.26
892.78
27.07
22.98
26.95
66.41
275.35
60.34
293.12
53.82
66.76
548.62
10.10
69.36
10.44
76.23
50.31
65.33
82.83
162.20
21.83
205.26
10.57
19.63
1.80
47.22
17.32
24.67
6.24
77.80
1.69
1.66
74.55
62.21
17.83
58.58
40.86
40.66
1,101.17
28.01
27.44
33.38
77.15
322.42
68.59
398.34
62.00
83.85
763.43
18.79
96.57
16.02
101.30
58.68
115.34
118.68
235.42
2.62
259.66
12.00
24.18
2.61
56.94
22.71
35.95
7.20
98.06
1.30
1.23
88.51
70.27
22.03
67.23
49.46
49.16
1,266.61
30.09
29.14
40.30
89.63
324.50
82.34
514.92
58.23
97.46
980.69
61.10
101.39
17.23
140.69
71.60
140.49
134.17
303.21
10.81
307.07
15.43
31.83
3.58
60.55
27.43
45.03
8.41
114.81
1.17
1.08
104.97
69.35
18.45
53.35
48.05
43.32
861.44
22.62
29.38
32.25
81.69
277.73
81.09
216.31
36.88
83.48
867.00
55.02
87.16
14.35
122.55
70.88
127.70
130.97
212.03
46.34
281.66
11.93
28.02
3.29
53.19
25.08
45.24
7.29
107.61
4.20
0.00
104.9
73.1
19.8
56.1
50.8
47.9
1,037.6
23.1
28.1
31.5
85.3
304.5
95.4
267.8
127.3
74.5
823.6
25.1
82.5
9.8
97.1
60.1
112.0
141.4
278.9
16.6
298.7
11.0
29.6
3.4
48.8
25.0
48.2
7.6
125.0
3.8
0.0
Table .1.6.
Annual change of import
Growth, in %
Food Products
fuel
and so on.
oils
Chemical products
Products classified by
the material
equipment
Miscellaneous
Unallocated
2002
20.3%
-5.7%
2003
-8.0%
12.4%
2004
13.2%
5.2%
2005
1.7%
11.1%
2006
4.6%
1.5%
2007
31.0%
10.1%
2008
11.6%
24.6%
2009
-4.8%
6.6%
2010
4.9%
17.3%
0.7%
0.3%
17.2%
37.9%
24.0%
104.6%
9.7%
-40.7%
53.8%
6.4%
2.6%
12.0%
55.7%
21.4%
17.8%
35.5%
-39.8%
25.7%
17.3%
2.7%
96.6%
-43.2%
3.5%
37.2%
33.8%
-28.6%
19.6%
16.3%
0.6%
0.2%
18.9%
8.1%
23.2%
16.7%
-2.3%
22.7%
21.2%
5.2%
102.2%
28.3%
16.9%
23.3%
15.0%
-32.0%
20.4%
36.4%
-11.0%
5.6%
11.6%
21.2%
39.2%
28.5%
-11.6%
-5%
-2.1%
-5.0%
21.4%
47.1%
1.0%
26.5%
18.3%
-8.3%
6.1%
-8.1%
-5.4%
-31.6%
-99.4%
0.0%
-22.7%
-10.5%
259.2%
-9.6%
-16.3%
-44.1%
-22.0%
-8.4%
-1.6%
-25.8%
-12.1%
-100%
0%
Table .1.7.
Import structure
Share in total import
Food Products
and so on.
oils
Chemical products
Products classified by the
material
equipment
Miscellaneous
Unallocated
2001
11.4%
1.1%
2.8%
2002
12.3%
0.9%
2.5%
2003
11.7%
1.0%
2.6%
2004
11.5%
1.0%
2.6%
2005
10.6%
1.0%
3.3%
2006
9.7%
0.8%
3.6%
2007
9.8%
0.7%
5.6%
2008
9.0%
0.7%
5.1%
2009
11.1%
1.0%
3.9%
2010
10.2%
1.1%
5.3%
13.8%
13.2%
14.0%
13.6%
19.1%
20.2%
18.5%
20.6%
16.1%
17.7%
0.9%
1.0%
1.1%
1.8%
0.9%
0.8%
0.9%
1.0%
0.9%
1.0%
10.2%
10.6%
11.0%
9.6%
10.3%
9.7%
9.3%
8.9%
11.3%
12.2%
12.2%
13.2%
14.4%
25.2%
29.4%
29.9%
28.6%
27.1%
23.8%
25.2%
16.7%
20.4%
18.8%
17.2%
17.4%
18.3%
19.8%
21.0%
24.0%
20%
6.5%
5.7%
5.6%
5.9%
7.8%
6.9%
6.7%
6.6%
7.8%
7.3%
24.3%
20.0%
19.6%
11.6%
0.1%
0.1%
0.0%
0.0%
0.1%
1.0%
0.3%
0.2%
0.1%
0.1%
0.1%
0.1%
0.0%
0.0%
0.0%
0.0%
157
Table .1.8.
Import coverage with export, bt product groups
Food Products
Beverages and
tobacco
fuel
Mineral fuels,
lubricants and so on.
Animal and
vegetable oils
Chemical products
Products classified
by the material
Machinery and
transport equipment
Miscellaneous
Transactions and
non-mentioned goods
Unallocated
2001
33.4%
2002
30.3%
2003
33.9%
2004
37.2%
2005
48.7%
2006
53.2%
2007
48.3%
2008
49.7%
2009
50.6%
672.3%
694.3%
566.7%
456.7%
524.3%
608.0%
547.7%
427.7%
381.0%
79.6%
70.8%
66.5%
57.0%
63.5%
85.1%
57.2%
77.5%
87.6%
18.5%
9.5%
22.8%
19.7%
26.4%
29.7%
16.9%
22.1%
25.1%
11.9%
35.1%
13.4%
32.8%
3.3%
27.5%
13.2%
26.1%
9.5%
27.2%
6.9%
27.6%
5.2%
27.2%
18.4%
29.5%
17.9%
30.3%
180.0%
119.4%
119.5%
74.6%
71.8%
76.2%
100.3%
86.0%
64.2%
27.0%
18.3%
18.6%
18.4%
19.5%
17.2%
14.5%
12.9%
11.8%
343.5%
343.3%
366.6%
332.1%
233.5%
237.5%
224.9%
197.7%
188.4%
0.6%
22.8%
0.9%
67.9%
0.6%
34.9%
1.0%
58.2%
177.6%
38.8%
139.3%
1.9%
99.2%
0.6%
82.1%
0.2%
14.1%
0.0%
158
2010
78.0%
465.9%
119.5%
35.3%
28.9%
76.3%
95.4%
18.5%
239.4%
61.9%
100.0%
2. Geographical flows of foreign trade

Table .2.1.
Exports from Macedonia by country
In million Euros
Germany
Serbia (and
Montenegro)
Kosovo
Greece
Italy
Bulgaria
Croatia
BiH
Albania
Netherlands
UK
Turkey
Spain
Belgium
Slovenia
India
Montenegro
Portugal
Russia
Romania
Austria
Switzerland
France
Slovakia
Taiwan
Ukraine
Sweden
U.S.
Other countries
2001
266.4
2002
248.1
2003
247.2
2004
254.3
2005
292.1
2006
298.7
2007
365.7
2008
381.9
2009
323.8
2010
522.90
298.6
259.7
242.1
279.3
372.0
442.3
469.2
631.4
113.0
101.9
23.3
65.4
18.1
11.2
50.8
29.9
9.7
24.2
8.4
23.4
123.3
87.5
23.0
62.2
19.2
14.4
47.5
30.2
9.0
15.8
11.0
22.8
159.2
84.9
22.8
58.4
20.9
15.3
41.9
30.9
28.9
18.8
8.5
18.8
184.0
107.9
41.3
64.6
26.7
18.9
38.0
34.2
43.4
18.6
12.0
22.0
252.0
136.6
61.7
65.1
40.9
22.4
35.8
34.7
36.9
11.2
28.1
25.5
286.6
188.5
103.1
98.9
51.4
32.2
44.1
29.0
44.0
39.4
65.7
32.7
15.3
1.0
6.8
28.4
25.5
12.1
1.2
6.8
17.4
48.3
15.8
1.5
6.8
5.1
62.1
17.3
3.4
7.2
6.1
15.6
20.3
10.5
11.9
8.2
8.2
0.9
3.1
111.0
52.8
0.5
3.8
81.5
41.8
1.6
5.0
63.8
52.2
1.7
4.7
57.9
45.1
1.7
6.8
35.9
135.4
1.4
15.4
17.9
55.7
357.5
219.3
253.5
155.5
71.1
72.6
47.9
47.9
21.2
51.3
75.1
43.8
0.6
26.1
13.9
22.6
22.4
15.2
10.9
16.4
8.1
47.9
2.0
6.4
7.6
59.3
225.95
327.16
185.06
177.12
222.01
93.34
64.14
54.65
53.04
44.77
38.44
55.63
60.98
52.17
15.6
1.1
6.9
39.8
17.9
309.6
255.3
177.3
119.7
64.7
53.3
53.6
55.6
39.1
128.1
130.1
50.5
0.4
20.3
7.0
17.2
14.0
14.6
7.9
11.8
4.4
9.9
1.5
11.2
38.0
47.1
246.4
219.3
208.3
155.5
154.1
110.0
61.9
60.0
44.0
30.5
29.4
27.4
25.8
24.4
24.0
17.8
17.6
16.0
14.1
13.6
12.3
9.0
8.6
7.5
7.4
6.8
6.7
43.0
159
20.19
41.01
27.92
14.16
10.47
16.06
9.94
10.75
50.0
Table .2.2.
Annual change of export by countries
Growth, in %
Germany
Serbia (and
Montenegro)
Kosovo
Greece
Italy
Bulgaria
Croatia
BiH
Albania
Netherlands
UK
Turkey
Spain
Belgium
Slovenia
India
Montenegro
Portugal
Russia
Romania
Austria
Switzerland
France
Slovakia
Taiwan
Ukraine
Sweden
U.S.
Other
countries
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
-4.6%
-6.9%
-0.4%
2.8%
14.9%
2.3%
22.5%
4.4%
-15.2%
61.49%
-18.2%
-13.0%
-6.8%
15.4%
33.2%
18.9%
6.1%
34.6%
-61.0%
23.3%
3.9%
-20.5%
24.6%
-28.1%
-21.6%
30.1%
1.6%
-14.2%
66.8%
-67.3%
-18.5%
9.1%
-14.2%
-1.3%
-5.0%
6.1%
29.4%
-6.5%
1.1%
-6.9%
-34.6%
31.4%
-2.6%
29.2%
-3.0%
-0.7%
-6.1%
8.9%
6.1%
-11.8%
2.3%
221.9%
19.2%
-23.1%
-17.6%
15.5%
27.2%
81.0%
10.6%
27.7%
23.1%
-9.3%
10.7%
50.2%
-1.2%
42.0%
16.7%
37.0%
26.5%
49.5%
0.9%
53.0%
18.6%
-5.9%
1.6%
-15.0%
-39.9%
134.0%
16.2%
13.7%
38.0%
67.0%
51.9%
25.5%
43.8%
23.2%
-16.6%
19.2%
252.3%
133.8%
28.4%
8.0%
35.5%
72.0%
21.0%
26.0%
65.4%
21.5%
91.9%
-11.1%
225.3%
97.9%
54.1%
38.3%
-9.7%
-34.7%
5.0%
10.9%
-1.8%
-3.1%
-1.4%
-28.7%
42.3%
-20.9%
16.9%
-0.9%
-38.6%
89.2%
30.6%
20.5%
-0.2%
-70.5%
28.6%
9.0%
131.4%
7.0%
17.7%
-74.9%
17.9%
209.8%
64.5%
36.1%
-47.6%
-15.4%
33.5%
22.7%
-4.6%
43.7%
72.1%
11.3%
-37.7%
-40.3%
23.1%
-26.6%
201.7%
31.0%
-21.8%
10.7%
-6.5%
-9.1%
-4.4%
45.5%
-38.1%
-14.2%
128.0%
-50.0%
4.2%
-27.6%
111.7%
15.5%
-14.1%
43.0%
29.9%
9.8%
36.4%
-10.7%
-14.0%
-45.8%
-60.0%
-42.3%
-13.3%
42.3%
28.2%
97.9%
31.4%
59.5%
4.4%
38.3%
39.8%
83.6%
383.0%
34.1%
-42.6%
-80.1%
-41.7%
-29.1%
-39.2%
-29.2%
-13.0%
-17.3%
-8.0%
-36.2%
38.9%
-46.6%
-65.6%
-44.1%
3839.8%
-31.8%
26.6%
-29.3%
-37.1%
-10.8%
12.8%
-45.2%
5.7%
-84.3%
271.9%
5.5%
-10.7%
-8.32%
49.17%
-11.15%
13.93%
44.11%
-15.18%
3.70%
-8.99%
20.50%
46.71%
30.57%
102.94%
135.98%
113.45%
-28.9%
-21.0%
25.0%
-13.7%
200.5%
-58.9%
-15.5%
26.0%
-27.6%
160
26.31%
191.02%
105.34%
15.39%
16.25%
118.16%
46.94%
59.26%
180.03%
Table .2.3.
Export structure by country
Share, in %
Germany
Serbia (and
Montenegro)
Kosovo
Greece
Italy
Bulgaria
Croatia
BiH
Albania
Netherlands
UK
Turkey
Spain
Belgium
Slovenia
India
Montenegro
Portugal
Russia
Romania
Austria
Switzerland
France
Slovakia
Taiwan
Ukraine
Sweden
U.S.
Other countries
2001
20.6%
2002
21.1%
2003
20.5%
2004
18.9%
2005
17.8%
2006
15.7%
2007
14.8%
2008
14.2%
2009
16.8%
2010
20.97%
23.1%
0.0%
8.7%
7.9%
1.8%
5.1%
1.4%
0.9%
3.9%
2.3%
0.7%
1.9%
0.6%
1.8%
0.0%
0.0%
0.0%
1.2%
0.1%
0.5%
3.1%
1.4%
0.0%
0.0%
0.1%
0.2%
8.6%
4.1%
22.0%
0.0%
10.5%
7.4%
1.9%
5.3%
1.6%
1.2%
4.0%
2.6%
0.8%
1.3%
0.9%
1.9%
0.0%
0.0%
0.0%
1.3%
0.1%
0.6%
2.4%
2.2%
0.0%
0.0%
0.0%
0.3%
6.9%
3.5%
20.1%
0.0%
13.2%
7.0%
1.9%
4.8%
1.7%
1.3%
3.5%
2.6%
2.4%
1.6%
0.7%
1.6%
0.0%
0.0%
0.0%
1.0%
0.1%
0.6%
1.4%
4.0%
0.0%
0.0%
0.1%
0.4%
5.3%
4.3%
20.8%
0.0%
13.7%
8.0%
3.1%
4.8%
2.0%
1.4%
2.8%
2.5%
3.2%
1.4%
0.9%
1.6%
0.0%
0.0%
0.0%
1.2%
0.1%
0.5%
0.4%
4.6%
0.0%
0.0%
0.1%
0.3%
4.3%
3.3%
22.6%
0.0%
15.3%
8.3%
3.8%
4.0%
2.5%
1.4%
2.2%
2.1%
2.2%
0.7%
1.7%
1.6%
0.0%
0.0%
0.0%
1.0%
0.2%
0.4%
0.4%
0.9%
0.0%
0.0%
0.1%
0.4%
2.2%
8.2%
23.2%
0.0%
15.0%
9.9%
5.4%
5.2%
2.7%
1.7%
2.3%
1.5%
2.3%
2.1%
3.4%
1.7%
0.0%
0.0%
0.0%
1.1%
0.6%
0.6%
0.4%
0.4%
0.0%
0.0%
0.1%
0.8%
0.9%
2.9%
18.9%
0.0%
12.5%
10.3%
7.2%
4.8%
2.6%
2.2%
2.2%
2.2%
1.6%
5.2%
5.3%
2.0%
0.0%
0.8%
0.3%
0.7%
0.6%
0.6%
0.3%
0.5%
0.2%
0.4%
0.1%
0.5%
1.5%
1.9%
23.5%
0.0%
13.3%
8.2%
9.4%
5.8%
2.6%
2.7%
1.8%
1.8%
0.8%
1.9%
2.8%
1.6%
0.0%
1.0%
0.5%
0.8%
0.8%
0.6%
0.4%
0.6%
0.3%
1.8%
0.1%
0.2%
0.3%
2.2%
12.8%
11.4%
10.8%
8.1%
8.0%
5.7%
3.2%
3.1%
2.3%
1.6%
1.5%
1.4%
1.3%
1.3%
1.2%
0.9%
0.9%
0.8%
0.7%
0.7%
0.6%
0.5%
0.4%
0.4%
0.4%
0.4%
0.4%
2.2%
9.06%
13.12%
7.42%
7.10%
8.91%
3.74%
2.57%
2.19%
2.13%
1.80%
1.54%
2.23%
2.45%
2.09%
0,0%
0,0%
0.0%
0.81%
1.64%
1.12%
0.57%
0.42%
0,0%
0,0%
0.64%
0.40%
0.43%
2.01%
161
Table .2.4.
Import of Macedonia by countries
In million Euros
Germany
Russia
Greece
Serbia and
Montenegro
Italy
China
Turkey
Bulgaria
Slovenia
Switzerland
Croatia
U.S.
Romania
Austria
France
Ukraine
Poland
Netherlands
Brazil
UK
Japan
Czech Republic
Hungary
Spain
Bosnia and
Herzegovina
Korea
Belgium
Sweden
Albania
Other countries
2001
240.0
156.0
206.2
2002
301.1
132.6
251.6
2003
269.4
158.2
265.7
2004
296.0
217.9
227.2
2005
270.2
341.8
239.3
2006
296.5
453.8
244.0
2007
389.0
465.7
303.7
2008
443.9
633.7
347.9
2009
371.0
354.9
314.9
2010
460.7
417.2
338.8
176.4
120.4
20.8
52.0
115.4
132.8
26.0
51.8
57.6
14.7
49.0
33.8
96.3
17.2
51.1
11.9
29.3
18.8
13.0
19.5
11.1
195.8
125.4
25.9
62.7
135.9
137.1
29.9
58.4
62.1
10.3
56.4
56.1
76.9
23.0
54.8
24.5
34.7
23.9
9.6
30.4
13.4
188.1
108.8
42.7
69.7
131.9
122.9
24.1
56.2
50.0
12.7
49.7
45.5
77.8
23.4
43.9
20.6
34.9
17.1
10.6
25.8
21.8
195.9
135.7
65.9
76.3
168.6
112.8
36.7
52.9
38.6
90.9
55.4
54.3
59.6
63.0
45.9
33.0
44.0
19.6
14.0
24.9
24.9
212.4
156.0
92.7
91.6
188.4
102.9
51.3
60.5
36.3
52.2
55.6
49.0
58.0
76.1
42.9
30.3
35.5
18.3
18.8
29.2
26.0
225.7
181.8
110.4
97.6
200.2
103.2
47.1
62.9
32.1
73.2
64.2
53.1
84.2
93.9
47.9
30.4
30.4
21.5
26.2
30.0
41.3
332.6
228.6
179.2
144.8
197.8
113.9
83.7
80.9
57.3
70.5
75.0
66.2
76.2
118.7
55.0
55.0
38.6
30.1
47.1
40.3
38.0
363.3
265.3
214.6
185.0
223.0
138.3
199.1
93.7
69.1
80.0
81.5
84.8
138.0
180.4
64.0
82.8
48.0
39.5
44.6
54.8
37.8
285.9
259.3
207.5
179.8
174.0
136.9
88.3
84.8
79.4
77.3
71.9
65.5
60.6
59.7
50.5
45.1
44.8
39.0
37.2
36.5
34.7
317.0
247.1
217.0
196.6
227.7
124.7
73.6
85.5
77.3
95.3
70.7
64.2
88.0
52.7
51.7
45.0
214.1
34.1
38.8
36.0
45.6
4.6
7.5
16.1
21.0
1.5
119.3
15.1
9.4
16.6
18.7
1.2
116.3
10.4
12.4
14.8
17.8
3.5
108.6
13.1
18.8
17.8
20.2
5.1
127.8
19.0
27.1
21.9
16.1
7.3
172.0
21.1
33.0
21.5
23.6
9.3
228.4
25.5
40.2
23.6
40.2
14.4
421.4
35.8
39.2
28.6
36.4
24.2
402.4
33.4
27.5
24.0
22.7
17.3
331.5
37.1
32.7
23.8
25.5
17.3
316.3
162
Table .2.5.
Annual change of import by country
Growth, in %
Germany
Russia
Greece
Serbia and
Montenegro
Italy
China
Turkey
Bulgaria
Slovenia
Switzerland
Croatia
U.S.
Romania
Austria
France
Ukraine
Poland
Netherlands
Brazil
UK
Japan
Czech Republic
Hungary
Spain
Bosnia and
Herzegovina
Korea
Belgium
Sweden
Albania
Other countries
2001
-12.5%
-24.9%
-5.6%
2002
25.5%
-15.0%
22.0%
2003
-10.5%
19.3%
5.6%
2004
9.9%
37.7%
-14.5%
2005
-8.7%
56.9%
5.3%
2006
9.7%
32.8%
2.0%
2007
31.2%
2.6%
24.5%
2008
14.1%
36.1%
14.5%
2009
-16.4%
-44.0%
-9.5%
2010
24.2%
17.6%
7.6%
-14.4%
0.1%
42.6%
-8.3%
9.1%
-14.9%
-10.2%
-17.3%
-35.9%
-3.1%
8.5%
-19.1%
-56.8%
-23.9%
4.1%
-7.9%
-15.5%
-21.2%
-9.4%
-42.8%
-9.4%
11.0%
4.2%
24.5%
20.4%
17.8%
3.3%
15.2%
12.8%
7.7%
-30.0%
15.1%
65.8%
-20.1%
34.0%
7.3%
105.8%
18.3%
27.3%
-26.3%
56.0%
21.1%
-3.9%
-13.2%
65.1%
11.2%
-2.9%
-10.3%
-19.5%
-3.8%
-19.5%
23.3%
-11.9%
-18.8%
1.2%
1.4%
-20.0%
-16.3%
0.7%
-28.6%
10.6%
-15.1%
62.4%
4.2%
24.7%
54.4%
9.5%
27.8%
-8.2%
52.7%
-5.9%
-22.9%
615.1%
11.4%
19.3%
-23.4%
169.5%
4.7%
60.6%
26.1%
14.5%
32.9%
-3.3%
14.5%
8.4%
15.0%
40.5%
20.0%
11.7%
-8.8%
39.7%
14.4%
-5.7%
-42.6%
0.5%
-9.7%
-2.7%
20.8%
-6.7%
-8.3%
-19.3%
-6.6%
33.6%
17.1%
4.4%
6.3%
16.5%
19.1%
6.6%
6.2%
0.3%
-8.2%
4.1%
-11.6%
40.3%
15.3%
8.3%
45.3%
23.4%
11.8%
0.4%
-14.3%
17.3%
39.7%
2.7%
58.8%
47.4%
25.7%
62.4%
48.4%
-1.2%
10.3%
77.5%
28.5%
78.2%
-3.7%
16.9%
24.8%
-9.5%
26.5%
14.7%
80.9%
26.8%
40.2%
79.8%
34.5%
-8.0%
9.2%
16.1%
19.7%
27.8%
12.7%
21.4%
138.0%
15.8%
20.6%
13.5%
8.7%
28.0%
81.2%
52.0%
16.5%
50.5%
24.5%
31.3%
-5.5%
36.0%
-0.5%
-21.3%
-2.2%
-3.3%
-2.8%
-22.0%
-1.0%
-55.7%
-9.4%
15.0%
-3.4%
-11.8%
-22.7%
-56.1%
-66.9%
-21.1%
-45.5%
-6.7%
-1.3%
-16.5%
-33.4%
-8.4%
10.9%
-4.7%
4.6%
9.3%
30.9%
-8.9%
-16.6%
0.8%
-2.6%
23.3%
-1.6%
-2.1%
45.4%
-11.6%
2.4%
-0.2%
377.8%
-12.5%
4.2%
-1.5%
31.5%
-19.8%
-40.8%
9.8%
-38.8%
-56.4%
-5.5%
226.3%
25.4%
3.5%
-10.9%
-18.3%
-2.5%
-31.3%
31.4%
-11.3%
-4.7%
194.0%
-6.7%
26.2%
51.7%
20.3%
13.1%
45.6%
17.7%
44.6%
44.0%
23.4%
-20.1%
43.0%
34.6%
11.4%
21.8%
-1.8%
46.4%
28.0%
32.8%
20.7%
21.9%
9.8%
70.2%
53.7%
84.5%
40.3%
-2.4%
21.1%
-9.3%
68.9%
-4.5%
-6.7%
-29.9%
-16.1%
-37.7%
-28.7%
-17.6%
11.2%
19.0%
-1.1%
12.6%
0.1%
11.2%
163
Table .2.6.
Import structure by country
Share, in %
Germany
Russia
Greece
Serbia and
Montenegro
Italy
China
Turkey
Bulgaria
Slovenia
Switzerland
Croatia
U.S.
Romania
Austria
France
Ukraine
Poland
Netherlands
Brazil
UK
Japan
Czech Republic
Hungary
Spain
Bosnia and
Herzegovina
Korea
Belgium
Sweden
Albania
Other countries
2001
12.7%
8.2%
10.9%
2002
14.3%
6.3%
11.9%
2003
13.2%
7.8%
13.0%
2004
12.6%
9.2%
9.6%
2005
10.4%
13.2%
9.2%
2006
9.9%
15.2%
8.2%
2007
10.1%
12.1%
7.9%
2008
9.5%
13.5%
7.4%
2009
10.3%
9.8%
8.7%
2010
11.2%
10.1%
8.2%
9.3%
6.4%
1.1%
2.8%
6.1%
7.0%
1.4%
2.7%
3.0%
0.8%
2.6%
1.8%
5.1%
0.9%
2.7%
0.6%
1.5%
1.0%
0.7%
1.0%
0.6%
9.3%
5.9%
1.2%
3.0%
6.4%
6.5%
1.4%
2.8%
2.9%
0.5%
2.7%
2.7%
3.6%
1.1%
2.6%
1.2%
1.6%
1.1%
0.5%
1.4%
0.6%
9.2%
5.3%
2.1%
3.4%
6.5%
6.0%
1.2%
2.8%
2.5%
0.6%
2.4%
2.2%
3.8%
1.1%
2.2%
1.0%
1.7%
0.8%
0.5%
1.3%
1.1%
8.3%
5.8%
2.8%
3.2%
7.2%
4.8%
1.6%
2.2%
1.6%
3.9%
2.3%
2.3%
2.5%
2.7%
1.9%
1.4%
1.9%
0.8%
0.6%
1.1%
1.1%
8.2%
6.0%
3.6%
3.5%
7.3%
4.0%
2.0%
2.3%
1.4%
2.0%
2.1%
1.9%
2.2%
2.9%
1.6%
1.2%
1.4%
0.7%
0.7%
1.1%
1.0%
7.6%
6.1%
3.7%
3.3%
6.7%
3.5%
1.6%
2.1%
1.1%
2.5%
2.1%
1.8%
2.8%
3.1%
1.6%
1.0%
1.0%
0.7%
0.9%
1.0%
1.4%
8.6%
5.9%
4.7%
3.8%
5.1%
3.0%
2.2%
2.1%
1.5%
1.8%
1.9%
1.7%
2.0%
3.1%
1.4%
1.4%
1.0%
0.8%
1.2%
1.0%
1.0%
7.8%
5.7%
4.6%
4.0%
4.8%
3.0%
4.3%
2.0%
1.5%
1.7%
1.7%
1.8%
2.9%
3.9%
1.4%
1.8%
1.0%
0.8%
1.0%
1.2%
0.8%
7.9%
7.2%
5.7%
5.0%
4.8%
3.8%
2.4%
2.3%
2.2%
2.1%
2.0%
1.8%
1.7%
1.7%
1.4%
1.2%
1.2%
1.1%
1.0%
1.0%
1.0%
7.7%
6.0%
5.3%
4.8%
5.5%
3.0%
1.8%
2.1%
1.9%
2.3%
1.7%
1.6%
2.1%
1.3%
1.3%
1.1%
5.2%
0.8%
0.9%
0.9%
1.1%
0.2%
0.4%
0.9%
1.1%
0.1%
6.3%
0.7%
0.4%
0.8%
0.9%
0.1%
5.5%
0.5%
0.6%
0.7%
0.9%
0.2%
5.3%
0.6%
0.8%
0.8%
0.9%
0.2%
5.4%
0.7%
1.0%
0.8%
0.6%
0.3%
6.6%
0.7%
1.1%
0.7%
0.8%
0.3%
7.6%
0.7%
1.0%
0.6%
1.0%
0.4%
10.9%
0.8%
0.8%
0.6%
0.8%
0.5%
8.6%
0.9%
0.8%
0.7%
0.6%
0.5%
9.2%
0.9%
0.8%
0.6%
0.6%
0.4%
7.7%

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UACS Review of The Foreign Trade 2011

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Skopje, 2011

CIP ". ",

TRENDS IN THE GLOBAL TRADE OF 2010 .................................................................................................... 91

PART 2: RESEARCH PAPERS ......................................................................................................................... 109

(Lafay, 19987, 1990, 1992). ,

Nysssens & Pouliot (1990),

Fuller (DF) Dickeey-Fuller (A

InX t a0 a1et 1 i InX t i i InYt i i InPr t i i Z t i t , (4)

logX -0.142 (4)

: (L) AIC. (*)

InXt 38.19InYt 8.80InPt 276.44Z t ,

InX t 0.015 0.0028et 1 0.129X t 1 0.1002Yt 1 1.327Pt 1 9.562Z t 1 ,

Akhtar, M., and Hilton, R. S. (1984) Effects of Exchange Rate Uncertainty on

DLE R 0.0086 - 0.41DLPPP

DDLE R -0.0072 0.515u t -1

Source: Direction of trade statistics of IMF

Source: Direction of trade statistics of IMF

Figure 3 Foreign Trade and Trade Openness of Macedonia (1999-2010)

Trade balance (rhs)

Trade openness (rhs)

Import coverage with export (rhs)

Source: State Statistical Office and calculations based on SSO data

Figure 4 Macedonias Total Exports (1999-2010)

Source: State Statistical Office and calculations based on SSO data

Figure 5 Contribution of Various Sectors (based on economic purpose) to Export

Source: Calculations based on SSO data

Source: State Statistical Office and calculations based on SSO data

Steel and iron

Vegetables and fruits

Oil and oil products

Source: Calculations based on SSO data

Serbia (incl. Kosovo and Montenegro)

Figure 10 Macedonias Export to Economic Blocks in 2010

Figure 11 Geographic Concentration of Exports (2004-2010)

Source: Calculations based on SSO data

Figure 12 Macedonias Total Imports (1999-2010)

Source: Calculations based on SSO data

Source: Calculations based on SSO data

Source: SSO and calculations based on SSO data

oil and oil products

electric machines, parts

steel and iron

Source: Calculations based on SSO data

Serbia and Montenegro

Figure 19 Concentration of imports (2004-2010)

Source: Calculations based on SSO data

Source: Calculations based on SSO data

US dollars per barrel

Source: International monetary statistics of IMF

Source: International monetary statistics of IMF

US dollars per metric tone

US dollars per metric tone

Figure 22 Prices of Metals (2003-2010)

steel and iron

tobacco and products

fruits and vegetables

oil and oil products

2. Specialization Patterns of Macedonia

Table 1: RCA index in the main sectors

Graphic 1: Geographical breakdown of Macedonian exports in 1993 and 2008

Source: Chelem, author calculation

A product effect measured by the sum

A market effect measured by the sum