The analysis of industrial and export opportunities of Macedonian economy

The new growth and trade theory suggest that economic diversification is the main fundamental driver of long-run economic growth. Production and export diversification matters for economic growth because the country’s capacity to accelerate long-run growth is connected to its ability to produce and export a diverse set of products. According to these theories countries with more complex and diversified export structure have more ability to grow faster, and vice-versa, Hausmann et al. (2005); Jesus Felipe at el. (2010). This process is not easy and it depends on country’s production structure and the existence of capabilities that were already accumulated by the country. The main aim of the paper is to explore the question „what are the main industrial opportunities of Macedonian economy in metal industry and machinery?” To answer this question and to fulfill the main goal of the study we are investigating the current production structure of Macedonian economy in these industries and we analyze the products similarities by using the product space concept. The results indicate that metal industry and machinery are the most important sectors in Macedonia. The data show that the total export value in 2015 is 1.713 million US dollars, while the relative share in country’s export is more than 33%. The total number of products that country exports in these industries in 2015 is 725 out of 1225 at 6-digit HS classification, while the number of products that country exports with comparative advantages (RCA>1) in the same year is significantly smaller (70 products). However, if we compare this number with the total number of products that country exports in all industries (460 products), we can conclude that more that 15% of that exporting products with comparative advantages are in these two industries