Petreski, Goce and Lazarov, Darko and Olivera, Kosotoska (2017) Pathways of Transition: Empirical analysis of Macedonian and Bulgarian Economy. Macedonian Academy of Sciences and Arts (MANU), Skopje. ISBN 978-608-203-197-2
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Abstract
The main objective of this study is a comparative empirical investigation of growth models in Macedonia and Bulgaria by estimation of growth sources and main drivers of economic growth in both countries. The other goal of the study is to identify and address the most binding constraints of economic growth, and to analyze the main challenges that both countries have faced within the transition period. Moreover, the study is focused on the analysis of trade structure of both countries and the possibilities to intensify the economic cooperation between Macedonia and Bulgaria, to explore the opportunities from foreign direct investments and transfer of technology. In order to fulfill such goals we use several scientific methodological approaches such as growth accounting, growth econometrics and international benchmark comparative analysis.
The estimated results of the growth accounting based on production approach shows that the major part of the Macedonian growth rate in the period 2000–2012 was due to the increase in production factors (physical capital and labor). Namely, employment (number of employees) as a growth factor has the greatest significance in the past. Absolute contribution is 0.84%, which determines the relative amount of 35.75% of the average rate of eco¬nomic growth. Physical capital (investments) is the next most important factor of growth, the absolute contribution of the growth of physical capital is 0.80%, or in term of relative amount, 34% of GDP growth is the result of physical capital.
The total factor productivity (TFP) or knowledge in its broadest sense has made its lowest contribution. Actually, the absolute contribution is 0.71%, or nearly 30% of GDP growth. The further decomposition of total factor productivity shows that technological progress (knowledge implemented in the machines) is insignificant with contribution of 8.5%. On the other side, the improvement of the educational structure - human capital (knowledge embo¬died in the labor force) has 21.7% relative contribution to the economic growth rate. The conclusion that the role of TFP for economic growth of Macedonian economy is negligible becomes more credible if we compare such contribution to economic growth in developed countries. For illustration, some empirical growth accounting research that have been done for developed and developing countries, indicate that the TFP contribution varies from 40% to 50% in deve¬loped countries, and from 35% to 40% in middle-income countries. Even more if we compare it with the results of growth decomposition in Bulgaria, where the total factor productivity had relative contribution to economic growth rate of approximately 40% in the same period; it is obvious that the Bulgarian growth is more sustainable and its growth model is more capable to promote in long run economic growth.
Additionally, the results indicate that the Macedonian growth is deter¬mined by the engagement of labor, which is understandable considering that the Republic of Macedonia in the period before 2000 had the highest unemployment rate and fairly the lower average wages, indicating that the growth potential of the economy is the excess supply of cheap labor.
| Item Type: | Book |
|---|---|
| Subjects: | Social Sciences > Economics and business |
| Divisions: | Faculty of Economics |
| Depositing User: | Darko Lazarov |
| Date Deposited: | 27 Feb 2018 10:22 |
| Last Modified: | 27 Feb 2018 10:22 |
| URI: | https://eprints.ugd.edu.mk/id/eprint/19601 |
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