Empirical analysis of export performance and economic growth: the case of Macedonia

Abstract

The main aim of the paper is to investigate the export structure of Macedonian economy at product level and to analyse the impact of export sophistication on economic growth. The results show that Macedonian export has recorded a significant positive trend in the last two decades, but the export structure is still highly concentrated (the top 10 products have nearly half of the total country's export) and it is composed from products with relatively low complexity level (garments, basic metals, agricultural products). Additionally, the estimated results based on vector autoregression (VAR) model and Granger causality test demonstrate positive and statistically significant causal relationship between export sophistication and economic growth for the period 1995-2017. Hence, policy makers should design a policy that will initiate the process of export diversification and structural transformation by moving from products with lower added value to products with high complexity in order to accelerate the growth rate.