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Master's Professional Reports Abstract

The Republic of Macedonia: economic considerations of a country in transition.
Fouche, James Andrew
Report 2001 F822 Public Affairs Library

Three criteria were established at the European Council's meeting in Copenhagen, Denmark in 1993, as the conditions to become a member of the EU. One of the membership criteria is that the candidate country "has the existence of a functioning market economy as well as the capacity to cope with competitive pressures and market forces within the [European] Union." In analyzing the present economic and political framework within the Republic of Macedonia, perhaps the most pressing issue is that of the economy. Left with a bleak situation after gaining its independence from Yugoslavia in 1991, Macedonia has since made many improvements to reform the old system into a market economy. The country has sought much guidance from the outside, but it is still understandably in a volatile situation. Like many former socialist or communist countries, a democratic and free market environment is a new concept, and will take much time for full and correct implementation of these "western" practices.

Considering Macedonia is a new country it has different, and perhaps more complex, problems than that of more established countries. Private sector institutions, as well as public ones, must be created at the national level. The small size of the country, in geographical terms and in population, is also a factor. In comparison with surrounding countries, the economy of Macedonia is even smaller than its population. "In fact, of all twenty-seven transition countries, perhaps only the economy of Armenia is smaller. By World Bank measures, Bulgaria's economy is four times larger, Romania's is fourteen times larger, and the Greek economy is more than fifty times larger." Additionally, Macedonia is a land-locked country, which greatly decreases its import and export potential. Finally, Macedonia is located in one of the most recognizably war-torn parts of the world, situated just south of Kosovo. This contributes to a lack of instability, considering that ethnic and social tensions strain trade and economic activity. Macedonia, despite all of the negative economic aspects, is the only country from the former Yugoslavia to gain its dependence without war. As well, it has managed to stave off much political corruption, and has achieved a change in government with elections in 1998, and has experience "an emerging tradition (since 1992) of ethnic power sharing in national governing coalitions." With regard to the region, one could argue that Macedonian society has been the most endurable in the Balkans.

Some speculate that in as little as 8 years, Macedonia could realize its bid for EU membership with the help of fast-track accession. Still others say that the country may never have the financial and political resources to carry out this endeavor. They believe that the economics of Macedonia are cash-driven and bribe-oriented, and that the old and new political regimes foster this kind of corrupt behavior. The more optimistic believe that the former government tried, and the one in power is trying, to build a new Macedonia, worthy of membership to the European Union. It is the optimistic side that will be analyzed in depth, while looking at the most important issues that economic reform must accomplish. Even though 8 years is probably not enough time for Macedonia to prove itself as a country stable enough to enter into a union such as the EU, reforms are underway. Enlargement within the EU is possible for, if not all, many of the countries that are struggling to achieve political and economic stability. Macedonia is no exception in this regard, and stands quite a good chance of advancing to accession talks with the EU in the near future.