COVER STORY
Low Productivity and
Labor Shortage – Key
Threats on the Path to EU
Dr. Blagica Petreski
Chief Economist and Executive Director
Finance Think - Institute for Economic Research and Policy
M
embership in the European Union, from an
economic point of view, has its benefits,
but also challenges. The biggest benefits
do not come with the accession to the European
Union (EU), but from the membership process.
The process itself means fulfilling certain criteria,
values, and principles that are common to all
member states of the European Union. These
values and principles are a certain guarantee that
the country can deal with the challenges, but also
the requirements that the European Union has.
Through the process of meeting these principles
and criteria, countries with the aspiration for
membership become more competitive, more
organized, and build values on a higher level
than the one they had before. The Macedonian
economy is characterized as a small, open, and
fragile, under the influence of political turbulence
in the country and with unsatisfactory rule of law.
Hence, the economic integration of the country
entails a thorough reconstruction – a repair of
the economy, full market openness, delegation
of a significant part of the country’s economic
sovereignty to the EU collective institutions, and
creation of economic policies as a result of joint
and binding decisions.
Benefits from the membership are multiple, and
all changes should lead to a better standard
of living for citizens. Higher economic growth,
higher growth in gross domestic product, higher
investmentc, and lower unemployment are the
main outputs expected from the accession to
the European Union. But the key benefits are
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EMERGING MACEDONIA
the indirect benefits that need to change the
‘economic matrix,’ or the basis for creating these
results, which include: institutional credibility and
rule of law, increased competitiveness, access to
market, increased efficiency, and better public
services.
Benefits to the Private Sector
Institutional credibility and the rule of law are part
of the foundation that is expected to be gained
from EU membership. This is one of the key
shortcomings of our economy, and perhaps a key
factor for low growth in recent years. The stability
of the regulations, the nonreligious application of
laws, and certainty in economic policies increase
the trust in institutions thus creating a positive
economic climate for medium and long-term
planning. In addition, the institutional credibility
and stability of economic policies influence the
optimism for investing in the country, both with
domestic and foreign investors. Such changes
should result in higher foreign investment in the
country.
EU membership offers a variety of benefits
for the business sector. In a research done
by Finance Think on the topic - Bridging the
Gaps and Using Potentials: Domestic Small
and Medium Enterprises in the Supply Chain
of Multinational Enterprises in the Country, the
results show that the technological capacity
of domestic companies is one of the key gaps
for the cooperation of foreign investors in the
country with domestic companies. This suggests