AmCham Macedonia 1/2019 - Page 6

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 6 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