Part I. The Republic of Macedonia – A Case Study (2007)
Ever since its reluctant declaration of independence in 1991,Central and Eastern Europe (CEE), Global Recession and Foreign Direct Investment (FDI) Articles Macedonia occupied the bottom of the list of countries in transition from Communism, as far as absolute dollar figures of FDI go. At 80.6 million USD, FDI in 2003 barely budged from previous years. In 2004, FDI reached 139.5 million USD, only to shrink to 116.2 million USD in 2005. Discounting the sale of ESM, the electricity utility, FDI remained static in 2006 (total FDI was 350.7 million USD or 124.7 million USD, without ESM).
Yet, this is a misleading picture. Macedonia was and is no worse off than other countries in Eastern Europe.
According to UNCTAD’s World Investment prolist Report 2007, FDI in Macedonia, as a percentage of gross fixed capital formation, shot up from 9.7% in the decade of the 1990s to 32.4% in 2006 (compared to 36.4%, the southeast European average; 20.8% the average of all countries in transition; and 12.6% the global average figure).
Macedonia’s FDI stock reached 2.437 billion USD, or 39% of GDP (compared to 42.2% as the southeast European average; 25.3% the average of all countries in transition; and 24.8% the global average figure).
Macedonia’s Inward FDI Performance Index, based on 12 economic and policy variables, climbed from the 86th to the 64th place out of 141 economies surveyed. Its Inward FDI Potential Index also improved from 115 to 106.
Throughout this period, foreign enterprises, profitable overall, consistently hired new employees and wages in the sector stabilized at c. twice the average salaries in local businesses.
Thus, as far as FDI goes, Macedonia’s performance, though far from stellar, was and is above the regional and global averages. The World Bank put it succinctly, as it summarized the period PRIOR to the assumption of power by the new government: