Which way leads forward?
North Macedonia does not suffer from a lack of resources, but from a lack of clear direction and determination. Only with a clear strategy, vision and courage can the country break out of the cycle of stagnation and create a future that everyone will want to live in.
The Republic of North Macedonia is at a crossroads where every decision will shape the path to the future. With economic growth of only 1,8% for 2024 – significantly below the regional average of 3,5% – and public debt approaching 68% of GDP, our country faces serious challenges. But the real question is whether we will have the courage and strategy to turn these challenges into opportunities.
The government recently arranged a loan with the Hungarian government, offering funds to the economy at low interest rates. At first glance, this move looks like a hopeful spark for economic growth. But the absence of a clear investment strategy leaves room for doubt. If funds end up in short-term projects or running costs instead of capital investment, we risk further stagnation.
The examples from Serbia and Slovenia teach us that credits can stimulate development only if they are directed to productive sectors. Unfortunately, Macedonia is far from this approach – investing only 0,2% of GDP in research and development, compared to 1,1% for Serbia. When we consider the dominance of trade in the economy, the question arises: where is investment to stimulate productivity?
The recent incidents that have polarized the country have only highlighted the deep socio-political problems. According to the OSCE, 60 percent of young people believe that ethnic tensions are the greatest threat to the future. Slovenia has successfully strengthened social capital through integration programs, while in our country politicization hinders this goal.
Maybe it's time to change the narrative. Inclusive policies and investments in social cohesion are not only a moral obligation, but also an economic necessity. Only through trust and togetherness can we strengthen our foundation for progress.
Every year 1.000 young people leave the country. Emigration has already created chronic economic consequences. But is the brain drain irreversible? Ireland and Croatia have shown that returning the diaspora and investing in human capital can bring positive results.
Our goal should be to stimulate young people not only to stay, but also to contribute their energy, knowledge and ambitions. Investments in innovation centers, as well as support for startups, will create a new generation that will build the future here.
Macedonia is on the cusp of its startup revolution, with the potential to transform from a trade-based economy into an innovative hub for entrepreneurship. The examples from Estonia show that even the smallest countries can become global leaders in technological development, but only if they focus on digitization, human capital development and policies that encourage entrepreneurship. In 2023, the global innovation index ranks Macedonia below the region's average, indicating a huge untapped potential. To overcome this gap, it is necessary to mobilize all stakeholders of society and create a strategy that will catalyze economic growth through innovation.
Instead of depending on foreign aid, we must build a local ecosystem in which innovation will be the driving force of development. Partnerships between academic institutions, the business sector and government should become the basis of this process. Academia can provide the necessary knowledge and research, while businesses will integrate innovation into practical application. The government, on the other hand, should create the appropriate conditions through financial instruments such as risk capital and tax incentives for startups. According to the World Bank, every penny invested in innovation and technology can generate up to five times the economic value for developing countries, underscoring the urgency for action.
If this vision is not implemented, Macedonia risks losing the global race for innovation, continuing the trend of economic stagnation and the outflow of young talent. The brain drain, which has already resulted in the loss of about 10 percent of the population since 2000, weakens the competitiveness of the economy and limits the ability to reform. This is not only an economic problem, but also an existential question for the future of the country. Macedonia has the opportunity to position itself as a regional innovation center, but only if it acts with determination and vision. The future of the country depends on today's decisions, and the time for change is now.
North Macedonia has the potential for transformation, but success will depend on the ability to focus on long-term solutions. Using the loan to build infrastructure, develop innovation and promote a green economy, rather than short-term and ineffective measures, is key to creating sustainable economic growth. Through capital investments in productive sectors and stimulating the startup ecosystem, we can retain young people and encourage new opportunities for work and development. Support for innovation and technology will help increase the competitiveness of the economy, opening the country to new markets and investors.
In addition to economic reforms, it is necessary to address social challenges, especially ethnic tensions, which are holding back progress. Inclusive policies and investments in joint projects will strengthen social capital, building trust and unity between different communities. Only with a clear strategy, vision and courage can the country break out of the cycle of stagnation and create a future that everyone will want to live in. North Macedonia does not suffer from a lack of resources, but from a lack of clear direction and determination. It is time for joint steps that will change the course of history and set the country on the path to stability and prosperity.
If not now, when?
(The author is an economic analyst)
