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POTENTIAL OPPORTUNITIES FOR PROMOTION OF THE ECONOMIC
COOPERATION BETWEEN THE REPUBLIC OF NORTH MACEDONIA AND THE REPUBLIC OF
TURKEY
Contents Introduction ...................................................................................................................................... 2
BASIC ECONOMIC INDICATORS ..................................................................................................... 3
1. GDP – Gross Domestic Product ......................................................................................... 3
2. Foreign Direct Investments (FDIs) ..................................................................................... 4
3. International Trade ........................................................................................................... 5
HOW TO INCREASE THE ECONOMIC COOPERATION BETWEEN THE TWO COUNTRIES? ............. 8
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Introduction
Following the establishment of diplomatic relations between the Republic of North
Macedonia and the Republic of Turkey on 26 August 1992, the bilateral relations in the past
28 years have been characterized by strong political and economic support from the Republic
of Turkey for the Republic of North Macedonia. Owing to the historical and cultural past, both
countries have very close and friendly relations.
According to the latest annual data of the State Statistical Office, 2019 was a very
positive year for the trade relations between the Republic of Turkey and the Republic of North
Macedonia, showing an increase in value of the total bilateral trade, which reached nearly
USD 540 million or 3.5% more in comparison with 2018.
The value of the Macedonian export amounted to USD 87.2 million, which is a decline
of 9.3% in comparison with 2018. The import from Turkey has reached USD 452.7 million,
growing 6.4% in comparison with 2018.
The Republic of Turkey is constantly on the list of top few countries that our country
has the largest volume of trade with. In 2019, Turkey was the eighth largest trade partner in
terms of international trade of the Republic of North Macedonia.
The flow of Turkish foreign direct investments in the Republic of North Macedonia is
mainly concentrated on construction, banking and service sectors, textile, traffic, medicine
and tourism.
The bilateral relations between the Republic of North Macedonia and the Republic of
Turkey are characterized by intensive political dialogue and significant dynamics regarding
the cooperation in every area, where the numerous high-level visits, as well as the regular
meetings between the two countries, also contribute to the good political relations.
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BASIC ECONOMIC INDICATORS
1. GDP – Gross Domestic Product
Figure 1 depicts the size
of the Gross Domestic Product (GDP) broken down into years. In 1992, the Turkish economy was 62 times larger, and in 2018, almost 111 times larger than the Macedonian economy in the same period.
In 1992, the GDP of
Turkey amounted to USD
389,307 million, and in 2018,
the GPD amounted to USD 1,237,357 million. Accordingly, the Turkish GDP in 2018, in comparison
with 1992, increased by 218%, or by USD 848,050 million nominal value. The Macedonian GDP of USD
11,240 million has increased by 77.7% in relative terms, in comparison with 1992, whereas expressed
in nominal value, the GDP has increased by USD 4,916 million in comparison with 1992, when it
amounted to USD 6,324 million.
Figure 2 depicts the data on GDP per capita, being the first measureable result regarding the competitiveness of the national economies. This information shows that the Turkish GDP per capita has increased by 115.2% in 2018, in comparison with 1992, and the Macedonian counterpart by 69.7%.
Nevertheless, the high increase percentage of our GDP arises from measurements carried out upon a low economic base. Concerning the nominal value, in 2018/1992, Turkey has increased its GDP per capita by USD 8,044 and Macedonia by USD 2,216.
Comparing the nominal value of GDP per capita of both countries in Figure 2, the Turkish GDP per capita, amounting to USD 6,983 in 1992, is somewhat over twice the size of the Macedonian GDP per capita, which amounted to USD 3,180. In 2018, the GDP per capita of Turkey of USD 15,027 is almost three times the Macedonian, which amounted to USD 5,396.
Figure 1: GDP (Gross Domestic Product) (millions USD, at constant 2010 prices, as per UNCTAD)
Period Turkey Macedonia
1992 389.307 6.324
2002 521.371 6.904
2012 898.741 9.583
2018 1.237.357 11.240
Increase/decrease 2018/1992, % 218 77,7 Извор:УНКТАД
Figure 2: GDP (Gross Domestic Product) per capita (USD, at constant 2010 prices, as per UNCTAD)
Period Turkey Macedonia
1992 6.983 3.180
2002 8.003 3.370
2012 12.039 4.620
2018 15.027 5.396
Increase/decrease 2018/1992, % 115,2 69,7 Source: UNCTAD
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2. Foreign Direct Investments (FDIs)
According to the FDI
review of the NBRM, the
Turkish foreign direct
investments (FDIs) in 1997
amounted to EUR 700
thousand. The same year,
their structural share in the
total investments in this
country was 0.5%.
In the period 1997-2018, Turkey has invested EUR 283.9 million in total, with a share in the total foreign
direct investments in the country of 5.3%, up to and including 2018, which amounted to EUR 5,307 million.
Figure 3:
Cumulative sum of Turkish FDIs in Macedonia, millions EUR
Period Turkey Share in the total FDIs in
the RNM, %
1997 0,7 0,5
2000 16,1 2,8
2005 25,1 1,4
2010 48,3 1,5
2015 214,6 4,9
2018 283,9 5,3 Source: NB of the RNM
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3. International Trade
The Republic of Turkey is a significant trade partner of the Republic of North Macedonia and it is constantly on our list of top 10 countries we have the largest volume of trade and business cooperation with.
Figure 4: International Trade of Macedonia
1992 1997 2000 2005 2010 2015 2019
Total international trade of Macedonia
with the world (millions USD) 2.405 3.015 3.416 5.275 8.826 10.957 16.657
International trade of Macedonia with
Turkey (millions USD) 50 73.8 62.7 160.2 312.6 396.4 539.9
Share of the international trade with
Turkey in the total international trade of
Macedonia (%)
2,1 2,4 1,8 3 3,5 3,6 3,2
Source: State Statistical Office
When observed in relative sizes, the share of the international trade with Turkey in the total trade of Macedonia with the world was 2.1% in 1992. Up to an including 2019, this share in the total international trade of this country has risen to 3.2%, or USD 539.9 million absolute amount, which is almost 10 times larger when compared to 1992.
The Republic of Turkey is a very important country to the Macedonian export and it is traditionally considered among the most important markets to Macedonia. In almost every year since the independence, the export to Turkey is constantly increasing. In 2019, it amounted to USD 87.2 million, with a minor share of 1.2% in the total export of this country (Figure 5).
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Figure 5: Macedonian export
1992 1997 2000 2005 2010 2015 2019
Total export from Macedonia
(millions USD)
1.199 1.237 1.323 2.042 3.351 4.530 7.187
Macedonian export to Turkey
(millions USD)
17.5 24.3 10.3 46.3 50.9 73.8 87.2
Share of export to Turkey in the total
export of Macedonia (%)
1,46 1,96 0,7 2,3 1,5 1,6 1,2
Source: SSO
The distinguishing trait of the structural share of our export is the domination of products from the lower-income branches, mostly textile, leather, flat rolled and other intermediate goods from related industries.
The total import of Macedonia in the observed period is characterized by quicker growth dynamics than the export, which points to continuous international trade deficit.
Figure 6: Macedonian import
1992 1997 2000 2005 2010 2015 2019
Total import into Macedonia
(millions USD)
1.206 1.779 2.094 3.233 5.474 6.427 9.470
Import of Macedonia from Turkey
(millions USD)
32.5 49.5 52.4 113.9 261.7 322.6 452.7
Share of the import from Turkey
in the total import into
Macedonia (%)
2,7 2,8 2,5 3,5 4,8 5 4,8
Source: SSO
The international trade of Macedonia with Turkey, as a rule, results in deficit on the Macedonian part every year, which varies in size each year. The highest deficit was observed in 2019, amounting to USD 365.5 million.
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CHARACTERISTICS OF THE TURKISH ECONOMY
The Turkish free market economy is largely driven by its industry and, increasingly, by
its service sectors, although its traditional agricultural sector yet covers 20% of the
employment. The automotive, petrochemical and electronics industries have grown and
surpassed the traditional sectors such as textile and clothing in the export structure of Turkey.
Turkey is dependent on the oil and gas import, but the country is working on building
relationships with a large number of international partners and takes steps to increase the
consumption of energy from domestic production, including from renewable sources, nuclear
energy and coal.
- Agriculture Sector has a share of 7% in the GDP and employs approximately 19% of
the population. Approximately 11% of the Turkish territory is used as agricultural land. The
major crop of the country is wheat. Turkey is the third largest exporter of tobacco in the world
and the largest producer of hazelnuts, covering 70% of the global production.
- Service Sector makes up 60% of the GDP and employs approximately 54% of the
workforce in the country. Tourism is a significant segment of the service sector, which
generates nearly 4% of the GPD and it is an important source of foreign currency to the
country. The most profitable segment of the Turkish hotel sector is Accommodation and Food
Service Activities, which generated income of EUR 4 billion in 2018, representing 91.3% of the
total sector value. The development of a strategy for tourism by 2023, which would assist the
Government devise a multifunctional approach to the segment of leisure tourist centers, with
focus on specific destinations, would help increase the demand in the Turkish hotel sector.
- Automotive Industry, that is, the production of Turkish automobiles grew with an
average annual rate of 6.7% in the
course of 2014-2018, reaching EUR
20.3 billion in 2018. The growth of
automotive production is mainly due
to the rising foreign demand. The
increased demand from the European
markets, especially Italy and France,
help strengthen the automotive
production in Turkey. Approximately
80% of the Turkish automobiles are
exported to Europe. Turkey
significantly invested in the road infrastructure of the country in the past years, which also
increased the automobile demand. The bridge Yavuz Sultan Selim worth EUR 2.1 billion
provided the Istanbul drivers with an additional option when crossing the Bosporus, which
substantially reduced the traffic congestion in Istanbul.
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In the course of the last decade, Turkey invested roughly EUR 80 billion in
infrastructure projects such as bridges, motorways, tunnels, railroads and airports. By 2023,
Turkey is planning to invest approximately EUR 57 billion in infrastructure projects. This will
help consolidate the position of Turkey as an important transport hub in the region.
HOW TO INCREASE THE ECONOMIC COOPERATION BETWEEN THE
TWO COUNTRIES?
The enhancement of the economic cooperation between Macedonia and Turkey is an
excellent opportunity that would benefit both countries, where the excellent mutual political
cooperation could provide a significant support.
We have overall high-level relations, being two friendly and brotherly countries, which
are not burdened by any political issues. The two countries have signed a strategic partnership
agreement and series of bilateral agreements; they enjoy successful cooperation and
meetings on all levels. Ten honorary consulates of the Republic of North Macedonia have
been opened across Turkey and two Turkish consulates were opened in Bitola and Ohrid.
The Republic of Turkey is a country with which we traditionally have excellent
relations, from the aspect of politics, culture and economy, we have great potential for
business cooperation and there are no obstacles on the road to a more intensive cooperation
on every level, to open dialogue, as well as will to realize what was agreed upon.
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The promotion of the economic cooperation between the two countries is of special
importance to the development of the broader South-East Europe region, where we belong,
and which holds great potential for intensification and enhancement of the current
cooperation between the business communities, especially in the area of innovation,
education, new technologies and improvement of the services toward easier access to third
markets. There is cooperation potential in the metal and electronics sector, energy,
construction, chemical industry, pharmacy and tourism. There are multitude of Turkish
companies that are investing in this country, primarily in the banking sector, construction,
traffic, medicine and tourism. The interconnection, exchange of experiences, contacts, joint
investments, with the aim of creating products with higher value added, will ensure greater
growth and development of the two economies.
The Republic of Turkey is a close friend and economic partner of our country, which should
provide opportunities for cooperation enhancement. Macedonia could be the starting
point for development of the Turkish businesses and investments in the entire Western
Balkans region. Turkey, on the other hand, is important to Macedonia as a first destination
that could be used to penetrate the markets in the Middle East and the African countries.
Macedonia is a crossroad, “heart of the Balkans” and therefore, we need to preserve and
develop good relations, which would affect the overall relations in the region at large.
Consequently, Macedonia and Turkey must fully liberalize the trade of agricultural and
food products, open a dialogue on institutional level as soon as possible, with the aim of
greater economic cooperation through investments on both parts, as well as joint
representation on third markets.
Our joint goal is to continue with and increase the successful tourist cooperation between
the Republic of North Macedonia and the Republic of Turkey. The traditional Macedonian-
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Turkish friendship, the mutual values and interests, closeness, firm and established
relations, as well as the great potential to prepare a joint tourist offer, will contribute to
the appeal of larger number of tourists that are into various types of tourism.
Apart from the desired strengthening of the good business relations, we also need to
jointly commit to reducing the discrepancies and the barriers to the trade and encourage
the companies toward concrete partnerships and mutual cooperation. Therefore, we need
to decrease or abolish the non-preferential barriers to the import of Macedonian products
on the Turkish market, which will contribute to a more extensive trade between the two
countries in every sector.
The Republic of North Macedonia has signed a Free Trade Agreement with Turkey, which
should ensure increased cooperation with this country, being a strategic partner in every
area. The exchange of experiences and information between the Macedonian and the
Turkish business community is a key factor to the enhancement of the already excellently
established economic cooperation between the two countries, with special focus on the
sectoral connection between the companies from both sides, with the aim of establishing
new partnerships toward joint presentation on third markets.
Turkey and Macedonia have multidimensional relationship, which draws its power from
the shared history and culture. The present relations with the minorities in both countries
are quite good, where the Turkish community in the Republic of North Macedonia provides
significant contribution to the entire economic, cultural and democratic development of
our country through its active presence in all fields of life. Both sides show serious
preparedness to continue with the excellent cooperation with the Turkish Cooperation and
Coordination Agency, whose support helped complete numerous projects in the area of
culture.
We require modernization of the domestic economy with participation of the Turkish
know-how, primarily when considering industrial and agricultural production, construction
and tourism, employing the Macedonian resources for outsourcing services and taking part
in the global value added chains through relocation of the Turkish exporters in Macedonia,
which is only part of the opportunities for cooperation promotion. Consequently, the
Macedonian companies will become more visible to the Turkish ones, and the potential
Turkish partner could gather information that would be critical for adopting business
decisions regarding cooperation with Macedonia.
In the opinion of the business community, without sincere political will, there will be
neither changes, nor quick bilateral progress. The most important thing is to have political
stability, functional legal state, consistency and foreseeability of the legislation, as well as
an efficient private-public dialogue. In order to increase the economic connection between
Macedonia and Turkey, both governments should determine a strategy for further
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cooperation and define the priorities. Most of all, the can contribute to the joint utilization
of the EU funds, transfer of the Turkish experience in public-private partnerships and
facilitation of the procedures for doing business.
The international economic cooperation is the only opportunity to increase the
competition on a global scale, which contributes to the strengthening of the national
competitiveness of the economy.
The Republic of North Macedonia is a small country, small economy, but with great
opportunities. The openness of our economy gives us the right to hope that we can attract
many businesspersons, and with the maximum efforts on the part of every factor, we can
reach greater economic cooperation between Macedonia and Turkey, resulting in an
opportunity for even closer connection of the best entrepreneurs from the two countries,
concrete joint activities and more substantial progress for everyone.
The private sector and the entrepreneurial spirit represent a driving force in the world, a
force that guarantees economic growth, contributes to the reduction of unemployment and
paves the way to progress, aiming at sustainability and long-term economic growth and
development.