AN EMPIRICAL ANALYSIS OF DETERMINANTS OF ECONOMIC GROWTH OF REPUBLIC OF NORTH MACEDONIA

Every country’s aim is to reach prosperous, innovative, competitive and dynamic knowledge- based economy with sustainable economic growth capable for providing higher standards of living to its population. The rise of GDP in real terms entails enlargement of economic resources that not only meets the current economic needs but also affords a better future for next generations. In fact, a key determinant of economic growth is investment, both in physical and human capital, having influence on the improvement of competitiveness, employment and productivity, which in turn contribute to GDP growth. However, during the last decade North Macedonia features with a remarkable upsurge of concern about sustainability of economic growth. Thus, the main goal of this paper is to empirically analyze the main determinants that promote the economic growth of the country. For that purpose quarterly data are utilized for the time period 1999Q1-2017Q4. The research method consists to the time series econometric techniques, using Vector Error Correction Method (VECM) and Johansen co-integration test for investigating both short term and long term determinants.