THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Macedonia

Ranked 53rd of 149

At a glance

Ranks

53 rd on the Legatum
Prosperity Index™

93rd
44th
62nd
40th
66th
37th
69th
119th
85th

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Macedonia performs best on Safety & Security and Education and scores lowest on the Social Capital sub-index.

Visit our Rankings table to see how Macedonia compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

Over the past decade, FYR Macedonia has overcome its prosperity deficit due to particularly strong performances in the Economic Quality and Business Environment sub-indices. Its biggest prosperity deficit comes in Social Capital and it has moved considerably closer towards a deficit in Personal Freedom. It is one of the few countries in the region to have a prosperity surplus.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

FYR Macedonia aspires to EU membership and has taken important strides to improve its economy, growth rates, business climate, and trade regime since the early 2000s. Its GDP growth is one on the fastest in region, comparable to that of Romania or Poland. While it was affected by the 2008 financial crisis, prudent fiscal policies and a stable financial system protected the country from being severely shocked and it did not enter a recession. This positive economic performance is reflected in the Prosperity Index, which sees FYR Macedonia moving up 28 ranks from 121st to 93rd in the Economic Quality sub-index over the past decade. There is greater satisfaction with living standards and current incomes. Anti-monopoly policies have become considerably more effective and are the most effective in the Balkans according to the Prosperity Index.

Unemployment and poverty remain among the highest in the region: the unemployment rate is at 27.9% and 22.1% of people live below the national poverty line, while 1.3% live in absolute poverty. However, it is a positive sign that both unemployment and poverty have seen a steady decline since 2007, with this trend expected to continue. FYR Macedonia also continues to have a considerable ‘grey economy’ and it is possible that the high unemployment rate does not reflect this. It is important that FYR Macedonia improves the quality of and access to education to improve employability and increase the labour force participation rate. Only 52% of women participate in the labour force, one of the lowest rates in the region.

FYR Macedonia’s biggest improvement comes in the Business Environment sub-index which sees the country move up an impressive 55 ranks from 99th to 44th. In an effort to boost competitiveness and increase foreign direct investment, FYR Macedonia has pushed through a number of market liberalisation reforms. Labour market flexibility is one of the best in the region and financial services are the most affordable. There has also been a considerable improvement in intellectual property protection, the highest in the Balkans. It is now one of the easiest places to start a business in, not only in its region, but in the world. Notably FYR Macedonia ranks as the 2nd easiest country, behind New Zealand, to start a business in. Infrastructure and logistics, however, need further improvement given that FYR Macedonia was one of the more underdeveloped regions of former Yugoslavia. Better infrastructure would help boost regional trade and help business growth.

Ease of starting a business (0-100) in FYR Macedonia and New Zealand compared to the OECD and global averages.
FYR Macedonia along with New Zealand ranks as the world’s easiest places to start a business!

Positive strides have also been made in governance, with FYR Macedonia moving up 14 ranks in the Governance sub-index. Government has become more transparent and efficient in challenging regulation. Corruption remains an issue in FYR Macedonia as it does for many of its regional peers, but has been seen to have improved over the past decade, as has judicial independence. A good percentage of parliament is made up of women at 33.3%, the 2nd highest in the region after Serbia and 10% above the regional average. However, low rule of law is a cause for concern, which troubles much of the region. Safety & Security is FYR Macedonia’s best performing sub-index, having moved up 19 ranks to 37th since 2007. Macedonians feel safer walking alone at night and have more access to food & shelter, while the homicide rate has also dropped to the lowest in the region.

Unfortunately, this economic and political progress has not been complemented with greater Personal Freedom, a sub-index in which FYR Macedonia has moved down 16 ranks to 69th. There has been a downwards trend in the tolerance and openness shown towards ethnic minorities, immigrants, and the LGBT community. There have also been increasing concerns over press freedom. FYR Macedonia’s media landscape is highly polarised with ties to important government or business officials. Journalists often feel the need for self-censorship and in 2015 serious allegations were made by the opposition that the government oversaw the wiretapping of over 100 journalists which sparked month-long anti-government protests. The European Commission launched an investigation and its findings supported the oppositions claims.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.