Poverty and the cost of non-Europe
After the Macedonian conflict of 2001, ESI undertook a series of empirical case studies, focusing on economic and social challenges. We explored rural areas and former industrial towns. We found that the problems of rural underdevelopment fell disproportionately on the ethnic Albanian population, while industrial decline primarily affected ethnic Macedonians (The other Macedonian conflict). We went to Kicevo, "Ahmeti's village", to explore the development challenges in a multi-ethnic area unaffected by the fighting of 2001. We also studied Kumanovo and its surroundings, a multi-ethnic area that witnessed some of the most serious fighting in 2001, and found what we called a development trap at the heart of the Balkans.
The problems were daunting everywhere we looked: slowly dying state-owned companies, an already weak but further decaying agricultural sector consisting primarily of small subsistence farming, and – with a few exceptions such as the textile sector in Stip – very little successful entrepreneurship of any scale.
Getting back to Kicevo three years later, we found impressive results on the implementation of the Ohrid Agreement, but an economic situation that had worsened from an already very difficult situation in 2002.
Unfortunately, these studies are still a good indicator of the socio-economic challenges Macedonia faces. They also illustrate the "costs of non-Europe" for Macedonia. Comparing Macedonia with its neighbour Bulgaria, the poorest EU member state, the picture is clear: During the last five years Macedonia's GDP per capita (in purchasing power parity) increased from 31 to 35 per cent of the EU28 average. In the same period Bulgaria's rose from 40 to 47 per cent, nearly twice as many percentage points.
In 2013 the employment rate stood at 40.7 per cent in Macedonia, and at 60.7 per cent in Bulgaria. Net inflows of foreign direct investment from 2007-2012 amounted to 2.6 billion USD in Macedonia, and 43.2 billion USD in Bulgaria. This means that there was more than 5,900 USD foreign investment for every Bulgarian resident, compared to not even 1,300 USD for every Macedonian resident.
Had Macedonia started membership talks in 2009, it would not have turned into Denmark. Most likely it would not even have turned into Bulgaria. But it could have been in a very different place than where it is today.
ESI Picture Story: Kicevo – a case study of Ohrid Agreement implementation (2006)
ESI Discussion Paper: The other Macedonian conflict (2002)