2016 Index of Economic Freedom

Macedonia

overall score67.5
world rank47
Rule of Law

Property Rights35.0

Freedom From Corruption45.0

Limited Government

Government Spending69.6

Fiscal Freedom92.1

Regulatory Efficiency

Business Freedom76.4

Labor Freedom66.7

Monetary Freedom83.5

Open Markets

Trade Freedom86.4

Investment Freedom60.0

Financial Freedom60.0

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Quick Facts
  • Population:
    • 2.1 million
  • GDP (PPP):
    • $27.6 billion
    • 3.8% growth
    • 2.3% 5-year compound annual growth
    • $13,349 per capita
  • Unemployment:
    • 27.9%
  • Inflation (CPI):
    • -0.1%
  • FDI Inflow:
    • $348.0 million
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Macedonia’s transition to a more open and flexible economic system has been facilitated by 10 years of substantial economic reform. Macroeconomic stability is relatively high, and implementation of competitive flat tax rates and an open trade regime has encouraged the development of a growing entrepreneurial sector.

Economic Freedom Snapshot

  • 2016 Economic Freedom Score: 67.5 (up 0.4 point)
  • Economic Freedom Status: Moderately Free
  • Global Ranking: 47th
  • Regional Ranking: 22nd in Europe
  • Notable Successes: Trade Freedom, Regulatory Efficiency, and Fiscal Freedom
  • Concerns: Property Rights and Corruption
  • Overall Score Change Since 2012: –1

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Background

The Republic of Macedonia gained its independence from the former Yugoslavia in 1991 and has achieved considerable political and economic stability. Prime Minister Nikola Gruevski of the conservative VMRO-DPMNE party prevailed in the April 2014 presidential and parliamentary elections in a coalition with the ethnic Albanian Democratic Union for Integration. The SDSM, the main opposition party, has since boycotted parliament because it disputes the election results. In order to end the political stalemate, new elections have been scheduled for April 2016. Macedonia completed NATO’s Membership Action Plan in 2008, but Greece continues to block its accession because it objects to Macedonia’s name. This is also delaying Macedonia’s accession to the European Union. Improvements in the legal framework are creating a stable environment for foreign and domestic investment.

Rule of LawView Methodology

Property Rights 35.0 Create a Graph using this measurement

Freedom From Corruption 45.0 Create a Graph using this measurement

Although Macedonia’s legal framework is sound, enforcement of the laws is weak, and the public is skeptical of the government’s willingness to prosecute corrupt officials. The public generally views the police, courts, higher education, and health care as the most corrupt public sectors. Despite the existence of a legal basis for the protection of property rights, enforcement remains problematic.

Limited GovernmentView Methodology

The individual income and corporate tax rates are a flat 10 percent. Other taxes include a value-added tax and a property transfer tax. Overall tax revenue equals 24.2 percent of total domestic income. Government spending amounts to 31.8 percent of total domestic output. The government has run a relatively small budget deficit. Public debt remains under 40 percent of GDP.

Regulatory EfficiencyView Methodology

Launching a business takes only two days and two procedures, and no minimum capital is required. After years of high unemployment, recent reforms have focused on injecting greater flexibility into the labor market. The IMF reports that non-financial public-sector debt is expected to rise, mainly due to a substantial expected increase in the debt burden of the two largest state-owned enterprises.

Open MarketsView Methodology

Macedonia’s average tariff rate is 1.8 percent. The government generally treats foreign and domestic investors equally. State-owned enterprises operate in several sectors of the economy. The financial sector has strengthened in recent years, with the government’s role limited primarily to regulatory enforcement. The market is dominated by foreign banks, which account for over 90 per cent of total banking assets.

Country's Score Over Time

Bar Graph of Macedonia Economic Freedom Scores Over a Time Period

Country Comparisons

Bar Graphs comparing Macedonia to other economic country groups Download Charts

Regional Ranking

rank country overall change
1Switzerland810.5
2Ireland77.30.7
3Estonia77.20.4
4United Kingdom76.40.6
5Denmark75.3-1.0
6Lithuania75.20.5
7The Netherlands74.60.9
8Germany74.40.6
9Luxembourg73.90.7
10Iceland73.31.3
11Czech Republic73.20.7
12Georgia72.6-0.4
13Finland72.6-0.8
14Sweden72-0.7
15Austria71.70.5
16Norway70.8-1.0
17Latvia70.40.7
18Poland69.30.7
19Cyprus68.70.8
20Spain68.50.9
21Belgium68.4-0.4
22Macedonia67.50.4
23Armenia67-0.1
24Malta66.70.2
25Slovakia66.6-0.6
26Hungary 66-0.8
27Albania65.90.2
28Bulgaria65.9-0.9
29Romania65.6-1.0
30Portugal65.1-0.2
31Montenegro64.90.2
32France62.3-0.2
33Serbia 62.12.1
34Turkey62.1-1.1
35Kosovo61.4N/A
36Italy61.2-0.5
37Slovenia60.60.3
38Croatia59.1-2.4
39Bosnia and Herzegovina58.6-0.4
40Moldova57.4-0.1
41Greece53.2-0.8
42Russia50.6-1.5
43Belarus48.8-1.0
44Ukraine46.8-0.1
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