Author ORCID Identifier

https://orcid.org/0000-0002-0735-1781 Garvanlieva Andonova Vesna

https://orcid.org/0000-0002-7902-0316 Nikolov Marjan

https://orcid.org/0000-0002-2114-2142 Velkovska Ivana

https://orcid.org/0000-0001-5067-9849 Petrovska Ana Marija


North Macedonia can improve its economic growth by addressing the infrastructure gap by at least full capital budget utilisation. The outturn/execution of capital budget expenditures is low and in relative terms decreasing. The planned public finances for regional balanced development are also low and non-compliant with the legally set levels. A test of several hypothetical scenarios of full capital budget utilisation it is expected to positively contribute to the economic growth immediately and in the period to follow. Even if total debt increases in nominal terms, in relative terms the debt-to-GDP on a longer-run reduces through generating additional economic output.


regional development, infrastructure, external debt, North Macedonia, capital expenditure, public investments




ATOYAN, R., BENEDEK, D., CABEZON, E., CIPOLLONE, G., MINIANE, J., NGUYEN, N., PETRI, M., REINKE, J. and ROAF, J. (2018), Public Infrastructure in the Western Balkans: Shifting Gears—Opportunities and Challenges, Washington, D.C.: International Monetary Fund.

EHLERS, T. (2014), ‘Understanding the Challenges for Infrastructure Finance’, Working Paper, 454, Bank for International Settlements BIS.

ESTACHE, A. (2007), ‘Infrastructure and Development: A Survey of Recent and Upcoming Issues’, Washington, D.C.: Global Annual World Bank Conference on Development Economics 2007, The World Bank.

ESTACHE, A. and SINHA, S. (1995), ‘Does Decentralization Increase Spending on Public Infrastructure?’ Policy Research Working Paper, 1457, The World Bank.

EUROPEAN COMMISSION (2018), Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the committee of the regions, ‘A credible enlargement perspective for and enhanced EU engagement with the Western Balkans’, COM(2018) 65 final.

FISHER, R. C. and SULLIVAN, R. (2016), ‘Why is State and Local Government Capital Spending Lower in the New England States than in Other U.S. States?’, Policy Reports Paper, 16 (1), New England Public Policy Centre.

GOVERNMENT OF THE REPUBLIC OF NORTH MACEDONIA (2017), Program of the Government 2017–2020.

HOLZNER, M. (2016), ‘Policy options for competitiveness and economic development in the Western Balkans: The case for infrastructure investment’, Studies, Policy Notes and Reports, 16, Vienna: Vienna Institute for International Economic Studies.

HOLZNER, M. and SCHWARZHAPPEL, M. (2018), Infrastructure Investment in the Western Balkans: A First Analysis, Vienna: Vienna Institute for International Economic Studies and the European Investment Bank.

HOLZNER, M., STEHRER, R. and VIDOVIC, H. (2015), Infrastructure investment in the Western Balkans, Vienna: Vienna Institute for International Economic Studies.

HURLEY, J., MORRIS, S. and PORTELANCE, G. (2018), ‘Examining the Debt Implications of the Belt and Road Initiative from a Policy Perspective’, CGD Policy Paper, 121, Washington D.C.: Center for Global Development.

INTERNATIONAL MONETARY FUND (2014), ‘Is it Time for an Infrastructure Push? The Macroeconomic Effects of Public Investment’, International Monetary Fund, World Economic Outlook: Legacies, Clouds, Uncertainties, Chapter 3, pp. 75–114. https://doi.org/10.5089/9781484372265.081

INTERNATIONAL MONETARY FUND (2016a), ‘Former Yugoslav Republic of Macedonia – Selected issues, Country Report, 19/32, International Monetary Fund. https://doi.org/10.5089/9781475554861.002

INTERNATIONAL MONETARY FUND (2016b), ‘Former Yugoslav Republic of Macedonia – Selected issues’, IMF Country Report, 16/357. https://doi.org/10.5089/9781475554861.002

NIKOLOV, M. (2017), Determinants for influence of the civil society organisations in policy creation for balanced regional development, Open Society Foundation.

OECD (2015), Infrastructure financing instruments and incentives, OECD Publishing.

OFFICIAL GAZETTE OF REPUBLIC OF NORTH MACEDONIA (2007), 63/2007, Law on balanced regional development.

PEREIRA, M. A. and ANDRAZ, M. J. (2013), ‘On the economic effects of public infrastructure investment: A survey of the international evidence’, Working Paper, 108, College of William and Mary Department of Economics.

THE WESTERN BALKAN INVESTMENT NETWORK (2018), Connectivity Agenda – Co-financing of investment projects in the Western Balkans, European Commission.

First Page


Last Page