FDI AND HUMAN CAPITAL FORMATION IN SOUTH-EASTERN EUROPE FOCUSING ON REPUBLIC OF MACEDONIA
FDI AND HUMAN CAPITAL FORMATION IN SOUTH-EASTERN EUROPE FOCUSING ON REPUBLIC OF MACEDONIA

Summary/Abstract: Presently MNEs influence the human capital formation in Republic of Macedonia at three levels. MNEs tend to transfer technology and knowledge onto their subsidiaries and provide many training opportunities for its employees. The offered trainings are in work related and job securing skills, and they tend to under invest in development activities. MNEs influence the local business community and transfer technology and knowledge through imposing higher standards on quality and after care activities. As a result of MNEs entry on the local market, local companies – vertical link, invested in new technology, human capital and employed new labour. In the sectors where MNEs have local competition, they caused technology and knowledge transfer onto horizontal links by pressing local competitors in improving its physical and human capacities for producing more competitive products/services. We concluded that Republic of Macedonia practiced, and continues to practice a passive FDI dependent strategy. An Investment Promotion Agency (IPA) has been recently established, but there are no specific FDI coordinated activities for the country’s promotion, and no clear strategic positioning compared to neighbours. Republic of Macedonia is a small market and although it has FTAs (free trade agreements) with most of the countries in the region, is not attractive for foreign investors, which find Romania and Bulgaria to be more suitable destinations due to their EU accession in 2007, their larger markets and the allocation of the EU structural funds. These developments determine the position of the country on the external playground, with limited short-term possibilities for change (next 2-3 years). In this type situation, the study proposes that a solid knowledge of all available in-country resources is significant for developing and implementing a more assertive FDI dependent strategy.

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