THE IMPACT OF FDI ON THE POST-CONFLICT ECONOMIC RECOVERY OF NORTH MACEDONIA
Abstract
This article examines the role of foreign direct investment (FDI) policy in the post-conflict economic recovery of North Macedonia. Drawing on institutional analysis, empirical evaluation, and regional data, the study investigates whether the state policy of FDI attraction contributed to inclusive development or, conversely, reinforced pre-existing structural inequalities. The research addresses three key aspects: the evolution and institutional configuration of FDI policy since the early 2000s; the quantitative and qualitative outcomes of its implementation in terms of FDI inflows and their share in GDP; and the spatial distribution of investment capital across regions, especially in light of interethnic divisions. Particular attention is paid to regions with a high concentration of the ethnic Albanian population, such as the Polog and Northeastern regions, which were among the focal points of the 2001 armed conflict. While the FDI policy has demonstrated a certain level of effectiveness in raising aggregate investment levels, it has largely failed to serve as a tool for reducing regional disparities. Instead, it has contributed to the entrenchment of uneven development, as evidenced by low investment rates and persistent socio-economic vulnerability in conflict-affected areas. The analysis highlights a critical connection between the geography of investment flows and regional socio-economic resilience, focusing on indicators such as unemployment, income levels, and the share of households in need of social assistance. The article argues that the persistence of inequality in regions predominantly inhabited by ethnic minorities—against the backdrop of uneven FDI allocation—may act as a latent driver of renewed tensions. In this context, FDI is seen not only as a source of capital but also as a potential factor of social destabilization when inadequately integrated into a broader strategy of reconciliation and territorial cohesion. The findings aim to contribute to the academic discourse on post-conflict recovery and provide lessons for other countries facing similar challenges.
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