THE EFFECTS OF EXPORTS ON ECONOMIC GROWTH: A COMPARATIVE ANALYSIS OF SERBIA AND NORTH MACEDONIA

The aim of this paper is to empirically examine the impact of exports on the economic growth of Serbia and North Macedonia. Both countries represent small, open economies of the Western Balkans that rely heavily on trade with the European Union and undergo similar transition processes, but differ, among other things, in market size, export structure, and industrial capacity. The comparative analysis provides insights into the specific challenges and potentials of both countries and may serve policymakers in the Western Balkans in shaping strategies for sustainable economic growth. The research is based on annual time series covering GDP per capita growth rate, the share of exports in GDP, the share of imports in GDP, and the share of foreign direct investment (FDI) inflows in GDP for the period 1995–2024. The analysis was conducted using the Autoregressive Distributed Lag (ARDL) model, which is particularly suitable for examining macroeconomic time series of different orders of integration. The results of the ARDL bounds test indicate the existence of cointegration among the observed variables in both countries. In the long run, exports have a positive and statistically significant effect on GDP per capita growth in Serbia and North Macedonia. However, in the short run, exports in Serbia show a lagged negative effect on economic growth, while in North Macedonia their short-run effect is not statistically significant. Imports and FDI serve as control variables in the model. In Serbia, imports stimulate growth in the short run but pose a risk of negative long-term effects, indicating dependence on the external sector and an unfavorable import structure. In North Macedonia, imports have no statistically significant effects. FDI in both countries represent a consistent and significant growth factor, as they exert both short-run and long-run positive effects on GDP per capita growth, confirming the importance of capital inflows and technology transfer for sustainable economic growth.