1. Assessment of the Status and Potential of the Enterprise Sector

2. Key economic sectors 1. ICT – software industry 2. Agribusiness & food processing 3. Apparel 4. Automotive components Clustering and collaboration between firms is limited Clusters: i.Automotive ii.Fashion and Design iii.MASIT iv.IT cluster YES4 BIZ v.Textile vi.Cluster for Processing Fruits & Vegetables vii.Cluster for Wine

3. Competitiveness of key economic sectors vs. EU rivals ICT – software industry (i)growing trend among Western European and US companies to outsource software related activities to lower-cost destinations (ii)country has low labor costs and highly skilled human capital in the field of ICT (iii)country’s limited domestic market, due to which export becomes an issue of paramount importance Agribusiness and food processing (i)agriculture accounts for 12% of GDP (ii)About 49% of the total land area is agricultural land, split evenly between cultivable land and pastures (iii)1/5 of the working force is employed in agriculture, 14.8% of the value added of the manufacturing sector in the food industry, and around 10% of exports is generated in agriculture

4. Competitiveness of key economic sectors vs. EU rivals Apparel (i)in 2011 there were about 800 companies employing more than 40.000 people that represent 35% of the industrial employment. (ii)this sector represents 17% of the total exports, with amount of about €550 million. Automotive components (i)new companies, which account for 86% of total industry revenue (ii)small-and-medium-sized domestic firms, which are mainly aftermarket parts producers that export to neighboring countries, EU, Russia, Turkey and South Africa Pharmaceuticals (generic)

5. “Smart”? Software industry Agribusiness and food processing Apparel Automotive components Pharmaceuticals (generic) ???

6. Threats & challenges Emigration rate by educational level: Source: OECD, F. Docquier, 2011 1995 2005 Brain drain: FYR Macedonia is ranked 133/142 globally for 2011

7. Internationalization of the economy Share of high and medium-high technology manufacturing exports, 2011

8. Internationalization of the economy Mixed end use high tech exports, shares of different goods in %

9. Internationalization of the economy FDI inflows to the FYR Macedonia in USD million (and as % of GDP) 4.6% 8.5% 1.6% 2.2%

10. Internationalization of the economy FDI stock in FYR Macedonia by activity, 2012

11. Internationalization of the economy Gross Expenditure on R &D (GERD) as % of GDP Source: UNESCOstat 2011 FYR Macedonia: 0.2% of $10.44B GDP = $20.8M GERD

12. Internationalization of the economy GERD – % by Business Enterprises in SEE Source: UNESCOstat 2011 OECD: 70% of R&D

13. Assessment of the climate for entrepreneurship SMEs innovating in-house as % of SMEs

14. Assessment of the climate for entrepreneurship Public-private co-publications per million population