Macedonia’s exports and the gravity model

This paper examines the export performance of the Republic of Macedonia to its main trading partners; hence we focus on the major importing countries which are most present in the Macedonian trade balance. The data used in this article are analyzed with gravity model, which has good characteristics and very stable performance. Further, the data sample is formed on the Balkan countries i.e. Albania, Bosnia and Herzegovina, Bulgaria, Croatia, Greece, Romania, Slovenia, Turkey and Serbia and Montenegro. The results show that the domestic country GDP is positively correlated with the exports from the source country to target countries and that Balkan countries have positive propensities to import from Macedonia, however it was found that populations of source country and target country are negatively correlated with exports from the source country to target countries. Additionally, the business cycles had no positive effect on Macedonian export to the target countries.