Dimitar Eftimoski | St. Clement of Ohrid (original) (raw)
Papers by Dimitar Eftimoski
Economic Analysis and Policy
Zbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu, 2006
By the end of the 1980s, the central issue of development was focused on the growth of income and... more By the end of the 1980s, the central issue of development was focused on the growth of income and not on the growth of quality of life. Therefore, the development strategies were oriented towards production and left no significant space for improving the welfare of individuals.In the beginning of the 1990s, the human development concept emerged, stressing that economic development ultimately should result in growth of quality of life of individuals, while the goal of the development process was to expand the capabilities of individuals by placing them in the focus of the efforts for development.This paper if focused on the quality of life of the individuals. Moreover, in addition to the previous practice in Macedonia of calculating the human development index (HDI) - as a measure of quality of life, an attempt will be made to calculate the humanpoverty index (HPI-2) - as a measure of non-income poverty, gender development index (GDI) - as a measure of inequality between men and wome...
The primary aim of this paper is to show how can we construct poverty measures from grouped data,... more The primary aim of this paper is to show how can we construct poverty measures from grouped data, i.e., to show how can we derive poverty measures from parameterized Lorenz curve? In this paper, Gaurav Datt’s approach has been applied. The derived poverty measures are estimated in the case of Macedonia, using interactive software package “Povcal", created by the World Bank. Our findings suggest two main conclusions: 1) the high poverty level is accompanied with a moderate level of income inequality, and 2) the transmission mechanism from the economic growth to poverty reduction is working properly.
The AMFITEATRU ECONOMIC journal, 2006
There is a strong link among investments in human capital, economic growth and human development.... more There is a strong link among investments in human capital, economic growth and human development. Since human capital (improvements in the quality of human labour) is embodied technical progress in labour (knowledge and skills), the economic development depends on advances in technological and scientific knowledge, economic development depends on the investments in human capital. The first part of the paper outlines the two key concepts related to investment in human capital - the basic economic concept and the human development concept. The second part is related to the limitations regarding the investment in human capital in Macedonia, expressed through four major dimensions: 1) poverty and inequality; 2) economic policy; 3) absence of a clear link between economic growth (GDP per capita) and human quality of life (HDI) and 4) the access of individuals to the capital market and to information.
In this paper, in a sample of Central and Eastern European countries (Albania, Bulgaria, Czech Re... more In this paper, in a sample of Central and Eastern European countries (Albania, Bulgaria, Czech Republic, Estonia, Hungary, Macedonia, Moldova, Romania, Russian Federation, Slovak Republic, Slovenia, and Ukraine) we investigate the effects of: 1) democracy (measured by democracy indices); 2) government related variables and 3) other selected macroeconomic variables, on labor market outcomes. As labor market outcomes we use the following variables: unemployment rate, long-term unemployment rate, employment to population ratio, and average annual hours worked. As independent government related variables we use the following: government consumption (lagged), tax revenues as percentage of GDP (lagged), Herfindahl index of government (lagged). For the level of democracy we use following indices: Freedom house political rights and Civil liberties index (lagged), worker rights by CIRI human rights data project and Physical integrity rights index (lagged). Finally (regarding the independent ...
Zbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu, 2006
By the end of the 1980s, the central issue of development was focused on the growth of income and... more By the end of the 1980s, the central issue of development was focused on the growth of income and not on the growth of quality of life. Therefore, the development strategies were oriented towards production and left no significant space for improving the welfare of individuals. In the beginning of the 1990s, the human development concept emerged, stressing that economic development ultimately should result in growth of quality of life of individuals, while the goal of the development process was to expand the capabilities of individuals by placing them in the focus of the efforts for development. This paper if focused on the quality of life of the individuals. Moreover, in addition to the previous practice in Macedonia of calculating the human development index (HDI) - as a measure of quality of life, an attempt will be made to calculate the human poverty index (HPI-2) - as a measure of non-income poverty, gender development index (GDI) - as a measure of inequality between men and w...
Basically, it could be concluded that by the end of the 1980s, the central issue of development w... more Basically, it could be concluded that by the end of the 1980s, the central issue of development was focused on the growth of income and not on the growth of quality of life. Therefore, the development strategies were oriented towards production and left no significant space for improving the welfare of individuals. In the beginning of the 1990s the human development concept emerged. According to this concept economic development ultimately should result in growth of quality of life of individuals, while the goal of the development process is to expand the capabilities of individuals by placing them in the focus of the efforts for development. Therefore, the quality of people's lives should not be evaluated on the basis of the average income level, but according to the people's capabilities to lead healthy lives, be educated, have self-respect and take active part in the social mainstreams. Human welfare growth is directly related to the freedom of choice. The increase of hum...
This paper evaluates two different models for short-term forecasting of the Macedonian GDP : (a) ... more This paper evaluates two different models for short-term forecasting of the Macedonian GDP : (a) the medium-scale static factor model, based on the static principal components analysis, and (b) the small-scale macroeconomic structural equation model. Recursive dynamic pseudo out-of-sample forecasts, based on a panel of quarterly time series, indicate that forecast errors of the factor model are smaller overall in comparison to errors of the structural equation model at all forecast horizons. In line with the existing short-term GDP forecasting practice, our medium-scale factor model (that extracts common factors from a data set of 52 variables) diversifies and strengthens the current macroeconomic forecasting strategy in Macedonia
Jahrbücher für Nationalökonomie und Statistik
This paper investigates the effect of human capital on economic growth in OECD countries by focus... more This paper investigates the effect of human capital on economic growth in OECD countries by focusing on two different channels: (1) absorption of superior technologies, and (2) augmentation of factors of production. One recent empirical study found that in isolation each channel appears insignificant, which implies that estimates that emanate by restrictive specifications that account for only a subset of these channels are likely to suffer from an omitted variable bias. Using an augmented specification (with interaction terms between the initial level of real GDP per capita and the average years of schooling), we find that OECD countries that start with a higher stock of human capital grow faster, which implies that human capital influences economic growth through the first channel only. Our results differ from previous studies (that investigated both channels), which either confirmed the simultaneous (positive or neutral) effect from both channels, or found that only the second ch...
International Journal of Emerging Markets
PurposeThe impact of remittances on household consumption stability and economic growth is not qu... more PurposeThe impact of remittances on household consumption stability and economic growth is not quite clear. This paper attempts to reopen the debate on the relationship among these three variables. The current remittance literature suggests that a decrease in household consumption volatility, induced by remittances, automatically leads to economic growth. This paper challenges these arguments by stating that, under certain circumstances, there is no automatic relationship among remittances, household consumption stability and growth.Design/methodology/approachThe authors approach the question from the perspective of emerging Central, Eastern and Southeastern European (CESEE) countries. The authors use the two-step system generalized method of moments (GMM) estimator with the Windmeijer (2005) finite-sample correction. To test the existence of the possible non-linear effects of remittances on household consumption stability and economic growth, the authors use threshold regressions.F...
Economics and Culture, Jun 1, 2016
In this paper, the extended framework of the IS-MP-IA model has been tested. Since the appearance... more In this paper, the extended framework of the IS-MP-IA model has been tested. Since the appearance of the Romer's (2000) model, a bulk of studies with its extensions have been published. Perhaps, the most notable amongst them were those proposed by Hsing (2004, 2013) and Giese and Wagner (2006)-which are integral part of this paper. The application of the extended Romer (2000) model to selected Central Eastern and South Eastern Europe (CESEE) countries
When a firm or economy realizes a competitive advantage, actually it possesses something which ot... more When a firm or economy realizes a competitive advantage, actually it possesses something which others lack, and does something which others cannot do, or do not know how to do it. Firms' competitiveness, mostly, stems from knowledge and competency. Basically, it is the accumulation of capital in the form of knowledge, in most of the firms' constitutive systems. Competitiveness determines the productivity level of an economy, whereas the productivity level determines the sustainable prosperity level of an economy. The knowledge economy offers virtually unlimited resources, as human capacity to create is boundless. Taking into consideration the abovementioned facts, the aim of this paper is to provide responses to the following questions: Why should contemporary firms and economies invest in new knowledge? What is the knowledge competitiveness level of the Macedonian firms and economy? What is the knowledge competitiveness of the Macedonian economy in comparison with the knowledge competitiveness of innovation-driven economies and the remaining efficiency-driven economies? In order to obtain the answers to these questions, we will make use of some theoretical experiences, supported by a comparative empirical analysis which, in essence, is based on the composite indicators-Knowledge Index and Global Competitiveness Index.
Applied Economics Letters
Zbornik Radova Ekonomskog Fakulteta U Rijeci Casopis Za Ekonomsku Teoriju I Praksu, Dec 22, 2006
By the end of the 1980s, the central issue of development was focused on the growth of income and... more By the end of the 1980s, the central issue of development was focused on the growth of income and not on the growth of quality of life. Therefore, the development strategies were oriented towards production and left no significant space for improving the welfare of individuals. In the beginning of the 1990s, the human development concept emerged, stressing that economic development ultimately should result in growth of quality of life of individuals, while the goal of the development process was to expand the capabilities of individuals by placing them in the focus of the efforts for development. This paper if focused on the quality of life of the individuals. Moreover, in addition to the previous practice in Macedonia of calculating the human development index (HDI)-as a measure of quality of life, an attempt will be made to calculate the human poverty index (HPI-2)-as a measure of non-income poverty, gender development index (GDI)-as a measure of inequality between men and women, as well as the human development index at the level of aggregated urban and rural municipalities. We hope that it will contribute to the improvement of the quality of decisions made by the state and local authorities in Macedonia when it comes to issues concerning the human development.
Economics and Culture, 2016
In this paper, the extended framework of the IS-MP-IA model has been tested. Since the appearance... more In this paper, the extended framework of the IS-MP-IA model has been tested. Since the appearance of the Romer’s (2000) model, a bulk of studies with its extensions have been published. Perhaps, the most notable amongst them were those proposed by Hsing (2004, 2013) and Giese and Wagner (2006) - which are integral part of this paper. The application of the extended Romer (2000) model to selected Central Eastern and South Eastern Europe (CESEE) countries (Albania, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Macedonia, Moldova, Romania, Russian Federation, Slovak Republic, Slovenia and Ukraine) shows that on an average, higher world output and lower world interest rate and inflation have positive effect on real output. A lower government consumption to gross domestic product (GDP) ratio also increases the real output. However, the insignificant government consumption implies that the Ricardian equivalence might hold in these economies. Hence, fiscal prudence is needed, and th...
The Amfiteatru Economic Journal, 2006
There is a strong link among investments in human capital, economic growth and human development.... more There is a strong link among investments in human capital, economic growth and human development. Since human capital (improvements in the quality of human labour) is embodied technical progress in labour (knowledge and skills), the economic development depends on advances in technological and scientific knowledge, economic development depends on the investments in human capital. The first part of the paper outlines the two key concepts related to investment in human capital-the basic economic concept and the human development concept. The second part is related to the limitations regarding the investment in human capital in Macedonia, expressed through four major dimensions: 1) poverty and inequality; 2) economic policy; 3) absence of a clear link between economic growth (GDP per capita) and human quality of life (HDI) and 4) the access of individuals to the capital market and to information.
There is a strong link among investments in human capital, economic growth and human development.... more There is a strong link among investments in human capital, economic growth and human development. Since human capital (improvements in the quality of human labour) is embodied technical progress in labour (knowledge and skills), the economic development depends on advances in technological and scientific knowledge, economic development depends on the investments in human capital. The first part of the paper outlines the two key concepts related to investment in human capital-the basic economic concept and the human development concept. The second part is related to the limitations regarding the investment in human capital in Macedonia, expressed through four major dimensions: 1) poverty and inequality; 2) economic policy; 3) absence of a clear link between economic growth (GDP per capita) and human quality of life (HDI) and 4) the access of individuals to the capital market and to information.
Journal of Competitiveness, 2012
When a firm or economy realizes a competitive advantage, actually it possesses something which ot... more When a firm or economy realizes a competitive advantage, actually it possesses something which others lack, and does something which others cannot do, or do not know how to do it. Firms' competitiveness, mostly, stems from knowledge and competency. Basically, it is the accumulation of capital in the form of knowledge, in most of the firms' constitutive systems. Competitiveness determines the productivity level of an economy, whereas the productivity level determines the sustainable prosperity level of an economy. The knowledge economy offers virtually unlimited resources, as human capacity to create is boundless. Taking into consideration the abovementioned facts, the aim of this paper is to provide responses to the following questions: Why should contemporary firms and economies invest in new knowledge? What is the knowledge competitiveness level of the Macedonian firms and economy? What is the knowledge competitiveness of the Macedonian economy in comparison with the knowledge competitiveness of innovation-driven economies and the remaining efficiency-driven economies? In order to obtain the answers to these questions, we will make use of some theoretical experiences, supported by a comparative empirical analysis which, in essence, is based on the composite indicators-Knowledge Index and Global Competitiveness Index.
Economic Analysis and Policy
Zbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu, 2006
By the end of the 1980s, the central issue of development was focused on the growth of income and... more By the end of the 1980s, the central issue of development was focused on the growth of income and not on the growth of quality of life. Therefore, the development strategies were oriented towards production and left no significant space for improving the welfare of individuals.In the beginning of the 1990s, the human development concept emerged, stressing that economic development ultimately should result in growth of quality of life of individuals, while the goal of the development process was to expand the capabilities of individuals by placing them in the focus of the efforts for development.This paper if focused on the quality of life of the individuals. Moreover, in addition to the previous practice in Macedonia of calculating the human development index (HDI) - as a measure of quality of life, an attempt will be made to calculate the humanpoverty index (HPI-2) - as a measure of non-income poverty, gender development index (GDI) - as a measure of inequality between men and wome...
The primary aim of this paper is to show how can we construct poverty measures from grouped data,... more The primary aim of this paper is to show how can we construct poverty measures from grouped data, i.e., to show how can we derive poverty measures from parameterized Lorenz curve? In this paper, Gaurav Datt’s approach has been applied. The derived poverty measures are estimated in the case of Macedonia, using interactive software package “Povcal", created by the World Bank. Our findings suggest two main conclusions: 1) the high poverty level is accompanied with a moderate level of income inequality, and 2) the transmission mechanism from the economic growth to poverty reduction is working properly.
The AMFITEATRU ECONOMIC journal, 2006
There is a strong link among investments in human capital, economic growth and human development.... more There is a strong link among investments in human capital, economic growth and human development. Since human capital (improvements in the quality of human labour) is embodied technical progress in labour (knowledge and skills), the economic development depends on advances in technological and scientific knowledge, economic development depends on the investments in human capital. The first part of the paper outlines the two key concepts related to investment in human capital - the basic economic concept and the human development concept. The second part is related to the limitations regarding the investment in human capital in Macedonia, expressed through four major dimensions: 1) poverty and inequality; 2) economic policy; 3) absence of a clear link between economic growth (GDP per capita) and human quality of life (HDI) and 4) the access of individuals to the capital market and to information.
In this paper, in a sample of Central and Eastern European countries (Albania, Bulgaria, Czech Re... more In this paper, in a sample of Central and Eastern European countries (Albania, Bulgaria, Czech Republic, Estonia, Hungary, Macedonia, Moldova, Romania, Russian Federation, Slovak Republic, Slovenia, and Ukraine) we investigate the effects of: 1) democracy (measured by democracy indices); 2) government related variables and 3) other selected macroeconomic variables, on labor market outcomes. As labor market outcomes we use the following variables: unemployment rate, long-term unemployment rate, employment to population ratio, and average annual hours worked. As independent government related variables we use the following: government consumption (lagged), tax revenues as percentage of GDP (lagged), Herfindahl index of government (lagged). For the level of democracy we use following indices: Freedom house political rights and Civil liberties index (lagged), worker rights by CIRI human rights data project and Physical integrity rights index (lagged). Finally (regarding the independent ...
Zbornik radova Ekonomskog fakulteta u Rijeci : časopis za ekonomsku teoriju i praksu, 2006
By the end of the 1980s, the central issue of development was focused on the growth of income and... more By the end of the 1980s, the central issue of development was focused on the growth of income and not on the growth of quality of life. Therefore, the development strategies were oriented towards production and left no significant space for improving the welfare of individuals. In the beginning of the 1990s, the human development concept emerged, stressing that economic development ultimately should result in growth of quality of life of individuals, while the goal of the development process was to expand the capabilities of individuals by placing them in the focus of the efforts for development. This paper if focused on the quality of life of the individuals. Moreover, in addition to the previous practice in Macedonia of calculating the human development index (HDI) - as a measure of quality of life, an attempt will be made to calculate the human poverty index (HPI-2) - as a measure of non-income poverty, gender development index (GDI) - as a measure of inequality between men and w...
Basically, it could be concluded that by the end of the 1980s, the central issue of development w... more Basically, it could be concluded that by the end of the 1980s, the central issue of development was focused on the growth of income and not on the growth of quality of life. Therefore, the development strategies were oriented towards production and left no significant space for improving the welfare of individuals. In the beginning of the 1990s the human development concept emerged. According to this concept economic development ultimately should result in growth of quality of life of individuals, while the goal of the development process is to expand the capabilities of individuals by placing them in the focus of the efforts for development. Therefore, the quality of people's lives should not be evaluated on the basis of the average income level, but according to the people's capabilities to lead healthy lives, be educated, have self-respect and take active part in the social mainstreams. Human welfare growth is directly related to the freedom of choice. The increase of hum...
This paper evaluates two different models for short-term forecasting of the Macedonian GDP : (a) ... more This paper evaluates two different models for short-term forecasting of the Macedonian GDP : (a) the medium-scale static factor model, based on the static principal components analysis, and (b) the small-scale macroeconomic structural equation model. Recursive dynamic pseudo out-of-sample forecasts, based on a panel of quarterly time series, indicate that forecast errors of the factor model are smaller overall in comparison to errors of the structural equation model at all forecast horizons. In line with the existing short-term GDP forecasting practice, our medium-scale factor model (that extracts common factors from a data set of 52 variables) diversifies and strengthens the current macroeconomic forecasting strategy in Macedonia
Jahrbücher für Nationalökonomie und Statistik
This paper investigates the effect of human capital on economic growth in OECD countries by focus... more This paper investigates the effect of human capital on economic growth in OECD countries by focusing on two different channels: (1) absorption of superior technologies, and (2) augmentation of factors of production. One recent empirical study found that in isolation each channel appears insignificant, which implies that estimates that emanate by restrictive specifications that account for only a subset of these channels are likely to suffer from an omitted variable bias. Using an augmented specification (with interaction terms between the initial level of real GDP per capita and the average years of schooling), we find that OECD countries that start with a higher stock of human capital grow faster, which implies that human capital influences economic growth through the first channel only. Our results differ from previous studies (that investigated both channels), which either confirmed the simultaneous (positive or neutral) effect from both channels, or found that only the second ch...
International Journal of Emerging Markets
PurposeThe impact of remittances on household consumption stability and economic growth is not qu... more PurposeThe impact of remittances on household consumption stability and economic growth is not quite clear. This paper attempts to reopen the debate on the relationship among these three variables. The current remittance literature suggests that a decrease in household consumption volatility, induced by remittances, automatically leads to economic growth. This paper challenges these arguments by stating that, under certain circumstances, there is no automatic relationship among remittances, household consumption stability and growth.Design/methodology/approachThe authors approach the question from the perspective of emerging Central, Eastern and Southeastern European (CESEE) countries. The authors use the two-step system generalized method of moments (GMM) estimator with the Windmeijer (2005) finite-sample correction. To test the existence of the possible non-linear effects of remittances on household consumption stability and economic growth, the authors use threshold regressions.F...
Economics and Culture, Jun 1, 2016
In this paper, the extended framework of the IS-MP-IA model has been tested. Since the appearance... more In this paper, the extended framework of the IS-MP-IA model has been tested. Since the appearance of the Romer's (2000) model, a bulk of studies with its extensions have been published. Perhaps, the most notable amongst them were those proposed by Hsing (2004, 2013) and Giese and Wagner (2006)-which are integral part of this paper. The application of the extended Romer (2000) model to selected Central Eastern and South Eastern Europe (CESEE) countries
When a firm or economy realizes a competitive advantage, actually it possesses something which ot... more When a firm or economy realizes a competitive advantage, actually it possesses something which others lack, and does something which others cannot do, or do not know how to do it. Firms' competitiveness, mostly, stems from knowledge and competency. Basically, it is the accumulation of capital in the form of knowledge, in most of the firms' constitutive systems. Competitiveness determines the productivity level of an economy, whereas the productivity level determines the sustainable prosperity level of an economy. The knowledge economy offers virtually unlimited resources, as human capacity to create is boundless. Taking into consideration the abovementioned facts, the aim of this paper is to provide responses to the following questions: Why should contemporary firms and economies invest in new knowledge? What is the knowledge competitiveness level of the Macedonian firms and economy? What is the knowledge competitiveness of the Macedonian economy in comparison with the knowledge competitiveness of innovation-driven economies and the remaining efficiency-driven economies? In order to obtain the answers to these questions, we will make use of some theoretical experiences, supported by a comparative empirical analysis which, in essence, is based on the composite indicators-Knowledge Index and Global Competitiveness Index.
Applied Economics Letters
Zbornik Radova Ekonomskog Fakulteta U Rijeci Casopis Za Ekonomsku Teoriju I Praksu, Dec 22, 2006
By the end of the 1980s, the central issue of development was focused on the growth of income and... more By the end of the 1980s, the central issue of development was focused on the growth of income and not on the growth of quality of life. Therefore, the development strategies were oriented towards production and left no significant space for improving the welfare of individuals. In the beginning of the 1990s, the human development concept emerged, stressing that economic development ultimately should result in growth of quality of life of individuals, while the goal of the development process was to expand the capabilities of individuals by placing them in the focus of the efforts for development. This paper if focused on the quality of life of the individuals. Moreover, in addition to the previous practice in Macedonia of calculating the human development index (HDI)-as a measure of quality of life, an attempt will be made to calculate the human poverty index (HPI-2)-as a measure of non-income poverty, gender development index (GDI)-as a measure of inequality between men and women, as well as the human development index at the level of aggregated urban and rural municipalities. We hope that it will contribute to the improvement of the quality of decisions made by the state and local authorities in Macedonia when it comes to issues concerning the human development.
Economics and Culture, 2016
In this paper, the extended framework of the IS-MP-IA model has been tested. Since the appearance... more In this paper, the extended framework of the IS-MP-IA model has been tested. Since the appearance of the Romer’s (2000) model, a bulk of studies with its extensions have been published. Perhaps, the most notable amongst them were those proposed by Hsing (2004, 2013) and Giese and Wagner (2006) - which are integral part of this paper. The application of the extended Romer (2000) model to selected Central Eastern and South Eastern Europe (CESEE) countries (Albania, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Macedonia, Moldova, Romania, Russian Federation, Slovak Republic, Slovenia and Ukraine) shows that on an average, higher world output and lower world interest rate and inflation have positive effect on real output. A lower government consumption to gross domestic product (GDP) ratio also increases the real output. However, the insignificant government consumption implies that the Ricardian equivalence might hold in these economies. Hence, fiscal prudence is needed, and th...
The Amfiteatru Economic Journal, 2006
There is a strong link among investments in human capital, economic growth and human development.... more There is a strong link among investments in human capital, economic growth and human development. Since human capital (improvements in the quality of human labour) is embodied technical progress in labour (knowledge and skills), the economic development depends on advances in technological and scientific knowledge, economic development depends on the investments in human capital. The first part of the paper outlines the two key concepts related to investment in human capital-the basic economic concept and the human development concept. The second part is related to the limitations regarding the investment in human capital in Macedonia, expressed through four major dimensions: 1) poverty and inequality; 2) economic policy; 3) absence of a clear link between economic growth (GDP per capita) and human quality of life (HDI) and 4) the access of individuals to the capital market and to information.
There is a strong link among investments in human capital, economic growth and human development.... more There is a strong link among investments in human capital, economic growth and human development. Since human capital (improvements in the quality of human labour) is embodied technical progress in labour (knowledge and skills), the economic development depends on advances in technological and scientific knowledge, economic development depends on the investments in human capital. The first part of the paper outlines the two key concepts related to investment in human capital-the basic economic concept and the human development concept. The second part is related to the limitations regarding the investment in human capital in Macedonia, expressed through four major dimensions: 1) poverty and inequality; 2) economic policy; 3) absence of a clear link between economic growth (GDP per capita) and human quality of life (HDI) and 4) the access of individuals to the capital market and to information.
Journal of Competitiveness, 2012
When a firm or economy realizes a competitive advantage, actually it possesses something which ot... more When a firm or economy realizes a competitive advantage, actually it possesses something which others lack, and does something which others cannot do, or do not know how to do it. Firms' competitiveness, mostly, stems from knowledge and competency. Basically, it is the accumulation of capital in the form of knowledge, in most of the firms' constitutive systems. Competitiveness determines the productivity level of an economy, whereas the productivity level determines the sustainable prosperity level of an economy. The knowledge economy offers virtually unlimited resources, as human capacity to create is boundless. Taking into consideration the abovementioned facts, the aim of this paper is to provide responses to the following questions: Why should contemporary firms and economies invest in new knowledge? What is the knowledge competitiveness level of the Macedonian firms and economy? What is the knowledge competitiveness of the Macedonian economy in comparison with the knowledge competitiveness of innovation-driven economies and the remaining efficiency-driven economies? In order to obtain the answers to these questions, we will make use of some theoretical experiences, supported by a comparative empirical analysis which, in essence, is based on the composite indicators-Knowledge Index and Global Competitiveness Index.