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In recent years, the software industry has emerged as one of the most dynamic sectors of the Macedonian economy. With a growth rate of 7.7% in 2009, the Macedonian software industry outran the development pace of the overall economy and became an engine for growth, innovation and competitiveness. Like several other transformation countries in South East Europe, Macedonia has discovered the strategic importance of the software industry and its enormous potential for exports.
The interest in software exports has been mainly spurred by four major factors.
First, on the demand side, there is a growing trend among Western European and American companies to outsource software related tasks and activities to lower-cost destinations thereby creating substantial market opportunities for Macedonian soft ware and IT services companies.
Second, on the supply side, Macedonia has significant comparative advantages, such as lower labor costs and highly skilled human capital.
Third, like in many other transformation countries, the Macedonian government recognized the strategic importance of the software industry for the development and competitiveness of its national economy. Being a cross-cutting technology, promoting the software industry is a well-proven measure to increase productivity, efficiency and innovation as well as to facilitate industrial transformation towards a knowledge based economy.
The fourth factor contributing to the importance of software exports for the development of the Macedonian economy is the country’s limited domestic market. Thus, export becomes an issue of paramount importance for the development and growth of the software industry. For small national economies like Macedonia inward-oriented import substitution policies are no option, instead they have to refer to outward-oriented export-led growth.