The purpose of this study is to investigate the long-run determinants of economic growth by examining the relationship between selected macroeconomic variables using time series data for the period 2003–2024. Particular emphasis is placed on evaluating how structural and demographic factors influence growth dynamics in the context of a small open economy. This analysis contributes to the empirical literature by providing updated evidence for the post-transition period and offering insights relevant for policy design. To achieve this objective, the study employs cointegration techniques to verify the presence of long-run equilibrium relationships among the variables. Once cointegration is confirmed, the Fully Modified Ordinary Least Squares (FMOLS) and Dynamic Ordinary Least Squares (DOLS) estimators are applied to obtain efficient and unbiased estimates of the long-run coefficients. The empirical results suggest that investment, trade openness, and human capital exert a positive and statistically significant effect on long-run economic growth, while high public debt and inflation exert a negative impact. Demographic factors such as dependency ratios also show a measurable influence, with young dependency exerting a growth-dampening effect. The consistency of the results across FMOLS and DOLS reinforces the robustness of the findings. Based on these results, the study recommends policies aimed at fostering investment in physical and human capital, maintaining macroeconomic stability through prudent fiscal management, and implementing structural reforms to enhance productivity. Strengthening demographic policies to mitigate the burden of dependency ratios and promoting inclusive growth strategies are also emphasized as crucial for ensuring sustainable long-run growth.
Boban Tomeski (2025) studied this question.