Foreign direct investment and product-space jumps: evidence from North Macedonia

Export diversification is constrained by capability proximity. Countries move into products related to what they already produce. Whether foreign direct investment relaxes that constraint has not been measured at the country level. Using Harmonized System 1992 product-year data from the Atlas of Economic Complexity for 1995–2024, I compare products linked to North Macedonia’s foreign-invested catalytic, automotive, and electrical export platform against all others before and after 2011, with product and year fixed effects. FDI-linked products expanded disproportionately in export values, revealed comparative advantage (RCA) status, and RCA intensity. The differential is concentrated on the intensive margin and survives external demand controls. Among products newly reaching RCA between 2006 and 2024, the ten FDI-linked entrants were more distant and substantially more complex than the 47 others and supplied 72.6% of new-entrant exports. Export-platform FDI can generate product-space jumps the framework does not predict, documenting export-structure change, not capability formation.