The tobacco sector in the Republic of Macedonia : competitiveness analysis

Abstract: The tobacco sector is an important part of the Macedonian agriculture and the economy in general. This project is giving an overall prospective of the Macedonian tobacco industry, and it points out its comparative advantages and disadvantages. The core question at the beginning was "Whether Macedonian tobacco industry is competitive or not?" In order to determine the answer to this question, both descriptive and empirical approaches are used. The essential part of this study was the approach developed by Porter or the determinants of national advantage. The description of this sector was developed following the concept of Porter's Diamond model with an overall aim of determining this sector's strengths, weaknesses, threats and opportunities in a so called SWOT analysis. This study also includes some competitiveness index calculations. Tobacco is regarded, as a good of public well being by the Law on tobacco. It is a source of employment and net income for the population. The sector is an important part of the Macedonian agriculture, and it has much strength in the factor conditions it possesses. It is an export-oriented high quality product, which generates important incomes for the Macedonian agriculture and the economy as a whole. This sector's weakest sides are mostly originating from the problem of badly developed relations producer/buyer and the insufficient Law enforcement on the government behalf. The biggest challenge that the tobacco industry faces is the active campaign against smoking that causes an over all decrease in the demand for tobacco. The tobacco is declared to be a hazard for people's health and many pro-health policies are proposed against it. The tobacco is a significant crop for the Macedonian agriculture and economy since it is an essential income sources for many families and essential source for government revenues, and it is foreseen that it will continue to exist on the Macedonian fields for the years to come.