The wine production in FYROM : does the wine sector have a comparative advantage?

Abstract: FYROM has a long tradition of producing wine. Wine production in FYROM is one of the greatest contributors of the agricultural share of their GDP. The aim of the thesis is to see if the wine production in FYROM has a comparative advantage compared to other countries that produce wine and if FYROM is able to sustain the advantage in the future. The countries chosen for comparison are Bulgaria, Croatia, France and Italy. The methods used in the thesis are the Balassa Index and Porter’s Diamond of National Advantage. These economic tools address the comparative advantage of a nations sector of production. The calculation of the Balassa Index show that FYROM has a comparative advantage in wine production in respect to Bulgaria and Croatia, but not compared to France and Italy. The vineyards are outdated and the vines and grapes do not meet the foreign market demands in respect to quality of the wine produced. There is therefore a need of a renewal of the vineyards to improve the quality. The economic situation of the wine farmers requires aid from the government for the renewal and for FYROM to sustain and strengthen their comparative advantage.