Value Chain Analysis and Strategic Framework for Economic Upgrading in North Macedonia’s Critical Minerals Sector

Resource-rich developing nations frequently face the “paradox of plenty,” where mineral wealth fails to translate into broad-based economic development. This paper addresses this challenge in the context of North Macedonia, an EU candidate country with significant deposits of zinc, lead, and other critical minerals. While the country is a notable supplier of primary ores to the EU, it currently captures only a fraction of the potential value by exporting raw concentrates rather than processed metals. This study presents a comprehensive analysis of the economic case for value chain upgrading. Using a mixed-methods approach that combines quantitative trade data analysis, comparative EU benchmarking, and macroeconomic modelling, we quantify the “value gap” at approximately $56 million annually, a 50% increase in export revenue achievable through the development of domestic refining capacity. Our analysis demonstrates that such a move could increase the mining sector’s contribution to GDP from 2.0% to 2.6% and nearly double employment in the sector. To address the complex, multi-dimensional nature of this policy choice, we introduce a novel theoretical contribution: the Resource Upgrading Decision Matrix (RUDM). This framework provides a structured methodology for evaluating upgrading opportunities across four key dimensions: Economic Feasibility, Strategic Importance, Sustainability & Social License, and Governance Complexity. By applying the RUDM to North Macedonia, we provide a clear, evidence-based roadmap for industrial policy that can guide the nation beyond extraction and toward sustainable economic transformation. JEL Classification: Q32, L72, O14, F23, O25