Informality, institutional inconsistency and information asymmetry as barriers for entrepreneurship and innovation in the non-wood forest products sector in Republic of North Macedonia

Abstract

Non-wood forest products (NWFPs) are crucial for rural development, offering opportunities for entrepreneurship and innovation in forest-dependent areas. However, the NWFPs sector in North Macedonia faces significant barriers to growth, rooted in both public and private spheres. This paper explores three key challenges: informality, institutional inconsistency and information asymmetry, and conceptualizes them through an analytical framework called the 3-I’s Model. Informality, prevalent among private actors, disrupts market stability and discourages investment. Institutional inconsistency, in the form of regulatory overlaps between the forestry and environmental sectors, hinder coordination. Additionally, the lack of accessible information on support programs limits opportunities for development for both private companies and public institutions. By applying a sectoral and regional innovation systems framework, the study demonstrates how outdated practices and misaligned institutional structures have hindered innovation over decades. The interplay between public and private spheres amplifies these challenges, with institutional inefficiencies and information gaps perpetuating informality and limiting sectoral growth. To overcome these barriers, the paper recommends targeted policy interventions that foster collaboration between public and private sectors, strengthen regulatory alignment, and improve access to information. The 3-I’s Model thus provides a practical lens for understanding these systemic constraints and guiding reforms that can enhance the NWFPs sector’s role in sustainable rural development in North Macedonia.