The Republic of North Macedonia started its transition process in the 90s of the 20th century, in extremely difficult conditions. After the independence, in addi-tion to the presented internal unfavorable conditions and problems, the country in the same time, faced with numerous external negative shocks. Despite the difficult situation, North Macedonia started the transition process and imple-mented key reforms. In the past three decades, during the transition process, were implemented numerous reforms in all key areas, following the experiences and good practices from the countries in the Region and other successful coun-tries in transition. Тhe achieved results in North Macedonia in the area of eco-nomic growth and development, role of law, institutions, as well as in the other crucial areas – human development, education, science and environment are below compared with the successful transition countries and the EU member states. The low development progress and the weak results in the crucial social areas impose the need for design of a new development model for the Macedo-nian economy. The aim of the paper is to identify the current conditions and limitations of the Macedonian economy, which will be used as a starting point for design of recommendations for creation and implementation of a new de-velopment model for the Macedonian economy that will ensure achievement of sustainable development. In order to achieve the paper’s goal, three scientif-ically based approaches for a decomposition of the Macedonian GDP were ap-plied.