KOSOVOS ECONOMIC GROWTH

AND DEVELOPMENT

INTRODUCTION

Kosovos Profile:
Area: 10,887 sq km
Population: 2m (estimated)
Capital City: Pristina
Currency: Euro
Legal Status: Independent
Economy: Pre transition,
transition, current situation
Poverty: 15.2%
Unemployment: 45%

The focus of this presentation is to

discuss the ways in which
unemployment, free trade agreement
(FTA), and foreign direct investment
(FDI), continue to affect the economic
development in Kosovo.

STRUCTURE OF UNEMPLOYMENT IN KOSOVO

Unemployment by age:
15-24 years old= 76%
The pressure of unemployment falls
directly on the youth!

STRUCTURE OF UNEMPLOYMENT IN KOSOVO (2)

More than half of the population is

under the age of 25 and about 21
percent are between 15 and 25, so the
rate of labor force expansion will
continue to rise.

Source: World Development Indicator (2015). Data for Kosovo

from World Bank Estimates

FACTORS THAT LEAD TO

UNEMPLOYMENT

Conflicts in Kosovo
Lack of motivation for private
businesses to invest in Kosovo.
Lack of human capital, labor skill,
public infrastructure.
Corruption
Lack of qualitative education

UNDERGROUND ECONOMY

Informal grey economy is made of

activities that are purposely hidden to
avoid taxation.
Informal black economy includes
profits made of tax avoidance and
contraband of legal goods.
Black economy entails criminal
activities such as, prostitution, illegal
drugs, contraband of illegal goods etc.

IMPACT ON ECONOMY AND

EMPLOYMENT

Large impact of informal economy in

Kosovos GDP is manifested in a
harmful cycle.
One the one hand, non- payment of
taxes decrease tax income, which in
turn lessen the possibility to offer
better public health to citizens.
On the other hand, it makes more
difficult for government to collect taxes

IMPACTS OF UNEMPLOYMENT IN ECONOMY

The connection between

unemployment and economic
development is a distressing fact
because it results in low economic
growth.
Unemployment reduces incomes, with
the reduced incomes there is also a
limit in demand, and thus reducing the
overall economic activity.

IMPACTS OF UNEMPLOYMENT IN ECONOMY (2)

Over the past years Kosovo faced a

high rate of emigration.
Around 30% of Kosovos families have
one or more family member/s that lives
abroad.
As a result, Kosovo misses the
opportunity of having a higher skilled
and more educated work force.

FREE TRADE AGREEMENT (FTA)

What is FTA?

What impact does FTA

have on
underdeveloped and
developed countries?

FREE TRADE AGREEMENT IN KOSOVO (CEFTA)

AND ITS ECONOMIC RELEVANCE

A bigger market
Competition enhancement
Development of international
businesses
Globalization
Access to the latest technology
New genial ideas
Various international products

FOREIGN DIRECT INVESTMENT (FDI) (CONTD)

Why is important FDI in Kosovo?

What should we do to attract foreign

investments?

Is important foreign assistance for

Kosovo?

FOREIGN DIRECT INVESTMENT (FDI) (CONTD)

Is Kosovo attractive for FDI?

Mineral deposits

Tourism in Kosovo

BARRIERS FOR FOREIGN

INVESTMENTS

Corruption

Judiciary System

The problem of electricity

CONCLUSION

A successful economic development

strategy must focus on improving the
skills of the area's workforce, reducing
the cost of doing business and making
available the resources business needs
to compete and thrive in today's global
economy.~ Rod Blagojevich

RECOMMENDATION WHY INVEST IN KOSOVO?

Language
Workforce
Location & Time Proximity
Taxes & Labor

RECOMMENDATION (CONTD) LANGUAGE

Language

English

Included in education curriculums

German

Due to a vast number of Kosovar citizens living

in German speaking countries

RECOMMENDATION (CONTD)- WORKFORCE

Youngest population in the Balkans

70% of the population seeks higher education

Source: Invest in Kosovo (IPAK).

RECOMMENDATION (CONTD) - LOCATION & TIME

PROXIMITY

Part of the South-Eastern Europe

Close to the EU market
Is in the same time zone with the
neighboring countries.

RECOMMENDATION (CONTD) - TAXES & LABOR

Low tax payment required from the

government
Low labor costs

Source: NeoIT (2006); Survey on Call Centers in Kosovo (2009)