Abstract
In the last 15 years, Kosovo has faced serious economic challenges, the most pressing of which has been the persistent and huge negative trade balance. Many believed that trade liberalisation would remedy the situation and trade with neighbouring countries was liberalised, followed by the liberalisation of trade with the EU. However, trade liberalisation has not produced the expected results, as it did not enhance the competitiveness of domestic industries. It did, however, exacerbate the consumption bias of an already heavily consumption-dependent country. The benefits from trade liberalisation were limited due to supply-side constraints, and in the future greater emphasis should be placed on domestic measures to enhance production capacities. The recent literature argues that policymakers should consider industrial policy to boost the country’s productive capacities. The discussion of the privatisation process in the context of industrial growth in Kosovo is still highly relevant, as over half of the assets of the former socially owned enterprises have not yet been sold or liquidated. The transformation of some of these remaining assets could contribute to increasing the production capacity and contribute to a wider economic development. This would extend the production base, which is already being gradually expanded by new private initiatives. Once a critical mass of private enterprises has been achieved, the effects of trade liberalisation are likely to become more visible.
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Notes
- 1.
Based on HS nomenclature, Chapter 84.
- 2.
For instance, Bartlett (2003) suggested that rather than going for complete trade liberalisation, Kosovo should develop an integrated export policy that would rest on three major pillars: competitiveness of domestic companies (border-in policies), trade facilitation programmes (border-related policies), and export promotion programmes (border-out policies).
- 3.
Kosovo institutions have adopted formally two trade policies, the first in 2005 while the second in 2009. Both policies focus on the need for trade liberalisation as a promoter of export growth.
- 4.
http://www.doingbusiness.org/reports/global-reports/doing-business-2017 (accessed on: October 20, 2016).
- 5.
Specifically, the issue of zeros, of which there are many in the Kosovo trade matrix and especially in sectorial databases as well as the prospect of accounting for historical patterns in the trade between Kosovo and the EU.
- 6.
Social product was the Yugoslav version of GDP.
- 7.
In former Yugoslavia, the ‘social sector’ was the sector composed of socially owned enterprises together with the public sector. It excluded the quite widespread private sector of activity, mainly in agriculture.
- 8.
In 2014, the Ministry of Trade and Industry developed the ‘Concept of Kosova Industrial Policy’, a concept document that in general terms lays out the directions for the industrial development of Kosovo.
- 9.
Workers’ self-management implied workers’ participation in the process of enterprise decision-making, both directly at the workers’ general assembly and through representatives in the workers’ councils (Uvalić 2010).
- 10.
The UNSC Resolution 1244 formally ended Serbian rule in Kosovo with the establishment of the international protectorate. However, Kosovo remained legally bound to Serbia until the declaration of independence in 2008.
- 11.
See UNMIK Regulation 2002/12 on the establishment of the Kosovo Trust Agency (http://kta-kosovo.org/html/index.php?module=htmlpages&func=display&pid=6; accessed on: October 23, 2016).
- 12.
Much of the current privatisation infrastructure—legal and institutional—is similar to the one establishing KTA. Hence, the designation ‘Agency’ is used interchangeably for both KTA and PAK, respectively.
- 13.
The 20% rule was included not as a compensation for the loss of ownership rights but rather as compensation for workers’ loss of their management rights (see Knudsen 2010).
- 14.
A share of proceeds would go into maintaining Agency operations. Currently, it stands at 5%.
- 15.
See UNMIK Regulation 2003/13 on the Transformation of the Right of Use to Socially-Owned Immovable Property.
- 16.
The Special Chamber of the Supreme Court, and indeed the entire process of privatisation, has seen a heavy international involvement over the years. Until September 2014, the board of directors of the agency—the main decision-making body—was comprised of members appointed by international mechanisms governing Kosovo and the local representatives, with the former having the right to veto any board decision. Moreover, a number of judges in the Special Chamber of the Supreme Court are still ‘internationals’. All this was done to preserve the credibility of the process.
- 17.
The Department of Trade and Industry (DTI) was established based on the UNMIK Regulation no. 2000/63. DTI was responsible for managing the overall issues related to the trade and industry in Kosovo.
- 18.
According to the World Bank Doing Business report 2017.
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Gashi, P. (2019). Trade and Industrial Development in Kosovo. In: Osbild, R., Bartlett, W. (eds) Western Balkan Economies in Transition. Societies and Political Orders in Transition. Springer, Cham. https://doi.org/10.1007/978-3-319-93665-9_8
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