Post-Conflict Economic Recovery in Kosovo

Abstract

Modern Kosovo faces many challenges in post-conflict economic recovery and development. The current international and regional agenda significantly complicate the recovery process. It is a combination of both chronic underdevelopment and post-conflict reconstruction. Such a mix produces limited state governance, a vast shadow economy and criminal networks, massive unemployment, and widespread poverty worsened by original Kosovo's problems such as gender disbalance in the labor force, ethnic discrimination, and unsettled rights of local property owners. The article highlights the current results of internal and external efforts to enhance the ability of Kosovo’s authorities to provide economic and physical security for local households and businesses. It focuses on international support through direct financial aid and external investments and argues that this support challenges the political independence and viability of this self-declared polity. Kosovo is still on the list of Europe's poorest and most vulnerable regions. Reforms are proceeding slowly. A large share of state-owned enterprises is unprofitable. The private sector is fragmented, and microenterprises dominate. Kosovo's economy relies heavily on imports and excessively depends on the trade sector. Financial discipline, efficiency, and transparency of the resource’s distribution, optimization of intersectoral interaction, fight against corruption – all these issues are still on the current economic and political agenda, as they were ten years ago, despite Kosovo’s ranking as one of the top twenty most improved economies in the world. Financial dependence becomes a formidable barrier to Kosovo's membership in the European Union.