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MUSTAFA Muhamet, ZOGAJ Alban and ABDIXHIKU Lumir University AAB- Riinvest , Prishtina

Challenges of Reindustrialization in Kosovo The Adriatic – Balkan Area from Transition to Integration. MUSTAFA Muhamet, ZOGAJ Alban and ABDIXHIKU Lumir University AAB- Riinvest , Prishtina 21-22 May 2010 Ancona. Contents. Development specificities of Kosovo :

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MUSTAFA Muhamet, ZOGAJ Alban and ABDIXHIKU Lumir University AAB- Riinvest , Prishtina

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  1. Challenges of Reindustrialization in KosovoThe Adriatic – Balkan Area from Transition to Integration MUSTAFA Muhamet, ZOGAJ Alban and ABDIXHIKU Lumir University AAB- Riinvest , Prishtina 21-22 May 2010 Ancona

  2. Contents • Development specificities of Kosovo : • in four decades passed through the industrialization and deindustrialization • it faces the needs for reindustrialization process. • Challenges in building competitiveness capacities in condition of small developing economy open market • Competitiveness of emerging new industries • An evaluation of industrial policies and recommendations for appropriate policy instruments and approaches. RIINVEST INSTITUTE …centre of excellence…

  3. Methodology • This paper is part of a wider study, developed by Riinvest Institute in coordination with MTI, regarding industrial policies in Kosovo. • Desk research, consultation of secondary sources • Survey of around 1200 manufacturing enterprises/ businesses with more than 4 employees and less if they are exporters • October 2009. RIINVEST INSTITUTE …centre of excellence…

  4. Industry output composition comparison: 1988 / 2008 RIINVEST INSTITUTE …centre of excellence…

  5. Main industrial sectors in Kosovo (2008) RIINVEST INSTITUTE …centre of excellence…

  6. Industry/manufacturing and other macroeconomic indicators Kosovo’s composition of GDP accounts for, services 60%, agriculture 25% and industry 15% (Riinvest 2006). Despite this low level of representation, the industry contributes much more to exports (import substitution) and investments. GDP / capita 1760 Euro( $2500) , trade deficit 30-40% of GDP; Unemployment about 40%; RIINVEST INSTITUTE …centre of excellence…

  7. Industrial Policy for Kosovo ? • Dilema over industrial policies • Washington Consensus • New developments and discussions • How and emerging industry could build its competitiveness capacities • Horizontal and vertical policies • Industry role in economic growth • Industry and other sectors • Which industries

  8. Competitiveness indicators [1] Profitability rate shown in the table is declared rate from businesses surveyed. RIINVEST INSTITUTE …centre of excellence…

  9. Influence of imports on firms’ products RIINVEST INSTITUTE …centre of excellence…

  10. Barriers in Doing Business RIINVEST INSTITUTE …centre of excellence…

  11. Industrial Policy Constraints and Policy Instruments Evaluation (1) Iinitial record and evaluation of the intensity of implementation of various policy instruments to tackle constraints in building Kosovo’s industrial competitive capacities : Evaluation of the presence 0- absent; 5 high presence RIINVEST INSTITUTE …centre of excellence…

  12. Industrial Policy Constraints and Policy Instruments Evaluation (2) RIINVEST INSTITUTE …centre of excellence…

  13. Industrial Policy Constraints and Policy Instruments Evaluation (4) RIINVEST INSTITUTE …centre of excellence…

  14. Industrial Policy Constraints and Policy Instruments Evaluation (5) RIINVEST INSTITUTE …centre of excellence…

  15. Conclusions • Six manufacturing sectors in Kosovo, that has shown better performance compared to other sectors • food processing and construction materials have the biggest share on the industry output. • Create more developed policy environment and conditions • Environment of fair competition for all sectors, rather than just focusing on narrow group of sectors. RIINVEST INSTITUTE …centre of excellence…

  16. Recommendations Policy instruments that we suggest are: • In the area of finance, we recommend credit lines for manufacturing and exporting businesses, as well as support in introducing venture capital funds and other instructional investors, including also Diaspora participation. • In the area of infrastructure, we recommend facilitation of PPP’s. • In the area of innovation we recommend public funding and tax incentives for research and development as well as legal protection of intellectual property. • Last but not least, on the human capital area, we recommend subsidies for skills acquisition and stimulating investment on private education. . RIINVEST INSTITUTE …centre of excellence…

  17. Rcommendations • Improvements in general policy areas • Specific instruments that address competitiveness constraints - horizontal approach • On the other side, especially due to the weak institutional capacities • Avoid vertical approach expect b for ICT sector

  18. muhamet.mustafa @riinvestinstitute.org; ++ 381 38 601 320 …centre of excellence… Thank you very much! RIINVEST INSTITUTE …centre of excellence…

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