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Pillars of National Development of Kosovo

The purpose and meaning of national development strategy

The Republic of Kosovo is at an important stage for orientation of its development agenda towards European integration in all areas. Such a European development orientation comes naturally after concluding the emergency and stabilization phase during 1999-2007, and the state-building phase in the post-independence period. During the emergency and stabilization stage, we as a society along with our international partners, was focused on rebuilding the basic devastated infrastructure as well as restoring normal living conditions. Later, in the state-building stage, our energies were directed at establishing the institutional architecture of the country and basic physical infrastructure for development and welfare. Thus, public investments were focused towards building new state institutions, development of educational and health infrastructure as well as other infrastructure necessary for sustainable development.

However, while the rate of economic growth in the recent years has been considerable and satisfactory despite the world economic crisis – averaging 3.3% annualy since 2009 – subsequently resulting in lowering the overall poverty levels, they nonetheless could be even higher. In fact, they have to be higher in order to allow a sustainable development and higher standards of living for Kosovo. Income per capita in Kosovo are 11% in relation to European Union countries, and to attain this level of EU countries, Kosovo needs to have a growth rate of 8% in the next 30 years. Also, as Kosovo is lagging behind the average of Southeast European countries that are non-EU members, based at a number of key economic and social indicators that illustrates the economic development and quality of life, initially our goal is to attain the level of these countries (as illustrated by the table below).

 

Indicator

Kosovo

Average of Southeast European non-EU countries

Gross Domestic Product per capita

€2,935

€3,504

Percentage of unemployment

30.1%

20.8%

Participation in labour market

40.5%

49.7%

Percentage of population living in poverty

29.9%

19.7%

Ratio between export and import

12.0%

46.5%


Therefore, in this new development stage of Kosovo, a new approach to development policies is needed. This new approach which will address all factors that currently are limiting economic growth and improvement of standard of living, and which treats development as a multi-faceted enterprise. In this sense, Kosova is not poor of strategies and specific initiatives that aim addressing the development barriers separately. In fact, there are numerous and detailed sectoral strategies or specific initiatives but their implementation is rather difficult because of limited capacities.

It is necessary to integrate the existing policies and strategies and create a common axis of orientation. A genuine national development policy requires not only their coherent interaction, but also to narrow the focus of their multitude measures, by selecting the “country’s top priorities”.

The National Development Strategy (2016-2021) represents such a list of top priorities. This is a document that aims to address key obstacles to development of Kosovo. Creating such a document is based on the principle that one of the key obstacles to sustainable economic development is the coordination of development policies and institutional processes, as identified by various national and international institutions.

Developing a list of priorities, under an umbrella strategy, will allow building synergies between various initiatives, prevent institutional overlap, yield higher performance efficiency, orientation of support of the development partners and establish a firm guiding basis for Kosovo’s institutions and accountability to the public. The stakeholders of this important document are all of us – state institutions, private sector, civil society, development partners, etc. – as the measures set out under this document require the contribution of each of us in order to be effective, either as an implementation or supervisor body.

NDS is also distinct from other documents on policy orientation in that it spans onto a timeframe beyond the mandate of one government and is focused on priorities of high importance. As a guiding policy document on development it does not address all aspects of governance, but is confined to those related to the overall social and economic development. Furthermore, it reflects development initiatives, which are national objectives that enjoy a broad social consensus.

Simultaneously, NDS is in full harmony with other strategic processes, such as EU integration process through the implementation of Stabilization and Association Agreement (SAA) or the Economic Reforms Programme (ERP). This is because the measures set out in NDS are mostly synchronized with priorities of economic and institutional reforms necessary for Kosovo’s integration into the European Union.

NDS is a document prepared by the Kosovo institutions, under the leading and coordinating role of the Strategic Planning Office (SPO) mandated by the Prime Minister of the Government of the Republic of Kosovo and with the technical support of the European Commission Office in Kosovo. The process of drafting the document commenced under the Government Decisions dated 3rd of June 2015 and continued with a consultative process within state mechanisms through working groups, based on preparatory and study work carried out by SPO in the previous year. The document is also open to public consultation in order to obtain input from civil society, private sector and other stakeholders


Guiding principles and structure of priorities

Selection of NDS priorities and measures was done based on two general principles. The first underlying principle is the need to ensure highest annual economic growth rates. This, in turn, implies the need to increase revenues, consequently the employment and welfare of the citizens of Kosovo. The second principle is the need to ensure social cohesion and inclusion parallel with economic growth, which means non-exclusion of certain social groups from benefits deriving from economic growth. Inclusion is required not only as a pre-requisite for social justice and cohesion but also because, as such, it drives larger and more sustainable economic growth.

In view of these guiding principles, during the previous studies that preceded the development of NDS and the consultation process, key obstacles that prohibit higher rate of economic growth and increased inclusion have been identified in a structured way. This was followed by identification of necessary interventions, or measures that will be undertaken in the course of the next six years to eliminate these obstacles and unlock the economic and social potential of the country.

The nature of obstructions to economic growth and inclusive development is very complex. However, expressed in economic terms, the common denominator of these obstructions is the fact that they have impact, directly or indirectly, by limiting the quality, productivity and of the capital and labour force of the country – two main factors necessary for economic growth. More concretely, these obstructions inhibit economic growth by producing market distortions and institutional failures; discourage private sector investments and innovation, rendering the use of country’s resources in a rather inefficient and effective way.

On the other hand, the nature of interventions on these obstructions is pragmatic, focusing on achieving the targeted results of economic growth and inclusion rather than ideological prejudice on the need for state’s intervention or adopt a hands off approach, leaving the free market to its own devices. The underlying principle NDS is that that the economy of Kosovo will develop by having private sector and competitiveness as its own pillars, as the most effective ways to generate value and allocate resources in economy. To achieve this the active role of the state is undoubtedly necessary and also to allow for the growth and strengthening of private sector.

It is worth noting that interventions hereunder are guiding and orientation principles, with main focus on their designation as priorities and not necessarily their development as detailed final interventions. In many sectors the Republic of Kosovo has already clearly identified priorities and approach to addressing challenges, therefore measures set out in these sectors are more detailed. In some others yet, there is need for further consultation and study to develop specific solutions, therefore the options produced there are more open and generic. Detailed, ready solutions to all challenges cannot be a requirement for producing a framework strategic document such as NDS. There where solutions remain more generic, at least the need for intervention has been set out as a priority, therefore the strategy as such should be seen as a living document, something to be complemented during the coming years through specific sectoral policies and strategies.

Structurally, NDS is divided into four thematic pillars: human capital, the rule of law and good governance, development of competitive industries and development of infrastructure These pillars make the strategy to promise Employment, Law, Business and Construction (in Albanian, PLAN).

To understand the logic behind the pillars and their correlation, imagine a business seeking to invest in Kosovo and conditions it requires to achieve its success. This business requires that what the NDS requires, too: capable labour force, rule of law, business support schemes and reliable infrastructure. Meeting these requirements for businesses will lead to the path of economic development.

These pillars make sense and produce their impact on development only if implemented in full, as their success is contingent on the synergy arising from the interaction of measures, in full alignment with one another. For example, the impact of investments in infrastructure (Pillar 4) is exponentially higher if operated in conjunction with closure of loopholes that allow for abuse of public procurement system (Pillar 2), as the investment will then be diverted to where it is needed the most and with lower cost. Developing a credit guarantee scheme to businesses (Pillar 3) will be helpful for a variety of industries besides solving the problems of supporting infrastructure (pillar 4).

 

Read the full, National Development Strategy 2016-2021 of Kosovo (NDS):
http://www.kryeministri-ks.net/repository/docs/National_Development_Strategy_2016-2021_ENG.pdf

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Pillars of National Development of Kosovo

The Republic of Kosovo is at an important stage for orientation of its development agenda towards European integration in all areas. Such a European development orientation comes naturally after...
December 2018