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Competitiveness in South East Europe 2021

A Policy Outlook

image of Competitiveness in South East Europe 2021

The future sustainable economic development and well-being of citizens in South East Europe depend on greater economic competitiveness. Reinforcing the region’s economic potential in a post-COVID-19 context requires a holistic, inclusive and growth‑oriented approach to policy making. Against the backdrop of enhanced European Union (EU) accession prospects and a drive towards deeper regional integration, the governments of the six Western Balkan (WB6) economies have demonstrated a renewed commitment to enacting policy reforms.

The third edition of Competitiveness in South East Europe: A Policy Outlook comprehensively assesses policy reforms in the WB6 economies across 16 policy dimensions crucial to their competitiveness. It leverages a highly participatory assessment process, which brought together the views of OECD experts, WB6 policy makers and local non-governmental stakeholders to create a balanced and realistic depiction of their performance. The report seeks to provide WB6 policy makers with a multi-dimensional benchmarking tool, enabling them to compare performance against regional peers as well as OECD good practices, and to design future policies based on rich evidence and actionable policy recommendations.

Economy-specific profiles complement the regional assessment for the first time in this edition of Competitiveness in South East Europe: A Policy Outlook, and provide each WB6 economy with an in-depth analysis of their competitive potential as well as policy recommendations tailored to their specific challenges to inform their structural economic reforms and sustainable development agenda.

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Kosovo profile

Kosovo is a small open economy with a limited but growing productive base. Services account for the largest share of the Kosovar economy, making up 47.5% of gross domestic product (GDP) and 65% of employment (World Bank, 2021[1]; Kosovo Agency of Statistics, 2021[2]). Wholesale and retail trade, real estate, transportation and storage, and financial services are the largest service sectors in the economy (Kosovo Agency of Statistics, 2021[3]). Industry accounts for 26.4% of GDP, with the highest contribution coming from the manufacturing and the construction sectors (11.7% and 8.5% of GDP, respectively) (Kosovo Agency of Statistics, 2021[3]). The contribution of agriculture, forestry and fishing to Kosovo’s GDP has declined considerably over the past decade, from 15% in 2008 to 6.9% in 2019, although it still accounts for a significant share of employment – 5.5% of formal employment and an estimated 35% of informal employment (World Bank, 2021[1]; Cojocaru, 2017[4]).

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