Economy

Post-war crisis?
For almost twenty years since the end of World War II Kosovo had been going through a relative economic growth. The political reform occurred at the beginning of the Seventies contributed to an advance of the economic and societal progress of the country, while the Eighties marked a general inversion of trends.
Two decades of economic recession - experienced by the whole former Federal Republic of Yugoslavia - seriously affected Kosovo, a region traditionally lagging behind the rest of the Federation in terms of socio-economic standards. According to UNDP, in the 1985-1994 period only, economic output fell from 1,125 to 320 US$.
Yet if mismanagement by Yugoslav Federal authorities had left the local economy in critical conditions, the region had to pay the additional toll of the almost total destruction of property and enterprises caused by the conflict.

Since the end of the war, a series of small commercial activities flourished in Kosovo, but serious doubts arose as regards the sustainability of what might be read as a partial economic rebirth. In fact, the agricultural production still results fragile: although improving, it did not reach prewar levels. On the other hand, the industrial sector � if present at all � is largely to be rebuilt: mining, metallurgic and manufacturing enterprises, formerly playing a key-role in the local economic development, are still closed.
The construction sector boomed in the immediate aftermath of the conflict (thanks to the injection of foreign capitals in post-war reconstruction) and today appears as the leading economic sector.

Problems and recommendations
The critical situation is confirmed by the high rates of unemployment peaking in 2001 more than 60% among the Albanian ethnic group. Rates are probably even higher among Serbs and other minority groups who have even narrower access to employment opportunities. These figures need to be reviewed in the light of more realistic estimates that tell of a high number of people employed in the informal sector.
The economic subsistence of the local population is strongly linked to the quasi-legal grey sector and to the remittances coming from Kosovans living abroad.
The international community has until recently strongly contributed to the overwhelming majority of the national budget (in 2000 almost 430 million US$). The progressive decrease of expenditures of international actors in the region is starting to have a visibly negative impact on the local economy: Kosovan authorities will soon have to look for local alternatives out of the crisis.

As the International Crisis Group noticed, a concrete reform plan would be needed for the productive system to be restarted. The introduction of the German Mark as official currency surely facilitated trade, but the measure was not sufficient to foster international investment in the area. Nothing was done to plan the necessary infrastructure for the long term economic re-launch.
The privatisation process was considerably delayed by the failure of providing solutions to various property-related issues.
This fact, jointly with regional political instability (and in this sense it is once again to be stressed the need for a solution to the issue of the permanent status of Kosovo) and a still deficient legal framework practically impeded any inflow of foreign capitals.