The internal processing as an opportunity to increase competitiveness and to generate new jobs: the case of Kosovo

Halil Kukaj,Burim Prenaj

doi:10.18468/pracs.2018v11n2.p229-238

Abstract

Global competition compels corporations to increase competitiveness by lowering production costs. Internationally affirmed brand corporations achieve to lower production costs by applying different forms of international business cooperation with business entities in developing countries. One of the forms of international business cooperation is by which cooperation the internationally affirmed brand corporations manage to reduce production costs, while businesses in developing countries realize the profits for themselves and contribute to reducing the level of unemployment in their countries. Given the positive aspects of internal processing, the paper aims to sensitize as much as possible the business entities to implement this form of business cooperation. Based on the analysis of data collected by the Customs Administration of Kosovo it can be concluded that in Kosovo, internal processing has been implemented very little, but we recommend that in the future to intensify the implementation of the internal processing in Kosovo.

Highlights

External partner benefits from this form of cooperation are: - increases the amount of production without investing in developing production capacity and avoids the risk of major investment; - exploits cheap labor of local partner, - uses free inputs in the country; - facilitates the placement of products in the local market; - eliminates the problem of currency risk; - exceeds barriers of local customs
Raw material and reproductive material of the external partner is imported by the local partner in order to be processed by implementing the customs procedure of internal processing
The data in table 1 shows that during the reporting period, imports under customs procedure 7100 have the highest participation, while in the second place is the customs procedure 5100,the third place belongs to the customs procedure 9100, while the last place is for customs procedures 4100

Summary

INTRODUCTION

Internal processing is based on the contract for the integration of production factors of the local partner with the external partner. The finished products bear the brand of the external partner, which is usually internationally renowned brand In this kind of cooperation, the foreign partner usually takes the obligation of placement of products in international markets (Kukaj, 2014). Given the positive aspects of inward processing, the majority of developing countries implement various measures to encourage corporations of developed countries to enter into cooperation with local business entities, final internal processing (Sinanagic, 2002). Given the positive aspects of the internal processing, we recommend Kosovo business entities to apply, as much as possible, this form of international cooperation. We recommend to the institutions of Kosovo to apply various measures to encourage this form of international business cooperation

INTERNAL PROCESSING AS AN INTERNATIONAL BUSINESS COOPERATION FORM

IMPORTS OF GOODS FOR INTERNAL PROCESSING

THE IMPLEMENTATION OF THE INTERNAL PROCESSING IN KOSOVO

Imports under customs procedures with economic impact

Imported goods for Internal Processing

Participation given in percentage

The number of license users for Internal Proessing

CONCLUSION