Economic Growth In Kosovo Research Articles

Role of Public Expenditure in Economic Growth: Econometric Evidence from Kosovo 2002–2015

Abstract The aim of the study is to examine the impact of public expenditure on economic growth of Kosovo. Time series data span for the period of time 2002-2015. The structure of the econometric model is built on Keynesian theories and endogenous growth model. The model estimation is performed only after implementing the Augmented Dickey-Fuller (ADF) Unit Root test to estimate if time series are stationary. Several tests have been implemented to determine model validity. The model has met all the assumptions of statistical tests: error term residuals have a normal distribution (Jarque-Bera test), there is no auto-correlation between variables (Breusch-Godfrey Serial test), and error variances are constant, known as the principle of homoscedasticity (Breusch-Pagan-Godfrey test). Gross domestic product is used as a dependent variable in the model, while public expenditure (G), foreign direct investment (FDI), export (EXP) and total budget revenue (TrTax) are used as the endogenous variables. The study results have revealed that there is a positive and statistically significant effect of public expenditures and exports on economic growth. Total budget revenue has a positive impact on economic growth but this has not been proved to be statistically significant. The authors of the research have also found out that FDI is negative and statistically insignificant.

Kosovo: Rule of Law and Economic Growth

An increasing amount of literature links the quality of institutions and governance to economic performance across the economies. In this respect, the maintenance of rule of law plays a critical role, for it encourages growth, investments and innovations, and firm growth and business development. This article examines the effect of rule of law on economic growth in Kosovo and argues that the deficiencies in rule of law, the judiciary in particular, and uncontrolled levels of corruption have negatively impacted economic growth in the country—by directly affecting growth, and indirectly—through lowering investments and risking business environment. The data shows mixed results. Its availability is problematic, too. Moreover, the data is inconsistent and controversial, rendering it difficult to draw a clear and concise conclusion. In analyzing the case of Kosovo, a number of factors must be taken into consideration including foreign rule and administration, lack of full international recognition, the country’s disadvantaged status in former Yugoslavia, and repression and war in the 1990s—which to a great extent—have influenced and determined the quality of institutions and governance, henceforth economic performance.

Collection of Value Added Tax in Kosovo and Its Effect on Economic Growth

The revenue collected from the value added tax constitutes the main income of the Kosovo government. For this reason, this research has a great importance in the formulation of effective policies in Kosovo that will subsequently improve the efficiency of tax collection of Value Added and growing fiscal and budgetary stability. This research it will have a descriptive analysis of the trends of VAT collection in Kosovo from 2005- 2015 years using different analytical techniques to examine trends and data structure over the years. We have used two types of analysis; One is the descriptive analysis of trends and the other is the contrast of the descriptive analysis of trends that is the econometric technique used to analyze the VAT effect on economic growth in Kosovo. The source of data for this study is secondary through the Annual Financial Report of the Ministry of Finance of Kosovo and the IMF. In order to analyze the data generated for the study, the statistical tool utilized is OLS technique (multiple regression). One of the key findings in the collection of VAT has been its dependence on the border. Revenue collection is among the most pressing problems and such situation does not guarantee a country's budgetary stability. Also, based on the findings we noted that the VAT share of the gathering in gross domestic product of the Interior of the country has been low compared to other countries in Europe developing, reflecting a low level of economic development. Also from econometric analysis is confirmed that the regression coefficient shows that we have a VAT impact on GDP in Kosovo, because the level of significance is .000, or includes the rate of 1%. Also, the correlation between VAT and GDP shows a strong positive relationship, or statistically interpreted with the increase of VAT, will increase the GDP of Kosovo, these two elements conclude that VAT has a significant impact on economic growth in Kosovo. Furthermore, this research highlight some key issues that policy makers should consider dealing with the collection and effective use of revenue collected from VAT, to improve growth.

The Impact of FDI on the Structure of the Kosovo Economy

This study has addressed the impact of domestic investment and FDI net flow from the services sector on economic growth for a period of 10 years. The data are taken from CBK, in annual periods, using the technique of Pearson correlation and multiple OLS regression, conducted with the statistical program SPSS 21.0. FDI attraction by the services sector is found to be greater than by the other sectors. This becomes more evident by findings from econometric analysis, where the services sector has a strong impact on economic growth in the country. Meanwhile, the "crowding out" effect has happened, indicating that local investment (local firms) has a modest level of technical and managerial changes, since increasing effect is estimated to be negative. According to this study, the economy of Kosovo has grown with an average rate of 4% for 16 years and the biggest contributor is the services sector with 56% of GDP, which includes financial services, insurance companies, construction, telecommunications, real estate, trade etc. This pace still continues to be a model of economic growth in Kosovo and continues to be supported by certain economic policies, while other sectors lag behind. This result clearly shows that, although the level of FDI inflows in Kosovo is low, the sector specification shows positive trend of incoming flows in the services sector. This is due to dominance in market of the financial sector and that of insurance with foreign capital as the only financing source of the local businesses.

Relationship between Import-Exports and Economic Growth: The Kosova Case Study

This paper, prepared in the framework of Granger casuality technique extended by taking account of recent relevant literature, analyzes the causality between exports, imports and economic growth in Kosovo. According to regression results, it is found that exports are a significant determinant of economic growth. But, when adding imports to the model, the effects of exports become statistically insignificant. We explore this relationship using the vector error correction models and we employ Granger causality technique in order to investigate the presence of causality among these variables. The results show that both short run and long run relationships exist among these variables. Moreover, the finding suggests, 1) bidirectional Granger causality between GDP and export, 2) unidirectional Granger causality that runs from import to exports, 3) unidirectional causality running from exports to import.The empirical results show that in Kosovo exports and accordingly economic growth are significantly affected by imports of intermediate. The high interest - low exchange rate policy implemented in recent years in the context of inflation targeting policy has supported this process, which has its limits.

Relationship in Between FDI Inflow and Economic Growth in Kosovo

This study treats the relationship of foreign direct investment (FDI) and economic development in Kosovo. FDI is considered as an important factor of economic growth of places in development, so rightly the question is asked: “Which is the impact of FDI inflow on economic growth of Kosovo?” This study shows the relationship in between FDI inflow and five macroeconomic indicators that have an important role in economic development of Kosovo such as: GDP, GDP per capita, GNI, Exports, and Balance Trade. The data were taken from World Bank and the statistic agency of Kosovo for 2005 to 2014 period. Pearson Correlation technique was used for empirical analysis that is realized with SPSS v. 21.0 statistical program, the results showed that there is a positive relationship in between FDI inflow and GDP growth, whereas there is a negative relationship of FDI inflow and trade balance of Kosovo. This study arguments what is necessary to be done in leading policies to attract foreign direct investment in Kosovo.

The Role and Impact of Remittances on the Economic Growth - Kosovo Case Study

In this research paper the role and impact of remittances on the economic growth of Kosovo in the recent years (2008 - 2013) through remittances, inflation rate, real effective exchange rate (REER) as independent variables and economic growth as depend variable is analyzed. The secondary data are used which are taken from international and domestic institutions which are analyzed through STATA software (an econometric and statistical program).The reason for writing is that in 2013 the total value of remittances in Kosovo was 620.8 million € and in 2011 Kosovo was among the top 10 countries with the highest level of remittances. The main arguments used in this research paper are: how do remittances affect in overall the economy? What is the impact of remittances on businesses? How do we use it for family consumption? In the research methodology are used secondary data and all of them are analyzed by STATA software which helps in calculation of OLS method of regression, descriptive statistic and correlation matrix.Also this paper research findings show us that if we refer to the result of variables that are included in the paper though OLS methods, the remittances (β1= - 0.017) and the exchange rate (β3= - 0.322) have negative impact and nonsignificant (T < 2) effect on economic growth but the inflation rate has positive (β2= 0.245) and significant (T > 2) effect on economic growth and the coefficient of determination (R²) is 84% then the coefficient of Durbin Watson Statistic (DW) is 2.11, it means there is no autocorrelation.

The Foreign Direct Investment and Economic Growth - Case Study for Kosovo

This research paper will explain the impact and relationship between the Foreign Direct Investment (FDI) and economic growth, Kosovo case. The used data in research are secondary data and cover a period of time between 2008 and 2013. By using STATA program for calculation and by various regression analyses (descriptive statistics, linear regression and correlation) relationships have been identified between involved variables in research, where economic growth is defined as dependent variable, whereas FDI, interest rate and real effective and exchange rate (REER) are defined as independent variables. The main results in this research paper indicate that FDI has a positive relation (0.011) but non-significant effect (T<2) on economic growth while the interest rate has a positive relation (0.076) and a significant effect (T>2) on economic growth in Kosovo. The real effective exchange rate has a negative (-0.347) and non-significant relation (T<2) with economic growth. The main activities of FDI in overall Kosovo's economy are: real estate, transport and telecommunication, financial and manufacture services, construction, etc. The main conclusion is that the Kosovo institutions should create a favorable environment, such as: political stability, enforcement of justice, reduction of trade barriers, Kosovo should also create appropriate policy for protection of foreign investors, investment security, fair competition and institutional support. This will impact the drastic improvement and increase of FDI. In 2013 Kosovo had an FDI percentage of 5% of GDP while in 2007 it was over 13% of Kosovo's GDP.

Impact of Financial Sector on Economic Growth: Evidence from Kosovo

Financial sector is world-wide considered the core component of the economic growth (Greenwood, 2013). This paper aims to present the impact of financial sector on economic growth in Kosovo, during the period 2008 until 2014. The main theoretical arguments for discussion and analysis are focused on the problems and challenges of financial sector in Kosovo under former Yugoslavia, the main process of establishment of financial sector in Kosovo in post war period, overall structure of financial sector in Kosovo, the effect of financial global crisis on financial sector particularly on foreign capital / investors in banking system and other factors that have impacted reduction of the annual rate of financial sector in 2010 and 2011. In the methodology of this research are used secondary data, which are calculating through STATA program and as the main analyses in the paper are descriptive statistic, OLS method and correlation matrix. The results of analyses have shown that financial sector has positive impact and positive correlation with Kosovo's economic growth, inflation rate has positive impact and positive significance on economic growth and exchange rate has negative impact and non - significance in economic growth in the period 2008 - 2014. As a result the research concludes that financial sector should play a crucial role in Kosovo's economy because its participation in GDP is too high (together with FDI and remittance they participate about 60 % of Kosovo's GDP). Regardless of decrease of financial sector in last few years (it is as result of reflection of global crisis in Kosovo), it is very important for the financial sector to continue to increase further its participation in overall economy of Kosovo DOI: 10.5901/mjss.2015.v6n6s4p315

Economic growth in Kosovo and in other countries in terms of globalization of world economy

The global financial crisis causes, as among the greatest crises and consequences, reflected the world in continuously increase of unemployment, poverty and inequality. This crisis was reflected in both developed and developing countries including countries in transition. The fact cannot be denied that the effects of financial crisis are even felt in the Republic of Kosovo where during this period of time following consequences could be clearly noted: decrease of the real economy, poverty, reduction in remittances, decrease of external investments, contracting criteria for bank loans and other direct and indirect effects. However, the global economy did continue to recover during 2010 and 2011. Nevertheless, uncertainty regarding to the volatility of global economic recovery in this period is greater than in the previous period. This setting is mainly extracted from instability of financial market due to problems with public finances in several EU member States and entry of protective measures by some rapidly growing economies and developing countries, in response to large capital inflows. It is important to consider the fact that, despite the recent crisis, economic growth model, based on the deepening of EU integration process, in terms of finance, trade, labour markets and institutions, remains as best model for developing countries and Kosovo itself. Special treatment is given to achieved achievements and projections for the following years under policies compiled by the Government of the Republic of Kosovo to enable generic analysis for concrete situation of our national economy. Also, this paper shall explain the underlying factors which will influence on a more accelerated economic development.

Labour market and the charasteristics of unemployment in Kosovo

Kosovo, given its difficult past, is the most underdeveloped country of Europe. Gross national product is the lowest in the region, in 2009 was 1853 Euros per capita, which is half the value of the average gross natio-nal product of the region. Average economic growth in Kosovo during 2006-2009 was 4.8%. This economic growth, although seemingly large, given the low level of development in Kosovo cannot solve problems to address important economic issues that Kosovo faces, unemployment, poverty etc. Kosovo has a large import of goods and the export-import cover is only 10%, thus the trade deficit is extremely high. Unemploy-ment remains the main economic problem for many years in Kosovo. The unemployment rate in Kosovo remains high even though there are no clear statistics about the rate of unemployment. According to many stu-dies, whether local or international institutions, the unemployment rate ranges near 40%. So this high rate of unemployment imposes as a pri-mary and essential task before the Kosovo institutions to establish poli-cies and strategies for promoting employment which is undoubtedly the best way to combat poverty.According to many studies, in order to keep the unemployment at current levels, Kosovo needs a growth rate of 7% and therefore we conclude that in order to reduce unemployment, the growth should be significantly increased over 7%, and with current developments this is unachievable, neither it is expected to be achieved by the competent institutions regarding economical growth