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Prospects for economic growth depend
upon the success of two overarching factors (1) mitigating
risks related to political uncertainty and the maintenance
of peace and security in the region; and (2) implementation
of a policy program that promotes private sector- led
growth, including completion of the reconstruction effort.
Such a package of reforms might include the following
measures: Within a sound fiscal position proceed with
prioritized capital projects to complete the rehabilitation
of infrastructure, but resist unsustainable spending on
recurrent expenses such as the public sector wage bill.
Pursue improved trade relations within the region. Maintain
a uniform tariff rate and reduce the rate across the board.
Consider a compensating revenue effort to raise taxes from
the value-added tax, including through improved
administration. Proceed with privatization of socially-owned
enterprises and restructuring of publicly owned enterprises,
including privatization of land-use rights of public
enterprises (SOEs) slated for liquidation. Strengthen the
capacity of the municipal courts to implement and enforce
creditors rights and contracts. Rehabilitate the power
sector, including lignite mines, and pursue a strategy for
integrating with the regional power grid. Develop a strategy
for the revitalization of the rest of the mining sector.
Address overstaffing issues in private enterprises and SOEs,
address transitional unemployment issues and facilitate
redeployment to alternative productive activities. Keep the
labor market relatively unencumbered by payroll taxes.
Facilitate employment search. by linking information systems
to enterprise surveys and the provision of vocational
training. and then looking at the particulars of several
sectors. Chapter 2 looks at macroeconomic stability, and
considers the prospects for improving economic growth in
Kosovo. Chapter 3 discusses a conducive business Climate.
Chapter 4 examines the prospects for export-led growth in
the power, mining and agriculture sectors. These are three
sectors in which Kosovo could have a comparative advantage,
as it is relatively well endowed with (1) lignite, (2) other
minerals, and (3) fertile agricultural land; enjoys free
trade with the European Union and is geographically located
close to Western European markets. Finally, Chapter 5
reviews the labor market outcomes and policies for a liberal
labor market and an appropriately skilled labor force.
