Foreign Direct Investment in Kosovo and possible avenues for change

Foreign Direct Investment (FDI) is very beneficial in assisting economic development in underdeveloped economies. The positive contributions can be seen in the spillover effects, employment creation, and increase in available capital. As a post conflict society, Kosovo is still rebuilding its society and institutions. Various sectors of the economy are underperforming or are not fully developed. Most noteworthy, the agricultural sector remains underproductive. The demographics and laws on the books provide positive conditions for possible investment. The average age in Kosovo is 35 and corporate taxes are very low at 10%. Industries have been privatized and several economic zones (EZs) have been established to further encourage inflows. Several industries lend themselves very well to foreign investment such as energy, agriculture, tourism and telecommunications. Yet foreign investment does not flow in at the rate that one would think. This is because of corruption and low public trust in institutions. The government of Kosovo remains a big question mark as it is unclear if contracts will be enforced and property protected. Aside from institutional problems, poor infrastructure and unreliable electricity further exacerbate the problem. Kosovo has the potential to be a productive economy, but major reforms are necessary