Rule of law, regulation and economic performance in Kosovo: An empirical analysis

The institutional environment forms the framework within which individuals, firms and government interact to generate income and wealth in the economy. Rule of law and regulatory framework has a strong bearing on competitiveness and economic performance. It plays a central role in the ways in which societies distribute the benefits and bear the costs of policies, investment, human capital, productivity and organization of production. Owners of land, corporate shares and intellectual property are unwilling to invest in the improvement of their property if their rights as owners are insecure. Of equal importance, if property cannot be sold and bought with confidence that authorities will endorse the transaction, the market itself will fail to generate investments and growth respectively. The literature on the impact of rule of law and regulatory framework on economic performance in Kosovo has been scant at best. This paper employs an empirical analysis of the nexus between improvements in rule of law and regulation on economic performance in Kosovo from 1998-2018. It finds that rule of law and regulation are not only important as enablers of growth but also can explain economic performance in a statistically significant way