Kosovo Country Economic Memorandum, November 2021 : Raising Firm Productivity
To boost economic growth and foster sustained formal job creation in Kosovo, igniting firm productivity is crucial. Based on detailed micro-data, this note examines the characteristics and recent evolution of firms in Kosovo, with particular attent...
| Main Author: | |
|---|---|
| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2022
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/undefined/099135201212235843/P17195107602a90bd086730a54423f6b077 http://hdl.handle.net/10986/36897 |
| Summary: | To boost economic growth and foster
sustained formal job creation in Kosovo, igniting firm
productivity is crucial. Based on detailed micro-data, this
note examines the characteristics and recent evolution of
firms in Kosovo, with particular attention to firm
productivity. For the last decade, the landscape of firms in
Kosovo has been dominated by microenterprises with low
productivity, employment, and survival rates. Firm creation
and growth,small firm density, average size, and the
likelihood of survival are all low, which implies that there
are severe constraints on private sector development.
Kosovo’s firms are only tenuously linked to global markets
and the country is lagging in the share of female-run
companies. Positive and rising net job creation in 2015-18
was driven by higher formalization of jobs and the
increasing size of incumbent firms, especially young small
and medium enterprises (SMEs). Kosovo needs a
multidimensional policy strategy to foster growth in firm
productivity. Based on the study findings and the results of
other notes prepared for Kosovo’s country economic
memorandum (CEM), this note presents a policy strategy that
targets the three main sources of firm productivity growth:
(1) firm productivity (the within component); (2) market
reallocation (the between component); and (3) firm dynamics
(entry and exit). Section one examines the characteristics
and recent dynamics of Kosovar firms. Section two analyzes
the drivers and evolution of productivity, with emphasis on
the links between productivity and access to credit. It also
assesses the main barriers to productivity growth. Section
three sheds light on how Coronavirus disease 2019 (COVID-19)
has affected Kosovar firms. Section four concludes by
discussing tentative policy implications of the analysis. |
|---|