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 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

Credit policy and its impact in the work of Kosovo businesses

Credit policy in Kosovo is a result and a reflection of the general development of macroeconomic policy. In the post-war Kosovo economic trends were negative. Therefore, in order to come to recovery and promotion of economic development, Kosovo needs investments. Surely credits represent one of financial resources through which material factors are provided for opening of new jobs that will be expressed in the decreasing of unemployment and increasing of the national production. Kosovo, as a part of Euro area, cannot make monetary policy, but it may make credit policy. Currently, out of the banking system of Kosovo is over 1.4 million Euros of financial means, and for this sum the credit potential is reduced, as a very important factor for business and the economy of Kosovo in general. Credits in Kosovo are characterized by high interest rates and short time of their return, so the purpose of this paper is to show how much the credits have been in the function of the development of businesses in Kosovo

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

Credit policy and its impact in the work of Kosovo businesses

Credit policy in Kosovo is a result and a reflection of the general development of macroeconomic policy. In the post-war Kosovo economic trends were negative. Therefore, in order to come to recovery and promotion of economic development, Kosovo needs investments. Surely credits represent one of financial resources through which material factors are provided for opening of new jobs that will be expressed in the decreasing of unemployment and increasing of the national production. Kosovo, as a part of Euro area, cannot make monetary policy, but it may make credit policy. Currently, out of the banking system of Kosovo is over 1.4 million Euros of financial means, and for this sum the credit potential is reduced, as a very important factor for business and the economy of Kosovo in general. Credits in Kosovo are characterized by high interest rates and short time of their return, so the purpose of this paper is to show how much the credits have been in the function of the development of businesses 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

Increase of Exports as a Potential Factor for Sustainable Economic Development of Kosovo

Kosovo as the newest state in the region, in the economic aspect represents an economic complex with considerable potential of human, economic and demographic resources, having an open economy and entirely Euro integrated, with the central position in Balkan Peninsula. As a new state Kosovo is going through a transition phase and is found in an unsatisfactory position, therefore a serious professional intervention by the competent mechanisms is necessary towards finding an adequate solution which enables a speedier economic, social and cultural development, thus accessing into economic and political integrations in the region and in Europe. Kosovo economy during 2012 was characterised by a positive norm of growth. The real norm of economic growth in the country reached the figure of 2.9 per cent. The slowest developments in the regional and European markets during this year appeared as a challenge for the general economic activity in the country. In 2012, a decrease was marked from several important sources of financing in the country, especially the foreign direct investments. A reduction was also characterised in export of goods, but, growth of export of the services neutralised the effect of decrease of goods export. Kosovo suffers from the negative trade balance, implying that Kosovo depends on imports, whereas its opportunities to export local products into foreign market are very low. With intention of improving the competitive position of Kosovar enterprises, and for increasing export into world market, the existing economic policies need to be amended and supplemented and the institutional functioning needs to be improved as well. The aim of this study is to provide a realistic overview of the economic situation of Kosovo through an overall analysis and to also give recommendations with intention of improving the trade balance in favour of increase of Kosovar export in the future

Developments in Kosovo’s economy analysed on a macroeconomic point of view

Despite that in the last years, Kosovo has experienced economic growth, it still remains the least developed country in Europe. Kosovo’s economy is still fragile. During 2009 Kosovo’s economy peaked at 4.0% while during 2010, economic growth achieved 4.6%, while the GDP was estimated to be 4.2 Billion Euros. During 2009, Kosovo’s economy was characterised by deflation (-2.4%), during 2010 it saw a raise in inflation, while consumer price index was rated at 3.5%. There is still a high rate of unemployment in the labour market, about 45%, and it remains a challenge for the country’s economy. During 2009, money deposited from Kosovars living abroad experienced a decline of 5.6%, where during 2010 these deposits marked a slight improvement. Trading imbalances since the post-war period have continued in 2010, which has created a high level of dependence of commercial deficit (deficit constitutes about 45% of the GDP). The purpose of this study is to give a clear view of the macroeconomic situation of Kosovo through a comprehensive analysis and critical approach towards developments so far, in order to improve the economic state in the future

Impact of Globalization in Kosovo’s Economy

The economy in Kosovo continues to generate macroeconomic growth and solid stability, especially in fiscal and financial terms. Despite the increasing risks from the external sector, Kosovo’s economy has marked positive growth rates in 2012 also. Nevertheless, being an open economy, it has not been spared of the effects of the crisis faced direly by some of the most developed countries, and especially those in the Eurozone, which have shrinked the growth rate in comparison to previous years, despite it being positive. These risks mainly are reflected into the adverse impacts of the crisis on external demand for Kosovo products (along with an already low export rate), and by a lighter impact on migrant remittances, and a stronger impact on foreign direct investment. The decline in remittances has been smaller than forecasted, mainly because migration in Kosovo is of longer term in nature, and 70% of our migrants possess foreign citizenships. The banking sector has remained solid, with private sector deposits and loans continuing to increase in 2009 and 2010. There is still evidence though, that banks have become more prudent in extending loans, mainly due to the fact that bad loans are increasing at a slow pace. Adverse impacts of the global financial crisis have been compensated by an expansionist fiscal policy adopted by the Government, thereby ensuring medium growth rates

Challenges and Problems in the Kosovo Reality Related to Foreign Direct Investment

Economic development is a goal aspired by many countries of the world, Kosovo included. In attaining such goals, many countries face numerous difficulties. Amongst the most often taken paths by various countries is the attraction of foreign direct investments to the country. The term investment includes a wide range of human activities in engaging financial means into one of the areas: immoveable property, bonds and shares, manufacturing and service projects, scientific research, technological development, personnel education, etc. Different from internal investment which is engaged by domestic investors in their own territories, Foreign Direct Investment, the topic of our study, is a form of investment which generates revenues by a company in the country and an affiliate branch outside the investor’s seat. Foreign Direct Investments generate relations through the local company and its branches outside the country. Foreign Direct Investments (FDIs) are considered to be a strength giving life to economic development of a country, and especially the developing countries. They have an important role to play in a long-term development of a country, and not only as a capital source, but also in increasing competitive abilities of the domestic economy, by technological transfers, strengthening infrastructure, increased productivity and generation of new employment opportunities