Kosovo promotes a vision for a digital economy and artificial intelligence, but businesses face water shortages, high energy prices, and poor infrastructure.
Experts warn that without institutional stability, investments in education, and more favorable conditions for business, ambitions for economic transformation risk remaining just declarations.
From the United Arab Emirates - the country with one of the strongest and most dynamic economies in the Middle East, built on long-term investments in infrastructure, technology and skills development - the President of Kosovo, Vjosa Osmani, presented Kosovo as a disciplined and vibrant economy, supported by reforms and the rule of law, welcoming to investors and open to global partnerships.
With 1.5 million inhabitants and a young population, Kosovo has seen economic development in recent years, which has been reflected in the doubling of gross domestic product within a decade, as well as in increased employment and investment.
Osmani, in her speech at the World Government Summit, held earlier this month in Dubai, described this journey as an extraordinary transformation from a war-torn country, and said that Kosovo is now ready for the “next-generation economy” – open to collaboration and committed to innovation and artificial intelligence.
"The economic success of any country depends largely on its human capital. From Kosovo's perspective, the growth of the next generation's economy rests on three pillars that reinforce each other: empowered people, strong institutions, and a dynamic private sector," said Osmani.
Kosovo Prime Minister Albin Kurti also promised that, during his new term in office, the country's digital transformation will not remain just a slogan, but will also serve as an engine for sustainable economic development. He announced new support to boost investment and strengthen the country's manufacturing sector.
"Over the next four years, we will invest around 1 billion euros in production through loan guarantees for investors. So, we will make available 1 billion euros of sovereign guarantees, which serve as a mortgage to guarantee private investments in factories and production," Kurti said during the presentation of the government program on February 11.
On the ground, the reality still falls short of these stated ambitions. Institutions often fail to keep up with the challenges of the traditional economy, leaving businesses to grapple with high energy prices, lack of infrastructure, and other operational obstacles.
Kujtim Gjevori oversees the production lines every day at his nylon bag factory in the Drenas Business Park, where about 100 workers depend on the stability of this business. But instead of focusing on expansion and growth, he says more and more energy and resources are going to cope with high electricity costs and basic infrastructure problems.
Kosovo's transition to an open energy market has significantly increased his company's costs, forcing it to postpone investment plans for at least two years.
For Gjevori, this is not just a business issue, but a chain of missed opportunities - production that has not increased, jobs that have not been created, and exports that have only remained on the agenda.
"We know that Europe has a liberalized electricity market. But let's look at it in numbers: previously, we paid 80 euros per megawatt for electricity, while Europe paid 110 euros. Today, we pay 280 euros, while Europe continues to pay 110-120 euros. This represents a clear warning signal for foreign investors," Gjevori tells Radio Free Europe's Expose program.
Last year, large businesses in Kosovo switched to a liberalized electricity market, where prices are no longer set by the state, but by supply and demand. This decision was opposed by many companies, who warned of dramatic increases in bills and requested a one-year extension until the market was ready, but this did not happen.
Gjevori says that the challenges, in addition to the high price of energy, are also related to frequent power outages. The infrastructure problems also extend to the water supply, as illegal connections to the network cause outages that leave businesses without supply. As a result, Gjevori's company has been forced to improvise solutions.
"We have taken buckets, filled them, refilled them... Then we have also built a personal well, which we use when the water stops," says Gjevori.
Insufficient water and electricity, but also an untrained workforce, according to Mejdi Bektashi. The economic expert says this combination makes it impossible for Kosovo to quickly catch up with high-tech economies.
"In recent years, in various tests conducted by credible international organizations such as PISA, we have fallen almost to the bottom of the world list. It is very problematic that with this preparation, or with almost minimal investments in the education sector, we can produce cadres for the use of artificial intelligence and information technology," says Bektashi.
In fact, the information technology sector in Kosovo is one of the few areas with a positive trade balance: exports of ICT services reached over 185 million euros last year, while imports were around 45 million.
But, even according to Arian Zeka, from the American Chamber of Commerce in Kosovo, this success remains limited and does not reflect the overall state of the economy.
In recent years, economic growth in Kosovo has been relatively stable - between 3 and 4 percent, but Zeka says this pace is not sufficient to support ambitions for digital transformation and the development of advanced industries.
He adds that this potential is also opposed by external factors, such as tense relations with Serbia, but also by internal political instability, as seen over the past year.
"I personally know of a case from last year, when a local and international consortium in the field of energy decided to move its investment to Albania, due to the inability for its request to be treated with a little more seriousness by the institutions of the Republic of Kosovo," Zeka tells Exposena. /REL
