Investing in A Newly Deregulated Energy Sector - The Case of Kosova
Kaganiku, Teuta
2007
- Submitted in partial fulfillment of the degree of Master of Arts in Law and Diplomacy at the Fletcher School of Law and Diplomacy. Abstract: Eight years after the end of the conflict, Kosova's economy is still lagging behind. With a slow annual growth rate of 3 percent, the unemployment rates of a two million nation are still high reaching at times up to 50 per cent of the employable population. ... read moreThe 1,117 GDP per capita in 2006 was slightly less than in 2005 when it stood at 1,120, and the national income still depends around 69 per cent on customs tax. Kosova is not demonstrating yet a sound economic performance in order to provide its citizens with qualitative services and opportunities for a poverty-free living. The domestic production is very slowly reviving mainly through the privatization of publicly- and socially-owned enterprises of the pre-war centralized system. There is a small number of new production businesses being established, but they are small or medium in size. Kosova is not poor in natural resources. Mines of zinc and lead oars, nickel and iron, and lignite were the country s primary sources of foreign exchange. At present, their production is hardly a small portion of what was produced in the times when the companies were at their peaks. In the last years, much of the economic growth discussion evolved around investments in the energy sector and the construction of a new power plant, which should generate lignite-based energy not only for Kosova, but for the region as well. With a GDP of 2.2 billion Euros, the Kosovar government cannot afford to construct a plant with a cost estimated at 3bill USD. Still lacking statehood, Kosova cannot apply for international loans. Expecting to inherit the debt that the Serbian government has taken up on behalf of Kosova, estimated at 1 bill USD, the ability to borrow internationally is postponed even further to a distant future. The only option left is foreign investment. The question unanswered is how these investments will boost Kosova s economic growth, while ensuring benefits to the foreign investor.read less
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