FDI attraction in Kosovo: potential despite weaknesses
In the recent past, Kosovo could only partly tap its po-tential in terms of both quantity and quality of at-tracted investment. Despite several policy measures, e.g. the establishment of economic zones and the in-troduction of a flat corporate tax at 10%, FDI inflows remained at a rather low level during the last decade. FDI largely went into the real estate sector, while knowledge- and export-oriented industries only ac-counted for a small share.
Current conditions are chal-lenging, but not without opportunities. Kosovo’s key strengths such as the competitive cost structures as well as the integration process with the EU and at the regional level are of high relevance in the context of changes in investment patterns, e.g. for attracting nearshoring projects. Unlocking the potential requires a targeted and coherent approach generating syner-gies within the policy and institutional framework. In-vestment attraction efforts need to be intensified and focused on the most promising target groups. At the same time, it is critical to strengthen capacities throughout the entire investment attraction cycle.
