Country Economic Memorandum
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Publication
Removing Regulatory Barriers to Competition
(Washington, DC, 2021-11)Competition can drive productivity growth in Kosovo, especially in the context of the post-Coronavirus disease 2019 (COVID-19) recovery. As the economy rebuilds, it is key that markets function smoothly, and that anticompetitive firm behavior or government intervention do not constrain the path to recovery. Competitive product markets can help a country recover from economic shocks more quickly. Competition in product markets can also prop-up economic recovery in a more inclusive way for the poorest households. Kosovo has made significant progress towards pro-competition regulation of product markets but there is still significant room for improvement. Although the product market regulation (PMR) indicators are limited in scope and should therefore be considered as an entry point for further analysis, this assessment allows to identify potential constraints to competition and possible policy reforms. Kosovo can increase competition by: (a) eliminating public owned enterprise (POE) - related barriers to competition to ensure a level playing field for private and public operators in markets where they compete, (b) improving the regulatory process and facilitating business registration to boost market entry, and (c) introducing policy reforms in network sectors and professional services to eliminate regulatory barriers to competition and avoid anticompetitive practices. -
Publication
Boosting Export Performance
(Washington, DC, 2021)Improving Kosovo’s export competitiveness can help to catalyze growth and reduce poverty. As a small economy, Kosovo will benefit from integration, both globally and regionally, to exploit scale economies from access to a larger market. Higher exports will not only contribute to growth and lower current account deficits but can also help heighten productivity due to more innovation and learning by exporting. Exporting firms, which are more competitive, will also be able to create better jobs and economic opportunities for Kosovars. This background note examines export dynamics in Kosovo over the period 2010-19, benchmarking Kosovo against relevant comparator countries. It overviews Kosovo’s trade structure, export dynamics at the firm level, trade policy and regulatory framework, and constraints to trade in goods and services and identifies policy options for consolidating trade growth in growing sectors. The note also spotlights digitalization and digital trade. It analyzes the enabling environment and suggests policies to enhance digital connectivity, improve the regulatory environment for digital trade, and encourage the use of e-payments. -
Publication
Serbia's New Growth Agenda: Removing Regulatory Barriers to Competition
(World Bank, Washington, DC, 2020-03-26)This note outlines barriers to competition in product markets based primarily on the screening of Serbian regulations using the OECD Product Market Regulation methodology and comparison to regulations in the OECD. The note focuses on topics covered by the 2018 OECD-WBG product market regulation (PMR) indicators such as regulation of network industries, professional services, state-owned enterprises, and restrictions on foreign businesses. The OECD-WBG product market regulation indicators are a screening tool that measure the degree to which regulations promote or inhibit competition. The indicators rely on qualitative information on over 1,000 features of economy-wide and sectoral regulations. The qualitative information is collected and coded based on a standardized questionnaire and later aggregated into quantitative scores that run from 0 (least restrictive) to 6 (most restrictive) using standardized weights. The analysis in this note relies on primary data for Serbia collected by the World Bank Group and comparative data for other countries collected by the OECD. To ensure comparability across countries the data is current as of January 1, 2018. The data has been collected throughout 2018 and the indicators included in this report are as of July 2019. The PMR indicators for Serbia have been calculated as part of the partnership between OECD and WBG Markets and Competition Policy Team and the primary data has been collected in collaboration with more than 30 public and private institutions in Serbia. -
Publication
Serbia’s New Growth Agenda: FDI Spillovers
(World Bank, Washington, DC, 2019-11-28)This note examines the relationship between the presence of foreign firms and total factor productivity (TFP) growth of domestic firms (called ‘FDI, Foreign Direct Investment, spillovers’) in Serbia over the period of 2005-16. The analysis finds evidence of FDI spillovers in Serbia. Domestic firms on average enjoy higher productivity because of the presence of FDI firms in the economy. Moreover, domestic firms that supply to FDI firms or are located in the same industry as FDI firms, enjoy higher productivity. This presumably stems from technology transfer, higher quality standards, or higher competition. However, productivity of domestic firms sourcing from industries with a large share of FDI firms find their productivity reduced, likely due to markups by foreign firms. The effect of FDI on productivity of domestic firms also varies by firm size and industry. Small firms benefit more from spillovers associated with backward linkages (when they supply to an FDI firm) but are worse off with more horizontal FDI (when they compete with FDI firms in the same industry). Firms in high-tech industries benefit more from horizontal and backward FDI spillovers, but firms in low-tech industries experience no effect. Lastly, firms in the transport manufacturing industry do not enjoy any FDI spillover from foreign firms in their industry. -
Publication
Firm Productivity and Economic Growth in Turkey
(Washington, DC: World Bank, 2019-04-29)Turkey’s pace of income convergence has globally been one of the most remarkable of the past fifteen years. Sustaining growth and improvements in living standards in Turkey will require higher productivity in the economy. The Turkey Productivity Report (2019) provides an in-depth analysis of firm productivity in Turkey and how this adds up to economic growth in the country. The report has six parts. The first two provide macro and micro diagnosis of productivity in the economy – what are the productivity trends, how have these affected economic growth, what firms in what industry are the most productive, and are they absorbing an increasing or decreasing share of resources? From here the report analyzes specific policy areas that might explain firm productivity dynamics in Turkey – namely firms’ integration in the global economy, access to innovation support, the quality of human capital, and the business environment including competition. The report finds that economic integration and innovation have boosted firm-level productivity, though reforms could further accelerate these positive impacts. Productivity gains could accelerate the demand for more educated and skilled workers. The growth of more productive firms could in turn also be accelerated through reforms that increase competition and reduce regulatory burden.