Kosovo Could Unlock $1.5 billion and 87,000 Jobs by Removing Key Investment Barriers

The report finds that Kosovo offers important advantages for investors, including a young workforce, competitive service providers and opportunities linked to European demand.

Kosovo could attract an estimated $1.2 billion to $1.5 billion in private investment by removing barriers in three promising sectors, according to a new World Bank Group report. The Country Private Sector Diagnostic identifies utility-scale solar and wind generation, business services and building components manufacturing as areas where targeted reforms could produce substantial gains. Changes across these sectors could create between 61,000 and 87,000 direct and indirect jobs over five to ten years, expanding opportunities for better-paid employment.

The report finds that Kosovo offers important advantages for investors, including a young workforce, competitive service providers and opportunities linked to European demand. Persistent regulatory barriers, unreliable electricity and other operating constraints prevent businesses from fully using those advantages and expanding production. Its recommendations focus on practical changes that would give investors greater certainty, reduce business costs and improve access to skills and markets.

World Bank Group Country Manager for Kosovo and North Macedonia Carole Megevand said removing investment barriers would help create jobs, generate domestic revenue and support sustainable, inclusive growth. She described the report as a guide for prioritising reforms with the greatest potential to expand private-sector activity and advance development goals. The World Bank Group said it would continue supporting Kosovo through knowledge, financing and expertise to increase investment and create quality employment.

Renewable energy investment depends on clearer market arrangements

Kosovo plans to increase renewable energy's share of installed electricity generation capacity from 23% in 2024 to 63% by 2031, requiring greater certainty for investors about who will purchase their power. The report recommends a multi-year auction schedule and operational liquidity guarantees for transmission system operator KOSTT under the country's 2025 Rule on the Renewable Energy Support Mechanism. By 2035, these reforms could attract $1 billion in private investment, create 8,300 jobs and reduce emissions by an amount equivalent to an estimated 24% of Kosovo's annual carbon dioxide output.

Business services could expand access to better-paid work

Kosovo's business services sector has grown rapidly over the past decade, supported by European demand for outsourcing and digital services, digitalisation and a competitive balance of cost and quality. The sector employs a young workforce and offers comparatively high wages, giving it considerable potential to expand better-paid employment. Labour regulations, skills shortages, regulatory barriers and unreliable electricity continue to restrict that expansion, making even narrowly targeted reforms valuable.

Recommended changes include specifying requirements for remote and hybrid employment contracts, introducing a standard labour inspection checklist and legally recognising electronic signatures for private commercial contracts. These measures would clarify business obligations and simplify commercial activity, improving competitiveness and helping companies attract investment. Implementing the sector's recommendations could bring an estimated $68 million to $177 million in new investment and generate between 32,000 and 46,000 jobs.

Manufacturing reforms could strengthen construction and exports

Building components manufacturers could benefit from strong domestic construction demand, growing European demand for energy-efficient products and an established export base that remains underused. Policy distortions and market failures raise operating costs through unreliable and expensive electricity, opaque land markets, cumbersome construction permits, skills mismatches, restricted working capital and weak enforcement of product standards. Addressing these constraints could attract $187 million to $296 million in private investment and create 21,000 to 33,000 jobs, strengthening exports and links with Kosovo's construction industry.

The report recommends a standardised agreement granting long-term infrastructure use rights and a fast-track process for industrial construction permit applications submitted by manufacturers. It also proposes mandatory structured workplace training for vocational certification in building components manufacturing occupations, helping workers develop skills that match employers' needs. Targeted, risk-based inspections of manufactured products would strengthen standards enforcement and support firms seeking to compete in domestic and export markets.