USAID Kosovo Compete Activity—Sector Assessments

The Activity focuses on three key export-oriented sectors: Wood Processing, Information and Communications Technologies (ICT), and Food Processing. The Wood Processing industry in Kosovo is an important economic sector with a growing ability to serve local and international markets. The industry's competitiveness has been improving due to the growing adoption of modern production technologies by key industry participants. This has translated into substantial growth in sales in both domestic and export markets. Based on interviews with two of the country's largest machinery suppliers, Compete estimates that wood processors in Kosovo invested close to €30 million in technology adoption over the past five years. Technological upgrading has also been accompanied by growth in the number of companies in the sector, an expansion of employment in response to growing market opportunities, and an upward trend in the growth of exports. Exploiting price differentials, Kosovo's exports of wood products to Switzerland, Germany, and other European countries have increased significantly. The top export destinations of select Kosovo wood products, by nominal € value, are Switzerland, Germany, and Italy. The Information and Communications Technologies (ICT) sector in Kosovo is a rapidly growing industry with significant potential for development. The sector has experienced rapid growth in recent years, with the number of high school graduates in ICT increasing from 2018 to 2019. The average monthly salary in the ICT sector has also increased, with companies in municipalities showing a high level of activity. The sector has a strong potential for growth, with opportunities for expansion into new markets and the development of new services and products. The Food Processing sector in Kosovo is a significant contributor to the country's economy, with a growing ability to serve local and international markets. The sector has experienced significant growth in recent years, with exports of agricultural and food products increasing by 27% in 2020 compared to the previous year. The top export destinations of Kosovo prepared food exports, by share, are the European Union, Switzerland, and Germany. The USAID Kosovo Compete Activity has synthesized information from several sources to develop assessments of the three focus sectors. The Activity has collected additional information on export trends in key segments of its focus sectors, including Kosovo Customs data on exports through the end of 2019. Compete has also consulted with key companies and industry associations in the focus sectors concerning the scope of the impact of the COVID-19 pandemic on their respective industries. The Activity's methodology has involved the collection and analysis of data from various sources, including industry associations, companies, and government agencies. The data has been used to develop assessments of the three focus sectors, including the Wood Processing, ICT, and Food Processing sectors. The assessments have identified key challenges and opportunities for growth in each sector, and have provided recommendations for addressing these challenges and seizing opportunities for growth. The expected results of the Activity across all three sectors are: 1) market systems are strengthened to increase sector competitiveness; and 2) market actors within those market systems are more productive and competitive. The Activity aims to achieve these results through a combination of technical assistance, capacity building, and market development activities.