A diagnostics approach to economic growth and employment policy in low income economies: The case of Kosovo

The economic challenges facing Kosovo in 2008 are considerable. Economic growth has been below the rate achieved in neighbouring countries and more than one-third of the work force is unemployed. The paper applies a 'diagnostics' analytical framework to identify the most binding constraints on economic growth and job creation. The binding constraints to growth are found to be the costs and access to finance, poor provision of public goods and weaknesses in the rule of law. The analysis also suggests that policy options for job creation must focus on increasing both economic growth and the employment intensity of growth. © 2009 John Wiley & Sons, Ltd.