The traditional economic driver of Kosovo has been primary industry (agriculture and forestry, mining and energy generation), with manufacturing providing a minor contribution to the generation of wealth. Some 30% of GDP is provided by remittances from the diaspora (mainly in Germany and Switzerland) who account for 20% of Kosovo’s pre-1999 war population.
Over 65% of the working population resident within Kosovo is employed within the agricultural sector. Formerly a net exporter of foodstuffs, Kosovo now has a large negative trade balance in this sector, with food products being the largest single import segment, accounting for 30% of imports by value.
Apart from the mining of lignite by the energy provider, Kosovo Electricity Co (KEK), and the extraction of construction minerals, the formal mining sector has stagnated since the 1999 NATO intervention. The two former national icons of the mining sector (Trepca and Ferronikeli) ceased production in 1999 and have not yet resumed active mining operations.
At 34%, plastics and wood contribute most to exports, followed by metals (31%), which are almost exclusively derived from scrap.
The energy sector has been adversely affected by a lack of investment to replace ageing Eastern Bloc equipment. There are two lignite-fired thermal power plants (TPP) and these are also in need of substantial refurbishment. Some 50% of all electricity generated by KEK is either lost as a result of technical problems or not paid for by the consumers, so that the company receives payment for only 40% of the electricity it generates. KEK is attempting to generate sufficient energy to serve the domestic market, although disruption by power outages means that energy supplies have to be supplemented by imports.
KEK power plant near Prishtina
Kosovo’s minerals sector was a key provider to the economy of the former Yugoslavia. The geology of Kosovo is varied and has resulted in a wide range of minerals being present in mineable quantities. These include lignite, lead-zincsilver, nickel, chrome, aluminium, magnesium and a wide variety of construction materials. Mismanagement and underinvestment, as well as the political developments in former Yugoslavia that resulted in NATO intervention, have had a dramatic negative effect on Kosovo’s mining industry and on the amount of metals produced throughout the region. This emphasises the major role that Kosovo played in the economy of the former Yugoslavia as a provider of raw materials.
Mining of dimension stones