SMEs sector and its role in economic development of Kosova

Abstract

Since 1999 Kosovo has undergone a transition from a socialist system of the former Yugoslavia in a free market 
economy. Economic transformations that have occurred after the war in Kosovo have been associated with 
changes in the structure of companies. Micro, small and medium enterprises have been increasing these years. 
Under the Yugoslav system, the bulk consisted of social enterprises. Therefore the private sector took the brunt 
of economic development. With the privatization of socially owned enterprises, many employees who previously 
have remained unemployed have set up their businesses by creating new jobs. However, the rate of 
development of SMEs has been very slow due to unfavorable environment that existed in Kosovo. Increasing 
competition from foreign companies has also had a negative impact on competitiveness enterprises. 
Entrepreneurship in many countries is seen as a driving force of economic development and movement toward a 
market economy. Many countries make efforts to create a more favorable environment for businesses with the 
aim of development and economic growth.  
The purpose of this paper is to analyze the role of small and medium enterprises in the economic development of 
the country. Also, this paper will diagnose the current situation of small and medium enterprise and identifying 
problems, obstacles and barriers that businesses face in their development. Finally is reviewed the impact of the 
development of SMEs in GDP, and finding the appropriate policy measures to support enterprise development in 
the country. The methodology of the paper will be descriptive, based on secondary data, and also made a 
comparative analysis between Kosovo and the region countries.