Kosovo’s private sector shows strong growth potential, yet structural constraints continue to limit competitiveness, productivity, and inclusive economic participation. Although the economy has grown steadily in recent years, this growth has not generated sufficient quality employment opportunities, particularly for youth and women, whose labor market participation remains among the lowest in Europe. The economy is dominated by micro and small enterprises, which account for around 99% of registered businesses and play a critical role in entrepreneurship and job creation.
Despite their importance, many enterprises face barriers such as limited access to international markets, weak business-support services, low levels of innovation and digitalization, and persistent skills gaps. These challenges are particularly evident in sectors with strong potential for economic growth and employment, including furniture, apparel, and rural tourism. Strengthening enterprise competitiveness, improving market access, and expanding innovation and support services are therefore essential to creating sustainable jobs and fostering inclusive economic growth in Kosovo.
The GROW project aims to create a more competitive, innovative, and inclusive private sector in Kosovo, focusing on the furniture, apparel, and rural tourism sectors, as well as related value chains like wood processing, prefabricated construction, and home and technical textiles. This project addresses key challenges that hinder business growth, such as limited market access, insufficient business support services, low levels of innovation and digitalization, skills gaps, and issues related to quality standards and sustainable production. GROW's theory of change posits that stronger enterprises, supported by effective market actors and institutions, will be better positioned to grow, create jobs, and contribute to sustainable economic development. By utilizing Inclusive Systems Development approach, the project seeks to strengthen the ecosystem surrounding businesses by collaborating with local institutions and market actors. GROW's goal is to develop solutions that will generate lasting impact even after the project's completion. Key activities include enabling enterprises improve product and service quality, adopt digital and automated solutions, enhance innovation and product development, implement sustainable production practices, and meet international quality standards. Through the Innovation Fund and Export Fund, the project encourages investments in new technologies, business models, and market opportunities. GROW also supports export promotion and market access through business-to-business matchmaking, participation in international trade fairs, branding and promotional activities, market intelligence, and export-readiness services. In rural tourism, the project aids in destination development and management, supports agritourism initiatives, and support the generation of new tourism products and experiences that strengthen local value chains and communities. The project collaborates closely with enterprises, business-support service providers, sector associations, municipalities, trade promotion agencies, financial institutions, and other public and private stakeholders to enhance market functions, improve service delivery, and expand economic opportunities. The primary beneficiaries are micro, small, and medium-sized enterprises, entrepreneurs, and individuals seeking employment and income opportunities, particularly women, youth, and members of marginalized communities. Through these efforts, GROW aims to create sustainable jobs, increase incomes, strengthen enterprise competitiveness, and contribute to a more resilient and inclusive economy in Kosovo. |
GROW interventions are expected to directly benefit small and medium enterprises in the target sectors, alongside new start-ups and service providers engaged through co-financing and training mechanisms. Benefiting firms are expected to grow in sales, productivity, and market access, supported by improvements in product design, quality, digitalization, and green practices.