Effects of the Central European Free Trade Agreement (CEFTA) on Kosovo 2014-2023

Abstract

Kosovo is a member of the Central European Free Trade Agreement (CEFTA). Through this agreement, policies related to free trade in Central European countries have been created and implemented. CEFTA aims to liberalize and expand the market to achieve economic objectives, such as increasing exports, Foreign Direct Investment (FDI), production, and competitiveness. In Kosovo, trade liberalization has not been accompanied by an improvement in the competitiveness of the manufacturing sector, resulting in a high trade deficit. The objective of this research is to analyze data on the export and import of commercial goods between Kosovo and CEFTA countries from 2014 to 2023 and their impact on Gross Domestic Product (GDP) and FDI over these years. Empirical analyses show that exports and imports with CEFTA member countries have a significant impact on GDP, but do not have a noticeable effect on increasing FDI.