During 1999-2008, donor community spent around 2.3 billion euro for the reconstruction and development of Kosova.

Foreign aid in Kosova reached very high levels in per capita terms in 2000 and 2001; more than 50 percent was allocated in the first two years.

Public Utilities and the Housing sectors are the largest absorbers (around 40 percent of total aid); less aid went for Health, Education, and Agriculture. In absolute terms, the largest amount of donor funds spent for Health and Education is recorded in the first post-conflict year (2000)—channeled toward rehabilitation and reconstruction of health and education facilities.

From the sectoral analysis it can be concluded that improvements made in sectors like Housing, Education, and Health would have not been possible without large aid inflows. Donors’ efforts in reviving education and health services have been successful and this has had positive impacts on enrollment rates that are near-universal at the primary and secondary levels. There has also been an increased access to safe water and safe dwellings in rural areas for all quintiles. This can again be translated into better health outcomes through a reduction of water-borne diseases.

Income poverty is high, but shallow, showing that the opportunity for sustainable development seemed to have been within reach. The economy has made improvements during the first post-conflict decade but has failed to provide sustainable growth and employment opportunities; this implies that there was lack of structural changes in the domestic economy, notably in the field of trade, industry, and agriculture production. Also, to produce long-term favorable effects, donors’ focus on sectors like health and education should have lasted for the whole decade, given the age-structure of Kosova.

CONCLUSION

Income and Non-Income PovertyIncome and Non-Income Poverty

Sectoral Distribution of Aid to Kosova

METHODOLOGYFollowing Feeny (2003) and Arndt et al. (2006): Description of annual aid flows and patterns by year (and region) and then assess the impact of post-conflict aid on promoting economic development and poverty reduction.

Contribution of aid donors to poverty reduction is estimated by categorizing sector aid flows; this framework enables an evaluation of the likely impact of aid on poverty by using inputs instead of outputs.

Primary sources: The Reconstruction Intervention Monitoring System (RIMS) database, MFE; covers donor activities in post-conflict Kosova.

FOREIGN AID AND POVERTY REDUCTION IN POST-CONFLICT KOSOVAVenera DemukajSchool of International Studies, University of Trento

INTRODUCTION

Poverty Headcount by Location

0

10

20

30

40

50

60

Total Rural Urban

2003/04 2005/06

Access to safe water

0

20

40

60

80

100

Total Poor Rural

2003/2004 2005/06

Perinatal Mortality Rate 2000-2006

23.1

29.1 28.727.1 27.6

25.7

22.1

0

5

10

15

20

25

30

35

1999 2000 2001 2002 2003 2004 2005 2006 2007

Net Enrollment Rates for Primary Schools

quintile 2poorest quintile quintile 3 quintile 4 richest quintile60

65

70

75

80

85

90

95

2003/04 2005/06

Net Enrollment Rates for Secondary Schools

quintile 2poorest quintile quintile 3 quintile 4 richest quintile

60

65

70

75

80

85

2003/04 2005/06

45 percent of the population lives below the poverty threshold, as defined by the World Bank (2007).

Improvements in access to safe water and living in safe dwellings.

Education and health services have shown continual improvements in terms of coverage and respondents’ satisfaction with these services.

Perinatal mortality rates have recorded a decreasing trend during 2000-2006; problems with under-funding and mismanagement remain.

Sources: WB 2007; MoH 2007

Source: RIMS database, 2009