Photo: Chris Hondros for Mercy Corps

Like it or not, Kosovo is independent. Yet its survival depends on whether or not it will be able to build a functioning and sustainable economy, a goal that remains far from certain. Post-independence Kosovo faces daunting economic challenges, including weak infrastructure, unemployment rates of nearly 50 percent, and economic corruption that has been ranked as fourth worst in the world by Transparency International.

Although some in Kosovo are confident about prospects for economic growth and development, many estimate that it will be another ten to fifteen years before Kosovo can support itself economically. Commentary from the World Politics Review argues that independence may actually exacerbate Kosovo's economic problems:

While Kosovo may be able to get loans now from the IMF and World Bank, the last nine years have shown that aid alone is not going to do it. Kosovo has already received 25 times per capita the amount of aid given to Afghanistan, and the economy is still in shambles. Furthermore, it is a safe bet that Serbia will obstruct investment in Kosovo, first by shutting down the commercial border between the countries, and then by challenging privatization plans in the World Court and other international bodies. Late last week, Serbia indicated that it will continue to pay Kosovo's debts to the international community, which will amount to $70 million this March alone. Serbia's only reason for doing this is to preserve its legal claim to the territory and its right to tax any development projects. The legal wrangling likely to result will tie up proposed projects for years, and chase away the few investors Kosovo might be able to attract.

In a land where three farmers commit suicide per day, microfinance is making positive difference in Vidarbha- India's primary cotton growing region. Over 500,000 female small entrepreneurs there are determined to lift their families from the burden of debt by forming microfinance groups and finding alternative ways to make an income.

The micro credit banks urges them to save with them, with each member depositing money, ranging from 50 rupees to 1,000 rupees every month. The bank in turn provides credit to the group, whose members borrow money from the group depending on their needs.

Thatcher Cook for Mercy Corps

A sobering piece on Chinese/American trade by James Fallows in this month's issue of The Atlantic:

Through the quarter-century in which China has been opening to world trade, Chinese leaders have deliberately held down living standards for their own people and propped them up in the United States. This is the real meaning of the vast trade surplus—$1.4 trillion and counting, going up by about $1 billion per day—that the Chinese government has mostly parked in U.S. Treasury notes. In effect, every person in the (rich) United States has over the past 10 years or so borrowed about $4,000 from someone in the (poor) People’s Republic of China.

Fallows concludes:

Like so many imbalances in economics, this one can’t go on indefinitely, and therefore won’t. But the way it ends—suddenly versus gradually, for predictable reasons versus during a panic—will make an enormous difference to the U.S. and Chinese economies over the next few years, to say nothing of bystanders in Europe and elsewhere.