Regions of Kosovo Compared to Countries with Similar GDP per Capita PPP.
by FWolf14
Methodology:
Given that Kosovo does not report GDP data on regional level, I estimated the GDP per capita of each region based on the total amount of municipal taxes paid in each region. Municipal taxes include taxes paid for building permits, property taxes, administrative fees, payment of utilities and so on. Given that the municipal taxes reflect economic activity and they are mostly similar across regions, I considered them to be a good proxy for relative economic activity. I calculated the relative economic activity of each region based on the amount of municipal taxes they pay, then I scaled around Kosovo’s GDP per capita based on that relative scale. Kosovo’s GDP per capita in 2019 is $12,322 based on the IMF data.
The methodology is similar to a previous post from the past, with the main difference being that the data has been updated, the currency is now USD, and given that I am comparing the regions to other countries, I chose to use Purchasing Power Parity (PPP).
Limitations:
- The results rest on the assumption that municipal taxes are paid at an equal rate. This means that tax evasion does not affect the accuracy of the results, as long as tax evasion is equal across all 7 regions. If tax evasion is higher in a specific region, then the GDP per capita of that region will be understated and this will ultimately inflate it in other regions.
- Similarly, some municipal taxes are not equal across regions, though they are similar. This is another challenge that I cannot tackle directly through this methodology. I will try to find a better proxy to tackle this issue in the future, but at the moment I cannot think of any better one.