The issue of self-determination in the post-colonial era remains contentious due to the absence of clear secession mechanisms and established legal frameworks, leading to conflict and ambiguity. Kosovo, declaring independence from Serbia in 2008, manifests the challenges faced by self-declared states. The contested nature of its sovereignty has hindered Kosovo’s international representation and performance, diplomatic relations, trade, and security cooperation, complicating its access to the full spectrum of capabilities that fully-pledged countries are entitled to in the international arena, consequently affecting Kosovo’s economic growth. This research aims to demonstrate how independence and recognition have influenced Kosovo’s economic development and its performance in the international arena. By adhering to the constitutive theory of statehood, which emphasizes the importance of universal international recognition, the study examines the legal, political, and largely economic implications of partial recognition. Furthermore, highlights the factors under which recognition matters. Utilizing qualitative and quantitative methods, including data from the World Bank, IMF, and Kosovo Agency of Statistics as well as archival research, the study addresses the gap in literature regarding the operational challenges and economic prospects of partially recognized states after the acute phase of the conflict. The findings emphasize the critical role of international recognition in facilitating economic growth and improving Kosovo’s performance in the international arena.