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Albania
PROSPECTS FOR REFORM
In 1992, after close to fifty years of communist-imposed isolation
following five centuries of Ottoman domination, the Albanian people
had little awareness of the outside world and possessed Europe's
least developed trade network. The Albanians faced the daunting
task of reviving their moribund factories and workshops and learning
the realities of modern capitalism while building a market economy
from scratch. Burgeoning unemployment, falling output, acute food
shortages, and widespread lawlessness eroded most grounds for
optimism in the prospects for rapid success. Individual Albanian
factories could not switch on assembly lines because idled plants,
farms, mines, and generators elsewhere in the production chain
were not supplying essential inputs. For most enterprises, importing
these inputs was impossible because Albania's nascent foreign-exchange
market was not yet fully operative. Despite Albania's dire circumstances,
World Bank and European Community economists projected that the
country's resource base and labor force could provide the basis
for an escape from poverty if the government, with the international
community's financial help, took urgent steps to establish the
institutions and infrastructure needed to support a market economy
and stimulate small-scale private entrepreneurship in the farm
sector.
The government's immediate objective was to restore a secure
food supply for the general population and provide income and
employment for rural inhabitants. Albanian leaders turned to the
international community for direct food aid and technical and
material assistance for the farm sector. Boosting agricultural
output was also a prerequisite for resuming industrial production
because many factories needed inputs of raw materials produced
in the farm sector. Overall resumption of production had to be
coordinated between state enterprises so as to create economic
demand and establish a smooth flow of supplies. In 1992, despite
the country's inability to pay its international creditors, Albania
looked to the IMF, World Bank, and individual Western countries
to lend the money needed to jump start and stabilize the economy.
Over the longer term, the Albanian economy's fate depended on
the country's political leadership restoring law and order, attracting
private investors from abroad, and obtaining credits and aid from
Western governments for the modernization of industry and agriculture.
The last task was especially important because the lack of expertise
in international trade and poor quality of Albania's exports precluded
the country's earning the foreign exchange necessary to improve
infrastructure and increase production. Chronic unemployment was
almost certain to be a reality in Albania until urbanization significantly
slackened population growth.
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Despite Albania's small size and its communist regime's almost
pathological yearning for secrecy, a surprising amount of literature
is available on the Balkan state's economy. The best descriptions
of Albania's Stalinist system are Adi Schnytzer's Stalinist Economic
Strategy in Practice and Örjan Sjöberg's Rural Change and Development
in Albania. Stavro Skendi's Albania, Peter R. Prifti's Socialist
Albania since 1944, and Robert Owen Freedman's Economic Warfare
in the Communist Bloc offer valuable historical insights into
Albania's economic development. Gramoz Pashko, the Albanian economist
best known in the West, has also contributed several clearly written,
compelling papers on Albania's communist economic system, including
"The Albanian Economy at the Beginning of the 1990s." Both the
Economist Intelligence Unit and Business International publish
regular studies of the Albanian economic situation, which are
particularly useful to persons exploring the possibility of trading
with the country or setting up business operations there. (For
further information and complete citations, see Bibliography).
Data as of April 1992
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