|
Albania
The Economy
EUROPE'S POOREST NATION by every economic measure, Albania has
been isolated and underdeveloped for centuries. Economists estimated
the gross domestic product per capita at about US$450 in 1990,
a figure that placed Albania below Lesotho and above Sri Lanka
as the world's thirty-second least developed country. Ironically,
Albania possesses significant fossil fuel and mineral deposits,
including oil and chromite, as well as a topography and annual
rainfall suitable for generating hydroelectric power. Large-scale
drainage projects begun after World War II turned marshes into
fertile fields in Albania's lowlands, and the country's Mediterranean
climate offers ideal conditions for cultivating fruits and vegetables.
But Europe's highest birth rate and a mismanaged postwar industrial
expansion, which failed to create enough productive jobs to absorb
the flood of people entering the work force, left Albania with
an abundance of literate but unemployed and unskilled workers.
At the start of the 1990s, thousands of desperate Albanians fled
abroad seeking jobs because of the wretched standard of living
and limited economic opportunity at home.
Albania's communist economic system, with its strict central
controls, egalitarian incentive system, and bias toward heavy
industry, collapsed in the early 1990s, idling almost all of the
country's production lines. In early 1992, the government was
piecing together a new, market-based economic mechanism. The People's
Assembly passed many new laws on privatization of state property
and protection of free enterprise, private property, and foreign
investments, and lawyers drafted new civil and commercial codes,
banking and tax laws, and labor, antitrust, and social security
regulations. The structure of Albania's productive capacity was
clearly going to change radically as the government broke up collective
farms and privatized state lands and enterprises and as managers
adjusted to free-market conditions. Nevertheless, agriculture
was certain to remain the economy's cornerstone for the foreseeable
future. The farm sector produced over 30 percent of Albania's
net material product (see Glossary) and employed over 50 percent
of the work force before the centrally planned economy buckled.
However, farm output failed to keep pace with the demands of Albania's
burgeoning population, and the entire sociopolitical system began
to crumble when the farm sector could no longer supply adequate
food to urban areas or raw materials to factories.
The orthodox Stalinists of the ruling Albanian Party of Labor
(APL) worshiped heavy industry and for decades offered it investment
monies, which usually flowed from foreign coffers. That investment
brought expansion and diversification to the country's entire
industrial sector, but production was constrained by the mismanagement
and inefficiency that characterize communist systems. Before the
communist economy imploded in 1990, industry accounted for over
40 percent of Albania's net material product and employed about
25 percent of the nation's work force. The industrial sector's
most important branches were petroleum production, electric-power
generation, mining, engineering, and light industry. The transportation
and trade sectors had registered improvements in absolute terms
over prewar levels of development, but both lagged behind European
standards.
Starting in the 1920s, Italy, Yugoslavia, the Soviet Union, and
China in turn supported the Albanian economy before war or political
spats prompted Tiranė to break off each relationship. Enver Hoxha,
first secretary of the APL, launched a policy of strict autarky
when the country's last foreign patron, China, stopped aid infusions
in 1978. Rapid population growth and lagging farm and industrial
output, however, soon brought hunger and economic chaos. Tiranė
delayed significant economic reform until popular discontent threatened
to explode into revolution. By 1991, a chain reaction of supply
shortfalls had paralyzed the entire economy, and Albania cried
out for humanitarian aid, this time from the West. Albania's opening
to the world had a major impact on the freedom of enterprises
and people to participate in foreign trade, but the country's
escalating foreign debt and currency problems rendered it incapable
of importing badly needed materials and equipment.
The totality of the collapse of Albania's communist economic
system made introducing free-market reforms more difficult, in
the view of some Western authorities, than in any other East European
country. So critical was the need for heating fuel in the winter
of 1991-92 that people stripped wood from park benches, and the
nurses at an orphanage in Shkodėr locked up branches and twigs
to keep them from thieves. Mobs stormed warehouses, factories,
bakeries, flour mills, shops, and hotels, taking everything they
could carry and destroying much of what they could not. Italian
soldiers escorting food convoys found that they had to guard their
own garbage trucks after armed gangs descended on the vehicles
to pick through their contents. Thieves stole medicine, medical
equipment, and even ambulances from hospitals. Fires in storehouses
and factories burned out of control because fire fighters had
no equipment in good repair. Opposition political leaders blamed
the communist APL for instigating unrest in hopes of demonstrating
to the impressionable that the isolation and apparent order of
the old regime were better than the present chaos and the ways
of the wider world.
Despite Albania's economic dysfunction and backwardness, Western
economists predicted that the country stood a good chance of prospering
if its government could restore order and take advantage of the
country's fertile lands, relatively rich mineral resources, favorable
location, potential for tourism, and generally literate work force.
Albania's communist regime published few economic statistics,
and Western scholars found that the sparse data made available
were often neither accurate nor consistent. No statistical yearbook
was issued for fourteen years after 1974, and data on performance
of the oil industry were treated as a state secret after production
began falling in the 1970s. Observers specializing in the Albanian
economy have posited that the communist government released data
only when performance results were positive and that data on aggregate
economic growth were not published when they were close to or
below the population growth rate.
Data as of April 1992
|
