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Albania
Dependence on the Soviet Union, 1948-60
After breaking with Yugoslavia, Albania turned toward the Soviet
Union, forming a twelve-year relationship. In September 1948,
Moscow stepped in to compensate for Albania's loss of Yugoslav
aid, and Albania's factories quickly became dependent on Soviet
technology. Anxious to pay tribute to Joseph Stalin personally,
the authorities in Tiranė implemented new elements of the Stalinist
economic system. The regime introduced a Soviet-style three-step
process for drawing up the national economic plan and adopted
basic elements of the Soviet fiscal system, under which enterprises
contributed to the state treasury from their residual income and
retained only a share of earnings for authorized self-financed
investments and other purposes. The Ministry of Finance thus won
the authority to set each enterprise's investment policy and regulate
its current activity through the state bank.
The First Five-Year Plan (1951-55) emphasized mining and electric-power
production as well as transportation improvements. The plan called
for an increase in industrial production at an average annual
rate of 27.7 percent, including an increase of 26.5 percent in
consumer-goods output and a 31-percent rise in production of goods
consumed by producers. Shortfalls in agricultural production during
the first year doomed the entire plan. The farm sector failed
to meet output targets for raw materials, leaving the industrial
sector unable to meet targets for consumer goods. Industrial productivity
also lagged because recently urbanized peasants had not had enough
time to learn to operate factory equipment. The regime then realigned
planning priorities in favor of agriculture and consumer-goods
production. Over the plan period, annual industrial output reportedly
increased at an average of 22.8 percent; consumer-goods output
rose 24.3 percent; and producer-goods output rose 20.7 percent.
The Albanian economy's backwardness dashed the leadership's hopes
of rapidly developing heavy industries, specifically the mineral-processing
and capital-goods manufacturing branches, at the expense of the
agricultural sector. Although their efforts brought partial success--the
ratio between the values of agricultural and industrial production
shifted from 82:18 in 1938 to 40:60 in 1953--70 percent of Albania's
work force continued to till the soil.
Having relatively easy access to capital because of generous
Soviet aid, the regime redoubled its industrialization drive and
tightened control of the agriculture sector. Albania conducted
all its foreign commerce with the other communist nations between
1949 and 1951 and over half its trade with the Soviet Union itself.
The Soviet Union and its satellites wrote long-term "loans" to
cover shortfalls in Albania's balance of payments. Soviet and
other East European aid at first dovetailed with the Albanian
leadership's ambition to industrialize the country. Tiranė's Second
Five-Year Plan (1956-60) called for an annual increase of 14 percent
in industrial production. Good results in 1956 and 1957 prompted
the authorities to revise plan targets upward. Although the new
goals went unattained, industrial production rose an average of
about 17 percent annually over the five-year period. In 1955 private
farms still produced about 87 percent of Albania's agricultural
output, and the government reemphasized its farm collectivization
drive. By 1960, however, the proportion of output from collective
and state farms was unchanged. The farm sector continued to suffer
from low productivity and poor worker motivation. Soviet aid was
required, and wheat imports were depended on to meet as much as
48 percent of Albanian need.
Considering Enver Hoxha's obsession with heavy industry misguided,
the new Soviet leadership balked at the idea of investing in large-scale
industrial projects in Albania after Stalin's death in 1953. The
Soviet Union and other communist countries had provided considerable
investment and equipment to Tiranė from 1948. Especially after
1955, however, this aid was designed primarily to integrate Albania's
economy into a "division of labor" established by the Soviet-led
Council for Mutual Economic Assistance ( Comecon--see Glossary).
Albania's allotted role demanded that it foster agricultural growth
and increase the extraction of raw materials and the production
of consumer goods. The leadership in Tiranė considered Moscow's
advice to concentrate on production of cash crops and raw materials
a disparaging attempt to relegate Albania to the status of a Soviet
colony in perpetuity. When Tiranė began to tilt toward China,
Moscow and its satellites offered incentives to persuade Hoxha
to remain in the Comecon fold. The disagreement over Albania's
development policy soon became entangled in the animosities between
the Soviet Union and China. In 1959 the two communist giants competing
for Albania's hand poured capital into the tiny Balkan country
so rapidly that it could not be absorbed. China extended Albania
a US$13.8 million loan; Moscow followed with new credits totaling
US$83.8 million, and other East European countries contributed
another US$35 million.
Data as of April 1992
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