Albanian Economy Towards 2020

By Dr. Enriko Ceko*

 

For a long time, at the end of every year, in the space of Electronic Magazine Perqasje (Approach) I write about the economy of Albania for the coming year.  This year, too, I am writing about the strengths and weaknesses of the Albanian economy and the opportunities and threats that lie ahead over the course of a year.For the year 2020, the Albanian economy as a strong side has the entrepreneurial capability of Albanians and the desire of Albanians for consumption.  These two strengths have been the two main axes on which the Albanian economy has been based for almost 30 years.Entrepreneurial ability (spirit) is one of the most important factors of production, but this factor of production must be combined with the other factors of production, land, labor, capital and technological innovation, which are the other four factors of production.In fact, land as one of the most problematic factors of production is still unused in Albania.  Approximately 300,000 hectares of agricultural land out of the approximately 700,000 hectares of agricultural land that Albania owns is still unused.

We have about 10 billion euros of citizen savings in banks that are not yet lent to the amount and quality that the business community and citizens want.  A large proportion of the labor force, mainly the most active 25- to 45-year-olds, migrate.  Technological innovation is underutilized due to the limited opportunities available to citizens and businesses in Albania.Regarding the desire of Albanian citizens for consumption, it should be noted that for the last 30 years the main driving force of the Albanian economy has been consumption.  This is because Albanian citizens came out very poor from the previous regime and almost without individual and family property, which encourages the individual and families to invest in their property and meet their needs, desires and pleasures.Further, it should be noted that in the last 5 - 6 years the confidence and reliability of the Albanian consumer in key sectors such as construction, agriculture, wholesale and retail trade is declining due to the prices and quality of products and services offered in the domestic market.One of the key aspects of the Albanian economy has been and remains its integration into the region and beyond, which remains one of the weaknesses. 

My personal view is that Albania, in terms of political, economic, social, environmental, cultural, sports, legal, etc developments, should look first at the cooperation between Albanians in the region and beyond and then look at the still immature implications for semi-Balkan cooperation (Mini Shengen). In this respect, there is nothing wrong with cooperating with the countries of the Semi Balkan (Western Balkan) but this in the wider context, because before the efforts for partial West Balkan cooperation can be made, the integration of the entire Balkans, and this cooperation of the entire Peninsula, must be made. Cooperation of the Balkans can and should be done in a broader context, that is the cooperation of Southeast Europe and the cooperation of the Mediterranean countries, where Albania is a natural integral part.  Furthermore, cooperation within the framework of European rather than regional integration is the main objective.Another weakness for the Albanian economy is the existence of a completely corrupt managerial staff, mainly in public administration. 

If we analyze carefully what happened to the managerial strata in Albania, it should be noted that in the early 1990s, an attempt was made to create a managerial stratum on the basis of modern and improved curricula of the economic faculties in the Albanian public universities.  But now, with the impossibility of developing this managerial layer and the high level of taxation for personal income, the uninspired Albanian managerial layer is completely engulfed in deep corruption, which makes it very difficult to get out in the short term.  This requires us to resume once again the creation of a new managerial layer, which we must take care not to corrupt and create continuity.The Albanian economy has a golden opportunity to exploit what the economic language is called "momentum".  Imagine a train.  Initially the train runs slowly and spends a lot of energy on its speed.  The train then runs at high speed, but does not spend much energy because it has acquired it and maintains a good portion of its speed due to inertia.  Further when it is near the station where it will stop, the train tries to slow down to stop at the designated station.  So is the momentum.  It depends on what speed the economy is. 

For years we have spent a lot of energy and still have not reached the situation where the Albanian economy is inert, and then find the right lane to go to the one we want to stop and then restart.  The golden opportunity to take advantage of the momentum we are in is to orient the Albanian economy in the right lane so that we can make the most of the speed we will gradually gain.Among the main threats to the Albanian economy we can mention the slowdown of economic growth in the continent and the lack of competitive advantages of the Albanian economy vis-à-vis regional economies and beyond.  It is impossible for an Albanian farmer to compete with one or two hectares of land and one or two cows with a Macedonian or Polish farmer and no longer with a Danish or German farmer.  It is impossible for an Albanian small and medium-sized firm to compete with small and medium-sized firms in the Balkans and Europe. 

The lack of competitive advantage comes for many reasons, but mainly because of the inadequate fiscal system.In order to put the Albanian economy car on the right track, to get the speed it needs, to put all its component gears in motion, and to put other new gears in this economy car, we need to build a  state budget to serve the life of the citizens of this country. Also, to put this economic drive on the right track we need to have institutions that serve the citizens and the business community. To have an economy car running on the right track, legislation needs to be at the service of citizens and businesses. If we are able to return to the state budget, institutions and legislation throughout the year 2020, then we can speculate that the Albanian economic machine might be put into operation, but it needs a capable management and  incorruptible.The whole world history to date has shown that the slowdown in economic growth rates has come almost entirely due to the corruption of the management layer and the lack of proper policy orientation of the economy. 

Senator, World Business Angels Investment Forum