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Albania’s Troubled Economy Justin Wise wisejj@uwec.edu Geography 308 (Russia and Eastern Europe) Professor Zoltan Grossman University of Wisconsin-Eau Claire Spring 2005 Where in the World is Albania? http://www.worldatlas.com/webimage/countrys/europe/al.htm

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albania s troubled economy

Albania’s Troubled Economy

Justin Wise

wisejj@uwec.edu

Geography 308 (Russia and Eastern Europe)

Professor Zoltan Grossman

University of Wisconsin-Eau Claire

Spring 2005

where in the world is albania
Where in the World is Albania?

http://www.worldatlas.com/webimage/countrys/europe/al.htm

influences on albania s economy
Influences on Albania’s Economy
  • Geography
    • Coastal boundary
    • Mountainous region
  • History
    • War
    • Transition from Communist government
    • Foreign assistance
    • Pyramid Schemes

http://www.factmonster.com/ipka/A0107268.html

geography of albania
Geography of Albania
  • Similar in size to the state of Maryland
  • Coast is along the Adriatic Sea
  • Two major regions:
    • Mountainous
    • Coastal lowlands
mountainous region
Mountainous Region
  • 70% of the landmass is mountainous highlands
  • Highlands located in the North, East, and South

http://www.geocities.com/Paris/Louvre/6820/PEISAZH2.JPG

mountainous land use industry
Mountainous Land Use & Industry
  • Land Use
    • Mining
    • Timber
    • Livestock
  • Industry
    • Machining
    • Cement production
    • Textile
    • Metal goods

http://www.lib.utexas.edu/maps/atlas_east_europe/albania-economy.jpg

coastal region
Coastal Region
  • Densely populated
  • Contains a majority of the country’s agricultural lands

http://www.geocities.com/Paris/Louvre/6820/vlora8.jpg

coastal land use industry
Coastal Land Use & Industry
  • Land Use
    • Agriculture
      • Wheat, Grapes, Dairy, etc.
    • Pasture land
  • Industry
    • Petroleum refineries
    • Chemicals
    • Textiles
    • Food Processing

http://www.lib.utexas.edu/maps/atlas_east_europe/albania-landuse.jpg

history of albania
History of Albania
  • Long history of involvement in war
  • Isolation from rest of world in Enver Hoxha (communist) dictatorship
  • Dramatic shifts in government systems
  • Large amounts of foreign aid in recent years
  • Corrupted Pyramid business practices
long history of involvement in war
Long history of involvement in war
  • Occupied during both World Wars
    • WWI
      • Italy, Serbia, Greece, & France
    • WWII
      • Germany & later Soviet Union
      • Pro-Nazi “Greater Albania” included Kosovo and western Macedonia
  • Kosovo Conflict
    • Large numbers of Kosovar-Albanian refugees

www.msnbc.com/news/546910.asp&h=249&w=330&sz=19&tbnid=8ThwmEGLh68J:&tbnh=86&tbnw=114&start=17&prev=/images%3Fq%3Dalbanian%2Bwar%26hl%3Den%26lr%3D%26sa%3DG

isolation from the rest of the world
Isolation from the rest of the world
  • Enver Hoxha
    • Albania’s 1st communist chief of state
    • Ruled for 40 years
  • Albania became the most tightly controlled country in Europe
    • Restricted trade
    • Limited communication with the rest of Europe

http://ciml.250x.com/gallery/enver.jpg

shifts in governmental systems
Shifts in governmental systems
  • Early 1900s-1948 – Socialist
  • 1948-1991 – Communist
    • Soviet Communism
    • Enver Hoxha dictatorship
    • Chinese Communism
  • 1991-1992 – Reformed Socialist
  • 1992-Present – Emerging Democracy
large amounts of foreign aid
Large amounts of Foreign Aid
  • Italy, under Mussolini, provides aid when he gained Albania (1935-1939)
  • Communist partisan leader Enver Hoxha takes over
  • Albania joins Soviet-allied Council for Mutual Economic Assistance “Comecon” (1949)
  • Hoxha signed agreement between Soviet Union and Albania for economic assistance (1951)
foreign aid continued
Foreign Aid Continued…
  • Large amounts of economic aid from Soviet Union, Eastern European countries, and China begin pouring into Albania (1959)
  • Albania sides with China, Soviet economic support to Albania stops, and Chinese aid is increased (1960)
  • China terminates all economic aid to Albania (1978), and it becomes the poorest country in Europe
the pyramids of albania
The Pyramids of Albania!
  • Albanians personal savings soared
    • Equaling ~15% of the nation’s GDP (1995)
  • Investors saw opportunity
    • Introduction of the pyramid scheme…
how the pyramid system works
How the Pyramid System Works
  • High interest rates
    • Promise of 30%-50% return
  • Earliest depositors gain most return
  • Everyone investing benefits
    • Or do they…
pyramids gone awry
Pyramids Gone Awry
  • All but few operated honestly
  • Systems corrupted by swindlers and pseudo-businesses
  • Many Albanians fooled
effects of the pyramid schemes
Effects of the Pyramid Schemes
  • 50% of Albania’s GDP lost to the schemes
    • $1.2 billion
    • ½ of nation’s money gone (only eight years ago!)
  • Albanian government blamed by the people
    • Trust in the government broken
    • Judiciary and bureaucracy remain weak
effects continued
Effects continued…
  • Massive rioting broke out
    • Foreign minister Tritan Shehu attacked and injured after trying to calm the rioters
    • Police stations, town halls, court houses set on fire
    • US forces currently in Albania helped to control crowds
current economic status
Current Economic Status
  • Poorest country in Europe
    • Lowest European standard of living
  • Relatively high unemployment rate
    • 15.8% (closer estimates near 30%)
  • Organized crime flourishes in chaotic circumstances
  • Remains a developing country, even though it’s in Europe
  • EU Membership? Not a chance!

http://www1.tip.nl/~t100878/ALPIX/jube.jpg

currency exchange rate
Currency & Exchange Rate
  • Leke or Lek
  • Current Exchange Rate
    • 97.42 per US Dollar

http://www1.tip.nl/~t100878/ALPIX/abb5lv.jpg

http://www1.tip.nl/~t100878/ALPIX/abc1laa.gif

future albanian economy
Future Albanian Economy
  • Striving for a more open-market economy
  • New chief of state Alfred Moisiu (elected July 2002)
    • Restored public order
    • Increased economic activity and trade
  • Remittances of workers abroad help to supplement the GDP

http://cp.settlement.org/english/albania/images/alb17.jpg

references
References
  • http://lcweb2.loc.gov/frd/cs/altoc.html
  • http://www.loc.gov/rr/international/european/albania/al.html
  • http://www.abacci.com/atlas/economy3.asp?countryID=121
  • http://www.factmonster.com/ce6/world/A0856539.html
  • http://www.factmonster.com/ipka/A0107268.html
  • http://www.state.gov/p/eur/ci/al/c4069.htm
  • http://www.worldbank.org/html/prddr/trans/so97/albania2.htm
  • http://www.b-info.com/places/Bulgaria/news/97-01/jan28a.omri