NATO INDIVIDUAL FELLOWSHIP PROGRAM 1995-1997 ECONOMIC TRANSITION IN ALBANIA: POLITICAL CONSTRAINTS AND MENTALITY BARRIERS by MARTA MUÇO (ALBANIA) June, 1997 2 ECONOMIC TRANSITION IN ALBANIA: POLITICAL CONSTRAINTS AND MENTALITY BARRIERS Dr. Marta MUÇO, Assoc. Prof. Chairperson of Macroeconomic Section Department of Economics Faculty of Economics&Business University of Tirana, ALBANIA Tel. +355 42 24772 Fax. +355 42 26320(home) E-mail
[email protected] This study is made possible by the generous support of the Office of Information and Press at North Atlantic Treaty Organization through the NATO Individual Fellowship Program, 1995-1997. Parts of it in the early versions have been published during the work as articles or presented at various international conferences as papers. The author is very grateful to all reefers and discussants that helped her to finalize the study. The opinions in this study reflect the author’s view and possible errors are her responsibility alone. 3 Table of Contents Introduction Chapter 1: The Socialist Legacy-A Real Obstacle to Albanian Economic Reform 1.1. The Level of Economic Centralization. 1.2. Structural Misorientations. 1.3. The Internal and External Imbalance. Chapter 2: The Ongoing Economic Transformation in Albania 2.1. Initial Political and Macroeconomic Conditions 2.2. Stabilization, Liberalization and the Openness of the Country 2.3. Privatization, Employment and the Labor Market 2.4. Reform of Institutions and the Legal System. 2.5. Pattern of Growth during Transition and Factors that could determine a Post-Emergency Growth Behavior in Albania. 2.6. Crisis of 1996-1997: Complexity of Reasons versus Simple Financial Looses.