This study seeks to present the Albanian economic reform analyzing the
current situation and the strong influence from the past. The advantages and
disadvantages of Albania, the similarities and specifics of its model, as well as political,
institutional and mentality constraints are discussed, too.

The first chapter of the paper tents to analyze the socialist legacy and initial
conditions inherited from the past, similar to those of the other ex-communist countries
in Eastern Europe. The level of centralization, structural misorientations and
macroeconomic imbalance are analyzed briefly.
The second chapter examines the first years of the Albanian economic reform, the
difficulties and the early outcomes of this process. The earlier economic transformation
followed by the stabilization program that has been implemented since 1992 show the
real chance of this country to abandon its long isolation and to create a new democratic
society and a new market economy. Possibilities for a sustainable growth after solving
some post emergency issues are also discussed. Political and economic reasons that
could be at the roots of recent 1996-1997 crisis have been analyzed.
The third chapter seeks to highlight some important aspects of the Albanian
economic reality that makes its transformation different. Compared with other
countries that suffered the same legacy, Albania had the most difficult initial
conditions. Some political and mentality constraints are emphasized.

Financial Constraints in Albania

This project was financed by USAID on behalf of the Albanian Center for Economic Research as part of the project “Hidden barriers to economic growth in Balkan Peninsula”, The Balkan Network. Original data survey and the paper are at Dosje 1/4, “Balkan Network”, 1996, ACER, Tirana, Albania.