Introduction

In this paper, we are traveling to analyze the economic growing in Albania. We choused this subject because it has been an intense argument recently in Albania, particularly between politicians.

To analyse this phenomenon, we have to cognize in what consists the economic growing and which are the macroeconomic factors that influence on it.

We have subdivided our paper in some subdivisions. At subdivision two, we will speak about what is economic growing and how is it related with the economic development of Albania. In the other subdivisions, we will handle some macroeconomic factors such as the production factors, the function of the authorities and investings and how this factors influenced on the economic growing in Albania for certain periods of clip.

2. ECONOMIC GROWTH & A ; DEVLOPEMENT

As taught at economic lessons, the economic growing represents the addition of GDP ( Gross Domestic Product ) -real rate or the addition in a state ‘s end product of goods and services ( merchandise per capita ) . ( Haderi, 2007, p.4ff, ain interlingual rendition ) .

Now, allow us look to the per centum of GDP-real growing rate in Albania in old ages 2002-2009.

Figure 1

Beginning: hypertext transfer protocol: //www.indexmundi.com/albania/gdp_real_growth_rate.html

We see that GDP-real growing rate in Albania have been rather high in the last old ages, despite 2009. Does this mean that there has been a high economic development in this state?

The term economic development is for more comprehensive than economic growing. It

Implies progressive alterations in the socio-economy construction of a state. Viewed in this

manner economic development involves a steady diminution in agricultural portions in GNP and uninterrupted addition in portions of industries, trade banking building and servicesA? .

_________________________

hypertext transfer protocol: //www.economics4development.com/

– 2 –

Therefore, we conclude that even why economic growing in Albania is increased in the last old ages this does non intend that Albania had an economic development.

3.LABOR, CAPITAL, TECHNOLOGY & A ; ECONOMIS GROWTH

In this subdivision, we mean to analyze how economic growing is related to labour, capital, and engineering. The three elements that contribute in the production of goods and services are labour, capital, and engineering. Logically all three factors must be present if an economic system is to turn. The inquiry is which contribute gives each of them. In this treatment, we find two different groups. The first group of research workers, which think that the addition of labour and capital influences the most in the economic system growing, and the 2nd group, which thinks that engineering, influences the most. Harmonizing to the 2nd group, the addition of labour may increase in some rate the economic growing but this will halt when we will hold a full business. By the other manner, the addition of capital may take in a lessening of the production because if people are more paid they are non motivated to work harder. Therefore, if we want to hold a lasting and stable economic growing, despite labour and capital we have to better continuously the engineering. This is called intensive growing. Differently from the intensive growing, the addition of production because of labour and capital ( extended growing ) works merely for a limited period.

For illustration, the economic prostration of the Soviet Union in 1990, after old ages of economic success, surprised many people. This prostration lends credibleness to the “ extended growing hypothesis ” , because this economic system was based on the monolithic accretion of labour and capital and did non incorporate inovative engineering.

What happened in Albania? We used some informations published from CIA ( 2010 ) to compare economic growing in Albania, labour force and industrial production:

GDP-real growing rate: 2.1 % ( 2009 ) , 6.1 % ( 2008 ) .

Labor force: 1.03 million ( non including 352 000 emigrant workers ) ( 2009 ) .

Unemployment rate: 12 % ( 2009 ) , 12.5 % ( 2008 ) .

Industrial production growing rate: -4 % ( 2009 ) .

As we see the labour, force is made of about 1/3 of entire population of Albania. Even why the employment in 2009 has been lower than in 2008, the GDP-real growing rate has been higher in 2008 than in 2009. Therefore, we conclude that labour force can non explicate the

economic growing. However, labour remains a factor that may act upon on the economic growing. By the other manner, we note that industrial production growing rate is negative so we may say that inovative engineering is non applicated. The decision of this subdivision is that Albania is related the most with the extended growing as the major portion of ex-communist economic systems. However there is a undertaking called ” Albania in the age of cyberspace ” which attempts to present the latest information engineering in all public disposal. However, this undertaking promoted by the premier curate of Albania ( Berisha ) still remains merely in paper.

– 3 –

4.THE ROLE OF THE GOVERNMENT & A ; ECONOMIC GROWTH

The function of the Government in an economic system is a authoritative argument. The sentiments about the authorities intercession are subdivided in three schools. The first school is based on free markets. This school refuses every sort of Government intercession and it is called neoclassic broad school. Sing to Albania we can non speak about really free markets sing the fact that it has been a centralised economic system. Nowadays it is still called an economic system in passage.

The 2nd is the revisionist school, which does non portion the same sentiment with neoclassic school about free markets efficiency. Revisionists think that particularly in hapless states ( Albania ) markets does non work good. The revisionist position admits that the authorities has to take a particular, complex, and non unvarying intercession. Differently from neoclassic philosophy it does non merely permits, but besides even recommends an active usage of revenue enhancement policy to pull strings comparative monetary values in economic system.

In the instance of Albania, Albanian Government has influenced for a faster development by utilizing revenue enhancement policy, fiscal support of Albanian State Bank, public and private investings ( which we will analyze subsequently ) etc. Anyhow this, political relations did non win in the economic growing in Albania, because of an informal economic system called “ pyramids ” , which consists of persons or unaccredited houses allowing recognition or roll uping sedimentations from the populace.

The Albanian authorities has approved a level revenue enhancement government of 10 % . Conservative Prime Minister Sali Berisha declared this move to be a financial revolution for Albania, which now allegedly features one of the lowest revenue enhancement rates in the universe. This is believed to be a strong arm in the battle against the informal sector, and above all a charming slug for economic prosperity, to bring forth double-digit economic growing rates. However, current GDP growing chances are merely at approximately 5 % . A?

The 3rd school rejects the thoughts of neoclassic and revisionist school and claims that we can non give sense to the selective intercession because we can non specify how such political relations influence in the economic growing. For illustration, would USA economic system grow faster if it has become Communist in 1917? In other words, the same political relations may give different end products in different economic systems.

______________________

2. Mario Holzner, Research Reports, No. 341, July 2007.

– 4 –

5. INVESTMENTS & A ; ECONOMIC GROWTH

Investings play a really of import function in the economic growing of a state in passage. In this subdivision, we will analyze the moral force and the effectivity of investings in Albania related to the economic growing. We saw in subdivision two that during 2002-2008, existent one-year GDP growing varies from 4 % to 7 % . Therefore, we can rank Albania as a middle-income economic system. Let us associate this information with the investings. The kineticss of investings in Albania grow particularly after 1996. Harmonizing to National Institute of Statistics of Albania, ( INSTAT, statistical years1995-2006 ) norm investings per dweller during 1996-2006 were 26 times higher than those in 1950-1990. Anyway, in 1996 investings fell because of pyramid strategies. Besides in 2002, investings fell by 7.7 % compared to 2001. This was besides reflected on the alterations of GDP-real rate growing, which from 7.1 % in 2001 fell to 5 % in 2002. This manner we can do a direct connexion between investings and economic growing.

A high rate of investings does non intend effectivity. Investings in the service sectors ( trade, hotel services, bars and eating houses ) in 2006 was 51.6 % of the GDP, while the industry and agribusiness was merely 32.6 % of the GDP. Those informations shows that Albania is a state, which consumes goods, and services that come from imports and that investing do non convey a sustainable and long-run growing of the national economic system.

Now allow us see how private and public sector investings are related.

Figure 2: The construction of investings for 1996-2007 ( in per centum of GDP ) .

Beginning: http_ces.epoka.edu.al

From figure 2 we conclude that private investings in Albania has been larger than public investing, so we may state that private investings influenced the most the economic growing in Albania.

– 5 –

6. CONCLUSIONS

The publications about economic growing in Albania have sparked an intense argument, particularly by the politicians, which explain the phenomenon, as they want.

In this authorship, we tried to depict in a critical manner the chief statements of this argument touching some of import dimensions such economic development ; labour, capital and engineering ; the function of the authorities and investings.

Other dimensions such, rising prices and budgets were non treated because we do non hold adequate cognition in these countries.

Our survey does non offer clear and deciding consequences nor gives recommendations ; anyhow, we tried to explicate how some macroeconomic factors influenced economic growing in Albania. One thing is for certain: the argument remains opened.