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

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Albania’s Troubled Economy

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  1. 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

  2. Where in the World is Albania? http://www.worldatlas.com/webimage/countrys/europe/al.htm

  3. 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

  4. Geography of Albania • Similar in size to the state of Maryland • Coast is along the Adriatic Sea • Two major regions: • Mountainous • Coastal lowlands

  5. http://www.grida.no/db/maps/prod/level3/id_1259.htm

  6. 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

  7. 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

  8. Coastal Region • Densely populated • Contains a majority of the country’s agricultural lands http://www.geocities.com/Paris/Louvre/6820/vlora8.jpg

  9. 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

  10. 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

  11. 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

  12. 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

  13. 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

  14. 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)

  15. 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

  16. The Pyramids of Albania! • Albanians personal savings soared • Equaling ~15% of the nation’s GDP (1995) • Investors saw opportunity • Introduction of the pyramid scheme…

  17. How the Pyramid System Works • High interest rates • Promise of 30%-50% return • Earliest depositors gain most return • Everyone investing benefits • Or do they…

  18. Pyramids Gone Awry • All but few operated honestly • Systems corrupted by swindlers and pseudo-businesses • Many Albanians fooled

  19. 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

  20. 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

  21. 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

  22. 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

  23. 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

  24. 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

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