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Privatisation and Transition in Albania

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  • Iraj Hashi
  • Lindita Xhillari

Abstract

This article considers the privatisation policy and its role in the transition to a market economy in Albania. The disintegration of the old regime took place over a much longer time than in other Central and East European countries, resulting in chaos and a political vacuum in which no systematic or effective policy could be formulated. The new government, committed to fundamental reforms necessary for a market economy, did not take power until after the second general election in March 1992. One outcome of this long pre-transition period was that the privatisation programme had to evolve gradually in the course of transformation, without ever having been planned in a comprehensive and integrated manner. Privatisation proceeded on five different fronts: small privatisation, privatisation of agriculture, housing, small and medium-sized enterprises and mass privatisation. The article discusses the progress of each aspect and provides up-to-date information and data on their progress. The privatisation of agriculture and housing were the most crucial aspects of the overall policy, with significant impacts on economic growth and the progress of the transformation programme. The privatised agricultural sector grew very rapidly and made a major contribution to pulling the whole economy out of the 'transformational recession'. Privatised housing created a significant wealth effect amongst the urban population, providing many of them with collateral or start-up capital. The privatisation of state-owned enterprises, however, was carried out with much more difficulty and controversy. Although auctions were to be the main method of transfer, ensuring a significant income for the treasury, in practice many enterprises were privatised through other methods, bringing in less income and giving rise to allegations of political favouritism. Another aspect of privatisation was the weak corporate governance mechanism which replaced state ownership. Many small and medium-sized enterp
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Suggested Citation

  • Iraj Hashi & Lindita Xhillari, 1997. "Privatisation and Transition in Albania," Working Papers 004, Staffordshire University, Business School.
    • Handle: RePEc:wuk:stafwp:004
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    References listed on IDEAS

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    1. Gramoz Pashko, 1993. "Obstacles to economic reform in Albania," Europe-Asia Studies, Taylor & Francis Journals, vol. 45(5), pages 907-921.
    2. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
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    5. Roman Frydman & Edmund S. Phelps & Andrzej Rapaczynski & Andrei Shleifer, 1993. "Needed mechanisms of corporate governance and finance in Eastern Europe1," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 1(2), pages 171-207, June.
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    Cited by:

    1. James Korovilas, 1999. "The Albanian Economy in Transition: The Role of Remittances and Pyramid Investment Schemes," Post-Communist Economies, Taylor & Francis Journals, vol. 11(3), pages 399-415.
    2. Erjon Luci & Marta Muco & Peter Sanfey, 2001. "Stabilization, monetary policy and financial institutions in Albania," wiiw Balkan Observatory Working Papers 16, The Vienna Institute for International Economic Studies, wiiw.
    3. Nevila MEHMETAJ, 2021. "Accountability, anti-corruption and transparency policies in Public-Owned Enterprises (POEs) in Albania," CIRIEC Studies Series, in: Andrea ZATTI & CIRIEC (ed.), Accountability, anti-corruption, and transparency policies in Public-Owned Enterprises (POEs), volume 2, chapter 0, pages 125-141, CIRIEC - Université de Liège.
    4. Andrea ZATTI (ed.), 2021. "Accountability, anti-corruption, and transparency policies in Public-Owned Enterprises (POEs)," CIRIEC Studies Series, CIRIEC - Université de Liège, volume 2, number css2.
    5. Drini Imami & Luca J. Uberti & Endrit Lami & Edvin Zhllima, 2018. "Political business cycles and construction licensing : Evidence from post‐socialist Tirana, Albania (1994–2015)," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 26(3), pages 523-552, July.
    6. Theesfeld, Insa & Pirscher, Frauke (ed.), 2011. "Perspectives on institutional change - water management in Europe," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 58, number 109519.
    7. Nebojsa Stojcic, 2012. "Patterns And Determinants Of Enterprise Restructuring In Central And East European Countries," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 21(2), pages 429-456, december.
    8. Dirk J. Bezemer, 1999. "Post-Socialist Financial Fragility: the Case of Albania," Tinbergen Institute Discussion Papers 99-045/2, Tinbergen Institute.

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