A policy paper for the Government of Albania
Prepared by the Centre for Social and Economic Studies, in collaboration with the Development Research Centre on Migration, Globalisation and Poverty, University of Sussex, UK
Tirana, April 2006
In the last 15 years, the phenomenon of emigration has been at the core of economic and social changes occurred in Albania. By the end of 2005, more than 25 percent of Albanian citizens were estimated to be living abroad. No other Central or East European country has been so affected by emigration in such a short period of time. Russell King (2003) goes as far as to describe Albania as “a kind of laboratory for studying new migratory processes”. What is the relationship between emigration and economic and social change in Albania? Like other economic and social phenomena, emigration has had both positive and negative affects on the economic development of the country. In this context, the task for economic policy is to seek to maximize the positive aspects of emigration, whilst minimizing negative ones. In the overall context of Albanian emigration, three are the
major issues that deserve particular attention: remittances, the sustainable return of emigrants and “the brain drain”.
In 2004, remittances sent by Albanian emigrants were estimated at 1 billion USD. They constituted some 13.5 percent of the GDP (almost the size of an economic sector), were three times higher than net foreign direct investment, double the official development aid received by Albania and covered 50 percent of the trade deficit (Bank of Albania, 2005). As a result, remittances have played a significant role in the poverty reduction of many households in Albania, representing the major factor that distinguishes “poor” and “nonpoor” households (De Soto et al., 2003). However, in the context of unfavorable economic and social conditions, this monetary value injected into the Albanian economy from emigration has until now been insufficient to increase domestic production. It has been mainly used for the import of the consumption goods. It has also been a key factor influencing one of the peculiarities of the Albanian economy during the transition period; extroversion (Samson, 1996), meaning that internal consumption greatly exceeds the capacity of national production to meet the needs of the population. Due to a shortage of investment, which could potentially generate more employment opportunities, a part of the younger generation is obliged in turn also emigrate. In this case, emigration recycles emigration. Furthermore, recent studies suggest that, primarily as a result of the family unification in host countries, the remittances of Albanian emigration have reached a new phase of maturity, and are likely to undergo a gradual decline in the short term (De Zwager et al., 2005; Maroukis, 2005; Gedeshi et al., 2003).
Sustainable return of emigrants
Turning to the question of return, a recent set of studies suggests that perhaps more than half of Albanian emigrants, especially in Greece and Italy, are willing to come back to their country of origin – but only after on average 14-17 years in their country of destination (De Zwager et al., 2005; Gedeshi et al., 2003). The return of emigrants is potentially important for the economic growth of Albania, as they may bring back capital, foreign work experience and new ideas. A study by IOM, De Zwager et al. (2005) estimated that long-term emigrants have accumulated in the country of emigration a total pool of retained savings of between 10 and 15 thousand million Euros. Out of this group of emigrants, 38 percent indicated an intention to return and invest in Albania. Applying an average multiplier this leads to an estimated remittance pool of Euro 8.5 to 9.7 billion (De Zwager et al. 2005). Besides, the return of a proportion of those who emigrated might balance the negative trend of remittances’ falling curve. However, interviews with emigrants indicate that many things need to change in Albania in order to make return sustainable (King, 2005).
The third issue highlighted above, and the one on which this paper is focused, is the ‘brain drain’. Work by the Centre for Economic and Social Studies suggests that about 50 percent of all lecturers, research people and intellectuals in the country, most of them young and trained in part in Europe, have left Albania since 1990. Nearly 66 percent of those Albanians known to have carried out a PhD in Western Europe or the US since 1990 have either emigrated from Albania, or never returned after their graduation. This emigration continues even nowadays, with a significant group of talented and successful students remaining abroad after finishing the university or post-graduate studies there. This is important, since according to “new growth literature”, people equipped with a high level of human capital constitute one of the major factors, probably the key one, in promoting the economic growth of a country (Lucas, 1988). In the 1970s, to protect developing countries from the “brain drain” phenomenon, Bhagwati et al. (1976) suggested the establishment of “a tax on the brain”, and a number of other measures have been suggested since that date, including “ethical recruitment” that would prevent recruitment of certain professionals from poor countries, or compensation to be paid by rich countries to poorer countries for “stealing” their skilled personnel. However, in the context of economic globalization and freedom of the
individual, such approaches face significant obstacles. Instead, therefore, we ask a number of rather different questions, including: What conditions need to be created to encourage skilled people to remain in Albania? What can be done to encourage a proportion of talented students to return to Albania after their university graduation? And last but not least, what forms of partnership might be established with Albanian lecturers and researchers working in the universities and research institutions of Europe and USA, so that in the end both sides can enjoy a win-win situation?
The Albanian government has many challenges ahead in the domain of migration, and finds itself in front of a critical dilemma. If nothing is done, many of the problems described above will be aggravated in the future, potentially resulting in negative effects on economic and social growth. However, if appropriate actions are taken, it is at least
feasible that the country could place itself in a new spiral of development. The paper is organized in three main parts, which are followed by some relevant conclusions and entry points for government action. The first part explains the methodology and data sources. The second section illustrates the brain drain phenomenon in Albania and the third part consists of ideas and suggestions about how to turn the ‘brain drain’ into ‘brain gain’. The paper is enriched with relevant experiences from other countries that can be taken into consideration and applied in Albania.
You can read the full policy paper here: Brain_Gain_Policy_Paper_english