A new paper by Ilir Gedeshi

Emigrants’ remittances undoubtedly represent the most positive aspect of emigration in Albania.
During the period from 1991-2000, emigrant remittances, mainly arriving from Greece and Italy, have
been increasing progressively. According to the evaluations of the Bank of Albania, they actually total
about 530 million USD annually, or about 18% of the GDP. That’s why the remittances have been a
fundamental factor in determining one of the characteristics of Albania is transition, extroversion of
the economy (extroversion1), i.e. that the local consumption is higher than the GDP, while the
difference is compensated for from the remittances of emigration and foreign aid. Whereas, from the
viewpoint of the importation of finance, if comparison is drawn with the economies of other East and
Central European countries still in transition, Albania is the only country that bears some resemblance
with East Germany. The problem arising is that with a lack of microeconomic restructuring, this
money from emigrants introduced into the Albanian economy has not stimulated local production to
the appropriate extent, but instead, it has been used for the import of consumable goods, thus
deepening the extroversion of the economy. The first risk resulting from this situation is that a part of
the new generation joining the labour market is obliged to practise emigration. Emigration in this case
stimulates emigration. In the long run, if these tendencies continue to exist, the quantity of remittances
will shrink. A few surveys carried out in other countries show that the pattern of the remittances has
the shape of a curved line, reaching a peak after 10 – 14 years and thereafter, decreasing drastically2.
Even the remittances of Albanian emigration are approaching this threshold. There is no doubt that the
social-economic consequences in this case will be grave, but they cannot, however, be avoided or
alleviated through economic policies.

 

Read the full paper here.