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Albania in Crisis

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Albania in Crisis

The Predictable Fall of the Shining Star

9781840640700 Edward Elgar Publishing
Daniel Vaughan-Whitehead, Senior Economist, International Labour Office, Geneva, Switzerland and Professor, Sciences Po, Paris, France and the University of Geneva, Switzerland
Publication Date: 1999 ISBN: 978 1 84064 070 0 Extent: 384 pp
At the beginning of the 1990’s the first encouraging results on GDP growth combined with the fulfilment of international requirements led many to believe that Albania was a ‘shining star’ in Central and Eastern Europe. But in 1997 this progress was reversed by unprecedented institutional, political and social turmoil leading to a spiral of violence and chaos.

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Contents
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At the beginning of the 1990’s the first encouraging results on GDP growth combined with the fulfilment of international requirements led many to believe that Albania was a ‘shining star’ in Central and Eastern Europe. But in 1997 this progress was reversed by unprecedented institutional, political and social turmoil leading to a spiral of violence and chaos.

This book presents, for the first time, a comprehensive analysis of the different factors behind the 1997 political, economic and social upheaval in Albania. It shows that the crisis was both predictable and complex, and not simply a matter of a disgruntled population attempting to regain their money. Using extensive and detailed evidence Daniel Vaughan-Whitehead identifies the major reasons for the growing discontent and final explosion: - the increase in unemployment, collapse of industrial production, inefficiency of the banking system, limitations and drawbacks of foreign investment, failure of mass privatization, falling living standards, and rising poverty. He examines the consequences of the crisis at the enterprise level, by region, sector, industry and property form using a unique survey of over 1,000 enterprises. In conclusion he offers a series of policy recommendations with a view to regenerating production whilst avoiding a new social explosion in a destroyed economy, weakened by political instability and the conflict in Kosovo.

This unique book will be essential reading for all academics working in the area of transition as well as policymakers from international organizations involved in transition economies.
Critical Acclaim
‘. . . a comprehensive and timely overview of one of the least known and least understood of the transition economies, Albania . . . the book is an excellent overview of events in Albania during the past decade. It assembles an impressive range of data and other information about Albania and presents in a very accessible manner. The surveys, in particular, provide a wealth of useful information and can be very helpful in shaping future policies. The author presents the main arguments in a very clear and cogent manner . . . I hope and expect that this valuable book will do much to stimulate further
debate and research about Albania.’
– Peter Sanfey, Journal of Comparative Economics

‘This book provides an analysis of economic developments in Albania since 1990, with particular emphasis on the political, economic, and social collapse of 1997. It is, on the whole, an excellent, thoroughly researched book . . . this is far and away the finest book on the Albanian economy in the 1990s to have appeared thus far.’
– Adi Schnytzer, Slavic Review

‘Albania in Crisis will be of great interest not only to those international organizations and experts working on the reconstruction of Albania, but also to other policymakers in the region, and to anybody with a professional, academic or general interest in the “transition”.’
– Elizabeth Goodson, International Labour Review

‘One of the most comprehensive economic analyses on Albania. Based on personal experience, Daniel Vaughan-Whitehead’s book is an excellent alternative approach to the Albanian 1997 crisis explanation. It represents a deep insight into the social problems of a poor but still promising country. Surveys and the enormous work with data are a great help in designing sustainable policies for recovery and growth . . . it will be an excellent addition to the scarce literature on Albania.’
– Marta Muço, Bank of Albania, Albania

‘During the early 1990s the Albanian economic performance was often lauded as one of the success stories on the path to systematic transformation and its policies as worthy of emulation by other countries in transition. The astonishing reversal in economic fortunes that followed and the accompanying social conflicts have led some to question that optimism and the general relevance of orthodox prescriptions. But this book – which is informed by extensive field work and findings from a large enterprise-level data set – is the first to provide a critical, comprehensive account and analysis of the Albanian experience. The volume – and especially its provocative findings – will be of considerable interest to social scientists and policymakers who are interested in promoting sustainable reform in former communist countries.’
– Derek C. Jones, James L. Ferguson Professor of Economics, Hamilton College, New York, US

‘This is a riveting, first-hand, unique account of the spectacular rise and fall of the Albanian economy in transition. From a good observation point (ILO) and on the strength of a large scale enquiry into over 1,000 enterprises over three years, Daniel Vaughan-Whitehead helps us understand the 1997 reversal and crisis, which was not just unleashed by the banking pyramid’s collapse but was predictably rooted in the fragility of earlier achievements and their large-scale social costs. The book is of very great value not only to country specialists but to anybody with a professional, academic or general interest in the “transition”.’
– D. Mario Nuti, University of Rome ‘La Sapienza’ , Italy and London Business School, UK
Contents
Contents: Preface Part I: Assessment: The Reasons for the Crisis 1. The Apparent Rapid Success of the Balkan Tiger 2. The Profound Crisis in Industry 3. Difficulties in Emerging Services 4. The Missing Pillar: The Inadequacy of the Banking System 5. The Unemployment Shock 6. Impoverishment Wages and Incomes 7. The Avoidance of Social Dialogue and Participation 8. The Failure of the Mass Privatisation Programme 9. Limitations and Drawbacks of Foreign Capital 10. The Collapse of the Albanian Pyramid Part II: Prospects: Albania after the Storm 11. The Extent of the Destruction 12. A Halt to Economic Activity 13. Macroeconomic Indicators Moving Backwards 14. The Social Abyss 15. Reviving Production Forces 16. Reviving Life Forces Bibliography Index
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