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Geography, agriculture and the economy Geography
Albania is a mainly mountainous country on the western seaboard of the Balkan peninsula . It shares borders with Serbia and Montenegro to the north and north-east, the Former Yugoslav Republic of Macedonia to the east and Greece to the south. The principal geographic regions include coastal lowlands on the Adriatic Sea, intermediate hill country and rugged inland mountain ranges. The coastal areas have a Mediterranean climate, but the rest of the country has the seasonal extremes of a continental climate. The estimated population in 2004 was 3.2 million, showing a growth rate of 0.6 per cent. In the decade up to 2002, in the wake of Albania’s difficult political and economic transition from a rigid communist and isolationist state to a democratic form of government and liberalized economy, an estimated 15 per cent of the population emigrated, mainly to Greece and Italy. Those emigrants included a high proportion of the country’s intellectual elite. Illegal emigration, a source of concern for the European Union, continues. Agriculture Only about one quarter of Albania’s land is arable. The remaining land is covered mainly by forests and some pasture. Almost half of the arable land lies along the coast, 37 per cent is in the hills and 19 per cent in the mountains. Of the 417,000 ha equipped for irrigation under the former centralized economy, only one third is now operational, and much of the rest cannot be rehabilitated in a cost-effective way. After a non-communist government was elected in 1992, the centralized economy was dismantled. State-run cooperatives and state farms were privatized and the land was redistributed to farmers. About 470,000 small family farms were created, with holdings averaging about 0.7 ha, and these were typically fragmented into even smaller units. In hill and mountain areas, some land parcels are even smaller, measuring as little as 0.2 ha. Initially, after the collapse of the state farm system, farmers adopted a subsistence model, producing just enough to satisfy their own needs. Subsequently, in areas of high productive potential, which happen to lie near urban centres, farmers gradually became more market-oriented. Farmers in the productive coastal lowlands are advantaged in terms of marketing, economic opportunity, overall business investment and level of economic activity. In mountain areas, where infrastructure is inadequate and marketing opportunities are few, farming is still mainly at the subsistence level. The agricultural sector provides employment for about 60 per cent of Albania ’s labour force and it accounts for about 25 per cent of the gross domestic product (GDP). Agriculture, which still relies on antiquated equipment and labour-intensive methods, has been a major focus for external technical and financial aid. Albania is still highly dependent on food imports. Livestock production is a major component of agriculture, accounting for about 50 per cent of the sector’s total output. In mountain areas, livestock production, together with a range of fruit and vegetable products and viticulture, offers some of the best opportunities for boosting household incomes. Economy Albania ’s transition to a democratic society and market-based economy after 1992 has proved challenging, in part because the country emerged from an extreme form of strict and isolationist communism. Under the previous government, Albanians could not practice private trade, internal travel was tightly restricted, and interactions with the outside world, including trade, were kept to a minimum. The country suffered several shocks during the transition period. One was the collapse of financial pyramid schemes early in 1997, which triggered a crisis that that shook Albania’s society and institutions. Another was the Kosovo crisis of 1999, which brought almost 500,000 refugees into Albania. Despite the difficulties of transition, Albania is now a parliamentary republic and is working to consolidate a legal, judicial and regulatory framework that conforms with the standards of a democratic society and a liberalized economy. The wave of emigration that was spurred by the transition has had a positive effect by bringing a substantial amount of foreign currency into the country in the form of remittances. In 2005 remittances amounted to about 15 per cent of the gross domestic product (GDP), according to Bank of Albania estimates. Remittances help underpin the domestic currency and help maintain adequate levels of foreign exchange reserves. In 2004 total GDP was estimated to be US$7.6 billion and was growing at an annual rate of about 6 per cent. An increasing number of Albanians are finding employment in the non-agricultural private sector, particularly in construction, transport and other services, which make substantial contributions to the national economy. Most of the banks operating in Albania are foreign-owned. The low level and limited geographic coverage of financial institutions hinders development of the private sector. Albania is a potential candidate for membership in the European Union.
Source: IFAD |
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