Albania’s economic freedom among best in region

TIRANA, Jan. 25 – Despite losing 2 points during the past year, Albania’s economic freedom ranks among the best in the region, lagging behind only compared to neighbouring Macedonia. The finding made available in the 2011 Index of Economic Freedom published by The Wall Street Journal and The Heritage Foundation, assess 183 countries based on ten indicators that evaluate openness, the rule of law, and competitiveness.
Albania ranked 70th in the index, sandwiched between Portugal and Belize, performing better than most Balkan countries.
“Albania’s economic freedom score is 64, making its economy the 70th freest in the 2011 Index. Its level of economic freedom declined by 2 points during the past year, due primarily to decreases in trade freedom, investment freedom, freedom from corruption, labor freedom, and its government spending score. Albania is ranked 33rd freest among the 43 countries in the Europe region, and its overall score is above the world average.”
Albania has achieved strong economic growth over the past five years, driven mainly by the services and construction sectors and reflecting significant diversification of the economic base. The government has taken steps to enhance the business environment and has adopted broad structural reforms to foster growth in the private sector, says the report. Although foreign direct investment has increased in recent years, levels still remain among the lowest in the region. Albania’s overall economic freedom score is constrained by weak property rights and pervasive corruption. The low property rights score is largely a result of political interference in the judiciary.
“Albania’s regulatory system is not fully transparent but is becoming more conducive to entrepreneurial activity. Establishing and running a business has been facilitated by recent reforms. Many license requirements have been abolished, and a broad simplification of licensing procedures has been undertaken.’
Foreign and domestic firms are treated equally under the law, and nearly all sectors are open to foreign investment. Foreigners may not purchase agricultural land but may rent it for up to 99 years. They also may purchase commercial property if the proposed investment is worth three times the price of the land. There are no restrictions on foreign ownership of other property. Foreigners may own 100 percent of Albanian companies, and monetary expatriation is legal. Residents and non-residents may hold foreign exchange accounts. The state can expropriate an investment or asset in rare cases for public-interest purposes, but there are legal provisions for compensation. Inadequate infrastructure, lack of reliable power, weak rule of law, poorly defined property rights, inefficient bureaucracy, and corruption discourage foreign investment.
With little or no direct exposure to recently troubled international financial assets, Albania’s banking system has been able to withstand the global financial shock with little disruption.
All Balkan countries ranked slightly below the regional European average, but only Serbia and Bosnia and Herzegovina received scores below the world average. Macedonia was the highest ranking economy in the Balkans, coming in 55th place out of the 183 countries in the Index.