TIRANA, Nov. 20 – U.S prestigious Forbes magazine has ranked Albania as the 74th best country for business in 2012, worse than almost all regional countries except for Serbia. Forbes ranks Albania poorly on tax burden 122nd, innovation 110th, and property rights 99th, corruption 86th and better on investor protection 17th, monetary freedom 51st.
The Forbes magazine rated Slovenia and Macedonia as the best countries in the Balkans in which to do business. Serbia is rated worst. The US financial magazine in its annual list ranks Slovenia in 23rd position out of 141 analyzed countries worldwide. Macedonia is second in the Balkans, ranked in 37th place. Montenegro is ranked 45th while Croatia is two places below in 47th place. Bulgaria takes 49th position and Romania is ranked in 60th place. Greece, which is currently struggling with its debt crisis, takes 68th position. Albania, Bosnia and Herzegovina and Serbia are in 74th, 85th and 90th places respectively. The list does not include Kosovo.
Forbes determined the Best Countries for Business by grading 141 nations on 11 different factors: property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape, investor protection and stock market performance.
Forbes on Albania
Albania, a formerly closed, centrally-planned state, is making the difficult transition to a more modern open-market economy. Macroeconomic growth averaged around 6% between 2004-08, but declined to about 3% in 2009-11. Inflation is low and stable. The government has taken measures to curb violent crime, and recently adopted a fiscal reform package aimed at reducing the large gray economy and attracting foreign investment. Remittances, a significant catalyst for economic growth declined from 12-15% of GDP before the 2008 financial crisis to 8% of GDP in 2010, mostly from Albanians residing in Greece and Italy. The agricultural sector, which accounts for almost half of employment but only about one-fifth of GDP, is limited primarily to small family operations and subsistence farming because of lack of modern equipment, unclear property rights, and the prevalence of small, inefficient plots of land. Energy shortages because of a reliance on hydropower – 98% of the electrical power produced in Albania – and antiquated and inadequate infrastructure contribute to Albania’s poor business environment and lack of success in attracting new foreign investment needed to expand the country’s export base. FDI is among the lowest in the region, but the government has embarked on an ambitious program to improve the business climate through fiscal and legislative reforms.
The completion of a new thermal power plant near Vlore has helped diversify generation capacity, and plans to upgrade transmission lines between Albania and Montenegro and Kosovo would help relieve the energy shortages. Also, with help from EU funds, the government is taking steps to improve the poor national road and rail network, a long-standing barrier to sustained economic growth.
The country will continue to face challenges from increasing public debt, approaching its statutory limit of 60% of GDP. Strong trade, remittance, and banking sector ties with Greece and Italy make Albania vulnerable to spillover effects of the global financial crisis.
