Competing for Remittances

Prepared for IOM Albania 29 June 2005 by:
Nicolas de Zwager; Ilir Gedeshi; Etleva Germenji; Christos Nikas

In 2004, remittances sent by Albanian emigrants were estimated at 1 billion USD. They constituted some 13.5 percent of the Gross Domestic Product (GDP) (almost the size of an economic sector), were three times higher than net foreign direct investment, double the official development aid received by Albania and covered 50 percent of the trade deficit (Bank of Albania, 2005). As a result, remittances have played a significant role in the poverty reduction of many households in Albania, representing the major factor that distinguishes “poor” and “non-poor” households (De Soto et al., 2003). However, in the context of unfavourable economic and social conditions, this monetary value injected into the Albanian economy from emigration has until now been insufficient to increase domestic production. It has been mainly used for the import of the consumption goods.  It has also been a key factor influencing one of the peculiarities of the Albanian economy during the transition period; extroversion (Samson, 1996), meaning that internal consumption greatly exceeds the capacity of national production to meet the needs of the population. Due to a shortage of investment, which could potentially generate more employment opportunities, a part of the younger generation is obliged in turn to also emigrate. In this case, emigration recycles emigration. Furthermore, recent studies suggest that, primarily as a result of family unification in host countries, the remittances of Albanian emigration have reached a new phase of maturity, and are likely to undergo a gradual decline in the short term (De Zwager et al., 2005; Maroukis, 2005; Gedeshi et al., 2003).

The objective of this study was to provide inputs into the Government of Albania's National Strategy on Migration and the subsequent National Action Plan. This study had two broad areas of inquiry: (a) the extent and scope of remittance flows, and their transfer process, and (b) the potential of enhancing the impact of remittances on economic growth and development. Its content, conclusions and recommendations should be read and understood within the context (management of emigration flows), and timeframe (to 2010) identified by these framework documents. In support of this objective we utilized mutually reinforcing qualitative and quantitative approaches.
 

COMPETING FOR REMITTANCES zipped.pdf

E-Mail | Print