chapter  6
42 Pages


Albania’s communist government resisted reform and cast the country into a dangerous state of international isolation after the departure of Soviet and Chinese technicians in 1960 and 1978 respectively (Sandstrom and Sjoberg 1991). Fiercely nationalistic and fearful of foreign domination, Albanians found it hard to reconcile their political instincts with the economic reality of continuing external dependence (Biberaj 1990). With the highest rate of population growth in Europe, Albania had to struggle just to stop the very low living standards falling even further behind the average for Europe. Drought during the late 1980s (through a succession of dry winters) reduced agricultural output and also eroded the effectiveness of hydropower projects, while export performance stagnated: at the time trade was transacted mainly with near neighbours (Bulgaria, Italy, Romania and FRY) along with France, Germany and Poland, exchanging minerals, electricity and agricultural produce for raw materials and capital goods. Until May 1990 the country’s constitution officially forbade any sort of foreign investment and even credits were ruled out. However, after Hoxha’s death in 1985 the country began to move slowly away from the constitutional position of 1976 and money was borrowed to finance foreign trade deficits, although servicing became a problem with the stagnation of the late 1980s (Hall 1994).