Is Albanian 2015 Mass Emigration A Reason Behind Institutional Malfunction? (Essay Sample)

Is Albanian 2015 Mass Emigration A Reason Behind Institutional MALFUNCTION?
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Abstract
Migration has always been part of history for a very long period. The mass Emigration in Albania is a subject to various reasons since the country has previously enjoyed economic stability and growth across all its development quarters. In 2008, the country experienced a macroeconomic imbalance both in the private and public sector, thus heralding the beginning of economic breakdown. The breakdown was characterized by unemployment, collapse of the banking system and huge debts. With the declining economic growth, there have been increased poverty levels, thus forcing the locals to seek for other alternatives. One of the immediate alternatives was the mass Emigration in 2015. This kind of mass emigration only worsened the condition in Albania due to transfer of skills and manpower to the country of destination. The paper analyzes various factors of Albanian 2015 Mass Emigration as a reason behind Institutional malfunction.
Key words: Economic Instability, Unemployment, Emigration, Growth, Balkan.
Is Albanian 2015 Mass Emigration A Reason Behind Institutional Malfunction?
Human migration is ancient occurrence that has always matched periods in time that is characterized by economic crises, political conflicts and overpopulation. For many years, Europe has been the major scene for vast movements of populations motivated by factors such as "pull factors" or "push factors" (Flora, 2016). These factors are either external or internal and may in one way or the other be associated with the countries of destination.
Albania is a middle income state that has made various steps in creating an authentic, market economy and multi-party democracy over the past decades. After graduating in 2008 from international Development Association (IDA) to International Bank for Reconstruction and development (IBRD), Albania has managed to maintain positive financial stability and maintained a positive growth irrespective of the looming financial crisis (The World Bank, 2016). Prior to the global financial crisis, Albania was considered as one of the fastest growing economies in the region. The country enjoyed an average growth rate of 6% (Albanian Correspondent, 2016). There was also a rapid reduction in poverty. After 2008, the average growth rate reduced by half. There was also a macroeconomic imbalance both in the private and public sectors. The rate of growth rate has been viewed in terms of unemployment and poverty. Between 2002 and 2008, the rate of poverty in Albania reduced by 12.4% while in 2012, the rate of poverty increased by 14.3%. Unemployment in Albania increased from 12.5%, while in the second quarter it increased 17.3%, with the rate of unemployment in youth reaching 34.2%. There was a recovery rate. "The recovery to growth rates above 3% in 2011 moderated in 2012 and 2013, reflecting the deteriorating situation in the Eurozone and the difficult situation in the energy sector (The World Bank, 2016). Growth picked up to 2.1 % in 2014, led by an increase in consumption and private investments.  A rebound is expected in 2015, but growth is also expected to stay below the countries potential over the medium term" (The World Bank, 2016). In conducting a statistical correlational analysis of the relationship between the country’s growth rate and poverty rates, the outcomes (r=-0.3) a significant negative relationship between the two implying that as the economic growth increased, the poverty levels reduced. In this context since the country has been facing negative economic growth, the rates of poverty have been increasing resulting in instability.
An institution is likely to perform dismally as a result of inadequate man power. Inadequate skills to effectively run an economy may be some of the reasons why there is institution malfunction in Albania. The reasons for Albanian Institution Malfunction can be attributed to various factors. Less revenue for the government and increased debt, thus forcing the government to raise taxes.
Albania has been experiencing less revenue collection. According to Independent Balkan News Agency, "Fiscal indicators for the first six months of the year indicate an 8.6 billion ALL or 68 million USD drop from the projected figure (Independent Balkan News Agency, 2016). Meanwhile, the "hole" created by taxation and customs is estimated to be around 13.4 billion ALL or 105 million USD”. The ministry of Finance published data that showed that, "in total revenues in the state budget for the first six months of the year, are 4.5% less than the government’s projections or 8.6 billion all (68 million USD) compared to the first five months, there a further drop in income" (Independent Balkan News Agency, 2016). A statistical correlation analysis of the relationship between changes in poverty levels and the revenue collection generated strong positive results with (r=0.59). Specifically, the poverty levels in the country have a direct positive relationship with the rates of tax collection from the government. This is clear indication that poverty is increasing in the country causing the government to be unable to collect sufficient revenue to fund its projects with are necessary for state stability. The situation had become even worse in the month of May in which the state budget is said to have missed its estimated 52 million USD. By June, the situation was even worse when the tax department could not collect the targeted 16 million USD. All this problems have been related to the customs revenue and tax revenues (Independent Balkan News Agency, 2016). According to the government of Albania, there has been a general tax reduction except for the profit tax which was quite higher than that of planning. The question of fall in taxes can be attributed to challenges in the tax administration. Furthermore, there are certain external factors that may have contributed to poor revenue collection (Ramadani, 2015). According to IMF, "Some of the reasons reflect external factors such as the drop of the price of oil, low interest rates or low inflation. But some others relate to the application of the law and tax regulation. Thus, there’s a problem of administration. Taxes in Albania are not that low, but performance of revenues is not that strong" (International Monetary fund, 2016).
The debt crisis in Albania is sinking the country’s economy. According to IMF, Albania has a debt of one billion Euros from both the World Bank and IMF. The government of Albania negotiated with the IMF and the World Bank to secure loans. According to Minister Cani, "In the meetings with IMF, we saw that we had good chances of striking a deal. This would give way to low interest loans from international financial institutions, in order to inject the necessary liquidity to help economic growth without risking macro-economic equilibrium" (Kurani, 2014). The high rate of debt is attributed to the administration of the previous regimes. According to the ministry of Finance in Albania, the public debt that was witnessed in 2013 and 2014 respectively includes the arrears payments that the government owes private businesses for various services that the government benefited from (Kurani, 2014). When the current government took office, it was obliged to increase the debt to 72.1% so as to meet the severe financial situation that the country was facing. The increase in the public debt affected the growth of the country negatively. The economic growth for the country has been estimated at 2.8%. Such kind of a growth is a negative based on the world economic growth especially for the European countries. Most western economies were performing exemplary well due to low fuel prices, reduced inflation and it is therefore expected for most European countries to follow the trend. The debt crisis in Albania is however a major setback and has affected the country negatively.
To demonstrate the relationship between the current financial challenges and the instability in the country, a correlational analysis involving the relationship between government debt and government taxes was conducted. This involved the comparison of the changes in the rates of government taxes to the debt between the years of 2013 and 2014. The comparison was done using percentage changes to ensure that values are compatible. The results of the correlational analysis are illustrated by the correlational analysis done below:
MinitabCorrelations: Government Debt, Government Taxes

Government Debt

Government Taxes

Government Debt

Pearson Correlation
Sig. (2-tailed)
N

1
.
9

.922
.000
9

Government Taxes

Pearson Correlation
Sig. (2-tailed)
N

.922**
.000
9

1
.
9

***.Correlation is significant at 1.01 level (2-tailed)

The Pearson correlations of Government Debt, Government Taxes = 0.922, P-Value = 0.000. This demonstrated that the strength of association between the two variables was very high (r=0.922), and that the correlation coefficient was also significantly different from zero (p<<<0.001). Moreover, it can be argued that at 93% (0.9222) of the changes in Government Taxes in the country can be explained by Government Debt.
Consequently, institutional malfunction in Albania can also be attributed to various factors that either directly or indirectly impact on the economy. Albania was able to cope with the unfair external economic environment for a long period of time. Inflation in the countr...