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Economy

Albania's exports less integrated than the region in the global value chain due to Covid-19

  • 4/6/2021 7:27 AM
Albania's exports less integrated than the region in the global value chain due to Covid-19

The sectors of the Albanian economy, Agriculture, Industry with all their subcategories have the lowest integration in the global value chains.

The low integration of the sectors in the global exports will prolong in time the economic integration of our country in the EU and consequently the full membership, says an analysis of the Vienna Institute for International Economic Studies. Experts report that the Covid-19 Pandemic has further worsened this integration, and urge the EU to speed up economic aid to the Western Balkan countries before they find new trading partners.

The added value of exports was very low in Albania than in other countries. In 2018, the added value of exports to Albania was 12.2%, while in North Macedonia it was 33%.

The average growth rate of links in global value chains is low for agriculture, mining and manufacturing industries for the six Western Balkan countries.

As expected, neither the agricultural sector (A) nor the mining sector (B) show strong links. Metal production (CH) is a sector that shows consistently high values. Another sector that shows high values ​​for links in global value chains is the production of chemicals (CE). Furthermore the other two sectors - the production of electrical equipment (CJ) and the production of machinery and equipment (CK) - depend on foreign inputs and have major links with global markets.Albania's manufacturing industries show very low links before and during the Covid-19 pandemic, indicating a lack of integration into the global value chain. In contrast, North Macedonia and Montenegro show higher levels of connections in their production processes.

The results have shown that potential EU membership and previous Stabilization and Association Agreements (SAAs) increase trade flows between new trading partners. These agreements support economies to sell their products directly and indirectly in global markets. Vienna experts suggest that the Western Balkans should focus its efforts on achieving the maximum possible level of economic integration with the EU even before full accession, including greater access to the EU budget, membership in the EU Customs Union, and expansion of the existing SAA.

Experts call for EU support for the Western Balkans during the COVID-19 crisis to be increased in order to keep countries on track for EU integration. More investment in regional infrastructure is needed to expand cooperation.

EU support for the Western Balkans during the COVID-19 crisis needs to be increased in order to keep the Region on track for EU integration. More investments in regional infrastructure have the potential to make the Balkan Region more attractive for post-Covid-19 investments especially for countries such as Austria and Germany.

/Klara Ruci/