Ownership and Private Property

Ownership and Private Property

Albania's government sought to save itself during the collapse of the country's economy by abandoning its Stalinist ideology, reviving family farms, and allowing for the creation of small trade and service businesses. It launched reforms in early 1991 that legalized private ownership and gave statutory protection to joint ventures involving Albanian and foreign companies. In its June 1991 economic program, the coalition government called for the rapid privatization of state-owned property, including the relinquishment of agricultural land to private farmers and the transfer of ownership of industrial enterprises through a free distribution of shares in mutual funds or stock in holding companies. Later the government began auctioning off small enterprises, including shops and restaurants, as well as distributing apartments and homes to their current residents without requiring payment. The government also planned to liquidate unsalvageable enterprises.

The new government supported calls for a crash privatization program and the free granting of ownership rights to the "most natural recipients" by arguing that the economy sorely lacked independent decision makers and that no recovery could be expected until private property had been established. The economy's paralysis and widespread popular unrest underscored the urgency of going forward with some kind of privatization scheme. The law on economic activities provided for the privatization of industrial enterprises and firms dealing with handicrafts, construction, transportation, bank services, foreign and domestic trade, housing, culture and the arts, and legal services. The law, however, called for special legislation to regulate the privatization of Albania's energy and mineral extraction industries, telecommunications, forest and water resources, roadways and railroads, ports and airports, and air and rail transportation enterprises. The government created a National Privatization Agency to auction off enterprises; Albanians were to receive first option to buy.

Privatization proceeded in fits and starts, but within several months about 30,000 people found themselves employed in the nonagricultural private sector. The government privatized about 25,000 retail stores and service enterprises and about 50 percent of all small state enterprises in each sector, mostly through direct sales to workers. Also privatized were state firms engaged in handicrafts, a brick factory, bakeries, a fishery and fishing boats, a construction company, and six seagoing cargo vessels. The government also planned a large-scale privatization of workshops, production lines, and factories. The original plan called for the establishment of about five mutual funds and transformation of the surviving larger state enterprises into joint-stock companies. The shares in these companies would be distributed to the mutual funds, whose shares would in turn be distributed free to all adult citizens resident in Albania. Limited domestic capital, however, made privatization of large enterprises difficult.

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