European Integration, Opportunities and Risks of Business and Agriculture in Albania

Abstract

The Integration Process of Albania in the European Union started in 1993 and is considered a long road with many challenges. The signing of the Stabilization-Association Agreement in 2006 is the most important moment of this process, including the harmonization of legislation, to prepare the final EU membership process. This article analyses business opportunities and risks, mainly those of the agri-food sector on its way to the EU. In this framework, trade agreements with the EU and Free Trade Agreements (CEFTA) have influenced the liberalization of trade for agri-food products, intensifying and increasing the level of trade with Europe and the countries of the region. This article also deals with the identification of comparative advantages for the agri-industry sector, where facing the regulated European market, not only challenges are analyzed, but also serious limitations, increasing the need for a structural change in trade relations. In the focus of this paper, are the economic and regional strategies, as well as the progress of the business and agri-food processes, also addressing the trade flows of Albania with the countries of the region and the EU. The analysis of this paper consists of three main premises: 1) in the framework of European integration, costs and benefits in terms of economy and business are more visible in the medium and long term; 2) the integration in the medium term brings a higher economic growth for the countries that aspire to join the EU; and 3) the European integration makes the economy more efficient, bringing about an increase in the ratio of investments, in relation to income, through the reduction of risk with a tendency to increase capital and income per capita (European Commission Report, 2023). The analysis of empirical data shows that the results are not as convincing as expected, thus confirming other previous studies by experts in the field. The main conclusion of this paper is that the integration process has influenced reforms and economic policies in terms of formal and content, both in terms of costs and benefits. In substantive terms, the data analysis shows that the process of European integration has served as a strong impetus for the development of institutions in the country, inter-institutional coordination, the establishment of new institutions, the improvement of human resources, local markets, and the increase of absorptive capacities of funds from the EU. On the other hand, it is concluded that in specific areas of domestic business, such as agri-industry, the effects of EU integration are either not felt yet or are minimal.