Albania and EU membership

difficult, however, in a country with a strong tradition of state centralism and interventionism.

Despite the fact that Albania has made progress by improving all its macro-economic indicators, still, there are many problems, such as the budget depends greatly on external financing, the private sector is weak and foreign direct investments are low. The weak functioning of market mechanisms has led to the prevalence of an ultra-free market economy, similar to anarchy, known as anarchic-capitalism, which is far from being a functional market economy. Part of the Albanian economy is even the informal economy. Its size is considered to be about 40-50%, whose main outputs are criminal activity, human trafficking, drug, smuggling and massive tax evasion; most of the businesses do not declare their real profit, because of taxation (Bogdani & Loughlin, 2007, p.61). Activating market mechanisms and institutions and the reduction of the informal sector are the current economic challenges. Other features influencing negatively the economy is the possession and control of the national wealth and the economic activity by a privileged minority through their political power. The economy is highly monopolized and the majority of the monopolies are linked with the politics. Albania collects less in tax revenue and social security contributions per capita compared to other countries in the region, even though its value added tax and contribution rates are among the highest. Also tax evasion and tax avoidance are a matter of concern. Then the financial sector is still a remote part of the Albanian economy, because the Albanian economy remains largely cash-driven and the majority of transaction and payments are done outside the banking system. According to the U.S. Department of State, “Banks do not yet play a central role in the Albanian economy, as most business cannot rely on banks for financing" (Bogdani & Loughlin, 2007, p.63).

Now let us analyze what are some advantages of Albania entering the EU. The first benefit is the unification of the Albanian nation. The historical conditions have unfairly separated 10