Derrick Digest for Oct. 6, 2017: Romania leads southeastern Europe in economic freedom

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Romania, Bulgaria and Albania make big gains in 2017

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Oct. 6, 2017

 

There’s good news for southeast European countries in this year’s edition of the Fraser Institute’s Economic Freedom report: Romania placed 20th globally, while Albania jumped 10 spots to place 32nd and Croatia edged up nine spots to 72nd.

Romania, Bulgaria, Rwanda, Albania and Cyprus are the countries that showed the greatest upward gains in economic freedom over the period of 2000 to 2015, according to the report prepared by the independent Canadian public policy research and educational.

“Studies have found that countries with institutions and policies more consistent with economic freedom have higher investment rates, more rapid economic growth, higher income levels, and a more rapid reduction in poverty rate,” wrote study authors James Gwartney, Robert Lawson and Joshua Hall.

Romania’s score — up two from 2016 — was a result of “its good performance in terms of freedom to trade and credit market regulations, which outweighed the results of (how) regulations and bureaucratic procedures are affecting business and competition,” according to a report on seenews.com.

According to the report, the cornerstones of economic freedom are:

  • personal choice;
  • voluntary exchange;
  • freedom to enter markets and compete; and
  • security of the person and privately owned property.

Reseachers used 42 data points to create the index and measure the degree of economic freedom in size of government; legal system and property rights; sound money; freedom to trade internationally; and regulation.

And for the first time, the analysis of the policies and institutions of 159 countries and territories took into account gender equality. If a nation didn’t legally afford women equal economic opportunities, their score was downgraded.

“The link between economic freedom for all citizens and the prosperity they enjoy is undeniable,” said Fred McMahon, Dr. Michael A. Walker Research Chair in Economic Freedom with the Fraser Institute.

Nations in the top quartile of economic freedom had an average per-capita GDP of $42,463 in 2015, compared to $6,036 for bottom quartile nations (PPP constant 2011 US$), the report reads, while life expectancy is 80.7 years in the top quartile compared to 64.4 years in the bottom quartile.

Hong Kong and Singapore placed one-two, once again. The top 10 was rounded out New Zealand, Switzerland, Ireland, the United Kingdom, Mauritius, Georgia, Australia, and Estonia. Canada fell out of the top 10 to tie for 11th place with the United States. The 10 lowest-rated countries are: Iran, Chad, Myanmar, Syria, Libya, Argentina, Algeria, the Republic of the Congo, the Central African Republic and, lastly, Venezuela.

 

Kosovo, Albania move forward on joint energy market

Albania and Kosovo are moving ahead with plan to create a joint energy market. Earlier this week, Albanian Minister of Infrastructure and Energy Damian Gjiknur met with Kosovo’s Minister of Economic Development, Valdrin Lluka. 

“We decided to reactivate the work groups in order to move forward the unification of the markets. We also discussed the process for the creation of the power exchange in Albania and Kosovo’s readiness to participate in it,” Gjiknuri said.

The two also discussed co-ordinating activation of the 400-kv interconnection line between the two countries. 

After hosting the Prime Minister of the Republic of Kosovo, Albanian Prime Minister Edi Rama said in a joint press conference that he was “hopeful of the necessary acceleration of our two governments' common agenda.” Rama spoke of removing barriers that hinder the “full integration of our two countries,” such as freer movement across borders, better access to the labour market and diploma equivalency. In a meeting on Nov. 27, the two parties will finalize an agreement to join their custom divisions in the port of Durres. 

 

TAP investing 800M Euro in Albania in 2017-18

The Trans Adriatic Pipeline (TAP) will invest 800 million euros in Albania in 2017-18, according to TAP country manager for Albania Shkelqim Bozgo.

The 878-kilometre pipeline — 215 km of which will be in Albania — will connect to the Trans-Anatolian Pipeline (TANAP) on the border of Greece and Turkey. It will transport gas from the Sha Deniz gas and condensate field through Greece and Albania before traversing the Adriatic Sea to southern Italy. 

Overall, TAP is expected to create 1.5 billion euro of investment in Albania. And there are 131 additional projects valued at 23 million euros that will roll out in the coming months along the transportation corridor, said TAP managing director Luca Schieppati. 

"The project will directly contribute to the three countries’ gross domestic products (GDP) through taxes. Also, TAP will promote economic development and direct as well as indirect job creation along the pipeline route, both during construction and operation. Currently nearly 6,000 people work for the project in Greece, Albania and Italy, as part of TAP’s network of key contractors," Schieppati said in September. “There are many ‘spill-over’ effects for adjacent businesses, including accommodation, transport, catering, etc. via eligible suppliers.”

He also pointed to the investment in local infrastructure, such as rehabilitating a double-lane bridge in Corovoda, Albania, and exapanding and upgrading utility vehicles in northern Greece.   

“Furthermore, TAP is supporting local communities with strategic projects as part of our social and environmental investment (SEI) programme. In total, we will invest over 55 million euros in the communities along our route.”

In related news, the Snam-TAP interconnection has been endorsed by Italy’s Ministry of the Environment, according to a report in Trend

“Italy’s Ministry of the Environment released a few days ago a positive feedback on the project presented by Snam Rete Gas for the implementation of the 55km track that will connect the landing point of the Trans Adriatic Pipeline to Melendugno to the national gas network in Brindisi,” a source in Italy’s Snam company, which is one of the shareholders of TAP project, told Trend Sept.28.

“The decree, signed by Minister Gian Luca Galletti, is dated September 22 and sanctions the environmental compatibility of the project.”

 

Albania's GDP grows more than 4% in Q2

Construction, mining and tourism boosted Albania’s gross domestic product (GDP) by 4.06% in the second quarter of 2017 year-on-year, according to figures released by the Institute of Statistics. And following a week of meetings with senior Albanian officials, the International Monetary Fund (IMF) said the country’s economy continues to strengthen, based on domestic demand, large energy-related foreign investment, growing tourism and recovery in key EU trading partners.

The IMF recommended that Albania “maintain macroeconomic stability and deepen structural reforms to improve the investment climate, as well as catch up to European Union (EU) income levels,” according to a news report.

"The growing economy and clear electoral mandate provides a unique opportunity for the new government to redouble reform efforts," the mission said in a statement.

The Q2 numbers bested the 3.7% overall growth expected by Albania and the IMF. The first quarter growth also performed better than the prediction, with a bump of 3.94%.

All sectors of the economy grew in the second quarter, with the exception of administrative and professional activities, along with arts, recreation and leisure. 

Prime Minister Edi Rama has said that the government is working to reach an annual growth rate of more than 5% in a four-year term.