Business immigration, a signal for smart policies and accountability

The migration of businesses is part of the movement of capital where the return and conditions of doing business are or are perceived as better. Businesses in the role of investors have a central role in the management of this capital movement, orienting in this case the movement of the labor market, but also strengthening the economic activities of the countries where they move.

According to the statistical data of the Bank of Albania for the balance of payments for the first 6 months of 2023[1] there is an outflow of capital investments of Albanian resident businesses in the absolute value of 126 million euros[2]. This value is significantly higher (36 million Euros) when compared to the value of outgoing capital investments of 90 million Euros in the first 6 months of 2022.

Although it is impossible to find a data source for the exact number of businesses that have left Albania, from the analysis of online publications by INSTAT for “Business Registers” for the year 2022[3] and “foreign and joint ventures 2019 -2021” [4] it is concluded that no data are found for this indicator. Even from the statistics between these registers, it can be seen that they do not have compatibility for at least the year 2021[5], where Albanian enterprises are presented in different numbers, while foreign and joint enterprises have data compatibility.

However, from an indirect calculation from all the data presented in the registers above, it seems that at least up to 1,350 Albanian and foreign businesses have closed or left in the host countries of Albanian capital investments. Over 75% of them went to Kosovo, North Macedonia, Montenegro, Croatia, Greece, Italy and a certain part already to Germany, China and other EU countries, but not excluding the departure of professionals of IT and other services, not including offshore companies that come as foreign investments within a few years, after opening in tax haven jurisdictions.

Looking at the news headlines, one might think that there is a dramatic increase in Albanian resident businesses moving abroad. On the other hand, if we read the truncated indicators of official publications, an unrealistic perception can be created regarding the reasons that push a part of the capitals of Albanian origin, which for the first 6 months of 2023 shows a significant increase in their outflow.

But are these stories and this perception true?

In an approach to the migratory reality of capitals of Albanian origin with the departure of an inherent part of the population able to work, as well as the departure of the Albanian brain towards the international labor market, it seems to be a direct reason to orient the attention of businesses Albanian residents to emigrate.

From all the possible information regarding the role and power of immigrants in the host countries, it can be concluded that they are filling important positions in both the rapidly growing and declining sectors of the neighboring and European economies and beyond.

Just like local businesses, businesses that leave the country or even those Albanian residents who have created income from legal and illegal sources, who do not choose Albania to invest their capital have reason to feel more valued and with a security greater to benefit the recovery of the capitals they invest. This is related to that important factor called investment guarantee.

Meanwhile, in our country this guarantee has been broken enough to no longer have the attention of foreign and local businesses, despite the fiscal concessions made by the government, but poorly studied or not studied as well as it should be. In this case, it is necessary to mention as a reason for concern the unified calls of foreign and domestic business organizations, the long-standing calls of Albanian exporters and producers, as well as the calls for attention and sincere dialogue of all economists and advisers of business, who feel that coordinated interventions emerging from the dialogue can address a positive change in the climate for doing business.

Regardless of the financial, human and social costs of capital for families and the country of origin, as Albania may be for foreign investments that come out, the economic emigration data with a value of only 103 million Euros in 6 months must necessarily return attention of smart policies to analyze and focus resources to address the causes and solutions.

Although some of the local businesses have realized that emigration is not a necessary condition for development, we must understand that the evolution of emigration from year to year suggests that migration is part of the development equation as long as there is no guarantee that it can be benefited in the future from a boom in returns of capital and skilled labor to the country. Meanwhile, embassies and the old and new community can be attached as an integral promotional part of Albanian products “Made in Albania”. This policy can influence the reduction of the emigration tendency by successfully using the capitals of the diaspora in the country of their residence.

In many countries, immigration is being used for the development of segments of their economies, which may not necessarily adapt to the Albanian economic environment for many decades to come.

For Albania, business emigration should be related to the reasons why individuals and families emigrate to imply that some costs associated with emigration can be saved and used effectively, if policies and law enforcement will not be affected by corruption and violence or denial of the rights to do business based on a decent labor market. These responsible duties belong to the government and not just businesses.

Public policies have an impact on whether businesses emigrate and this fact is the same in the reasoning used by individuals when they emigrate. For example, the intention to emigrate is proportionally lower in countries that spend more on social protection. Similarly, countries that have managed to build an education system competitive with the regional labor market manage to keep more workforce to qualify and integrate it into a market as advanced as the level of education. But when the funds for research and development of science and technology are at the lowest level in the region there is no stronger reason to show the effect of the policies and strategic vision for the country.

Meanwhile, another example for our country with an agricultural sector up to 21% of the economy, agricultural subsidies can reduce immigration. But if the governments would not use the agricultural economy and the individuals who live in them as until today, but through the force of responsible politics would have oriented the agricultural economy towards diversification and not based essentially only on agricultural production, but on agro-processing, then there would likely be no further emigration of individuals and businesses conditioned by market uncertainty and affordability.

On the contrary, as it is being experienced until today, the fact of a large agricultural sector, with an important role, even if agricultural subsidies were increased a little, they still fail to influence immigration, since the productivity of agricultural production cannot compete with imports and developed regional and European agricultural economies.

However, from the study of countries that have implemented cash transfers for the population unable to afford the standard of living, as well as for new and traditional businesses that are highly dependent on internal consumption, it has been observed that in an upward trajectory of their can reduce immigration, especially if they are conditioned by market-appropriate investments in education and technology.

In conclusion of this argument that is unlikely to be exhausted with so many arguments, we think that the implementation of the 2030 Agenda for Sustainable Development, and the increased awareness of the importance of policies aimed at reducing poverty and improving social conditions directly affect the labor market and consequently also in the orientation of businesses to choose where to invest. If smart policies will replace the multitude of outdated and electorally benefit-oriented policies, they can cause a shift in public policies to be more goal-oriented and help reduce flows of forced economic migration.

[1] https://www.bankofalbania.org/?crd=0,8,1,1,0,17830&uni=20230911145607162158210189185160&ln=1&mode=alone

[2] https://altax.al/bilanci-i-pagesave-na-tregon-se-ekonomia-performon-dobet-dhe-pse-turizmi-tregon-shenja-rritje/

[3] https://www.instat.gov.al/media/11652/regjistrat-e-biznesit-2022.pdf

[4] https://www.instat.gov.al/media/11436/ndermarrjet-e-huaja-dhe-te-perbashketa-shqip.pdf

[5] https://www.instat.gov.al/media/10065/regjistrat-e-biznesit-2021.pdf (see page 29 of the link to page 8 of the link above)