{"id":22172,"date":"2025-06-04T12:39:00","date_gmt":"2025-06-04T10:39:00","guid":{"rendered":"https:\/\/altax.al\/?p=22172"},"modified":"2025-05-28T12:59:04","modified_gmt":"2025-05-28T10:59:04","slug":"geoeconomic-fragmentation-unstable-supply-and-strategic-dilemmas-for-albania-and-kosovo","status":"publish","type":"post","link":"https:\/\/altax.al\/en\/geoeconomic-fragmentation-unstable-supply-and-strategic-dilemmas-for-albania-and-kosovo\/","title":{"rendered":"Geoeconomic fragmentation, unstable supply, and strategic dilemmas for Albania and Kosovo"},"content":{"rendered":"\n

In the last decade, and especially after 2020, the world has shifted toward a new economic reality where globalization, once an unstoppable force of cooperation and interconnection is gradually being replaced by a new geoeconomic order<\/strong>, divided into blocs and dominated by strategic interests.<\/p>\n\n\n\n

Albania and Kosovo<\/strong>, as countries on the periphery of this system, are not merely spectators but involuntary participants in this transformation with major consequences.<\/p>\n\n\n\n

The IMF emphasizes[1]<\/a> that globalization has entered a new phase where geopolitics has become a determinant for the flow of goods, technology, and capital. According to the model presented, the division into geoeconomic blocs<\/strong> will influence the divergence of technological standards, complicate international transfers, and weaken market efficiency.<\/p>\n\n\n\n

This reinforces the idea that Albania and Kosovo<\/strong>, as countries on the EU’s periphery and outside the strategic chains of the G7 and BRICS<\/strong>, will face disproportionate effects of fragmentation. The impact is not just on prices, but on the functioning of the economy itself from supply standards to investments.<\/p>\n\n\n\n

The fragmentation of global supply networks, driven by the US-China trade war<\/strong>, the COVID-19 pandemic, and the war in Ukraine, has rendered supply chains no longer functioning as integrated systems. In their place, more localized and divided approaches have emerged, often along geopolitical lines. For small economies like those of Albania and Kosovo, <\/strong>this brings a double risk: on the one hand, they do not benefit from global production, while on the other, they experience the shocks of disruptions with full intensity.<\/p>\n\n\n\n

The example of 2022<\/em>, when cement and iron prices in Albania rose by over 50%, is more than an episode of inflation it is a clear sign of structural dependence on centralized supply sources<\/strong>. Kosovo faces similar challenges, especially in the construction and industrial sectors, which rely on narrow and poorly diversified imports.<\/p>\n\n\n\n

From rhetoric to strategy, emphasizing the vital role of diversification<\/strong><\/p>\n\n\n\n

In theory, source diversification is a classic mechanism for minimizing risk. But for Albania and Kosovo, it must become an active tool of economic policy\u2014not merely a point in a long-term strategy.<\/p>\n\n\n\n

The Supply Concentration Index<\/strong> (Herfindahl-Hirschman Index, HHI), which exceeds the 0.25 threshold for both countries, indicates a dangerous dependence on a handful of countries: Italy, Turkey, and Greece for Albania; Germany and Turkey for Kosovo<\/strong>. This dependence not only creates economic risk but also limits the strategic autonomy of these states in moments of crisis.<\/p>\n\n\n\n

Developments in the EU and G7, <\/strong>such as reshoring and friend-shoring policies, offer an opportunity to follow the same logic: building more sustainable and geographically closer supply chains. In this regard, the CEFTA markets, Central Asia, or North Africa r<\/strong>epresent promising alternatives for more secure and less crisis-exposed supplies.<\/p>\n\n\n\n

But these will not happen automatically, as they require detailed market analysis, financing mechanisms, long-term partnerships, and proactive trade diplomacy.<\/p>\n\n\n\n

The cost of inaction is much higher<\/strong><\/p>\n\n\n\n

For a country like Albania<\/strong>, where prices and inflationary pressures directly hit consumers and fiscal capacities are limited, every effort for diversification is perceived as costly in the short term.<\/p>\n\n\n\n

The same applies to Kosovo<\/strong>, which heavily relies on remittances and has a high dependence on imports.<\/p>\n\n\n\n

But the cost of inaction is much higher.<\/p>\n\n\n\n

During the pandemic, Albania experienced serious disruptions in the import of aluminum and electric panels\u2014key products for the construction sector. This was not just a supply crisis, but translated into inflation, construction delays, and uncertainty for investors.<\/p>\n\n\n\n

Thus, the apparent costs of diversification must be weighed<\/strong> against the long-term benefits in stability and resilience.<\/p>\n\n\n\n

Selected policies as solutions, from strategic reserves to domestic production<\/strong><\/p>\n\n\n\n

Consequently, Albania and Kosovo should undertake selected policies:<\/p>\n\n\n\n