Improving the Business Climate of Albania EU Integration as a Surrogate for an Efficient Public Administration and Simplified Legal Framework

Abstract

A simple and standardized legal framework, that is easy to understand and apply, and an efficient public administration will go a long way to help improve the business climate, in order to attract foreign investments, as well as increase the competitiveness of the local economy in the globalized market. On average, a company in Albania pays 34 different taxes in a year, meanwhile a company operating in Germany pays a total of only nine taxes. A company operating in Albania must spend more than 350 hours in a year to comply with the elaborate administrative red tape, whereas a company in the United States would need only about 175 hours a year. Such reality is the reason why Doing Business 2015 puts Albania in the 68th place in the world, while Macedonia is ranked 30th and Montenegro in the 36th place. This paper will use and compare data from different countries with similar background to Albania and will conclude that the EU integration process has a direct impact upon the legal framework and the efficiency of public administration of aspiring countries, and such an impact goes hand in hand with the improvement of the business climate in those countries. The paper will focus on Albania, on the business climate of the country, on the challenges faced by local entrepreneurs and foreign investors, as well as on the barriers faced by business due to an inept public administration and due to a too complicated legal framework. At the end, the paper will seek to offer alternatives to enhance the effectiveness and efficiency of the public administration, as well as innovative approaches to improve the fiscal and legal framework. To this end, the EU integration process can and must be used as the much needed surrogate to push forward the sought reforms.