and by the end of 1992 all cooperatives had been dismantled with their land and assets distributed. The physical break-of up farms, which distinguishes Albania from transition countries in the CIS, created a production structure based on small farmers (Csaki _et al._ 2004). It helped to avert economic collapse in the immediate post-reform period; agricultural value added in 2001 was one third above that in 1989 (Macours and Swinnen 2000). Land use certificates ( _tapi_ ) were issued quickly but demarcation and registration was left for later and remains incomplete, creating impediments to land transfers through rental as well as sales markets, both of which were allowed and regulated during the 1990s. Ownership claims predating the 1945 collectivization were declared void although a failure to address restitution did not prevent the issue form surfacing vehemently in political debates.

A number of factors are commonly believed to have contributed to levels of agricultural growth in Albania remaining well below those achieved by China or Vietnam immediately post-reform (Lin 1992, Pingali and Xuan 1992).<sup>4</sup> Although massive irrigation and drainage investments had been made between 1950 and 1975, these fell into disrepair due to lack of effective institutional arrangements for maintenance (World Bank 2007). Rural areas are also reshaped by migration, with 30% of rural households estimated to have at least one member living overseas and almost 90% having a migrant relative (McCarthy _et al._ 2009). As more than 60% of Albanian migrants remit part of their income, transfers have become a mainstay of Albania‟s rural economy. Although migration could help generate investment to regions of origin, such impacts seem limited as most remittances support consumption rather than productive investment (Miluka _et al._ 2010). Catalytic effects of migration on educational investments (Dabalen and Miluka 2010), female empowerment, (Stecklov _et al._ 2010), and occupational mobility (Carletto and Kilic 2011) also seem to have been limited. At the same time, migration networks create options for the skilled to leave, possibly draining rural areas of talent and entrepreneurial skills. Finally, although the number of plots per farm in Albania remains low in comparison to China or Vietnam (Deininger and Jin 2005, Deininger and Jin 2008), concerns about inefficiencies due to an overly fragmented land ownership structure have been raised (Lusho and Dhimiter 1998). Fragmentation has also been linked to abandonment of potentially productive plots (Lemel 2000) through a number of channels (SabatesWheeler 2002) including broader social change and low agricultural profitability (Sikor _et al._ 2009). Whether fragmentation is to blame or some other issue is at the root of the problem is an important issue that will have implications for the policy options pursued to deal with the problem.

# **2.2 Characteristics of Albania’s rural economy**

Data from the 2005 Albania LSMS, administered from April to November 2005 by the Institute of Statistics (INSTAT) in collaboration with the World Bank, to 3,640 households in 480 enumeration areas

> 4 Certificates include a basic sketch and description of the parcel and its boundaries, the name of the household head, and the issuing authority.

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