How has the financial crisis impacted the agriculture sector in Albania - Research Paper Example

As a result it is more subject to the exogenous fluctuations originating in the macro-economy. This implies that the impact of the crisis on the specific agricultural food sectors and countries heavily rely on the strength of the interconnection to the financial system and the world wide economy. Prior to the impacts of the global economic and financial crisis intensified in the late quarter of 2008, Albania had enjoyed an average Gross domestic product of 6.0%. This had been attributed to the then continued macroeconomic stability and a strong influx of migrant remittances.

As pointed out in the report (Swinnen, & Van, 2009.), 60% of the Albania population works in the agricultural sector which implies that most of its economic activities revolve around agribusiness. A similar research carried by (Agra Europe, 2009) indicates that 23% percent of Albania’s gross domestic product relies on agriculture. This is very imperative sector in economic growth and development of the region. However, the economic downturn of the early 2009 reduced Albania’s GDP to 0.7%. . y the weak competitive capacity, their limited access to credit facilities and unfavorable business environment that has been created by unfair competition with superior foreign products and inconsistent application of both fiscal laws and regulations.

Therefore, order and sanity in the business has failed due to lack of a sound macroeconomic structures that will enable the region to compete favorable with other nations and states. In addition, there have been cases of deprived infrastructure (energy, communication and transport lines) dubious assets term rights and weak laws that dampen foreign and domestic investments. A recent research by World Bank,( 2009b) that focused on the effects of the economic downturns, credit constraints, trade deficits and their impacts on the production, allocation and consumption of resources in Albania.

For instance, different stakeholders throughout the supply chain have suffered due to lack of confidence in the trade. This has necessitated them to cut costs and reduce dependence on the credit facilities. They have had negative impacts on the investment functions which in turn have grave impacts on the aggregate demand of the region. This in turn has driven firm to operate at loses causing loss of jobs. For example as farmers have reduced the use of fertilizers, crop production product and demand for machinery also dropped.

This has had negative consequences on the contracts that sustain business in society (Swinnen & Van, 2009). This implies that some lease and hold contracts were terminated leading to lose of business operation that could be profitable. Farmers have also adopted home-made feeds that have reduced the yields such as the quality of meat, the quality and quantity of milk produced. Second financial crisis has made it