NCPA - National Center for Policy Analysis


March 28, 2008

Kosovo, with a predominantly ethnic Albanian Muslim population, has grabbed headlines by declaring its independence.  Skeptics wonder if the new state can make it economically.  But there's one Muslim country in the oft-tumultuous Balkans that's already doing things right: Albania.  During the past two years Albania's government has enacted a number of exciting and eye-opening reforms, says Steve Forbes, editor-in-chief of Forbes magazine.

On the economic front, Prime Minister Sali Berisha proudly points to Albania's now having the smallest government per capita in Europe:

  • It has enacted a 10 percent flat tax on both personal incomes and business profits.
  • This rate is lower than Albania's previously low maximum rates of 23 percent on individual incomes and 25 percent on profits.
  • Social security levies have been lowered by 31 percent.
  • Tariffs with European countries have been eliminated; government personnel have been cut by almost 30 percent, and the cost of procurement is down 20 percent.
  • Total revenues have surged from 22 percent of gross domestic product (GDP) to 27 percent.


  • To make government more efficient, the prime minister initiated a program with Estonia -- a pioneer in this -- to bring high tech to tax collection and government contracts.
  • Foreign direct investment -- albeit from a low base -- is growing impressively, having tripled in 2006 and nearly doubling again in 2007.
  • The government has worked to make it easier to do business in Albania, instituting a "one-stop shop" for registering a business. 
  • Education is also being emphasized, particularly by the private sector.

Since the fall of communism, Albania has been a stalwart U.S. ally, even supplying troops to help us in Iraq.  Its economic and anticorruption successes are models for other Muslim nations, says Forbes.

Source: Steve Forbes, "Muslim Success Story," Forbes, April 7, 2008.

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