Can lack of financial markets be a blessing?
In an article co-authored with Rene Fry, in 2005, we concluded that Albania, a small open economy in South-East Europe, escaped unscathed from the Russian and Turkish crisis of 1998 and 2001 respectively, where most of the countries in the region suffered. Our argument was that financial markets in Albania are relatively less developed than the other South-Eastern European countries in the sample, and hence are driven mainly by idiosyncratic factors providing a natural cushion against external effects. I think I have to make that point again amid the current financial crisis. And I am not the only one. The FT on March 18th wrote a piece on how it’s not all bleak in Europe, especially for Albania and Azerbaijan. Despite being heavy commodity exporters, against which the IMF has warned that will be highly vulnerable to the crisis (Wroughton, 2009), these two countries have expected positive growth for 2009, alongside China. A past to forget Albania’s post-communist financial market devel
