Title: Land redistribution in Albania, its impact and the challenges of a postreform
Edvin Zhllima 1, 2, 3, 5, Drini Imami 1, 2, 3, 4, 5
1. Development Solutions Associates
2. Faculty of Economics and Agribusiness, Agriculture University of Tirana
3. Department of Agricultural Economics and Engineering, University of Bologna
4. Institute of Advanced Studies, University of Bologna
5. Institute of Open Society (Grantee)
Abstract
In the early 1990s, Albania underwent the political, economic and social changes that
took place also in the rest of Central Eastern Europe (CEE). Land reform was one of
the main reforms affecting agriculture sector, economy and politics. Our paper is based
on a study aiming to analyse the major institutional and structural results of the land
reform in Albania. Our study found and re-identified the undesirable impact of the land
reform of 1991, focusing on the Manez Municipality. On the structural side, the
division of land created high fragmentation. On the institutional side the study found
and re-identified many types of insecurity toward property rights.
1
Introduction
In the early 1990s, Albania underwent the political, economic and social changes that
took place also in the rest of Central Eastern Europe (CEE). Land reform was one of
the main reforms affecting agriculture sector, economy and politics (about 2/3 of the
population was leaving in rural areas, engaged primarily with agriculture). Land was
transferred to the private agents (farmers - new owners), free of charge, equally per
capita within each village. Land was spited in different plots, according to quality and
location; consequently the average size was 1.2 Ha in the early 1990, and each farm
consisted of 3-4 plots, resulting in high fragmentation. However, 15 – 20 % of
agricultural land was redistributed to the “old owners” (pre collectivization owners) in
line with the will of local residents. In some cases a mixed approach was used,
respecting pre-collectivization boundaries.
The land registration and titling in Albania was expected to immediately reduce the
property right uncertainty of the Albanian farmers, encouraging investments and land
transactions, contributing to the process of consolidation.
1
Our paper is based on a study aiming to analyse the major institutional and structural
results of the land reform in Albania. The study focused mostly on reflecting the
influence of the land reform on the emerging structure of agriculture production as
well as in the land tenure insecurity created after the land reform.
The main objectives of the paper are as follows:

To reflect the structural impact of the land reform in agriculture;

To find out the impact of the reform on the property rights (perceptions);

To observe the agriculture land market performance in the context of tenure
relations among farmers.
The paper builds on a descriptive analysis of property rights evolution in Albania
making use of literature review and an empirical conducted by the author in the
Municipality of Manez.
The paper is organized into six chapters. The next chapter provides a literature review
of land reforms and the last land reform impact in Albania. Chapter three summarises
the theory and the conceptual framework. Chapter four will describe the case study
area. The fifth chapter describes the methodology used for the field research. The sixth
chapter focuses on the land reform impact in the case study area. In the end are
presented main conclusions and recommendations for further research.
2
Historical background of the land reforms in Albania
After independence from Ottoman Empire, Albania had a highly unequal land
structure dominated by Ciflig (large State ownership given temporarily to military and
civil servants for merits). The remaining part was state and religious owned land and
only a small share of land was designated as individual ownership. A market oriented
land reform aiming at de-concentrating the agriculture land was initiated in 1932 by
King Zogu I which failed to achieve this purpose. Between 1932 and 1945 the land
inequality reduced because of the inheritance division process as well as due to the
emerging land market pressure (Wheeler et al, 2003).
After 1945, the Communist Party which came into power after WWII redistributed
agriculture land to small owners and the landless. This redistribution was quickly
followed by collectivization that was completed in 1976 with the establishment of
large agricultural production cooperatives and state farms. Cooperatives was created
2
by a forced collectivisation process of family farms and State Farms were mainly
created on formerly religious land, nationalized foreign agricultural enterprises, former
big landowners or land made productive after continuing improvements.
Different from other socialist countries in Central and Eastern Europe, the new
constitution declared that the state or cooperatives were the sole owners of land except
3% of the land that remained privately owned, with a maximum surface of 1100 m2
per household (Wheeler et al, 2003).
With the collapse of the communist regime in 1991, 80% of the agriculture land was to
be distributed free of charge, to new owners in per capita terms based on the land
surfaces of each village, strictly respecting the quality of the land and other indicators
of its value. The remaining agriculture land was distributed according to pre-1945
boundaries. The process was accompanied by a registration and titling procedure
(Giovarelli et al, 2001; Kodderitzsch, 1999) and by the creation of a unified system of
immovable property, the Immovable Property Registration System (IPRS). The new
owners were provided with initial land title that certifies the property right to land of
family farm in the name of the household head. Data from Ministry of Agriculture tell
that in 2007 has been accomplished the registration 87.5% of certificates distributed
(MoAFCP, 2007).
Table 1. Comparison among the land reforms in Albania
Terms
of
land 1930
1946
1991
reforms
Objective
Reduction of the Distributing land to Distributing equally
number of landless all rural residents
in quantity and
people
quality land for all
Surface affected
2.12
in % of agricultural
land
The rights given to Full
rights
new land owners
transfer
alienation
39.44
for Usufructs
and
95.7
Full
rights
for
Cooperatives Land
Usufructs for State
Farms till 1995
Land
structure Big, medium and Medium and small Small farms
emerged
small farms
farms
Source: Guri, 2007
3
Table 1 (above) summarises the main features of the land reforms carried in Albania
since 1930. It is obvious that the last land reform is the most egalitarian, most inclusive
and radical in its objectives, area of implementation and its structural impact.
The majority of scholars consider the distribution and privatization of land as a vital
reform for the survival of the agricultural sector during the first transition years.
National and international institutions assume that the individual ownership gave new
incentives for farmers, boosting agricultural growth from which had collapsed in the
early 1990 (WDR, 1997, MoAF, 2003).
Despite the redistribution effect which was the first objective of land reform, there
were also indirect and undesirable effects which mainly the structural fragmentation
and the fuzzy land rights emerging after the distribution of land.
A. The structural impact: On the structural side, the division of land created high
fragmentation, with respect to the quality and distribution of land by families (See
Table 1). As a result, the family farms are small (1.2 Ha), composed by many
parcels (an average of 3-4 plots per farm), often allocated far from each other and
from farm houses (from 1 to 10 km). Most studies in Albania conclude that
fragmentation is one of the most negative phenomena of the reform (Lemel, 2000;
MoAFCP, 2007 (a); Civici, 2003; Lusho et al, 1998).
B. The Institutional impact. Despite the distribution of official titles, since in the
beginning of the reform, scholars identified property rights insecurity in different
areas in Albania. Lemel (1995) found two types of tenure insecurity: formal and
subjective insecurity. By “formal” insecurity Lemel (2002) defined the insecurity
coming from low availability of documentation, the registration discrepancies,
inaccurate mapping, etc. Even after more than a decade since the beginning of the
reform surveys carried in different parts of Albania still observe strong signs of
formal insecurity on land rights (Mathijs, E., 2001; Stahl, et al 2007; MoAFCP
2007, B). By subjective insecurity is understood the owner’s perception on the
insecurity of his/her property. Subjective property insecurity in Albania is affected
by the unresolved issue of pre-collectivization owners, creating conflict inside rural
communities (Lemel, 2000). In Albania are identified different types of subjective
insecurity:
1. A direct type coming from the disputes residents among those having the land
titles of the land reform and those having inherited land before 1945 (pre4
collectivization owners) in the villages (Lemel.H, 1998; Musabelliu et al, 2004;
Wheeler et al, 2003)
2. An indirect type coming from

Type A-The perception of people toward the changing patterns of policies
regarding property rights. Such perception has implications on the nationally
unresolved issues of restitution and compensation of the land owners of the
period before 1945. The reform of 1991 did not take into consideration pre
1945 land owners but the pressure of ex-owners and the intervention of
OSCE forced the government to approve a law for restitution, where possible,
and compensation in financial or equivalent land terms in other cases. The
process is still unsolved, generating still (perceived) property insecurity
(OSCE, 2003: World Bank, 2006; IMF, 2006)

Type B-The perception toward the institutions that manage the property titles
and their transfer procedures (i.e. Immovable Property Right Offices, civil
courts and notaries). This is relevant in the context of high levels of
corruption (WB, 2007, CRSSD, 2007).
C. The malfunctioning of the rural land market in Albania.
The land
consolidation has been seen from policy makers as a panacea for the low
agricultural competitiveness in Albania and the land market as the main instrument
of land consolidation (MoAFCP, 2007). Data and surveys show in the first decade
after the beginning of the reform (Wheeler et al,2003; Lemel,2000; Moor et al,
1997, Kodderitzsch, 1999) until recently (WB, 2006; ARD, 2004; WB, 2007), a
formal rural immovable property market scarcely developed in Albania1. Scholars
found in Albania that property rights insecurity have a negative impact in land
sale/buy decision (Lemel. 2000, Civici, 2003, Mathijsm, 2001, Stahl, et al 2007;
Musabelliu et al, 2004) and in willingness to sell price levels (Guri, 2005:285)
D. The environmental impact and the los of agricultural land. The legal and
institutional failures in developing property laws after 1990 gave space to illegal
occupation, abuse and irreversible alterations of agricultural land (USAID, 2004;
Wheeler et al, 2003). The new Albanian farmers did not understand the legal
1
The Living Standards Measurement Survey (LSMS) 20051 gives some brief figures showing that 1.6 % of the
interviewed farms sold land and 6.7% of farms bought land in the last 15 years. The IPRS database shows 32750
transactions of land per year which means, subtracting the lease, that less than 1.2% of total registered land in rural
areas has been transferred per year (WB 2007).
5
obligations related to land reform2 (MoAFCP (c), 2007). Albanian farmers behaved
similarly as their mates from other post-socialist countries, seeking to benefit from
the ownership rights disregarding the associated obligations (Sikor, 2004).
E. High number of land disputes and conflicts. There is a high incidence of land
conflicts in rural Albania. Even recent surveys provides a large evidence of
conflicts among villagers caused by overlapping land boundaries, clashes among
the “post 1991” and “pre-1945” land titles, disputes on rights of passage, etc.
(Stahl, et al, 2007, LSMS 2005, OSCE 2004).
3
Theoretical and conceptual framework
Our research is based on New Institutional Economics (NIE) school which emphasis
the role of property rights in providing certainty and improving the economic
performance and efficiency (North, D., 1990). This school of thought accepts that free
markets have transaction costs and assumes that property rights are the main force
moving resources toward their optimal use (Pejovich, 1990). To maintain an
environment with well defined property rights, NIE envisions the involvement of more
actors than the state itself in the establishment of these rights. NIE considers more
important the (informal) recognition of individuals or firms than the (formal/official)
recognition by law (O’Driscoll et al, 2003). However NIE states that the State is a
central actor in enforcing property rights and facilitating the transfer of resources to
higher value uses (Davis et al, 1999).
Barzel assumes that high transaction costs related to definition and transfer of the
property rights, create a situation of non-complete property rights and impede people
from finding the gains from their assets and the optimal distribution of property rights
(Barzel 1997). Demsetz (1967) and Alchian (1973) show importance of transaction
costs in situations of externalities created in the absence of rights, in shaping owner’s
position in dealing with others by excluding and preventing them from interfering in
his/her actions (Demsetz, 1967; Alchian et al, 1973).
These concepts are reflected in Figure 1, in which the agricultural land market operates
in the context of an efficient capital market as well as by an accessible market of
2
Although article 11 of Law 7501 maintains that those individuals that have land in ownership or in use are
obligated to preserve and increase its productive capacity and to create systems of protection (Bockheim, 1998)
6
agricultural inputs and outputs. It also shows the direction of the impact by strata of
interventions.
Figure 1. Conceptual framework of the impact of property rights on agriculture
development
Source: Own contribution based on (Conning et al, 2006)
The implication of institutions is very important. One of the basic arguments for
scholars studying land property rights is that well defined property rights can reduce
the risk perception future return on land use, creating incentives for short and long
term investment (i.e. land productivity enhancement), land transfer (i.e. sale and rental)
and crediting (Johnsen,1986). As a result, market incentives may flourish on both the
supply and demand sides.
7
The efficient functioning of both the capital and land markets, in the context of
property security, is assumed to facilitate the investments and reduce land
fragmentation. Such changes can cause an increase of wealth for both buyers and
sellers. Land buyers and users can increase production efficiency and turnover3. Secure
property rights increases the land value and consolidation, therefore those who sell
land have more financial leverage to shift to off-farm activities, while those that buy
may benefit from the economies of scale. Land rights lead to the redistribution of land
to its “best” use (Deininger, 2003 ; Swinnen, et al, 2006). According to some growth
theories of structural change (envisioned by Lewis, W.A., 1954) the rural-urban
migration could be facilitated at the meso-level (if urban areas can afford the smooth
rural migration or the shift to off-farm activities is stimulated), and sustainable
economic development could be generated in macro level.
4. Case study area description
After reviewing carefully the literature on property rights security in Albania, a case
study area was selected to investigate on land reform institutional impact in rural
population of Albania. The field research was carried out in May 2007, in the
Municipality of Manez, located in between the most developed urban centers in
Albania such as Durres and Tirana, roughly 23 km from both of them and near to the
sea (See Figure.2).
Figure 2. Location of Manez Municipality in Albania
3
Data analysis of LSMS 2005 in Albania shows that 10% increase of land surface available to farms
increase with 5% the agricultural production (WB, 2007 )
8
Source: Albania Census Atlas, INSTAT 2004.
Manez was selected because its rural community accepted the distribution of land
according to the per capita principle, in line with the legal base of the reform. Another
reason for choosing this area is its cooperative agricultural land status during the time
of communism. This former status gives us a better opportunity to interpret the
relations between ownership changes during the 20th century as it is based in former
land titles which were collectivised in the communist regime.
5. Methodology of the study
Most relevant studies on Albania try to identify or assess insecurity mostly through the
assessment of title possession and the evaluation of the number of disputes. Since the
survey made by Lemel (1998) on subjective insecurity, no research has dealt with
insecurity perception of local agents. In this study we analyze the farmers’ perception
on property rights or what is considered subjective insecurity. The study focuses on the
same types of subjective insecurity provided in the literature review at Chapter 3. The
levels of insecurity during the focus group procedure were rated through an interval
from 1 to 5 where: 1-very strong, 2-strong, 3-not strong 4-weak and 5-very weak.
Differently from the previous studies on land rights security in Albania, this study has
applied a focus group method. The focus group method is used to elicit people’s
feelings, beliefs, concerns and attitudes toward the land rights. It is a suitable
instrument for acquiring the meaning behind facts and for giving insights into
tendencies (IWOA, 2004; Kitzinger, 1994, Morgan, 1988, Krueger, 1988).
The process of delineating the focus groups was based on different socio-economic
indicators. The chosen focus groups represent different groups of interests regarding
the land rights such as: (i) farmers that had land before 1946 (that potentially have land
claims), (ii) farmers that became land owners with the reform of 1991, (iii) aldermen
(official representatives and leaders of the local community) (iv) villagers that had
done transactions of agricultural land in the last 3 years and (v) immigrants that moved
to the chosen villages before and after 19914.
4
In 2001 immigrants counted for about 30% of the total local population, increasing the demand on land. The
migrants came from vulnerable and mountainous areas of the Northeast part of the country or from areas that were
selected for national strategic uses such as damns, lakes and mining activity. When the distribution of land began
they profited from their share equally with the residents.
9
There were five focus groups were composed by six, seven or eight participants; a total
of 38 people participated. . In addition, there we carried out 35 open interviews with
other local residents, in order to better clarify, compare and verify issues that had come
up during the focus groups.
6. The impact of the land reform
6.1 The structural impact of the land reform in Manez
Manez inhabitants accepted the equal distribution and not other types of distribution,
because the former owners were a minority, the biggest owners were not residing
there, the land ownership perception was vague and the distribution of land gave
higher surfaces in per capita terms compared with the land surface provided to the
former owners if the land was distributed according to pre-1945 land boundaries.
Further details of the land distribution procedure are given in the box below:
Box 1. The “legal” distribution procedure of agricultural land
Villages Land Distribution Commissions .— composed of 5-7 persons — were established
to distribute land and certify property rights. After assessing the surface and the eligible
population before 31 July 1991 they defined the surface per capita for each village. The
land was allocated by quality and use, such as morphology, slope rate, infrastructure,
inherited plants, and access to roads and distance from the village center. Pursuing such
indicators, many villages divided the land into more than 4 different categories such as
irrigated areas, planed areas, hilly areas, orchards and vineyard surfaces, etc. In order to be
equidistant from houses, the parcels were divided in ribbon shapes and the divisions were
developed in a radial fashion from the center of the village.
Each resident benefited 0.35 Ha agriculture land from the land reform implemented in
year 1991 in Manez, varying from village to village with respect to differences in
population and available land. The newly created farms were small (1.2-1.3 Ha) (see
Figure 3), composed by 4-5 plots on average (some of them, up to 8 different plots)
with a maximum distance of 8 km from the house.
Figure 3.
Farm dimensions in the Manez Municipality
10
m ore than 3 ha
Farm dimensions
2-3 ha
1.5-2 ha
1-1.5 ha
0.5-1 ha
0.1-0.5ha
less than 0.1 ha
0
5
10
15
Share of agr. Holdings (%)
20
25
30
Source: Municipality statistics, 2006
During early transition most farms were “subsistence farms” because of lack of access
to market, the high migration, limited financial resources and the limited off-farm
opportunities. The farm structural change was accompanied with a reduction of the
surface under irrigation because of the maltreating of the irrigation infrastructure (See
Table 2). Approximately 25% of the land surface is left fallow as a result of low
returns from agriculture activity, reduced land quality, limited irrigation and high
migration.
Table 2. The structural changes to agriculture in the first years of transition.
Year 1990
Land distribution
Year 1994
1
Number of units
1618
2354 ha
Unit surface
1.4 ha
48 ha
Plot surface
0.35ha
80%
Land surface irrigated
49%
Source: Manez municipality data
Agriculture is the main economic activity for the poor population which represents 1/4
of the Manez population. However, the agriculture sector in Manez is loosing its
importance and productivity has weakened slightly. The main couses mentioned in
focus groups were fragmentation, long distance to market and the competitive pressure
faced from the imported agricultural products.
11
6.2. The institutional impact -The subjective insecurity on land rights
6.2.1. The direct subjective insecurity
The direct perception of insecurity are caused mainly from the disputes between the
new land owners (those having land from the reform) and the villagers which shave
inherited the same plots of land since the period before 1945-so called precollectivization land owners. In Manez Municipality there exists a general lower
attention to indirect subjective insecurity of type A regarding the policies and the
constitutional changes. The indirect insecurity of type B coming from the perceptions
toward the main institutions which manage property rights is more emphasised and is
mostly reported through the groups of pre-collectivisation owners, the “new” land
owners (except youth and educated persons), the buyers and the aldermen (Table 3).
Table 3: The perception of property right insecurity by groups of interest
Subjective
Pre-
New land
New
Buyers and
insecurity
collectiv.
owners.
comers
sellers
toward PR
land
Strong
Weak
Strong
Aldermen
Interviews
Strong
Not strong
Weak
Weak
owners
Strong
Direct
Not strong
buyers
on
Weak
youth
and
for
for
sellers
educated
Indire
Type
ct
A.
Weak
Weak
Weak
Weak
Very weak for
youth
and
educated
Type
Strong
Not strong
Not strong
Strong
Strong
Not strong
B.
Source: Authors’ notes
The focus groups organised with pre collectivisation owners placed property rights as
root cause for agricultural inefficiencies and social conflicts. The existence of the precollectivization owners in the villages demonstrates direct subjective insecurity for the
new owners. Discussions with them and the aldermen group revealed frustrating
experiences of those possessing disputed land.
12
Most new owners were aware of their legal rights. Few of them, claimed that it is the
right of former owners to seek their land, blaming the government for improper
handling of this issue. However young farmers showed weaker awareness toward the
former owners’ disputes. Discussants and representatives of public order explained
disputes on land rise sporadically in the community bringing tension and refreshing the
property rights issue.
For those involved in land transactions, direct subjective insecurity was different
between buyers and sellers. Buyers experienced doubts and preferred ancestral rights
to reduce insecurity. Sellers declared that the formal rights were secure enough to
assure the transaction of land. Their opinion was that the risk of not finalising the land
transaction depended on the former owner’s willingness/ insistence to put pressure on
one of the parties and block the arrangement. New comers, who “benefited” from the
distribution of land or bought it from the local government, were less frequently
showing direct subjective insecurity5.
6.2.2 The indirect subjective insecurity
The indirect subjective insecurity of Type A which derives from the low credibility
on reform accomplishment, was not strongly evident. The indirect perception of
insecurity (Type B) is represented through the negative perceptions of focus groups
members toward the administrative apparatus, which registers and enforces the land
titles such as IPRS and the Civil Court. Majority of the participants in the discussions
pointed blamed them for mismanagement, abuse, highly bureaucratic procedures,
subjectivity and corruption, similar to different other surveys (WB, 2006) (CRSSD,
2005) (IDRA, 2007). Notaries have their share in the ongoing specific formal
insecurity; reports show a low level of professionalism, ethical problems and legal
violation conducted by notaries (OSCE, 2004).
6.3. The impact the subjective insecurity on the land market
6.3.1. The impact of direct subjective insecurity.
5
They were accused by other villagers for profiting from two distributions, one in the place of origin and the other
in the place of residence.
13
The direct subjective insecurity was found to create low willingness to sell for some
parcels which were subject to disputes with former land owners. Discussion with the
group composed by the post-collectivization land owners and the aldermen brought up
low willingness to sell land.
In the group that had carried out land transactions, the insecurity impact was clearly
divided in two types of statement. The buyers were more conscious of the former
owners’ claims and started the transaction only if no serious dispute appeared.
Potential buyers were more willing to buy (or perceived lower property right
insecurity) on plots about which the pre-collectivization owners did not put pressure or
“threaten” for any discretion or decision for transaction. Otherwise, former old owners,
in some cases, obtained certain amount of money (5-10% of the value of transaction),
against their commitment that they will recognize the new property transfer and rights.
There exists also the risk that the price is reduced because the buyer takes the
emotional costs of facing the claims of the pre-collectivisation owners. If the disputes
are harsh and in the buyer is not from the village the transaction is frozen or blocked. It
was a fact, expressed by notaries and the municipality that in the documents required
for the transaction a certification from local government – proving that the land was
not subject to conflict or a dispute over boundaries — was also needed.
6.3.2. Impact on land market of indirect subjective insecurity of type B.
The indirect subjective insecurity of type A does not impact very much the land
discretion. As for the type B on the side of land owners the errors in documents about
the demarcation of land and the abusive orientation of the IPRO and notaries, in
relation to documentation, negatively affected transactions. They were many
respondents showing a fear of falsification of documents by notaries or IPRO
personnel, or even the complete erasure of folders.
All these problems arise not only before the transaction but also after the transaction is
made. Interviews with the IPRO and experts of the notary and real estate agencies
expressed the concern that if the alienation of rights is not registered in IPRO, this can
break the chain of titles and make transactions valueless.
14
Table 4:The property right insecurity impact on transactions by groups of
interest in the Municipality of Manez
Subjective
Pre-
New land New
Buyers and Alderm
Interview
insecurity
collectiv.
owners.
comers
sellers
en
s
Weak
Very
Very weak
Very
Very
weak
weak
toward land land
transactions
Indirect
owners
of Weak
weak
Type A
Indirect
of Strong
Strong
type B
Direct
Strong
Strong
Not
Strong
strong
buyers
Weak
Strong
Not strong
buyers
on
Weak
youth
and
for Strong
Not
Strong
for Strong
Strong
for
sellers
educated
Source: Author’s elaboration
As theory states, a direct impact of property right insecurity is embodied in transaction
costs. These costs exist in order to capture, transfer and enforce the property rights
(Barzel, 1997).: The discussions with the focus groups and the interview revealed
different types of costs such as High investigation and negotiation costs of potential
sellers, because of numerous land disputes and the lack of transparency on ownership
status. The interviews with real estate agents and the farmers who have experienced
land transactions pointed that those which are not member of the community search for
intermediaries/witnesses (relatives and friends) to do the investigations and
negotiations which kept a percentage of the price (2-3% in most of the cases) 6. This
happens because the buyers are aware of the conflicts that the purchased land can
create, may affect the stability in their lives and their business in the community.
One member of the group which made transaction expressed that: “When you come in Manez you don’t
buy the home or land, but you buy the neighbour, which can be a bad one or good one”.
6
15
Another type of transaction costs are the high enforcement costs of property rights
received. Interview with focus groups participants and villagers show that to register a
transaction a villagers need to visit the IPRO an average of 15 times and the
procedures can endure 6 months on average. The evidences from other surveys show
that the official costs7 are duplicated by the bribes required from intermediaries or
IPRO personnel, as well as distance costs8 (CRSSD, 2006:21).
Conclusions
The Albanian land reform remains one of the most radical reforms in the former
communist countries of CEE with the highest level of de-collectivization and
individual privatization, giving modest attention to former owner’s issue. The last land
reform made changes to structural and institutional features that were identified as
failures.
Our study found and re-identified the undesirable impact of the land reform of 1991,
focusing on the Manez Municipality.
On the structural side, the division of land created high fragmentation in terms of
average farm size and fragmentation within farm, which has direct impact on
efficiency (economies of scale). and consequently,.
On the institutional side the study found and re-identified many types of insecurity
toward property rights. Similar to previous studies elsewhere, we found that in Manez
Municipality exists a strong perception of direct subjective insecurity, resulting from
the friction between the legal rights accepted by the majority of the local community
and the ancestral rights which the former owners claim to have; as well as a strong
perception of indirect subjective insecurity, which comes from the failures of the
institutions that are responsible for property rights transfers and enforcement. The land
rights insecurity has several important impacts: it reduces the willingness to sell or
buy, it can reduce the returns from sales (a part is given to the claimers); it may also
reduce the price of land, or in the worse case, it can cause an open ended conflict
which can block or make difficult the transaction (and have other side effects).
Farmers have difficulties in dealing with and excluding possible third parties (former
7
The normal procedure to complete an agricultural land transaction should last between 2 to 4 weeks
and the cost of one exchange transaction is fixed at 70 Euro, from which 35 goes to the notary and 35
to the IPRS services.
8
The trip from the village to the IPRO costs 1.8 Euro.
16
owners, disputes and pressure of the community) from interfering in transactions and
buyers have problems in capturing and enforcing the new land rights derived from the
transaction.
The overall transaction costs increase as the market suffers high pre-contractual and
post-contractual costs. On one side the state can not fully secure, make transparent and
manage the possession and exchange land rights. On the other hand, informal or
community based self-enforcement and information diffusion, is only partially
effective, given the heterogenic rural population. As a result of this insecurity the
investigation, negotiation and enforcement costs are high and added to the contractual
costs. Buyers are more oriented toward ancestral rights to reduce these costs, as a more
secure attestation of the possession of property.
Therefore, in the context of insecurity of property rights, state should enhance its
central role in the land market. The state should “close the chapter” of clashes among
ancestral rights and formal rights by permanently resolving the question of
compensation and consequently bringing an end to the direct disputes of former
owners. Also, formal rights have to be enforced by addressing the continuing legal,
institutional and administrative inefficiencies.
Consequently, the consolidation of property rights may decrease the land transaction
costs, provide better incentives for land sale — for those who are ready to move out of
agriculture — and facilitate the enlargement of market-oriented farms without
destroying the social and economic equilibrium in rural areas. Resolving agriculture
land property rights is a key step to promote agriculture growth, investments and
efficiency in Albania, thus more attention from the policy-makers for this issue and
more research can contribute to the future of the sector.
17
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