Strategic and foreign investments in Albania: structural incentives, governance challenges, and the risks of corrupt clientelism

Abstract This paper provides a detailed analysis of Albania’s legal framework for foreign and strategic investments within the broader context of the country’s post-communist transition. Following the fall of the dictatorial regime in 1990, Albania faced significant legal and institutional challenges in establishing a free market economy, particularly in regulating and encouraging foreign investment. The development of key legislation—particularly Law No. 7764 (1993) “On Foreign Investments” and its subsequent amendments—shows Albania’s efforts to align with democratic and economic standards, further supported by the 1998 Constitution. With Albania’s designation as an EU candidate country and the start of negotiations to complete the 35 acquis chapters, national authorities have increased efforts to attract foreign investment through strategic legal reforms and international cooperation. Despite these advances, the implementation of investment projects is still hindered by deep-rooted issues, including corruption, clientelism, excessive centralisation of power, and limited fiscal transparency. This study employs a dual-method research approach, combining both qualitative and quantitative data from Albanian and international statistical sources. Through comparative analysis, it evaluates the effectiveness of Albania’s legal tools in promoting investment and examines the legal constraints that affect strategic sectors. The findings highlight the progress made and the persistent systemic barriers to creating a sustainable and transparent investment environment.