Complementary Reforms and the Link between Trade Openness and Growth in Albania

This article uses previous findings by Chang, Kaltani & Loayza on the important role that reform complementarities play in the link between trade openness and economic growth to investigate whether reforms in a particular country, Albania, are sufficient for trade to be good for growth. The study simulates the growth-producing effect of Albania's reforms given a pre-established change in trade openness and contrasts it with other countries' performance. It then studies the reform variables and their alternative proxies by comparing their levels with those predicted by Albania's per capita income. The article concludes that Albania's most urgent reforms are in the areas of financial development, infrastructure and governance.