Financial Instruments of Regional Development

ANALYSIS FOR EXISTING FINANCIAL INSTRUMENTS FOR REGIONAL DEVELOPMENT IN ALBANIA

Table of Contents

1. ACRONYMS AND ABBREVIATIONS EU European Union ADF Albanian Development Fund CE European Commission LOFQV Laws for Organization and Functions of Local Government MF Ministry of Finance ME Ministry of Economy ME Ministry of Energy MI Ministry of Industry SME Small and Medium Enterprises LGU Local Government Units MBP Medium Term Budget Program GDP Gross Domestic Products RDF Regional Development Fund PPP Public-Private Partnership CG Central Government AG Albanian Government LG Local Government GL Lander Government T Taxes RDP Regional Development Planning 2

DPPFFA ADA GIZ Swissaid USD NARD RDA REDA CBA IPA DLDP MADA DPB IFCH

Department of Development Programming , Financing and Foreign Aid Austrian Development Agency German Agency for International Cooperation Swiss Government Aid American dollars National Agency for Regional Development Agency for Regional Development Regional Economic Development Agency Cost Benefit Analysis Instrument for Pre-Accession Decentralization and Local Development Program Agency for the Development of Mountain Areas Development Partners Board Insurance Fund of Cumpulsory Health

2. EXECUTIVE SUMMARY "No community , including the European Community cannot be sustained if the standard of living of the people who are part of it do not have" equality among individuals " , and if there is the slightest doubt on the willingness of member states this community to help counterparts " (EU , 2004 , p . Regional Policy) In fact, the European Cohesion Policy aims to promote overall harmonious development by strengthening the economic factors, social factors and territorial integrity. The main point of this important EU policy approach is to bring all areas of the community on a uniform basis.

It all starts by offering the means for regions which suffer from a lack of regional balances, to place them on a more equal competitive position. Albania, as a region of Europe, automatically becomes part of this shared vision.

Given that European Cohesion Policy sees Regional Development as very important process to achieve its objectives, the question that naturally arises are; "Where Albania is in relation to such a process?"

"What it has been done so far to address regional development?"

What is the perspective through which the country has seen regional development, perspective, which becomes very important if we consider the fact that other parallel processes are taking place in the context of EU Integration?

Albania has currently several options, among which must choose because there is not much time available. On the one hand, it is near and attempts to open negotiations with EU to become a member, which will make it subject for various financial funds and grants from the European Community. These funds will help the country to become a more competitive and stable member in the EU. 3

One of the funds directly related to issues of regional development, is the IPA III (RD instrument), the predecessor of the structural funds. Despite this Albania has also another internal RD to handle, and regions, which seeks to unify regions which are under development, as the EU operates with its institutions.

After analysis of the internal system (strategy, law, structure, and financial instruments) of regional development to date creates the need to re-address this issues by the Albanian government due to this system's significant inconsistency, with European requirements for rural development and this can future compromise “access“ to funds that are to be absorbed by the EU. This compromising can go further endangering EU integration. The Albanian Government has embarked on the road of choosing how to address internal RD, respecting the demands placed by the European regional development policy and EU integration.

The challenges of options discussed are numerous and a detailed analysis of the current state of development at the regional, institutional level, as well as of the costs and benefits of each option, sheds light on the most favourable option: convergence.

1. Currently, the Regional Development Fund (RDF) is the only financial instrument for regional development in Albania. Regional Development Fund was established through the approval of Law no. 10190, dated 26.11.2009 “On State Budget 2010 " , proposed by the Ministry of Finance .

2. During 2010-2013 the RDF approach was oriented towards meeting the basic needs of local government infrastructure and promoting most disadvantaged areas, chopping this way projects and funds with insignificant impact.

3. RDF for 2014 was 100 million USD (including all programs). Some of the most important programs in 2014 were: (i) Local Infrastructure Program. This is the largest program of RDF, as this fund constitutes 13 % of the total capital budget of funding for 2014, or 23 % of domestic capital expenditure.

In 2014 the total funding for this program reached 84.2 million USD. For 2014 103 new projects are funded from this program while for 2015 are 121 million dollars for 40 % of total domestic public spending; and (ii) Education Sector Program, with a funding level of 22.4 million USD in 2014.

4. There are several other funding mechanisms that have value for the consolidation of the concept of regional development. These schemes are : a) Albanian Development Fund established since 1993; b) Capacity Development Program SNV in Dibra 2007-2010; c) DLDP operating in northern regions and Durres; d) MADA, established by the Council of Ministers, which aims to support rural development, especially in remote areas; e) RDP to northern Albania.

5. Financial instruments of competitive grant used to finance investment projects in 2006. The inclusion of this instrument in investment financing scheme came as a need of 4

discontinuation of fragmentation of public investments at local level. A part of the unconditional transfer and investments of line ministries for water supply, education, health served as funding sources.

6. Structure of the Regional Development Fund is dominated by rural roads which occupied 57.7 percent of the total fund, education with 23.4 percent comes in second place and forests are in the last place with 0.4 percent of the total Regional Development Fund.

7. Budgetary and financial flows of Regional Development Fund are still small. The best year was 2015 with 0.92 % of GDP, but in any of the years did not reach 1 % of GDP. 8. Competitive grant in the years 2007 and 2009 was respectively 71 and 74 % of the unconditional transfer, while the Regional Development Fund in 2013 and 2014 was 70 % of the unconditional grant. Compared with its revenues this instrument has a considerable weight. In 2010, it accounted for 91 % of revenue from taxes and fees in 2013 and 2014 respectively 79 and 75 %. In relation to local government this is a very important instrument as compared with the voices of the local budget has significant weight but this instrument itself to the volume of budget and financial flows is far from an important instrument of regional development .

9. Qarks as a second level of local government, have as main role harmonization of regional and local policies with national ones. However qarks have failed to play their role for many reasons, among which we can mention: the lack of a clear framework of competences; limited financial resources; their inadequate administrative division that makes it impossible to be economic qarks, etc. These and others are the reasons that qarks do not have the role that was expected. This is also distinguished by the high weight of Regional Development Fund towards the unconditional transfer of qarks which ranges from 6 to 8 times higher.

10. Regional Development Fund compared to the total local budget expenditure occupies a considerable volume which ranges from 20 to percent.

11. RDF and expenditures against GDP stand at a huge discrepancy, showing in this way a greater attention towards expenditures than fruitful public investments through the Regional Development Fund. If we look, from 2013 to 2014 budgetary expenditures against GDP are increased by 4 % and RDF growth against GDP over the years has been very low, only 0.04 %. Also, the weight of the Regional Development Fund to the total expenditures is very low, only 0, 01 to 0, 02 % of expenditures.

12. The report RDF/GDP is lower than Investment/GDP and also with major difference. This shows that although a fruitful policy of channelling investment through the Regional Development Fund has not yet taken its rightful role in public investment.

13. A significant part of investments are channelled continuously for education, through RDF. The year with the highest level of percentage is 2010 in which RDF has received about 94 percent of investments in education and in 2014 was the lowest level where by RDF are realized only 24 percent of the investment. Meanwhile, in the field of Health very few funds are allocated through RDF 14. Competitive Grant/Public investments and RDF for water supply/Public Investments, has had a positive upward trend from 2006 to 2011 and then the trend has been steadily declining. This decline is reflected negatively in recent years by problems arising in the 5

waterworks, showing once again the important role that Regional Development Fund has for the coordination of regional policies and priority investments.

15. In different countries there are different experiences. However, what these experiences have in common is that various projects of regional character are treated with different funds from RDF. 16. By decision of the Council of Ministers in December 2015 were created: i) National Agency for Regional Development (NARD), ii) Regional Development Agencies (RDA) and iii) Regional Economic Development Agency (REDA).

These agencies have the mission of promoting a common investment policy, for the development of regions and their potentials, encouraging a wide possible cooperation model, the creation of public-private partnerships (PPP), with a common interest; development, promotion of regional and inter regional networking, reduction of the gap between developed areas and undeveloped ones and the implementation of public and private projects.

17. Since in the 2016 budget, a part of the investments listed as investments with regional character there are possible to join the Regional Development Fund. This policy may continue for 2017 but still being expanded in programs and funds. Merging this fund with the existing regional development fund would double the total fund or in the next two years the Regional Development Fund would occupy about 1.4 % of GDP. In a longer period like 2-3 years after, the fund should be further enhanced taking by the investment fund. This would require a deep structural reform of the budget. It retains the possibility of integrating more than half of the actual investment fund of regional development fund and if this is going to happen then the Regional Development Fund would occupy about 2.5 % of GDP. 18. From the experience so far we can say that the regional development fund has not followed the rules and procedures that are to be followed by budgeting in general and budgeting of capital investments, in particular. As well as for the implementation of this fund have been identified several problems. Also, regional development fund is not part of the budget management cycle which poses problems in terms of financial management of this fund.

Based on these circumstances and in order to increase the effectiveness and efficiency of the use of this fund, it is necessary that this fund to be harmonized with all the procedures and rules used for the medium-term draft and for the management of public finances.

Further consolidation of RDF as an instrument for regional development requires not only a good development strategy but it should be oriented and connected with the requirements of the EU for regional development.

19. For the inclusion of this fund in the schemes of managment and public finances are given some several proposals: Proposal I “Support for Regional Development” group should have7 sectorial programs.

Proposal II “Support for Regional Development” group These seven proposed programmes should be integrated into fewer programmes not divided by sectors but in some areas of development. These programmes may include: 6

• Tourism Development; • Urban/Rural Development; • Public Services.

20. To implement these schemes are offered three proposals: Proposal I For a period of 1-3 years, the scheme should be applied only for the current fund which is distributed in the past two years. In terms of funds proposed in this paper as regional development funds in various ministries, Regional Development Agency should apply in these ministries as beneficiaries of projects. In this scheme should be included the IPA projects and grants from various donors.

Proposal II The scheme above should operate for the funds allocated so far and others which are proposed to be regional development funds. In this scheme should be included the IPA projects and grants from various donors.

Proposal III The scheme above should operate for funds allocated so far and others which are proposed to be regional development funds. Also within the Regional Development Fund should be included also ADF. In this scheme should be included the IPA projects and grants from various donors.

In all these three proposals should be revised the role of line ministries in order to correct the functions that will pass to these agencies.

3. INTRODUCTION Albania's integration into Euro-Atlantic structures, the development of reforms tending toward globalization, rapid technological progress, changing social values and competitive pressures, are dictating the fundamental socio-economic changes. All these phenomena and this dynamic pose challenges for the government, local government and business, so it is important that in this reality, to know and to create the necessary space for a sustainable economic and social development. In this context, Albania needs more developed regions and a higher welfare and sustainable.

The decentralization reform aims to make sustainable democratic system, increase the efficiency and effectiveness of government, stimulate the creation of a more sustainable economic growth and make government more transparent, ensuring the participation of citizens in decision-making about local resources management. This reform in Albania, has already laid the institutional and legal foundations of the autonomy of municipal expansion for the use of local resources, natural and human resources and private investment.

In year 1998, Albania signed and then ratified the European Charter of Local Self-Government.

This historical deed opened up the path to a multi-party, institutional, and political process on 7

governance decentralization, and, consequently, in 1999 the Decentralization Strategy was developed. Based on this strategy, adopted in 2000, the Law on the Organization and Functioning of Local Government (Law No. 8652/2000), which, pursuant to the Constitution of the Republic of Albania, defines the role and functions of the Regional Council, as the second level of local government. At this historic moment, the access of stakeholders to define the role and responsibilities of the commercial concrete government for county then were left to a later period.

In year 2000 focus was placed in local governance, decentralization of first tier of governance and territorial reform.

In year 2012, the Government of Albania (GoA), pushed by donors through the Regional Development Program (RDP), placed considerable efforts to link regional development with governance institutions (qarks) and other institutional stakeholders. These efforts continue to this day and the RDP Project is still under implementation.

In year 2013, the GoA introduced its program “On Regionalization and Regional Reform” as a separate chapter in its entire program. The programme has the following main objectives: (i) Creation of regions and reconfiguration of qarks according to according to the European models of Self-governed Regions; (ii) New direction for national and regional development policies; (iii) Enhancement of functions and competencies of GoA entities at regional level; (iv) Increase of financial resources and assets for the regions; (v) New and more efficient model of central and local authorities at regional level; (vi) Crucial reform for involvement of Albania as an EU candidate country; (vii) Possibilities for regions to benefit technical support and funding from EU instruments.

On June 2014, Government of Albania through the Department of Program Development, Financing and Foreign Aid (DPPFFA) in the Prime Minister’s Office undertook the initiative to define an effective system related to the management of operational programs and investments on Regional and Territorial Cooperation and Development. The work was supported by the Austrian Development Agency (ADA) through the European Commission’s IPA (Instrument for PreAccession Assistance) Programme for 2008, and within the Project Preparation Facility (PPF).

Experts of the country in cooperation with foreign experts in the period June 2014 to October 2015 have undertaken a study on the regionalization of the country. The aim is to develop the basic model for Albania's development and transformation into a modern state, which is organized on the basis of regions with active community participation in decision-making. The purpose of this phase is a consistent approach to the formation of regions to create together with the national policy 8

conditions for a successful future of Albania priority development and reducing inequalities in all sectors, strengthening of infrastructure, education, social security, strengthening the economy to create jobs, to bringing a company to meet with democratic values. However, the main concern remains to prevent and to redress regional disparities.

On 2 December the Council of Ministers approved the decision “For establishment, organization and functioning of the national agency for regional development, the regional development agencies and regional economic development agency�

The mission of the agencies is to promote a common integrated investment policy, for the development of the regions and their potential.

The Agencies should establish an integrated model of cooperation in order to create public-private partnerships with common interest for development.

Also, the agencies should promote the regional and inter-regional network, in order to reduce the gap between developed and undeveloped areas and should aim the implementation of public and private projects.

According to the decision of the Council of Ministers the agencies will be financed from: a) The state budget; b) Its revenues; c) Other financial resources, through a contribution from the foreign aid programs (according to the agreements with foreign partners for the development and integration); d) Other legitimate sources such as donations.

The agencies perform their activities like an expert institution for the implementation and achievement of objectives for regional development policy. Furthermore, they contribute to harmonize and integrate the economic, social and environmental factors in the balanced development of all the Albanian regions.

Their assignment is to promote the inter-local, inter-regional and cross-border cooperation in order to foster the competitiveness, improve resource efficiency and enhance the quality of public services.

The agencies adjust their activities, by acting in independent form and by fostering the cooperation with other state, international or private bodies, for the implementation of joint programs and projects. These joint programs contribute to an integrated balanced development of the Albanian regions.

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The National Agency for Regional Development (NARD) is responsible for the establishment and coordination of financial programs, management of the development programs and projects at the regional and cross-border level.

NARD is directed by the General Director who organizes and directs all its activities and he is accountable to the Joint Management Board.

The Regional Development Agencies no. 1, 2, 3, and 4 are public juridical person, and extend their activities, respectively in regional development areas no.1- Shkoder, no.2- Tirana, no.3- Vlora and no.4- Korรงa.

The management bodies of the Regional Development Agencies (RDAs) are: a) The Development Partners Board (DPB); b) The Director of the Agency.

The Regional Development Agencies collaborate with local governments in preparing and implementing local development plans, in accordance with regional development plans, and establish local partnerships among local, regional and inter-regional levels.

The Development Partners Board is a collegial body composed of 9 members as follows: a) The responsible Minister for Urban Development; b) The responsible Minister for the Economic Development, Tourism, Trade and Entrepreneurship; c) The responsible Minister for Agriculture, Rural Development and Water Management; d) The responsible Minister for Transport and Infrastructure; e) The Heads of four municipalities according to the cooperation agreement.

While the Agency for Regional Economic Development (ARED) is organized in three main functional and program areas, as following: a) The program of projects preparation support, economic consulting and financial support to small and medium enterprises (SMEs) to develop regional and local economy; b) The program for public assets development, in support of investment with impact on local and regional development and the creation of regional partnerships for this purpose; c) The program of state participation in commercial companies and financial instruments for start-up businesses, aimed at developing the Public and Private Partnerships.

The governing bodies of the Agency for Regional Economic Development are: a) The Joint Management Board; 10

b) The General Director.

The agency also establishes a Consultation Board which is composed by 7 members. The composition, role and activities of the Board are regulated by a separate act.

Both agencies the National Agency for Regional Development (NARD) and the Regional Economic Development Agency (REDA), have a joint Management Board.

The Joint Management Board is a collegial body that leads the orientation of the activities of the National Agency for Regional Development (NARD) and the Agency for Regional Economic Development (ARED), ensuring a common vision and coordination of actions and resources between the two agencies, in compliance with their mission.

The Joint Management Board is composed of 9 members, which are: a) The representatives of the Regional Development Committee; b) The representatives of the General Secretariat of the Regional Development Committee; c) The General Director of the National Agency for Regional Development (NARD); d) The Director of the Regional Economic Development Agency (REDA); e) The directors of Agencies for Regional Development Areas (ARDA); f) The National Agency for Territorial Planning (NATP).

Albanian Development Fund already provides opportunities for the realization of such plans and projects. In addition, however, there are numerous other institutions, agencies and funds (300), which deal with similar objectives. The experiences during those years showed that there is a huge lack of coordination, joint planning and communication across the board. This prohibits the use of synergies, reduces endurance and consumes enormous financial resources and human resources.

To correct this deficiency, these investment projects are grouped together and will be together in a new structure in the form of regional management of Albania. With the support and funding of GIZ and Swiss Aid ADA, an advisory board was instructed to draft documents for the implementation and operation of these new structures, as well as decisions on the political level.

4. REGIONAL DEVELOPMENT FUNDING MECHANISMS AND INSTITUTIONAL SET UPS

So far, the Fund for Regional Development (RDF) is the only financial instrument for regional development in Albania. It is implemented through the cooperation of several institutions, under the supervision of the Prime Minister, as it will be explained in this session and it has been established through the approval of Law no. 10190, date 26.11.2009 “On state’s budget 2010”, 11

upon the proposal of the Ministry of Finance. The legislation on RDF is revised annually through the laws on state budget and the approval of respective DCMs. During 2010- 2013 the approach followed for the RDF was oriented towards fulfilling of basic infrastructure needs of LGs, promotion of most disadvantaged areas, while fragmenting the funds into small scale and insignificant impact projects.

The further consolidation of RDF as an instrument for RD requires not only a well-developed strategic orientation/ basis and a good link to EU requirements for RD, but also improvements of the competitive approach (more work is required in the criteria), simplification of the institutional set- up (too many stakeholders participate in the implementation of several functions), and a clear stand with regard to the involvement of Qarks.

After the changes on the government, the vision for the RDF in 2014 and afterwards was shifted towards promoting economic and development potential of the regions/ qarks/ provinces, being transformed into a mechanism for the generation and development of the country’s growing competitiveness among regional economies.

RDF in total for 2014 was 100 million USD (including all programs). Some of the most important programs for 2014 were: (i) Local infrastructure program: It is the largest program of RDF, as this fund constitutes 13% of the entire budget for capital funding for 2014, or 23% of the domestic capital expenditure. Only during 2014 total funding for this program amounted to 84.2 million USD. For 2014 were funded by these program 103 new projects. For 2015 there are 121 mln USD amounting for 40% of the total domestic public expenditures; and (ii) Education Sector Program, with a funding level of 22.4 mln USD for 2014.

There are also a number of other financing mechanisms and funds in Albania, which are worth mentioning for their contribution to development capacities at local government level and their impact on regional development practices: 1.

The Albanian Development Fund is one such example. Through its role as a funding agency, since 1993, ADF is responsible for the selection of infrastructure projects to be supported by the RDF. However, so far, most ADF projects have had a more local than regional focus.

2.

The Capacity Development Program of Netherlands Development Organization SNV in the Qark of Dibra, 2007-2010, has also been a very interesting experience that aimed to develop capacities at Qark level regarding the implementation of difficult projects. This has been considered so far as a widely successful practice. However, in this initiative as well, the Trust Fund component, though managed by Qarks (as a tool for

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capacity development) was actually meant for investment projects by municipalities and communes and not for projects proposed and implemented at Qark level.

3.

ISD, through its grant fund, also attempted to give a significant contribution towards the support of projects that are of a more regional dimension. However, the grant fund was merged with RDF in 2011, and thus it did not address any capacity development process at Qark level. Neither was this grant used to promote partnership approaches within a Qark.

4.

Decentralization and Local Development Program (which is financed from HELVETAS Swiss Inter cooperation) represents a very good case for the implementation of a competitive grant scheme, following the Albanian legislation and procurement rules. It definitely has an impact on the capacities of LGs for writing and submitting sound project proposals, most times also with an impressive inter-local cooperation. However, this grant scheme has municipalities and communes (and thus local projects) at its focus, and it does not directly intend to operate in compliance with EU/IPA requirements for projects proposal writing and assessment.

5.

Mountain Areas Development Agency (MADA), established as a foundation by a decision of the Council of Ministers aimed at supporting rural development (especially in remote mountainous areas), has at least two large projects financed by International Fund for Agricultural Development (IFAD), that have components of grant funding. The financial services that MADA is aiming at providing under these two projects are meant for poverty-stricken rural people and farmers’ communities. The case of MADA represents a good attempt of attracting communities (rather than local governments) in development (investments) projects that bear significant regional development impacts.

6.

The Regional Development Programme in northern of Albania (RDP), (funded by the Governments of Austria and Switzerland) has built an experience for addressing both, capacities for RD at Qark level and development of projects that are of a regional dimension. The RDP endowed with 2 million Euro is being designed in such a way that funding mechanisms can comply with EU requirements. At the same time it brings a bottom up approach on promoting and funding projects that are developed by [sub] regional partnerships. Its implementation is occurring at both Qark and 1st tier LGs level and the Fund is being managed by Qarks (in cooperation with RDP), thus contributing to a capacity development process for Qarks in the context of both decentralization and RD. Based in National decentralization Strategy in 2015 is done a deep reform of the power decentralization, delegating a large volume of functions and powers from central to local government.

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Continuation of the decentralization reform in some areas such as urban planning, fiscal decentralization process and consolidation of local finances, the continued decentralization of some management functions to supply drinking water to the local government, etc. will fill the role and profile of municipalities.

Based in National Decentralization Strategy and new law for local self-government which was approved in December 2015 to municipalities are transferred some new functions. In the local budget of 2016 are included the funds for new functions. The new functions that are transferred or 2016 to the municipalities are: Educational and supportive staff in preschool, University education support staff, Construction and maintenance of regional rural roads Fire Protection Service, Forest Service, Irrigation and drainage, Departments of Agriculture and Provision of social services.

New functions of local government will strengthen the role of municipalities in local sustainable development. The investment budget for these functions will be part of the regional development fund. We are aware that, today, our regions are far from the European concept of regionalization as in terms of their size as well as in terms of their status, however region today will be the focus of reform toward regionalization in Albania.

5. COMPETITIVE GRANT Competitive grant was used as a financial instrument for financing investment projects in 2006 until 2010 when started the regional Development Fund. The inclusion of this instrument in investment financing scheme came as a need of discontinuation of fragmentation of public investment in local and regional level and the performance of investment concept from the 14

perspective of spatial development and not in very individual view of the sector or area being interpreted by the line ministries. The structure of financial resources competitive grant consisted of i) the transfer of unconditional in Fiscal table Nomination as such nut practically part for investment in local infrastructure nomination competitive grant ii) Investments of ministries for water supply, education, health.

According to Law no. 8652, dated 31.07.2000, 'On the organization and functioning of local government', the water supply is a function of local government itself but de facto he continued to be a central feature while health and education were common functions.

Table : Competitive grant In thousand No. 1 2 3 4 5 Total

Naming Water supply Education Health care Roads Culture

2006

2007

LEK 2008

1,680,000 299,400 3,700,000 5,679,400

1,146,647 1,539,295 1,596,365 2,700,000 6,982,307

928,017 1,752,449 90,631 3,663,700 100,000 6,534,797

2009 1,020,819 1,927,694 99,695 5,500,000 110,000 8,658,208

Source Ministry of Finance (Management Budget Directory), (2015); As seen from the table above competitive grant from 2006 to 2009 has been increasing. The year 2009 is the year in which the size of this grant is the highest and then in 2010, this instrument was turned into a Regional Development Fund. As shown in Chart 1, the competitive grant has grown over the years depending on the growth of state budget expenditures. In 2011-2012 Regional Development Fund has been lower than the Competitive Grant of previous years.

Chart : Competitive Grant (CG) and Regional Development Fund (RDF) 2006-2015

5,679 6,982

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6,535 8,658 9,718 5,589 5,619 7,601 8,419 12,842 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Millions CG RDF

Source: Ministry of Finance (Management Budget Directory), author's calculations (2015)

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6. REGIONAL DEVELOPMENT FUND Following the experience that was created through Competitive Grant and in order to increase the pressure to expand the fund in 2010, Competitive Grant was composed as Regional Development Fund. The structure of this fund budget increased, forestry, irrigation and drainage as the sector that have direct links to local and regional development. To encourage the development of small unit of government (local government) to the national level is necessary for national budgetary policies to be harmonized with national budgetary policies. In view of this philosophy it is essential to the integration of sectorial policies to be carried out of the central government at the regional level.

The aim of this is the focus of budgetary policies on: Regional development issues; Fighting poverty and; To avoid the fragmentation budget.

It was composed the Regional Development Fund.

Through this mechanism are funded:

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Program of local infrastructure: financing stems from unconditional transfers to local government (directly defined by law as a separate budget), which stipulates the fact that this fund is hereditary for the next year (based on the Law on Local Government); Programs from ministry budgets: with sourced funding from a percentage of the respective programs of ministries. The most significant programs in terms of financing are: Education (basic, general, vocational, university and sports) and Water and Sanitation; Other programs of the ministries are those for Art-Culture; for afforestation; Health (primary health care, etc.).

These policies are a preparatory exercise for the local government units and various development agencies of the central government at the local level, in order to prepare them to be able in the future to absorb structural funds and investments from European Union institutions. The establishment of these capacities is a must, as the benefit from these funds will depend on the quality of the development plans, with a sectorial approach. Moreover, lack of capacity could generate an even higher bill, after the EU may demand the full funding in cases of irregularities in the planning or implementation of projects. From the creation of this fund it was made possible for projects to be more coordinated and more consistent against the rules that are required by the EU, increasing this way the absorption of these projects.

Table : Regional Development Fund In thousand LEK No. 1 2 3 4 5

Naming Water supply Education Health Care Roads

2010 1,533,91 3 3,648,88 4 3,000 3,576,00 0 0

Forestry Irrigation 6 and drainage 916,632 Culture 7 40,000 Total 9,718,42 18

2011

2012

2013

2014

2015

550,000

1,000,000

1,500,000

600,000

369,202

1,206,424 10,000

1,718,683 100,000

1,795,000 50,000

1,082,123 23,000

2,900,000 150,000

2,300,000 50,000

4,000,000 96,000

5,944,172 0

1,831,627 22,600 10,500,00 0 50,000

335,500 437,000 5,588,924

400,000 50,000 5,618,683

110,399 50,000 7,601,399

0 770,000 8,419,295

0 68,287 12,841,71

9

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Source Ministry of Finance (Management Budget Directory), (2015); As seen from the table above the Regional Development Fund in the first year of its inception has been 9.7 billion and in the next two years 2011 and 2012 was reduced significantly then increasing in 2014 and 2015. It is concluded also that except the fund for rural roads all the funds for other sectors such as water supply, education, health, forestry, irrigation, drainage and culture have been reduced. The total budget of these ministries (Ministry of Agricultural, Ministry of Culture, Ministry of Transport, Ministry of Environment and Ministry of Health care) that have these sectors has increased from year to year, while the sectors that are included in the Regional Development Fund are treated with smaller funds. This highlights another problem that has to do with the growing indifference of ministries in relation to regional development. This is due to the fact that in general the line ministries in their activities think and act strictly in sectors and areas that belong to their lines without taking into account the cooperation and harmonization of sectors to other areas. In fact the creation of this fund has intended to reduce the maximum of differences and narrow sectional interests and replace them with spatial development policies.

Chart : Structure of RDF

11.1 23.4 3.0 57.7 0.4 2.3 2.1 0.0 10.0

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20.0 30.0 40.0 50.0 60.0 70.0 Water supply Education Health care Roads Forestry Irrigation and drainage Culture

In percentage

Source: Ministry of Finance (Management Budget Directory), author's calculations (2015); Rural roads, which occupy 57.7 percent of all funds, in second place with 23.4 percent comes education, dominates the structure of the Regional Development Fund and forests occupy last place with 0.4 percent of the total Regional Development Fund. Reasons why this structure exist are related with unrealistic attitudes that various ministries have for creating and managing this fund since the quotas of their budget according to the draft budget Medium Term (PBA's) they value more the sectors and areas that manage completely itself, rather than regional development and administration where decisions are made by an evaluation committee. This is one of the reasons that this instrument should be developed in the future under necessary legal and organizational changes. But also the close relationship with government policies have made possible that in relation to other sectors the investment in rural roads to increase significantly. As a result of what was stated above comes the fact that most of the funds are concentrated in one or two sectors and the rest are less funded.

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Chart : The change in percentage compare with previous year of RDF and competitive grant

23 -6 32 12 -42 1 35 11 53 -60 -40 -20 0 20 40 60 2007 2008 2009 2010 2011 2012 2013 2014 2015 In percentage

Source: Ministry of Finance (Management Budget Directory), author's calculations (2015);

21

As seen from the chart no. 3 the highest pace of growth for competitive grant has been in 2007 and 2009, while for the Regional Development Fund has been in 2013 and 2015, years that have the largest increases in the history of creation of this instrument. This means that even the will to increase investment through Competitive Grant and RDF goes parallel with the good period of economic growth, which has given positive impulses to invest more. Also if you look at the graph No.4 compared to GDP provides us the same conclusions as the chart No.3.

22

Chart : Competitive grant and RDF in relation with GDP

0.64 0.72 0.60 0.76 0.78 0.43 0.42 0.56 0.60 0.92 0.00 0.10 0.20 0.30 0.40 0.50 0.60 0.70 0.80 0.90 1.00 2006 2007 2008 2009 2010 2011 2012 2013 2014

23

2015 In percentage

Source: Ministry of Finance (Management Budget Directory), author's calculations (2015); Even though the positive goals and objectives of the creation and use of this financial instrument to encourage local and regional development are evident, budgetary and financial flows of the fund are still modest. The best year was 2015 with 0.92% of GDP, but in any of the years it did not reach 1% of GDP.

24

7. REGIONAL DEVELOPMENT FUND AND LOCAL SPENDING POLICIES The economic development of local government units is not an isolated local problem or only under the competence of local government, but it is a problem that relates directly to economic development at the national level, by creating an encouraging climate for businesses through investments in infrastructure and by encouraging the fight to reduce poverty.

Regional Development Fund is a financing mechanism that operates based on a grant award and competition approach for applicants (mostly local governments and development agencies).

The expenditures of local government units are oriented mainly towards public services expenditures and investments. In the past 10 years the investment costs were about 30% of local government expenditures. Regional Development Fund in comparison with the unconditional transfer and its income has had a considerable weight. As seen from the chart no. 5 compared to the unconditional transfer it was higher. Competitive grant in 2007 and 2009 was respectively 71 and 74% of the unconditional transfer, while the Regional Development Fund in 2013 and 2014 was 70% of the unconditional grant. Compared to its revenues this instrument has a considerable weight. In 2010, it accounted 91% of revenues from taxes and fees in 2013 and 2014 respectively 79% and 75%.

In relation to local government this is a very important instrument as compared to the voices of the local budget has significant weight, but the instrument itself for the volume of budget and financial flows is far from an important instrument of regional development. From the data above we can notice that the annual level of the Regional Development Fund changes depending on incomes and unconditional transfer because of the instability of these revenues to the budget over the years to local government units.

25

Chart : RDF in relation to own revenues, RDF in relation to unconditional transfer

58 74 47 55 61 70 70 23 24 21 76 91 52 57 79 75 63 71 0 10 20 30 40 50 60 70 80 90 100 2006

26

2007 2008 2009 2010 2011 2012 2013 2014 Years In percentage FZHR/TRP FZHR/TRV

Source: Ministry of Finance (Management Budget Directory), author's calculations (2015); 625 809 882 531 508 661 681 821 880 0 100 200 300 400 500 600 700 800

27

900 1,000 2006 2007 2008 2009 2010 2011 2012 2013 2014 Years In percentage

Source: Ministry of Finance (Management Budget Directory), author's calculations (2015); Qarks as a secondary level of local government have their main role, harmonizing local and regional policies with national ones. This level of government also serves as an intermediate level between local level national one in terms of development. However qarks have failed to play this role for many reasons where among others we can mention the lack of a clear framework of competences, the opportunities which are limited from financial resources, their administrative division is not available to be economic qarks etc. These and other reasons deprive qarks to play the expected role. You can notice this easily by analysing the chart no. 6 where the Regional Development Fund is a multiple of the unconditional transfer for qarks. Competitive grant in 2007 was 880% higher than the unconditional transfers for qarks and in 2010 the Regional Development Fund has been 882% higher than the grant for qarks.

Chart : RDF and Domestic Spending to GDP

0.42 0.56 0.60 2.5 2.2 2.1 2.2

28

2.4 0.78 0.43 0 1 1 2 2 3 3 2010 2011 2012 2013 2014 Years In percentage RDF/GDP Domestic spending/GDP

Source: Ministry of Finance (Management Budget Directory), author's calculations (2015); Regional Development Fund compared to the local expenditures occupies a considerable weight.

In the chart No. 7 is obvious that by the weight that have both these indicators to GDP, compared with the total local budget expenditures over the years the Regional Development Fund occupies 20-30%. This indicates that this fund for local development perspective has a great importance because it is almost equal to the amount of investment that local government makes from its own funds. Compared to the weight and the effects that this fund would have on national and regional development it is very small. Also, we can notice a little variation from year to year of these reports indicating that the variation of these costs is made according to changes in GDP. Also this analysis can be divided into two parts with the first part in 2010, 2011 and 2012 it has been a decline of this report, and after 2012 it is seen a positive upward trend associated with economic expansion.

29

8. REGIONAL DEVELOPMENT FUND

AND

SPENDING

POLICIES

OF

THE

CENTRAL GOVERNMENT

Albania has inherited a backlog noted in all sectors of public services and investments. In this context, funding requirements and pressure on sectors such as; road infrastructure, health sector, education, drinking water supply, wastewater processing, land-Field, power supply etc., have made the budgets over years to focus on these sectors. The focus of the budget in these sectors and areas has made the local and regional development to be funded with modest amounts.

Chart : Budget Expenditure to GDP

33 29 29 28 29 33 25 26 27 28 29 30 31 32 33 34 2009 2010 2011 2012 2013 2014

30

In percentage

Source: Ministry of Finance (Management Budget Directory), author's calculations (2015); As can be seen from the graph of the quantitative data, the volatility of this ratio is clear in the extreme and a 4-year trend from 2010 to 2013 almost in the same levels of budgetary expenditure to GDP. This shows that economic expansion in Albania is often depended on budgetary spending and the trend or the manner of their execution has significantly influenced the behavior of the Gross Domestic Product (GDP) in the economy. The paradox of change budget expenditure in relation to GDP is expressed by investments, where even though the total of expenditures have increasing tendency over the years, the opposite happens with investments.

Chart : Public Investments to GDP

8.4 5.4 5.4 4.6 4.8 4.3 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0

31

9.0 2009 2010 2011 2012 2013 2014

In percentage

Source: Ministry of Finance (Management Budget Directory), author's calculations (2015); Chart no. 9 shows the fluctuating trend in the reduction of the level of public investment in relation to GDP over the years. This trend is related to the global economic downturn and its effects on foreign investment but also potential government policies that have not seen with proper priority investments. But compared to RDF, budget expenditures and investment in relation to GDP show a significant difference.

Chart : RDF and expenditures to GDP

0.78

32

0.43 0.42 0.56 0.60 29 29 28 29 33 0 5 10 15 20 25 30 35 2010 2011 2012 2013 2014 Years In percentage RDF/GDP Spending/GDP

Source: Ministry of Finance, author's calculations (2015) Graphical analysis above shows that the ratio of RDF and expenditure to GDP stands at disproportion showing in this way a greater attention to spending on public policy than fruitful investment through the Regional Development Fund. For purposes of analysis in this context, if we look that from 2013 to 2014 budget expenditures to GDP are increased by 4%, RDF growth to GDP over the years has been very low 0.04%. As shown in Chart No.10 the weight of Regional 33

Development Fund in relation to the total expenditures is very low. During the entire period under study almost only 0, 01 to 0, 02% of budget expenditures.

Chart : RDF and investments to GDP

0.42 0.56 0.60 8.4 5.4 5.4 4.6 4.8 0.78 0.43 0 1 2 3 4 5

34

6 7 8 9 2010 2011 2012 2013 2014 Years In percentage RDF/GDP Investments/GDP

Source: Ministry of Finance (Management Budget Directory),, author's calculations (2015); Compared to investments, ratio of RDF and investments to GDP is lower with large differences.

This shows that even though Regional Development Fund for several years is used as an instrument for investments in regional level, it occupies a small weight of total capital investment.

This conclusion comes for the fact that more of investments that are made in the local and regional level come directly from line ministries without channelling by the Regional Development Fund.

This is largely due to the credibility of institutions to transfer these investments, but also due to the narrow mentality of centralization.

35

9. RDF’S ROLE IN DIFFERENT SECTORS A.

EDUCATION

Despite this fact, is seen an upward trend of RDF’s role in the total of public investments but again it is low and not at its proper level. The report that investments have through RDF Competitive Grant under investment in general has been sometimes, volatile and too small in certain sectors.

Chart : Competitive Grant and RDF of education in relation with education investments

31 49 94 31 48 72 24 52 43 0 10 20 30 40 50 60 70 80 90 100 2006 2007 2008

36

2009 2010 2011 2012 2013 2014 Years In percentage

Source: Ministry of Finance (Management Budget Directory), author's calculations (2015); From the graph above it is clear that a significant proportion education investments are constantly channelled through RDF. While there is a fluctuation, where the year with the highest ratio is 2010 which RDF has received about 94 percent of investments in education and in 2014 was the lowest level and through the RDF were conducted only 24 percent of investments. This fluctuation of the different over the years is due to a change of policy in the years by Governments in relation to the education sector. Even here it concludes a lack of trust and appreciation towards this fund by the Ministry of Education and Youth, which covers this sector.

B.

HEALTH

Chart : Competitive Grant and health care RDF to investments in health care

3 3 0 0 3 7 1 13 55 0 10

37

20 30 40 50 60 2006 2007 2008 2009 2010 2011 2012 2013 2014 Years Percentage

Source: Ministry of Finance (Management Budget Directory), author's calculations (2015); Investments in health allocated by RDF are very few and this is clearly seen in the graph above. In general, these investments are concentrated in the respective institution leaving no space for a transfer of this responsibility.

Two moments are distinct to investments in Health: First, 2007 was the year during which, more than half of investment funds were carried through the RDF compared to a very low level near zero of the previous years; Secondly, during the years 2006, 2007 and 2008 when the fund was competitive grant, the weight in the total of investments was higher and then with the arrival of the structure of Regional Development Fund the weight that had investments in health has been quite low. This reduction in funding of the Regional Development Fund might have come as a result of consolidation Insurance Fund of Compulsory Health (IFCH). However a portion of these funds does not have to be extended through IFCH;

38

C.

WATER SUPPLY

Chart : Competitive Grant and RDF of water supply to investments in public sector

1 1 4 4 3 3 1 0 0 0 1 1 2 2 3 3 4 4 5 2006 2007 2008 2009 2010 2011 2012 2013 2014 Years Percentage

39

Source: Ministry of Finance (Management Budget Directory), author's calculations (2015); In relation to public investments and RDF Competitive Grant water supply has had a positive upward trend from 2006 to 2011 and then this trend has been steadily declining. This decrease was negatively impacted during recent years by problems occurred in the waterworks, showing once again the important role that can play the Regional Development Fund in the coordination of regional policies and investment priorities.

10. EXPERIENCES OF VARIOUS COUNTRIES Germany, as a federal country, the management of the Structural Funds is decentralized and is the responsibility of Lande's. In Nordrhein-Westfalen, ERDF Operational Regional Program is managed by the Government of Lande's and more specifically by the Ministry of Economy, Energy, Industry, SMEs and the Craft Sector. In Nordrhein-Westfalen urged competitive business infrastructure to develop four priority areas: (i) strengthening the entrepreneurial base; (ii) economy based on innovation and knowledge; (iii) sustainable development of urban and regional levels; and (iv) technical assistance.

Poland has had a decentralized approach for managing and implementing the Structural Funds, with specific regional objectives. Polish Śląskie region, part of ERDF PRO is successfully implemented through pre-selected projects under the Programme Sub-Regional Development.

Program Sub-regional Development was presented to increase the participation of interested parties, in response of demand from cities and municipalities to participate stronger in the process of implementing the PO. Śląskie region has a polycentric structure with four major conglomerates.

In order to involve the municipal authorities and the district in the process of implementation of 40

EU funds were created four platforms sub-regional on these bases: central (CentralnySlaski), Southern (Bielsko-Bialski), Northern (Częstochoëski) and Western (Rybnicko -jastrzębski). Each sub-region has developed partnership agreements that include municipalities, cities, knowledge institutions, and the private sector. Development programs are implementing on a sub-regional projects list approved by the stakeholders. They are established in consultation with local authorities of the four sub-regions.

In Estonia, they are used for regional development programs: •

Development of infrastructure, water and waste management;

•

Development of infrastructure and support for sustainable use of the environment;

•

Development of the energy sector;

•

Development of integrated and balanced regions;

•

The development of educational infrastructure;

•

Development of health and welfare infrastructure

In Italy, the management of the Regional Operational Programmes of the ERDF is decentralized.

PO ERDF the Lazio region is managed by the Regional Economic Development and Production Activities.

This is a PO ERDF on the Italian Regional Competitiveness and Employment.

PO is based on a number of different selection methods, applicable to various measures (activities).

These include: (i) the evaluation procedure through open calls i.e., open calls for tender where selected projects if they meet the eligibility criteria and certain minimum thresholds in relation to the merit criteria established in advance; (ii) evaluation procedure through competitive calls, call for tenders made time bound, where projects that have passed the first review of eligibility are sorted based on pre-set criteria of selection; and (iii) identification of projects based on sectorial plans of the regional authority.

In the Netherlands, the Dutch Infrastructure Fund is a special fund, with budgeting to ensure a sufficiently long period of time, which has invited the private sector to cooperate through PPPs. More specifically, the investment needs are identified, and is developing a plan of action for a period of 20-30 years, which can be divided into 3-4 enforcement plans / year (MTB). Each fiscal year the fund receives a fixed fee and implemented projects benefit from joining the private sector through PPPs. In Slovenia, the majority of funding is allocated through competitive calls. Slovenia has had a centralized approach to the management of structural funds. ERDF PO "Strengthening Regional Development potentials" managed by the Ministry of Economic Development and Technology, and more specifically the Directorate of EU Cohesion Policy. Competitive calls are widely used in 41

Slovenia in 2007-2013. Projects are selected on the basis of a short list of criteria for the award in accordance with the results indicators. His approach has worked well in the Slovenian context, although high levels of selection are criticized by unsuccessful applicants.

In the United Kingdom, the management of structural funds is a responsibility delegated. In Wales, two programs and two ERDF Operational PO European Social Fund are managed by the Office of the Wels European Funding, which are under the responsibility of the Wels Government. The program of the EU structural funds has six priority axes: (i) research and development, innovation and ICT; (ii) companies and business finances; (iii) transport and strategic infrastructure; (iv) energy and environment; (V) building sustainable communities; and (vi) technical assistance.

Ireland Border, Midland and Western Regional Operation Program PRO Structural Funds of the EU played an important role in the success of the Irish economy, and a substantial increase in living standards in all sectors of Irish society over the past decade. The government has focused on Structural Funds programs designed to strengthen competitiveness through three broad areas: infrastructure, human capital and the productive sector, including manufacturing, tourism and agriculture. With the increase of the structural funds in 1990, the government increased the funds allocated for infrastructure. Ireland has used EU Structural Funds for many years and used as a guide for reforms in the processes of Public Investment Management during the passage of the years. Economic and social progress achieved in Ireland through funding to previous EU structural funding now shows that are significantly lower than previous years. This also means that funding from the EU now plays only a minor role in the financing of public investment in Ireland. Now ERDF initiatives aimed at areas that generate high levels of value added.

Ireland has a complete set of guidelines for the assessment and management of capital investment projects, which dates back to 2005. These are, to a large extent, reflective evaluation system of the United Kingdom, and decide 'value for money' in the heart of the process, focusing on a balance between price and quality. Guiding principles for models selection are as follows: transparency in the process (all potential beneficiaries must be aware of the process and criteria to be used); PO incorporation of targets in the selection criteria; incorporation of horizontally applicable principles (e.g. sustainability, equality) in the selection criteria; the use of competitive selection processes, where possible; cost effectiveness and value for money; and consistency in the evaluation of proposals.

Lithuania is one of the smaller countries of the EU and takes more characteristics of a region within other member states. Because of this there is no PRO in Lithuania. However, but we distinguish case of the Operational Programme of Economic Growth, which represents almost 50% of the allocation of Structural Funds and is supported by ERDF and Cohesion Fund. The main objectives of the PO on economic growth are as follows: increasing the business of high value added; increase business productivity especially by creating a favourable environment for innovation and SMEs; and increase the efficiency of economic infrastructure. OP priority axes include: (i) research and development for competitiveness and growth; (ii) increase business 42

productivity and improving environment for business; (iii) information society for all; (iv) the basic economic infrastructure; (V) the development of trans-European networks; and (vi) technical assistance.

Lithuania uses pre-selection. Lithuania is different from other selected countries after she has moved in the opposite direction, from the most common approach of decentralization with many small projects; it had a centralized approach / strategy based on greater investment of national or regional significance.

11.REGIONAL DEVELOPMENT IN TERMS OF BUDGET FLOWS The structures of regional development in the 2016 budget By decision of the Council of Ministers in December 2015 have been created: i) National Agency for Regional Development, ii) regional development agencies (RDAs), and iii) Regional Economic Development Agency.

These agencies have the mission of promoting a common investment policy, to develop regions and their potential encouraging a model for a possible cooperation, creating public-private partnerships, with development as a common interest, promoting the regional and interregional network, reducing the gap, the gap between developed and undeveloped areas and implementing public and private projects. In accordance with the principle of cooperation, inter-agency cooperation promotes, inter-regional and cross-border, in order to boost competitiveness, improve resource efficiency and enhance the quality of public services. Agencies adapt their activities, acting in independent form and by promoting cooperation with other state bodies, international or 43

private, for the implementation of joint programs and projects, which contribute in integration and development of the regions. In accordance with the principle of reciprocity, agencies establish and use legal instruments in relations between themselves and with others, to ensure the right of equality and mutual respect between the parties, bodies and institutions that cooperate with each other.

Agencies are funded by: •

Contribution of the state budget;

•

Their income from assets and / or other financial resources;

•

Contribution of external assistance programs, under agreements with foreign partners for the development and integration;

•

Management costs, for programs or projects that they develop, with some beneficiaries;

•

Other legitimate sources, such as donations, etc.

Its own incomes, generated as above, go as a contribution to the budget of the agencies and can serve to increase staff, to finance projects or other activities, to fulfil their objectives and realize their programs. They are administered by agencies, under the legal acts. Agencies also can perform other delegated functions.

Agencies are organized by the Joint Management Board. This board is a collegial authority that ensures the functioning and coordination of the work of the activities of the National Agency for Regional Development and Regional Economic Development Agency (AZHER), while also providing a shared vision of coordination of actions the resources between the two agencies in fulfilment of their mission.

The Joint Management Board is composed of 9 members: a) Representatives from the Regional Development Committee; b) Representatives of the General Secretariat of the Committee for Regional Development; c) Director General of National Agency for Regional Development (NARD); d) Director of the Regional Economic Development Agency (REDA); e) Directors of agencies of regional development areas; f) Director of National Agency for Territorial Planning.

The main responsibilities of the Joint Management Board for NARD-in and REDA-in are: a) Approval of the budgets of the agencies; b) Approval of programs, various development projects and strategic action plan of the agencies; c) Approval of cooperation agreements and partnerships between agencies and other development partners; 44

d) Approval of the Rules of organization and functioning of agencies; e) Approval of the draft proposal for the structure of the agencies; f) Review of 6-month report and the annual performance of the agencies.

National Agency for Regional Development National Agency for Regional Development in the 2016 budget has 50 people. It will cover the entire territory and is responsible for the establishment and coordination of financial programs, management development programs and projects, in interregional and cross-border level.

NARD has the following duties and responsibilities: a) Coordinates the contribution of regional development agencies and other development partners for the preparation of the Operational Programme Development and contributes to the formulation and implementation of policy, at national level for regional development; b) Participates and provides advices during the drafting of operational development programs, at the level of regional development areas, and the drafting of plans / programs thematic for tourism, industry, agriculture, environment, etc.; c) Prepares development projects, pilot projects and / or other projects, at the request of municipalities, counties and other ministries or central institutions; d) Prepares cross-border projects and participates in inter-regional projects, feasibility studies and development processes for all institutions concerned; e) Coordinates the work with regional development agencies, designs and implements programs that provide assistance to increase capacity towards accreditation of their funds and the cohesion policy of the European Union and other partners of development, provides advisory services and increased capacity to prepare projects, their management by regional development agencies and other development actors; f) Can perform the role of program manager or enforcement authority for programs, projects of common regional, inter-regional and cross-border (with more than one beneficiary), under an agreement of cooperation and partnership for this purpose, with development partners and funders; g) Contributes to and promotes cross-border cooperation, regional or national and regional development agencies; h) Promotes and contributes to the implementation of national regional development policy and supports instruments to implement this policy; i) Creates and updates the information system for regional development at the national level.

Regional Development Agencies (RDAs) 45

Regional development agencies are: a) RDA 1- Shkoder; b) RDA 2- Tirane; c) RDA 3- Korรงe; d) RDA 4- Vlore.

In 2016 budget they will have 80 people. Bodies of management of regional development agencies (RDAs) are: a) Board of Partners for Development; b) Director of the Agency.

Regional development agencies can also raise advisory boards, composed of experts in respective fields of leadership development activities in their respective area of regional development.

Partners Development Board is a collegial organ composed of 9 members, as follows: a) The Minister responsible for Urban Development; b) The Minister responsible for the Economic Development, Tourism, Trade and Entrepreneurship; c) The Minister responsible for Agriculture, Rural Development and Water Management; d) The Minister responsible for Transport and Infrastructure; e) Mayors of four municipalities, according to the cooperation agreement for their participation carried on board and cooperation in the activities of the agencies, which are defined by the following criteria: -

They have status as a district centre, in the respective region;

-

They have the highest number of population per unit of local government.

f) The Director of the Regional Development Agency.

Regional Development Agencies 1, 2, 3 and 4, to realize the mission defined, perform duties as follows: a) Draft operational programs of regional development of the respective areas; b) Collaborate with local government units in the preparing and implementing of local development plans, in accordance with regional development plans, and creating local partnerships, regional and inter-regional; 46

c) They represent the interests of the relevant regional development in relations with the National Agency for Regional Development or other parties involved; d) Prepare and implement concrete programs and projects of regional and territorial development of the relevant area, contributing to the implementation of cohesion policy and regional development, encouraging, supporting and / or take part themselves in different forms of regional partnerships; e) Develop programs that support the design of regional projects with several beneficiary (Project Preparation Facility), promote and support the creation of regional partnerships; f) Raise and manage the information system for regional projects of local development, implemented in the relevant regional development, and contribute information and data to the National Agency for Regional Development; g) Perform other duties in accordance with laws, regulations and rules adopted by the RDA. RDAs are responsible for the establishment and coordination of financial programs, implementation and monitoring of development projects at regional and interregional level, on behalf of the agency or the beneficiaries at the local level, for the implementation of relevant agreements.

Regional Economic Development Agency (REDA) Regional Economic Development Agency in the 2016 budget has 25 people. The agency aims to promote and build partnerships between development actors of the public and private sectors in order to increase the impact of investment and regional economic development potential.

The Agency is organized in three main functional areas, as follows: a) The support program for the preparation of projects, economic consulting and financial support to small and medium enterprises (SMEs) to develop regional and local economy; b) The program for the development of public assets in support of investment impact on local and regional development and the creation of regional partnerships for this purpose; c) The program of state participation in the commercial and financial instruments for start-up businesses, aimed at developing partnerships with public and / or private.

Agency governing bodies are: a) The Joint Management Board; b) General Director.

Agency seeks that through the promotion of public-public partnerships, public-private and privateprivate, to develop economic and trade activities, which promote the potentials and develop the 47

regional economy, with the objective of creating jobs and opening new enterprises especially in less developed regions. In view of this goal, the Agency carries out duties as follows: a) Identifies areas, sectors or economic activities and coordinates resources, through which can generate projects or to promote regional partnerships for economic development; b) Project designs, develops and manages them, in order to promote sustainable investment, public and private, that will generate employment and economic development of these areas; c) Provides technical assistance to local government units, mediating in the creation of partnerships, with the aim of financing domestic absorption as well as from European funds, donations or other sources of assistance. The Agency also applies to national or international grants; d) Invests, through various forms of partnership in public assets, undertaking public commercial and business venture private, potentially rapid development, to create value, improve the efficiency of their operational and enhance their competitiveness in the market; e) Provides, coordinates and performs the function of managing authority for grants to support local enterprises, and provides direct financing schemes and partnerships for investment in order to encourage investment and regional development; f) Promotes the establishment of joint investment regional funds partnership with other public institutions, donors, or other private commercial companies with the aim of joint investment in development projects, in particular a priority area of development; g) Performs the function of the Technical Secretariat for Economic Support Programme (Pillar II), the Regional Development Fund; h) Cooperates closely with the National Regional Development Agency, regional development agencies and other partners in local, national and international, with a focus on encouraging partnerships and promoting economic development potential of the regions; i) All forms of participation, as above defined in the relevant contracts or agreements between the Agency and potential partners and investors, according to laws and regulations.

Currently regional financial flows of regional development are taken mostly from the budget of local government (municipalities and qarks). This was dictated by time factors like; fragmentation of local units, the lack of human capacity at the local level, lack of a deep decentralization of functions and powers held by the central level. Dictated by these conditions and reasons, almost the main part of that had to do with local government investment is transformed into financial flows (sources and uses) of the Regional Development Fund.

48

The large majority of these grounds already after the new territorial reform and an ambitious government program to deepen the decentralization, do not stay. Expanding financial inflows and outflows should redesign regional development in these conditions.

Many of these programs and projects that hold ministries and institutions should be spent on regional development as their nature and function resembles exactly this concept.

Some of these programs and projects that can pass as regional development competencies are in the following table.

Table : Budget linked closely to regional development by Ministries / Institutions No

Ministry/Institution/Program

Total

Of which investment

Total

Of which investment

Change (total)

Change (investment)

1.123.994

884.994

376.000

127.000

+747.994

+757994

495.000

336.500

124.576

2.100

+370.424

+334.300

1.618.994

1.221.494

400.576

129.100

3.534.646

1.188.596

2.180.780

24.930

+1.353.866

1.163.666

0

229.000

48.000

-14.100

-48.000

104.300

8.000

+126.620

+128.920

1.722.000

805.000

+2.515.582

+2.519692

109.233

-

+322.635

+326.968

(2016) 1

Ministry of Economic Development, Tourism, Trade and Entrepreneurship

1.1

Support for Development

1.2

Development of Tourism

Economic

Amount 1 2

Ministry of Agriculture, Rural Development and Water Management

2.1

Rural development by supporting agricultural, livestock, agroindustry and the Market

2.2

Agricultural Information

2.3

Support to Fisheries

2.4

Ministry of Agriculture / Management of drainage and irrigation infrastructure

2.5

Water Management

Extension

and

Amount 2 3

Ministry of Transport Infrastructure

3.1

Water supply and sanitation

3.2

Urban waste management

4

Ministry of Culture

4.1

Cultural heritage and museums

5

49

Ministry of Health

230.920

136.920

4.237.582

3.324.682

431.868

326.968

9.838.512

4.977.166

4.845.889

888.157

7.836.830

7.312.630

2.588.300

2.058.400

+5.248.530

+5254230

400.000

400.000

27.000

0

+373.000

+400.000

8.236.830

7.712.630

2.585.300

2.058.400

593.759

189.200

489.146

100.000

+104.613

+89.200

593.759

189.200

489.146

100.000

and

Amount 3

Amount 4

214.900

(2015)

No

Ministry/Institution/Program

Total (2016)

5.1

Primary Care Services

Of which investment

8.631.093

Total (2015) 10.005.808

Of which investment

Change (total)

Change (investment)

63.808

-1.374.715

+247.585

+74.292

+55.512

311.393 5.2

Public Health Services

2.802.192 93.512

2.727.900

38.000

11.433.285

404.905

12.733.709

101.808

21.638.300

328.300

22.349.623

69.123

-711.323

+259.177

2.245.859

139.088

2.030.385

37.385

+215464

+101.703

2.053.334

527.096

1.494.262

170.692

+559.072

+356.404

25.937.493

994.484

25.874.270

277.200

2.555.748

2.116.848

958.596

525.000

+1.597.152

+1.591.848

2.555.748

2.116.848

958.596

525.000

7.600.000

7.600.000

6.400.000

6.400.000

+1.200.000

+1.200.000

7.600.000

7.600.000

6.400.000

6.400.000

495.850

339.350

299.525

119.075

+196325

+220.275

495.850

339.350

299.525

119.075

2.151.400

1.128.000

1.566.208

348.200

+585.192

+779.800

Amount 10

2.151.400

1.128.000

1.566.208

348.200

Total

70.461.871

26.684.077

55.752.642

10.944.713

Amount 5 6

Ministry of Social Welfare and Youth

6.1

Social care

6.2

Labor market

6.3

Secondary (professional)

Education

Amount 6 7

Ministry of Environment

7.1

Programs Protection

for

environmental

Amount 7 8

Albanian Development Fund

8.1

Development programs

Amount 8 9

Ministry Industry

of

Energy

and

9.1

Support for Natural Resources

Amount 9 10

Ministry Development

of

Urban

10.

1

Ministry of Urban Development / Urban Planning and Housing

Since 2016 budget, the investments listed under the programs and ministries in the table above could be possible to join the Regional Development Fund. It is possible for the reason that all sectors and areas referred in the table above are policies and investment programs in the local and regional level, and are not national development or investment policies. So, these investments have effects on local and regional economy. This policy may continue for 2017 but expanding programs and funds too. The union of this fund with the existing regional development fund would bring the total fund to double or in the next two years, the Regional Development Fund would occupy about 1.4% of GDP.

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In a longer period after 2-3 years this fund should be extended even more by taking from the investment fund. This proposal is closely related with the regionalization of the country that presumes that the necessary structures and capacities will be established at the regional level. By oriented in this direction is completely justified that the funds for development of regional and to grow even more, in this sense the nationally investments funds are mostly for protection and national security, national standards and national development policies. It would require a whole a deep structural reform of the budget. It is the possibility of integrating of more than half of the actual investment fund of regional development fund and if it were going to happen then the Regional Development Fund would occupy about 2.5% of GDP.

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12.RECOMMENDATIONS ON THE DEVELOPMENT OF A SYSTEM OF FINANCIAL PROGRAMMING/MODEL, TO CONSOLIDATE THE INPUTS/FINANCIAL RESOURCES (RDF PROGRAMS OF THE STATE BUDGET, DONORS), SUITABLE FOR IMPLEMENTING THE REGIONAL DEVELOPMENT POLICY Recommendations on the directions of financing, financial instruments and instruments special support (Technical assistance).

Various international experiences have shown that different countries have used unique approaches when it comes to project selection, some of which are focused on pre-selection of a large number of strategic projects (e.g. Lithuania), others are focused on competitive calls (e.g. Ireland, Estonia), and others, especially countries large (e.g. Germany, Italy, Poland) have had a mixed methods approach. The evaluation and selection system used in these countries has varied from country to country; however, it has generally been oriented towards simplicity. For example, most countries have not used the Cost-Benefit Analysis (Cost Benefit Analysis - CBA) for evaluating projects.

Germany has been an exception, and used only CBA for major strategic projects. But most of the countries analysed were focused on the impact and weight used for weighted the individual criteria, to distinguish between the most important factors and those less important assessments.

International experience suggests that also takes, an optimal evaluation and selection of the project is to achieve four main objectives: the acquisition, impact, legitimacy and capacity; and it should focus on six basic requirements, efficiency, effectiveness, clarity, fairness, transparency and feasibility. Although everyone agrees with the importance of these objectives and basic requirements, the hardest part is finding the balance to ensure the achievement of all objectives.

Equally important it is to adapt the framework to the country context.

Evaluation criteria and methods of public investment Investments are important in creating a good climate for business and certainly have positive effects on economic growth. There are enough studies and practices on the relationship between public investment, private investment and economic growth, where most of them are focused on public relations infrastructure investment and economic growth. The relationship between public investment and economic growth is a positive and important. This relationship is conceptualized divided into three phases: i) in the first phase increased public investment increases the level of private investment and the rate of return, ii) in the second phase, public investments are more productive by increasing the growth rate and iii) in the third phase, reducing the productivity of public investment reduces their effect on the growth rate. For nearly half a century, techniques and cost-benefit analysis of the cost effectiveness have made better understood and perceived problem of public investment. However the dynamics of development has led to the complexity of the ascending further analysis of three important developments: First, while the cost-benefit techniques are suitable for small discrete projects, they may be insufficient for large infrastructure projects with the network characteristics or for projects, the implementation of which may extend 52

over many years? Project usually requires larger more elaborate analysis, to reduce uncertainty including risk management. Second, evaluation of investments that require other dimensions of analysis to evaluate the risk to which a project is exposed. Third, cost-benefit analysis to focus on the net present value of production derived from a project. These complexities have led to the design of new methods for assessing the sustainability and value of large investment projects. For major projects FURTHER suggested analytical strategy. One option could be the construction of alternative scenarios possible that a project may affect the economic, environmental, demographic or technological. So methods and procedures for the evaluation of various investment projects has evolved over the years depending on the size and importance of investment projects.

Medium Term Budget Program (MBP) In 2000, it began to introduce the Medium Term Budget Program (MBP). This document first MBP, which covered the period 2001-2003, achieved a considerable success by creating a stronger basis for the preparation of the 2001 Budget.

MBP in its infancy provide a comprehensive analysis of public expenditure. He covers current expenses as well as investment; it includes both budgetary expenditure and expenditure financed from social security contributions and health.

MBP aims to: • promote fiscal discipline by providing public expenditure planning within a realistic macroeconomic and fiscal framework; • enable the allocation of public spending priorities explicitly linking government policies to expenditure plans; • Encourage a greater technical efficiency in the allocation and use of budgetary resources; and • Bring more predictability in the budget process, allowing ministries to plan their spending programs term.

Budget program over a decade and a half has undergone many qualitative and quantitative changes. This exercise (program) is extended to all units of the central government and the majority of local government units. Jane Cowdery made many legal changes that have increased the effect in terms of efficiency of use of taxpayer’s money.

By Law 9936 dated 26.06.2008 "On budget system management in the Republic of Albania", MBP process is modernized. This process is extended in the last stages of finalizing the main where the entire process for the next three years.

Ministry of Finance every year sends central and local government units the guidance for the preparation of the medium-term draft. Along with this instruction are sent quotes by different programs. The medium term budget program is based on budgeting according programs. It is inclusive all year around which means that in this exercise all organizations will be participating and contributing.

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Medium Term Budget Program (MBP) is an operational instrument for the management of public spending and a key component of the Integrated Planning System. It is the result that comes from two processes: Review of Policy, Expenditure Planning and Investment Program. The expenditure plans are drawn up by central government units within the resources from Government. This document is used to inform the Parliament and the public about government spending plans for the next three years which will lead to the achievement of government policy objectives. It defines the medium-term context of the annual budget.

MBP main goals are: • Encouraging the effectiveness, efficiency and economy in the conduct of public expenditure; • Direct link between strategic and political priorities of the Government in allocation of public resources and the performance of public expenditure; • Promoting fiscal discipline allowing public spending to be planned within a realistic macroeconomic and fiscal framework; • Expanding the vision of the budget process by ensuring that spending programs are planned in the medium term (3 years).

MBP document drafted by the Ministry of Finance and the Council of Ministers gives the opportunity to develop a clear framework in the medium term resources that will serve as a basis for planning the current and capital public expenditure. Also, it serves central government units and their special funds since it enables the determination of their policies and programs in a coherent structure, and the ability to determine the costs and priorities within the context of available resources, so that financial resources may be allocated to medium term priority programs.

It should also be noted that the process of drafting the PBA is oriented basing on performance.

The advantages of this new way of planning the costs, consist in: • Contribution of clear products in meeting its policy objectives; • Measurable products; • Activities with cost MBP take into account all national and sectorial strategies, integration and development where their umbrella is the National Strategy for Development and Integration.

Regional development, annual budget and the medium term budget Regional development is covered by the Regional Development Fund which is accommodated in the bottom of the tableNo.3"unconditional transfer of municipalities" and in the budget of:

54

•

Ministry of Transport and Infrastructure for water supply and sanitation,

•

Ministry of Education and Sports for investment in basic education, secondary education, university education and sport,

•

Ministry of Health for primary healthcare services;

•

Ministry of Culture for Arts and Culture and,

•

Ministry of Environment for environmental rehabilitation, greenery and the afforestation.

This budget over the years has been increased in accordance with the objectives and perspectives of the various governments over the years that they had for this fund as an instrument of development. Albania over the years has been using the medium term budget as an efficient and effective standard of Public Financial Management. Experience shows that regional development fund has not been subject of the rules and procedures that are followed in general by budgeting and in particular capital investments budgeting. Also regarding the implementation of the fund are noted problems. During, all year round it may have applications and distribution of this fund which makes to not have a correct calendar for forecasting, application and implementation of this fund.

The experience of past years teach us that even in the last months of the year there were decisions for the allocation of the fund. These factors have made that somehow to affect the efficiency of using these funds. The fact that throughout the year, even in later years has been found undistributed funds, there have been negative effects. The minimum of these negative effects is amortization or impairment of this fund from inflation and changing prices of materials and raw materials. Regional Development Fund is not part of the budget cycle management which is a problem in terms of financial management of this fund. So, if entire state budget is subject of the control and audit by the State Supreme Audit, all these years RDF was not subject as such controls and audits. Based on these circumstances and with a perspective to increase the effectiveness and efficiency how to use this fund, it is necessary that this fund should be harmonized with all the procedures and rules used for the medium-term draft budget and for the management of public finances.

Further consolidation of RDF as an instrument for regional development requires not only a good development strategy but it should also be oriented and connected with the requirements of the EU for regional development.

After the changes in government, the vision for RDF in 2014 and subsequently moved towards the promotion of economic and development potential of the regions / counties / provinces, turning into a mechanism for the production and development of competition in the country's growth.

The objectives of the RDF should be in sync with the Strategy of Sustainable Development SDG2030 adopted at the United Nations in September 2015 in the 70th anniversary of UN materialized on 17 goals with 169 measurable indicators where target 17 seeks global partnership.

RDF will become a financial mechanism that will support the new national policy of regional development, to have competitive regions, with a sustainable economic, social and environmental development.

RDF should become part of the Medium Term Budget Program (MBP).

55

Taking into consideration that for regional development are created: i) The National Agency for Regional Development, ii) regional development agencies (RDAs), and iii) Regional Economic Development Agency it is necessary that the fund should be separate groups. This group named "Support for Regional Development". Responsibility for this group will have, "National Agency for Regional Development" (AKZHR), while the "Agency for Regional Development" (RDA) and" Agency of Regional Economic Development" (AZHER) be unit expendable dependent on each other.

Proposal I "Support for Regional Development� group should have the following programs: 1. Local and regional infrastructure, • This program will be targeted at improving the infrastructure at local and regional level.

2. Education, culture and sport Basic education The main objective of this program should be related to the provision of quality education for all students , improving the conditions of lesson - giving and teaching-learning , as well as ensuring equal conditions for participation in basic education for all children aged in preschool and forced .

Secondary education The main objectives of this program will be; further increase the quality of teaching, in order to meet the standards of European Union countries, the development of secondary vocational education in order to respond to market demands for jobs of secondary level.

University Education The main objective should be connected with the creation of the best possible conditions for the normal continuation of studies in universities.

Art and Culture The main objective of this program may be, the development of arts and culture, linking this with the development of tourism in our country.

Sport Development The main objective is the development of the sport, the increase of financial support to national and international activities for all sports disciplines. Creating the conditions for revision of the form and functioning of the Sports Club. Financial support of the activities of representatives of school sports teams in various disciplines, with the aim of laying the foundations for the creation of school sports associations.

56

3. The primary health care service The main objectives of this program can be: •

Equipping health centres with standard medical equipment;

•

Improving the delivery of primary health care through the expansion of the drugs scheme;

•

Reduction of infant mortality;

•

Reduction of maternal mortality;

•

Handling staff to provide periodic medical examination program for ages 40-65.

4. Water and Sanitation This program aims to designing policies and commit sufficient funds to improve the provision of water and sanitation and to move steadily towards compliance with EU standards and the objective of the Millennium Development Goals for the sustainability of environment.

5. Environmental Rehabilitation, greenery and forestation The main objective of this program will be to protect the environment, the expansion of green areas in order to achieve the objectives of the European Union as conservation, forest management and economy.

6. Support Economy This program will aim, financial support for economic development through support to SMEs (small and medium Enterprises).

7. Digital Albania This program will have as its main objective the maximization of the usage of technology information for different regions of the country.

So the group "Support for Regional Development”, should function with 7 programs above in all the budgeting cycles and procedures of Public Financial Management. According to this structure should be applied the medium-term budget programming and its implementation. In these conditions we achieve the budgetary and financial discipline to this fund and create the necessary conditions for the transformation of the fund in a local and regional development instrument. Also, it would fully integrate regional development fund in the budget cycle. Regarding the financial management in accordance with tests that will take place, legal changes can be made at making these procedures more flexible.

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Proposal II “Support for Regional Development” group These seven proposed programmes should be integrated into fewer programmes not divided by sectors but in some areas of development. These programmes may include: • Tourism Development; • Urban/Rural Development; • Public Services.

To implement these plans we offer three suggestions: Proposal I For a period of 1-3 years, the scheme should be exercised only for the current fund, which is distributed in the past two years. In terms of funding proposed in this paper as regional development funds in various ministries, Regional Development Agency should apply in these ministries as beneficiaries of projects. In this scheme should include the IPA projects and grants from various donors.

Proposal II The scheme should operate above the funds allocated so far and others which are proposed to be regional development funds (See Table No. 3: "The budget linked closely to regional development

by Ministries / Institutions”). In this scheme should include the IPA projects and grants from various donors.

Proposal III The above scheme should operate for funds allocated so far and others which are proposed to be regional development funds. Also within the Regional Development Fund should be included also ADF. In this scheme should include the IPA projects and grants from various donors.

In all these three proposals should be revised the role of line ministries in order to correct the functions that will pass to these agencies.

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13.BIBLIOGRAPHY •

Crosscutting strategy for decentralization and local government 2015-2020.

•

Policy for Planning and Territorial Development in Albania 2014-2018 , the Ministry of Urban Development

•

Decision of the Council of Ministers " On the establishment, organization and functioning of national agencies for regional development, regional development agencies and the regional economic development agency.

How Regions Grow?” Policy Brief, Organization for Economic Cooperation and Development (OECD), March 2009.

•

59

•

Regional Disparities in Albania” prepared under “Integrated Support for Decentralization Project: Working for Regional Development”, Tirana, November 2010.

•

Europe 2020: A European Strategy for Smart, Sustainable, and Inclusive Growth, August 2010.

•

EC (2014) Instrument for Pre-Accession Instrument (IPA II) – Indicative Strategy Paper for Albania (2014 – 2020).

•

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•

Operational Programme for the Development of the Living Environment. Republic of Estonia. 2007EE161PO002, version May 2010.

•

Regione Lazio, Dipartimento Programmazione Economica e Sociale, Direzione Regionale Programmazione Economica, Ricerca e Innovazione (2011) ‘Programma Operativo Regional e cofinanziato dal FESR 2007-2013: motive e deffetti della revisione’, A cura del Nucleo di valutazione e verifica degli investimenti pubblici, 7 Febbraio 2011.

•

Regione Lazio (2012), Programma Operativo Confinanziato dal F.E.S.R – Fondo Europeo di Sviluppo Regionale 20072013, Regione Lazio, CCI2007IT162PO004, version approved with the reprogramming approved by the Commission on 28 March 2012 (last known reprogramming), Dec C1659/2012 (original version was dated 2 October 2007, Dec 4584/2007).

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•

Report # 2 on Legal Framework Analysis prepared by the Austrian Development Agency, through the EC IPA Program for 2008. This is an initiative undertaken by the Department of Program Development, Financing and Foreign Aid (DPDFFA) in Albania,

•

Working Draft “Regional Management in Albania” prepared by Martin Ivancsics.

December 2014.

•

Report # 3 on Regional Development: Institutional Capacity Mapping and Financing Mechanisms prepared by the Austrian Development Agency, through the EC IPA Program for 2008. This is an initiative undertaken by the Department of Program Development, Financing and Foreign Aid (DPDFFA), in the Prime Minister Office of Albania.

•

National Strategy for Development and Implementation (NSDI) 2014-2020, Government of Albania

•

Law No. 8652 , dated 31.7.2000 " On the organization and functioning of local government"

•

Law No.115, dated 31.07.2014,“On the administrative and territorial units of local government in the Republic of Albania”.

•

Law 139 dated 17.12.2015 , "On local self-government "

• •

Law 9936 , dated 26.06.2008 , "On budget system management in the Republic of Albania" Promoting Regional development in Albania/Institute for Public and Private Policies (IP3), April 2015.

•

Larry Schroeder, “Albania, Studyon Fiscal Decentralisation Policy”, THE URBAN INSTITUTE, 2100 M Street, në Washington, DC 20037 Maj 2004 (202) 833-7200.

•

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•

Dedja,Taulant and Brahimi,Fran (2006) “The Dilemma of the Revision of the Administrative and Territorial Division in Albania: Obligatory, Voluntary Amalgamation, or Inter-Communal Collaboration as a Transitory Solution?” Conference Paper, Tirana, pp.

17- Institute for Contemporary Studies, Rr. Vaso Pasha 7, Tirana, Albania, ics@isb.iccal.org / http://www.ics-al.orgInternational Research and Consulting Centre, Institute of Federalism, University of Fribourg, Rte. d’Englisberg 7, 1763 Granges Paccot, Switzerland.

•

Afonso, A.; Santos, M. (2005) “Students and Teachers: a DEA approach to the Relative Efficiency of Portuguese Universities”; NEP: New Economics Papers Education.

•

Fernandes, S. (2003) “Efficiency of Local Government Spending: evidence from the Lisbon Region”; NEP: New Economics Papers Education.

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