1. (this country is called domestic country)

1.    Abstract

Import and
export value in Albania is different because import is more common in our
country compared to exports. Even though export showed a convincing increasing in
these last past years economy of Albania still suffers from deficit in trade
balances. The lack of export is the main reason for this problem. The products
that are imported include machinery, food, textile, tobacco etc. The purpose of
this project is to analyze the impact of import on innovation, IT and
productivity and coming to conclusion. In this paper we will see how imports
contribute in our economy.

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2.    Introduction

Imports
are the goods or services exchanged between two countries, where one of the
countries (this country is called domestic country) purchases them with the
purpose to use and trade them inside the country. The
domestic country purchases them with the purpose to use and trade them inside
the country.  The country that imports
these products or that takes these products inside, absence their production.
This happens mainly due to these reasons:

·       
High cost:  Our country can produce goods but the
production cost is higher than importing them. So in this case is better to
take goods and services from foreign countries.

·       
 Absence of technology:
The domestic country has land, labor and capital, all factors of production but
doesn’t have technology needed to produce these goods and services.

·       
Bad level of quality:
The domestic country doesn’t have the quality level of products and service as
the foreign countries. The products are produced here but not in the same quality.

Imports
on the domestic country affect many aspects of its economy, where the major
variables that it affects include: Gross Domestic Product, unemployment,
consumption, investment, exports, exchange rates, trade level and balances,
productivity, technology and innovation.

 

 

In
this paper we will examine only the effect in three factors:

1.      Productivity:

How
do the import effect in productivity? We see an increase or decrease?

2.      Technology
(IT):

 What is the effect of import in technology?
Does the technology get affected from the imported products?

3.      Innovation:

What
is the effect of import in innovation? What about the imported goods? How do
the imported goods help the domestic country do better in new innovation in
different fields of production?

 

3.    Literature review

Many researches have been interested
in studying the connection between trade and imports and how affect the
situation in Albania. There exist a relation with imports and the economy
growth of the country. Here are some of researches made during the years.

A study made on foreign trade and
economic development related with Albanian case explains the effect of import
in our county. This study says that import has a positive effect in Albanian
economy.

In another study in foreign
direct investment and Albania focuses more on the industry of the production of
food and beverages, because it concludes that it is has relatively high investment.
Furthermore it is based on imports as well as providing raw materials in the
country. It also shows the relation with productivity because 16% of the stock
of FDI in the manufacturing sector is investing in textile and leather,
which are intensive activities in terms of employment and export potential.

Another
research made in different places such as Germany, Sweden found out that in
firm levels, the effect of R&D on productivity is positive. Some years
later, in a study on Italy focused on SMEs, especially they reached the
conclusion that information about innovation and productivity affected
positively innovation shows on SMEs.

 

 

4.    Data and methodology

This
section include the information and data related to the import levels in
Albania in different period of time. The main purpose of this paper is to show
how imports has affected innovation  of
new things, technology and production of goods and services in our country.

 

4.1. Import Structure in Albania

During
January-December 2016, the total amount of imports reached ALL 578,976 million,
increasing by 6,3% compared to the same period in 2015.

The main weight
of imports for this period consists of “Machinery, equipment and spare
parts” with 22.6% and “Food, beverages and tobacco” by 17.3%, ie
for the same period of 2015, the structure remains almost same. Groups that
have increased more in the period January – September 2016 are respectively the
“Textiles and footwear”, and “Machinery, equipment and spare
parts” with 15.3% and 12.5%, “Construction materials and metals”
11, 5% as well as “Leather and rubber articles” by 9.1%.

4.2. Imports in Albania

 

Albania imported $4.65B during
the year 2016 making it the 87th largest importer in the world
according to OEC. During the last 5 years the imports of Albania have increased
at an annualized rate of 8.15%, from $5.12B in 2011 to $4.65B in 2016.

Albania’s economy is considered
to be import-oriented. The trade balance shows deficit over time, because
imports growth rate was increasing approximately with 25% only in the latest
years, which bring a reduction in domestic products. Exports are not sufficient
because of not having a lot of diversification and a competitive price, and
some reason responsible for this might be low infrastructure and income levels.

5.     Innovation

Innovation is considered the solution of a technical
problem occurs when there is a problem that needs a a new solutions to be
solved. Innovation is the process where a new idea is converted in goods and
services and the later creates value in society. New methods are found for the
use of particular product, which leads to beneficial results. This solution
could bring the creation of a new product or a new process, but the most
important part is to be unique, an innovative step and also to be applied in
the industry. The person who is can produce an innovation must be able to
benefit economically from it. This is provided by the protection of innovation
patent, which last twenty years.

There are three ways to register
patents in Albania:

1. Applications for patents that
appear directly in GDPT as a national application;

2. Patent applications through
the Patent Cooperation Treaty (PCT);

3. The patent issued by the
European Patent Office (EPO) and seeking protection in Albania.

 

 

 

As can be seen from the above
table, trade is affecting Albania’s chance to be more competitive. The
government of Albania has taken some measures in order to help and increase the
usage of patents, as a major tool for the growth of economy. Therefore some
programs are created to support the growth in innovation field.  One of the most important agencies is The
Agency for Research, Technology and Innovation (ARTI). This company aims to
force the relationship between research and technology. In addition they try to
ease the spread of information outside borders.

 

6.    Technology

Technology is defined as the use
of knowledge or for purposes of finding a solution to main problems. That is
the main reason why it affects how a business acts and somehow it measures
their effectivity and efficiency. In industries and economic aspect the use of
technology has become very important. An advanced technology is a good
indicator for the economic performance of the state, especially in
productivity. For instance developed countries are represented by having high
level of technology. Today a lot of industries are basically dependent on how
they use their technology systems. Technology is capable of changing the
business nature.

Technology in Albania was
increased from import. Buying new machineries from foreign countries it was
cheaper than continuing to use old technology. These new equipment increased
productivity.  According to the Albanian
Institute of Statistics (INSTAT), machinery-equipment imports only last year
rose over 24%, reaching 109.9 billion. Newer machineries in processing and
production enterprises will increase productivity at the same time reducing
production costs. Entrepreneurs processing industry show that by lowering the
cost by 10%, increases productivity by 20%. A good indicator is also the
computer usage in businesses. In first diagrams below are represented the
percentage of organizations with computers and in the second one percentage of
companies according employees with computers.

Since technology has a huge
impact, the government of Albania has taken some measures also in IT in order
to increase the usage of patents, as a major tool for the growth of economy.

 

 

 

7.   
Productivity

Productivity expresses a rate of efficiency
by the usage of three main factors of production in an economy such as land,
labor and capital. It is considered to be one of the important indicators for
the growth of the economy and it can be measured in different ways. An
important issue is the relation between productivity and technology. When
technology increases so does the productivity.

In this study, primarily labor
productivity is used as a measure of productivity from the labor factor. The
Total factor of Productivity is also examined, in order to understand the productivity
part which is not related with factors such as labor and capital.

As can be seen from the graph
Labor productivity shows an increasing function during the years. As import
increase there is a positive relation with productivity because it also increases
over time.

 

 

8.    Conclusions

This paper tries to analyze the impact
of import in information technology, productivity and innovation in Albania.
After the research we reached the following conclusion that import has a
significant impact in Albania.. We cannot define whether import has much more
positive impact rather than a negative one in the overall economy of our state
but the positive effect of import influences mainly in three factors: innovation,
productivity and information technology.  The strongest relation is founded between
import and technology, where import turns out to influence in increasing the
technology usage. Our country is being affected a lot by foreign countries
because by importing their products Albania is increasing the level of these
factors. By using foreign products Albania has satisfied the market needs.
Those goods and services that they are bringing us also are helping our country
to use itself the technology and innovation. Albania still faces a major
problem it is the lack of production for export. As import increases the higher
the deficit in trade balance goes. Export is a more important tool that needs
to be stimulated, in order to have a positive trade balance. Albania faced many
difficulties in politics which leads to malfunction in managing economic
activities and low performance of our country. As this situation goes, the
trade balance will continue to be in deficit and Albania will remain again an
import-oriented country. Even though there are shown positive impacts of
imports on Innovation, information and technology and productivity that is still
not enough for an economic growth of a state. A country needs to stimulate
exports as much as it cans. 

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