The impact of trade agreements. Case of Albania

Abstract

This paper aims to explain the impact of the CEFTA trade agreement on macroeconomic terms of Albania in the terms of GDP and trade balance. The main is the development of the states and the components taken in the study provide clear overview for this purpose. In the realization of this paper, the quantitative research method was used.There are mainly used government publications and scientific articles of various academics. Analysis of the findings is done with descriptive analysis and simple analysis, the explanation between variables. Regarding the work method, dependent variables such as GDP and imports were used and exports of our country and independent variables in the first analysis changed imports and exports to see how Albania’s GDP changes when variables change such as democracy index, free business index to get a better picture formed of the study. They are used as dummy variables that take the variables from 0-1. For help, the calculator on the web (distance calculator) and e-viewer was used for ease of calculations. By using the gravity equation, we show that CEFTA has had an important impact in the distribution of Albania to CEFTA partners. CEFTA has increased Albania’s exports by 34%. The results show that Albania’s imports have been affected significantly and are good for remittances. Another important relationship it is determined between the import and export of Albania. The increase in Albanian exports appears that it has a positive impact on Albanian imports. It is clear that the relationship between GDP, exports and foreign direct investments is a positive relationship, with growing exports and foreign direct investment, GDP is bound to grow to visible way.