Albania's militaristic supply distribution system had little in common with the retail trade sector in the capitalist world before 1990. The state fixed prices, determined which goods would appear on store shelves, and paid shop managers and clerks set salaries. The distribution system grew considerably after World War II, with the ratio of shops to inhabitants increasing from 1:896 in 1950 to 1:278 in 1988. There were two supply networks: one operated directly by the state, the other administered by local collectives under state supervision. The state-run supply network carried a narrow range of consumer goods that were, except in rare cases, domestically produced. The Ministry of Domestic Trade controlled about 85 percent of the state network. The balance fell under the jurisdiction of the Ministry of the Communal Economy, which managed repair and other workshops; the Ministry of Health, which operated pharmacies; and the Ministry of Education, which ran bookshops and art and handicraft stores. The collective-run shops dealt mostly in farm-related products but greatly improved the supply of consumer goods in rural areas.

The limited assortment and supply of consumer products available through retail outlets forced Albanians to become expert at improvising and dealing with shortages. The government imposed a rationing system on all consumer items in September 1946 and did not lift restrictions on nonfood items until 1956 and on food items until 1957. Cutoffs of Soviet and Chinese aid and failures in the agricultural sector led to severe food shortages in the early 1960s and again in the early 1980s, when the authorities reimposed meat rationing. The rural population clearly depended to a large extent on the personal plots of collective-farm members for basic food items for extended periods. The state distribution system failed to compensate for the loss from urban markets of produce grown on personal plots after the government restricted plot sizes in the 1980s. Sales of food products made up about 61.5 percent of the retail trade at about 10,600 shops in 1983. The total did not take into account the commerce in goods within agricultural cooperatives. Albania's economic planners neglected the country's service sector to an extent unknown even in other centrally planned economies.

The economic reforms of the early 1990s broke down the barriers that for decades had kept would-be-private entrepreneurs from the retail marketplace. At first, peasants began setting up roadside fruit and vegetables stands or carrying their produce to markets in the towns and cities. Later, small shops, restaurants, and workrooms opened their doors and began hiring workers. Soon after the communist economic system broke down, the government privatized about 25,000 retail stores and service enterprises-- about half of the small state enterprises in the retail and service sectors--mostly through direct sales to workers. One businessman, using French capital, opened up import shops and duty-free stores in the country's largest hotels. But supply problems hampered retail operations. The new entrepreneurs also encountered problems with local officials who arbitrarily imposed fees and license requirements based on obsolete communist-era laws or on no laws at all. The owner of Tiranė's first private restaurant, for example, complained that officials demanded an annual license fee equivalent to about US$10,000. In 1991 government officials were at work on a commercial code.

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Source: U.S. Library of Congress