Agricultural privatization in Albania consisted of distributing the land and most of the other assets to rural households and of the complete breakup of the former structures of production. These key features of the Albanian reform are in sharp contrast with those of other CEECs, where restitution of land was the most commonly chosen privatization process and where decollectivization was modest in the first years of transition. We argue that these differences were caused by a combination of changes in the political institutions, the economic structure, the historical legal status of the assets under privatization, and farm productivity. More specifically, the fact that all land was state owned, the large rural population share, and the very unequal pre-1945 land distribution have all affected the choice of the Albanian privatization process. Further, with low opportunity costs of agricultural labor and large uncertainties, the distribution of even small plots of land had large effects on the marginal welfare and income security of farm workers. The size and intensity of this political constituency was more influential than the lobbying efforts of the very concentrated vested interests in favor of land restitution to pre-1945 owners. The extremely low incomes of collective farm workers, caused by extreme inefficiencies of APCs, and relatively low exit costs induced a radical decollectivization of collective farms in an environment of a dramatic collapse of agricultural production, food shortages, reduced social control, political instability, and uncertain land reform legislation that characterized the early 1990s.
