What is happening with poverty in Albania - Op-ed by Kseniya Lvovsky, World Bank Country Manager to daily 'Shqip'

June 28, 2012

Op-ed by Kseniya Lvovsky, World Bank Country Manager Daily "Shqip"

Over the decade before the global financial crisis and the Eurozone turmoil hit, Albania made remarkable strides in reducing poverty.  The share of individuals who consumed less than what is required to satisfy basic needs declined from 25.4  percent in 2002 to 12.4 percent  in 2008. The share of those who could not afford to cover their basic nutritional needs decreased from about 5 percent in 2002 to 1.2 percent in 2008.

We know this from the good quality Living Standard Measurement Surveys (LSMS) that have allowed us to track this path over the decade.  The World Bank and others have analyzed the data extensively and disseminated the findings widely to discuss Albania’ s performance. Careful statistical work and significant donor support have allowed tracking poverty and a number of other key indicators over time, charting improvements in other areas of wellbeing such as health and education achievement. As the LSMS integrates information on different topics for the same households, we at the World Bank have also been able to chart achievements for particular groups such as the poor, or poor women, in many other dimensions.  In addition, a search on Google for the keywords “Albania” and “LSMS”  easily brings up a number of interesting papers produced by researchers around the world on a variety of topics of policy relevance. We know much more on a variety of topics ranging from agricultural land to gender wage gaps in Albania than in many of its neighboring countries because these rich databases have been made available for free on the World Bank’ s and the INSTAT’s  websites.  This free research by academics around the world is one of the global public benefits of making data accessible which is often overlooked in discussions on data access.

Despite the positive trends until 2008, prolonged economic slowdown during the crisis and difficult recovery in Europe puts these poverty gains at risk. Further evidence contributing to our concern is from regional databases and from neighboring countries (Serbia, Macedonia) that have more recent data than those available for Albania. This regional evidence was recently reported in our second Regular Economic Report (RER) for South-Eastern Europe (SEE), in tables on internationally comparable poverty estimates.   Those are very different poverty estimates than those that are used for national measurement, and are meant to complement rather than replace national poverty estimates.  Even if they are derived from the same data that are used at the national level (the LSMS in Albania), the main purpose of these estimates is to benchmark countries against each other. In order to ensure international comparability, the methodology used for these estimates differs from what is used at the national level.  As the surveys that countries collect are different, and as each country sets poverty lines at different levels, ensuring that the poverty estimates are internationally comparable results in estimates of poverty which can be very different from those used at the national level.

The World Bank produces various sets of estimates of internationally comparable poverty rates. At the global level it uses the well known 1 dollar a day measure.  For analysis specific to countries in Eastern Europe and Central Asia two different poverty lines have been adopted, respectively of 2.5 and 5 dollars a day.  In terms of purchasing power parity, which economists use for converting these benchmarks into national currencies, those are roughly equivalent to 132 and 264 Lek a day).

When I was looking at the RER report recently released by the Bank one thing jumped immediately to my eyes.  The tables on internationally comparable poverty estimates have many glaring gaps.  For only 2 countries out of the 6 in SEE we have “recent” poverty estimates, and those cover only up to 2010.  The years since the crisis hit have been difficult for Western Balkans, with governments having to take many difficult decisions. Without updated information to guide those decisions their ability to design effective crisis responses, particularly on social protection, will have been hindered.  It is particularly at times of crises that updated information that allows track new developments is needed. 

That is why implementing and making publicly available the new LSMS data is so important.  Only after a new LSMS survey of high quality will be conducted,   will we be able to accurately measure what has happened to poverty during the last years.  The World Bank and other donors are ready to help ensuring that high quality data are collected. It would be equally important to make the data available online to the broader research community, which would increase credibility of government policy making when it comes to helping the poor. Poverty estimates must not be a subject of political games; they should serve as a unifying force to do the right things.