A New Agenda for Albania's Future Growth

December 13, 2010

Tirana, December 13, 2010 – Albania can sustain growth in the future by implementing a new generation of policies and reforms focused mainly on education and skills, ICT development, energy sector, and better governance and rule of law, says a recent report of the World Bank which was presented today in Tirana. The report titled “The New Growth Agenda”, known also as the Country Economic Memorandum for Albania is a result of an extensive research and analysis of the Bank carried out together with international experts, as well Albanian experts.
The report explores future sources of grow as Albania enters a new stage of development. While analyzing new sources for growth, the report describes the human capital needs focusing on education and skills. It also reviews the developments of technology of information and communication. The report addresses the investment climate and factors that influence the return on investment. In addition it proposes measures for maintaining macro-financial stability of the economy and elaborates the growth challenges for Albania as an upper middle income country.

In the past decade, Albania’s GDP has grown consistently above five percent annually and survived the recent global turmoil in better shape than many other countries. This positive performance enabled the country to double the GDP per capita since 1998 and reduce the poverty by half, becoming thus an upper middle income country. These achievements were the results of a substantial structural reform program.

Reaching the upper middle income country status in a relatively short time is a major achievement.  It also poses new challenges. Under this new status Albania has to compete with low-wage poorer countries as well as with rich country innovators, said Kseniya Lvovsky, World Bank Country Manager for Albania in the presentation activity of the report.  Albania reached this point when external environment for attracting capital has become tougher, competition more intense and complex, and the global economy is being radically transformed.  Hence, a new generation of policies and reforms based on a strong forward looking vision will be required to sustain growth in the future.”

Albania is becoming increasingly integrated into global production systems, which means more dependent on international trade, technology and capital and it is important for Albania to consider and adapt to. While providing a diagnosis of some of the key factors for future growth, the report does not indicate which sectors (agriculture, tourism mining, banking, etc.) should be developed, since these decisions will be taken by private investors. Instead the role of the government in this process is that of facilitator, removing the obstacles to investment and helping to provide information and institutions that private firms require to flourish.

The report follows other recent World Bank studies, by focusing the analysis and recommendations on areas which are particularly important for future growth, in particular on the quality of Albania’s human capital through education, and the consolidation of the backbone infrastructure (ICT and energy). Albania has made considerable efforts to improve the business climate and to prepare for possible EU accession by enacting large numbers of new laws and regulations. To complement these measures a critical issue for firms is the extent to which the Government abides by, and implements existing laws and regulations in a consistent and coherent manner.

The report was presented by a team of World Bank experts and was followed by a fruitful discussion of representatives from Government, civil society, private sector and donors. This report aims to contribute to the ongoing debate of the Albanian society on the new growth agenda.