Thank you for joining us today to launch our flagship report entitled “Albania: The New Growth Agenda”.
Let me start by expressing our solidarity to people in Shkodra and adjacent areas affected by floods, and to the government and civil society organizations dealing with this disaster. These two topics – the unfolding emergency and a long-term growth agenda - at first seem unrelated, but the linkages exist. The unprecedented floods reinforce one of the main messages of the report: going forward, it is critical for the Albania’s economy to increase resilience to external shocks and uncertainties, whether they are caused by the financial turmoil, economic forces or nature.
We already introduced and discussed some parts of the report back in June this year in our 2nd ABCDE conference. And today we’re pleased to launch the final report. It has been the result of an extensive research and analysis that my colleagues in the Bank have carried out together with international experts, and with Albanian experts both inside and outside government.
Good news is plentiful. Albania’s GDP has grown consistently at rates above 5 percent annually in the past decade. GDP per capita doubled between 1998-2008 while poverty halved in just 5 years, between 2003 and 2008. The economy has come through the recent global turmoil in better shape than in many other countries. This positive performance enabled Albania to transform itself from a low income to an upper middle income country as of July 2010. These achievements would not have been possible without substantial structural reforms aimed at building market economy mechanisms and institutions and a sound macroeconomic framework.
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 both poorer countries, which have the advantage of lower wages, and with rich countries, which have greater resources and capacity to innovate. Furthermore, Albania reached this point when external environment for attracting capital has become tougher, competition has grown 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 future growth.
Many countries build their growth strategies around the vision of attracting significant FDI. This is needed in order to boost export performance, facilitate technology transfers, and provide more business for their SMEs. Some countries soon realize that in order to transform the vision into reality they have to offer more than their regional competitors and put extra efforts to upgrade their economic environment for the desired FDI. Albania is one of such countries and this report explores several areas that could help Albanian boosting strategic FDI inflows.
The report follows recent World Bank studies, in particular Investment Climate Assessment (2007), by focusing on areas which are particularly important for productivity growth and competitiveness. These areas include Albania’s human capital and the backbone infrastructure, such as ICT and energy. The report brings new analysis in each area and makes several recommendations. It also proposes measures to improve the enabling environment for growth, including governance and institutions.
As the following presentation will show, the report gives major attention to education. It examines how Albania’s education system could increase the number of individuals who have the skills demanded by a modern economy and creativity to solve problems. The report recognizes important advancements in ICT and energy, and also highlights the critical challenge of consolidating the new market structures in the coming years.
Albania has made considerable efforts to improve the business climate and prepare for potential integration with the EU by enacting large numbers of new laws and regulations. Yet, a critical issue for firms remains the extent to which the existing laws and regulations are implemented in a consistent and coherent manner. Regulatory certainly is identified by the report as an important area for continued improvement.
We hope the report will contribute to the ongoing debate on the new growth agenda. I believe this report would be useful for both policy makers and the Albania society at large in their choices about future directions. I am delighted that today's event includes a wide-ranging representation from Government, civil society, private sector and donors.
My colleagues and I look forward for a fruitful discussion.