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The economy of the Albanian regions away from the perspective of sustainable development

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Comparing the GDP growth rates of different regions can play a role in asset allocation, helping investment decisions in fast-growing regional economies.

However, experts clarify on the other hand, that beyond the foreign investments that have entered Albania, the lack of diversification of sectors and the increase in the utilization capacities of the productive sectors in the country still remains an unaddressed challenge with a sharp impact on the productivity of the economy.

This is evident in the fact that Albania in 2022 with a weight of 16 percent of the population of the Western Balkans (BP6) produces as much as 13 percent of it, or at least below the weight of the population. This ratio has changed for the worse compared to 10 years ago, where the weight of Albania’s population was 14% of the population and produced again as much as 13% of it.

Meanwhile, developed countries produce 2-3 times more added value than the weight of their population.

Effective employment is growing much more slowly and in some cases is declining. Aging is becoming pronounced, leading to a decline in the support ratio. In regions of the country, GDP and income per effective consumer are likely to grow more slowly as a result of demographic changes.

No other region of the country is as prosperous or innovative as Tirana, according to the indicator of the regional weight in the national GDP. On the other hand, according to long-term forecasts, the size of the economy of other regions is unlikely to come close to that of Tirana.

Because high-income and upper-middle-income Tirana and Durrës have larger economies, developments there may dominate the country’s economic trends.

The population is projected to decrease 15.8% between 2020 and 2050[1], despite a slowdown in its growth rate.

The main source of the obstacle for further and sustainable growth of the country’s regions is the weak support of innovation and the still unopened market to be an integral part of the chain of the regional and national economy based on rules.

[1] https://www.visualcapitalist.com/ranked-the-20-countries-with-the-fastest-declining-populations/

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Description

The economy of the regions is dominated by agriculture, where the highest level is found in Fier with 45.5% of the regional economy and the lowest level is found in Tirana with 3.8% of the regional economy.

The northern region[1] of the country is dominated by the extractive industry and energy, agriculture and the real estate market producing 22.3% of the national economy.

The central region[2] is dominated by Construction, information and technology, real estate, and most other sectors of the economy producing 50.5% of the national economy.

The southern region[3] is dominated by agriculture, real estate and retail trade and tourism services producing 27.2% of the national economy

The national economy is dominated by the central region, but mainly Tirana, for all sectors of the economy, except agriculture.

Many of the programs and development strategies of the regions still do not respond to the three basic requirements of the market:

 What to produce

 How to produce and

 For whom to produce.

Even in 2021, as in 2019, the lowest per capita income is presented in Kukës, followed by Lezha, Shkodra, Elbasani and Dibra, Korça. Meanwhile, in the group of regions with medium income, in addition to Durrës, Fier and Gjirokastër, Berati and Vlora are also included. High level incomes are presented again only in Tirana.

We see the weight in GDP at the lowest level in Kukës with 1.56 of the national GDP. At low levels of participation in the national GDP are also Dibra, Lezha, Berati. At more moderate levels, the weights of Shkodra, Korça, Vlora and Elbasan are slightly higher. At the highest level, the weight of the regional GDP is seen in Durrës, Fier and Tirana, which holds a weight of 43.72% of the national GDP.

From the difference in the two years 2021 and 2019, of the indicators according to the presentation in the table below, it can be seen that the per capita income has increased more in Fier, Tirana, Vlorë, Gjirokastër. Elbasan and Berat. Less have grown in Lezhë, Kukës, Shkodër, Dibër and Durrës.

Likewise, monthly family expenses have increased more in Elbasan, Vlorë, Dibër, Berat and Gjirokastër. The most moderate increase in family expenses is seen in Tirana, Korçë, Fier, Durrës, Kukës and Lezhë. It can be seen that the main part of the increased expenses is borne by food, transport and travel.

A contraction of regional populations is observed in all 10 regions, except for Tirana and Durrës.

No other region of the country is as prosperous or innovative as Tirana, according to the indicator of the regional weight in the national GDP. On the other hand, according to long-term forecasts, the size of the economy of other regions is unlikely to come close to that of Tirana.

The main source of the obstacle for further and sustainable growth of the country’s regions is the weak support of innovation and the still unopened market to be an integral part of the chain of the regional and national economy based on rules.

[1] Dibër, Durrës, Kukës, Lezhë, Shkodër
[2] Elbasan, Tiranë
[3] Berat, Fier, Gjirokastër, Korçë, Vlorë

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