{"id":22421,"date":"2025-06-18T18:50:27","date_gmt":"2025-06-18T16:50:27","guid":{"rendered":"https:\/\/altax.al\/?p=22421"},"modified":"2025-06-13T18:56:17","modified_gmt":"2025-06-13T16:56:17","slug":"structure-of-the-albanian-economy-in-2024-with-modest-growth-deep-inequalities-and-dominance-of-services","status":"publish","type":"post","link":"https:\/\/altax.al\/en\/structure-of-the-albanian-economy-in-2024-with-modest-growth-deep-inequalities-and-dominance-of-services\/","title":{"rendered":"Structure of the Albanian economy in 2024 with modest growth, deep inequalities, and dominance of services"},"content":{"rendered":"\n

At the end of 2024, the Albanian economy reflects more than just a numerical increase in enterprises<\/a> <\/strong>or the formalization of activity. It represents a complex reality, with unbalanced developments, a strong concentration in specific sectors, and pronounced regional and gender inequalities.<\/p>\n\n\n\n

On one hand, the number of registered businesses and farmers has increased significantly, signaling a positive trend toward formalization and the expansion of the economic base. The figures show more active legal units, more multi-location enterprises, and a broader presence of women in business leadership.<\/p>\n\n\n\n

But on the other hand, this growth remains superficial when the structure of the economy is analyzed in depth. The majority of businesses are small (micro), the main focus remains on low value-added services, while large enterprises are few in number but continue to dominate employment and turnover.<\/p>\n\n\n\n

Furthermore, 66% of all economic activity is concentrated in only three counties, leaving the rest of the country outside sustainable economic development. Gender inequalities are also present. Women are widely represented in non-productive sectors, but are almost completely absent in industrial and construction sectors.<\/p>\n\n\n\n

This contrast between quantitative growth and structural gaps raises important questions about the direction of economic policies in the country.
Albania has entered a phase where more than numerical growth is needed: it requires qualitative development, regional balancing, and a deeper and more inclusive productive structure.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Slight but stable increase in the number of businesses<\/strong>
Official data for 2024 show that 237,881 legal units were active in Albania, marking an increase of around 4.9% compared to 2023. Within this number, 132,172 enterprises were economically active (excluding farmers), representing a modest increase of 1.4%.
This slight but stable growth reflects a stabilized dynamic of the private sector, where developments are positive, but not rapid or explosive. The main explanations for this trend can be grouped into several key factors:<\/p>\n\n\n\n

a. Improvement of the business climate and formalization<\/strong>
Recent policies and reforms have focused on easing business registration and reducing bureaucratic barriers. This has brought a positive effect by encouraging entrepreneurs to enter the formal sector, which is visible in the growth of active legal units. A more stable legal and fiscal climate also helps preserve and expand existing businesses.<\/p>\n\n\n\n

b. Support for small enterprises and farmers<\/strong>
Support programs from the government and international donors have focused on formalizing farmers and small enterprises, integrating them into the formal economic chain. This is reflected in a 9.6% increase in farmers with NIPT, as well as in the ever-growing number of micro and small enterprises, which make up the majority of the private sector.<\/p>\n\n\n\n

c. Market expansion and domestic demand<\/strong>
In a developing economy, the demand for services and products is gradually increasing, especially in the trade and services sectors. This growth in demand creates opportunities for new businesses and the expansion of existing ones, particularly in major cities and regions where the economy is more active.<\/p>\n\n\n\n

d. Consolidation of multi-location enterprises<\/strong>
The 15% increase in enterprises operating in more than one location indicates a trend of consolidation and expansion of economic structures. This suggests that successful businesses are attempting to expand their activity into different areas, creating networks and improving operational efficiency. This is a sign of sustainability and organizational progress within the private sector.<\/p>\n\n\n\n

e. The role of emigration and capital return<\/strong>
An important factor is also the investment from the diaspora and emigrants, who often launch or invest in existing businesses in the country. This return of capital helps increase the number of businesses and contributes to the strengthening of the private sector.<\/p>\n\n\n\n

\n\n\n\n

<\/p>\n\n\n\n

Rural formalization and the profile of farmers<\/strong>
In 2024, Albania’s agricultural sector marked an important development with 105,709 farmers registered with NIPT, registering an increase of 9.6% compared to 2023. This positive trend indicates an advanced process of formalization, which is essential for improving fiscal transparency and access to financial support, credit, and modern agricultural technologies.<\/p>\n\n\n\n

Farmer structures and regional distribution<\/em>
The majority of farmers (57.5%) operate mixed farms and cultivate vegetables, reflecting a shift toward diversified production and improved sustainability of rural household economies. This also helps respond to the growing demand for fresh and food products in both the local and regional markets.
From a regional perspective, the municipality of Lushnje emerges as the area with the highest percentage of registered farmers, at 10.3%, reflecting the strong agricultural tradition and development potential of this region in the agro-food sector.<\/p>\n\n\n\n

\n\n\n\n

Gender gap \u2014 challenge and opportunity for development<\/em>
Despite the increase in the number of formalized farmers, the role of women in agriculture remains limited, with only 14.4% of registered farmers being women owners or administrators. This gender gap is a clear indicator of the barriers women face in access to ownership, financing, and decision-making in agriculture.
This situation not only limits social equity but also hinders the development potential of the rural sector, as greater inclusion of women could increase productivity and innovation in agriculture. International studies show that the economic empowerment of women in agriculture is one of the most effective ways to fight poverty and improve household well-being.<\/p>\n\n\n\n

The formalization of farmers in Albania is an important step toward strengthening the agricultural sector and rural economic development. However, the full inclusion of women in this process remains an open challenge, requiring coordinated and sustainable interventions to ensure fairer and more inclusive development.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Women in the Economy \u2013 Meaningful participation, but visible gender equality challenges<\/strong>
In the Albanian economy, women own or lead 31.4% of businesses, a percentage that shows their notable participation in entrepreneurship. The sector where they are most represented is “other services”<\/strong>, with a participation rate of 40.9%<\/strong>, followed by trade<\/strong> with 33.9%<\/strong>. This reflects a tendency of women toward sectors where their role has historically been more present and where more opportunities for economic engagement exist.<\/p>\n\n\n\n

On the other hand, women represent a significant portion of the labor force, comprising 46.2%<\/strong> of total employment, an indicator of relatively equal participation in the labor market.<\/p>\n\n\n\n

However, gender disparities remain pronounced in key sectors such as construction<\/strong>, where women make up only 16.1%<\/strong> of the employed. This gap indicates clear barriers to women’s access in traditionally male-dominated sectors, where more active inclusion and support policies are needed.<\/p>\n\n\n\n

This situation calls for sustainable and coordinated interventions<\/strong> from government policy, the private sector, and civil society to ensure a more favorable environment for gender equality<\/strong>, strengthening women\u2019s role across all economic sectors.<\/p>\n\n\n\n

Businesses \u2013 Dominance of services and micro size<\/strong>
In the Albanian economy, 86%<\/strong> of businesses operate in the services sector<\/strong>, with the most represented being trade, transport, and professional services<\/strong>. This illustrates a strong orientation toward the service economy, which plays a key role in job creation<\/strong> and economic development<\/strong>.<\/p>\n\n\n\n

However, the structure of businesses is significantly unequal in terms of size. Only 1.5%<\/strong> are large enterprises, yet these businesses have a disproportionate impact on the market, employing 49.6%<\/strong> of the labor force and generating 45.7%<\/strong> of annual turnover. This indicates that a few large businesses are the main drivers<\/strong> of the economy and labor market.<\/p>\n\n\n\n

Conversely, 85.8%<\/strong> of businesses are micro-enterprises<\/strong> with just 1\u20134 employees<\/strong>, creating a fragmented sector<\/strong> where most businesses are small and largely family-run<\/strong>. Despite their small size, these micro-businesses contribute 22.6%<\/strong> of total employment and 18.7%<\/strong> of annual turnover, playing an important role in supporting many Albanian households and sustaining a large part of the informal economic activity.<\/p>\n\n\n\n

This economic landscape signals the need for policies focused on consolidation and growth<\/strong> of micro-enterprises to enhance competitiveness<\/strong> and expand the formal employment base<\/strong> in the country.<\/p>\n\n\n\n

Regional Disparities in the Albanian Economy: Tirana dominates, peripheries lag behind<\/strong>
Official data shows a strong concentration of economic activity in the main counties of Tirana, Durr\u00ebs, and Vlor\u00eb<\/strong>, where 66.4%<\/strong> of the country\u2019s active businesses are located. Tirana<\/strong>, as the capital and primary economic center, hosts over 63,000 active businesses<\/strong>, highlighting its dominant role in Albania\u2019s economic development.<\/p>\n\n\n\n

On the other hand, Kuk\u00ebs<\/strong> ranks at the bottom with only 1,393 enterprises<\/strong>, reflecting a major development gap<\/strong> and lack of sustainable investment<\/strong> in peripheral areas. This sharp contrast underscores the absence of territorial balance<\/strong>, which is essential for a fair and inclusive development<\/strong> across the country.<\/p>\n\n\n\n

The central region<\/strong>, which includes Tirana and Elbasan<\/strong>, remains the main economic engine<\/strong> of Albania, with 53.6%<\/strong> of enterprises and 59.1%<\/strong> of the labor force concentrated there. This reality highlights the need for new policies aimed at economic rebalancing<\/strong> and active support for development<\/strong> in peripheral regions to reduce inequalities<\/strong> and create equal opportunities<\/strong> for investment and employment nationwide.<\/p>\n\n\n\n

Foreign Investment: Regional dominance and the need for diversification<\/strong>
In total, 5.3%<\/strong> of Albanian enterprises have foreign or joint capital<\/strong>, with a strong concentration of investments from neighboring countries. Italy<\/strong> leads with 41.8%<\/strong> of foreign capital, followed by Kosovo<\/strong> with 8.3%<\/strong> and Turkey<\/strong> with 6.5%<\/strong>. This composition reflects a traditional orientation toward regional partners<\/strong>, highlighting the historical and economic ties Albania has with these countries.<\/p>\n\n\n\n

However, this narrow focus on capital sources indicates a pressing need to diversify foreign investments<\/strong>, so that the Albanian economy becomes more resilient to regional shocks<\/strong> and benefits from global experience and capital<\/strong>. Infrastructure development, legal stability<\/strong>, and investment incentives<\/strong> in various sectors could be key steps to attract more international investors<\/strong> from diverse markets.<\/p>\n\n\n\n

Albania is developing an economic structure with a broad base in services and micro-enterprises<\/strong>, while also witnessing steady growth<\/strong> in the number of formalized farmers. This is a positive signal<\/strong>, indicating progress in formalization and economic diversification<\/strong>, with increasing focus on activities that support household economies<\/strong> and local markets<\/strong>.<\/p>\n\n\n\n

The analysis of businesses in Albania reveals a fragmented economy<\/strong>, dominated by micro-businesses<\/strong> in low value-added sectors<\/strong>, while medium-sized enterprises are largely absent<\/strong>. Gender and regional inequalities<\/strong> further deepen this unbalanced structure.<\/p>\n\n\n\n

What should be the focus?<\/strong><\/p>\n\n\n\n

    \n
  1. Empowering medium-sized enterprises<\/strong>, to increase formalization, employment, and productivity<\/strong>.<\/li>\n\n\n\n
  2. Greater inclusion of women<\/strong> in strategic sectors, as a pathway to equality<\/strong> and inclusive growth<\/strong>.<\/li>\n\n\n\n
  3. Balanced regional economic development<\/strong>, to avoid concentration<\/strong> and polarization<\/strong> of the economy.<\/li>\n<\/ol>\n\n\n\n

    Only through these pillars can Albania build a fairer, more competitive, and sustainable economy<\/strong>.<\/p>\n","protected":false},"excerpt":{"rendered":"

    At the end of 2024, the Albanian economy reflects more than just a numerical increase in enterprises or the formalization of activity. 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