Since 1998 Albania has experienced an important transformation that has lifted it into the ranks of upper middle income countries and has allowed a sharp reduction in poverty. Growth averaged more than 6 percent per year between 1998 and 2010, the best performance in Europe. This helped to reduce absolute poverty by half, with the headcount rate falling from 25 percent of the population in 2002 to 12 percent in 2008. The recent period of global turmoil has dampened growth somewhat but not as sharply as in many other countries. These challenges suggest the need for a 'new growth agenda' and this is the central topic of the report. The report is organized into four chapters.
- Chapter one gives a macroeconomic overview, examines the potential vulnerabilities of the economy and proposes measures for maintaining macro-financial stability of the economy. It further elaborates the growth challenges Albania faces as newly arrived upper middle income country.
- Chapter two describes the human capital needs of the new growth agenda and focuses on education and skills.
- Chapter three examines the backbone infrastructure, while the final chapter addresses the investment climate and factors influencing the return on investment. The report provides a diagnosis of some of the key factors likely to drive future growth but without recommending specific products or areas for private investment. The report argues instead that 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.