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For over two decades, Albania has been classified as an upper-middle-income country (with a per capita income between $4,466 and $13,845, according to the World Bank classification). However, to move beyond this threshold, the country needs to increase investments in education and technology, as suggested by the World Bank in its latest World Development Report for 2024, which focuses on the middle-income trap, Monitor reports.
Middle-income countries are racing against time. Since the 1990s, most countries worldwide, including Albania, have made enough progress to escape low-income levels and eradicate extreme poverty. Now, the ambitions must be elevated to reach high-income status within the next two to three decades.
According to the World Bank, the key to achieving this is an economy based on innovation and investment in human capital. North Korea serves as a good example globally, while in Europe, Poland and Estonia are notable.
With an aging population and high public debt, upper-middle-income economies, including Albania, are growing within limited spaces. People in these countries are increasingly anxious and skeptical about achieving high-income status in the next two decades.
The only way to ensure prosperity is through embracing technological development and fostering talent. The World Bank suggests that governments in upper-middle-income countries, including Albania, should borrow technology and ideas from abroad. This process requires restructuring enterprises, greater economic freedom, and social mobility. Additionally, the World Bank emphasizes that this process depends on how disciplined the government is in its policies, the executive levels within corporations, and how creative they can be.
Beyond technology, countries like Albania must invest in human resources and talent to advance creative power. Generally, countries like Albania have a talent gap compared to developed countries, so investments in education are seen as the primary tool for progress.
Talented and merit-based leaders are crucial for driving reforms towards prosperity, the World Bank report concludes. But is Albania heading in this direction? For nearly a decade, education has not been a priority for the government. Low investments, demographic shifts, and the quality of teachers have led Albania to experience the sharpest decline in global educational achievements between 2018 and 2022 in the international PISA test.
Albania continues to experience high levels of youth emigration. Official data from INSTAT showed that last year, 24.6% of young people aged 15-29 were neither working, studying, nor attending any training.
Albania continues to invest around 3% of its GDP in education, one of the lowest levels in Europe. Furthermore, the country's economy is not technology-oriented, and scientific research in universities is virtually non-existent. Agriculture and services dominate the economic structure, primarily relying on cheap labor rather than technology.
Public investments in Albania are not focused on technology, and on the other hand, private businesses operate in sectors with low labor value.