Albania is one of the poorest countries in Europe. Since the totalitarian regime collapse in 1990, it has undergone a painful transition from a centrally planned to a market economy. Almost all industries built under communism collapsed after entering the capitalist era and unemployment rose dramatically. By 1992, the economy had plunged by 50 percent.
The failed transition culminated in 1997 with the collapse of the widespread Ponzi schemes, ruining financially large swaths of the population. The country fell into anarchy for weeks as a result of the people’s anger.
After the chaos of the 1990s, Albania, with international help, got back on its feet, implemented the necessary pro-market reforms and has been growing steadily since the 1997 crisis.
The GDP per capita here is approximately one-fifth of the EU average. Because of its poor starting position, Albania has long been considered the poorest country in Europe. This is no longer true: it long ago overtook Moldova, Belarus, and Ukraine as well as its Balkan neighbours Bosnia and Herzegovina and Northern Macedonia.
Agriculture employs up a third of the working-age population, but its share of GDP is much lower due to low efficiency.
Industry began to develop in Albania after the Second World War. Large industrial plants built under communism, such as the steelworks in Elbasan, all went bankrupt after 1990 with a few exceptions. Of the current industries in Albania, the most prosperous are footwear and textiles, in which mainly Italian firms have invested.
The country is rich in oil, which has been extracted in the Fier area for nearly a century. The main source of electricity in Albania is hydroelectric dams, which cover almost all the consumption. Albania is among the “greenest” countries in Europe when it comes to energy production.
Services are the most dramatically growing sector of the Albanian economy. The most important of these are telecommunications, banking and insurance services, and especially tourism, which, together with associated services, already generates almost a fifth of the GDP.
The personal remittances sent home by Albanians working abroad provide a significant boost to the economy, amounting to around 9 per cent of GDP in 2022. Most Albanian migrant workers work in Italy, Greece and other EU countries.
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