THE LEGATUM PROSPERITY INDEX™ 2016

Bringing Prosperity to Life

Albania

Ranked 74th of 149

At a glance

Ranks

74 th on the Legatum
Prosperity Index™

107th
67th
71st
76th
49th
68th
60th
106th
121st

SUB-INDEX RANKINGS

In the Prosperity Sub-Index rankings, Albania performs best on Health and Personal Freedom and scores lowest on the Natural Environment sub-index.

Visit our Rankings table to see how Albania compares to other countries.

Prosperity Gap

The ‘Prosperity Gap’ takes a country's GDP and uses it as the yardstick to measure a nation's expected Prosperity Index ranking.

Albania is closing its prosperity gap but still under delivers compared to its wealth, a trait shared by many of its post-Communist regional peers.

Note:
In the chart above, each dot represents a country. The curve shows the general tendency with which prosperity increases as GDP per capita increases. If a country falls below the curve, then we can say that compared to all other countries, it is under-delivering prosperity for its citizens. Likewise, if a country rises above the curve, then we can say that it is over-delivering prosperity for its citizens. Learn more about the Prosperity Gap here.

Alternatively, have a look at the Prosperity Gap view on our Rankings table for a full list of countries and to see how each of them are performing on the various sub-indices.

Commentary

Albania struggles in the Economic Quality sub-index, despite having undergone significant market liberalisation reforms and has the lowest score among its Balkan peers. Nevertheless, GDP per capita growth is among the highest in Europe and is expected to rise, a positive sign for future prosperity and is notable at a time when many European countries are undergoing slower periods of growth. There has been a 4% drop in people who live below the national poverty line and unemployment is low for the Balkan region, affecting 16% of the population. Of concern is women’s participation in the labour market at 51.7%, well below the EU and OECD Averages.

Female labour force participation (%) in the EU, OECD, and Albania
Female labour force participation in Albania sits far behind the OECD & EU averages.

The Business Environment has seen the biggest improvement, having moved up 40 ranks since 2007 to 67th. Making the business climate more dynamic has been a priority for Albania. Between 2008 and 2011, with assistance from the World Bank, the government initiated a Doing Business reform program which dealt with the areas of promoting start-ups, obtaining credit, paying taxes, and resolving insolvency. There have also been significant efforts to improve Albania’s infrastructure to provide equal opportunities for the population and to further attract foreign investment. This is reflected in the 2016 Prosperity Index: it is far easier to start a business, get credit, and resolve insolvency now than in 2007. Logistic performance has also improved and redundancy costs have been reduced. In the information age, internet access is increasingly important and Albania has seen its broadband subscriptions significantly increase over the past decades, but it still lags far behind its Balkan peers. It should be noted that 85% of people believe they can get ahead by working hard, a 33% increase over the past decade.

In the Governance sub-index, Albania has moved up 20 ranks since 2007. After eight years of conservative rule, the Socialist Party won in a landslide victory in 2013, pledging to revive the economy, combat crime and corruption, and speed up Albania’s entry into the EU. Policymaking has become more transparent and since the election, confidence in the government has jumped by 17% and voter turnout is the highest in the Balkan region. Also of note, while women made up only 7% of parliamentarians in 2007, in 2016 they make up 20%. As with many of its Balkan peers, Albania has problems with corruption which permeates the public and private sectors and the Prosperity Index reports only a slight improvement in the perception of corruption since 2007. There has been improvement under the new government in measures to tackle corruption but it continues to hinder economic and business development.

Albania’s Business Environment and Governance Scores since 2007
Albania sees an improvement in both its Business Environment and Governance scores.

Albania has seen little change in both the Education and Health sub-indices. Albania is the worst performer in Education of the Balkan region by some way with far fewer secondary vocational and university-educated students than its regional peers. Access to tertiary education remains limited, particularly for the rural population and hinders Albania in its delivery of prosperity. A growing business environment will require skills that are relevant to the more service-based economy. Regarding Health, Albania has moved down 4 ranks to 49th in the Prosperity Index. While access and quality of health services have improved, the health sector continues to be underfunded. Albania spends substantially less on its healthcare than its regional peers and has seen an increase in obesity and diabetes in recent years.


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Data

How to read this graph:
When comparing multiple countries on a spider chart, data points that appear
further away from the center represent a better performance to the points that are closer to the center.