The Economy of Albania has undergone a transition from its communist past into an open-market economy in the last two decades. Although the country is rich in natural resources, the economy is mainly bolstered by emigrant annual remittances, services, and the agricultural sector.
The collapse of communism in Albania came later and was more chaotic than in other Eastern European countries and was marked by a mass exodus of refugees to Italy and Greece in 1991 and 1992. The country attempted to transition to autarchy, but this eventually failed. Attempts at reform began in earnest in early 1992 after real GDP fell by more than 50% from its peak in 1989. Albania currently suffers from high organised crime and corruption rates, the highest in Europe.
The democratically elected government that assumed office in April 1992 launched an ambitious economic reform program to halt economic deterioration and put the country on the path toward a market economy. Key elements included price and exchange system liberalization, fiscal consolidation, monetary restraint, and a firm income policy. These were complemented by a comprehensive package of structural reforms including privatization, enterprise, and financial sector reform, and creation of the legal framework for a market economy and private sector activity. Most agriculture, state housing, and small industry were privatized. This trend continued with the privatization of transport, services, and small and medium-sized enterprises. In 1995, the government began privatizing large state enterprises. After reaching a low point in the early 1990s, the economy slowly expanded again, reaching its 1989 level by the end of the decade.
Science and technology in Albania
Expenditure for scientific research and Development in Albania does not exceed 0.18% of GDP, which marks the lowest level in Europe. Economic competitiveness and exports are low, with the economy still heavily skewed towards low technology.
From 1993 human resources in sciences and technology have drastically decreased. Various surveys show that during 1990-1999, approximately 40% of the professors and research scientists of the universities and science institutions in the country have emigrated. Driving forces for the brain drain are found in the deteriorated economic living conditions, the lack of state of the art infrastructure and funds that constitute serious obstacles for research.
However in 2009 the government approved the "National Strategy for Science, Technology and Innovation in Albania" covering the period 2009–2015. The document was coordinated by the Department of Strategy and Donor Coordination of the Prime Minister's Cabinet, in cooperation with the Ministry of Education and Science and with UNESCO assistance.
It fixes five strategic goals to 2015:
- to triple public spending on research and development (R&D) to 0.6% of GDP;
- to augment the share of gross domestic expenditure on R&D from foreign sources, including via the European Union's Framework Programmes for Research, to the point where it covers 40% of research spending;
- to create four or five Albanian centres of excellence in science which will be equipped with dedicated laboratory equipment and workspaces that could be used for pre-incubation, testing, certification and so on of new technology based firms;
- to double the number of researchers, both through 'brain gain' incentives like a returning researchers grant scheme and through the training of new researchers, including 500 PhDs: this will entail establishing up to three new doctoral programmes in Albanian universities;
- to stimulate innovation in 100 companies, either via investment in local R&D or via consortia with academic research institutes or foreign partners.
The Strategy is to be implemented in synergy with other sectoral strategies and taking into account Albania's Higher Education Strategy adopted in 2008 and the National Strategy for Development and Integration (2007–2013). The latter underlines the importance of modernizing economic sectors such as the agro-food industry and tourism. It also underscores the strategic importance of energy, environmental and water resource management. Stakeholders have proposed prioritizing fields of research such as agriculture and food, information and communication technologies (ICTs), public health, Albanology and humanities, natural resources, biotechnology, biodiversity, defence and security.
The European Union (EU) has set clear objectives for research and innovation as part of its Lisbon Strategy for becoming the most competitive economy in the world. Like other Western Balkan countries aspiring to join the EU, Albania is trailing behind in the development process, having focused in recent years on laying the foundations for economic growth.
Deputy Prime Minister Genc Pollo acknowledges that "the high rates of socio-economic development required in the process of Albania's membership of the North Atlantic Treaty Organization (NATO) (now a member) and EU accession necessitate strengthening the role of science, technology and innovation in our society."
In August 2009, the government approved the establishment of the Albanian Agency of Research, Technology and Innovation, to improve policy implementation. In 2006, the Albanian government undertook a deep reform of the scientific research system. The Academy of Sciences was re-organized along the model of many other European countries; it now operates through a selected community of scientists and no longer administrates research institutes, these having been integrated into the higher education system. Two new faculties have been set up: the Faculty of Information Technology at the Polytechnic University of Tirana and the Faculty of Biotechnology and Food at the Agricultural University of Tirana. The University of Tirana has also gained an Applied and Nuclear Physics Centre and Biotechnology Department. Twelve government agencies and centres for technology transfer have also been created.