TIRANA, July 10 – The World Bank issued a review of Albania’s urban sector on Tuesday which both describes issues effecting cities and provides recommendations for their future development.
The bank’s report focuses on trends and issues that have been brought on by rapid urbanization and with the recent decentralization of major responsibilities to local governments.
The dramatic transformations Albania has experienced since the transition include the increased concentrations of population settlement and of economic activity that have brought about improvements in welfare for both the urban residents and for the communities sending migrants. The geographic pattern of Albania’s economy is strong and apparently becoming more established, as the Tirana/Durres metropolitan region will likely remain the economic center of the country. Urban growth will continue, but at a measured pace, as Albania’s urbanization rate approaches levels seen elsewhere in Europe. National development strategies and policies, including policies to strengthen and improve the investment climate experienced by firms in each city, should therefore acknowledge and work with these new realities, according to the report.
The spontaneous market response that emerged in the first decade of the transition, managed to absorb a massive increase in demand for urban property and to dramatically improve the quality of housing. But the complementary public contribution of local public goods and services has not kept up with the private efforts. Urban management has been largely missing, in terms of a government role in providing both the needed infrastructure and a well-focused and light-handed regulatory guidance that also mimics the affordability and responsiveness of the informal market. The challenge for central and local governments will be to promote a more integrated urban economy that maintains the entrepreneurial agility demonstrated in the past, while ensuring that cities realize the citizens’ desires for an inclusive and environmentally healthy society.
The demographic and economic dynamics of recent urban development Albania continues unabated. Albania’s population declined by 3.6 percent in the first ten years of the transition, as the population took advantage of the new freedom to travel abroad and escape domestic economic and political crises. The period between the censuses (1989-2001) witnessed an equally dramatic reallocation of population internally, with migration from the northern interior and mountain regions to the center and coast, and especially to the capital. The greater Tirana area and the Tirana-Durres corridor have become the heartland for new industrial, commercial and service activities, and the home to tens of thousands of migrants.
The most obvious indicator of the internal population realignment is urbanization, with the share of the urban population increasing from 35 to 42 percent during the inter-census period.
Most municipalities are very small (less than 25,000 residents) and only two secondary cities approach 100,000 (Durres and Elbasan). The Tirana/Durres area dominates the urban population distribution.
Although determined by many factors, the urban development and migration phenomena since the transition has been correcting a structure that evolved under central planning, and has been adjusting to the emerging marketplace. The swell of migration, seemingly chaotic and spontaneous, has reflected Albanians natural and practical responses to the new geography of opportunity.
How much future urban growth can be expected in Albania, creating continued demand for public investment, housing and urban services, as well as labor supply and consumer impetus for the economy is unknown. A likely projection indicates that the urban population could rise to 1.7-2.0 million over the next two decades, assuming a steady rise in the urbanization rate to about 54 percent. On this trajectory, Albania would reach the (current) average urbanization of the European and Central Asia Region in 30 years, with a 61 percent urbanization rate and 2.2 million urban population in 2030. While these figures represent reasonable (and probably conservative) estimates given the uncertainty of migration behavior, they imply that Albania’s cities may need to accommodate 400,000-700,000 new residents over the next generation, if it continues the kind of demographic pattern typical of the rest of Europe. Not all of the new urban residents will be moving from rural settlements, since urbanization also results from the administrative reclassification of areas to reflect their changed character and from higher natural growth rates of the existing urban population.
Where in the city system will most of the new urban growth occur? This will largely depend on trends in economic activity. But it remains highly likely that the Tirana-Durres metropolitan area will continue to dominate the economic and geographic region. INSTAT projections show increasing regional concentration, with the share of population in Tirana and Durres districts to increase from less than a quarter to almost a third of the national population, and the other major regions (especially North and South) declining.
A deliberate program to promote dispersal of the urban population in Albania away from Tirana-Durres would be difficult to implement effectively, and costly if exercised through public fiscal transfers, as evidenced from the very mixed and often disappointing regional development efforts of many countries.
Behind the urbanization process has been a profound structural transformation of the Albanian economy away from agriculture and traditional industry, and towards higher productivity sectors. Activities of trade and services, that in all countries emerge and thrive from increasing urban economies, have been the dominant contributor to GDP growth since the early 1990s. Tourism is a major component (about 30 percent) of the service sector, showing signs of growing potential for coastal, cultural and ecotourism, starting from a very low base. With the building boom, especially in urban areas, construction has become one of the most dynamic sectors of the Albanian economy. Although accounting for only around ten percent of GDP, the construction sector has been the main source of growth in industrial output since 1998. Agriculture has traditionally played an important role in the economy, accounting for 24 percent of GDP and 58 percent of employment in 2004.
Urbanization has demonstrated its potential for poverty reduction. Geographical mobility of labor, including urban-bound population movement, is one of the most important adjustment mechanisms households can use to cope with income and asset poverty, and with structural unemployment. Between 2002 and 2005, the LSMS surveys have revealed a marked decline in poverty, by all measures, in the four major regions of the country.
Urban poverty has declined faster than rural poverty, with the urban poverty headcount falling from 19.5 to 11.2 percent (a 43 percent reduction), while the rural headcount fell from 29.6 to 24.2 percent (by 18 percent) over the period.
The poverty analysis confirms that migration implies moving away from povertyةn particular, from the poorest and remotest areas of the country to the relatively richer districts of Tirana and the coast. There is also evidence of increased poverty within Tirana, in the zones with the highest numbers of new residents. Access to infrastructure and basic services is also weaker in these areas than for the city overall.
