TIRANA, Jan. 12 – Albania is one of Europe’s least prepared countries in its readiness for the future production through the adoption of emerging technology, a report by Switzerland-based World Economic Forum think tank has shown.
The report classifies Albania as a nascent country with a current limited production base that exhibits a low level of readiness for the future through weak performance across the drivers of production component.
Albania ranks 91st out of 100 countries in the structure of production with poor complexity and scale indicators assessing the mix and uniqueness of products a country can make as well as the total volume of manufacturing output and the significance of manufacturing to the economy.
Albania ranked better in the ‘drivers of production’ pillar, 78th, with human capital and institutional framework as the best indicators, but poor access to foreign and local demand to scale production and technology and innovation.
In addition to Albania, only Serbia and Bosnia and Herzegovina were included among Western Balkans EU aspirant economies in the World Economic report, scoring significantly better compared to Albania.
The report ranks Albania poorly for its ability to innovate and capacity to attract and retain talent but 32nd on FDI and technology transfer.
Albania is described as an upper-middle-income country with a population of 2.9 million and a GDP per capita of US$ 4,200.
Manufacturing, a sector dominated by the key garment and footwear industry and producing the country’s top exports, accounts for 6 percent of the country’s $12 billion GDP and employs 9.3 percent of working population. However, the sector mainly relies on raw material imported from Italy and cheap labor costs in Albania and is mainly involved in cut-make-trim production, with few emerging ‘Made in Albania’ brands.
“Rapidly emerging technologies—such as the Internet of Things, artificial intelligence, wearables, robotics and additive manufacturing—are spurring the development of new production techniques, business models, and value chains that will fundamentally transform global production,” says the World Economic Forum in its ‘Readiness for the future of production’ report.
“Both the speed and scope of change add a layer of complexity to the already challenging task of developing and implementing industrial strategies that promote productivity and inclusive growth,” adds the report.
Lack of productive knowhow has been identified as the key constraint holding back economic growth in Albania over the past quarter century during the country’s transition to democracy and market economy after the collapse of the 45-year communist regime and its planned economy, according to a Harvard University report.
Lack of adequate knowledge and skills needed to produce complex goods and services is also identified by low levels of exports of goods and services as a percent of the GDP and poor diversification compared to regional competitors.
“Albania faces a unique knowhow constraint that is deeply rooted in its closed-off past, and the limited diversification that has taken place in the private sector, can in nearly all cases, be linked to distinct inflows of knowhow,” says a report published by the Center for International Development at Harvard University (CID) – Harvard’s primary center for research on sustainable international development.
