This report on Albania urban sectorreview focuses on trends and issues that have come to thefore with rapid urbanization and with the recentdecentralization of major responsibilities to localgovernments. Continuing the achievements and addressing theproblems will require actions by local governments and, justas importantly, by the central government, which sets thelegal and regulatory conditions for local governance and thetone of political leadership. The major challenges facingboth levels of government include: 1) restoring a betterbalance between public goods and private goods, and betweenpublic interests and private interests, as demonstrated inurban management and land use; 2) devising and implementinga form of urban planning and regulation that serves theurban economy and the demands for commercial and householdreal estate, and can be enforced; 3) making localgovernments more effective managers of cities, withsustainable financing. This implies that the private sectoris enabled and not hampered by avoidable problems with localinfrastructure services, or by unnecessary regulations orfiscal impositions; and 4) helping the citizens who remainrelatively disadvantaged to continue improving theirwelfare, including their housing assets, in the urbanlocation. The study concludes that the dramatictransformations Albania has experienced since the transitionhave had very clear spatial dimensions. The increasedconcentrations of population settlement and of economicactivity have brought about improvements in welfare for boththe urban residents and for the communities sendingmigrants. The geographic pattern of Albania's economyis strong and apparently becoming more established, as theTirana/Durres metropolitan region will likely remain theeconomic center of gravity. Urban growth will continue butat a measured pace, as Albania's urbanization rateapproaches levels seen elsewhere in Europe. Nationaldevelopment strategies and policies, including policies tostrengthen and improve the investment climate experienced byfirms in each city, should therefore acknowledge and workwith these spatial realities.