While Albania 's performance hasbeen impressive, there are concerns about the sustainabilityof high rates of economic growth in the future. The evidencefrom the growth accounting exercise indicates that totalfactor productivity growth from post-transition reallocationis gradually coming to an end. At the same time, thecontribution of capital accumulation has only picked upmodestly. This suggests that in order to sustain high GDPgrowth going forward, Albania must seek to raise itsinvestment and, secondary school enrollment rates, increasethe degree of trade integration, and improve institutionalquality (governance). Worryingly, total factor productivitygrowth has slowed significantly in recent years while thecontribution of factor accumulation was negligible. Neitherremittances nor earnings from illegal activities constitutea solid basis for long-term economic development. There aresigns, already, of a decelerating trend in the level ofremittances. Furthermore, there are concerns about thefinancing of the country's investment needs over themedium term. The likelihood that Albania's access toconcessional financing sources will decline, as well asexpectations for dwindling external support and inflows fromabroad, presents major risk factors that must be mitigatedwith the help of the donor community.
PDF
download
878987797
028-85220240
