Despite the impressive performance ofthe economy in the last five years, however, poverty inAlbania has remained high, and per capita income, at aroundUS$1,230 in 2002, has remained one of the lowest amongtransition economies. In an effort to adopt policies toshare widely the benefits of growth, and reduce poverty, theGovernment outlined a poverty alleviation strategy in the2000 Interim Poverty Reduction Strategy Paper (I-PRSP), anddeveloped it in detail two years later in the Growth andPoverty Reduction Strategy (GPRS), the precursor to thecurrent National Strategy for Socio-Economic Development(NSSED). However, in recognition of the data limitations,the first round of a five-year Living Standards MeasurementSurvey (LSMS) program was launched in 2002. This surveyprovides valuable information on a variety of issues relatedto living conditions in Albania, including details on incomeand non-income dimensions of poverty in the country, and,forms the basis of the present assessment of poverty inAlbania. The poverty line used for this assessment is thefirst absolute poverty line based on nationallyrepresentative, household level expenditure data everestimated for Albania, and is based on an actual consumptiondata. Poverty in Albania has marked spatial and regionaldimensions, with rural areas and the Mountain region beingconsistently poorer than rest of the country, stipulatingthe depth of poverty in the Mountain area is much morepronounced than in any other region, with a poverty gapindex of over 11 percent. The study reviews the determinantsof poverty, through the main characteristics of poorhouseholds, and labor market characteristics of the poor,noting widespread unemployment rate in urban areas. It thenexamines the non-income dimensions of poverty, health andeducation inequalities, and reviews the role of socialtransfers, determining pensions - and remittances fromAlbanian relatives - are the largest sources of transferincome. The results of the analysis point priority areas,namely, that coverage under health insurance needs to beincreased; secondary school enrollments need to beincreased, and quality of education at this level improved;provision of basic services and infrastructure should beimproved, including access to quality health and educationservices and to basic sanitation services; and, it isimperative that the Government develops a rural developmentstrategy focused on poverty reduction in the short run,since a large number of the poor live in rural areas.Agriculture is the key income generating activity in theseareas, thus locally adapted rural extension service shouldbe provided. In terms of future growth, attention mustnecessarily shift to the manufacturing sector, forstimulating the manufacturing sector could potentiallycreate increased employment opportunities, while anotherarea that deserves great attention is tourism.
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