Growth without welfare; WB: Albania slowed down the pace of reaching EU standards, unlike the region

2023-10-20 07:34:00, Aktualitet CNA

Growth without welfare; WB: Albania slowed down the pace of reaching EU

The countries of the Western Balkans have made significant progress in terms of income convergence with the EU countries. Income convergence is usually measured by comparing a country's per capita income with that of a more prosperous nation, in this case the EU average. For the Western Balkans. The World Bank in the last regional report noted that this ratio ranged from 27.3 percent in Kosovo to 50 percent in Montenegro in 2022, indicating that the countries' living standards are between a quarter and half of the EU average. -'s.

However, not all countries have reached the same level of convergence, nor have they progressed at the same speed.

Examining the average speed of convergence, or the rate of change in income convergence per decade, it is evident that Montenegro and Serbia have increased the speed of convergence in the last decade. Other economies have reduced the speed of convergence, meaning that its rate has been lower than in the 2000s.

For example, the speed of convergence for Albania has decreased from an average of 5 percentage points after 1997 to about 2.7 percentage points in the last decade.

The World Bank notes that investments in human capital and business productivity are the two ways to accelerate convergence, in all countries of the Region and especially in Albania.

Other areas related to better economic management, reforms in state-owned enterprises (SOEs) and institutional strengthening generally affect welfare improvement. The Bank suggests that increased public investment management is also essential, as deficiencies in the quantity and quality of infrastructure capital undermine the return on private investment.

Coordinated regional integration policies and investments can also generate significant Region-wide benefits. For example, reducing waiting times at the border has the same impact on exports as reducing tariffs in the EU market.

Finally, the green transition and the need for a sustainable economic model are also seen as opportunities for the Balkan countries to align standards with the EU. Some of the countries in the region, including Albania, have opened negotiations with the EU for membership, but until the moment when the accession decision is made, Albania must have a per capita income level of at least 50% of the EU average from 32% that it currently has.

For years, Albania has fallen into the trap of an economic model based on free labor and businesses are not able to move to the next step of the value chain to increase profits for employees and therefore income per capita of the population. Monitor magazine

Growth without welfare; WB: Albania slowed down the pace of reaching EU