EBRD: Unclear focus could make Albanian industry inefficient

2025-05-29 10:02:00, Ekonomi CNA

Industrial policies are receiving increasing attention even in low-income countries, a trend that includes Albania.

At a time when high-income countries are strengthening subsidy and support policies for strategic sectors, Albania and similar economies risk following costly models because they do not have the necessary administrative or fiscal capacities to successfully cope with them, the EBRD's 2024-2025 Transition report, presented today, highlighted.

The report highlights that in the countries where the EBRD operates, the percentage of industrial exports has increased from around 10% in 2010 to over 45% in 2022. However, countries with lower administrative capacities such as Albania use instruments such as quotas or complicated licenses, which instead of promoting development, lead to misuse of resources and increased corruption.

Another element mentioned in the report is the use of Free Economic Zones as an instrument to reduce regional disparities. Albania is among the countries that have experimented with this model, but the report underlines that the economic impact of free zones is deeply local and depends on the proximity to infrastructure, the level of local skills and the quality of governance. In the absence of these elements, foreign investments do not bring sustainable effects for development.

The report highlights that Albania applies very few policies specifically targeted at new or high-growth enterprises. In the absence of a selective approach based on the age, size or technological capabilities of companies, financial assistance risks being distributed without real economic impact.

The EBRD emphasizes that industrial policies can only be successful if they are based on clear priorities, rigorous impact assessments and institutional coordination. For countries like Albania, the challenge lies in developing the capacity to design and implement policies that do not simply imitate Western models, but realistically address the country's structural needs.

The report highlights that for economies in transition, including Albania, mistakes in the design or implementation of industrial policies can create increased public spending, lost revenues and distortions in the economy. Therefore, the EBRD suggests more care, transparency and a focus on skills that build long-term competitiveness./ Monitor.al