Towards Regional Operational Programing by Co-PLAN

Assistance to Regional Development Policy Reform in Albania - 2015

Towards Regional Operational Programing (DRAFT) Dritan Shutina, Merita Boka, Rudina Toto1

Disclaimer: This document is prepared under the assistance of Swiss Development Cooperation (SDC) in Albania. The views expressed in this document do not necessarily reflect the views of SDC. The document was prepared in close cooperation with the Department for Development Programming, Financing and Foreign Aid of the Government of Albania and the Regional Development Agency of Region 3 (KorĂ§ĂŤ-Berat-Elbasan). The draft document is subject to further review and completion by GoA and the four RDAs.

TABLE OF CONTENTS LIST OF FIGURES .................................................................................................................... 3 LIST OF TABLES ...................................................................................................................... 7 LIST OF ACRONYMS .............................................................................................................. 12 1. INTRODUCTION .................................................................................................................. 14 2. CURRENT SITUATION ANALYSIS ........................................................................................ 15 2.1 SUMMARY AT NATIONAL LEVEL .................................................................................................................................. 15 2.2 COMPARATIVE ANALYSIS AND DISPARITIES BETWEEN REGIONS ................................................................ 15 2.2.1 Economic Growth, Development, Competitiveness and Economic Resilience .... 15 2.2.2 Social Cohesion through Education, Health, Poverty alleviation, Social inclusion and Culture .......................................................................................................................... 101 2.2.3 Energy, Transport, Infrastructure, Agriculture and Tourism, Environment and Services ............................................................................................................................... 152 2.2.4 Demography and Spatial Development ................................................................... 190 2.2.5 Accessibility and Polycentric Development............................................................ 222

3 PROFILES OF REGIONS AND STRATEGIES ......................................................................... 292 3.1 CONCLUSIONS OF THE ANALYSIS ............................................................................................................................ 292 3.2 REGIONAL TYPOLOGIES .............................................................................................................................................. 299 3.3 REGION 1 DEVELOPMENT PROFILE AND STRATEGY ...................................................................................... 311 3.4 REGION 2 DEVELOPMENT PROFILE AND STRATEGY ...................................................................................... 325 3.5 REGION 3 DEVELOPMENT PROFILE AND STRATEGY ...................................................................................... 334 3.6 REGION 4 DEVELOPMENT PROFILE AND STRATEGY ...................................................................................... 357 4. NATIONAL REGIONAL DEVELOPMENT STRATEGY AND PLAN ............................................ 369 4.1 OBJECTIVES AND INDICATORS ................................................................................................................................ 369 4.2 PRIORITY AXES .............................................................................................................................................................. 369 4.3 TOWARDS PROGRAMMING ........................................................................................................................................ 369 4.4 COHERENCE AND COMPLIANCE BETWEEN EU AND NATIONAL POLICIES ............................................ 369 4.4.1 EU policies.................................................................................................................. 369 4.4.2 National policies ........................................................................................................ 369 4.4.3 Cohesion and gradual merge ................................................................................... 369 4.5 COMPLEMENTARITIES WITH OTHER FUNDING SCHEMES ............................................................................. 369 5. FINANCIAL AND INSTITUTIONAL CONSIDERATIONS ........................................................... 370 5. IMPLEMENTATION AND PARTNERSHIP .............................................................................. 371 6. ANNEXES ........................................................................................................................ 372 6.1 METHODOLOGY FOR DOP/ROPS ......................................................................................................................... 372 NOTES AND REFERENCES ................................................................................................... 373

LIST OF FIGURES Figure 1. Albania GDP year on year growth rates (in %) ........................................................................... 16 Figure 2. GDP by Qark at current prices, in ALL Million (lhs) and GDP annual growth rates in % (rhs) ... 17 Figure 3. Contribution of Qarks at GDP growth (in percentage points) and total GDP annual growth rate (in %).......................................................................................................................................................... 18 Figure 4. Gross domestic product by regions at current prices, in ALL Million (lhs) and GDP annual growth rate in % (rhs)................................................................................................................................. 20 Figure 5. Contribution of regions in GDP (in % points) and GDP annual growth rate (in %) ..................... 20 Figure 6. GDP per capita by Qarks, indexes (Albania = 100) .................................................................... 23 Figure 7. GDP per capita by Regions, indexes (Albania = 100) ................................................................ 24 Figure 8. Gross national disposable income per capita at regional level, indexes (Albania = 100) ........... 27 Figure 9. Gross national disposable income per capita at regions level, indexes (Albania = 100) ............ 28 Figure 10. Participation of Qarks at Gross Values Added formation, (weights in %) ................................. 31 Figure 11. Qarks contribution at GVA (in pp) and GVA annual growth rate (in %) .................................... 31 Figure 12. GVA by qarks (weight in %) for each of the economic sectors, 2012 ....................................... 33 Figure 13. Participation of Regions at GVA formation, (weights in % vs. total GVA) ................................ 35 Figure 14. Contribution of Regions GVA, (in pp) and GVA annual growth rate (in %) .............................. 35 Figure 15. Regions share in GVA formation, (in %) ................................................................................... 36 Figure 16. Banks and GDP distribution by Qarks (weights vs. total) ......................................................... 38 Figure 17. Banks and GDP distribution by Regions (weights vs total) ...................................................... 39 Figure 18. Total deposits by Qarks (weights in %) .................................................................................... 40 Figure 19. Total deposits by Regions (weights in %) ................................................................................. 41 Figure 20. Loans to households by qarks (weights in %) .......................................................................... 42 Figure 21. Mortgage loans to households (weights vs. total in %) ............................................................ 43 Figure 22. Consumer credit to households by Qarks (weights in %) ......................................................... 44 Figure 23. Total loans to households by Regions (weights in %) .............................................................. 45 Figure 24. Mortgage loans to households by Regions (weights in %) ....................................................... 45 Figure 25. Consumer credit to households by Regions (weights in %) ..................................................... 46 Figure 26. Total loans by qarks as a ratio of GDP (in %) .......................................................................... 47 Figure 27. Loans to businesses (% of total) .............................................................................................. 48 Figure 28. Short term loans to businesses by Qark (End of year stock, ALL Million) ................................ 48 Figure 29. Medium term loans to businesses by Qark (End of year stock, ALL Million) ............................ 49 Figure 30. Long term loans to businesses by Qark (End of year stock, ALL Million) ................................ 49 Figure 31. Loans to businesses by regions (% of total) ............................................................................. 50 Figure 32. Loans to businesses by Regions as % of GDP ........................................................................ 51 Figure 33. Short term loans to businesses by Regions (End of year stock, ALL Million) .......................... 52 Figure 34. Medium term loans to businesses by Regions (End of year stock, ALL Million) ...................... 52 Figure 35. Long-term loans to businesses by Regions (End of year stock, ALL Million) ........................... 53 Figure 36. Loans to business by maturity (End of year stock, ALL Million) ............................................... 54 Figure 37. Registered unemployed jobseekers at qark level (number) ..................................................... 57 Figure 38. Registered unemployed jobseekers at region level (number) .................................................. 58 Figure 39. Registered unemployed jobseekers by education level by qark (in %) .................................... 60 Figure 40. Registered unemployed jobseekers by education level by qark (in %) .................................... 61 Figure 41. Registered unemployed jobseekers by education level by region (in %) ................................. 62 Figure 42. Qark contribution in overall employment (in %) ........................................................................ 63 Figure 43. Contribution of qarks in public administration employment ...................................................... 64 Figure 44. Employment in non-agricultural private sector by qarks (in %) ................................................ 65 Figure 45. Employment in private agricultural sector at qark level (in %) .................................................. 66 Figure 46. Employment by categories at qark level, 2014 (in %) .............................................................. 67 Figure 47. Total employment by regions (in %) ......................................................................................... 67 Figure 48. Employment in public administration by regions (in %) ............................................................ 68 Figure 49. Employment in private non-agricultural sector (in %) ............................................................... 69 Figure 50. Employment in agricultural private sector by regions (in %) ..................................................... 70 Figure 51. Employment by categories at regions level, year 2014 (in %) .................................................. 70

Figure 52. Active enterprises for 10,000 inhabitants (number) .................................................................. 73 Figure 53. Indexes of stock of active enterprises per 10,000 inhabitants .................................................. 74 Figure 54. Active enterprises by regions per 10,000 inhabitants (number) ............................................... 76 Figure 55. New enterprises birth rate by qarks, (in %) .............................................................................. 79 Figure 56. New enterprises birth rate (in %) by qarks ............................................................................... 80 Figure 57. Female owned/administrated new enterprises birth rate (in %) by qarks ................................. 81 Figure 58. Differences from the national new enterprises birth rate total (rh) and female owned/administrated new enterprises birth rate (lh) .................................................................................. 81 Figure 59. Active enterprises by economic activity (average values 2010-2014, in %) ............................. 83 Figure 60. Active enterprises by economic activity (average values 2010-2014, in %) ............................. 84 Figure 61. Active enterprises by qark and size: rh-sum of categories = 100 per each qark; lh-sum of qarks per each category =100. ............................................................................................................................ 85 Figure 62. Active enterprises by regions and size: rh-sum of categories = 100 per each region; lh-sum of region per each category =100. ................................................................................................................. 86 Figure 63. Joint and foreign enterprises versus total active enterprises at qark level: selected years (in %, rh chart) & average 2010 - 2014 (in %, lh chart) ........................................................................................ 88 Figure 64. Share of each qark at total foreign and joint enterprises in Albania (in %, Albania = 100%) .... 89 Figure 65. Joint and foreign enterprises versus total active enterprises at regional level: selected years (in %, rh chart) & average 2010 - 2014 (in %, lh chart) .................................................................................. 91 Figure 66. Share of each region at total foreign and joint enterprises in Albania (in %, Albania = 100%) . 92 Figure 67. Total FDI inflows in Eur Million (lhs) and FDI as % of GDP (rhs) ............................................. 94 Figure 68. FDI stock (mln Eur) by economic sectors ................................................................................. 95 Figure 69. R&D expenditure in selected countries .................................................................................... 97 Figure 70. High-technology exports (% of manufactured exports) ............................................................ 97 Figure 71. Number of teachers per 10000 inhabitants at qark level ........................................................ 106 Figure 72. Index of total number of pupils enrolled/number of teachers in basic schools (at qark level) 108 Figure 73. Number of pupils graduated per 10000 inhabitants by qarks ................................................. 111 Figure 74. Number of teachers per 10000 inhabitants at qark level ........................................................ 113 Figure 75. Index of the number of pupils graduated per 10000 inhabitants, by regions .......................... 115 Figure 76. Index of total number of pupils enrolled/number of teachers in upper secondary schools by qarks ........................................................................................................................................................ 120 Figure 77. Number of pupils graduated per 10000 inhabitants at qark level ........................................... 122 Figure 78. Number of teachers per 10000 inhabitants at regions level ................................................... 124 Figure 79. Index of total number of pupils enrolled/number of teachers in upper secondary schools ..... 125 Figure 80. Index of the number of pupils graduated per 10000 inhabitants ............................................ 126 Figure 81. Index of the number of beds for 10000 inhabitants, at qark level ........................................... 130 Figure 82. Index of the number of beds for 10000 inhabitants, at regions level ...................................... 132 Figure 83. Infant mortality (for 1,000 live births) ...................................................................................... 133 Figure 84. Infant mortality (for 1,000 live births) ...................................................................................... 133 Figure 85. Poverty headcount ratio according to four main Instat strata (in %) ....................................... 135 Figure 86. Extreme poverty headcount ratio by main strata (in %) .......................................................... 138 Figure 87. Poverty headcount ratio by qark (in %) .................................................................................. 139 Figure 88. Poverty gap and poverty severity by qarks (in %) .................................................................. 140 Figure 89. Poverty headcount ratio by development regions (in %) ........................................................ 141 Figure 90. Poverty gap and poverty severity by development regions (in %) .......................................... 141 Figure 91. Gini coefficient by qarks ......................................................................................................... 143 Figure 92. Gini coefficient by development regions ................................................................................. 144 Figure 93. Degree of education for population over 21 years old ............................................................ 146 Figure 94. Degree of education for population over 21 years old ............................................................ 147 Figure 95. Index of the average number of families receiving social assistance for 10000 inhabitants .. 151 Figure 96. Index of the average number of families receiving social assistance per 10000 inhabitants, by regions ..................................................................................................................................................... 151 Figure 97. Nationally administered roads (km/1000km2) index, at qark level ......................................... 155 Figure 98. Sub - nationally administered roads (km/1000km2) index, at qark level ................................ 157 2 Figure 99. Nationally administered roads (km/1000km ) index, at regions level ..................................... 158

Figure 100. Sub-nationally administered roads (km/1000km2) index, at regions level ........................... 158 Figure 101. Road vehicles per 1000 inhabitants, at qark level ................................................................ 161 Figure 102. Road vehicles per 1000 inhabitants, at regional level .......................................................... 161 Figure 103. Passenger road vehicles per 1000 inhabitants, at qark level ............................................... 163 Figure 104. Passenger road vehicles per 1000 inhabitants, at qark level ............................................... 163 Figure 105. Cars per 1,000 inhabitants, at qark level .............................................................................. 165 Figure 106. Cars per 1000 inhabitants, at regional level ......................................................................... 165 Figure 107. Road vehicles for goods per 1,000 inhabitants, at qark level ............................................... 167 Figure 108. Road vehicles for goods per 1000 inhabitants, at regional level .......................................... 167 Figure 109. Maritime transport of passengers, by ports .......................................................................... 169 Figure 110. Urban waste per capita (ton per inhabitant) by qarks ........................................................... 171 Figure 111. Urban waste per capita in 2012 (ton per inhabitant) by qarks .............................................. 172 Figure 112. Urban waste per capita (ton per inhabitant) by regions (left) and Urban waste per capita in 2014 (right) .............................................................................................................................................. 173 Figure 113. Inert/solid waste per capita (ton per inhabitant) by qarks ..................................................... 174 Figure 114. Inert/solid waste per capita in 2012 (ton per inhabitant) by qarks ........................................ 175 Figure 115. Inert/solid waste per capita (ton per inhabitant) by regions (left) and inert/solid waste per capita in 2012 (right) ................................................................................................................................ 176 Figure 116. Population trends (in %) ....................................................................................................... 190 Figure 117. Population changes 2016/2001 (as by January 1) by qarks (in %) ...................................... 194 Figure 118. Population changes 2016/2001 (as by January 1) by qarks (in%) ....................................... 195 Figure 119. Population by qarks (weights vs total populations, in %) ...................................................... 197 Figure 120. Population by regions (weights vs total populations, in %) ................................................... 198 Figure 121. Index of population density by qarks .................................................................................... 200 Figure 122. Index of population density by development regions ............................................................ 201 Figure 123. Index of urban population per qark ....................................................................................... 204 Figure 124. Index of urban population per region .................................................................................... 207 Figure 125. Population pyramid for 2016 ................................................................................................. 207 Figure 126. Population structure according to main age groups (in %) ................................................... 208 Figure 127. Age dependency ratio (rhs) and young/old ratio (lhs) ........................................................... 208 Figure 128. Average population by age groups at qark level (in %) ........................................................ 210 Figure 129. Average population by age groups and gender at qark level (in %) ..................................... 210 Figure 130. Average population by age groups and development regions level (in %) ........................... 211 Figure 131. Average population by age groups and gender at development regions (in %) ................... 212 Figure 132. Age dependency ratio at qark level 2014 (in %) ................................................................... 213 Figure 133. Age dependency level by gender, 2014 (in %) ..................................................................... 213 Figure 134. Age dependency ratio at regions level 2014 (in %) .............................................................. 214 Figure 135. Age dependency level by gender, 2014 (in %) ..................................................................... 214 Figure 136. Land use by qarks (in %) ...................................................................................................... 216 Figure 137. Land use by regions (in %) ................................................................................................... 217 Figure 138. Land cover by municipality (in %) ......................................................................................... 219 Figure 139. Soil sealing per capita based on Corine LULC 2006 (in %) ................................................. 220 Figure 140. The 17 Functional Urban Areas of Albania ........................................................................... 223 Figure 141. Regression lines for the population of FUAs, with and without Tirana ................................. 225 Figure 142. Regression lines of FUAs GDP for 2012, with and without Tirana ....................................... 226 Figure 143. Thiessen polygons of the 17 FUAs ....................................................................................... 227 Figure 144. The Lorenz curve of the FUAs size and Gini coefficient of inequality .................................. 228 Figure 145. Potential accessibility of 17 FUAs ........................................................................................ 229 Figure 146. Regression line and slope of potential accessibility ............................................................. 229 Figure 147. The Lorenz curve of potential accessibility and the Gini coefficient ..................................... 230 Figure 148. Distribution of hotels / FUA ................................................................................................... 233 Figure 149. Population potential within 30 km radius .............................................................................. 233 Figure 150. No. of students per FUA ....................................................................................................... 233 Figure 151. Population of FUA versus PUSH .......................................................................................... 234 Figure 152. PIA intersections ................................................................................................................... 236

Figure 153. Access time of people to motorways exists .......................................................................... 237 Figure 154. Travel time of people to regional centers by road and public transport ................................ 238 Figure 155. Cities with at least 10,000 residents within 60 minutes by road ........................................... 239 Figure 156. Access to higher secondary schools .................................................................................... 240 Figure 157. Potential Accessibility of FUAs ............................................................................................. 241 Figure 158. Index of total revenues per capita by development regions ................................................. 245 Figure 159. Revenues by sources at development regions (Albania =100, in %) ................................... 247 Figure 160. Index of own revenues per capita by regions ....................................................................... 247 Figure 161. Composition of revenues by main sources at development regions (Region =100, in %) ... 248 Figure 162. Index of total revenues per capita by regions ....................................................................... 252 Figure 163. Revenues by sources at municipal level (Region 1 =100, in %) ........................................... 254 Figure 164. Index of own revenues per capita, at Municipality level ....................................................... 254 Figure 165. Composition of revenues by main sources at Municipal level (Region =100, in %) ............. 256 Figure 166. Index of total revenues per capita in Region 2, year 2014 ................................................... 259 Figure 167. Revenues by sources at municipal level (Region 2 =100, in %, year 2014)......................... 260 Figure 168. Index of own revenues per capita Region 2, year 2014 ....................................................... 261 Figure 169. Composition of revenues by main sources at Municipal level (Region =100, in %, year 2014) ................................................................................................................................................................. 262 Figure 170. Index of total revenues per capita by regions ....................................................................... 266 Figure 171. Revenues by sources at municipal level (Region 3 =100, in %) ........................................... 267 Figure 172. Index of own revenues per capita in region 3 (year 2014) ................................................... 268 Figure 173. Revenues by main sources in Region 3 (Municipality =100, in %, year 2014) .................... 269 Figure 174. Index of total revenues per capita by municipalities, year 2014 ........................................... 273 Figure 175. Revenues by sources at municipal level (Region 2 =100, in % for year 2014) .................... 274 Figure 176. Index of own revenues per capita, at Municipality level for 2014 ......................................... 275 Figure 177. Composition of revenues by main sources at Municipal level (Region 4 =100, in %, year 2014) ........................................................................................................................................................ 276 Figure 178. Main financial resources available for investments (in ALL million) ..................................... 279 Figure 179. Regional Development Fund (in ALL million) ....................................................................... 280 Figure 180. Expenditures by categories, year 2014 (in %) ...................................................................... 281 Figure 181. Expenditures by categories for region 1, year 2014 (in %) ................................................... 283 Figure 182. Capital expenditures per capita, region 1 (in ALL) ............................................................... 284 Figure 183. Expenditures by categories for region 2, year 2014 (in %) ................................................... 285 Figure 184. Capital expenditures per capita, Region 2 (in ALL, year 2014) ............................................ 286 Figure 185. Expenditures by categories for Region 3, year 2014 (in %) ................................................. 287 Figure 186. Capital expenditures per capita, Region 3 (in ALL) .............................................................. 288 Figure 187. Expenditures by categories for Region 1, year 2014 (in %) ................................................. 290 Figure 188. Capital expenditures per capita, Region (in ALL, year 2014) .............................................. 291 Figure 189. A summary of the disparities analysis per qark .................................................................... 293 Figure 190. National population and territory per altitude ........................................................................ 300 Figure 191. Share of local territories for altitudes above sea level: 0-100m and 100-300m .................... 302 Figure 192. Share of the local territories for altitudes above sea level: 300-500m, 500-800m and above 800m ........................................................................................................................................................ 303

LIST OF TABLES Table 1. Gross domestic product by Qarks at current prices, in ALL Million ............................................. 17 Table 2. Gross domestic product by regions at current prices, in ALL Million ........................................... 19 Table 3. GDP per capita by Qarks (in ALL) ............................................................................................... 22 Table 4. GDP per capita by Qarks, indexes (Albania = 100) ..................................................................... 22 Table 5. GDP per capita by Region, in ALL ............................................................................................... 25 Table 6. GDP per capita by Region, indexes (Albania = 100) ................................................................... 25 Table 7. Gross national disposable income (ALL) per capita .................................................................... 26 Table 8. Gross national disposable income per capita, indexes ................................................................ 26 Table 9. Gross national disposable income (ALL) per capita at regions level ........................................... 27 Table 10. Gross national disposable income per capita, indexes at region level ...................................... 28 Table 11. Gross Values Added at Qark level, (in ALL Million) ................................................................... 30 Table 12. GVA by economic sector and qarks, (weight vs. total, in %) ..................................................... 32 Table 13. Gross Values Added at Region level, (in ALL Million) ............................................................... 34 Table 14. Regions share in GVA formation, (in %) .................................................................................... 36 Table 15. Weight of economic sectors in Regions GVA formation, (weight vs total, in %) ........................ 37 Table 16. Bank distribution in Albania by Qark (no. of branches/agencies) .............................................. 38 Table 17. Bank distribution in Albania by Regions (no. of branches/agencies) ......................................... 39 Table 18. Total deposits by Qarks (weights in %) ..................................................................................... 40 Table 19. Total deposits by Regions (weights in %) .................................................................................. 41 Table 20. Loans to households by Qarks (qark share versus total in %) .................................................. 42 Table 21. Mortgage loans to households by Qarks (weights in %) ............................................................ 42 Table 22. Consumer credit to households by Qarks (weights in %) .......................................................... 43 Table 23. Total loans to households by Regions (weights in %) ............................................................... 44 Table 24. Mortgage loans to households by Regions (weights in %) ........................................................ 45 Table 25. Consumer credit to households by Regions (weights in %) ...................................................... 46 Table 26. Loans to businesses (% of total) ................................................................................................ 47 Table 27. Loans to businesses by regions (% of total) .............................................................................. 50 Table 28. Short term loans to businesses by Regions (end of year stock, ALL Million) ............................ 51 Table 29. Medium term loans to businesses by Regions (End of year stock, ALL Million) ....................... 52 Table 30. Long term loans to businesses by Regions (End of year stock, ALL Million) ............................ 53 Table 31. Loans by regions and maturities (End of year stock, ALL Million) ............................................. 53 Table 32. Unemployment rate (in %), national level .................................................................................. 55 Table 33. Registered unemployed jobseekers at qark level (number) ...................................................... 56 Table 34. Registered unemployed jobseekers at region level (number) ................................................... 57 Table 35. Registered unemployed jobseekers by education level by qark (number) ................................ 59 Table 36. Registered unemployed jobseekers by education level by region (number) ............................. 60 Table 37. Total employment by qarks (number) ........................................................................................ 62 Table 38. Employment in public administration ......................................................................................... 63 Table 39. Employment in non-agricultural private sector ........................................................................... 64 Table 40. Employment in agricultural private sector .................................................................................. 65 Table 41. Total employment by regions (number) ..................................................................................... 67 Table 42. Employment in public administration by regions (number) ........................................................ 68 Table 43. Employment in non-agricultural private sector by regions (number) ......................................... 68 Table 44. Employment in agricultural private sector by regions (number) ................................................. 69 Table 45. General indicators on entrepreneurial spirit in Albania .............................................................. 71 Table 46. Active enterprises by qarks, stock at the end of the year (no) ................................................... 71 Table 47. Active enterprises, stock at the end of the year (weights vs. total, in %) ................................... 72 Table 48. Active enterprises by qarks per 10,000 inhabitants (number) ................................................... 72 Table 49. Active enterprises per 10,000 inhabitants indexes by qarks ...................................................... 74 Table 50. Active enterprises by regions, stock at the end of the year (number) ........................................ 75 Table 51. Active enterprises by regions, stock at end of the year (weights vs. total, in %) ....................... 75 Table 52. Active enterprises by regions per 10000 inhabitants (number) ................................................. 75 Table 53. Stock of active enterprises per 10,000 inhabitants, indexes ...................................................... 76

Table 54. Indexes of stock of active enterprises per 10,000 inhabitants ................................................... 76 Table 55. Newly created enterprises (no) .................................................................................................. 77 Table 56. Relative relevance of female participation, at qark level (in %) ................................................. 77 Table 57. Birth rate of enterprises (%) ....................................................................................................... 78 Table 58. Newly created enterprises by regions (number) ........................................................................ 79 Table 59. Relative relevance of female participation (in %) ....................................................................... 79 Table 60. Birth rate of enterprises by regions (%) ..................................................................................... 80 Table 61. Active enterprises by economic activity by qarks, average values 2010-2014 .......................... 83 Table 62. Active enterprises by economic activity by region, average values 2010-2014 ......................... 84 Table 63. Active enterprises by size and qark level (average values 2010-2014, in %) ............................ 85 Table 64. Active enterprises by size at regional level (average values 2010-2014, in %) ......................... 86 Table 65. Active enterprises by ownership at qark level (number) ............................................................ 87 Table 66. Active enterprises by ownership at qark level (in %, Qark =100) .............................................. 87 Table 67. Active enterprises by ownership at qark level (in %, Albania = 100) ......................................... 89 Table 68. Active enterprises by ownership at region level (number) ......................................................... 90 Table 69. Active enterprises by ownership at regional level (in %, Region = 100) .................................... 90 Table 70. Active enterprises by ownership at regional level (in %, Albania = 100) ................................... 91 Table 71. Average labour costs per employee in full time units by economic activity ............................... 93 Table 72. Export by categories (weights in % versus total exports) .......................................................... 96 Table 73. Expenditures in education by qarks (mln ALL) ........................................................................ 101 Table 74. Expenditures in education at development regions level ......................................................... 102 Table 75. Number of schools for basic education by qarks (nr) .............................................................. 102 Table 76. Distribution of schools for basic education by qarks (in %) ..................................................... 104 Table 77. Number of teachers in schools of basic education .................................................................. 105 Table 78. Number of teachers per 10000 inhabitants at qark level ......................................................... 105 Table 79. Index, number of teachers per 10000 inhabitants at qark level ............................................... 106 Table 80. Pupils enrolled in basic schools by qarks(no) .......................................................................... 108 Table 81. General enrolment rate by qarks (in%) .................................................................................... 109 Table 82. Pupils graduated in basic schools by qarks(number) .............................................................. 109 Table 83. Number of pupils graduated per 10000 inhabitants, by qarks ................................................. 110 Table 84. Number of schools for basic education by regions (nr) ........................................................... 111 Table 85. Distribution of schools for basic education by regions (in %) .................................................. 111 Table 86. Number of teachers in schools of basic education by regions ................................................. 112 Table 87. Number of teachers per 10000 inhabitants, by development regions level ............................. 112 Table 88. Index, number of teachers per 10000 inhabitants by qarks ..................................................... 113 Table 89. Pupils enrolled in basic schools by qarks (number) ................................................................ 113 Table 90. General enrolment rate at regional level (in %) ....................................................................... 114 Table 91. Pupils graduated in basic schools by regions (number) .......................................................... 114 Table 92. Number of pupils graduated per 10000 inhabitants, by regions .............................................. 114 Table 93. Number of schools for upper secondary education by qarks (no) ........................................... 115 Table 94. Distribution of schools for basic education by qarks (in %) ..................................................... 116 Table 95. Teachers in upper secondary schools by qarks ...................................................................... 117 Table 96. Number of teachers in upper secondary schools per 10000 inhabitants at qark level ............ 117 Table 97. Index, number of teachers per 10000 inhabitants at qark level ............................................... 118 Table 98. Pupils enrolled in upper secondary schools by qarks (number) .............................................. 119 Table 99. Indicators of pupils enrolled/number of teachers by qarks (in %) ............................................ 119 Table 100. Pupils graduated in upper secondary schools at qark level (number) ................................... 120 Table 101. Number of pupils graduated per 10000 inhabitants at qark level .......................................... 121 Table 102. Number of schools for basic education by regions (no) ......................................................... 122 Table 103. Distribution of schools for basic education by regions (in %) ................................................ 122 Table 104. Number of teachers in schools of upper secondary educations by regions ......................... 123 Table 105. Number of teachers per 10000 inhabitants, by development regions level ........................... 123 Table 106. Index, number of teachers per 10,000 inhabitants in upper secondary schools at regions level ................................................................................................................................................................. 124 Table 107. Pupils enrolled in upper secondary schools, at development regions level (no) ................... 124

Table 108. Indicators of pupils enrolled in upper secondary schools, at development regions level (no.) ................................................................................................................................................................. 125 Table 109. Pupils graduated in upper secondary education (number) .................................................... 125 Table 110. Number of pupils graduated per 10000 inhabitants ............................................................... 126 Table 111. State budget expenditures for healthcare at qark level ......................................................... 127 Table 112. State budget expenditures for healthcare at regions level ..................................................... 127 Table 113. Total health services providers* ............................................................................................. 128 Table 114. Number of hospitals (nr) ........................................................................................................ 128 Table 115. Number of beds and distribution among qarks ...................................................................... 129 Table 116. Indicators for the number of beds at qark level ...................................................................... 129 Table 117. Total health services providers at regions level* ................................................................... 130 Table 118. Number of hospitals per region (nr) ....................................................................................... 131 Table 119. Number of beds and distribution among regions ................................................................... 131 Table 120. Indicators for the number of beds at regional level ................................................................ 131 Table 121. Infant mortality (per 1,000 live births) by qarks (2011-2015) ................................................. 132 Table 122. Infant mortality (per 1,000 live births) by regions (2011-2015) .............................................. 133 Table 123. Poverty indicators by strata ................................................................................................... 134 Table 124. Extreme poverty indicators by four Instat strata (in %) .......................................................... 137 Table 125. Poverty indicators by qark (in %) ........................................................................................... 139 Table 126. Poverty indicators by regions (in %) ...................................................................................... 140 Table 127. Percentage of real consumption per capita per strata by categories (in %) .......................... 142 Table 128. Gini coefficient by qarks ......................................................................................................... 142 Table 129. Gini coefficient by development regions ................................................................................ 143 Table 130. The highest diploma attained by the population 21 years old and above at qark level (years) ................................................................................................................................................................. 145 Table 131. The highest diploma attained by the population 21 years and over at regional level ............ 146 Table 132. Dwelling conditions and access to basic services by qark (in %) .......................................... 147 Table 133. Dwelling conditions and access to basic services by qark (in %) .......................................... 148 Table 134. Possession of durables of households by qark (in %) ........................................................... 148 Table 135. Possession of durables of households by regions (in %) ...................................................... 149 Table 136. Average number of families receiving social assistance, at qark level (no) ........................... 149 Table 137. Average number of families receiving social assistance per 10000 inhabitants at qark level, Index ........................................................................................................................................................ 150 Table 138. Index of the average number of families receiving social assistance per 10000 inhabitants, by region ....................................................................................................................................................... 151 Table 139. National energetic independence (ktoe) ................................................................................ 152 Table 140. Road network indicators, at qark level ................................................................................... 154 Table 141. Road network indicators, at development regions level ........................................................ 157 Table 142. Road vehicles, at qark level ................................................................................................... 160 Table 143. Road vehicles, at regional level ............................................................................................. 161 Table 144. Road vehicles for passengers, at qark level .......................................................................... 162 Table 145. Road vehicles for passengers, at regional level .................................................................... 163 Table 146. Total cars and cars per 1000 inhabitants, at qark level ......................................................... 164 Table 147. Total cars and cars per 1000 inhabitants at regional level .................................................... 165 Table 148. Road vehicles of goods, at qark level .................................................................................... 166 Table 149. Road vehicles for goods, at regional level ............................................................................. 167 Table 150. Indicators of air transport ....................................................................................................... 169 Table 151. Indicators of railway transport ................................................................................................ 170 Table 152. Urban waste per capita (ton per inhabitant) by qarks ............................................................ 171 Table 153. Urban waste per capita (ton per inhabitant) by regions ......................................................... 172 Table 154. Inert/solid waste per capita (ton per inhabitant) by qarks ...................................................... 174 Table 155. Inert/solid waste per capita (ton per inhabitant) by regions ................................................... 175 Table 156. Soil erosion in 2010 - 2013 .................................................................................................... 176 Table 157. Content of some pollutions of air in Tirana ............................................................................ 178 Table 158. Content of some pollutions of air in ShkodĂŤr ......................................................................... 178

Table 159. Content of some pollutions of air in Durrës ............................................................................ 178 Table 160. Content of some pollutions of air in Elbasan ......................................................................... 179 Table 161. Content of some pollutions of air in Fier ................................................................................ 179 Table 162. Content of some pollutions of air in Vlorë .............................................................................. 179 Table 163. Content of some pollutions of air in Korçë ............................................................................. 180 Table 164. Bacteriological pollution of sea water in beach 2012-2013 .................................................... 181 Table 165. Arrivals and departures of foreign citizens (by border) .......................................................... 184 Table 166. Arrivals and departures of Albanian citizens (by border) ....................................................... 186 Table 167. Number of agricultural holdings by qarks .............................................................................. 187 Table 168. Number of agricultural holdings by qarks .............................................................................. 187 Table 169. Production of field crops at qark level (in ton), 2014 .............................................................. 188 Table 170. Production of field crops at regions level (in ton), 2014 ......................................................... 188 Table 171. Arable land with field crops by qarks ..................................................................................... 189 Table 172. Arable land with field crops by regions .................................................................................. 190 Table 173. Population by qarks (number) ................................................................................................ 192 Table 174. Population by development regions (number) ....................................................................... 194 Table 175. Distribution of the population at qark level (weights versus total population) ........................ 196 Table 176. Distribution of the population at qark level (weights versus total population) ........................ 197 2 Table 177. Population density by qarks (inhabitants per km ) ................................................................. 199 2 Table 178. Population density by development regions (inhabitants per km ) ........................................ 200 Table 179. Population projections at qark level (number) ....................................................................... 202 Table 180. Population projections at development regions level (number) ............................................. 202 Table 181. Urban population per qark and total Albania (in %) ............................................................... 203 Table 182. Index of urban population per qark and total Albania ............................................................ 204 Table 183. Urban population per region and total Albania (in %) ............................................................ 205 Table 184. Index of urban population per region ..................................................................................... 206 Table 185. Average population by age groups, 2014 .............................................................................. 209 Table 186. Average population by age groups and development regions (number) ............................... 211 Table 187. Land use by qarks (in %) ....................................................................................................... 215 Table 188. Land use by regions (in %) .................................................................................................... 216 Table 189. Building permits issued for new buildings by qarks ............................................................... 221 Table 190. Building permits issued for new buildings by regions ............................................................ 221 Table 191. The morphological polycentricity indexes in Albania and Europe – 27 .................................. 223 Table 192. Main revenue data at regional level (All) ............................................................................... 243 Table 193. Total revenues at development region level .......................................................................... 245 Table 194. Contribution of development regions in total revenues (weights in % vs total revenues) ...... 246 Table 195. Composition of revenues by main sources (Region =100, in %) ........................................... 248 Table 196. Composition of own revenues at regional level during 2014 ................................................. 250 Table 197. Revenue indicators for Region 1, at municipal level .............................................................. 252 Table 198. Contribution of municipalities in total revenues (weights in % vs total revenues, region = 100) ................................................................................................................................................................. 253 Table 199. Revenues by main sources (Municipality =100, in %) ........................................................... 255 Table 200. Composition of own revenues at regional level during 2014 ................................................. 257 Table 201. Revenue indicators for Region 2, at municipal level .............................................................. 258 Table 202. Contribution of municipalities in total revenues (weights in %, region 2 = 100, year 2014) ... 260 Table 203. Revenues by main sources in region 2 (Municipality =100, in %, year 2014) ....................... 261 Table 204. Composition of own revenues in Region 2, year 2014 .......................................................... 264 Table 205. Revenue indicators for Region 3, at municipal level .............................................................. 265 Table 206. Total revenues composition by Municipalities (weights in %, region 3 = 100) ....................... 266 Table 207. Revenues by main sources in Region 3 (Municipality =100, in %, year 2014) ..................... 268 Table 208. Composition of own revenues in Region 3, year 2014 .......................................................... 271 Table 209. Revenue indicators for Region 4, at municipal level .............................................................. 272 Table 210. Contribution of municipalities in total revenues (weights in %, region 2 = 100) ..................... 273 Table 211. Revenues by main sources Region 4, (Municipality =100, in %, year 2014) ......................... 275 Table 212. Composition of own revenues in Region 4, year 2014 .......................................................... 278

Table 213. Expenditures by categories at regional level (in %) ............................................................... 281 Table 214. Expenditure allocation by categories, region 1 (in %) ............................................................ 282 Table 215. Expenditure allocation by categories, region 2 (in %) ............................................................ 284 Table 216. Expenditure allocation by categories, region 3 (in %) ............................................................ 286 Table 217. Expenditure allocation by categories (in %) ........................................................................... 289 Table 218. Regional and territorial typologies ......................................................................................... 304 Table 219. Summary of the typological profiles of the 4 Development Regions ..................................... 306 Table 220. Administrative Composition of Region 1 ................................................................................ 311 Table 221. Environmentally protected areas for Region 3 ....................................................................... 313 Table 222. A summary of key and strategic planning documents for the territory of Region 1 ............... 320 Table 223. Administrative Composition of Region 2 ................................................................................ 326 Table 224. Environmentally protected areas for Region 3 ....................................................................... 327 Table 225. Administrative Composition of Region 3 ................................................................................ 335 Table 226. Environmentally protected areas for Region 3 ....................................................................... 339 Table 227. Administrative Composition of Region 4 ................................................................................ 357 Table 228. Environmentally protected areas for Region 3 ....................................................................... 360

LIST OF ACRONYMS AD

Action Documents

CoM

Council of Ministers

DCM

Decision of the Council of Ministers

DDPFFA

Department for Development Programming, Financing and Foreign Aid

DOP

Development Operational Program

European Union

FDI

Foreign Direct Investments

FUA

Functional Urban Areas

GDP

Gross Domestic Product

GNDI

Gross National Disposable Income

GLTP

General Local Territory Plan

GNTP

General National Territorial Plan

GoA

Government of Albania

IRBMP

Integrated River Basin Management Plan

IPS

Integrated Planning System

ISPA

Indicative Strategy Paper for Albania

LDOP

Local Detailed Operational Plan

MTBP

Medium Term Budgeting Program/Plan

MUD

Ministry of Urban Development

NARD

National Agency for Regional Development

NERP

National Economic Reform Program

NPEI

National Plan for European Integration

NSDI

National Strategy for Development and Integration

NTC

National Territory Council

NTPA

National Territory Planning Agency

IPA

Instruments for Pre-Accession

Operational Program

Regional Development

RDA

Regional Development Agency/ies

RDF

Regional Development Fund

RDP

Regional Development Program for Northern Albania

RMM

Regional Management Mechanism

ROP

Regional Operational Program

SSPP

Single Sector Project Pipeline

1. INTRODUCTION

2. CURRENT SITUATION ANALYSIS 2.1 SUMMARY AT NATIONAL LEVEL 2.2 COMPARATIVE ANALYSIS AND DISPARITIES BETWEEN REGIONS Since the beginning of the transition from an almost totally closed economy to the open market one in 1990, the Albanian economy marked important milestones. The structural adjustments introduced over time, provided somehow a breeding ground for overall economic growth. However, regardless of the economic reforms and abundant natural resources combined with a very favourable geographic position, Albania has not succeeded in being established as a developed economy during these 25 years of transition. An earlier study of regional disparities1, conducted for the period 2000-2009, showed that Albania was ranked relatively low compared to EU countries, while disparities at local level were significantly more pronounced than at the regional2 level. The current analysis intends to extend the time series to 2014-2015, in order to provide an updated analytical ground for regional development policy making. Not only figures on indicators have changed for the last 6 years, the geographic area of representation has been transformed as well. Thus, the following analysis takes place at regional level, considering the 4 development regions that GoA has designated and approved through the DCM no. 9613. In order to assess disparities within the regions and steer towards the conception of regional profiles, the analysis will also compare indicators at qark level and in specific cases (financial indicators) also at municipal level4.

2.2.1 Economic Growth, Development, Competitiveness and Economic Resilience Economic Growth and Development Considerable attention is paid to the Gross Domestic Product (GDP) as the main macroeconomic indicator broadly used to describe economic growth. After a relative stabilization of the economy, following the financial and economic crisis of 1997-1998 and Kosovo crisis in 1999, Albanian economic growth proceeded at accelerated growth rates. The GDP marked double digit growth rates till the end of 2008. Structurally, Albaniaâ&#x20AC;&#x2122;s GDP consists primarily of services (45%). High consumer demand and FDIs channelled into the services sector resulted in overreliance of the economic growth on services at the expense of the production. Agriculture is also a key sector in the Albanian economy accounting for approximately 18% of GDP, higher than

industry with 11%. On the other hand, the construction sector has shrunk its size, representing 9.5% of GDP in 2014 from 15.8% in 2008. Figure 1. Albania GDP year on year growth rates (in %) 14.0

11.7

11.5

12.0 10.0

8.4

8.0 6.0

3.7

4.0

2.5

2.0 1.3

0.0

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Source: INSTAT & Authorâ&#x20AC;&#x2122;s calculations

The outbreak of the last global financial â&#x20AC;&#x201C; economic crises highlighted deficiencies of the Albanian economy as well as the unsustainability and inappropriateness of the consumption driven economic model. Strong domestic demand (main driver of economic growth in the last 20 years) defined large current account deficits, in turn financed prevalently from: remittances, public assets privatization and inflows of foreign direct investments. Financial intermediation, based mainly on deposits and capital, nourished prevalently the non-tradable sectors of the economy (those presenting the highest growth rates), and less the tradable ones. Consequently, high imports of consumption and investment goods determined trade and current account imbalances. However, the external financing sources seem to be drying up and privatizations soon to be concluded. The migration cycle is coming to maturity and the crisis of Greek and Italian labour markets is also leading to a declining trend of remittances with many migrants returning to Albania. This reduction of sources, combined with a contraction of financial intermediation from the Albanian banking system, determined a sluggish domestic demand and low investment levels, thus hindering overall economic growth. Starting from 2008, nominal GDP growth rates followed a sensible moderation, hitting the lowest historical level, of about 1.3% in 2013. GDP growth rates show the same patterns in the breakdown by qarks.

Table 1. Gross domestic product by Qarks at current prices, in ALL Million Qark/Year 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* Dibër 18,240 20,378 21,738 22,944 24,659 26,701 31,739 34,187 38,784 38,171 42,428 42,524 44,098 Durrës 58,307 62,556 68,231 74,339 81,044 90,084 103,018 109,722 126,245 129,921 127,057 129,726 134,528 Kukës 14,813 16,366 17,455 18,533 20,045 21,881 23,394 25,122 27,600 29,179 29,202 30,998 32,145 Lezhë 23,460 25,848 27,719 29,634 32,001 34,856 36,640 38,868 39,882 41,294 43,587 41,885 43,435 Shkodër 38,586 43,652 46,988 50,433 54,218 57,466 61,002 65,688 74,088 73,687 77,164 74,707 77,472 Elbasan 55,015 62,201 67,521 73,251 78,752 83,398 79,339 84,708 99,805 105,856 95,845 101,238 104,986 Tiranë 226,704 253,710 275,664 304,730 331,412 371,520 437,495 463,838 480,440 497,619 501,276 507,191 525,966 Berat 31,246 34,922 37,366 39,555 42,192 45,505 42,694 45,187 50,769 54,592 49,021 49,828 51,673 Fier 62,762 69,622 75,145 79,907 86,358 92,796 110,129 111,906 130,871 144,648 170,861 177,698 184,276 Gjirokastër 17,218 18,839 20,185 21,440 23,303 24,723 24,152 25,544 27,890 32,472 36,145 35,083 36,382 Korçë 38,999 44,305 47,742 51,763 56,162 62,624 60,795 64,981 68,993 71,794 77,799 78,886 81,806 Vlorë 37,360 41,697 45,267 48,268 52,064 56,115 70,279 74,185 74,278 81,391 82,425 80,792 83,783 Albania 622,711 694,097 751,022 814,797 882,209 967,670 1,080,676 1,143,937 1,239,645 1,300,624 1,332,811 1,350,555 1,400,549 Source: INSTAT & Author’s calculations *For 2014, the latest GDP data are only at national level and are preliminary (thus subject to revisions). Using 2013 Qark weights to total GDP, we computed the distribution of the national data at Qark level.

Figure 2. GDP by Qark at current prices, in ALL Million (lhs) and GDP annual growth rates in % (rhs)

Source: INSTAT & Author’s calculations

Nominal GDP breakdown by 12 Qarks emphasizes some patterns that remain permanent over time. So, the contribution of the Qark of Tirana dominates broadly and constantly GDP formation. Over 15 years, the Qark of Tirana has generated on average about 37.7% of total nominal GDP. From the sectorial point of view, GVA data show that the main contributors are the “wholesale and retail trade, repair of motor vehicles and household goods, hotels and rest; transport and communications”, “Financial, real estate, renting and business activities” and the “Construction” sector of the economy. The second largest contributor to overall GDP formation is the Qark of Fier with 10.7% of total nominal GDP. The contribution of the Qark of Fier has increased especially over the last five years. Structurally, the GVA breakdown by sectors shows that in the Qark of Fier the “agriculture, hunting and forestry; fishing” sector is the main contributor (about 38% in the last five years). Nevertheless, its contribution has progressively diminished counterbalanced by the notable increase of the industrial sector (especially due to the oil extraction industry). Thus, in 2012 “Agriculture, hunting and forestry; Fishing” represented about 35% of GVA and “industrial” sector represented 33% of total GVA. Durrës is the third largest contributor representing on average 9.5% of total nominal GDP (according the GVA by sectors data, the main contributor is “Wholesale and retail trade, repair of motor vehicles and household goods, hotels and rest; transport and communications” sector (in average 33.1% over the last 5 years. “Agriculture, hunting and forestry; Fishing” and “Industry”, both accounted in average for 15% of GVA over the last 5 years. These three qarks have generated about 57.9% of GDP over the fifteen years and in 2014 their contribution accounts for more than 60% of nominal GDP. Figure 3. Contribution of Qarks at GDP growth (in percentage points) and total GDP annual growth rate (in %)

Vlorë Fier Elbasan Kukës

Korçë Berat Shkodër Durrës

Gjirokastër Tiranë Lezhë Dibër

11.7

8.4 5.9

4.9

2.5

1.3

3.7

0 -‐2 -‐4

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Source: INSTAT & Author’s calculations

*For 2014, the latest GDP data are only at national level and are preliminary (thus subject to revisions). Using 2013 Qark weights to total GDP, we computed the distribution of the national data at Qark level.

From a regional point of view, GDP formation has been broadly dominated by the contribution of Region 2 (Tirana, Durrës and Dibër). Region 2 has contributed for more than 50% of total GDP over the last five years. Dibër as a Qark had a minimal contribution over the years, but this fact is hidden when merged in one region with best performers such as Tirana and Durrës. This may lower the overall positioning of the region (still high compared to others), but seems effective from a future structural funds distribution prospective, as it keeps the region at beneficiary level. It also contributes to lowering the disparities between regions, thus having an impact on the internal regional development funds distribution scheme. Table 2. Gross domestic product by regions at current prices, in ALL Million Region 1

Region 2

Region 3

Region 4

Albania

2000

64,085

249,914

109,754

99,292

523,045

2001

71,462

284,457

118,305

109,146

583,370

2002

76,859

303,251

125,260

117,340

622,710

2003

85,866

336,644

141,428

130,158

694,096

2004

92,162

365,633

152,629

140,597

751,021

2005

98,600

402,013

164,569

149,615

814,797

2006

106,264

437,115

177,106

161,725

882,210

2007

114,203

488,305

191,527

173,634

967,669

2008

121,036

572,252

182,828

204,560

1,080,676

2009

129,678

607,747

194,876

211,635

1,143,936

2010

141,570

645,469

219,567

233,039

1,239,645

2011

144,160

665,711

232,242

258,511

1,300,624

2012

149,953

670,761

222,665

289,431

1,332,810

2013

147,590

679,441

229,952

293,573

1,350,556

2014 153,053 704,592 238,464 304,440 1,400,550 Source: INSTAT & Author’s calculations *For 2014, the latest GDP data are only at national level and are preliminary (thus subject to revisions). Using 2013 Qark weights to total GDP, we computed the distribution of the national data at Qark level.

Figure 4. Gross domestic product by regions at current prices, in ALL Million (lhs) and GDP annual growth rate in % (rhs)

Source: INSTAT & Author’s calculations *For 2014, the latest GDP data are only at national level and are preliminary (thus subject to revisions). Using 2013 Qark weights to total GDP, we computed the distribution of the national data at Qark level

The second largest determinant of GDP level is Region 4 (Fier, Vlorë and Gjirokastër) accounting on average for about 19.3% of total GDP. Figure 5. Contribution of regions in GDP (in % points) and GDP annual growth rate (in %) Region 4

Region 3

Region 2

Region 1

GDP_yoy growth rate

25 20 15 10 5 0 -‐5 2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

Source: INSTAT & Author’s calculations

Region 3 (Elbasan, Berat and Korçë) accounts in average for about 18.8% of nominal GDP and the smallest contributor is Region 1 (Shkodër, Lezhë and Kukës). The regional contribution to nominal GDP provides somehow an indication of the economic strength of each region. Regions 3 and 4 show similar contribution values, with Fier and Elbasan Qarks playing a balancing role in each of them. Region 2 has outstandingly higher values, and Region 1 is the most disadvantageous. However, overall Qark/Region contribution to national GDP (showing growth) may not necessarily be backed by values of GDP per capita (Albanian Lek). These per capita values and their indexes (both at Qark and Regional levels) help in providing a better understanding of the disparities and the nature of the sectors’ development within each region. GDP per capita for all qarks has followed an upward trend over time. Over years, Tirana has remained constantly above other Qarks and above the national average. Yet, in the recent years, the gap between Tirana and the national average results seem to be narrowing somewhat. The other qarks show rather moderate differences among them, with the northern qarks (Dibër and Kukës) remaining still in the most disadvantageous position. For a better comparison and assessment of disparities, GDP per capita were indexed (Albania 100).

Table 3. GDP per capita by Qarks (in ALL) Dibër Durrës Kukës Lezhë Shkodër Elbasan Tiranë Berat Fier Gjirokastër Korçë Vlorë Albania

2000 69,568 194,739 87,022 112,772 114,486 128,307 312,478 119,173 135,524 94,625 112,939 111,708 153,782

2001 89,605 228,237 121,982 137,052 140,357 143,553 353,058 151,886 153,567 140,328 138,455 177,988 189,791

2002 95,429 235,907 132,317 146,186 149,316 150,502 376,226 160,597 162,766 151,256 145,785 191,892 201,299

2003 106,009 251,656 145,363 160,148 167,961 169,194 418,649 178,468 179,529 164,551 164,678 212,950 223,099

2004 122,790 256,521 164,058 173,202 184,852 188,137 418,725 199,057 195,970 183,019 179,799 227,021 240,153

2005 149,689 255,400 205,238 187,817 204,226 211,835 413,257 224,823 212,916 204,602 200,023 235,795 259,319

2006 171,931 268,296 258,233 203,729 220,967 230,213 430,350 245,597 231,956 226,580 219,400 252,464 280,350

2007 188,240 295,140 284,685 221,878 234,528 243,640 473,432 266,558 249,575 242,233 244,519 270,385 306,095

2008 204,248 393,760 246,346 254,351 260,872 249,550 604,972 266,736 324,389 275,667 254,490 369,347 366,665

2009 227,262 415,217 271,812 274,083 284,891 271,319 627,582 290,892 335,683 303,871 276,087 393,356 390,754

2010 265,396 471,571 305,599 284,376 325,888 323,729 636,036 335,387 399,460 347,230 297,333 398,808 425,554

2011 267,885 477,615 329,255 296,302 328,928 345,890 644,342 368,464 448,466 424,125 313,791 442,650 447,754

2012 303,882 462,253 334,897 314,323 347,624 315,144 638,507 335,889 535,347 487,302 343,020 450,723 459,512

2013 307,282 471,153 358,296 302,893 337,512 334,148 643,047 343,244 558,883 476,729 348,783 441,696 466,131

2014 307,491 496,712 361,127 310,977 344,243 342,274 684,753 346,337 568,529 467,979 355,933 453,123 483,870

Source: INSTAT & Author’s calculations

Table 4. GDP per capita by Qarks, indexes (Albania = 100) 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

45.2

47.2

47.4

47.5

51.1

57.7

61.3

61.5

55.7

58.2

62.4

59.8

66.1

65.9

63.5

Durrës

126.6

120.3

117.2

112.8

106.8

98.5

95.7

96.4

107.4

106.3

110.8

106.7

100.6

101.1

106.6

Kukës

56.6

64.3

65.7

65.2

68.3

79.1

92.1

93.0

67.2

69.6

71.8

73.5

72.9

76.9

77.5

Lezhë

73.3

72.2

72.6

91.8

72.1

72.4

72.7

72.5

69.4

70.1

66.8

66.2

68.4

65.0

66.7

Shkodër

74.4

74.0

74.2

75.3

77.0

78.8

76.6

71.1

72.9

76.6

73.5

75.7

72.4

73.9

Elbasan

83.4

75.6

74.8

75.8

78.3

81.7

82.1

79.6

68.1

69.4

76.1

77.3

68.6

71.7

73.4

Tiranë

203.2

186.0

186.9

187.7

174.4

159.4

153.5

154.7

165.0

160.6

149.5

143.9

139.0

138.0

146.9

Berat

77.5

80.0

79.8

80.0

82.9

86.7

87.7

87.1

72.7

74.4

78.8

82.3

73.1

73.6

74.3

Fier

88.1

80.9

80.5

81.6

82.1

82.7

81.5

88.5

85.9

93.9

100.2

116.5

119.9

122.0

Gjirokastër

61.5

73.9

75.1

73.8

76.2

78.9

80.8

79.1

75.2

77.8

81.6

94.7

106.0

102.3

100.4

Korçë

73.4

73.3

72.4

73.8

74.9

77.1

78.3

79.9

69.4

70.7

69.9

70.1

74.6

74.8

76.4

Vlorë

72.6

93.8

95.3

95.5

94.5

90.9

90.0

88.3

100.7

93.7

98.9

98.1

94.8

97.2

100

100.0

Dibër

Albania 100 100 100 Source: INSTAT & Author’s calculations

The GDP per capita index of Tirana Qark was more than twice the national average in 2000. It has gradually decreased in the following years, to reach a minimum value of 138 in 2013 and increasing to 149 in 2014. Durrës is the second qark that shows a tendency of higher GDP/capita index than the national average, usually between 101 and 126, with its highest values in the first 5 years of the study period. On the other hand, the GDP/capita index of Fier qark has also increased in the last 4 years above the national average to reach a value of 122. The other qarks show also some individual improvements in their GDP per capita index, however remaining below the national average the last 14 years. It is also interesting to note that the huge difference between Tirana and other qarks (in early 2000s) has smoothen gradually and slightly by the end of the study period. This slight narrowing of the disparity between qarks is due to both, a better distribution and the higher investment levels (national private and foreign direct investments) among qarks (especially those endowed in natural resources) and decreasing values for Tirana and Durrës (base effects). Figure 6. GDP per capita by Qarks, indexes (Albania = 100) Vlorë Korçë

Year 2000

Vlorë

Year 2005

Country Index = 100

Korçë

Country Index = 100

Gjiroka…

Fier

Berat

Tiranë

Elbasan

Shkodër

Lezhë

Kukës

Durrës

Dibër

Dibër 0

100

125

150

Vlorë Korçë

175

200

225

100

125

150

175

200

Year 2010

Vlorë

Year 2014

Country Index = 100

Korçë

Country Index = 100

Gjiroka…

225

Gjiroka…

Fier

Berat

Tiranë

Elbasan

Shkodër

Lezhë

Kukës

Durrës

Dibër

Dibër 0

100

125

150

175

200

225

Source: INSTAT & Author’s calculations

100

125

150

175

200

225

The regional analysis places Region 2 above the national average with, however, values in a decreasing order from 150 (in year 2000) to around 120 (in year 2014). This region is in a better position compared to the others due to Tirana and Durrës qark as 2 out 3 composing qarks. Region 4 shows improvement in the last fours years in terms of GDP/capita index, due to Fier qark GDP/capita increase. The other regions have similar indexed values, with Region 1 in a slightly more disadvantageous position. Figure 7. GDP per capita by Regions, indexes (Albania = 100) Year 2000 Region 4

Year 2005 Region 4

Country Index = 100

Region 3

Region 2

Region 1

Region 1 0

100

125

150

175

200

225

Country Index = 100

100

125

150

Year 2010 Region 4

Region 3

Region 2

Region 1

Region 1 25

100

125

150

175

200

225

Year 2014 Region 4

Country Index = 100

175

225

Source: INSTAT & Author’s calculations

Country Index = 100

100

125

150

175

200

225

Table 5. GDP per capita by Region, in ALL 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Region 1

107,601

135,483

144,785

160,833

177,021

199,181

221,352

238,428

255,968

278,993

309,172

318,933

334,835

330,812

337,315

Region 2

233,118

275,039

291,343

321,585

331,983

340,189

359,590

396,413

501,893

526,749

552,054

560,929

559,173

565,045

595,920

Region 3

120,833

143,864

151,351

169,915

187,935

210,846

230,051

249,020

255,033

277,241

317,426

340,034

328,957

341,015

347,735

Region 4

120,316

158,245

169,048

186,447

202,842

218,483

237,351

254,813

331,331

349,218

392,195

443,435

502,305

511,045

518,841

Albania

153,782

189,791

201,299

223,099

240,153

259,319

280,350

306,095

366,665

390,754

425,554

447,754

459,512

466,131

483,870

Source: INSTAT & Author’s calculations

Table 6. GDP per capita by Region, indexes (Albania = 100) 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

Region 1

70.0

71.4

71.9

72.1

73.7

76.8

79.0

77.9

69.8

71.4

72.7

71.2

72.9

71.0

69.7

Region 2

151.6

144.9

144.7

144.1

138.2

131.2

128.3

129.5

136.9

134.8

129.7

125.3

121.7

121.2

123.2

Region 3

78.6

75.8

75.2

76.2

78.3

81.3

82.1

81.4

69.6

71.0

74.6

75.9

71.6

73.2

71.9

Region 4

78.2

83.4

84.0

83.6

84.5

84.3

84.7

83.2

90.4

89.4

92.2

99.0

109.3

109.6

107.2

Albania 100 100 100 100 Source: INSTAT & Author’s calculations

100

31.1

100.0

The gross national disposable income (GNDI5) is another important indicator to assess consumer’s behaviour and available resources. Table 7. Gross national disposable income (ALL) per capita 2008

2009

2010

2011

2012

2013

2014

Dibër

185,694

204,310

239,723

241,284

272,470

274,776

262,363

Durrës

357,991

373,283

425,953

430,187

414,470

421,311

423,814

Kukës

223,968

244,361

276,037

296,559

300,279

320,393

308,127

Lezhë

231,246

246,402

256,867

266,879

281,831

270,851

265,337

Shkodër

237,175

256,119

294,363

296,265

311,690

301,808

293,722

Elbasan

226,881

243,917

292,413

311,542

282,567

298,800

292,041

Tiranë

550,017

564,200

574,508

580,358

572,504

575,021

584,258

Berat

242,506

261,514

302,943

331,875

301,168

306,933

295,508

Fier

294,922

301,781

360,818

403,932

480,008

499,760

485,091

Gjirokastër

250,626

273,182

313,640

382,009

436,929

426,297

399,298

Korçë

231,373

248,204

268,570

282,631

307,562

311,886

303,695

Vlorë

335,796

353,629

360,229

398,694

404,132

394,970

386,622

Albania

333,358

351,290

384,387

403,291

412,012

416,821

410,847

Source: Bank of Albania, INSTAT & Author’s calculations

According to the data, the average national gross disposable income amounted to about 410,847 lekë in 2014, down by 416,821 in 2013. For an easier comparability GNDI data were transformed in indexes. Table 8. Gross national disposable income per capita, indexes 2008 2009 2010 2011 Dibër 56 58 62 60 Durrës 107 106 111 107 Kukës 67 70 72 74 Lezhë 69 70 67 66 Shkodër 71 73 77 73 Elbasan 68 69 76 77 Tiranë 165 161 149 144 Berat 73 74 79 82 Fier 88 86 94 100 Gjirokastër 75 78 82 95 Korçë 69 71 70 70 Vlorë 101 101 94 99 Albania 100 100 100 100 Source: Bank of Albania, INSTAT & Author’s calculations

2012 66 101 73 68 76 69 139 73 117 106 75 98 100

2013 66 101 77 65 72 72 138 74 120 102 75 95 100

2014 64 103 75 65 71 71 142 72 118 97 74 94 100

In 2008, GDNI per capita indexes stay below the national average (100) for 9 out of 12 qarks, with almost constant values for the whole study period. Tirana has again an outstanding position with (however decreasing) values between 165 and 138. Durrës 26

qark GNDI index is usually slightly above the national average and Qark of Vlorë values are constantly almost at the threshold. All of the changes in GDNI index levels are simultaneously determined by overall GDP changes, net primary and secondary income changes and the taxes, tariffs and net interests on debt payments. Figure 8. Gross national disposable income per capita at regional level, indexes (Albania = 100) Vlorë

Vlorë

2008

Korçë

2010

Korçë

Gjirokastër

Fier

Berat

Tiranë

Elbasan

Shkodër

Lezhë

Kukës

Durrës

Dibër

Dibër 0

100

125

Vlorë

150

175

100

125

Vlorë

2012

Korçë

175

2014

Korçë

Gjirokastër

150

Gjirokastër

Fier

Berat

Tiranë

Elbasan

Shkodër

Lezhë

Kukës

Durrës

Dibër

Dibër 0

100

125

150

175

100

125

150

Source: Bank of Albania, INSTAT & Author’s calculations

Qark level data were arranged to obtain the GDNI indicators for the 4 development regions. Region 2 has the highest level of disposable income (again because of Tirana and Durrës) and Region 1 has the lowest GDNI over the whole target period. Table 9. Gross national disposable income (ALL) per capita at regions level Region 1

2008 232,716

2009 250,816

2010 279,264

2011 287,262

2012 300,223

2013 295,817

2014 287,810

Region 2 Region 3 Region 4 Albania

456,302 231,867 301,233 333,358

473,551 249,241 313,949 351,290

498,650 286,719 354,256 384,387

505,228 306,268 399,401 403,291

501,371 294,953 450,381 412,012

505,270 304,940 456,983 416,821

508,462 296,701 442,695 410,847

Source: Bank of Albania, INSTAT & Author’s calculations

175

Regional GNDI indexes indicate for pronounced differences (sometimes of 70 points out 100) among regions, especially between Region 2 in one side and regions 3 and 1 in the other. The latter suggests for different private consumption behaviour of aggregate households according to disposable income (corrected for taxes and net income factorespecially remittances and income from FDI’s) among the regions. Table 10. Gross national disposable income per capita, indexes at region level 2008 2009 2010 70 71 73 137 135 130 Region 2 70 71 75 Region 3 90 89 92 Region 4 Albania 100 100 100 Source: Bank of Albania, INSTAT & Author’s calculations Region 1

2011 71 125 76 99 100

2012 73 122 72 109 100

2013 71 121 73 110 100

2014 70 124 72 108 100

Figure 9. Gross national disposable income per capita at regions level, indexes (Albania = 100) 2008

Region 4

Region 3

Region 2

Region 1

Region 1 0

100

125

150

175

2012

Region 4

Region 3

Region 2

Region 1

Region 1 25

100

125

150

100

125

175

Source: Bank of Albania, INSTAT, Ministry of Finance & Author’s calculations

150

175

2014

Region 4

Region 3

2010

Region 4

100

125

150

175

For a better understanding of the GDP and GNDI figures we should look at each qark and region sectorial contribution in the overall economic growth. For this purpose, the following analysis is using Gross Value Added (GVA) data breakdown by economic sectors. The GVA analysis is key in leading towards the conceptualization of the regionsâ&#x20AC;&#x2122; economic profiles.

Table 11. Gross Values Added at Qark level, (in ALL Million) 2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013*

2014*

Dibër

14,474

15,796

16,820

18,592

19,672

20,771

22,227

24,079

27,242

29,581

33,710

33,197

37,470

37,099

38,509

Durrës

46,214

52,029

53,769

57,072

61,746

67,299

73,049

81,237

89,229

94,938

109,731

112,989

114,579

113,177

117,479

Kukës

11,124

12,595

13,660

14,932

15,796

16,778

18,067

19,733

20,237

21,737

23,989

25,376

24,177

27,043

28,071

Lezhë

17,902

20,286

21,635

23,582

25,084

26,827

28,844

31,433

31,756

33,631

34,665

35,912

39,301

36,541

37,931

Shkodër

30,089

33,453

35,583

39,825

42,522

45,657

48,870

51,823

52,747

56,837

64,396

64,084

62,228

65,177

67,654

Elbasan

44,384

48,399

50,733

56,748

61,103

66,314

70,984

75,208

68,694

73,294

86,749

92,060

91,209

88,323

91,681

Tiranë

169,843

196,218

209,060

231,468

249,461

275,872

298,720

335,035

379,204

401,338

417,592

432,767

442,063

442,491

459,312

Berat

20,808

27,256

28,814

31,860

33,814

35,809

38,030

41,036

37,015

39,098

44,128

47,477

46,964

43,471

45,124

Fier

50,569

54,619

57,878

63,519

68,002

72,340

77,839

83,683

96,066

96,827

113,752

125,979

144,053

155,029

160,923

Gjirokastër

12,929

14,734

15,878

17,187

18,266

19,410

21,004

22,296

20,942

22,102

24,242

28,240

25,213

30,607

31,771

Korçë

32,049

34,161

35,964

40,421

43,204

46,861

50,622

56,474

52,629

56,225

59,968

62,437

63,231

68,822

71,439

Vlorë

28,093

31,961

34,452

38,042

40,964

43,697

46,928

50,604

60,956

64,189

64,562

70,784

66,889

70,485

73,165

478,478

541,507

574,246

633,248

679,634

737,635

795,184

872,641

936,717

989,797

1,077,484

1,131,302

1,157,377

1,178,273

1,223,063

13.2

6.0

10.3

7.3

8.5

7.8

9.7

7.3

5.7

8.9

5.0

2.3

1.8

3.8

Albania YOY (%)

Source: INSTAT & Author’s calculations *With regard to 2013 and 2014, GVA data are available only at national level. To account for Qark distribution of GVA for both years’ weights of GDP at current prices were used.

Gross value added formation is dominated from the contribution of the Qark of Tirana during 2000-2014. The second and third main contributors are the Qark of Fier and Durrës respectively. Figure 10. Participation of Qarks at Gross Values Added formation, (weights in %) Vlorë

100

Korçë

Gjirokastër

Fier

Berat

Tiranë

Elbasan

Shkodër

Lezhë

Kukës

Durrës

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Dibër

Source: INSTAT & Author’s calculations

Since 2008, the structure of GVA presents major changes. Tirana is still the main contributor in overall, but the magnitude of its contribution decreases considerably to almost 0 in 2013 and then experiences some increase again in 2014 on the back of the total economic downturn and construction sector contraction. Fier keeps more balanced contribution overtime, while Durres experiences significant reduction after 2010. Figure 11. Qarks contribution at GVA (in pp) and GVA annual growth rate (in %)

Source: INSTAT & Author’s calculations

The above contribution may be explained through the GVA data breakdown by economic sectors and qarks. Table 12. GVA by economic sector and qarks, (weight vs. total, in %) Agriculture hunting and forestry; Fishing

Industry

Construction

Wholesale and retail trade, repair of motor vehicles and household goods, hotels and rest; transport and communications

Dibër

42.0

20.3

5.0

7.8

6.9

18.0

100

Durrës

16.4

15.5

7.9

34.1

13.4

12.7

100

Kukës

36.9

7.9

15.3

11.1

8.6

20.2

100

Lezhë

33.7

11.7

10.7

16.7

11.1

16.1

100

Shkodër

33.9

12.2

9.8

12.7

12.4

19.0

100

Elbasan

34.1

14.2

8.2

19.8

7.6

16.1

100

Tiranë

4.7

10.3

17.8

29.7

20.1

17.4

100

Berat

42.6

11.0

10.5

14.2

6.6

15.1

100

Fier

34.9

33.2

5.6

10.3

7.4

8.6

100

Gjirokastër

37.2

4.6

6.7

14.6

13.9

23.0

100

Korçë

38.7

10.8

10.1

12.1

9.3

19.0

100

Vlorë

27.5

11.9

12.7

18.5

13.4

16.0

100

2012

Financial, real - estate, renting and business activities

Other services activities

Total

Source: INSTAT & Author’s calculations

So, in qarks of Berat, Dibër and Korçë “Agriculture, hunting and forestry and fishing” account for approximately 40% of qarks total GVA, while in Tirana and Durrës this sector of the economy presents the smallest share, with 4.7% and 16.4% respectively. “Wholesale and retail trade; repair of motor vehicles and household goods; hotels and restaurants; transport and communications” have contributed extensively to GVA formation in the qarks of Tiranë and Durrës. The same for “Financial, real - estate, renting and business activities”. Durrës has a rather balanced profile across sectors, with services and tourism as the dominating share (34%), while Tirana has a dominant profile of services, tourism and real estate combined (50%), an insignificant rural character and of course the highest share in construction sector as compared to other Qarks. Industry does not constitute a significant GVA share in Tirana as compared to other Qarks (for instance Fier and Dibër). Tirana is mainly oriented towards a consumption and services economic profile, which can be explained by the high population number, huge expansion of new settlements and the location of main administrative services and central government institutions. 32

On the other hand, Tirana has for years been the most attractive location for the development of the housing construction industry. Most of the remittances and capital established through other economic activities has been invested on housing, following also a relatively high demand at least for the period 20002010. As of 2011, most of the housing demand in channelled into central location residences, or gated communities, of high quality and thus expensive prices. The overall quantity of housing units has decreased (see also section on building permits), partially due to major changes happening with the planning legislation and government`s policies on construction moratoriums, and partially due to changing demand patterns. According to Gross Value Added data for 2012, “Agriculture, hunting and forestry; Fishing” sector of the economy accounts in average for 18.8% of total GVA. In 10 out of 12 qarks, “Agriculture, hunting and forestry; Fishing” contribution to total qarks GVA is above the national average, delineating an agricultural economic profile of these qarks to some extent. However, the lowering of the national average happens mainly due to Tirana’s contribution. The qark of Durrës is positioned somewhat below the national average. Figure 12. GVA by qarks (weight in %) for each of the economic sectors, 2012 Agriculture, hunting and forestry; Fishing (Qark=100) Albania = 18.8%

Gjirokastër Vlorë Fier Korçë Berat Elbasan Tiranë Durrës Dibër Kukës Lezhë Shkodër

Industry (Qark=100) Albania = 11.5%

Construction (Qark=100) Albania = 11.4%

Gjirokastër Vlorë Fier Korçë Berat Elbasan Tiranë Durrës Dibër Kukës Lezhë Shkodër

Wholesale and retail trade, repair of motor vehicles and household goods, hotels and rest ; transport and communications (Qark=100)

Albania = 20.0%

Financial, real -‐ estate, renting and business activities (Qark=100)

Other services (Qark=100)

Albania = 12.3%

Albania = 12.7%

Gjirokastër Vlorë Fier Korçë Berat Elbasan Tiranë Durrës Dibër Kukës Lezhë Shkodër

Gjirokastër Vlorë Fier Korçë Berat Elbasan Tiranë Durrës Dibër Kukës Lezhë Shkodër 0

Gjirokastër Vlorë Fier Korçë Berat Elbasan Tiranë Durrës Dibër Kukës Lezhë Shkodër

Gjirokastër Vlorë Fier Korçë Berat Elbasan Tiranë Durrës Dibër Kukës Lezhë Shkodër 0

Source: INSTAT & Author’s calculations

“Industry” accounts for about 11.5% of national GVA. This shows first for a dominance of agriculture versus industry and second for a strong national profile on services. In the qark of Fier, “Industry” accounts for more than 30% of qarks GVA, mainly due to petroleum extraction industry. The same for the qark of Dibër, where the mining industry determines a contribution of the “Industry” sector of about 20% of total qark GVA (especially after 2008), about 10 percentage points above the national average. The “Construction” sector contribution to total GVA has followed a downward trend over time contributing with about 11.4% to total GVA in 2012. While in Tirana the “Construction” sector contribution to overall qark GVA has been broadly related to real estate developments, in other qarks infrastructural estates played a major role (see Qark of Kukës). From a regional point of view, GVA formation is dominated by the increasing contribution of Region 2 (Tirana, Durrës, Dibër). Region 2 accounts on average for more than 50% of total gross value added of the country. This is due to Tirana and Durrës respective contributions, and also Dibër contribution on industry. Thus, the overall GVA is very sensitive to possible changes in the Region 2. Beside differences among regions, there are also differences in GVA contributors within the same region. Differences remain high between Region 1 in one side and Region 2 and other regions in the other. Table 13. Gross Values Added at Region level, (in ALL Million) Region 1

Region 2

Region 3

Region 4

2000

59,115

230,531

97,241

91,591

2001

66,334

264,043

109,816

101,314

2002

70,878

279,649

115,511

108,208

2003

78,339

307,132

129,029

118,748

2004

83,402

330,879

138,121

127,232

2005

89,262

363,942

148,984

135,447

2006

95,781

393,996

159,636

145,771

2007

102,989

440,351

172,718

156,583

2008

104,740

495,675

158,338

177,964

2009

112,205

525,857

168,617

183,118

2010

123,050

561,033

190,845

202,556

2011

125,372

578,953

201,974

225,003

2012

125,706

594,112

201,404

236,155

2013

128,763

592,768

200,618

256,123

2014 133,658 615,302 208,245 Source: INSTAT & Author’s calculations

265,860

Figure 13. Participation of Regions at GVA formation, (weights in % vs. total GVA)

Source: INSTAT & Authorâ&#x20AC;&#x2122;s calculations

In the aftermath of the global financial and economic crisis, regions contribution in GVA growth rates marked important changes. Despite overall GVA growth rate was largely determined by the contribution of Region 2, its size shrank considerably to almost inexistent in 2013. This is due to construction and trade sector negative performance. Other regions contributed considerably in GVA growth rate post crisis, due to more steady economic activity related to the agricultural, tourism and extraction industry). Figure 14. Contribution of Regions GVA, (in pp) and GVA annual growth rate (in %)

Source: INSTAT & Authorâ&#x20AC;&#x2122;s calculations

Table 14. Regions share in GVA formation, (in %) Average 2000-2004 Region 1 12.3 Region 2 48.6 Region 3 20.3 Region 4 18.8 Source: INSTAT & Author’s calculations

Average 2005-2009 11.7 51.1 18.8 18.4

Average 2010-2014 11.0 51.0 17.4 20.5

The data show that regions share in total GVA-formation experienced only small changes over the last 15 years. Region 2 accounts for more than 50% of total GVA produced in the Republic of Albania, largely on the back of higher population and businesses demographics. While, only slight changes are observable in the GVA composition in the three 5 - years periods considered. Figure 15. Regions share in GVA formation, (in %)

Source: INSTAT & Author’s calculations

Gross value added data for qarks by economic sectors were re-arranged to obtain regional GVA data breakdown by economic sectors (linear transformations, thus mathematically correct). Similarly as for qark level data analysis, regional GVA provides input on their economic profiling. “Agriculture, hunting and Forestry; Fishing” accounts for more than 30% of total region GVA in regions 1, 3 and 4, with the highest value in Region 3 (37.5%) due to the pronounced contributions of Korçë and Gjirokastër. In region 2 “Agriculture, hunting and Forestry; Fishing” contributes with less than 10% in region’s GVA formation, and this is due to the strong role of Durrës and Tirana in the services and construction and real estate sectors, as well as Dibër in industry. As a result, Region 2 presents a rather multidimensional growth profile, thus also more diversified. Region 4 has a better representation of the industry sector (24%) 36

compared to other regions (less than 12%) and this is due to the role of Fier qark. It actually suggests for a rather diverse economic character of Fier qark, which constitutes both an advantage and a disadvantage for the overall profiling and visioning of future economic growth. The disadvantage is mainly environmental agriculture/tourism and oil extraction industry competing for resources. Table 15. Weight of economic sectors in Regions GVA formation, (weight vs total, in %) 2012 Agriculture, hunting and Forestry; Fishing Industry Construction Wholesale and retail trade, repair of motor vehicles and household goods, hotels and rest; transport and communications Financial, real - estate, renting and business activities Other services Total Source: INSTAT & Authorâ&#x20AC;&#x2122;s calculations

Region 1

Region 2

Region 3

Region 4

34.4

9.3

37.5

33.0

11.2

11.9

12.4

24.1

11.1

15.1

9.3

7.7

13.6

29.2

16.1

13.1

11.3

18.0

7.9

9.8

18.3

16.5

16.8

12.2

100

Financial intermediation Economic growth and development in Albania has been stimulated and sustained by an increasing flow of financial resources through the financial system. This financial system has experienced substantial changes in the last 10 years. Financial intermediation has strengthened and more innovative financial instruments were introduced. The banking system represents the most active and developed segment of the financial system, accounting for roughly 95% of its assets. Out of the 16 commercial banks operating in Albania (distributed over the national territory through around 499 branches and agencies), 14 are owned by foreign banks and have boosted further the competitiveness and efficiency in the market. The Bank of Albania supervises and regulates banks and microcredit institutions according to the Law â&#x201E;&#x2013; 8269 of December 1997. An emerging segment of the Albanian financial system is the nonbank financial institutions such as investment/pension funds and insurance companies. These institutions are supervised by the financial supervisory authority, which is an independent institution and is governed by law â&#x201E;&#x2013; 9572, dated 03.07.2006. However, this segment of the financial system remains yet underdeveloped. The absence of capital markets in particular emphasizes the imperative need for further developing to support economic activity in the country.

Table 16. Bank distribution in Albania by Qark (no. of branches/agencies) 2007 7

2008 8

2009 8

2010 9

2011 10

2012 10

2013 10

2014 9

Durrës Kukës Lezhë Shkodër Elbasan Tiranë Berat

36 6 21 17 23 161 14

46 8 26 23 28 208 21

51 9 26 24 29 210 21

54 9 25 25 30 210 20

54 10 26 25 30 212 21

55 9 25 25 30 218 21

53 9 24 24 30 213 22

51 9 23 22 28 203 20

Fier Gjirokastër Korçë Vlorë Albania

32 20 30 32 399

43 25 37 38 511

45 24 38 39 524

44 24 38 41 529

44 24 37 41 534

43 23 37 42 538

42 23 38 41 529

42 20 35 37 499

Dibër

Source: Bank of Albania

The data show for a good overall distribution of banks over the territory. The highest number of banks (branches, agencies) is found in the Qark of Tirana, standing much above other qarks. This is related to the other factors that have very high value indicators in Tirana, such as population, number of active enterprises, the dominance of the services/construction/real estate sector, etc. and to whom banks provide their financial services. The second qark with the highest number of bank branches and agencies is Durrës, which however stands for ¼ of those in Tirana. The other qarks show more contained differences among them, with Dibër and Kukës presenting the lowest number of banks (branches and agencies) over time. As suggested also by literature, bank distribution in the territory follows to some extent economic growth and development of the territory and it is related to the number of users (thus population and businesses). Figure 16. Banks and GDP distribution by Qarks (weights vs. total)

Source: Bank of Albania, INSTAT & Author’s calculations

So, the presence of banks in the 12 qarks follows the same patterns as qarks contribution to overall economic growth. The GDP curve and banks distribution curve in the above graph match almost fully. Thus, the qarks that contribute more to economic growth benefit financial services offered by a higher number of banks. Also, empirical findings from economic growth literature on Albania suggest for a positive and stable relationship between economic growth and financial development. Of course, further analysis is needed to understand whether finance spurs growth, or the other way around. The grouping of banks on a regional level shows a very good positioning for Region 2. Region 4 is ranked second, but several points below Region 2. Regions 3 and 1 follow the other two, with Region 1 being the less served by banks (having also the lowest contribution in overall GDP). Table 17. Bank distribution in Albania by Regions (no. of branches/agencies) Region 1 Region 2 Region 3 Region 4 Albania

2007 44 204 67 84 399

2008 57 262 86 106 511

2009 59 269 88 108 524

2010 59 273 88 109 529

2011 61 276 88 109 534

2012 59 283 88 108 538

2013 57 276 90 106 529

2014 54 263 83 99 499

Source: Bank of Albania

Again, bank distribution on a regional level matches with the contribution of the regions in economic growth – Region 2 accounting for the largest share in total GDP and also the highest number of banks and the other 3 following the same pattern as for banks distribution. Figure 17. Banks and GDP distribution by Regions (weights vs total) 2014

Region 4

Banks

Region 1 60 50 40 30 20 10 0

GDP

Region 2

Region 3

Source: Bank of Albania, INSTAT & Author’s calculations

Banks in Albania collect deposits and provide financial resources (loans or credit) for both households (consumer credit and mortgage loans) and enterprises. Overall deposits in Albania have increased steadily over the last 15 years. Till 2010, total deposits increased at accelerated pace reaching the highest growth rate of 18.5%. After 2010, deposits annual growth rate remained positive but at a moderated pace. In 2015 total deposits increased by 1.9% in annual terms. The qark of Tirana is the main provider of deposits in Albania (almost 1/3 of the population and 44% of active enterprises), thus accounting for approximately 40% of total depositing activity in Albania. There’s a big gap though between the qark of Tirana and other qarks, while differences among other qarks themselves are rather low. Table 18. Total deposits by Qarks (weights in %) 2007

2008

2009

2010

2011

2012

2013

2014

2015*

Tiranë

42.6

43.0

40.6

40.9

39.1

37.8

38.3

39.8

Durrës

9.0

9.3

8.9

8.6

8.5

8.4

Elbasan

6.0

5.8

6.0

5.7

5.9

6.0

5.8

5.9

Shkodër

4.5

4.9

5.3

5.4

5.3

5.1

Korçë

5.4

5.5

5.7

5.8

6.2

6.5

6.3

5.9

5.8

Vlorë

6.7

6.4

6.6

6.7

6.8

7.0

6.9

Fier

6.8

6.0

5.8

6.1

6.2

6.1

6.2

Lezhë

2.3

2.4

2.6

2.3

2.2

2.3

Other Total Albania

16.8

16.9

18.1

18.4

19.4

20.2

19.6

19.7

100.0

Source: Bank of Albania * Data for 2015 relate to the end of September 2015.

Figure 18. Total deposits by Qarks (weights in %) Other

Lezhë

Fier

Vlorë

Korçë

Tiranë

Durrës

Elbasan

Shkodër

100

90 80 70 60

50 40 30 20

10 0 2007

2008

2009

2010

2011

Source: Bank of Albania

2012

2013

2014

2015

At the regional level, the main contributor to total deposits is Region 2, accounting in average for about 53.8% of total deposits suggesting for a significant potential amount of financial resources to be allocated and feed the economy with the necessary resources to promote growth and development. Regions 3 and 4 contribute almost the same in the overall deposits in Albania, while Region 1 has the lowest contribution, though not much different compared to 3 and 4, due to the role of Shkodër qark. Table 19. Total deposits by Regions (weights in %) 2007 Region 1 11.0 Region 2 55.8 Region 3 15.6 Region 4 17.6 Total Albania 100 Source: Bank of Albania

2008 11.5 56.2 15.6 16.7 100

2009 12.4 54.4 16.2 17.0 100

2010 12.3 54.4 16.2 17.1 100

2011 12.4 52.9 17.0 17.6 100

2012 12.6 51.8 17.5 18.1 100

2013 12.4 52.0 17.4 18.2 100

2014 12.2 53.2 16.6 18.0 100

2015 12.3 53.1 16.6 18.0 100

Figure 19. Total deposits by Regions (weights in %) Region 1

Region 2

Region 3

Region 4

100 90 80 70 60 50 40 30 20 10 0 2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: Bank of Albania

Besides collecting deposits, banks intermediate savings in the economy through loans, both to households and businesses. Backed from an accelerating demand and abundant supply of financial resources, loans to households increased steadily till 2008 (annual growth rate 30.6%). The uncertainties generated from the international markets crisis, the decreasing building permits issuance and the high level of nonperforming loans induced notably decelerated growth rates for households` credits. Some pick-up was noticed during 2014 and 2015, but far from the double digits growth rates recorded prior 2008. Total household loans breakdown by qarks show for a highly pronounced disparity between Tirana and the rest of qarks. Approximately 60% of total loans to households flow in the qark of Tirana. Durrës is ranked the second with an average of 7.6% and other qarks stand between 2.5 and 3.9%.

Table 20. Loans to households by Qarks (qark share versus total in %) 2007

2008

2009

2010

2011

2012

2013

2014

2015

Tiranë

60.1

58.1

58.7

59.0

58.6

59.3

59.0

59.1

59.8

Durrës

7.7

7.8

7.9

7.8

7.6

7.4

7.7

7.5

Elbasan

3.6

3.5

3.4

3.5

3.7

Shkodër

3.3

3.7

3.8

3.9

4.0

3.9

3.8

Korçë

3.2

2.8

2.7

2.8

2.7

2.6

2.7

2.6

Vlorë

4.2

4.3

4.2

4.3

4.1

4.3

4.2

4.0

Fier

3.4

3.5

3.3

3.4

3.6

3.5

3.4

3.6

3.5

Lezhë

3.2

3.5

3.1

2.9

2.6

2.5

Other Total Albania

11.3

12.7

12.4

12.3

12.9

12.7

12.6

12.5

12.6

100.0

Source: Bank of Albania

Figure 20. Loans to households by qarks (weights in %)

Source: Bank of Albania

Households’ loans are classified into mortgage loans (around 60%) and consumer credit (around 40%). Similarly to total household loans, mortgage loans have a double-digit growth rate before 2008 and slow down afterwards. Mortgage loans concentrate highly in the qark of Tirana (around 65%), while all other qarks have values of 8.5% and below, with the mountainous qarks (Dibër, Kukës, Berat and Gjirokastër) having the lowest shares. Table 21. Mortgage loans to households by Qarks (weights in %) Tiranë Durrës Elbasan Shkodër

2007 68.0 8.0 3.1 2.1

2008 65.0 8.4 2.9 2.6

2009 65.9 8.5 2.7 2.3

2010 64.2 8.3 2.7 2.7

2011 63.5 8.1 2.6 2.6

2012 62.0 7.8 2.9 2.6

2013 65.0 8.5 2.8 2.0

2014 67.9 8.5 2.7 2.1

2015 64.1 7.8 2.9 2.9

Korçë Vlorë Fier Lezhë Other Total Deposits

2.5 4.5 2.1 2.0 7.8

2.3 4.1 2.7 2.5 9.6

1.9 4.4 2.6 2.7 9.1

2.2 4.6 2.9 2.6 9.9

2.1 4.7 3.3 2.6 10.4

2.2 4.6 3.1 2.7 11.9

2.1 4.5 2.7 1.6 10.7

1.8 4.5 2.8 1.5 8.3

2.0 4.6 3.4 2.5 9.8

100.0

Source: Bank of Albania

Figure 21. Mortgage loans to households (weights vs. total in %)

Source: Bank of Albania

Consumer credit, on the other hand, has been relatively volatile over the considered period. After a sharp increase in 2009, consumer credit growth rates turned negative in the next following three years. In 2013, consumer credit increased by about 26.2% annually and decreased by about 20.8% in 2015 compared to the previous year. Consumer credit by qarks follows the same patterns as total and mortgage loans with the high domination of the qark of Tirana and much lower disparities among other qarks. Table 22. Consumer credit to households by Qarks (weights in %) Tiranë Durrës Elbasan Shkodër Korçë Vlorë Fier

2007 50.8 7.4 4.2 4.7 4.0 4.0 4.9

2008 45.7 6.8 4.6 5.8 3.8 4.6 5.1

2009 49.8 7.1 4.3 5.8 3.8 3.9 4.3

2010 52.4 7.1 4.3 5.5 3.5 3.9 4.0

2011 51.9 6.9 4.6 5.8 3.4 3.7 4.0

2012 55.3 6.8 4.4 5.9 3.2 3.3 4.0

2013 53.3 6.9 4.5 5.8 3.3 4.1 4.1

2014 51.7 7.1 4.6 5.4 3.4 4.0 4.3

2015 54.0 7.0 4.8 5.0 3.4 3.2 3.7

LezhĂŤ 4.6 Other 15.6 Total Deposits 100.0 Source: Bank of Albania

5.4 18.2 100.0

4.6 16.5 100.0

3.7 15.5 100.0

3.4 16.3 100.0

3.2 13.9 100.0

3.5 14.4 100.0

3.4 16.1 100.0

2.5 16.5 100.0

Figure 22. Consumer credit to households by Qarks (weights in %)

Source: Bank of Albania

The domination of the qark of Tirana is present also in the Region 2 data, which has a share of around 70%. All other 3 regions stand between 9 and 11%, with Region 3 in a slightly more disadvantageous positioning. Table 23. Total loans to households by Regions (weights in %) Region 1 Region 2 Region 3 Region 4 Total Albania

2007 9.3 70.6 9.6 10.5 100

2008 10.4 69.0 9.5 11.0 100

2009 10.5 69.7 9.2 10.6 100

Source: Bank of Albania and Authorâ&#x20AC;&#x2122;s calculations

2010 10.0 69.9 9.3 10.8 100

2011 10.1 69.4 9.3 11.1 100

2012 10.0 69.9 9.3 10.7 100

2013 9.7 69.8 9.6 10.9 100

2014 9.6 69.9 9.5 11.0 100

2015 9.5 70.5 9.4 10.7 100

Figure 23. Total loans to households by Regions (weights in %)

Source: Bank of Albania & Author’s calculations

Mortgage loans to households in Region 2 account in average for more than 75% of total mortgage loans, while consumer credit for about 65%. The rest is distributed among the other regions showing for the high divergence between Region 2 and the other three. Table 24. Mortgage loans to households by Regions (weights in %) 2007 2008 2009 2010 Region 1 6.1 7.5 7.2 7.7 Region 2 77.9 75.7 76.6 75.0 Region 3 7.5 7.5 6.9 7.4 Region 4 8.5 9.2 9.2 10.0 Total Albania 100 100 100 100 Source: Bank of Albania and Author’s calculations

2011 7.8 74.3 7.3 10.6 100

2012 8.3 72.9 8.1 10.7 100

2013 6.3 76.1 7.7 9.9 100

Figure 24. Mortgage loans to households by Regions (weights in %)

Source: Bank of Albania and Author’s calculations

2014 5.7 78.4 6.5 9.4 100

2015 7.9 74.4 7.3 10.4 100

Table 25. Consumer credit to households by Regions (weights in %) 2007 2008 2009 2010 Region 1 13.2 15.7 14.5 13.1 Region 2 62.0 57.1 61.0 63.4 Region 3 12.1 13.0 12.2 11.7 Region 4 12.8 14.2 12.3 11.8 Total Albania 100 100 100 100 Source: Bank of Albania and Authorâ&#x20AC;&#x2122;s calculations

2011 13.2 62.9 12.1 11.8 100

2012 12.5 65.6 11.1 10.8 100

2013 13.0 63.9 11.4 11.8 100

2014 12.8 62.8 12.1 12.3 100

2015 11.6 65.1 12.3 11.0 100

The amount of financial resources that the banking system channels into the private sector of the economy is very important to economic growth. Money channelled to businesses through loans (by maturity and purposes) presents high growth potential for the economy. Total loans currently present about 38.2% on nominal GDP, indicating for a relatively low level of financial intermediation as compared to the SEE countries of 50% of GDP. Figure 25. Consumer credit to households by Regions (weights in %)

Source: Bank of Albania and Authorâ&#x20AC;&#x2122;s calculations

Overall favourable macroeconomic conditions induced accelerated annual credit growth rates until 2008 (about 35.1% year on year). After the beginning of the global financial and economic crisis, lending activity in Albania faced a sudden decline and the double-digit growth rates diminished to become negative in 2013 and 2015. In 2015, total lending activity contracted by about 2.5% (data available till the end of the third quarter of 2015). On one side, demand for loans is assessed to be week and on the other hand banks have adopted a more prudent crediting policy (in view of the high level of nonperforming loans in their balance sheets).

Figure 26. Total loans by qarks as a ratio of GDP (in %)

Source: Bank of Albania and own calculations

The overall credit stock for businesses is highly concentrated in Tirana (average 70.4% of total stock over the period 2007-2015). The other qarks show a similar pattern as for households’ loan. However, the share of the mountainous qarks (Gjirokastër, Berat, Dibër and Kukës) in the total business loans is lower than their share in the households’ loan. The latter might be related to the low number of active enterprises exercising their activity in these qarks. Table 26. Loans to businesses (% of total) 2007 2008 2009 2010 Tiranë 67.3 67.9 68.8 70.0 Durrës 7.6 7.4 7.8 7.9 Elbasan 3.4 3.2 3.2 2.7 Shkodër 2.5 2.6 2.6 2.5 Korçë 2.2 2.0 2.0 1.7 Vlorë 3.8 3.8 3.6 3.5 Fier 3.8 3.4 3.0 3.0 Lezhë 2.4 2.2 2.2 1.9 Other 7.0 7.4 6.9 6.8 Total Loans 100 100 100 100 Source: Bank of Albania and Author’s calculations

2011 70.6 7.8 2.9 2.5 1.6 3.1 3.0 1.9 6.6 100

2012 71.7 7.6 2.8 2.4 1.6 3.0 2.5 2.0 6.4 100

2013 71.7 7.9 3.0 2.4 1.7 2.9 2.4 1.7 6.3 100

2014 72.7 7.6 3.0 2.3 1.7 2.5 2.5 1.6 6.1 100

2015 73.3 7.3 2.9 2.3 1.6 2.4 2.6 1.6 6.1 100

Figure 27. Loans to businesses (% of total)

Source: Bank of Albania and Authorâ&#x20AC;&#x2122;s calculations

Overall short-term loan increased steadily till 2011 and then growth rates decelerated to be negative. In 2015, short term loans contracted by about 4.1% annually. Loan stock to business breakdown by maturity and qarks confirms confirm again a concentration in businesses in the qark of Tirana.

Figure 28. Short term loans to businesses by Qark (End of year stock, ALL Million)

Source: Bank of Albania and Authorâ&#x20AC;&#x2122;s calculations

Overall medium-term loans increased steadily till 2010 and then growth rates slowed down to turn negative over the last three years. In 2015, the stock of medium term loans decreased annually by 6.3%. Medium term loans are still largely granted to businesses in Tirana qark, but with slightly less of a divergence compared to short-term ones.

Figure 29. Medium term loans to businesses by Qark (End of year stock, ALL Million)

Source: Bank of Albania and Authorâ&#x20AC;&#x2122;s calculations

Overall long-term loans stock market had double-digit growth rates till 2011. Afterwards, due to a more tightening lending policy adopted by the banking system, long-term credit grew at a slower pace. In 2015, long term credits decreased by about 2.9% annually for the first time since 2007. Concentration of long-term loans for businesses at qark level is similar to the medium-term ones. Figure 30. Long term loans to businesses by Qark (End of year stock, ALL Million)

Source: Bank of Albania and own calculations

Loans to businesses represent an important determinant and driver of economic growth, both at national and qark level. The data show that during the last 10 years, finance have supported the most dynamic sectors of the economy (services, construction etc.). Medium to long-term loan are crucial to finance

businesses investment projects (otherwise not feasible) and thus contribute to overall economic development. Short-term loans are very important from businesses’ point of view, since allow them to fulfil working capital financing needs, which allow their normal daily operation. Following the global economic and financial downturn, the enhanced uncertainties surrounding the economy, further deterioration of loan portfolio quality and the prudent (tightening) lending policy followed by banks, led to overall slowdown – contraction of lending activity. On the loan demand side, the high uncertainties about future developments and low capacity utilization rates in the economy fostered reluctance of businesses to invest. From a regional perspective analysis, there’s a high degree of concentration of the total stock of loans to businesses in Region 2 (Tirana) with almost 80%. This hampers credit access outside this region, but it shows as well the low demand and thus lower power for engaging in economic activities in the other regions, especially in Region 1. Figure 31. Loans to businesses by regions (% of total)

Source: Bank of Albania and Author’s calculations

Table 27. Loans to businesses by regions (% of total) 2007 2008 2009 2010 Region 1 6.7 6.7 6.5 6.1 Region 2 76.6 77.2 78.3 79.5 Region 3 7.4 7.0 6.9 6.1 Region 4 9.3 9.1 8.4 8.2 Total Albania 100 100 100 100 Source: Bank of Albania and Author’s calculations

2011 6.1 80.1 6.2 7.7 100

2012 6.0 80.9 6.0 7.1 100

2013 5.7 81.2 6.2 6.9 100

2014 5.5 81.8 6.2 6.5 100

2015 5.4 82.1 5.9 6.5 100

Seemingly, despite not marking important shifts, or changes in the ratio of credit stock to nominal GDP, regional distribution shows for a divergent positioning of

Region 2. The other three regions have a marginal ratio to nominal GDP in terms of loans stock. Figure 32. Loans to businesses by Regions as % of GDP

Source: Bank of Albania and Authorâ&#x20AC;&#x2122;s calculations

Table 28. Short term loans to businesses by Regions (end of year stock, ALL Million) Region 1 Region 2 Region 3 Region 4 Albania

2007 3,129.6 67,207.4 4,438.3 6,329.9 81,105.1

2008 4,508.3 96,505.6 5,949.6 9,235.8 116,199.2

2009 4,599.0 114,796.5 6,926.2 10,010.3 136,332.1

2010 5,590.3 125,935.4 6,974.4 10,369.8 148,869.9

2011 6,715.8 153,200.7 9,519.7 11,015.6 180,451.8

2012 7,026.6 156,661.9 9,356.5 9,220.4 182,265.4

2013 5,916.9 157,750.0 10,122.2 8,252.8 182,041.9

2014 5,816.2 163,134.5 9,254.4 6,802.4 185,007.5

2015 5,898.3 157,153.1 7,916.1 6,410.9 177,378.5

Source: Bank of Albania and Authorâ&#x20AC;&#x2122;s calculations

Further on, the analysis of short-term, mid-term and long-term loans stock by development regions shows for a high concentration of financial resources in Region 2, usually above 75%. Medium-term loans data show for less divergence of the Region 2 compared to the other three regions, than data for short and long-term loans, thus reflecting the same pattern as that of qarks distribution.

Figure 33. Short term loans to businesses by Regions (End of year stock, ALL Million)

Source: Bank of Albania and Author’s calculations

Table 29. Medium term loans to businesses by Regions (End of year stock, ALL Million) Region 1 Region 2

2007 2,935.4 37,511.2

2008 3,222.9 44,193.5

2009 3421.0 45973.7

2010 3843.0 57901.4

2011 5236.0 62383.9

2012 4869.5 64239.1

2013 4975.6 55795.7

2014 4485.0 55849.1

2015 3496.1 53545.8

Region 3 Region 4 Albania

2,991.8 6,222.7 49,661.1

3,029.4 4,801.5 55,247.3

3582.6 4726.3 57703.6

3454.8 5656.8 70856.0

4197.7 6146.5 77964.0

4553.6 6749.4 80411.7

4824.4 6424.9 72020.6

4482.8 6155.5 70972.4

3904.5 5586.0 66532.4

Source: Bank of Albania and Author’s calculations

Figure 34. Medium term loans to businesses by Regions (End of year stock, ALL Million)

Source: Bank of Albania and Author’s calculations

Table 30. Long term loans to businesses by Regions (End of year stock, ALL Million) Region 1 Region 2 Region 3 Region 4 Albania

2007 3,544.5 42,842.7 3,929.3 3,490.0 53,806.5

2008 4,342.8 66,294.2 5,629.7 6,296.0 82,562.6

2009 5,203.3 79,265.4 6,233.3 6,482.1 97,184.0

2010 5,257.1 92,598.4 5,460.5 7,346.2 110,662.2

2011 5,884.5 111,226.5 5,757.3 8,141.6 131,009.8

2012 6,288.1 119,931.1 5,306.9 7,495.8 139,022.0

2013 5,647.7 123,223.6 4,851.7 6,874.9 140,597.9

2014 5,956.4 128,900.1 6,542.2 7,135.0 148,533.7

2015 5,570.5 125,162.3 6,131.9 7,310.5 144,175.1

Source: Bank of Albania and Authorâ&#x20AC;&#x2122;s calculations

Constraints of on this kind of financing have important implications for the regions, since business cannot afford to make or finance new investment projects, especially those of a certain dimension. The lack of long term financing in these regions may be determined by both demand and supply side factors. On the demand side, businesses might not able to provide attracting projects and relative business plans or do not have sufficient assets to collateralize loans. On the supply side, among other, banks are suspicious about balance sheets provided by businesses since the high informality rate in the economy, have adopted prudent lending policies through tight terms and conditions and cannot monitor in time the progress of the project financed. Figure 35. Long-term loans to businesses by Regions (End of year stock, ALL Million)

Source: Bank of Albania and Authorâ&#x20AC;&#x2122;s calculations

Table 31. Loans by regions and maturities (End of year stock, ALL Million) 2007

2008

2009

2010

2011

2012

2013

2014

2015

Region 1

9,609.5

12,073.9

13,223.3

14,690.4

17,836.2

18,184.3

16,540.2

16,257.6

14,964.9

Short

3,129.6

4,508.3

4,599.0

5,590.3

6,715.8

7,026.6

5,916.9

5,816.2

5,898.3

Medium

2,935.4

3,222.9

3,421.0

3,843.0

5,236.0

4,869.5

4,975.6

4,485.0

3,496.1

Long

3,544.5

4,342.8

5,203.3

5,257.1

5,884.5

6,288.1

5,647.7

5,956.4

5,570.5

147,561.3

206,993.3

240,035.6

276,435.3

326,811.1

340,832.1

336,769.2

347,883.6

335,861.3

67,207.4

96,505.6

114,796.5

125,935.4

153,200.7

156,661.9

157,750.0

163,134.5

157,153.1

Region 2 Short

Medium

37,511.2

44,193.5

45,973.7

5,7901.4

62,383.9

64,239.1

55,795.7

55,849.1

53,545.8

Long

42,842.7

66,294.2

79,265.4

92,598.4

111,226.5

119,931.1

123,223.6

128,900.1

125,162.3

Region 3

11,359.3

14,608.7

16,742.1

15,889.7

19,474.6

19,217.0

19,798.2

20,279.5

17,952.5

Short

4,438.3

5,949.6

6,926.2

6,974.4

9,519.7

9,356.5

10,122.2

9,254.4

7,916.1

Medium

2,991.8

3,029.4

3,582.6

3,454.8

4,197.7

4,553.6

4,824.4

4,482.8

3,904.5

Long

3,929.3

5,629.7

6,233.3

5,460.5

5,757.3

5,306.9

4,851.7

6,542.2

6,131.9

16,042.6

20,333.2

21,218.7

23,372.8

25,303.7

23,465.7

21,552.6

20,092.9

19,307.4

Short

6,329.9

9,235.8

10,010.3

10,369.8

11,015.6

9,220.4

8,252.8

6,802.4

6,410.9

Medium

62,22.7

4,801.5

4,726.3

5,656.8

6,146.5

6,749.4

6,424.9

6,155.5

5,586.0

Long

3,490.0

6,296.0

6,482.1

7,346.2

8,141.6

7,495.8

6,874.9

7,135.0

7,310.5

184,572.7

254,009.1

291,219.7

330,388.1

389,425.7

401,699.1

394,660.3

404,513.6

388,086.0

Region 4

ALBANIA

Source: Bank of Albania and Author’s calculations

The distribution of total stock of credit among regions for short, medium and longterm loans follows similar patterns. The Region 1 loan portfolio is composed on average by 36.7% of short-term, 27.4% medium-term and about 36% long- term loans. Region 2 loan portfolio has a dominance of around 46.5% of the shortterm loans, followed by 34.2% of long-term. Region 3 and 4 loan portfolios have also dominating short-term loans respectively of 44.8% and 40.5%. In both cases, long-term loans cover a bigger share compared to medium-term ones. Figure 36. Loans to business by maturity (End of year stock, ALL Million) Short

Medium

Region 2

Long

Thousands

Region 1 18 16 14

Long

300 250

200

150 100

2 0

0 2007

2008

2009

2010

Region 3

2011 Short

2012

2013

Medium

2014

2015

2007

2008

2009

2010

Region 4

Long

Thousands

Medium

350

Short

400

2011 Short

2012

2013

Medium

2014

2015

Long

30 25 20

15 10 10 5

0 2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: Bank of Albania and Author’s calculations

0 2007

2008

2009

2010

2011

2012

2013

2014

2015

Labour market indicators The labour market indicators have been subject to frequent changes from a methodological point of view. Shifting from administrative data to labour force surveys data determined substantial changes in labour market indicators (among other things, LFS accounts for employment in agricultural sector of the economy not covered by the administrative data) 6 . The most important indicator that describes the labour market development is the unemployment rate, signalling for the health of the economy, labour market frictions and also living standard conditions. At the national level, unemployment rate for the age group 15-29 was 32.5% in 2014, quite high compared to other age groups and marking a first jump in 2012 (see endnote in the table below). This suggests, to some extent, for friction and rigidity of the labour market in absorbing the available human resources, but also probably for inappropriate quality of the labour force. Unemployment rate by gender for this age group is higher among males than females. The age group 30-64 years had an unemployment rate of 13.3% in 2014 (gradually increasing since 2007), with malesâ&#x20AC;&#x2122; unemployment higher than that of females. Table 32. Unemployment rate (in %), national level Unemployment rate 2010 2011

Age group Albania

2007

2008

2009

15-29 30-64 15-64 15+ Male

19.8 10.7 13.5 13.4

24.7 10.0 13.2 13.1

21.9 10.4 13.8 13.8

22.5 10.8 14.2 14.0

15-29 30-64 15-64 15+ Female

22.8 10.7 14.4 14.3

25.5 9.1 12.7 12.5

21.6 8.5 12.2 12.2

15-29 30-64 15-64 15+

15.8 10.6 12.2 12.2

23.8 11.2 13.9 13.7

22.2 12.9 15.9 15.8

2012

2013

2014

21.9 11.1 14.3 14.0

26.0 10.0 13.8 13.4

27.2 13.1 16.4 15.9

32.5 13.3 17.9 17.5

23.8 8.3 12.8 12.6

22.8 10.0 14.0 13.6

28.4 10.4 15.2 14.6

29.7 14.6 18.3 17.8

35.6 14.0 19.7 19.2

20.7 14.0 15.9 15.9

20.6 12.4 14.7 14.4

22.0 9.5 12.0 11.7

23.6 11.2 13.8 13.5

27.4 12.3 15.5 15.2

Source: Labour Force Surveys 2007-2014, INSTAT

The total number of unemployed jobseekers (as recorded at the employment offices) declined by approximately by 1.3%, and 0.5% for female unemployed jobseekers, during 2010 â&#x20AC;&#x201C; 2014. Female unemployed jobseekers stand for about 51.2% of the total, with the lowest number in the qark of DibĂŤr (45.9%) and the

highest in the qark of Tirana (56.6%). These figures may be dedicated to the structure of the economy in terms of sectors (mainly industry in Dibër, while females are self-employed in agriculture activities; mixed but with a dominance of services in Tirana, and with very low levels of agricultural activity), as well as to the interest of jobseekers based on their educational background. Table 33. Registered unemployed jobseekers at qark level (number)

Berat Dibër Durres Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

2010 6,557 7,851 8,980 16,382 16,258 5,328 9,432 9,408 14,104 21,211 21,559 6,765 143,835

2011 6,504 7,319 8,899 16,209 15,700 5,326 9,159 9,457 14,233 21,166 21,732 6,782 142,486

Total 2012 6,694 6,956 8,876 16,174 16,124 5,068 9,260 10,018 14,699 19,893 21,819 6,950 142,531

2013 6,492 6,416 9,001 16,288 16,490 5,036 9,911 11,210 15,317 18,901 20,508 7,078 142,648

2014 6,140 6,004 9,734 16,308 16,755 4,820 9,929 10,727 13,978 16,449 21,675 9,479 141,998

2010 3,395 3,544 4,940 7,816 8,503 2,924 4,612 4,989 6,766 9,451 12,151 3,766 72,857

2011 3,386 3,456 4,916 7,756 8,410 2,832 4,911 4,570 6,970 9,590 12,368 3,779 72,944

Females 2012 3,530 6,956 8,876 16,174 16,124 5,068 9,260 10,018 14,699 19,893 21,819 6,950 139,367

2013 3,425 2,959 4,665 7,780 9,309 2,725 5,224 5,530 7,612 8,910 11,578 3,978 73,695

Source: INSTAT and Author’s calculations

The distribution of unemployed jobseekers by qarks seems to be almost uniformly spread. The highest number of unemployed jobseekers is registered in the qark of Tirana (about 15%) and the lowest one in the qark of Gjirokastër (3.6% of the total) and in the other mountainous qarks (Berat and Dibër). A similar pattern is depicted for female jobseekers. Qarks with higher numbers of unemployed jobseekers include also Shkodër, Lezhë, Elbasan and Fier. The data for long-term unemployed jobseekers is presented similarly. The fact that Tirana, Shkodra, Lezha, Elbasan and Fier have higher numbers may be related partially to the higher wages level and concentration of the working age population in these qarks due to better living conditions.

2014 3,049 2,718 4,650 7,774 9,485 2,395 5,144 5,353 6,921 7,719 12,229 5,029 72,466

Figure 37. Registered unemployed jobseekers at qark level (number) Berat

Dibër

Durres

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

100

Berat

Dibër

Durres

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

0 2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

2013 22,052 19,202 16,429 16,012 73,695

2014 19,993 19,597 15,967 16,909 72,466

Source: INSTAT and Author’s calculations

Table 34. Registered unemployed jobseekers at region level (number)

Region 1 Region 2 Region 3 Region 4 Albania

2010 44,723 38,390 32,371 28,351 143,835

2011 44,856 37,950 31,872 27,808 142,486

Total 2012 44,610 37,651 32,128 28,142 142,531

2013 45,428 35,925 32,691 28,604 142,648

2014 41,154 37,413 32,377 31,054 141,998

2010 21,206 20,635 15,823 15,193 72,857

2011 21,130 20,740 16,053 15,021 72,944

Females 2012 44,610 37,651 28,964 28,142 139,367

Source: INSTAT and Author’s calculations

The distribution of the registered unemployed jobseekers on a regional level is almost uniform showing for no disparities regarding this indicator. This is of course inherited from the almost uniform data at qark level. Region 1, which has also low productivity figures, has slightly higher registered unemployed jobseekers. However, Region 2 (so far the best performer in most of growth indicators) is ranked second in terms of higher registered unemployed jobseekers. In fact, this indicator is closely related to other structural indicators, including demography and trust on the employment support system. The lowest level of unemployed jobseekers is registered in region 4 with only 20.2% of total unemployed jobseekers. The lowest figure here may be dedicated to the potential of the region for rather diversified economic sectors and probably also informal employment. This is also a region highly impacted by emigration.

Figure 38. Registered unemployed jobseekers at region level (number) Total

Region 1

Region 2

Region 3

Female

Region 4

100 90 80 70 60 50 40 30 20 10 0

Region 1

Region 2

Region 3

Region 4

100 90 80 70 60 50 40 30 20 10 0 2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

Source: INSTAT and Author’s calculations

During 2010-2014, around 54.3% of registered unemployed jobseekers have completed primary education (8-9 years educations), 41.5% have completed the upper secondary education (general and vocational) and only 4.2% have completed tertiary education. Country wise these figures show for: either those who complete university education had relatively good access to jobs (probably related to the services, real-estate and industry sectors); or there are not enough jobs that can be accessed through the upper secondary (general) and primary education due to the evolution of the sectors and their skills requirements. Probably sectors are demanding for young employees with vocational education (covering diverse professions), but the latter has not matured yet to respond properly to the employment market. In the qark of Vlora, 65.8% of registered unemployed job seekers have completed the primary education level. In the qark of Shkodër from the total number of unemployed jobseekers only 43.7% have completed primary education. The highest number of unemployed jobseekers with completed tertiary education is in the qark of Gjirokastra (8.8) and the lowest one is in the qark of Elbasan (1.3%).

Table 35. Registered unemployed jobseekers by education level by qark (number) 2010

2011

2012

2013

2014

Primary Upper secondary Tertiary Primary Upper secondary Tertiary Primary Upper secondary Tertiary Primary Upper secondary Tertiary Primary Upper secondary Tertiary

Berat 3,561 2,865 131 3,540 2,839 125 3,544 2,981 170 3,557 2,788 147 3,290 2,664 186

Dibër 4,491 3,261 99 4,416 2,794 109 4,199 2,572 87 3,872 2,353 192 3,500 2,156 348

Durrës 5,089 3,458 433 5,066 3,374 458 5,072 3,377 428 5,230 3,407 365 5,386 3,611 737

Elbasan 8,942 7,212 228 8,754 7,229 226 8,741 7,215 218 8,882 7,224 182 9,032 7,036 241

Fier 8,269 7,249 740 8,061 6,836 802 8,173 6,970 981 8,408 6,962 1,120 8,445 7,015 1,296

Gjirokastër 2,424 2,416 488 2,447 2,383 496 2,357 2,286 425 2,369 2,261 405 2,367 2,011 441

Korçë 5,263 3,679 490 5,259 3,448 452 5,352 3,472 436 5,726 3,719 466 5,583 3,752 594

Kukës 4,400 4,970 38 4,614 4,807 37 4,930 5,012 76 5,425 5,516 269 5,252 5,137 338

Lezhë 8,699 4,962 443 8,801 4,967 465 8,921 5,213 565 9,151 5,549 618 8,266 5,116 597

Shkodër 8,900 11,526 786 8,965 11,408 792 8,457 10,704 733 8,103 10,173 625 8,004 7,657 788

Tiranë 12,548 8,110 941 12,908 7,878 946 13,097 7,644 1,079 12,481 6,950 1,076 12,589 7,493 1,594

Vlorë 4,392 2,102 272 4,918 1,593 271 5,027 1,586 337 4,556 2,031 491 5,216 3,280 983

Albania 76,978 61,809 5,089 77,750 59,559 5,176 77,870 59,024 5,635 77,759 58,933 5,956 76,929 56,926 8,143

Source: INSTAT and Author’s calculations

The distribution of registered unemployed jobseekers according to respective educational attainments at qark level shows that those in possession of elementary education are concentrated mainly in the qarks of Tiranë, Elbasan and Lezhë. Those holding a secondary level (general or vocational) degree are in average located in the qarks of Shkodër, Tiranë, Elbasan and Fier. Meanwhile, unemployed registered jobseekers holding a tertiary education level are located in the qarks of Tiranë, Fier and Shkodër. However, it is important to look at these figures as shares within the respective qarks, as this provides a more realistic picture of the employment force potential by education per qark.

Thus if Qark = 100%, then in all qarks there mainly a dominance of unemployed jobseekers with primary education. This dominance is higher in Lezhë, Dibër, Tiranë and Korçë. Figure 39. Registered unemployed jobseekers by education level by qark (in %) Primary

Uppersecondary (general and vocational)

Qark=100 Weight of category in total unemployed jobseekers by Qark

Tertiary

100 90 80

70 60 50

40 30 20 10 0 Berat

Dibër

Durres

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Source: INSTAT and Author’s calculations

The distribution of unemployed people by education level, does not show for imbalances among regions. Table 36. Registered unemployed jobseekers by education level by region (number)

2010

2011

2012

2013

2014

Primary Upper secondary (general and vocational) Tertiary Primary Upper secondary (general and vocational) Tertiary Primary Upper secondary (general and vocational) Tertiary Primary Upper secondary (general and vocational) Tertiary Primary Upper secondary (general and vocational) Tertiary

Region 1 21,999

Region 2 22,128

Region 3 17,766

Region 4 15,085

Albania 76,978

21,458

14,829

13,756

11,767

61,810

1,267 22,380

1,473 22,390

849 17,553

1,500 15,426

5,089 77,749

21,182

14,046

13,516

10,812

59,556

1,294 22,308

1,513 22,368

803 17,637

1,569 15,557

5,179 77,870

20,929

13,593

13,668

10,842

59,032

1,374 22,679

1,594 21,583

824 18,165

1,743 15,333

5,535 77,760

21,238

12,710

13,731

11,254

58,933

1,512 21,522

1,633 21,475

795 17,905

2,016 16,028

5,956 76,930

17,910

13,260

13,452

12,306

56,928

1,723

Source: INSTAT and Author’s calculations

2,679

1,021

2,720

8,143

Vlorë

The registered unemployed jobseekers that have completed the primary education level represent almost equal shares of unemployed jobseekers both in region 1 and region 2. Regions 3 and 4 have less unemployed jobseekers that have attained elementary schooling than the first two. Seemingly Region 1 has a higher number of jobseekers that have completed upper secondary education (general and vocational) compared to all other three, which have similar figures for this educational level. The highest number of unemployed jobseekers holding a tertiary degree is present in regions 2 and 4 during 2014 and the lowest in region 3. Figure 40. Registered unemployed jobseekers by education level by qark (in %) Region 1

Region 2

Region 3

Albania=100 Weight of each Region in registered unemployed jobseekers by category

Region 4

120 100 80 60 40 20 0 Primary

Secondary

Tertiary

Source: INSTAT and Author’s calculations

Similarly to the analysis at qark level, distribution of unemployed jobseekers by le level of education within the regions is dominated by those who have attained primary education. This level of education is clearly not sufficient to address the employment market demand, neither the sectors’ development ambition. It shows somehow a feature or “rurality” within each region, emphasising that agriculture has been a main sector of [self] employment for people who migrated towards urban settlements, without being able to adapt to new employment exigencies. On the other hand, the still large proportion of unemployed jobseekers (in each region) having attained secondary education (general or vocational) should be considered a potential workforce for engagement in tourism and related services sector. Those holding tertiary educational degrees represent a smaller fraction of the unemployed jobseekers in all regions, which is positive. The slightly higher numbers of regions 2 and 4 may be related to the high population figures, especially in Region 2.

Figure 41. Registered unemployed jobseekers by education level by region (in %) Primary

Uppersecondary (general and vocational)

Region=100

Tertiary

Weight of each category in total unemployed jobseekers by Region

100 90 80

70 60 50 40 30

20 10 0 Region 1

Region 2

Region 3

Region 4

Source: INSTAT and Author’s calculations

Overall employment during 2010-2014 has been volatile. After increasing by 5.4% in annual terms till 2011, growth rates experienced slowdown to 1.2% in 2012. In 2013, employment decreased by about 4.4% to pick over the year 2014 by 0.9%. In total over the 5-years period, employment increased in average by 2.9%. Table 37. Total employment by qarks (number) Berat Dibër Durres Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

2010 56,428 50,982 63,857 113,800 123,648 24,703 86,298 20,695 42,575 61,549 212,675 42,324 899,534

2011 55,686 51,760 69,426 106,043 109,941 25,907 80,699 29,695 51,338 63,730 244,344 59,230 947,799

2012 58,262 50,722 63,693 109,036 115,308 23,202 83,998 27,596 50,793 62,590 255,825 58,325 959,350

2013 50,579 54,747 60,426 111,519 111,254 24,898 69,137 24,407 39,897 64,279 255,183 50,590 916,916

2014 47,793 47,369 82,520 117,078 108,640 25,550 62,205 28,880 33,379 63,324 256,844 51,757 925,339

Source: INSTAT

The highest employment level is registered in the qark of Tirana (around 26.3% of total employment) followed by Fier (12.2%) and Elbasan (12.0%). These qarks have high population numbers, but also clear internal sector employment dominances. For instance both Fier and Elbasan have an employment dominance of the private agricultural sector, while Tirana has an employment

dominance of the non-agricultural private sector. Employment levels in the qarks of Durrës and Shkodër present similar patterns, while Kukës has the lowest level in overall employment (2.8% over the target period). Figure 42. Qark contribution in overall employment (in %) Berat Fier Lezhë

Dibër Gjirokastër Shkodër

Durres Korçë Tiranë

Elbasan Kukës Vlorë

Albania=100 Weight of each Qarkn in total employment of Albania

100 90

80 70 60 50 40 30 20

10 0 2010

2011

2012

2013

2014

Source: INSTAT and Author’s calculations.

Overall employment in public administration over the last five years had a downward trend, recording an overall decline by approximately 1.5%. Public administration employment accounts for about 17.7% of total employment over the period 2010-2014. Table 38. Employment in public administration Berat Dibër Durres Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

2010 8,527 9,301 12,915 13,521 14,285 6,283 10,501 5,869 6,823 11,989 55,676 10,647 166,337

2011 8,409 8,772 12,995 14,035 13,658 5,939 10,113 5,736 6,578 11,505 57,052 10,308 165,100

2012 8,413 8,974 12,473 13,783 14,561 5,802 9,773 5,295 6,679 11,547 57,071 10,029 164,400

2013 8,347 8,992 11,754 13,703 13,636 5,801 9,823 5,264 6,764 11,553 58,079 10,184 163,900

2014 8,295 8,835 11,700 13,599 13,596 5,721 9,682 5,102 6,683 11,213 59,444 10,015 163,885

Source: INSTAT

Qark of Tirana has the highest share in the total public administration employment (Albania = 100), and this is due to the highly concentrated presence of public and central government institutions in the capital city. In average, the qark of Tirana accounts for around 34.9% of total public administration employment over the last 5 years. the other qarks have almost uniform

distribution of these institutions (due to deconcentration policy and structure of national and local government) and thus related employment. Figure 43. Contribution of qarks in public administration employment Berat Fier Lezhë

Dibër Gjirokastër Shkodër

Durres Korçë Tiranë

Elbasan Kukës Vlorë

Albania=100 Weight of each Qark in public sector employment

100 90 80 70 60 50 40

30 20

10 0 2010

2011

2012

2013

2014

Source: INSTAT and Author’s calculations.

Employment in non-agricultural private sector accounted in average for 29.6% of total employment during 2010-2014. In 2014, employment in this sector increased by 9.6% in annual terms and represented about 34.4% of total employment. The progressive employment in this sector is assessed to be the outcome of public policies in particular sectors of the economy (apparel industries) and the policy aiming the formalization of the economy, among others. Table 39. Employment in non-agricultural private sector Berat Dibër Durres Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

2010 6,699 4,305 23,166 13,426 16,754 5,715 12,351 1,828 7,906 13,457 119,428 16,801 241,836

2011 6,853 3,578 31,414 13,399 16,092 6,316 12,422 2,095 8,078 13,727 124,389 17,924 256,287

2012 7,827 3,634 33,680 13,685 16,159 3,500 12,790 1,966 8,515 13,665 135,341 17,928 268,690

2013 8,275 3,293 36,825 13,845 16,424 4,030 12,650 2,078 8,541 13,764 153,014 18,024 290,763

2014 8,828 4,190 38,000 13,990 17,671 4,937 12,685 2,040 9,256 13,882 173,360 19,732 318,571

Source: INSTAT

Employment in the non-agricultural private sector is highly concentrated in the qark of Tirana and accounts for about 51.1% of total employment. This may be related to high population numbers and to the strong services/realestate/construction economic profile (by sector) of this Qark. The second ranked 64

qark is Durrës with about 11.8% of total employment. Both Tirana and Durrës encompass more than 60% of total employment in the private non-agricultural sector of the economy and this contributes to a non-agricultural employment profile of the Region. Figure 44. Employment in non-agricultural private sector by qarks (in %) Berat Fier Lezhë

Dibër Gjirokastër Shkodër

Durres Korçë Tiranë

Elbasan Kukës Vlorë

Albania=100 Weight of each Qark in non-‐ agricultural sector employment

100 90 80

70 60

50 40 30 20 10 0 2010

2011

2012

2013

2014

Source: INSTAT and Author’s calculations.

The agricultural private sector accounts for about 52.7% on total employment data during 2010-2014. Overall employment in this sector has declined over time, thus registering a decrease of about 4.2% in 2014. Over the 5 years period, total employment in the agricultural private sector has contracted by approximately 9.9%, remaining however very high on a national level. These figures are correlated with GDP/GVA contributions of agriculture as a sector in Albania. Table 40. Employment in agricultural private sector Berat Dibër Durres Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

2010 41,202 37,376 27,776 86,853 92,609 12,705 63,446 12,998 27,846 36,103 37,571 14,876 491,361

2011 40,424 39,410 25,017 78,609 80,191 13,652 58,164 21,864 36,682 38,498 62,903 30,998 526,412

2012 42,022 38,114 17,540 81,568 84,588 13,900 61,435 20,335 35,599 37,378 63,413 30,368 526,260

2013 33,957 42,462 11,847 83,971 81,194 15,067 46,664 17,065 24,592 38,962 44,090 22,382 462,253

2014 30,670 34,344 32,820 89,489 77,373 14,892 39,838 21,738 17,440 38,229 24,040 22,010 442,883

Source: INSTAT

Employment in agricultural private sector is more intense in the qarks of Elbasan, Fier and Korça. The qarks of Elbasan and Fier account each for more than 17% 65

of total employment in the private agricultural sector over time. Korça follows with about 10.9% of total employment. These profiles are borne due to the location of these qarks, the size of agricultural land, the size of the area and population of the qarks, especially Elbasan. Figure 45. Employment in private agricultural sector at qark level (in %)

Source: INSTAT and Author’s calculations.

Overall employment analysis per categories (public administration, private nonagricultural and private agricultural) shows specific qark compositions. Thus, the private non-agricultural sector of the economy absorbs the largest part of employed work force in Tirana and Durrës. This sector accounts for a considerable portion of employment in Lezhë and Vlorë as well, though at a lower level. On the contrary, employment in the private agricultural sector accounts for a very large share in total employment of the qarks of Kukës, Elbasan, Fier and Dibër.

Figure 46. Employment by categories at qark level, 2014 (in %) Public administration

Private non-‐agricultural

Qark=100 Weight of each sector in total employment of Qark

Private agricultural

100 90 80 70

60 50 40 30 20 10 0 Berat

Dibër

Durres

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: INSTAT and Author’s calculations.

The above qark analysis of employment is reflected at the regional level as well. Region 2 accounts for the largest share of total employment (39.2%) over the last 5 years (Tirana and Durrës contribution). The share of region 2 against total employment has increased at a slow but constant pace over time. Region 1 presents the lowest share to total employment (14.3%). Table 41. Total employment by regions (number) 2010 124,819 327,514 256,526 190,675 899,534

Region 1 Region 2 Region 3 Region 4 Albania

2011 144,763 365,530 242,428 195,078 947,799

2012 140,979 370,240 251,296 196,835 959,350

2013 128,583 370,356 231,235 186,742 916,916

Source: INSTAT

Figure 47. Total employment by regions (in %) Region 1

Region 2

Region 3

Region 4

Albania=100 Weight of each Region in total employment of Albania

100 90 80

70 60

50 40 30 20 10 0 2010

2011

2012

Source: INSTAT and Author’s calculations

2013

2014

2014 125,583 386,733 227,076 185,947 925,339

Employment in public administration (average of 47.8%) is concentrated in Region 2 (Tirana). Regions 3 and 4 have almost uniform shares and Region 1 has the lowest share of the employed in public administration. Table 42. Employment in public administration by regions (number) Region 1 Region 2 Region 3 Region 4 Albania

2010 24,681 77,892 32,549 31,215 166,337

2011 23,819 78,819 32,557 29,905 165,100

2012 23,521 78,518 31,969 30,392 164,400

2013 23,581 78,825 31,873 29,621 163,900

2014 22,998 79,979 31,576 29,332 163,885

Source: INSTAT

Figure 48. Employment in public administration by regions (in %)

Source: INSTAT and Authorâ&#x20AC;&#x2122;s calculations

At regional level, employment in private non-agricultural sector (average 29.6% over the last five years) shows for a higher concentration particularly in Region 2 â&#x20AC;&#x201C; 48.6% of the Region`s total and 64.3% of the total employment in the private non-agricultural sector. Region 1 constitutes the lowest % of the total employment in the private non-agricultural sector Table 43. Employment in non-agricultural private sector by regions (number) Region 1 Region 2 Region 3 Region 4 Albania

2010 23,191 146,899 32,476 39,270 241,836

2011 23,900 159,381 32,674 40,332 256,287

Source: INSTAT

2012 24,146 172,655 34,302 37,587 268,690

2013 24,383 193,132 34,770 38,478 290,763

2014 25,178 215,550 35,503 42,340 318,571

Figure 49. Employment in private non-agricultural sector (in %) Region 1

Region 2

Region 3

Region 4

100

Albania=100 Weight of each Region in private non agricultural sector employment

90 80

70 60

50 40 30 20 10 0 2010

2011

2012

2013

2014

Source: INSTAT and Author’s calculations

Regions 1, 3 and 4 constitute more than 60% of the total employment in private agricultural sector, with region 3 leading among the four and where around 35.9% of the employed are occupied in the agricultural sector of the economy. It is curious to note though that region 1 still constitutes the individual lowest share of the total employment in private agricultural sector, outpacing region 2 as well. This is mainly due to the inclusion in region 2 of Dibër qark that has most of its employed workforce working in the agricultural private sector. Table 44. Employment in agricultural private sector by regions (number) Region 1 Region 2 Region 3 Region 4 Albania

2010 76,947 102,723 191,501 120,190 491,361

2011 97,044 127,330 177,197 124,841 526,412

2012 93,312 119,067 185,025 128,856 526,260

2013 80,619 98,399 164,592 118,643 462,253

2014 77,407 91,204 159,997 114,275 442,883

Source: INSTAT

The overall composition of employment by sectors is presented differently in each region during 2014. Thus, regions 3 and 1 show high similarities for all three sectors, with employment in the agricultural sector as significantly very dominant. Region 4 is also similar to 3 and 1, but has a lower level of representation for the agricultural sector at the benefit of the non-agricultural private sector. The latter is clearly the dominant sector for Region 2 and is highly correlated with the services/construction/real estate profile of the Region 2. Should be noted that in all four regions, public administration employment is not dominant.

Figure 50. Employment in agricultural private sector by regions (in %)

Source: INSTAT and Author’s calculations

Figure 51. Employment by categories at regions level, year 2014 (in %) Public administration

Private non-‐agricultural

Private agricultural

Region=100 Weight of each sector in total employment of

100 90 80 70

60 50 40 30 20 10 0 Region 1

Region 2

Region 3

Region 4

Source: INSTAT and Author’s calculations

Entrepreneurial spirit The business demography statistics (active enterprises, birth rate etc.) mirror broader developments in the economy such as job creation and dynamism of economic growth. Enterprises births tend to increase the competitiveness of a countries enterprise population, obligating them to become more efficient in view of newly emerging competition. Thus, enterprise births and survival might simulate innovation and adoption of new technologies helping, at the same time productivity enhancement within the economy.

The stock of active enterprises had an increasing trend till 2008, but since then growth rates have slowed down, turning negative in 2012 and increasing again afterwards. Fluctuation in active enterprises numbers mirror to some extent overall economic developments since the financial turmoil faced and involved the Albanian economy. Table 45. General indicators on entrepreneurial spirit in Albania Active enterprise s(no) New enterprises (no) Birth rate (in %) Active enterprises for 10.000 inhabitants Active enterprises with female owner/administrator (%)

2005 62,162 10,607 17.1

2006 73,672 14,568 19.8

2007 80,077 14,010 17.5

2008 94,533 19,884 21.0

2009 94,953 13,081 13.8

2010 103,038 16,469 16.0

2011 109,039 12,905 11.8

2012 106,837 12,828 12.0

2013 111,083 12,131 10.9

2014 112,537 17,377 15.4

91.4

109.8

129.2

158.4

185.3

222.4

254.2

289.4

328.3

388.6

22.9

23.7

24.2

24.8

25.1

26.5

26.9

27.0

28.0

Source: INSTAT and Author’s calculations

There were about 112,537 enterprises exercising their economic activity in Albania during 2014, compared to 103,038 enterprises in 2010. This marks an increase by 9,499 enterprises in 5 years. Further on, the number of active enterprises owned/administrated by women has increased steadily representing in 2014 about 28% of the total stock of active enterprises, suggesting for a better inclusion of females in the business world. Table 46. Active enterprises by qarks, stock at the end of the year (no) 2010

2011

2012

2013

2014

Berat

4,366

4,545

4,470

4,557

4,302

Dibër

2,097

2,142

1,945

2,077

2,164

Durrës

12,316

12,918

11,625

10,599

9,578

Elbasan

6,972

7,611

7,311

7,442

7,859

Fier

9,416

9,924

9,527

9,830

9,693

Gjirokastër

2,926

3,022

2,642

2,814

2,681

Korçë

6,673

6,843

6,610

6,728

7,311

Kukës

998

1,053

986

1,062

1,068

Lezhë

2,844

3,104

2,954

3,189

3,388

Shkodër

6,258

6,607

6,543

5,945

5,446

Tiranë

39,656

42,117

43,295

47,477

49,467

Vlorë

8,516

9,153

8,929

9,363

9,580

103,038

109,039

106,837

111,083

112,537

Albania Source: INSTAT

Enterprises distribution by qarks shows for dominant presence in the qark of Tirana. Over the 5 years period (2010-2014), about 40.9% of total active 71

enterprises were located in the qark of Tirana, with around 44% of the total stock in 2014. A progressive increase in figures is noticed after 2010, with figures almost doubling those of the previous years. Table 47. Active enterprises, stock at the end of the year (weights vs. total, in %) Berat

2010

2011

2012

2013

2014

4.2

4.1

3.8

Dibër

2.0

1.8

1.9

Durres

12.0

11.8

10.9

9.5

8.5

Elbasan

6.8

7.0

6.8

6.7

7.0

Fier

9.1

8.9

8.8

8.6

Gjirokaster

2.8

2.5

2.4

Korce

6.5

6.3

6.2

6.1

6.5

Kukes

1.0

0.9

1.0

0.9

Lezhe

2.8

2.9

3.0

Shkoder

6.1

5.4

4.8

Tirane

38.5

38.6

40.5

42.7

44.0

Vlore

8.3

8.4

8.5

Albania 100 100 Source: INSTAT and Author’s calculations

100

The qarks of Durrës (average 9.9%), Fier (average 9.5%), and Vlorë (average 8.3%) present almost similar patterns with regard to the number of active enterprises and rank second after Tirana, but with great divergence from Tirana. On the other hand, while the number of active enterprises increases annually in Tirana, the qarks of Durrës and Fier are faced with a downward trend over the 5 years. The lowest number of active enterprises is present in the qark of Kukës (average of 0.9% versus total). Dibër and Lezhë also rank low with 2.2% and 2.9% respectively. The other qarks are in a more moderate position between Korça and Elbasan in one side and the most disadvantaged qarks in the other, though still with very low shares (around 4%). Table 48. Active enterprises by qarks per 10,000 inhabitants (number) 2010

2011

2012

2013

2014

Berat

285

304

305

314

296

Dibër

142

149

138

150

156

Durrës

464

479

424

385

348

Elbasan

225

248

240

246

260

Fier

285

305

298

309

305

Gjirokastër

356

385

354

382

364

Korçë

285

297

291

297

323

Kukës

109

118

112

123

124

Lezhë

202

222

213

231

245

Shkodër

273

293

294

268

246

Tiranë

531

552

554

602

627

Vlorë

454

495

489

512

524

Albania 353 375 Source: INSTAT and Author’s calculations

368

383

389

The data show in overall for a relatively high entrepreneurship, which is not equally distributed among qarks. On average, the highest number of active enterprises for 10,000 inhabitants (over the 5 years) is registered in the qark of Tirana (573.2) and the lowest level is registered in the qark of Kukës (117.1), which corresponds to the positioning of these qarks in terms of total number of active enterprises as well. This same pattern is kept for respective periods of 2010 and 2014. Figure 52. Active enterprises for 10,000 inhabitants (number) 700

2010

2012

2014

600 500 400

300 200 100

0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: INSTAT and Author’s calculations

In 2014, the qarks of Tiranë and Vlorë had the highest levels of active enterprises for 10000 inhabitants, with 627 and 524 respectively and both staying above the national average of 389. The presence of a better infrastructure and business services in these areas has favoured the establishment and operation of enterprises over time. It is also linked to access to financial services and population number. The qarks of Durrës, Gjirokastra and Korça show similar patterns and stand slightly below the national average for 2014. Their values are dedicated especially to the geographical location of the main cities in these qarks and key infrastructure that they possess (main border cities and port city). People living in Korça and Gjirokstra in particular operate economic activities in cooperation with businesses in the neighbouring areas in Greece and have sought to extend their markets in the cross border zone.

Table 49. Active enterprises per 10,000 inhabitants indexes by qarks 2010

2011

2012

2013

2014

Berat

Dibër

Durrës

131

128

115

100

Elbasan

Fier

Gjirokastër

101

103

100

Korçë

Kukës

Lezhë

Shkodër

Tiranë

150

147

151

157

161

Vlorë

129

132

133

134

135

Albania

100

Source: INSTAT and Author’s calculations

The indexes of the stock of active enterprises for 10,000 inhabitants facilitate interpretation of the dynamic entrepreneurship patterns among qarks and allow also for easier comparison with the national average (Albania = 100). In 2010 there were 3 qarks standing above the national average, with a leading position of Tirana, Durrës and Vlorë. Disparities were also distributed among qarks. Over time, the leading position of Tirana and Vlora pronounced further, while Durrës fell below the national average in 2014. All other qarks remained below the national average. Disparities among the other 9 had smoothen, but all together have worsened in their position versus Tirana and Vlora. This is a case showing for centralised growth of economic activities in Tirana, next to the other ones on GDP, GVA, employment, etc. Figure 53. Indexes of stock of active enterprises per 10,000 inhabitants Year 2010, Index Albania = 100

Year 2012, Index Albania = 100

Year 2014, Index Albania = 100

Vlorë

Tiranë

Shkodër

Lezhë

Kukës

Korçë

Gjiroka…

Fier

Elbasan

Durrës

Dibër

Berat

Berat 0

100

125

150

175

Berat 0

Source: INSTAT and Author’s calculations

100

125

150

175

100

150

200

From a regional analysis perspective, more than 50% of the total stock of active enterprises in located in the Region 2 (Tirana and Durrës dominated), thus determining a big gap between this region and the other ones. Table 50. Active enterprises by regions, stock at the end of the year (number) 2010

2011

2012

2013

2014

Region 1

10,100

10,764

10,483

10,196

9,902

Region 2

54,069

57,177

56,865

60,153

61,209

Region 3

18,011

18,999

18,391

18,727

19,472

Region 4

20,858

22,099

21,098

22,007

21,954

106,837

111,083

112,537

Albania 103,038 109,039 Source: INSTAT and Author’s calculations

Regions 3 and 4 have almost equal number of active enterprises, with 19% and 20.7% respectively (average for 10 years) and both show for a declining trend over time. Table 51. Active enterprises by regions, stock at end of the year (weights vs. total, in %) 2010

2011

2012

2013

2014

Region 1

9.8

9.9

9.8

9.2

8.8

Region 2

52.5

52.4

53.2

54.2

54.4

Region 3

17.5

17.4

17.2

16.9

17.3

Region 4

20.2

20.3

19.7

19.8

19.5

Albania 100 100 Source: INSTAT and Author’s calculations

100

Entrepreneurial activity is not equally distributed among regions. On average, during the 5 years, Region 2 has registered the highest level of active enterprises for 10,000 inhabitants (487.2) and Region 1 has the lowest (228). The figures correspond with those of Qarks as presented above. Similarly, the same patterns as for the Qark of Tirana above, are presented in the regional figures for 2014. Table 52. Active enterprises by regions per 10000 inhabitants (number) 2010

2011

2012

2013

2014

Region 1

117

133

152

171

222

Region 2

292

332

378

433

509

Region 3

180

202

227

251

289

Region 4

218

252

287

322

382

254

289

328

389

Albania 222 Source: INSTAT and Author’s calculations

Regions 1, 3, and 4 have levels of active enterprises per 10,000 inhabitants standing below the national average. There are significant disparities among them, but much more pronounced is the difference with region 2. Region 1 has the lowest values, though these values have increased gradually during 2005-

2014. The indexes of the stock of active enterprises for 10,000 inhabitants support further the evidence that Region 2 has a higher dynamism among all four and stands above the national average. Despite improvements over time, new reforming stimuli are needed to improve the performance of this indicator in regions 1 and 3. Figure 54. Active enterprises by regions per 10,000 inhabitants (number) 600

Region 1

Region 2

Region 3

Region 4

500 400 300 200 100 0 2010

2011

2012

2013

2014

Source: INSTAT and Author’s calculations

Table 53. Stock of active enterprises per 10,000 inhabitants, indexes 2010 2011 Region 1 62.0 63.1 Region 2 131.9 129.5 Region 3 73.2 73.8 Region 4 98.5 100.2 Albania 100.0 100.0 Source: INSTAT and Author’s calculations

2012 63.4 129.1 73.6 99.2 100.0

2013 59.6 130.5 72.4 99.9 100.0

2014 57.1 131.1 74.3 98.4 100.0

Table 54. Indexes of stock of active enterprises per 10,000 inhabitants Year 2010, Index Albania = 100

Year 2012, Index Albania = 100

Year 2014, Index Albania = 100

Region 4

Region 3

Region 2

Region 1

100

125

150

100

125

150

100

125

150

Source: INSTAT and Author’s calculations

The potential for economic performance at Qark and Regional level, should be analysed from a perspective of newly created enterprises as well. The number of newly created enterprises has been volatile over time, subject to some extent to

external shocks (upward or downward stimulating). Thus, in 2010-2011, the number of newly created enterprises recorded a decline of 21.6%. Although at a moderated pace, the declining trend continued during the next two years. In the frame of the central government policy and measures against informality in Albania, around 17,377 enterprises were newly created in 2014, about 43.2% more than the previous year. Among newly established enterprises, (average for the last five years), female owned/administrated enterprises represent about 30.6%. For the first time in the last five years, in 2014, the number of newly created enterprises with female owner/administrator recorded a high positive growth rate of about 51.7% compared to the previous year. Table 55. Newly created enterprises (no) Total

Female owner/ administrator

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

Berat

671

442

447

352

670

242

134

131

195

Dibër

275

171

132

164

253

Durrës

1,593

1,474

1,396

1,088

1836

445

449

404

252

582

Elbasan

1,340

785

710

715

940

464

248

208

184

285

Fier

1,553

1,037

817

863

1577

494

322

256

228

377

Gjirokastër

433

332

282

235

389

122

100

105

Korçë

839

690

693

573

952

253

219

156

179

313

Kukës

123

100

110

243

Lezhë

470

373

315

332

869

133

105

336

Shkodër

1,002

843

909

547

1141

280

235

267

150

337

Tiranë

6,753

5,355

5,885

6,107

7053

2,203

1,755

1,906

1,967

2283

Vlorë

1,417

1,305

1,142

1,045

1454

463

400

350

297

478

Albania 16,469 Source: INSTAT

12,905

12,828

12,131

17,377

5,173

4,020

3,863

3,549

5,385

In 2014, the distribution of the female owned/administrated active enterprises versus total active enterprises for each qark was higher in the qarks of Tirana (30%), Berat (28.6%), Vlora (28.3%), Lezhë (28.6%) and Shkodër (27.7%) and it was lowest in the qark of Kukës and Dibër. The difference of Tirana to other qarks is in fact higher as female owned/administrated enterprises constitute in average about 45.1% of total active enterprises at national level for the period 2010-2015. Table 56. Relative relevance of female participation, at qark level (in %)

Berat Dibër Durrës Elbasan

Female owned / active enterprises in each qark 2010 2011 2012 2013 2014 26.1 27.0 27.9 27.9 28.6 16.9 17.5 17.5 18.1 18.7 25.6 26.1 26.8 26.6 27.6 24.3 25.0 24.9 25.0 25.7

Female participation: Albania =100 2010 2011 2012 2013 2014 4.2 4.2 4.3 4.1 3.8 1.3 1.3 1.2 1.2 1.3 11.6 11.5 10.7 9.1 8.2 6.2 6.5 6.2 6.0 6.3

Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

24.9 21.9 25.0 12.8 23.5 23.6 29.9 25.4 26.5

25.6 23.0 25.5 13.2 23.9 24.1 30.0 26.3 26.9

26.5 23.2 25.2 14.2 24.7 25.1 30.2 26.6 27.4

26.6 23.3 25.9 15.1 25.0 26.3 30.4 26.9 27.8

26.6 24.0 26.9 15.6 28.6 27.7 30.7 28.3 28.5

8.6 2.4 6.1 0.5 2.4 5.4 43.4 7.9 100

8.7 2.4 5.9 0.5 2.5 5.4 43.0 8.2 100

8.6 2.1 5.7 0.5 2.5 5.6 44.6 8.1 100

8.5 2.1 5.7 0.5 2.6 5.1 46.9 8.2 100

8.0 2.0 6.1 0.5 3.0 4.7 47.5 8.5 100

Source: INSTAT and Author’s calculations

The birth rate of newly created enterprises is constructed as a ratio between the new enterprises and the total stock of active enterprises for each relative period. At a national level it can be noticed that the female owned/administered enterprises birth rate has been higher during 2010-2014, thus suggesting for higher integration of women in the business world. Table 57. Birth rate of enterprises (%) Total 2010 2011 2012 2013 Berat 15.4 9.7 10.0 7.7 Dibër 13.1 8.0 6.8 7.9 Durres 12.9 11.4 12.0 10.3 Elbasan 19.2 10.3 9.7 9.6 Fier 16.5 10.4 8.6 8.8 Gjirokaster 14.8 11.0 10.7 8.4 Korce 12.6 10.1 10.5 8.5 Kukes 12.3 9.3 10.1 10.4 Lezhe 16.5 12.0 10.7 10.4 Shkoder 16.0 12.8 13.9 9.2 Tirane 17.0 12.7 13.6 12.9 Vlore 16.6 14.3 12.8 11.2 Albania 15.4 9.7 10.0 7.7 Source: INSTAT and Author’s calculations

2014 15.6 11.7 19.2 12.0 16.3 14.5 13.0 22.8 25.6 21.0 14.3 15.2 15.6

Female owner/ administrator 2010 2011 2012 2013 2014 21.2 10.9 10.5 7.1 15.9 16.9 9.3 7.0 9.6 14.1 14.1 13.3 12.9 8.9 22.0 27.4 13.1 11.4 9.9 14.1 21.0 12.7 10.1 8.7 14.6 19.0 14.4 9.3 8.7 16.3 15.1 12.5 9.4 10.3 15.9 10.9 12.9 12.1 15.6 22.2 19.9 14.1 11.9 10.6 34.6 18.9 14.8 16.2 9.6 22.3 18.6 13.9 14.6 13.6 15.0 21.4 16.6 14.7 11.8 17.7 19.0 13.7 13.2 11.5 16.8

The data show for a relative dynamism in the entrepreneurial activity among qarks and differences of qarks against the national average. Should be noted that new enterprises birth rates for qarks have almost doubled in 2014 compared to 2013 (thus after the national elections year). The national new enterprises birth rate for 2014 was 15.4%, with an increasing trend over time, without reaching the national average of 2010 (16%). The highest birth rate of new enterprises in 2014 was registered in the qark of Lezhë (25.6%) followed by the qarks of Kukës (22.8%), Shkodër (21.0%) and Durrës (19.2%). The lowest values of the indicator new enterprises birth rate were registered in the qarks of Dibër (11.7%), Elbasan (12.0%) and Korçë (13.0%). Furthermore, the new enterprises birth rate stands above the national birth rate of new enterprises for the qarks of Lezhë, Kukës,

Shkodër, Durrës and Fier. All the other qarks stand below the national new enterprises birth rate. Figure 55. New enterprises birth rate by qarks, (in %) 30

Average Albania 2014 = 15.4% Average Albania 2010 = 16.0%

2010 2014

25 20 15 10 5 0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korcë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: INSTAT and Author’s calculations

From a regional point of view, Region 2 has the highest number of the total newly created enterprises, as well as the highest concentration of female owned/administered new enterprises (average 57.3%) versus total female owned/administrated new enterprises in Albania. Region 3 and region 4 show similarities in figures, while Region 1 is the most disadvantaged. Table 58. Newly created enterprises by regions (number) Total

Female owner/administrator

2010

2011

2012

2013

2014

2010

2011

2012

2013

2014

Region 1

1,595

1,314

1,324

989

2,253

427

358

371

259

710

Region 2

8,621

7,000

7,413

7,359

9,142

2,708

2,239

2,334

2,255

2,922

Region 3

2,850

1,917

1,850

1,640

2,562

959

601

495

453

793

Region 4

3,403

2,674

2,241

2,143

3,420

1,079

822

663

582

960

Albania

16,469

12,905

12,828

12,131

17,377

5,173

4,020

3,863

3,549

5,385

Source: INSTAT and Author’s calculations

Female owned/administered enterprises in Region 1 account in average for less than 10% of total female owned/administered enterprises of Albania. However, in all regions, the rates of female owned/administered enterprises versus regional total values are almost uniform. Table 59. Relative relevance of female participation (in %)

Region 1

Female owned / active enterprises in each region 2010 2011 2012 2013 2014 22.5 23.0 24.0 24.7 26.7

Female owned / total active enterprises in Albania 2010 2011 2012 2013 2014 8.3 8.4 8.6 8.2 8.3

Region 2 Region 3 Region 4 Albania

28.4 25.0 24.7 26.5

28.7 25.6 25.5 26.9

29.0 25.7 26.2 27.4

29.3 26.0 26.3 27.8

29.8 26.8 27.0 28.5

56.3 16.5 18.9 100.0

55.8 16.6 19.2 100.0

56.4 16.2 18.8 100.0

57.2 15.8 18.8 100.0

57.0 16.3 18.5 100.0

Source: INSTAT and Author’s calculations

The highest birth rate of new enterprises was recorded in Region 1 (22.8%), about 7.4 percentage points above the national average. The same dynamics might be notices in the female owned/administrated new enterprises birth rate where the value recorded for Region 1 in 2014 stands about 10.0 percentage points above the national average. Table 60. Birth rate of enterprises by regions (%) Total 2010 2011 2012 2013 Region 1 15.8 12.2 12.6 9.7 Region 2 15.9 12.2 13.0 12.2 Region 3 15.8 10.1 10.1 8.8 Region 4 16.3 12.1 10.6 9.7 Albania 16.0 11.8 12.0 10.9 Source: INSTAT and Author’s calculations

2014 22.8 14.9 13.2 15.6 15.4

Female owner/administrator 2010 2011 2012 2013 2014 18.8 14.5 14.8 10.3 26.8 17.6 13.7 14.1 12.8 16.0 21.3 12.3 10.5 9.3 15.2 21.0 14.6 12.0 10.1 16.2 19.0 13.7 13.2 11.5 16.8

Figure 56. New enterprises birth rate (in %) by qarks 25

2010

2012

2014

National averages for the respective years:

0 Region 1

Region 2

Region 3

Region 4

Source: INSTAT and Author’s calculations

Region 2 and region 4 both fall below the national average birth rate and are very similar to each other. With regard to female owned/administrated new enterprises birth rate, region 2, 3 and 4 present almost the same level in 2014.

Figure 57. Female owned/administrated new enterprises birth rate (in %) by qarks 30 2010

2012

2014

National averages for the respective years:

25 20 15 10 5 0

Region 1

Region 2

Region 3

Region 4

Source: INSTAT and Author’s calculations

The figures presenting the differences from the national average show similar patterns for both total new enterprises birth rate and female owned/administrated new enterprises birth rate. Figure 58. Differences from the national new enterprises birth rate total (rh) and female owned/administrated new enterprises birth rate (lh) 10 2010

2012

Total new birth rate: differences from the national averages

14 12

2010

2012

Female owned/administrated birth rate: differences from the national averages

4 2

0 -‐2

-‐2

-‐4 Region 1

Region 2

Region 3

Region 4

-‐4 Region 1

Region 2

Region 3

Region 4

Source: INSTAT and Author’s calculations

Enterprises are analysed also on a sectorial level. Trade sector of the economy accounts for the largest share on total active enterprises both at the national level and qark level. At a national aggregated level, the number of active enterprises operating in the trade sector presents about 41% of the total. The average highest share of active enterprises in the trade sector is in the qarks of Berat (47.2%) and Fier (46.1%), while the lowest is in the qark of Dibër (34.7%). Enterprises in the accommodation and food services sector constitute (national average) 15.8% of total active enterprises. At qark level, Shkodër, Tiranë and 81

Vlorë shares of active enterprises against total stand above the national average. The qarks of Dibër, Durrës, Gjirokastër and Lezhë stand slightly below the national average

Table 61. Active enterprises by economic activity by qarks, average values 2010-2014 Albania

Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Agriculture, Forestry, Fishing

1.7

2.0

1.9

2.0

1.4

3.1

2.1

2.4

3.0

3.2

0.4

4.6

Industry

9.3

12.8

12.6

10.3

12.3

11.3

8.6

10.9

9.3

7.7

9.2

Construction Trade Transport & Storage Accommodation & Food services Information & Communication Other services Total

4.3

2.3

4.3

5.4

2.6

3.7

4.2

2.6

6.1

5.5

3.2

4.5

6.3

41.0

47.2

34.7

42.6

42.4

46.1

40.2

43.5

37.9

40.0

41.9

39.1

38.0

7.5

8.4

15.4

7.8

11.6

8.4

8.7

11.3

8.2

8.0

7.2

5.1

8.2

15.8

14.4

15.5

15.1

14.3

15.3

13.7

13.4

15.3

17.3

16.0

18.7

2.2

1.8

1.4

1.3

2.0

1.8

1.6

2.3

1.1

1.6

3.0

1.5

18.3

11.0

14.3

15.1

14.6

12.3

15.6

13.8

21.0

16.3

16.4

24.2

13.5

100.0

Source: INSTAT and Author’s calculations

Figure 59. Active enterprises by economic activity (average values 2010-2014, in %) Agriculture, Forestry, Fishing

Industry

Construction

Trade

Transport & Storage

Accomodation & Food services

Information & Communication

Other services

100 90

80 70 60 50 40 30 20 10 0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Source: INSTAT and Author’s calculations

Lezhë

Shkodër

Tiranë

Vlorë

Trade constitutes the major share for active enterprises at regional level as well, with the highest regional share in Region 3. Accommodation and food services also account for a good proportion of active enterprises with Region 1 as the one having the highest internal share (16.3% of total active enterprises of the region). Table 62. Active enterprises by economic activity by region, average values 2010-2014 Agriculture, Forestry, Fishing Industry Construction Trade Transport & Storage Accommodation & Food services Information & Communication Other services Total

Albania 1.7 9.3 4.3 41.0 7.5 15.8 2.2 18.3 100

Region 1 3.1 9.7 4.2 40.9 7.5 16.3 1.5 16.8 100

Region 2 0.8 8.4 4.7 39.7 6.0 15.9 2.6 22.0 100

Region 3 1.8 11.3 2.6 44.0 10.7 14.4 1.8 13.5 100

Region 4 3.6 10.1 4.9 41.9 8.3 16.3 1.6 13.2 100

Source: INSTAT and Author’s calculations

Figure 60. Active enterprises by economic activity (average values 2010-2014, in %) Agriculture, Forestry, Fishing Trade Information & Communication

Industry Transport & Storage Other services

Construction Accomodation & Food services

100 90

80 70 60 50

40 30 20 10 0 Albania

Region 1

Region 2

Region 3

Region 4

Source: INSTAT and Author’s calculations

Active enterprises breakdown by size shows that enterprises with 1 to 4 employees dominate over all other categories (89.8% at the national level). This pattern keeps presence at qarks and regional level as well. Berat has the highest level of active enterprises with 1-4 employees (93.3%) and Kukës has the lowest (80.8%). Enterprises with 5-9 employees constitute in average 4.9% of the total active enterprises in Albania. Kukës has the highest internal share (comparing among qarks) of these enterprises (7.2%) and Berat has the lowest (2.5%). If both categories (1-4 and 5-9 employees) are considered as small enterprises, then for each qark more than 90% of active enterprises fall into this category.

Enterprises with 10-49 employees constitute on average 4.2% of total active enterprises and the largest enterprises, (more than 50 employees) represent only 1.2% in average. Table 63. Active enterprises by size and qark level (average values 2010-2014, in %) Sum of categories per qark = 100 1-4

5-9

Sum of qarks per category=100

10-49

50+

10-49

50+

Berat

93.3

2.5

3.4

0.9

1-4 4.3

5-9 2.1

3.3

3.0

Dibër

86.7

4.7

7.2

1.4

1.9

1.8

3.3

2.2

Durrës

90.1

4.8

3.9

1.3

10.6

10.4

9.7

10.7

Elbasan

92.2

3.4

3.7

0.7

7.0

4.7

6.1

4.0

Fier

92.6

3.3

0.7

9.2

6.1

7.1

5.5

Gjirokastër

89.1

3.9

5.6

1.4

2.6

2.1

3.5

3.0

Korçë

92.6

3.1

3.5

0.8

6.5

4.0

5.3

4.3

Kukës

80.8

7.2

9.8

2.1

0.9

1.4

2.2

1.7

Lezhë

90.1

4.3

1.2

2.9

2.5

3.0

2.9

Shkodër

89.3

5.1

4.6

1.1

5.7

5.8

6.2

5.2

Tiranë

87.8

6.3

4.4

1.6

40.0

52.4

43.5

52.7

Vlorë

92.1

3.9

3.3

0.7

8.6

6.7

4.9

Albania

89.8

4.9

4.2

1.2

100

Source: INSTAT and Author’s calculations

Considering the sum of qarks = 100 per each size, then Tirana comprises the highest share of total enterprises per each category of enterprises and this share stands always above 40%, to reach 52% for the 5-9 category. Durrës is ranked second for all categories, but in any case not more than 10.7%. Figures show for pronounced divergences between Tirana and all other qarks, with Kukës having the lowest figures (not more than 2.2%). Figure 61. Active enterprises by qark and size: rh-sum of categories = 100 per each qark; lh-sum of qarks per each category =100. 5-‐9

10-‐49

50+

1-‐4

100 90

100

Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

10 0 1-‐4

Source: INSTAT and Author’s calculations

5-‐9

10-‐49

50+

Similarly, active enterprises with 1-4 employees dominate in all four-development regions. Regions 2 and 1 have very similar figures for this category, (88.2 and 88.7% respectively) while Region 3 shows for the highest share (92.6% of total active enterprises in the region). Table 64. Active enterprises by size at regional level (average values 2010-2014, in %) Sum of categories per region = 100 1-4 5-9 10-49 50+ 88.7 5.1 5.0 1.2 88.2 5.9 4.4 1.5 92.6 3.1 3.6 0.8 92.0 3.6 3.6 0.8 89.8 4.9 4.2 1.2

Region 1 Region 2 Region 3 Region 4 Albania

Sum of regions per category=100 1-4 5-9 10-49 50+ 9.4 9.8 11.5 9.8 52.4 64.6 56.5 65.6 17.8 10.8 14.8 11.3 20.4 14.8 17.3 13.3 100 100 100 100

Source: INSTAT and Author’s calculations

However, similarly to qarks above, considering the sum of regions = 100 per each category, then Region 2 (Tirana and Durrës dominance) represents the highest share of total enterprises per each category of enterprises and this share stands always above 52%, to reach 65.6% for the 50+ category. Figure 62. Active enterprises by regions and size: rh-sum of categories = 100 per each region; lh-sum of region per each category =100. 1-‐4

5-‐9

10-‐49

50+

100

Region 1

Region 2

1-‐4

5-‐9

Region 3

Region 4

' 10-‐49

50+

82 Region 1

Region 2

Region 3

Region 4

Albania

Source: INSTAT and Author’s calculations

In order to assess the attractiveness of qarks, the structure of active enterprises by ownership should be explored. The total number of joint and foreign enterprises has been increasing progressively during 2010 – 2014. This might be also related to the privatizations process, which is yet to conclude in Albania. In 2014, the total number of active enterprises amounted to 5,246 in total, i.e. 592 enterprises or about 12.7% compared to the previous year.

Table 65. Active enterprises by ownership at qark level (number) 2010

Albania

2011

2012

2013

2014

Total

Albanian

Foreign &Joint

Total

Albanian

Foreign &Joint

Total

Albanian

Foreign &Joint

Total

Albanian

Foreign &Joint

Total

Albanian

Foreign &Joint

103,038

99,897

3,141

109,039

105,241

3,798

106,837

102,806

4,031

111,083

106,429

4,654

112,537

107,291

5,246

Berat

4,366

4,341

4,545

4,518

4,470

4,436

4,557

4,527

4,302

4,275

Dibër

2,097

2,086

2,142

2,129

1,945

1,937

2,077

2,063

2,164

2,151

12,316

11,979

337

12,918

12,492

426

11,625

11,186

439

10,599

10,075

524

9,578

9,063

515

Elbasan

6,972

6,887

7,611

7,508

103

7,311

7,205

106

7,442

7,331

111

7,859

7,723

136

Fier

9,416

9,322

9,924

9,814

110

9,527

9,415

112

9,830

9,704

126

9,693

9,566

127

Gjirokastër

2,926

2,880

3,022

2,974

2,642

2,587

2,814

2,756

2,681

2,617

Korçë

6,673

6,555

118

6,843

6,708

135

6,610

6,482

128

6,728

6,603

125

7,311

7,169

142 22

Durrës

Kukës

998

984

1,053

1,031

986

966

1,062

1,042

1,068

1,046

Lezhë

2,844

2,793

3,104

3,029

2,954

2,882

3,189

3,110

3,388

3,296

Shkodër

6,258

6,134

124

6,607

6,465

142

6,543

6,394

149

5,945

5,787

158

5,446

5,311

135

Tiranë

39,656

37,568

2,088

42,117

39,589

2,528

43,295

40,558

2,737

47,477

44,277

3,200

49,467

45,720

3,747

Vlorë

8,516

8,368

148

9,153

8,984

169

8,929

8,758

171

9,363

9,154

209

9,580

9,354

226

Source: INSTAT and Author’s calculations

Table 66. Active enterprises by ownership at qark level (in %, Qark =100) ∑Categories = 100 Albania Berat Dibër Durrës Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë

Albanian 97.0 99.4 99.5 97.3 98.8 99.0 98.4 98.2 98.6 98.2 98.0 94.7 98.3

2010 Foreign&Joint 3.0 0.6 0.5 2.7 1.2 1.0 1.6 1.8 1.4 1.8 2.0 5.3 1.7

Albanian 96.5 99.4 99.4 96.7 98.6 98.9 98.4 98.0 97.9 97.6 97.9 94.0 98.2

2011 Foreign &Joint 3.5 0.6 0.6 3.3 1.4 1.1 1.6 2.0 2.1 2.4 2.1 6.0 1.8

Albanian 96.2 99.2 99.6 96.2 98.6 98.8 97.9 98.1 98.0 97.6 97.7 93.7 98.1

Source: INSTAT and Author’s calculations

2012 Foreign&Joint 3.8 0.8 0.4 3.8 1.4 1.2 2.1 1.9 2.0 2.4 2.3 6.3 1.9

Albanian 95.8 99.3 99.3 95.1 98.5 98.7 97.9 98.1 98.1 97.5 97.3 93.3 97.8

2013 Foreign&Joint 4.2 0.7 0.7 4.9 1.5 1.3 2.1 1.9 1.9 2.5 2.7 6.7 2.2

Albanian 95.3 99.4 99.4 94.6 98.3 98.7 97.6 98.1 97.9 97.3 97.5 92.4 97.6

2014 Foreign&Joint 4.7 0.6 0.6 5.4 1.7 1.3 2.4 1.9 2.1 2.7 2.5 7.6 2.4

Despite the progressive increase over time of the number of foreign and jointly owned enterprises, they represent a small share against the total number of active enterprises. Over the last five years, joint and foreign enterprises accounted in average for 3.8% of total active enterprises and always represented less than 5% of total active enterprises. Despite absolute numbers, these kind of enterprises are very important for overall economic development since among the injection of capital and creation of new jobs, they also are a conduit of new technologies, knowhow, and new business culture. The data show that in average, foreign and joint enterprises represent the highest share against total active enterprises per qark, in the qark of Tirana (5 year average is 6.4%) and the qark of Durrës (5 year average is 4.0%). In the qark of Lezhë and Shkodër joint and foreign enterprises represent on average 2.4% and 2.3% respectively as compared to the total number of active enterprises in each qark. Data for 2014 show that Tirana and Durrës have both attracted the largest share against total active enterprises in respective qarks with Tirana highly dominating over the national average. There are only a few foreign and joint enterprises located in the qarks of Dibër and Kukës. Figure 63. Joint and foreign enterprises versus total active enterprises at qark level: selected years (in %, rh chart) & average 2010 - 2014 (in %, lh chart) Vlorë

Berat 8.0

Tiranë

6.0 Tiranë

4.0

Shkodër Durrës

Lezhë Kukës

2.0 Shkodër

Average Albania = 3.8%

Vlorë

Dibër

Korçë Elbasan

0.0

Gjirokas… Fier Elbasan

Lezhë

Fier Kukës

Gjirokastër Korçë

Durrës 2010

Dibër

2012

Berat

2014

Source: INSTAT and Author’s calculations

To explore the distribution of the foreign and joint enterprises in the Albanian territory we construct an indicator as the number of foreign and joint enterprises for each qark against the total number of foreign enterprises in Albania (the sum of shares of each qark gives 100%, thus Albania = 100%). The spatial distribution of foreign and joint enterprises results to be highly concentrated in the qarks of Tirana and Durrës. Both of these qarks have attracted in average during 2010 –

2014 about 79.0% of total foreign and joint enterprises operating in Albania. Berat and Korçë represent the lowest number of foreign and joint enterprises (0.3% and 0.5%) against the total. Table 67. Active enterprises by ownership at qark level (in %, Albania = 100) ∑Qarks = 100 Berat Dibër Durrës Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

2010 Foreign Albanian &Joint 4.3 0.8 2.1 0.4 12.0 10.7 6.9 2.7 9.3 3.0 2.9 1.5 6.6 3.8 1.0 0.4 2.8 1.6 6.1 3.9 37.6 66.5 8.4 4.7 100.0 100.0

2011 Foreign Albanian &Joint 4.3 0.7 2.0 2.0 11.9 11.9 7.1 7.1 9.3 9.3 2.8 2.8 6.4 6.4 1.0 1.0 2.9 2.9 6.1 6.1 37.6 66.6 8.5 8.5 100.0 125.4

2012 Foreign Albanian &Joint 4.3 0.8 1.9 0.2 10.9 10.9 7.0 2.6 9.2 2.8 2.5 1.4 6.3 3.2 0.9 0.5 2.8 1.8 6.2 3.7 39.5 67.9 8.5 4.2 100.0 100.0

2013 Foreign Albanian &Joint 4.3 0.6 1.9 0.3 9.5 11.3 6.9 2.4 9.1 2.7 2.6 1.2 6.2 2.7 1.0 0.4 2.9 1.7 5.4 3.4 41.6 68.8 8.6 4.5 100.0 100.0

2014 Foreign Albanian &Joint 4.0 0.5 2.0 0.2 8.4 9.8 7.2 2.6 8.9 2.4 2.4 1.2 6.7 2.7 1.0 0.4 3.1 1.8 5.0 2.6 42.6 71.4 8.7 4.3 100.0 100.0

Source: INSTAT and Author’s calculations

Figure 64. Share of each qark at total foreign and joint enterprises in Albania (in %, Albania = 100%) Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

100 80 60 40 20 0 2010

2011

2012

2013

2014

Source: INSTAT and Author’s calculations

Rearrangement of data at regional level shows that the foreign and joint enterprises represent a minority compared to total active enterprises in each of the development regions (less than 10% over the period 2010-2014).

Table 68. Active enterprises by ownership at region level (number) 2010

2011

2012

Albanian

Total

Albanian

Foreign &Joint

Total

2014

Total

Albanian

Region 1

10,100

9,911

189

10,764

10,525

239

10,483

10,242

241

10,196

9,939

257

9,902

9653

249

Region 2

54,069

51,633

2,436

57,177

54,210

2967

56,865

53,681

3184

60,153

56,415

3,738

61,209

56934

4275

Region 3

18,011

17,783

228

18,999

18,734

265

18,391

18,123

268

18,727

18,461

266

19,472

19167

305

Region 4

20,858

20,570

288

22,099

21,772

327

21,098

20,760

338

22,007

21,614

393

21,954

21537

417

Albania

103,038

99,897

3,141

109,039

105,241

3,798

106,837

102,806

4,031

111,083

106,429

4,654

112,537

107291

5246

Total

Foreign &Joint

2013

Foreign &Joint

Albanian

Foreign &Joint

Total

Albanian

Foreign &Joint

Source: INSTAT and Authorâ&#x20AC;&#x2122;s calculations

In Region 2 for instance, foreign and joint enterprises represent about 5.7% of total active enterprises as average for the period, while in 2014 only, they represent 7% of total active enterprises (being above the national average). Table 69. Active enterprises by ownership at regional level (in %, Region = 100) 2010 Albanian

2011 Foreign & Joint

Albanian

2012 Foreign & Joint

Albanian

2013 Foreign & Joint

Albanian

2014 Foreign & Joint

Albanian

Foreign & Joint

Region 1

98.1

1.9

97.8

2.2

97.7

2.3

97.5

2.5

97.5

2.5

Region 2

95.5

4.5

94.8

5.2

94.4

5.6

93.8

6.2

93.0

7.0

Region 3

98.7

1.3

98.6

1.4

98.5

1.5

98.6

1.4

98.4

1.6

Region 4

98.6

1.4

98.5

1.5

98.4

1.6

98.2

1.8

98.1

1.9

Albania

97.0

3.0

96.5

3.5

96.2

3.8

95.8

4.2

95.3

4.7

Source: INSTAT and Authorâ&#x20AC;&#x2122;s calculations

Regions 3 and 4 show similar tendencies with 1.4% and 1.6% respectively for the period 2010-2014. Alike Region 2, these regions have experienced a slight increase by 2014. Figure 65. Joint and foreign enterprises versus total active enterprises at regional level: selected years (in %, rh chart) & average 2010 - 2014 (in %, lh chart) Average Albania = 3.8%

Region 1 8.0

Region 4

6.0 4.0

Region 3

2.0 Region 4

Region 2

0.0

Region 2

2010

Region 1

2012

2014

Region 3

Source: INSTAT and Author’s calculations

The spatial distribution of foreign and joint enterprises in the Albanian territory (thus number of foreign and joint enterprises per each region against total number in Albania) suggests for a high concentration in region 2. This region seems to have attracted an increasing number of foreign and joint enterprises (average 2010 – 2014 is 79.3%), mainly in Tirana and Durrës as well but to a lesser extent. Table 70. Active enterprises by ownership at regional level (in %, Albania = 100) 2010 Foreign Albanian & Joint 9.9 6.0

2011

2012 Foreign Albanian & Joint 10.0 6.0

2013 Foreign Albanian & Joint 9.3 5.5

2014 Foreign Albanian & Joint 9.0 4.7

10.0

Foreign & Joint 6.3

Region 2

51.7

77.6

51.5

78.1

52.2

79.0

53.0

80.3

53.1

81.5

Region 3

17.8

7.3

17.8

7.0

17.6

6.6

17.3

5.7

17.9

5.8

Region 4

20.6

9.2

20.7

8.6

20.2

8.4

20.3

8.4

20.1

7.9

Albania

100.0

Region 1

Albanian

Source: INSTAT and Author’s calculations

In 2014, about 81.5% of total foreign and joint enterprises were located in Region 2 showing for high inequalities in this regard with the other regions: 7.9% in Region 4; 5.8% in Region 3; and 4.7% in Region 1.

Figure 66. Share of each region at total foreign and joint enterprises in Albania (in %, Albania = 100%) Region 1

Region 2

Region 3

Region 4

100 90 80

70 60 50 40 30

20 10

0 2010

2011

2012

2013

2014

Source: INSTAT and Author’s calculations

Competitiveness The concept of national competitiveness refers to the ability of the national economy to grow (thus the ability to increase the citizens quality of life) and compete with other countries for human capital, investments and other resources. Competitiveness is measured by a set of factors, policies and institutions that determine the countries level of productivity8. According to the Global Competitiveness Report 2015-2016, Albania is ranked 94/140 countries9, scoring 3.9/7. Competitiveness is a new objective in Albanian policy-making and data related to this objective and the respective indicators are not generated yet at qark or regional level. The following analysis is carried out at national level. Competitiveness is analysed through indicators on price and non – price competitiveness. Price competitiveness is assessed shortly by using the REER index10. Non – price competitiveness is assessed through data on foreign direct investments flows, exports and technological competitiveness. Real effective exchage rates (REER)11 are often used as measures to assess for international price and cost competitiveness. This index captures broad macroeconomic developments both in exchange rates and prices and provides a comprehensive assessment of the international pressures on domestic enterprises (in the medium term with regard to costs or prices)12. According the REER Index, Albania losst some competitiveness in the last five years (in

average the albanian currency appreciated in real terms by about 1.8% in 2015 as compared to 2010, thus rendering our exports more expensive). Some price competitveness was gained in 2014, REER index increased by 0.4% suggesting for a depreciation of the ALL. In Albania, according the one and latest survey on labour costs, the average labour cost per employee in full time units is about 314 ALL per hour (2.2 Euro/hr). Average labour costs vary by economic activities registering the highest level in those more knowledge based such as financial and insurance activities (3.9 Euro per hour), professional scientific and technical activities (2.8 Euro per hour) and electricity, gas, steam, and air conditioning (2.8 Euro per hour). The lowest average labour costs are observed in more labour intensive economic activities like water supply, sewerage, waste management and remediation (1.5 Euro per hour), accommodation and food service activities (1.54 Euro per hour) and administrative and support service activities (1.6 Euro per hour)13. Table 71. Average labour costs per employee in full time units by economic activity Typology Currency

Hourly cost

Monthly cost

Annual cost

Total

Lek 314

Euro 2.2

Lek 55,007

Euro 392.2

Lek 660,083

Euro 4,706.1

Mining and quarrying

353

2.5

61,704

439.9

740,444

5,279.1

Manufacturing Electricity, gas, steam, and air conditioning Water supply; sewerage, waste management and remediation activities Construction Wholesale and retail trade; repair of motor vehicles and motorcycles Transportation and storage Accommodation and food service activities Information and communication

219

1.6

38,803

276.6

465,632

3,319.8

398

2.8

68,309

487.0

819,711

5,844.2

210

1.5

37,727

269.0

452,728

3,227.8

278

2.0

48,815

348.0

585,777

4,176.4

258

1.8

46,642

332.5

559,699

3,990.4

372

2.7

65,459

466.7

785,507

5,600.4

215

1.5

38,214

272.4

458,563

3,269.4

367

2.6

65,237

465.1

5,581.4

Financial and insurance activities

545

3.9

94,294

672.3

Real estate activities Professional, scientific and technical activities Administrative and support service activities Public administration and defense

339

2.4

59,799

426.3

782,841 1,131,52 4 717,585

391

2.8

67,386

480.4

808,629

5,765.2

229

1.6

40,384

287.9

484,611

3,455.1

360

2.6

62,385

444.8

748,618

5,337.4

Education Human health and social work activities

366

2.6

62,904

448.5

754,849

5,381.8

325

2.3

56,627

403.7

679,525

4,844.8

8,067.3 5,116.1

Arts, entertainment and recreation

321

2.3

56,008

399.3

672,101

4,791.8

Other service activities

287

2.0

49,892

355.7

598,700

4,268.5

Source: Instat and Authors calculations

With regard to non – price competitiveness, the messages are controversial. FDI data suggest for a relatively favourable position of the Albanian economy (though related to privatization and concessionary contracts in sectors presenting low value added exports). Meanwhile, data on technological exports and R&D expenditure show that Albania still is not in an advantageous position14. Despite the global economic downturn, the inflow of foreign direct investments grew steadily (partly on the back of privatization process in specific years) guided prevalently from labour cost factors. According to the BOP data15, the total inflow of foreign direct investments for 2014 recorded Euro 878 million, down by 7.1% compared to the previous year (about Euro 300 per capita). Privatization receipts, especially over the second quarter of 201316 , played an important role in the flow of FDI’s in the considered period. Excluding the privatization receipts from total FDI’s inflows, the annual growth rate FDI’s inflows resulted in about 6.2%. Figure 67. Total FDI inflows in Eur Million (lhs) and FDI as % of GDP (rhs) 1000 900 800

700

12 FDI 10

FDI exl. privatization Fdi, % of GDP

600 500

400

300 200

100

0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Source: Bank of Albania, Instat and Authors calculations

The latest data on FDI stock by economic activity concern 2014. The total stock of FDI’s at the end of 2014 amounted to about Euro 4,553 million, up by 10.7% in annual terms and accounting for about Euro 1574 per capita. By economic activity, the most attracting sector were the “transport, storage and

communication”, “financial and monetary intermediation”, “mining and quarrying” which overall represented about 58.5% of the total FDIs stock at the end of 2014. As by the end of 2014, FDI’s data by country of origin show that the three biggest investors were Greece, Canada and Italy. These three countries cumulatively, represented about 54% of the total stock of FDI at the end of 2014. Figure 68. FDI stock (mln Eur) by economic sectors

Other

Wholesale and retail trade&hotels, restaurants

Mining and quarrying 1400 1200 1000 800 600 400 200 0 -‐200

Manufacturing

Transport, storage and communication

Financial and monetary intermediation+Real estate and…

Construction Electricity, gas and water supply

2012 2013 2014

Source: Bank of Albania, Instat and Authors calculations

Despite registering positive growth rates in overall stock of FDI’s, in a globalized economy, labour costs are important but not sufficient to attract foreign investors, especially after a threshold level (not a sustainable comparative advantage in the long term). A friendly and favourable overall business environment and well trained specialized work force represent the key to attracting foreign direct investments toward the tradable sectors of the economy. From this point of view it is important bear in mind that more than a source of external financing FDI’s inflows (especially those called Greenfield FDI’s) represent a conduit of new technologies and know-how in the destination country, create new jobs and transmit a new culture of doing business. In theory, high levels of FDIs would generate higher exports. The data on external trade statistics show for significant changes in the structure of Albanian exports by commodity and destination countries. In addition to the historical positive contribution of “Textile and footwear” and “Construction materials and metals”, exports of “Mineral, fuels, electricity” played a major role in the overall increase of total exports starting from 2011. Over the last three years “Textile and footwear” exports have increased steadily supported at the same time by special measured adopted by the Albanian government after 2013. At the same

time, export performance was augmented by an increased positive contribution of exports of crude oil and electrical, both attracting relevant FDIâ&#x20AC;&#x2122;s. After 2013, on the back of lower oil prices, the contribution of oil to total exports have been shrinking somewhat. Table 72. Export by categories (weights in % versus total exports) 1993-1999

2000-2005

2005-2010

2011

2012

2013

2014

2015

Food, beverages, tobacco

15.9

8.9

6.9

5.7

6.0

5.9

6.5

8.7

Minerals, fuels, electricity Chemical and plastic products Leather and leather manufactures Wood manufactures and articles of paper

13.5

3.2

17.7

29.9

35.7

40.3

33.6

26.5

1.7

0.9

1.1

1.4

1.0

1.2

1.3

1.6

2.9

3.0

1.7

1.5

1.3

1.2

4.8

3.4

3.2

2.3

2.5

3.2

3.6

3.4

Textile and footwear Construction materials and metals Machineries, equipment and spare parts

46.7

63.1

45.5

32.6

29.1

28.2

33.6

37.0

8.1

11.5

17.1

21.0

18.9

14.7

14.5

3.2

3.3

4.3

3.9

3.6

3.3

3.6

4.4

3.4

2.8

2.6

1.8

1.9

1.8

2.0

2.6

100

Others

100 Source: INSTAT & authors calculations Export FOB

The assessment of the relationship between FDIs and exports results more than complex, due to the heterogeneous nature of FDIs. An important issue is whether FDI is a complement to or a substitute for trade, which might influence the market shares. The data for Albania show a positive relationship between FDI inflows and the trade deficit, which suggests that most FDIs might be horizontal in nature (thus do not stimulate the production of goods to be integrated in further manufacturing process) therefore having no favorable outcome on our external competitiveness. To proxy for tecnological competitiveness we used data on spending on research and development as % of GDP and the ratio of high technologies export as % of manufactured export. Data on R&D expenditures as a % of GDP are very limited and for Albania concern only 2007 and 2008. The data show that the level of R&D expenditures in Albania is the lowest one compared to regional countries and main trading partners (Italy, Greece) and well below the level of EU.

Figure 69. R&D expenditure in selected countries ALB

ITA

GRC

MKD

2.5 2 1.5 1 0.5

0.1

0.2

0 2005

2006

2007

2008

2009

2010

2011

2012

2013

Source: World Bank Database http://databank.worldbank.org/data/home.aspx

The same conclusion might be drawn when analyzing the level of high technologies exports as % of manufactured exports. For 2013, in Albania high technologies exports as a % of manufactured exports recorded 0.5%, quite low when compared to the other countries in the region and to the 14.3% for the EU countries. Meanwhile, based on this measure there is an essential heterogeneity in all countries in the region, in terms of their technological competitiveness. As a result, Albania would need further structural changes in the labor market and also on goods market, with respect to both quality and standards, in order to improve its competitiveness and speed up the adjustment development. Figure 70. High-technology exports (% of manufactured exports)

ALB

ITA

BIH

GRC

MKD

20 15 10 5

0 1990 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: World Bank Database http://databank.worldbank.org/data/home.aspx

Albania still lags behind the neighbouring countries and main trading partners in terms of competitiveness. At this point it is necessary a ri-orientation of satisfactory financial resources towards education and training of human resources and selection of high productivity investments projects, aiming at the tradable sectors of the economy. The existing abundant natural resources should be used in an innovative and efficient way, in order to create unique comparative advantages, which in turn would enhance the competitiveness (beyond price competitiveness) of the Albanian economy and the export led growth. Therefore, facing the XXIth century challenges and in view of EU integration, a new growth model, focused in the quality of human capital, represents a precondition in promoting and boosting long run sustainable economic development of the country. Economic Resilience Headwinds from the EU, high uncertainty and worsened confidence, weak credit and falling remittances put a drag on domestic demand in the post crisis years. Since the onset of the global crisis in 2008, the economic growth slowed down to 2.4% on average. Nevertheless, Albania avoided an output contraction after the financial crisis of 2008 and despite a substantial deterioration in asset quality the financial sector proved resilient and did not require public support. Nevertheless, the aftershocks of the crisis slowed economic growth and exacerbated domestic and external vulnerabilities. As in many other countries, growth has slowed from pre-crisis levels due to lacklustre domestic demand and moderating exports. Despite sound banking system liquidity and profitability indicators, the intermediation remained low and its balance sheets continue to suffer from non-performing loans. Weaker economic activity has pressured fiscal revenues while the increase of fiscal debt called for a consolidating path of the fiscal policy. Inflation and inflation expectations remained low as the economy operated below its potential. In such an environment the monetary policy started an easing cycle cutting interest rates till the lowest historical level of 2%. The cost of lending to the private and public sector fell to their historic minimum levels. The deceleration of the increase in non-performing loans, improvement of liquidity in the system, preservation of sound balance sheets in the financial sector and stability of the exchange rate have all contributed to the countryâ&#x20AC;&#x2122;s financial stability. The economic upswing in Albania â&#x20AC;&#x201C; starting in 2014 - continued at the beginning of 2015. Real GDP grew by 2.8% in Q1 and available indicators suggest for

continued growth in the second quarter. Growth was supported by private and public capital investment and foreign demand. The latest data are consistent with continued economic expansion in the second quarter of this year. The labour market is improving only gradually. The growth rate of credit to the economy has been subdued. It remains close to 2% for the last 2 years, due to weak credit demand and tougher bank lending conditions. Weak credit demand reflects decreased investment demand, the low confidence and the risk adverse behaviour of the economic agents. Tougher lending standards reflect not only the concern on high credit risk, as shown by high level of NPLs, but also the risk averse behaviour of the banking sector (dictated by deleveraging group policies (headquarter banks). Growth in real GDP is expected to accelerate from 2.4% in 2015, to 3.3% and 4.3% in 2016. It will be driven by a rising domestic demand benefiting from low interest and inflation rates, an improved economic confidence, and a gradual lending recovery. Public sector demand is expected to grow minimally in 2015. On the other hand, weak external demand is slowing down growth, but is counteracted somewhat by the fall in the oil prices and a weaker Lek exchange rate. The output gap is expected to gradually close by 2016 and turn positive by 2017. In line with the expected recovery, the demand side will exert weak but gradually increasing inflationary pressures. Several economic reforms can be initiated or consolidated in order to stimulate the economy in the near term. The policy initiatives have to focus on further improving the ability to conduct business in order to make the domestic market more appealing to foreign investors but also to facilitate domestic investment. Investments in production sectors need to be targeted and incentivized. In several regulatory aspects Albania could do better. For a better business environment the country has to improve contract enforcement, simplify the tax system for investors, and shorten procedures to get electricity, to deal with construction permits and to register property. Parallelly, the legislation for overseeing the efficient application of these reforms needs to be strengthened. High public debt, not favourable debt dynamics and high level of euoroization have impaired the functioning of transmission mechanism and have threatened monetary policy effectiveness during the post crisis period. Meanwhile, the high degree of the informality in the economy conditions further the deepening of financial intermediation and is a drawback for overall economic development. The reduction of informal economy will increase the potential for financial intermediaries to intermediate in the economy. In the same time, enhancing

public financial literacy will provide more room to increase financial intermediation. Public policy aimed at ensuring sustainable growth and an effective labour market development has to be carefully planned and executed. Significant effort has to be devoted to the consolidation and further democratization of institutions. The goal is to strengthen the role of independent public servants, increase productivity and consolidate meritocracy. Currently, Albania is ranked unfavourably in terms of indicators that measure incidence of corruption and public sector efficiency. In addition, several labour market reforms have to be carried out to increase the productivity of the workforce, minimise skill mismatch and frictional unemployment as well as enact targeted policy to address longterm unemployment through requalification of workers or training. These policies have to be accompanied with deep education reforms to ensure local universities are more competitive internationally and are in tune with labour market needs. The policy paths elaborated above all supplement the catch-up process of the Albanian economy and society, but additional policy initiatives are also required. Improving Albaniaâ&#x20AC;&#x2122;s competitiveness is a necessity if the country wants to ensure a swift and unfragmented convergence path to the EU countries. Concurrently, the success in this endeavour will help Albania withstand market pressures in an enlarged and competitive union. To achieve this, it is crucial to develop the Albanian financial market, which is currently underdeveloped. In addition, it is imperative that the country invests more in human and technological capital to improve its general technological readiness. To achieve this, more finances have to be devoted to research and development in a wide range of sectors.

100

2.2.2 Social Cohesion through Education, Health, Poverty alleviation, Social inclusion and Culture Education Education represents one of the most important drivers of economic growth over time. It defines the quality and specialization of the workforce and is a key factor in economic sectors` reforms. Any strategic prioritization and visioning process that the government of Albania goes through should be sustained by the education sector development and related plans. It is based on this crosssectorial visioning that the Government should decide on whether to shift education priorities and investments towards tertiary or vocational education for a given period, as well as each sectors should be particularly sustained by a short to long-term education plan. The government choice to channel more funds on innovation and research and development should also be sustained by the education reform and vice versa. Gross expenditure dedicated to education increased in annual terms by 51% during 2013. Following fiscal consolidation policies, overall expenditure allocated in education diminished by 4% in 2015 compared to the previous year. Education funds are highly concentrated and prevalently allocated in the qark of Tirana (64.3% of the total in 2012 and 35% in 2015). Allocation for other qarks has always been significantly lower than for Tirana, but in almost all cases has experienced growth during 2012-2015, by at least doubling at the end of the period in contrast to the beginning. Durrës has experienced stronger growth rates than other qarks, probably related to the strengthening of the tertiary education in this qark. Kukës and Gjirokastër have the lowest expenditure allocation shares, along the period. Table 73. Expenditures in education by qarks (mln ALL) 2012

2013

2014

2015

2012

Million ALL

2013

2014

2015

% of total

Berat

764

1,818

1,843

1,735

2.7

4.3

4.1

Dibër

781

1,852

2,029

1,843

2.8

4.4

4.5

4.3

Durrës

310

3,339

3,365

3,294

1.1

7.9

7.5

7.7

Elbasan

1,526

4,588

4,848

4,449

5.4

10.9

10.8

10.4

Fier

1,279

3,348

3,568

3,417

4.6

7.9

8.0

736

1,760

1,839

1,690

2.6

4.2

4.1

3.9

1,150

2,725

2,859

2,595

4.1

6.5

6.4

6.1

Gjirokastër Korçë

101

Kukës

600

1,464

1,538

1,430

2.1

3.5

3.4

3.3

Lezhë

649

1,667

1,774

1,741

2.3

4.0

4.1

1,135

3,345

3,376

3,090

4.1

7.9

7.6

7.2

Tiranë

18,012

13,873

15,093

15,071

64.3

32.9

33.8

35.2

Vlorë

1,070

2,403

2,574

2,488

3.8

5.7

5.8

Albania 28,012 42,184 44,706 42,844 Source: Ministry of Finance and Authors calculations.

100.0

Shkodër

Regionally wise, gross expenditures in education have been concentrated in Region 2, though experiencing decrease over time (because of Tirana). About 47% of total education expenditures were allocated in this region in 2015. The lowest level is allocated to region 1 (only 15% in 2015), though this region has experienced significant growth from 2012 (9%) to 2015. Overall, all other three regions encounter a jump in allocated expenditures in 2013, maintaining a constant share afterwards. This policy is positive in terms of smoothening disparities among regions (also qarks), but Region 2 (and Tirana qark) remains still highly advantageous compared to others. Table 74. Expenditures in education at development regions level 2012

2013

2014

2015

2012

2013 2014 % of total

Million ALL

2015

Region 1

2384

6477

6688

6261

Region 2

19103

19064

20487

20208

Region 3

3441

9131

9551

8780

Region 4

3084

7511

7981

7595

Albania 28012 42184 44706 42844 Source: Ministry of Finance and Authors calculations.

100

In Albania, the data show for a progressive diminishing of the number of schools in basic education (primary and lower secondary). Overall, there were about 1,600 schools for basic education in Albania in the academic year 2009/2010. The next academic year the number of institutions offering basic education diminished by 6.5% in annual terms, to reach about 1,469 schools for basic education. The same trend kept in the coming years, but at a slower pace recording in the academic year 2013/2014 about 1,464 institutions for basic education, out of which 434 in urban areas. Most of this contraction happened in rural areas, in line with the overall contraction of rural population over the selected period (rural population decreased by 13% during the same period). Table 75. Number of schools for basic education by qarks (nr) 2009 - 2010 Total

Urban

2010 - 2011 Total

Urban

2011 -2012 Total

102

Urban

2012 - 2013 Total

Urban

2013 - 2014 Total

Urban

Berat

103

Dibër

Durres

113

107

105

Elbasan

219

213

197

198

Fier

176

170

172

171

169

Korçë

131

127

125

Kukës

105

Lezhë

Gjirokastër

Shkodër

147

136

138

137

Tiranë

248

136

238

132

239

127

235

126

230

123

Vlorë

116

103

101

100

1,600

452

1,496

445

1,473

435

1,472

434

1,464

434

Albania

Source: Instat

The distribution of basic schooling institutions calculated, as the number of schools for basic education against the total number of these institutions in Albania shows for high variation between qarks. In the academic year 2013/2014 15.7% of basic schooling institutions were located in the qark of Tirana, out of which 54.8% located in the urban area. The qark of Elbasan accounted for about 13.5% of basic schooling institutions out of which 17.7% located in urban areas during the academic year 2013/2014. The third qark with the highest number of schools for basic education is the qark of Fier with about 11.5% out of the total where about 26.0% are located in urban areas. The location in urban versus rural areas reflects the geography of the qarks as well distribution of population/households in relation to territorial morphology and land use. Tirana is the central place of Albania in many terms and has the biggest urban area in the country. Elbasan qark has a vast mountainous territory with several small villages distribute across. Though the city of Elbasan is one the 5 main urban centres in the country (area and population wise), it cannot balance the large number of small villages located in relatively far commuting distance (more than 1 hour) from Elbasan city and the smaller urban centres of the qark. Fier on the other hand has a largely plain territory, dominated by the city of Fier and several extended villages that from a typological point of view may easily fall into the category of small urban centres. Fier has also good commuting distances (city-surroundings within the qark), which increases the possibility for pupils and families to access schools in the urban area, more than for Elbasan. The case of schools is one of those typical services investment strategies where governments should decide whether to focus on the construction of new schools (better territorial distribution of the facilities), or on

103

the improvement of urban transportation and road system (centralization of facilities’ distribution and better infrastructure for commuting trips). The qarks of Tirana, Elbasan and Fier account for the largest number of basic education institutions. Disparities among these three exist, but are not extremely high. For instance, if indexed, Tirana qark stands at 192% against Albania = 100, while Elbasan and Fier stand at 161% and 139% respectively (academic year 2013-2014). Berat, Dibër, Durrës and Vlorë have similar indexes, around 20 percentage points below the country average. Korça is almost equal to the country average, while Gjirokastër has the most disadvantageous positioning with 38%. The overall picture shows for pronounced divergences among all 12 qarks, but for no extreme positioning as it has happened with other indicators (i.e. GDP, population, etc.). Disparities are stronger though, if looking at the distribution of these schools in urban areas, versus rural ones. Tirana is positioned very high compared to other qarks (more than half of the schools in urban areas), while Dibër, Kukës and Gjirokastër (very mountainous geography and very steep and sloppy terrain, low population number) are extremely disadvantageous in terms of offering centralised access to primary education institutions. Again this can turn out to be positive as pupils can access schools in their villages, but it has to be supported by an efficient schools construction and maintenance investments strategy and policy on teachers’ employment and distribution. Table 76. Distribution of schools for basic education by qarks (in %) Berat Dibër Durres Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

2009 - 2010 Total Urban 6.4 5.8 6.1 2.9 7.1 10.0 13.7 8.0 11.0 10.2 3.8 3.3 8.2 6.2 6.6 2.0 5.3 5.1 9.2 8.0 15.5 30.1 7.3 8.6 100 100

2010 - 2011 Total Urban 6.5 5.6 6.6 2.7 7.2 10.3 14.2 7.6 11.4 10.6 3.2 3.1 8.5 6.1 5.5 2.2 5.1 4.9 9.1 8.3 15.9 29.7 6.9 8.8 100 100

2011 -2012 Total Urban 6.4 5.7 6.7 2.8 7.1 9.9 13.4 7.8 11.7 10.6 3.2 3.2 8.6 6.2 5.6 2.1 5.2 4.8 9.2 8.5 16.2 29.2 6.7 9.2 100 100

2012 - 2013 Total Urban 6.4 5.8 6.6 2.8 7.1 9.9 13.5 7.8 11.6 10.4 3.2 3.2 8.5 5.8 5.6 2.1 5.4 5.3 9.4 8.8 16.0 29.0 6.9 9.2 100 100

2013 - 2014 Total Urban 6.4 5.8 6.6 2.5 7.2 9.9 13.5 8.1 11.5 10.1 3.1 3.0 8.5 6.0 5.7 2.3 5.5 5.3 9.4 9.2 15.7 28.3 6.8 9.4 100 100

Source: Instat and Authors calculations

The number of teachers in schools of basic education follows the same patterns as the number of the respective schools. Thus, the highest number of this category of teachers is located in the basic schools of the qarks of Tirana, Fier and Elbasan and the lowest number in the qark of Gjirokastra. There is a high

104

differentiation between the above three qarks and the others, and also there is variation in figures among the other qarks as well. Table 77. Number of teachers in schools of basic education

Berat Dibër Durres Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

2009 - 2010 Total Urban 1,464 610 1,750 410 2,267 1,207 3,221 980 3,196 1,056 911 405 2,015 657 1,252 309 1,476 547 2,463 1,049 5,474 3,736 1,752 999 27,241 11,965

2010 - 2011 Total Urban 1,424 574 1,581 358 2,171 1,188 3,071 960 3,008 1,045 897 394 2,118 707 1,132 294 1,335 520 2,321 1,003 5,273 3,558 1,642 943 25,973 11,544

2011 -2012 Total Urban 1,388 553 1,556 361 2,119 1,125 2,991 906 2,984 1,026 860 373 2,042 709 1,115 281 1,289 509 2,278 979 5,329 3,532 1,633 937 25,584 11,291

2012 - 2013 Total Urban 1,317 501 1,528 353 2,084 1,108 2,979 924 2,979 1,038 867 385 2,000 675 1,104 279 1,271 506 2,296 991 5,257 3,476 1,581 910 25,263 11,146

2013 - 2014 Total Urban 1,343 534 1,510 341 2,031 1,091 2,984 941 2,924 994 863 392 1,977 675 1,115 289 1,241 488 2,266 967 5,219 3,450 1,578 907 25,051 11,069

Source: Instat

In the last 5 years, the average number of teachers per 10,000 inhabitants was 89 in the case of schools for basic education. This indicator has followed a declining trend over time from an average value of 93.5 in the academic year 2009/2010 to 86.5 in the academic year 2013/2014. The lower level of the indicator is assessed to be determined both from the decrease of total number of schools for basic education (thus, lower number of teachers) and the increasing population densities (thus continuing internal migration). Table 78. Number of teachers per 10000 inhabitants at qark level Total

Urban

Berat

2009/ 2010 96.7

2010/ 2011 96.1

2011/ 2012 95.1

2012/ 2013 90.7

2013/ 2014 93.3

2009/ 2010 91.5

2010/ 2011 60.3

2011/ 2012 86.1

2012/ 2013 79.0

2013/ 2014 84.8

Diber

119.8

111.0

111.4

110.4

109.9

111.7

96.8

99.7

97.6

94.4

Durres

84.7

79.8

77.1

75.7

73.7

60.8

57.7

52.4

49.4

47.6

Elbasan

104.5

100.3

98.3

98.8

81.5

80.6

76.4

78.1

79.6

Fier

97.6

93.3

93.5

93.7

92.4

‘82.2

81.5

79.8

80.2

76.6

Gjirokaster

113.4

117.2

115.9

117.8

118.4

104.2

103.3

99.2

103.6

106.0

Korce

86.8

92.6

90.0

88.4

87.8

72.1

78.6

79.4

76.0

76.1

Kukes

138.6

127.7

127.9

127.6

129.7

104.4

99.0

93.9

92.2

95.0

Lezhe

105.2

95.8

93.0

91.9

90.2

74.0

67.8

63.7

60.6

57.1

Shkoder

108.3

103.6

102.6

103.7

103.1

106.3

101.9

99.2

99.9

97.2

Tirane

72.5

68.3

67.9

66.7

65.7

69.4

64.1

61.4

58.1

56.6

Vlore

94.1

89.3

86.4

86.2

83.2

77.8

76.2

72.7

71.9

Albania

93.5

89.4

88.2

87.2

86.5

77.6

73.8

70.8

68.2

67.0

Source: Instat and Authors calculations

105

The number of teachers per 10,000 inhabitants is key to assessing the relation between education provision/access and population dynamics. The overall availability of teachers, as suggested the by teacher per 10,000 inhabitant ratio reflects a relatively low response of basic education services to population dynamics. Figure 71. Number of teachers per 10000 inhabitants at qark level 140 120

TOTAL ALBANIA

100

Albania = 86.5

80 60 40 20 0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

140

URBAN AREA 120 100

Albania = 67.5

80 60 40 20 0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: Instat and Authors calculations

The highest number of teachers for 10,000 inhabitants (for basic education for the 5-years period) is registered in the qarks of Kukës (130.3) followed by the qarks of Gjirokastër (116.6), Dibër (112.5) and Shkodër (104.3). The lowest level of this indicator is registered in the qarks of Tirana (68.2) and Durrës (78.2) and in both cases is also lower than the national average of 86.5. This indicator is higher in the more mountainous and remote areas, due to depopulation and lower in the most urbanised and central areas of the country, such as Tirana and Durrës, which are the ones to remain constantly below the national average due to overpopulation (see also indexes in the following table). Table 79. Index, number of teachers per 10000 inhabitants at qark level 2009/ 2010

2010/ 2011

Total 2011/ 2012

2012/ 2013

2013/ 2014

106

2009/ 2010

2010/ 2011

Uban 2011/ 2012

2012/ 2013

2013/ 2014

Berat

103.4

107.5

107.8

104.0

107.8

117.9

81.7

121.7

115.9

126.6

Diber

128.1

124.1

126.3

126.6

127.0

143.9

131.2

140.9

143.1

140.9

Durres

90.6

89.3

87.4

86.8

85.1

78.3

78.1

74.1

72.4

71.0

Elbasan

111.7

112.2

111.5

112.8

114.1

104.9

109.2

108.0

114.5

118.9

Fier

104.3

106.0

107.5

106.8

105.9

110.4

112.7

117.6

114.4

Gjirokaster

121.3

131.0

131.4

135.1

136.8

134.2

140.0

140.2

151.8

158.4

Korce

92.9

103.5

102.1

101.4

101.5

92.9

106.5

112.3

111.3

113.7

Kukes

148.2

142.9

145.0

146.4

149.9

134.5

134.2

132.7

135.2

141.9

Lezhe

112.5

107.1

105.4

104.3

95.4

91.9

90.0

88.8

85.3

Shkoder

115.9

116.3

119.0

119.1

136.9

138.0

140.2

146.4

145.2

Tirane

77.5

76.4

77.0

76.4

75.9

89.4

86.9

86.8

85.2

84.5

Vlore

100.6

99.9

101.2

99.1

99.7

107.2

105.4

107.7

106.6

107.3

Albania

100.0

Source: Instat and Authors calculations

In absolute terms, the number of pupils enrolled in basic schools has been decreasing over the last five academic years. The overall number of pupils enrolled in basic schools has diminished on a yearly basis by an average of 3.8%. Seemingly, there has been a decreasing rate of female pupils’ enrolment over time. During 2014, the number of female pupils enrolled in basic education decreased by 3.7% in annual terms. Gjirokastër and Kukës have the lowest enrolment overtime and this is due to their low population number (2.6% and 3.0% of total population lives in these qarks). These are absolute numbers and decreasing rates could be linked to overall population diminishing, school leaving, or both. Enrolment in basic education is analysed also as an indicator of pupils per teacher. In average there were about 15.1 pupils enrolled per teacher during the academic year 2013/2014. This indicator has diminished over time at a slow pace shrinking from 16.2 pupils per teacher in the academic year 2009/2010 to 15.1 pupils per teacher in 2013/2014 (EU average for 2013 was 13.3). This change would be positive if the number of teachers per 10,000 inhabitants had increased. Instead, as the latter has also decreased in time, thus the “improvement of the pupils enrolled/teacher indicator” could be false and show that less children are enrolling in primary and lower secondary education. This could be impacted by the overall decreasing of the population and emigration (abroad), but could also be a sign that leads to less school attendance. The government should in fact investigate and analyse deeper this pattern to understand the real causes behind and take the respective mitigation measures. At qark level though, Gjirokastër has the lowest enrolment/teacher indicator, while the number of teachers per 10,000 inhabitants stands above the national average. This case suggest for both good enrolment and better standards of students/teacher in Gjirokastër. The reason could be the necessity to spread 107

school buildings and teachers across the territory, due to the geography of the terrain. Tirana and Durrës have pupils enrolled / teacher indicators above the national average, while also scoring low in number of teachers per 10,000 inhabitants. This suggest for: 1) decreasing enrolment rates; 2) lower levels of the students/teacher standard; 3) population keep increasing fast and beyond the capacity of the government to respond with better access to education facilities and professionals. Figure 72. Index of total number of pupils enrolled/number of teachers in basic schools (at qark level) 140 120

Albania = 100

100

80 60 40

20 0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: Instat and Authors calculations

Table 80. Pupils enrolled in basic schools by qarks(no) 2009 - 2010

2010 - 2011

2011 -2012

2012 - 2013

2013 - 2014

Total

Female

Total

Female

Total

Female

Total

Female

Total

Female

Berat

21,703

10,529

20,382

9,839

19,466

9,379

18,740

9,002

18,000

8,639

Dibër

26,830

12,908

25,166

12,054

23,725

11,232

22,405

10,529

21,200

9,897

Durres

43,357

20,771

41,811

19,936

40,372

19,240

39,568

18,774

38,247

18,059

Elbasan

48,066

23,219

45,138

21,767

42,841

20,534

41,341

19,670

39,022

18,678

Fier

48,519

23,188

45,985

21,928

43,837

20,755

42,096

19,918

40,512

19,124

Gjirokastër

9,685

4,692

9,121

4,369

8,656

4,177

8,330

3,957

8,112

3,877

Korçë

30,251

14,570

28,717

13,775

27,387

13,065

26,794

12,779

25,897

12,282

Kukës

18,584

8,807

17,621

8,311

16,736

7,798

15,811

7,331

14,948

6,862

Lezhë

23,623

11,424

22,461

10,738

21,178

10,018

20,136

9,457

19,296

9,005

Shkodër

37,008

17,650

35,086

16,724

33,198

15,798

31,375

14,948

29,578

14,067

Tiranë

107,226

51,377

104,866

50,085

102,673

48,998

101,255

48,136

99,902

47,468

Vlorë

25,143

12,007

24,330

11,520

23,635

11,152

22,986

10,886

22,360

10,646

Albania

439,995

211,142

420,864

201,046

403,704

192,146

390,837

185,387

377,074

178,604

Source: Instat

108

The general enrolment rate (ratio between the number of enrolled pupils and total population for age group 0-14 years, since no further disaggregation of population data by age is available) â&#x20AC;&#x201C; GER at national level has improved over time from 57.8% in 2008 to 69.0% in 2014. Seemingly, there is an improvement for females GER. The GER has diminished during 2008-2014 period in the qark of Vlora by 10.3 percentage. Table 81. General enrolment rate by qarks (in%) 2008 Total Albania 57.8 Berat 59.5 Diber 63.1 Durres 55.9 Elbasan 59.2 Fier 56.9 Gjirokaster 44.4 Korce 53.5 Kukes 82.4 Lezhe 58.3 Shkoder 59.5 Tirane 52.9 Vlore 75.9 Source: Instat and Authors calculations

2011 Total 57.7 70.0 69.3 22.7 68.6 70.9 71.8 67.1 70.7 71.9 71.4 68.4 72.9

2014 Total 69.0 65.3 79.1 75.6 67.1 66.6 58.5 59.8 90.0 74.7 70.3 68.1 65.6

2014 Females 68.2 65.2 76.9 76.5 66.6 65.6 58.7 59.0 85.5 73.1 68.5 67.5 65.9

The number of pupils graduated in basic schools has followed a downward trend over time. In 2013/2014 academic year, the total number of pupils completing basic education was 44,139 pupils, down by 7.7% compared to the previous year. The number of graduated pupils decreased in all 12 qarks in the last academic period (the highest decrease was registered for KorĂ§a). The same patterns can be observed for the number of female pupils graduated in basic schools for the academic year 2013/2014. Seemingly, the number of graduated pupils per 10,000 inhabitants has decreased during the same period. While the decrease of the total number of graduate pupils is linked to the population number, the other indicator (pupils/10,000 inhabitants) can be linked to lowering number of births per families. However, population dynamics are just one factor and it is suggested that the government makes a deeper investigation into the reasons behind lowering graduation rates. Table 82. Pupils graduated in basic schools by qarks(number) Berat

2009 - 2010 Total Female 2,723 1,406

2010 - 2011 Total Female 2,573 1,238

109

2011 -2012 Total Female 2,523 1,223

2012 - 2013 Total Female 2,372 1,144

2013 - 2014 Total Female 2,288 1,145

Dibër 3,161 1,490 3,015 Durres 4,790 2,240 4,826 Elbasan 5,831 2,959 5,511 Fier 5,989 2,969 5,890 Gjirokastër 1,189 553 1,258 Korçë 3,674 1,828 3,654 Kukës 2,015 937 1,939 Lezhë 2,974 1,541 2,799 Shkodër 4,345 2,146 3,811 Tiranë 12,647 6,319 12,868 Vlorë 2,949 1,446 3,042 Albania 52,287 25,834 51,186 Source: Instat and Authors calculations

1,475 2,360 2,822 2,894 608 1,825 920 1,406 1,865 6,225 1,517 25,155

2,850 4,634 5,414 5,861 1,224 3,421 2,083 2,700 4,216 12,355 3,099 50,380

1,399 2,286 2,690 2,773 594 1,649 993 1,336 2,095 6,063 1,478 24,579

2,624 4,632 5,544 5,274 1,061 3,276 1,850 2,491 4,011 11,790 2,894 47,819

1,256 2,278 2,698 2,545 462 1,577 891 1,260 1,972 5,697 1,384 23,164

2,528 4,461 4,906 4,856 969 2,468 1,825 2,358 3,680 11,209 2,591 44,139

1,206 2,151 2,406 2,292 486 1,200 862 1,142 1,746 5,378 1,280 21,294

Table 83. Number of pupils graduated per 10000 inhabitants, by qarks 2009/ 2010/ 2011/ 2012/ 2013/ 2010 2011 2012 2013 2014 Number of pupils graduated /10000 inhabitants

2009/ 2010/ 2011/ 2012/ 2013/ 2010 2011 2012 2013 2014 Indez_Number of pupils graduated per 10000 inhabitants

Berat

179.9

173.7

172.9

163.4

159.0

100.2

98.6

99.5

99.0

104.3

Dibër

216.3

211.6

204.1

189.6

184.0

120.5

120.1

117.5

114.9

120.7

Durres

178.9

177.4

168.6

168.2

161.8

99.7

100.7

97.1

101.9

106.1

Elbasan

189.1

180.1

178.0

183.0

162.4

105.4

102.2

102.5

110.9

106.5

Fier

182.8

182.6

183.6

165.9

153.5

101.8

103.6

105.7

100.5

100.6

Gjirokastër

148.0

164.3

165.0

144.2

133.0

82.5

93.2

95.0

87.4

87.2

Korçë

158.3

159.7

150.8

144.8

109.6

88.2

90.6

86.8

87.8

71.9

Kukës

223.1

218.8

238.9

213.8

212.3

124.3

124.2

137.5

129.6

139.2

Lezhë

212.1

200.8

194.7

180.1

171.5

118.1

114.0

112.1

109.1

112.4

Shkodër

191.1

170.1

189.9

181.2

167.4

106.5

96.5

109.3

109.8

Tiranë

167.4

166.6

157.4

149.5

141.1

93.3

94.6

90.6

92.5

Vlorë

158.3

165.4

169.5

158.2

141.6

88.2

93.9

97.6

95.9

92.9

Albania

179.5

176.2

173.7

165.0

152.5

100.0

Source: Instat and Authors calculations

110

Figure 73. Number of pupils graduated per 10000 inhabitants by qarks

160 140

Albania = 100

120 100 80 60 40

20 0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: Instat and Authors calculations

The above analysis is conducted at regional level as well. The data show for a considerable concentration of schools in region 2 and region 3 (reflecting data from qarks of Korçë, Elbasan, Durrës and Tirana). During the academic year 2013/2014, about 29.5% of basic schooling institutions are located in Region 2, out of which 41.0% located in the urban area. Table 84. Number of schools for basic education by regions (nr) 2009 - 2010 Total Urban Region 1 336 68 Region 2 458 194 Region 3 453 90 Region 4 353 100 Albania 1600 452 Source: Instat

2010 - 2011 Total Urban 295 69 443 190 437 86 321 100 1496 445

2011 -2012 Total Urban 295 67 442 182 418 86 318 100 1473 435

2012 - 2013 Total Urban 299 70 437 181 417 84 319 99 1472 434

2013 - 2014 Total Urban 300 73 432 177 417 86 315 98 1464 434

Region 3 accounted for 28.5% of basic schooling institutions out of which 20.6% located in urban areas, during the academic year 2013/2014. Region 1 and region 4 present almost similar numbers of basic education institutions, 20.3% and 21.7% respectively. The difference between them is that in the case of region 4, there’s a higher level of basic education institutions located in the urban area (about 31.1% of basic schooling institutions). The latter reflects data from qark of Fier and Vlorë. Table 85. Distribution of schools for basic education by regions (in %) 2009 - 2010 Total Urban

2010 - 2011 Total Urban

2011 -2012 Total Urban

111

2012 - 2013 Total Urban

2013 - 2014 Total Urban

Region 1 21.0 15.0 19.7 15.5 Region 2 28.6 42.9 29.6 42.7 Region 3 28.3 19.9 29.2 19.3 Region 4 22.1 22.1 21.5 22.5 Albania 100 100 100 100 Source: Instat and Authors calculations

20.0 30.0 28.4 21.6 100

15.4 41.8 19.8 23.0 100

20.3 29.7 28.3 21.7 100

16.1 41.7 19.4 22.8 100

20.5 29.5 28.5 21.5 100

16.8 40.8 19.8 22.6 100

The number of teachers in schools of basic education follows the same patterns as the overall numbers in Albania. Thus, the highest number of this category of teachers is located in the basic schools of Region 2, both in total and urban areas. Should be noted that there is a significant gap between the number of teachers in schools of basic education in region 2 and the other regions. Table 86. Number of teachers in schools of basic education by regions 2009 - 2010

2010 - 2011

2011 -2012

2012 - 2013

2013 - 2014

Total

Urban

Total

Urban

Total

Urban

Total

Urban

Total

Urban

Region 1

5,191

1,905

4,788

1,817

4,682

1,769

4,671

1,776

4,622

1,744

Region 2

9,491

5,353

9,025

5,104

9,004

5,018

8,869

4,937

8,760

4,882

Region 3

6,700

2,247

6,613

2,241

6,421

2,168

6,296

2,100

6,304

2,150

Region 4

5,859

2,460

5,547

2,382

5,477

2,336

5,427

2,333

5,365

2,293

Albania

27,241

11,965

25,973

11,544

25,584

11,291

25,263

11,146

25,051

11,069

Source: Instat

Table 87. Number of teachers per 10000 inhabitants, by development regions level 2009/ 2010

2010/ 2011

2011/ 2012 Total

2012/ 2013

2013/ 2014

2009/ 2010

2010/ 2011

2011/ 2012 Urban

2012/ 2013

2013/ 2014

Region 1

113

106

105

104

Region 2

Region 3

Region 4

Albania 94 89 88 87 Source: Instat and Authors calculations

The average (5-years) highest number of teachers for 10,000 inhabitants (for basic educations) is recorded in Region 1 (106.6 teachers for 10,000 inhabitants). Regions 3 and 4 have similar average levels of this ratio (95.3). The lowest level of this indicator is registered in region 2 (75.7 teachers for 10,000 inhabitants). These data are indexed in the following table, showing that Region 1 stands 21 percentage points above the national average, while Region 2 stands 17 percentage points below. Disparities exist but are not extreme.

112

Figure 74. Number of teachers per 10000 inhabitants at qark level

Source: Instat and Authors calculations

Table 88. Index, number of teachers per 10000 inhabitants by qarks

Region 1 Region 2 Region 3 Region 4 Albania

2009/ 2010

2010/ 2011

121 87 104 105 100

118 85 108 106 100

2011/ 2012 Total 119 85 108 108 100

2012/ 2013

2013/ 2014

2009/ 2010

2010/ 2011

120 85 107 108 100

120 84 109 108 100

121 89 104 110 100

123 88 102 114 100

2011/ 2012 Urban 120 86 113 114 100

2012/ 2013

2013/ 2014

122 84 114 117 100

121 83 119 117 100

Source: Instat and Authors calculations

The highest number of pupils enrolled over the five years is recorded in Region 2 (average 41.3% of total), though with diminishing values over time. The difference between region 2 and the other regions is substantial. The lowest share of enrolled pupils against the total is registered in region 1, about 16.9%. The same patterns are found for female pupilâ&#x20AC;&#x2122;s enrolment in basic education. Table 89. Pupils enrolled in basic schools by qarks (number) 2009 - 2010

2010 - 2011

2011 -2012

Total

Female

2012 - 2013

2013 - 2014

Total

Female

Region 1

79,215

37,881

75,168

35,773

71,112

33,614

67,322

31,736

63,822

29,934

Region 2

177,413

85,056

171,843

82,075

166,770

79,470

163,228

77,439

159,349

75,424

Region 3

100,020

48,318

94,237

45,381

89,694

42,978

86,875

41,451

82,919

39,599

Region 4

83,347

39,887

79,436

37,817

76,128

36,084

73,412

34,761

70,984

33,647

Albania

439,995

211,142

420,684

201,046

403,704

192,146

390,837

185,387

377,074

178,604

Source: Instat

At a regional level, the highest level of the general enrolment rate is registered in Region 1, about 75.5% during 2014, while the national average is 69.0%. GER is almost similar in regions 3 and 4. The same patterns in total GER are valid for female GER over time.

113

Table 90. General enrolment rate at regional level (in %) 2008 2011 Total Region 1 63.2 71.4 Region 2 Region 3 Region 4 Albania

2014

2014 Females

75.5

73.2

55.1

46.0

71.1

70.6

57.5

68.5

64.3

63.7

59.3

71.6

65.3

64.8

57.7

69.0

68.2

57.8 Source: Instat and Authors calculations

The number of pupils graduated in basic schooling has followed a downward trend over time. From the regional point of view, there is evidence of higher graduation levels in region 2 (approximately 40.1% of total pupils graduated in the last five years). The same pattern is observed for female pupils graduated in basic schooling during the academic year 2013/2014. Table 91. Pupils graduated in basic schools by regions (number) Region 1 Region 2 Region 3 Region 4 Albania

2009 - 2010 Total Female 9,334 4,624 20,598 10,049 12,228 6,193 10,127 4,968 52,287 25,834

2010 - 2011 Total Female 8,549 4,191 20,709 10,060 11,738 5,885 10,190 5,019 51,186 25,155

2011 -2012 Total Female 8,999 4,424 19,839 9,748 11,358 5,562 10,184 4,845 50,380 24,579

2012 - 2013 Total Female 8,352 4,123 19,046 9,231 11,192 5,419 9,229 4,391 47,819 23,164

2013 - 2014 Total Female 7,863 3,750 18,198 8,735 9,662 4,751 8,416 4,058 44,139 21,294

Source: Instat and Authors calculations

The highest level of graduated pupils per 10,000 inhabitants is registered in Region 1 with about 177.4 pupils graduated and the lowest level is registered in Region 3 (144.0). Region 1 stands for about 16 percentage points above the national average. Table 92. Number of pupils graduated per 10000 inhabitants, by regions 2009/ 2010

2010/ 2011/ 2012/ 2013/ 2009/ 2010/ 2011 2012 2013 2014 2010 2011 Index_Pupils graduated per 10000 inhabitants

2011/ 2012

2012/ 2013

2013/ 2014

Region 1

203.8

189.1

200.9

187.2

177.4

113.6

107.3

115.7

113.4

116.3

Region 2

176.2

174.5

165.4

158.4

150.7

98.1

99.0

95.2

96.0

98.8

Region 3

176.8

171.9

167.8

166.0

144.0

98.5

97.5

96.6

100.6

94.4

Region 4

170.4

174.8

176.7

160.7

147.1

95.0

99.2

101.8

97.3

96.4

Albania 179.5 176.2 173.7 165.0 Source: Instat and Authors calculations

152.5

100.0

114

Figure 75. Index of the number of pupils graduated per 10000 inhabitants, by regions

Total Albania = 100 Region 4

Region 3

Region 2

Region 1 0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

Source: Instat and Authors calculations

So far, primary and lower secondary educations were analysed, providing input on the quality of education infrastructure and indications on the future workforce by qark and region. However, upper secondary education is the other key category of education, showing how the young workforce can be channelled into economic sectors and/or tertiary education specializations and knowledge economy. The number of upper secondary schools has remained almost constant over the last 5 years, at national, qark and regional level. (500 in 20092010 and 512 in 2013-2014). 447 schools out of 512, are located in urban areas. Table 93. Number of schools for upper secondary education by qarks (no) 2009 - 2010

2010 - 2011

2011 -2012

2012 - 2013

2013 - 2014

Total

Urban

Total

Urban

Total

Urban

Total

Urban

Total

Urban

Berat

Dibër

Durres

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

115

Tiranë

103

Vlorë

Albania 500 Source: Instat

430

508

445

507

437

511

444

512

447

While numbers remain unchanged over years, the distribution of upper secondary schools shows for considerable variation among qarks. Around 20.1% of upper secondary schooling institutions were located in the qark of Tirana in 2013-2014, out of which 83.5% in the urban area. The qark of Fier accounted for about 12.5% of upper secondary schools, out of which 92.2% in urban areas and Elbasan had 10.4% of the total, out of which 90.6% in the urban areas. Gjirokastër and Kukës have the lowest figures, with 4.3% and 3.7% each. The largest number of upper secondary schools in Albania is located in urban areas, with Kukës as the extreme case, where all upper secondary schools are located in the urban area. Differently from the basic education, the location of upper secondary education facilities is not correlated with geography, transport and demography. The choice to locate all facilities in urban areas is a matter of pragmatic efficiency as well as inherited from the previous system where the dominant policy was to invest on schools and dormitories concentrated in urban areas, rather than on road network, housing for teachers, and transportation schemes. Table 94. Distribution of schools for basic education by qarks (in %) 2009 - 2010

2010 - 2011

2011 -2012

2012 - 2013

2013 - 2014

Total

Urban

Total

Urban

Total

Urban

Total

Urban

Total

Urban

Berat

5.6

5.3

5.5

5.4

5.7

5.5

5.4

5.5

5.4

Dibër

4.6

5.1

4.5

4.7

4.5

4.8

4.7

5.0

4.9

5.4

Durres

6.6

6.5

6.7

6.4

7.0

6.8

7.0

6.9

Elbasan

11.0

11.2

10.6

10.8

10.7

11.0

10.6

11.0

10.4

10.7

Fier

12.6

13.0

12.4

13.0

12.2

12.8

12.5

13.3

12.5

13.2

Gjirokastër

4.2

4.3

Korçë

9.2

8.8

9.1

8.5

9.1

8.7

8.8

8.3

9.0

8.5

Kukës

4.0

4.7

4.1

4.7

3.9

4.6

3.9

4.5

3.7

4.3

Lezhë

4.8

4.9

5.2

4.9

5.0

4.9

5.0

4.9

Shkodër

9.2

8.8

9.3

8.5

9.5

8.9

9.6

9.0

9.2

8.5

Tiranë

19.4

18.8

20.3

20.0

20.3

19.5

20.2

19.4

20.1

19.2

Vlorë

8.8

8.6

8.3

8.1

8.2

8.0

8.1

8.6

8.7

Albania 100 100 100 100 Source: Instat and Authors calculations

100

The number of teachers in upper secondary education decreased during the academic year 2010/2011 by 0.9%, registering 8,179 teachers from 8,250 in the previous year. In the academic year 2013/2014 there were about 8,606

116

teachers. The highest number of this category of teachers is located in the qark of Tirana with about 2,310 upper secondary schooling institutions. There’s a high divergence between the qark of Tirana and the other qarks, as well as differences among the other qarks themselves. The differences are similar for urban areas. Table 95. Teachers in upper secondary schools by qarks 2009 - 2010 Total Urban Berat 477 259 Dibër 329 169 Durres 613 389 Elbasan 850 510 Fier 1008 624 Gjirokastër 281 144 Korçë 661 364 Kukës 222 121 Lezhë 401 237 Shkodër 780 471 Tiranë 2038 1423 Vlorë 590 369 Albania 8250 5080 Source: Instat

2010 - 2011 Total Urban 458 256 318 173 619 398 843 496 929 591 278 137 666 373 227 119 383 229 748 455 2143 1502 567 359 8179 5088

2011 -2012 Total Urban 458 257 327 172 666 446 855 515 926 581 301 160 672 371 238 127 412 260 799 484 2246 1568 573 354 8473 5295

2012 - 2013 Total Urban 450 257 343 186 695 455 854 514 931 594 250 129 679 381 254 142 425 270 790 476 2364 1710 575 362 8610 5476

2013 - 2014 Total Urban 460 260 345 184 664 445 850 520 934 561 285 150 666 380 253 150 445 282 788 489 2310 1666 606 375 8606 5462

In the last 5 years, the average number of teachers in upper secondary education per 10,000 inhabitants was 29.0. This indicator did not change much over time, (28.3 in 2009-2010 and 29.7 in 2013-2014). This indicator is higher in urban areas (average, 33.0 per 10,000), thus higher than the national average. Table 96. Number of teachers in upper secondary schools per 10000 inhabitants at qark level Total

Urban

Berat

2009/ 2010 31.5

2010/ 2011 30.9

2011/ 2012 31.4

2012/ 2013 31.0

2013/ 2014 32.0

2009/ 2010 38.9

2010/ 2011 26.9

2011/ 2012 40.0

2012/ 2013 40.5

2013/ 2014 41.3

Diber

22.5

22.3

23.4

24.8

25.1

46.0

46.8

47.5

51.4

50.9

Durres

22.9

22.8

24.2

25.2

24.1

19.6

19.3

20.8

20.3

19.4

Elbasan

27.6

27.5

28.1

28.2

28.1

42.4

41.6

43.4

44.0

Fier

30.8

28.8

29.0

29.3

29.5

48.6

46.1

45.2

45.9

43.2

Gjirokaster

35.0

36.3

40.6

34.0

39.1

37.1

35.9

42.6

34.7

40.6

Korce

28.5

29.1

29.6

30.0

29.6

40.0

41.5

41.6

42.9

Kukes

24.6

25.6

27.3

29.4

40.9

40.1

42.4

46.9

49.3

Lezhe

28.6

27.5

29.7

30.7

32.4

32.1

29.9

32.5

32.3

33.0

Shkoder

34.3

33.4

36.0

35.7

35.8

47.7

46.2

49.1

48.0

49.2

Tirane

27.0

27.7

28.6

30.0

29.1

26.4

27.1

27.3

28.6

27.3

117

Vlore

31.7

30.8

31.3

Albania

28.3 28.2 29.2 Source: Instat and Authors calculations

31.4

33.1

30.7

29.6

28.8

28.9

29.7

33.0

32.5

33.2

33.5

33.0

The highest number (5-years average) of teachers for 10,000 inhabitants (for upper secondary educations) is registered in the qark of Gjirokastër (37) followed by the qark of Shkodër (35), the qark of Vlorë (31.7) and the qark of Berat (31.4). The lowest level of this indicator is registered in the qarks of Dibër (23.6) and Durrës (23.8). Demography could be a factor impacting these figures, though in the case of Gjirokastër could as well be induced by graduation of a large number of teachers in the local university. These newly graduated teachers come from the city itself as well as the surrounding areas of the south Albania and most of them, after graduation, keep living in their hometowns. The highest number of teachers per 10,000 inhabitants in urban areas in 20132014 is found in the qarks of Dibër (50.9), Shkodër (49.2) and Kukës (49.3). The lowest value of the indicator is recorded in the qarks of Durrës, (19.4) and Tiranë (27.3). This again shows for the concentration policy of facilities in urban areas of the more remote and mountainous qarks, and probably better distribution in the central locations. However, in Tirana a Durrës may as well be linked to the diversity of territorial typologies – several settlements are not considered urban, but still have high densities and population number compared to urban areas elsewhere in the country. Table 97. Index, number of teachers per 10000 inhabitants at qark level 2009/ 2010

2010/ 2011

Total 2011/ 2012

111 110 108 80 79 80 Diber 81 81 83 Durres 98 98 96 Elbasan 109 102 99 Fier 124 129 139 Gjirokaster 101 103 101 Korce 87 91 93 Kukes 101 98 102 Lezhe 121 118 123 Shkoder 95 98 98 Tirane 112 109 107 Vlore 100 100 100 Albania Source: Instat and Authors calculations Berat

2012/ 2013

2013/ 2014

104 84 85 95 99 114 101 99 103 120 101 106 100

108 85 81 95 99 132 100 99 109 121 98 111 100

2009/ 2010

118 139 59 128 147 112 121 124 97 145 80 93 100

2010/ 2011

83 144 59 128 142 110 128 123 92 142 83 91 100

Uban 2011/ 2012

120 143 63 131 136 128 125 128 98 148 82 87 100

2012/ 2013

2013/ 2014

121 153 61 130 137 104 128 140 96 143 85 86 100

In absolute terms, the number of pupils enrolled in upper secondary schools increased over the last five academic years (in average by 2.0%), though the

118

125 154 59 133 131 123 130 149 100 149 83 90 100

growth rate has faced contraction over the period. Almost the same patterns are observed for female student’s enrolment over time. During 2014, female students enrolment in upper secondary schools decreased by 2.2% in annual terms. Except for the qarks of Korçë and Fier, the total number of enrolled pupils did experience some diminishing in the last academic year. Female enrolment did not decrease in 2014 in the qark of Elbasan only. The latter may be due to the consolidated history of Elbasan city with the education sector for all categories, upper secondary, vocational and tertiary education. Table 98. Pupils enrolled in upper secondary schools by qarks (number) 2009 - 2010 Total Female Berat 8,414 6,720 Dibër Durres 11,654 13,768 Elbasan 15,679 Fier Gjirokastër 3,638 9,957 Korçë Kukës 5,372 6,987 Lezhë Shkodër 11,346 38,602 Tiranë 8,520 Vlorë Albania 140,657 Source: Instat

2010 - 2011 Total Female

2011 -2012 Total Female

2012 - 2013 Total Female

2013 - 2014 Total Female

3,698

8,970

3,828

8,570

3,634

8,837

3,684

8,323

3,464

3,276

7,381

3,362

7,497

3,402

7,308

3,501

6,925

3,436

5,567

13,901

6,229

15,153

6,705

15,551

6,841

15,152

6,728

6,819

14,514

6,827

14,919

6,971

15,246

7,023

15,152

7,019

7,387

15,886

7,529

15,579

7,421

15,873

7,412

15,797

7,224

1,757

4,011

1,822

3,847

1,805

3,765

1,728

3,482

1,622

4,555

10,733

4,873

11,182

5,032

11,403

5,097

11,416

5,038

2,504

6,227

3,021

6,070

2,849

5,901

2,806

5,479

2,558

3,653

7,555

3,909

7,774

4,009

7,734

3,950

7,590

3,775

5,216

12,249

5,652

11,929

5,523

12,399

5,662

11,951

5,471

17,254

39,924

18,062

40,689

18,632

41,243

18,943

40,532

18,594

4,168

8,783

4,274

8,973

4,182

9,165

4,244

10,138

4,372

65,854

150,134

69,388

152,182

70,165

154,425

70,891

151,937

69,301

Factors that impact enrolment rates in upper secondary schooling in Albania include: the education level of the household spouses, the presence and vicinity of the upper secondary school to the dwelling (in fact most are concentrated in urban areas, worsening access for rural households), income level of the parents and the search for employment opportunities (the highest share of the unemployed jobseekers was for the age group 15-24). The number of pupils enrolled against the number of teachers (totals and index) is the highest in Durrës, Dibër and Kukës qarks and lowest in Shkodër and Gjirokastër. This could be explained with the better performance of the two latter qarks in terms of teachers per 10,000 inhabitants, figures that for Durrës, Kukës and Dibër are the lowest. During the academic year 2013/12014 there were about 17.7 pupils enrolled per teacher in the upper secondary schools. The level of the indicator is slightly lower compared to the previous year. Table 99. Indicators of pupils enrolled/number of teachers by qarks (in %) 2009/

2010/

2011/

2012/

2013/

119

2009/

2010/

2011/

2012/

2013/

Berat Dibër Durres Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

2010 2011 2012 2013 2014 Total number of pupils enrolled / number of teachers 17.6 19.6 18.7 19.6 18.1 20.4 23.2 22.9 21.3 20.1 19.0 22.5 22.8 22.4 22.8 16.2 17.2 17.4 17.9 17.8 15.6 17.1 16.8 17.0 16.9 12.9 14.4 12.8 15.1 12.2 15.1 16.1 16.6 16.8 17.1 24.2 27.4 25.5 23.2 21.7 17.4 19.7 18.9 18.2 17.1 14.5 16.4 14.9 15.7 15.2 18.9 18.6 18.1 17.4 17.5 14.4 15.5 15.7 15.9 16.7 17.0 18.4 18.0 17.9 17.7

2010 2011 2012 2013 2014 Index of total number of pupils enrolled / number of teachers 103.5 106.7 104.2 109.5 102.5 119.8 126.4 127.6 118.8 113.7 111.5 122.3 126.7 124.8 129.3 95.0 93.8 97.2 99.5 101.0 91.2 93.2 93.7 95.1 95.8 75.9 78.6 71.2 84.0 69.2 88.4 87.8 92.6 93.6 97.1 141.9 149.4 142.0 129.5 122.7 102.2 107.5 105.1 101.5 96.6 85.3 89.2 83.1 87.5 85.9 111.1 101.5 100.9 97.3 99.4 84.7 84.4 87.2 88.9 94.8 100.0 100.0 100.0 100.0 100.0

Source: Instat and Authors calculations

Figure 76. Index of total number of pupils enrolled/number of teachers in upper secondary schools by qarks 140

120

Albania = 100

100 80 60 40

20 0 Berat

Dibër

Durres

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: Instat and Authors calculations

The number of pupils graduated in upper secondary schools presents some volatility during the last 5 years. While it has followed an upward trend until 2012/2013, during the academic year 2013/2014, the total number of pupils completing upper secondary education resulted in about 35,254 pupils, down by 23.2% compared to the previous year. The number of graduated pupils decreased in all 12 qarks in the last academic year (the highest in Gjirokastër). Table 100. Pupils graduated in upper secondary schools at qark level (number) 2009 - 2010 Total

Female

2010 - 2011 Total

2011 -2012

Female

120

Total

Female

2012 - 2013 Total

Female

2013 - 2014 Total

Female

Berat

2,043

1,130

2,324

1,122

2,250

1,044

2,676

1,226

1,882

959

Dibër

1,762

968

2,022

1,011

1,954

945

2,228

1,081

1,844

987

Durrës

2,418

1,379

3,274

1,623

3,411

1,877

4,174

2,064

3,367

1,770

Elbasan

3,572

2,090

3,903

2,038

3,970

2,051

4,622

2,321

3,312

1,928

Fier

4,450

2,371

4,556

2,274

4,536

2,313

5,134

2,511

4,126

2,196

Gjirokastër

1,063

545

1,273

587

1,105

583

1,156

572

690

406

Korçë

2,637

1,321

3,021

1,422

2,879

1,459

3,284

1,600

2,283

1,324

Kukës

1,241

673

1,558

759

1,603

761

1,733

902

1,645

837

Lezhë

1,737

1,005

2,206

1,196

2,180

1,204

2,402

1,321

1,932

1,089

Shkodër

2,545

1,309

3,261

1,620

3,247

1,700

3,612

1,807

3,083

1,579

Tiranë

9,060

4,685

10,612

5,206

11,454

5,645

12,416

5,933

9,520

4,957

Vlorë

2,295

1,251

2,344

1,235

2,338

1,219

2,462

1,287

1,570

850

34,823

18,727

40,354

20,093

40,927

20,801

45,899

22,625

35,254

18,882

Albania

Source: Instat and Authors calculations

The number of pupils graduated in upper secondary schools per 10,000 inhabitants improved over time reaching the level of 158.4 in the academic year 2012/2013. Then this indicator became 121.8 pupils per 10,000 inhabitants, about 23.1% lower compared to the previous year. Table 101. Number of pupils graduated per 10000 inhabitants at qark level 2009/ 2010/ 2011/ 2012/ 2013/ 2010 2011 2012 2013 2014 Number of pupils graduated per 10000 inhabitants

2009/ 2010/ 2011/ 2012/ 2013/ 2010 2011 2012 2013 2014 Index_NR pupils graduated per 10000 inhabitants

Berat

135.0

156.9

154.2

184.3

130.8

112.9

109.3

116.4

107.4

Dibër

120.6

141.9

140.0

161.0

134.2

100.9

102.1

99.2

101.6

110.2

Durres

90.3

120.4

124.1

151.6

122.1

75.6

86.6

87.9

95.7

100.3

Elbasan

115.9

127.5

130.5

152.6

109.6

96.9

91.8

92.5

96.3

90.0

Fier

135.8

141.3

142.1

161.5

130.4

113.6

101.7

100.7

101.9

107.1

Gjirokastër

132.3

166.3

149.0

157.1

94.7

110.7

119.7

105.6

99.2

77.7

Korçë

113.6

132.0

126.9

145.2

101.4

95.1

95.0

90.0

91.7

83.3

Kukës

137.4

175.8

183.8

200.3

191.4

114.9

126.5

130.3

126.4

157.1

Lezhë

123.9

158.3

157.2

173.7

140.5

103.6

113.9

111.4

109.6

115.4

Shkodër

111.9

145.6

146.3

163.2

140.2

93.6

104.8

103.7

103.0

115.1

Tiranë

119.9

137.4

145.9

157.4

119.8

100.3

98.9

103.4

99.4

98.4

Vlorë

123.2

127.5

127.8

134.6

85.8

103.1

91.8

90.6

85.0

70.5

Albania

119.5

138.9

141.1

158.4

121.8

100

Source: Instat and Authors calculations

There is variation among qarks regarding the number of graduated pupils in the upper secondary schools per 10,000 inhabitants. Disparities are not extreme, but Kukës stands around 57 percentage points above the national average, constituting thus an outlier in the group. The lowest level of those graduated in upper secondary schools per 10,000 inhabitants is found in the qarks of

121

Gjirokastër, Korçë and Vlorë, with 17-30 percentage points below the national average. Figure 77. Number of pupils graduated per 10000 inhabitants at qark level 180 160

140

Albania = 100

120 100 80 60

40 20 0 Berat

Dibër

Durres

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: Instat and Authors calculations

At the development regions level, Region 2 has the highest concentration of upper secondary education facilities (32.0%, or 164 schools in 2013-2014), out of which 41.0% (or 141 schools) located in the urban area. Table 102. Number of schools for basic education by regions (no) 2009 - 2010

2010 - 2011

2011 -2012

2012 - 2013

2013 - 2014

Total

Urban

Total

Urban

Total

Urban

Total

Urban

Total

Urban

Region 1

Region 2

153

131

160

140

160

134

163

138

164

141

Region 3

129

109

128

110

129

111

127

110

127

110

Region 4

128

111

127

113

125

111

127

114

130

117

Albania 500 Source: Instat

430

508

445

507

437

511

444

512

447

Regions 3 and 4 have similar levels, while Region 1 has the lowest number of the upper secondary schools (17.8%, or 91 schools), out of which 79 in the urban area. Table 103. Distribution of schools for basic education by regions (in %) Region 1 Region 2 Region 3 Region 4

2009 - 2010 Total Urban 18.0 18.4 30.6 30.5 25.8 25.3 25.6 25.8

2010 - 2011 Total Urban 18.3 18.4 31.5 31.5 25.2 24.7 25.0 25.4

2011 -2012 Total Urban 18.3 18.5 31.6 30.7 25.4 25.4 24.7 25.4

122

2012 - 2013 Total Urban 18.4 18.5 31.9 31.1 24.9 24.8 24.9 25.7

2013 - 2014 Total Urban 17.8 17.7 32.0 31.5 24.8 24.6 25.4 26.2

Albania 100 100 100 100 Source: Instat and Authors calculations

100

The highest number of teachers for the upper secondary education is found in Region 2, for both the total and the urban areas. This number is almost doubling the figures of the other regions, while Region 1 has an even lower number than half of the Region 2. Table 104. Number of teachers in schools of upper secondary educations by regions 2009 - 2010

2010 - 2011

2011 -2012

2012 - 2013

2013 - 2014

Region 1

Total 1,403

Urban 829

Total 1,358

Urban 803

Total 1,449

Urban 871

Total 1,469

Urban 888

Total 1,486

Urban 921

Region 2

2,980

1,981

3,080

2,073

3,239

2,186

3,402

2,351

3,319

2,295

Region 3

1,988

1,133

1,967

1,125

1,985

1,143

1,983

1,152

1,976

1,160

Region 4

1,879

1,137

1,774

1,087

1,800

1,095

1,756

1,085

1,825

1,086

Albania

8,250

5,080

8,179

5,088

8,473

5,295

8,610

5,476

8,606

5,462

Source: Instat

However, Region 1 has the highest number of teachers per 10,000 inhabitants, while Region 2 has the lowest. Thus, though the latter has higher absolute numbers, the standard teachers/10,000 inhabitants is lower in this region, probably due to high population number and inability of the government to respond to the needs Table 105. Number of teachers per 10000 inhabitants, by development regions level 2009/ 2010

2010/ 2011

2011/ 2012 Total

2012/ 2013

2013/ 2014

2009/ 2010

2010/ 2011

2011/ 2012 Urban

2012/ 2013

2013/ 2014

Region 1

30.6

30.0

32.4

32.9

33.5

41.0

39.2

41.8

41.7

42.8

Region 2

25.5

26.0

27.0

28.3

27.5

25.6

26.0

26.5

27.4

26.2

Region 3

28.7

28.8

29.3

29.4

40.8

37.0

42.0

42.6

43.0

Region 4

31.6

30.4

31.2

30.6

31.9

39.6

37.8

37.9

37.2

37.1

Albania 28.3 28.2 29.2 29.7 Source: Instat and Authors calculations

29.7

33.0

31.9

33.2

33.5

33.0

123

Figure 78. Number of teachers per 10000 inhabitants at regions level Total Albania = 29.7

Urban area, Albania = 33.0

Region 4

Region 3

Region 2

Region 1

Region 1 0.0

10.0

20.0

30.0

40.0

0.0

10.0

20.0

30.0

40.0

50.0

Source: Instat and Authors calculations

The indexing of the indicator (teachers/10,000 inhabitants) shows for moderate disparities among all 4 regions. These disparities are more pronounced when the indicator is applied to urban areas only. In this case, Region 3 stands 30 percentage points above the national average, followed by Region 1 (29 above), Region 4 (12 above) and Region 2 (21 below the national average). Table 106. Index, number of teachers per 10,000 inhabitants in upper secondary schools at regions level 2009/ 2010

2010/ 2011

2011/ 2012 Total

2012/ 2013

2013/ 2014

2009/ 2010

2010/ 2011

2011/ 2012 Urban

2012/ 2013

2013/ 2014

Region 1

108.1

106.4

111.0

110.8

112.8

124.2

122.9

125.9

124.5

129.7

Region 2

90.1

92.2

92.5

95.3

92.6

77.6

81.5

79.8

81.8

79.4

Region 3

101.4

102.1

100.3

99.0

123.6

116.0

126.5

127.2

130.3

Region 4

111.7

107.8

106.8

103.0

107.4

120.0

118.5

114.2

111.0

112.4

100

Albania 100 100 100 100 Source: Instat and Authors calculations

Region 2 has the highest number of pupils enrolled in upper secondary education over the five years (41.1% of the total). Again, Region 2 has almost the double of figures shown for other regions, while Region 1 is in the most disadvantageous position (16.5%). Female enrolment is presented seemingly. Pupils enrolled per number of teachers has the highest value in Region 2 and the lowest values in Region 4. Disparities among regions in this case (see indexes below) are low. Table 107. Pupils enrolled in upper secondary schools, at development regions level (no) 2009 - 2010

2010 - 2011

2011 -2012

124

2012 - 2013

2013 - 2014

Total

Female

Total

Female

Total

Female

Total

Female

Total

Female

Region 1

23,705

11,373

26,031

12,582

25,773

12,381

26,034

12,418

25,020

11,804

Region 2

56,976

26,097

61,206

27,653

63,339

28,739

64,102

29,285

62,609

28,758

Region 3

32,139

15,072

34,217

15,528

34,671

15,637

35,486

15,804

34,891

15,521

Region 4

27,837

13,312

28,680

13,625

28,399

13,408

28,803

13,384

29,417

13,218

140,657

65,854

150,134

69,388

152,182

70,165

154,425

70,891

151,937

69,301

Albania

Source: Instat

Table 108. Indicators of pupils enrolled in upper secondary schools, at development regions level (no.) 2009/ 2010/ 2011/ 2012/ 2013/ 2010 2011 2012 2013 2014 Total pupils enrolled/number of teachers Region 1 16.9 19.2 17.8 17.7 16.8 Region 2 19.1 19.9 19.6 18.8 18.9 Region 3 16.2 17.4 17.5 17.9 17.7 Region 4 14.8 16.2 15.8 16.4 16.1 Albania 17.0 18.4 18.0 17.9 17.7 Source: Instat and Authors calculations

2009/ 2010

2010/ 2011

99.1 112.1 94.8 86.9 100

104.4 108.3 94.8 88.1 100

2011/ 2012 INDEX 99.0 108.9 97.2 87.8 100

2012/ 2013

2013/ 2014

98.8 105.1 99.8 91.5 100

95.4 106.8 100.0 91.3 100

Figure 79. Index of total number of pupils enrolled/number of teachers in upper secondary schools Total Albania = 100 Region 4

Region 3

Region 2

Region 1 80

100

105

110

Source: Instat and Authors calculations

The absolute number of pupils graduated in Region 2 (both total and females) is higher than for the other regions (approximately 40.3% of the total in the last five years is found in region 2), while Region 1 has the lowest values. However, when figures are given for 10,000 inhabitants and indexed, one can notice that Region 1 scores better (23 percentage points above the national average in 2013/2014), Region 2 ranks second and equal to the national average, while regions 3 and 4 have the same levels of 10 percentage points below the national average. Disparities in this case are moderate among regions Table 109. Pupils graduated in upper secondary education (number)

125

2009 - 2010

2010 - 2011

2011 -2012

2012 - 2013

2013 - 2014

Total

Female

Total

Female

Total

Female

Total

Female

Total

Female

Region 1

5,523

2,987

7,025

3,575

7,030

3,665

7,747

4,030

6,660

3,505

Region 2

13,240

7,032

15,908

7,840

16,819

8,467

18,818

9,078

14,731

7,714

Region 3

8,252

4,541

9,248

4,582

9,099

4,554

10,582

5,147

7,477

4,211

Region 4

7,808

4,167

8,173

4,096

7,979

4,115

8,752

4,370

6,386

3,452

Albania

34,823

18,727

40,354

20,093

40,927

20,801

45,899

22,625

35,254

18,882

Source: Instat and Authors calculations

Table 110. Number of pupils graduated per 10000 inhabitants 2009/ 2010/ 2011/ 2012/ 2013/ 2010 2011 2012 2013 2014 Pupils graduated per 10000 inhabitants

2009/ 2010/ 2011/ 2012/ 2013/ 2010 2011 2012 2013 2014 Index_Pupils graduated per 10000 inhabitants

Region 1

120.6

155.4

157.0

173.6

150.2

100.9

111.9

111.2

109.6

123.3

Region 2

113.2

134.0

140.2

156.5

122.0

94.7

96.5

99.4

98.8

100.1

Region 3

119.3

135.4

134.4

156.9

111.4

99.8

97.5

95.3

99.1

91.5

Region 4

131.4

140.2

138.5

152.4

111.6

109.9

100.9

98.1

96.2

91.6

Albania 120.6 155.4 157.0 173.6 Source: Instat and Authors calculations

150.2

100.0

Figure 80. Index of the number of pupils graduated per 10000 inhabitants

Total Albania = 100 Region 4

Region 3

Region 2

Region 1 0

100

150

Source: Instat and Authors calculations

Health Healthcare represents a key public service with respect to social welfare and as an indicator of economic development and cohesion. The system has gone through several reforms in the last ten years, but the quality of the service is still 126

lagging behind, and users over the country prefer to receive services in Tirana or abroad, rather than make use of local facilities. This shows for poor access to qualitative services in the municipalities and regions. According the available data by the state budget, about ALL 31.1 billion were allocated on health services in 2015. This amount has been fluctuating overtime (2012-2014). Thus, total healthcare expenditures diminished by about 32.7% in 2013 and rose by about 18.7% in 2014. As a result of the consolidation path on fiscal policy (contraction of overall state budget expenditures and increased taxes) embarked by the central government, healthcare expenditures diminished again by 8.0% in 2015. Table 111. State budget expenditures for healthcare at qark level 2012

2013 2014 In ALL billion Berat 1.8 0.7 0.7 Dibër 1.9 0.7 0.8 Durrës 3.0 0.3 0.3 Elbasan 4.2 1.5 1.5 Fier 3.2 1.2 1.3 Gjirokastër 1.8 0.7 0.7 Korçë 2.7 1.1 1.2 Kukës 1.5 0.6 0.7 Lezhë 1.8 0.6 0.6 Shkodër 3.4 1.1 1.2 Tiranë 14.7 18.9 23.4 Vlorë 2.3 1.1 1.3 Albania 42.3 28.5 33.8 Source: Ministry of Finance

2015 0.7 0.7 0.3 1.5 1.1 0.8 1.2 0.6 0.6 1.3 20.9 1.3 31.1

2012 2013 2014 2015 Qarks weight vs total (in %) 4.2 2.5 2.2 2.4 4.5 2.5 2.4 2.3 7.1 1.0 0.9 0.9 9.8 5.1 4.5 4.9 7.6 4.1 3.8 3.6 4.2 2.6 2.2 2.7 6.4 3.9 3.6 3.7 3.6 2.0 2.0 2.0 4.2 2.2 1.9 2.1 8.1 4.0 3.6 4.1 34.7 66.2 69.0 67.2 5.5 3.9 3.9 4.1 100.0 100.0 100.0 100.0

From a distributional perspective, healthcare expenditures are largely allocated in the qark of Tirana (the biggest healthcare centre and most of related facilities are located in Tirana city) with about 67.2% against total expenditure in 2015. In the other qarks healthcare services benefit from marginal central government financial resources. The same scenario is reflected in the regional analysis, where Region 2 absorbed in 2015 about ALL 21.9 billion, or 70.5% of total healthcare expenditures. As for other regions, Region 1 has absorbed the less of the expenditures, though differences between these three regions are very low. Table 112. State budget expenditures for healthcare at regions level 2012 Region 1 Region 2 Region 3 Region 4

6.7 19.7 8.6 7.3

2013 2014 In ALL billion 2.2 2.5 19.9 24.5 3.3 3.5 3.0 3.3

2015 2.5 21.9 3.4 3.2

127

2012 2013 2014 2015 Regions weight vs total (in %) 15.9 8.2 7.5 8.2 46.4 69.7 72.3 70.5 20.4 11.5 10.3 11.0 17.2 10.5 9.8 10.4

Albania 42.3 28.5 33.8 31.1 Source: Ministry of Finance and authors calculations

100

For a more qualitative assessment of the service, indicators such as no. of hospitals, no. of beds, etc. shall be analysed. According 2013-2014 data, there are 6,652 healthcare service providers in Albania. This includes all kind of facilities except for hospitals. Table 113. Total health services providers* 2009

2010

2011 2012 2013 2009 2010 2011 2012 2013 number number Berat 445 455 477 477 480 6.8 6.9 7.1 7.2 7.2 Dibër 576 502 502 527 574 8.8 7.6 7.5 8.0 8.6 Durres 380 376 371 351 352 5.8 5.7 5.5 5.3 5.3 Elbasan 813 820 829 811 812 12.4 12.5 12.4 12.3 12.2 Fier 712 702 632 601 568 10.9 10.7 9.4 9.1 8.5 Gjirokastër 558 558 551 555 551 8.5 8.5 8.2 8.4 8.3 Korçë 733 736 762 753 751 11.2 11.2 11.4 11.4 11.3 Kukës 271 278 276 278 278 4.1 4.2 4.1 4.2 4.2 Lezhë 530 498 500 513 516 8.1 7.6 7.5 7.8 7.8 Shkodër 485 454 472 466 485 7.4 6.9 7.1 7.1 7.3 Tiranë 641 652 784 779 766 9.8 9.9 11.7 11.8 11.5 Vlorë 415 537 535 487 519 6.3 8.2 8.0 7.4 7.8 Albania 6559 6568 6691 6598 6652 100.0 100.0 100.0 100.0 100.0 Source: Instat & authors calculations *It refers to the total number of polyclinics, health centres, health posts, and consultation clinics for children, consultation clinics for women.

They have a relatively cohesive distribution across qarks, with Elbasan being ranked first (around 12%), Tirana and Korça with around 11.5% and the other qarks with 5-9% of the total facilities. Should be noticed that qark of Durrës is the most disadvantageous for this indicators, with an average of 5.5% during 2009-2013. On the other hand, the total number of public hospitals has not change 2009-2013, with Tirana having 7 hospitals, Elbasan 6 and the other qarks with 2-4 hospitals. Table 114. Number of hospitals (nr) Berat Diber Durres Elbasan Fier Gjirokaster Korce Kukes Lezhe

2009 4 3 2 6 3 3 4 3 3

2010 4 3 2 6 3 3 4 3 3

2011 4 3 2 6 3 3 4 3 3

128

2012 4 3 2 6 3 3 4 3 3

2013 4 3 2 6 3 3 4 3 3

Shkoder 2 2 Tirane 7 7 Vlore 4 4 Albania 44 44 Source: Instat & authors calculations

2 7 4 44

Regardless of the (often equal) number of hospitals per qark, each has different capacities, in terms of number of beds. As a rule, the total number of beds has decreased in Albania during 2009-2013. Berat and Shkodër had the major role in overall decrease, while other qarks have kept constant capacities and Korça and Kukës have experienced slight increase. The highest number of hospital beds is found in the qark of Tirana followed by Elbasan (this corresponds with the higher number of hospitals in these qarks as well). The lowest number of beds is present in the qarks of Lezhë, Berat, Kukës and Gjirokastër, though for instance Durrës and Shkodër have fewer hospitals. Table 115. Number of beds and distribution among qarks 2009

2010 2011 2012 Number of beds Berat 424 416 378 378 Diber 542 536 552 536 Durres 476 475 474 474 Elbasan 1089 1104 1096 1085 Fier 706 712 706 706 Gjirokaster 409 386 399 399 Korce 772 767 767 772 Kukes 367 372 372 372 Lezhe 348 340 344 340 Shkoder 705 650 705 705 Tirane 2217 2199 2189 2241 Vlore 750 750 729 715 Albania 8805 8707 8711 8723 Source: Instat & authors calculations

2013 360 512 471 1025 664 373 752 372 353 598 2157 646 8283

2009 4.8 6.2 5.4 12.4 8.0 4.6 8.8 4.2 4.0 8.0 25.2 8.5 100

2010 4.8 6.2 5.5 12.7 8.2 4.4 8.8 4.3 3.9 7.5 25.3 8.6 100

2011 In % 4.3 6.3 5.4 12.6 8.1 4.6 8.8 4.3 3.9 8.1 25.1 8.4 100

2012

2013

4.3 6.1 5.4 12.4 8.1 4.6 8.9 4.3 3.9 8.1 25.7 8.2 100

4.3 6.2 5.7 12.4 8.0 4.5 9.1 4.5 4.3 7.2 26.0 7.8 100

In terms of total number of beds per 10,000 inhabitants, it is evident that qarks with higher population levels have the lowest values of the indicator (knowing that the number of hospitals per qark does not show for extreme variances, unlike population among qarks). Thus, in qarks of Durrës and Tirana the number of beds per 10,000 inhabitants had the lowest values, 17.1 and 27.0 respectively in 2013. Gjirokastër and Kukës, having the lowest population levels, have 50.7 and 43.0 respectively in 2013, or 77 and 50 respective percentage points above the national average for the same year. Table 116. Indicators for the number of beds at qark level

Berat

2009 2010 2011 2012 2013 Number of beds per 10000 inhabitants 26.9 27.2 25.3 25.8 24.8

129

2009 2010 2011 2012 2013 Number of beds for 10000 inhabitants index 89.7 91.1 84.3 85.8 86.7

Dibër 35.5 36.2 38.3 Durres 18.1 17.9 17.6 Elbasan 34.6 35.7 35.7 Fier 21.0 21.6 21.7 Gjirokastër 47.6 46.9 50.9 Korçë 32.6 32.8 33.3 Kukës 39.2 40.8 41.6 Lezhë 24.4 24.2 24.6 Shkodër 30.4 28.4 31.3 Tiranë 30.3 29.4 28.7 Vlorë 39.5 40.0 39.4 Albania 30.0 29.8 30.0 Source: Instat & authors calculations

38.1 17.3 35.6 22.0 53.4 34.0 42.3 24.5 31.7 28.7 39.1 30.1

37.0 17.1 33.8 20.9 50.7 33.2 43.0 25.5 27.0 27.3 35.3 28.6

118.3 60.4 115.4 70.0 158.8 108.7 130.7 81.2 101.3 101.1 131.9 100.0

121.3 59.9 119.5 72.2 157.3 110.0 136.7 81.0 95.1 98.7 134.1 100.0

127.8 58.6 119.2 72.5 169.8 111.2 138.9 82.2 104.3 95.7 131.5 100.0

126.7 57.5 118.3 73.4 177.7 113.0 140.9 81.4 105.4 95.5 130.2 100.0

129.4 59.8 118.3 73.1 177.3 116.3 150.4 89.3 94.5 95.7 123.5 100.0

The indexed graph shows for high disparities among qarks in terms of public hospitals capacity. This disparities scenario is reversed though when considering the quality of the services in the same qarks. Thus access to the service is faced with the challenge of both capacity and quality, but in different locations, suggesting for different investments policies (not necessarily in value, but in purpose) in different qarks. Figure 81. Index of the number of beds for 10000 inhabitants, at qark level Vlorë

Albania = 100

Tiranë Shkodër Lezhë Kukës Korçë

Gjirokastër Fier Elbasan Durres Dibër Berat 0

100

150

200

Source: Instat & authors calculations

From a regional analysis point of view, the number of service providers and hospitals shows for moderate divergences, with Region 3 having a higher concentration and Region 1 having a lower one. Table 117. Total health services providers at regions level* 2009 Region 1

1286

2010

2011 number 1230 1248

2012

2013

2009

2010

1257

1279

19.6

18.7

130

2011 % 18.7

2012

2013

19.1

19.2

Region 2 1597 1530 1657 1657 1692 24.3 23.3 24.8 25.1 25.4 Region 3 1991 2011 2068 2041 2043 30.4 30.6 30.9 30.9 30.7 Region 4 1685 1797 1718 1643 1638 25.7 27.4 25.7 24.9 24.6 Albania 6559 6568 6691 6598 6652 100.0 100.0 100.0 100.0 100.0 Source: Instat & authors calculations *It referes to the total number of polyclinics, health centres, health posts, consultation clinics for children, consultation clinics for women.

Table 118. Number of hospitals per region (nr) 2009 2010 Region 1 8 8 Region 2 12 12 Region 3 14 14 Region 4 10 10 Albania 44 44 Source: Instat & authors calculations

2011 8 12 14 10 44

2012 8 12 14 10 44

2013 8 12 14 10 44

Aggregation of capacity data shows that Region 2 has the highest concentration of beds and Region 1 has the lowest. However, Region 3 on the other hand has the highest number of beds per 10.000 inhabitants (31.7 in 2013) and Region 2 has the lowest value (26.1 in 2013). It is interesting to notice that the indexed values show for lower disparities among regions with regard hospital beds/10,000 inhabitants, than among qarks. Table 119. Number of beds and distribution among regions 2009

2010

2011 number Region 1 1420 1362 1421 Region 2 3235 3210 3215 Region 3 2285 2287 2241 Region 4 1865 1848 1834 Albania 8805 8707 8711 Source: Instat & authors calculations

2012

2013

2009

1417 3251 2235 1820 8723

1323 3140 2137 1683 8283

16.1 36.7 26.0 21.2 100.0

2010 2011 2012 % versus total 15.6 16.3 16.2 36.9 36.9 37.3 26.3 25.7 25.6 21.2 21.1 20.9 100.0 100.0 100.0

2013 16.0 37.9 25.8 20.3 100.0

Table 120. Indicators for the number of beds at regional level 2009

2010

2011

2012

2013

Number of beds per 10,000 inhabitants

Region 1 30.3 29.5 31.3 Region 2 28.2 27.7 27.3 Region 3 32.2 32.8 32.6 Region 4 30.5 30.8 31.2 Albania 30.0 29.8 30.0 Source: Instat & authors calculations

31.5 27.2 32.9 31.5 30.1

29.6 26.1 31.7 29.3 28.6

131

2009

2010

2011

2012

2013

Number of beds for 10,000 inhabitants index

101.1 94.1 107.4 101.6 100.0

99.0 92.7 110.1 103.2 100.0

104.3 91.1 108.9 104.1 100.0

104.9 90.4 109.5 104.8 100.0

103.7 91.3 110.9 102.5 100.0

Figure 82. Index of the number of beds for 10000 inhabitants, at regions level

Albania = 100

Region 4

Region 3

Region 2

Region 1

100

120

Source: Instat & authors calculations

Overall, inflant mortality has followd a declining trend during 2011 – 2015 in Albania. The average infant mortality rate registered 8.7 in 2011, declining to 7.1 in 2015. While there’s been a significant contraction in the mortality rate registered in the qark of Shkodër for 2015 (from 12.6 in 2014 to 4.2 in 2015) the opposite was registered in the qarks of Fier and Dibër. Table 121. Infant mortality (per 1,000 live births) by qarks (2011-2015) 2011

2012

2013

2014

Berat

4.4

2.9

4.7

2.6

Dibër

9.6

7.4

8.8

8.0

11.4

Durrës

2015

10.0

7.2

6.2

6.8

5.2

Elbasan

7.9

9.2

8.5

9.4

7.8

Fier

7.2

6.9

9.3

5.1

8.7

Gjirokastër

9.4

15.5

5.6

2.7

2.9

Korçë

8.0

5.4

6.1

7.6

2.7

Kukës

5.0

7.2

6.0

7.1

4.4

Lezhë

11.2

12.3

7.3

9.7

5.0

Shkodër

9.2

9.8

12.9

12.6

4.2

Tiranë

9.4

10.3

7.9

7.8

8.4

Vlorë

3.1

6.6

6.5

7.7

8.8

Albania

8.7

8.8

7.9

7.1

Source: Instat & authors calculations

132

Figure 83. Infant mortality (for 1,000 live births) Vlorë

Tiranë

Shkodër

Berat 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0

Dibër

Durrës

Elbasan

Lezhë

Fier

Kukës

2011 2013

Gjirokastër

2015

Korçë

Source: Instat and authors calculations

Table 122. Infant mortality (per 1,000 live births) by regions (2011-2015) 2011 2012 2013 2014 2015 Region 1 8.7 9.9 9.4 10.4 4.5 Region 2 9.6 9.2 7.7 7.6 8.1 Region 3 7.2 6.7 7.0 7.9 5.1 Region 4 6.2 7.7 8.0 5.5 8.0 Albania 8.7 8.8 7.9 7.9 7.1 Source: Instat and authors calculations

Figure 84. Infant mortality (for 1,000 live births) Region 1 10.0 8.0 6.0 4.0 2.0 Region 4

Region 2

0.0

2011 2013 2015

Region 3

Source: Instat and authors calculations

133

Poverty The main source of information with regard to living conditions and poverty in Albania is the Living Standard Measurement Survey conceptualised as a household multi-purpose survey. The first LSMS was conducted by Instat in 2002 with World Bank support. The respective analytical reports made also use of data obtained through Census 2001. The methodology of LSMS 2002 has been kept unchanged so data obtained through the following surveys (2005 and 2008) are comparable in time and place. LSMS data are calculated for broadly defined regions that do not match with the boundaries of the development regions, neither do combine qarks among them. Instat has grouped these LSMS regions based on geographic contiguity, similarities and endowments. These Instat regions are named strata.17 Poverty indicators are available at qark level only for 2012 allowing us to aggregate them and obtain development regions indicators of poverty (using simple averages of the values for each of the qarks comprised in the relative region). Table 123. Poverty indicators by strata 18

Tirana Extreme Poor poor

Coastal Extreme Poor poor

Central Mountain Poverty Extreme Extreme Poor Poor measures poor poor 2002 Headcount 17.8 2.3 20.6 3.6 25.6 4.6 44.5 10.8 Depth 3.8 0.6 4.4 0.7 5.7 0.5 11.1 2.0 Severity 1.3 0.2 1.5 0.2 1.8 0.1 4.1 0.5 2005 Headcount 8.1 1.0 16.8 2.3 20.8 4.9 25.2 3.1 Depth 1.6 0.1 3.3 0.3 4.8 0.8 5.0 0.4 Severity 0.5 0.0 1.0 0.1 1.7 0.2 1.5 0.1 2008 Headcount 8.8 0.2 12.7 1.5 10.7 0.9 25.9 3.7 Depth 1.2 0.0 2.6 0.3 1.9 0.2 5.5 0.5 Severity 0.2 0.0 0.8 0.1 0.5 0.0 1.7 0.1 2012 Headcount 12.1 1.6 17.7 3.0 12.6 2.3 15.1 1.2 Depth 2.4 0.2 3.8 0.5 2.7 0.5 2.4 0.1 Severity 0.7 0.0 1.3 0.1 0.9 0.2 0.6 0.0 Source: INSTAT Living Standard Measurement Survey, LSMS 2002, 2005*, 2008*, 2012* After publishing the revised data for population 2001-2014 in May 2014, the data from LSMS 2005, 2008, 2012 are revised.

Total Extreme Poor poor 25.4 5.7 1.9

4.7 0.8 0.2

17.9 3.9 1.3

3.3 0.5 0.1

12.5 2.4 0.7

1.2 0.2 0.1

14.3 3.0 1.0

2.3 0.4 0.1

Prior 2008, higher GDP growth rates, increasing wages and pensions have determined a decrease in overall poverty. The share of population whose real per capita monthly consumption is below the poverty line 22 of Lek 4,891 (deflated in 2002 prices) fell progressively form 25.4% in 2002 to 12.5% in 2008.

134

Also, for the extremely poor population23, the headcount indicator decreased form 4.7% in 2002 to 3.3 in 2005 and to 1.2% in 2008. The headcount indicator improvement till 2008 means that more people are lifted out of poverty and extreme poverty. In the aftermath of the global financial and economic crisis, shifting of political priorities and the overall weak economic growth rates in the succeeding years, poverty in Albania has increased, as shown by 2012 LSMS. The share of population whose real per capita monthly consumption is below the poverty line of Lek 4,891 (in 2002 prices) increased from 12.5% in 2008 to 14.3% in 2012, meaning that a higher number of people fell into poverty. The same is for extremely poor population, which increased from 1.2% in 2008 to 2.3% in 2012. Overall increased poverty is reflected also at strata level. Thus, poverty in 2012 increased in Tirana, Costal and Central strata while decreased in the mountain strata. For the mountain stratum, the reduced poverty headcount ratio from 25.9% in 2008 to 15.1% in 2012 might be explained with population shifts, emigration and remittances, and continuation of movements from mountain areas to other regions. On the other hand, people who moved from the mountain stratum to the other ones, contributed to a transfer of poverty indicators from the mountainous to the other areas. Figure 85. Poverty headcount ratio according to four main Instat strata (in %) 45

2002

2005

2008

2012

30 25 20

15 10 5

0 Poor

Extremely poor Tirana

Poor

Extremely poor

Poor

Coastal

Extremely poor Central

Poor

Extremely poor

Mountain

Poor

Extremely poor Total

Source: INSTAT LSMS 2012 and Authorâ&#x20AC;&#x2122;s calculations

The other two measures, alternative to headcount, provided by LSMS on poverty, are the gap (depth) and the severity of poverty. The first one provides information on how far from the poverty line are the individuals and the poorer they are, the larger the contribution to overall poverty is. The severity of poverty has as a main advantage the sensitivity to inequality among the poor. It accounts for both the distance between the poor and the poverty line, and 135

inequality among the poor. In Albania the poverty gap narrowed over time from 5.7% in 2002 to 2.4% in 2008. Following the overall slowdown of the economy, this indicator jumped to 3% in 2012. Poverty gap resulted higher and above the national value of the indicator in the coastal area (about 3.8%) and lower and below the national value of the indicator in Tirana and the mountain area (2.4%). Severity of poverty in Albania was 1% in 2012, and 0.7% in 2008. Severity of poverty increased in Tirana, costal and central areas and decreased in the mountain areas both for poor and extremely poor, as explained above. The shifts in figures are a testimonial that poverty is no longer only a rural issue. In the mountainous area, the headcount has been higher in the rural areas than urban areas (in both 2008 and 2012), however both the gap and severity show for a reverse pattern. This may be linked to the living means and resources that people have access in the mountainous areas. Those living in the villages, though poor, are more equal among them and most live through agriculture. Those living in the cities have no such access to agriculture, but have also less access to other sectors, if compared to the other strata.

136

Table 124. Extreme poverty indicators by four Instat strata (in %) 2002 2005 Poverty measure Urban Rural Total Urban Rural Total Urban Headcount 5.9 1.8 1.6 1.8 2.7 2.3 1.9 Coastal Depth 1.2 0.3 0.7 0.2 0.5 0.3 0.4 Severity 0.3 0.1 0.2 0.0 0.1 0.1 0.1 Headcount 3.4 5.1 4.6 3.8 5.6 5.0 1.2 Central Depth 0.5 0.5 0.5 0.8 0.8 0.8 0.3 Severity 0.2 0.1 0.1 0.3 0.2 0.2 0.1 Headcount 7.8 11.6 10.8 2.5 3.3 3.1 2.9 Mountain Depth 1.6 2.1 2.0 0.3 0.4 0.4 0.6 Severity 0.5 0.5 0.5 0.0 0.1 0.1 0.2 Headcount 2.3 2.3 1.0 1.0 0.2 Tirana Depth 0.6 0.6 0.1 0.1 0.0 Severity 0.2 0.2 0.0 0.0 0.0 Headcount 4.1 5.2 4.7 2.2 4.3 3.3 1.2 Depth 0.8 0.7 0.8 0.3 0.7 0.5 0.3 Total Severity 0.2 0.2 0.2 0.1 0.1 0.1 0.1 Source: INSTAT Living Standard Measurement Survey, LSMS 2002, 2005, 2008, 2012 Stratum

137

2008 Rural 1.0 0.1 0.0 0.8 0.1 0.0 3.9 0.5 0.1

1.3 0.2 0.0

Total 1.5 0.3 0.1 0.9 0.2 0.0 3.7 0.5 0.1 0.2 0.0 0.0 1.2 0.2 0.1

Urban 3.5 0.6 0.2 1.7 0.2 0.0 1.0 0.3 0.1 1.6 0.2 0.0 2.2 0.3 0.1

2012 Rural 2.4 0.4 0.1 2.7 0.6 0.2 1.3 0.1 0.0

2.4 0.5 0.2

Total 3.0 0.5 0.1 2.3 0.5 0.2 1.2 0.1 0.0 1.6 0.2 0.0 2.3 0.4 0.1

In 2002 there was a large difference of the extreme poverty figures between urban and rural areas. Over, time this difference has somewhat narrowed down making extreme poverty territorial issue (probably local) more than rural or urban. The higher level of extremely poor in urban areas is met in the coastal area accounting for about 3.5% and the lowest value in the mountain urban area with 1.0%. With regard to rural areas, the highest value is registered central strata (2.7%) and the lowest value in the mountain strata (1.3%). Again this is linked to the continuous movement of population, strengthening of the urbanization patterns (at least in terms of settlement densities and areas) and emigration. Figure 86. Extreme poverty headcount ratio by main strata (in %) 14 12

2002

2005

2008

2012

10 8 6 4 2 0 Total Tirana

Urban

Rural Coastal

Total

Urban

Rural

Total

Urban

Central

Rural Mountain

Total

Urban

Rural

Total

Albania

Source: INSTAT LSMS 2012 and Authorâ&#x20AC;&#x2122;s calculations

The total poverty gap indicator (or poverty depth) has followed a declining trend form 2002 (0.8%) to 2008 (0.2%) and then increased in 2012 (0.4%). In 2012, the poverty gap increased in the coastal and Tirana strata in relation to urban areas. The highest value of the poverty gap was recorded in the coastal strata (0.6%) and the lowest one in the central and Tirana strata. Poverty gap in rural areas has also decreased over time to increase again in 2012 (recording 0.5% form 0.2% in 2008). The highest value for rural area poverty gap indicator was recorded in the central strata and the lowest one in Tirana strata. The severity of poverty is higher in the Central strata and lower (and below the national value) in the Mountain and Tirana strata (in 2012). At national level, poverty severity in 2012 was higher in rural areas (0.2%) and lower in the urban areas (0.1%). LSMS data for 2012 are available at qark levels thus allowing for qarks comparisons. The highest number of poor is in the qark of KukĂŤs (22.5%)

138

followed by Lezhë (18.4%), while the lowest headcount is in the qarks of Gjirokastër (10.6%), Vlorë (11.1%) and Elbasan (11.3%). Table 125. Poverty indicators by qark (in %) % Headcount Depth Severity Albania 14.3 3 1 Berat 12.3 2.3 0.7 Dibër 12.7 2.3 0.7 Durrës 16.5 3.6 1.3 Elbasan 11.3 2.3 0.7 Fier 17.1 3.4 1.0 Gjirokastër 10.6 2.4 1.0 Korçë 12.4 2.5 0.7 Kukës 22.5 3.8 0.9 Lezhë 18.4 4.7 1.8 Shkodër 15.5 3.7 1.6 Tiranë 13.9 2.7 0.8 Vlorë 11.1 2.4 0.8 Source: INSTAT LSMS 2012 and Author’s calculations

Lezhē has also the highest levels of poverty depth and severity in 2012 with 4.7% and 1.8% respectively. Kukës has the second highest poverty depth (3.8%), but has a lower severity compared to other qarks as for instance Durrës and Shkodër. So, the headcount has a diverse distribution among qarks and is not necessarily related to the geography. It seems to be impacted more by the population number and access of people to a diverse variety of living means and sectorial employment, as well as to the dominance of rural/urban structure that is recorded within each qark. Figure 87. Poverty headcount ratio by qark (in %) 25

Albania =14.3%

Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: INSTAT LSMS 2012 and Author’s calculations

On the other hand, should be noticed a slight relationship between poverty gap and poverty severity, with Gjirokastër and Kukës showing divergences within

139

their respective figures in all three indicators (headcount, gap and severity). However, in all cases, Gjirokastër values stand below the national average and this (together with other indicators analysed in this document), similarly as for Korça, shows the strong impact of the location (cross border) and the relationship (up to dependency) of these regions with the neighbouring areas in Greece. From qark data we have switched to development regions by applying simple averages to the composing qarks indicators for each region. The headcount indicator is larger in Region 1, about 18.8% compare to the other regions, and even larger than the national average of 14.3%. Figure 88. Poverty gap and poverty severity by qarks (in %) Poverty gap Albania = 3.0%

Vlorë Tiranë

Poverty severity Albania = 1.0%

Vlorë Tiranë

Shkodër

Lezhë

Kukës

Korçë

Gjirokastër

Fier

Elbasan

Durrës

Dibër

Berat

Berat 0

0.0

0.5

1.0

1.5

2.0

Source: INSTAT LSMS 2012 and Author’s calculations

Table 126. Poverty indicators by regions (in %) % Headcount Region 1 18.8 Region 2 14.4 Region 3 12.0 Region 4 12.9 Albania 14.3 Source: INSTAT LSMS 2012 and Author’s calculations

Depth 4.1 2.9 2.4 2.7 3

Severity 1.4 0.9 0.7 0.9 1

Region 3 and region 4 have similar levels of poverty with 12.0% and 12.9% respectively, and both stand below the national average of 14.3%. In region 2, about 14.4% of the individuals are poor. Region 2 represents almost the national average and this is explained with the very high population number (compared to other regions) and the very high diversity of population strata and sectorial representation.

140

Figure 89. Poverty headcount ratio by development regions (in %) 20

18 16

Albania =14.3%

14 12

10 8 6 4

2 0 Region 1

Region 2

Region 3

Region 4

Source: INSTAT LSMS 2012 and Author’s calculations

Region 1 is in a very disadvantageous positioning with regard poverty, with higher gap and severity as well (4.1% and 1.4% respectively), while Region 3 scores the best with the lowest values in all of the three poverty indicators. Figure 90. Poverty gap and poverty severity by development regions (in %) 4.5

1.6

4.0

Poverty gap Albania =3.0%

3.5 3.0

1.4

Poverty severity Albania =3.0%

1.2 1.0

2.5

0.8

2.0

0.6

1.5

0.4

1.0

0.2

0.5 0.0

0.0 Region 1

Region 2

Region 3

Region 4

Region 1

Region 2

Region 3

Region 4

Source: INSTAT LSMS 2012 and Author’s calculations

Other poverty and social inclusion related indicators are analysed further. So, real consumption per capita (deflated in 2002 prices) in 2012 resulted in about 8,971 Lek, down by about 7.5% compared to the previous year. The decrease in real consumption per capita, or the higher level of poverty registered in 2012 is correlated with the increasing shares of food and durables consumption and decreasing shares of non-food, education and utilities. These are usual patterns in poverty increases, since individuals tend to assure first food and later other activities. In overall, the same patterns are present at strata levels. 141

Table 127. Percentage of real consumption per capita per strata by categories (in %) Food Non-food Region Coastal 60.8 23.6 Central 65.5 18.7 Mountain 64.6 21.8 Tirana 58.4 23.3 Total 62.9 21.2 Region Coastal 54.8 27.7 Central 60.0 25.2 Mountain 58.0 28.2 Tirana 51.8 28.4 Total 56.5 26.9 Region Coastal 55.6 23.7 Central 57.7 24.6 Mountain 57.7 23.1 Tirana 43.8 32.2 Total 54.2 25.8 Region Coastal 56.3 23.4 Central 59.3 20.1 Mountain 56.9 21.6 Tirana 50.1 26.8 Total 56.3 22.6 Source: INSTAT and Authors calculations

Utilities 2002 2.5 2.0 2.9 2.1 2.3 2005 3.1 2.4 2.7 4.4 3.1 2008.0 6.0 3.3 5.4 4.8 4.6 2012 3.5 4.0 5.3 3.0 3.7

Education

Durables

1.4 1.3 1.0 1.6 1.3

11.8 12.5 9.7 14.6 12.3

2.3 0.9 0.8 1.2 1.4

12.1 11.5 10.3 14.2 12.1

0.6 0.6 0.5 0.6 0.6

14.1 14.0 13.3 18.5 14.9

0.7 0.6 0.6 0.8 0.7

16.1 16.0 15.7 19.3 16.7

The Gini coefficient is another measure of inequality of poverty varying between 0 (perfect equality) to 100 (perfect inequality). According the Gini coefficient, the highest degree of inequality was recorded in the qark of Vlorë and the lowest degree of inequality in the qark of Berat. Table 128. Gini coefficient by qarks Qarks/Year Berat

2002 25.6

2012 26.3

Dibër

28.3

20.9

Durrës

31.2

26.9

Elbasan

26.6

24.8

Fier

28.8

25.4

Gjirokastër

27.4

24.5

Korcë

27.0

26.0

Kukës

27.5

25.6

Lezhë

30.7

27.2

Shkodër

28.6

28.2

Tirana

29.5

28.2

Vlorë

33.5

26.8

Albania*

28.7

25.9

142

Source: INSTAT and Authors calculations *The value for Albania was calculated as the simple arithmetic average of the Gini coefficients for the 12 qarks.

The inequality among qarks and between qarks and the national average has diminished over time, thus marking the average level of 25.9 in 2012 from 28.7 in 2002. Gini values show for moderate inequality values, with highest ones (and above national average) for Shkodër and Tiranë. The inequalities among qarks have been higher in 2002 and have smoothened in 2012. Inequality was lower in the qarks of Dibër and Gjirokastër, while Dibër and Vlorës had the biggest rate of Gini change over the period 2002-2008. Figure 91. Gini coefficient by qarks 40 2002

2012

Albania 2002

Albania 2012

30 25 20 15 10 5 0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korcë

Kukës

Lezhë

Shkodër

Tirana

Vlorë

Source: INSTAT and Authors calculations

The Gini coefficient of poverty at development regions level was calculated as a simple arithmetic averge of the composing qarks of each of the regions. Again, inequality of development regions decresed and was close to the national average value in 2012. Table 129. Gini coefficient by development regions Region 1

2002 28.9

2012 27.0

Region 2

29.7

25.3

Region 3

26.4

25.7

Region 4

29.9

25.6

Albania 28.7 Source: INSTAT and Authors calculations

25.9

143

*The value for Albania was calculated as the simple arithmetic average of the Gini coefficients for the 12 qarks.

In 2012, the highest value of the Gini coefficient was registered in Region 1 (27.0) exceeding the national average of 25.9. In the other three regions, inequality seems to be at similar levels and below the national averge. Figure 92. Gini coefficient by development regions 31

2002

2012

Albania 2002

Albania 2012

30 29 28

27 26 25

24 23 Region 1

Region 2

Region 3

Region 4

Source: INSTAT and Authors calculations

Usually poverty is not only a monetary phenomenon and it is related also to other non-monetary aspects, such as the deprivation from the necessary level of education, basic services, adequate dwelling conditions etc. Education level of the individuals represents an important determinant factor of poverty, since higher education levels determine higher possibilities to find a good well-paid job. According LSMS data for 2012, the average number of years of schooling in Albania is 9.7. The highest number of average years of schooling is met in the qark of Tirana and the lowest one is recorded in the qark of Berat. Both, Tirana and Gjirokastra, and Vlora to a lower level stand above the national average in terms of average years of schooling for 2012. This is also correlated to the fact that in All qarks, except Tirana, lower secondary school constitutes the diploma obtained by the highest share of the population 21 years old and above. In the case of Tirana, upper secondary diploma is the one to constitute the largest share.

144

Table 130. The highest diploma attained by the population 21 years old and above at qark level (years) Without diploma Berat Dibër Durrës Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania Source: INSTAT

4.8 7.2 3.9 7.7 3.1 3.1 3.8 4.3 5.5 3.7 2.4 3.2 4.0

Primary

Lower secondary

Upper secondary

University and Higher

Total

Average years of schooling

10.6 7.4 9.3 9.0 7.3 5.7 9.2 8.5 11.2 9.3 4.5 5.8 7.4

49.9 40.4 45.5 46.0 44.7 41.7 47.3 44.5 44.4 41.5 28.9 41.6 40.2

25.6 34.0 31.2 26.6 35.1 34.6 28.9 31.5 28.9 34.0 41.1 36.1 34.1

9.1 10.9 10.1 10.7 9.9 14.9 10.1 11.2 10.0 11.5 23.0 13.3 14.3

100 100 100 100 100 100 100 100 100 100 100 100 100

8.4 9.2 9.3 8.9 9.4 10.0 9.2 9.2 8.6 9.0 11.0 9.8 9.7

The population above 21 years old without any diploma accounts in average of 4% of the population in Albania and represents the lowest share in all 12 qarks compared to the other categories. Its highest values are recorded in qarks of Elbasan and Dibër with 7.7% and 7.2% respectively, while the lowest level is found in the qark of Tirana (2.4%). At the national level, about 47.6% of the population over 21 years old have completed basic schooling (primary and lower secondary). Disparities between qarks for basic schooling degree are quite pronounced. The highest level is registered in the qark of Berat (60.5%) and the lowest level is registered in the qark of Tirana (33.4%). In the case of the upper secondary schooling, the highest level is registered in the qark of Tirana (41.1%) and the lowest in the qark of Berat (25.6%). Only 14.3% of total population over 21 years old have obtained an university or higher level of schooling, with the qark of Tirana registering the highest level and the qark of Berat registering the lowest level in 2012.

145

Figure 93. Degree of education for population over 21 years old Without diploma

Primary

Lower secondary

Upper secondary

University and higher

Vlore Tirane Shkoder Lezhe Kukes Korce Gjirokaster Fier Elbasan Durres Dibër Berat 0

100

Source: INSTAT and Authors calculations.

From a development regions perspective, disparities between regions in terms of mean years of schooling are moderate. The highest number of average years of schooling is met in Region 2 (Tirana`s impact) and the lowest one is recorded in Region 3. Table 131. The highest diploma attained by the population 21 years and over at regional level Without diploma

Primary

Lower secondary

University and Higher

Total

31.5 35.4 27.0 35.3 34.1

10.9 14.7 10.0 12.7 14.3

100.0 100.0 100.0 100.0 100.0

Region 1 4.5 9.7 43.5 Region 2 4.5 7.1 38.3 Region 3 5.4 9.6 47.7 Region 4 3.1 6.3 42.7 Albania 4.0 7.4 40.2 Source: INSTAT and Authors calculations

Mean years of school 8.9 9.8 8.8 9.7 9.7

Region 3 has the highest number of over 21 years old without a diploma (5.4%), standing above the national average of 4%; Regions 1 and 2 have similar levels (about 4.5%) and Region 4 has the lowest level (3.1%).

146

Figure 94. Degree of education for population over 21 years old Without diploma

Primary

Lower secondary

Upper secondary

University and higher

Albania Region 4 Region 3

Region 2 Region 1 0

100

Source: INSTAT and Authors calculations.

Region 3 has the highest level of population above 21 years old with basic (primary and lower secondary) education diploma and Region 2 has the lowest. Region 2 has the highest attainments also for upper secondary and university education and Region 3 has the lowest. According 2012 data from Instat, the main source of water in Albanian households is the running water inside the dwelling (80.6%). With the exception of the qarks of Durrës and Shkodër, all others are positioned above the national average, with the qark of Gjirokastër scoring the best. From a hygiene and sanitary infrastructure perspective, more than 80% of dwellings have a WC inside their building. Dwelling conditions are assessed as appropriate for living for 93.7% of the population. Table 132. Dwelling conditions and access to basic services by qark (in %) Access in basic services

Albania Berat Dibër Durres Elbasan Fier Gjirokaster Korce Kukes Lezhe Shkoder Tirane Vlore

Dwelling condition

Wc inside the dwelling

Running water inside the dwelling

Adequate heating

Very good or appropriate for living

94.0 95.0 98.2 96.2 88.6 90.2 88.8 88.0 84.7 90.5 96.5 98.0 97.9

80.6 77.3 90.8 71.4 82.5 80.8 91.4 86.9 77.6 80.5 73.4 80.2 84.2

79.3 71.0 79.6 77.2 81.2 63.2 81.9 70.8 57.0 88.0 84.8 86.7 87.1

93.7 91.2 92.0 93.8 91.0 94.0 91.6 89.8 87.5 91.3 93.4 97.1 95.5

147

Source: INSTAT

At the regional level, all but region 1 are positioned above the national average in terms of running water inside the dwelling. Region 4 scores the best with 85.5% of the population having running water inside the dwelling. Hygiene and sanitary conditions also are good in more than 90% of the dwellings, which report having a toilet inside their building. Dwelling conditions are assessed to be appropriate for living for more than 90% of the population in each of the regions. Table 133. Dwelling conditions and access to basic services by qark (in %) Access in basic services WC inside the dwelling

Dwelling condition

Running water inside the dwelling

Adequate heating

Very good or appropriate for living

76.6 81.2 74.3 77.4 79.3

90.7 94.3 90.7 93.7 93.7

Region 1 90.6 77.2 Region 2 97.5 80.8 Region 3 90.5 82.2 Region 4 92.3 85.5 Albania 94.0 80.6 Source: INSTAT and Authors calculations.

In average, 99.0% of Albanian households have a Colour TV in their dwelling, 97.5% have a refrigerator, 92.4% have a mobile phone and 89.6% have a washing machine. The sewing machine is present on average in about 8.1% of the Albanian households, reaching the highest value in the region of Fier (18.8%).

Table 134. Possession of durables of households by qark (in %) Fix line telephone Albania 24.0 Berat 23.1 DibĂŤr 13.6 Durres 20.9 Elbasan 24.5 Fier 18.3 Gjirokaster 36.2 Korce 32.2 Kukes 11.1 Lezhe 10.9 Shkoder 22.4 Tirane 28.9 Vlore 23.9 Source: INSTAT

Mobile phone 92.4 89.5 95.8 92.9 94.8 92.3 93.9 84.8 93.7 91.3 90.9 93.6 94.5

Color TV 99.0 98.7 99.3 99.0 99.3 99.6 98.6 99.6 98.0 98.0 97.8 98.9 99.8

Car 17.7 19.4 12.0 23.4 13.5 19.1 21.1 13.9 14.0 13.3 14.2 18.6 23.3

148

Sewing Machine 8.1 9.2 8.1 3.9 10.2 18.8 6.2 7.7 8.9 10.2 10.1 4.2 5.7

Washing Machine 89.6 91.2 76.6 91.2 83.1 89.3 91.2 84.7 80.1 81.5 85.6 95.5 97.3

Refrigerator

Dishwasher

97.5 97.6 95.7 97.0 96.6 98.9 99.0 96.4 89.9 97.0 96.1 98.4 99.4

3.2 3.6 2.9 3.2 0.6 3.6 5.1 1.7 0.6 2.6 3.8 3.8 4.7

Data for development regions were obtained by applying simple averages for the qarks comprised in each region. Colour TV is the most common durable, present in around 95% of the dwellings in Albania. The lowest level is registered in Region 1 (94.3%). The second most popular durable among the regions is the refrigerator followed by the washing machine. There are not large discrepancies for these durables among regions and compared to the national average. On contrast, the dishwasher is present only in 3.2% of the households, with Region 4 having the highest score (4.5%). Table 135. Possession of durables of households by regions (in %) Fix line Mobile Color telephone phone TV Region 1 14.8 92.0 97.9 Region 2 21.1 94.1 99.1 Region 3 26.6 89.7 99.2 Region 4 26.1 93.6 99.3 Albania 24.0 92.4 99.0 Source: INSTAT and Authors calculations.

Car 13.8 18.0 15.6 21.2 17.7

Sewing Machine 9.7 5.4 9.0 10.2 8.1

Washing Machine 82.4 87.8 86.3 92.6 89.6

Refrigerator

Dishwasher

94.3 97.0 96.9 99.1 97.5

2.3 3.3 2.0 4.5 3.2

Data on social assistance (families receiving monetary economic aid) show that the overall number of families receiving this kind of support has a fluctuating pattern but generally decreased overtime. As unemployment on the other hand has increased, it shows that the decreasing number of families might be dependent on other issues, such as lowering levels of population, decreasing overall fund, or lack of applications by those in need, or people droping out the list. Qarks of Shkodër, Dibër, Kukës and Elbasan have the highest numbers of total families receiving economic aid, while the other qarks show diverse trends, with Durrës and Vlorë having the lowest absolute figures. Table 136. Average number of families receiving social assistance, at qark level (no) 2000 Berat 12,730 Dibër 19,171 Durres 3,941 Elbasan 18,561 Fier 7,109 Gjirokastër 3,073 Korçë 13,087 Kukës 14,082 Lezhë 10,389 Shkodër 25,463 Tiranë 16,167 Vlorë 3,724 Albania 147,497 Source: INSTAT

2005 9,350 16,807 2,648 15,078 5,621 2,412 10,697 12,097 8,538 18,750 13,896 2,850 118,744

2010 5340 13764 1439 12626 3966 2154 9674 11419 7967 15585 11069 1865 96,868

149

2011 5084 14480 1438 13445 4187 2466 10463 11674 7610 15536 11274 1838 99,495

2012 4562 14317 1402 13616 4190 2577 9417 12327 7159 15375 12073 1796 98,811

2013 4527 14981 1403 14458 4547 2898 10258 12842 7423 15401 13656 2004 104,398

2014 2882 13045 1116 10277 3411 2000 8248 10611 5932 11982 7055 1513 78,072

On the other hand, if the total number of families receiving social assistance is presented per 10,000 inhabitants and indexed (Albania 100%), it can be noticed that Kukës and Dibër have continuously very high figures over time, with 355 and 250 respective percentage points (for 2014) above the national average (100%). Elbasan, Shkodër, Lezhe and Korçë are the followers, but with a variation of 26-100 percentage points above the national average. On the other hand, there are qarks like Tirana, Durrës and Vlorë that historically score better with a variation of 50-85% below the national average. Table 137. Average number of families receiving social assistance per 10000 inhabitants at qark level, Index 2000 2005 2010 Berat 137 134 105 Dibër 210 248 280 Durres 33 26 16 Elbasan 106 113 123 Fier 39 39 36 Gjirokastër 57 61 79 Korçë 103 108 125 Kukës 264 298 377 Lezhë 136 143 171 Shkodër 207 194 205 Tiranë 56 53 45 Vlorë 40 37 30 Albania 100 100 100 Source: INSTAT and Authors calculations

2011 99 293 16 128 38 92 133 382 159 201 43 29 100

2012 91 299 15 131 38 101 122 412 151 203 45 29 100

2013 87 300 14 132 40 109 126 412 149 193 48 30 100

2014 74 350 15 126 40 101 135 455 159 201 33 31 100

At qark level, these figures are nicely correlated with unemployment and economic growth potential. This same pattern is reflected in the tables and graphs for data at regional level, as presented below, with Region 1 scoring the worst (121% above the national average for 2014). Region 4, on the other hand has a better positioning compared to Region 2, because of the effect of Dibër data versus the Tirana and Durrës indicators.

150

Figure 95. Index of the average number of families receiving social assistance for 10000 inhabitants 2005

2010

2014

Albania = 100

500 450 400 350

300 250 200 150 100

50 -‐ Berat

Dibër

Durres

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: INSTAT and Authors calculations

Table 138. Index of the average number of families receiving social assistance per 10000 inhabitants, by region Region 1 Region 2 Region 3 Region 4 Albania

2000 197.3 79.1 112.5 42.0 100.0

2005 199.8 77.5 116.2 42.2 100.0

2010 228.5 68.2 119.6 40.1 100.0

2011 213.6 67.2 128.1 45.0 100.0

2012 236.9 63.1 125.0 40.5 100.0

2013 221.9 69.3 120.4 45.7 100.0

2014 221.2 67.4 127.4 41.9 100.0

Source: INSTAT and Authors calculations

Figure 96. Index of the average number of families receiving social assistance per 10000 inhabitants, by regions 2005

2010

2014

Albania = 100

250

200 150 100 50 0 Region 1

Region 2

Region 3

Source: INSTAT and Authors calculations

151

Region 4

2.2.3

Energy, Transport, Infrastructure, Environment and Services

Agriculture

and

Tourism,

This section provides an analytical overview of several sectors with high impact economic development, economic and social welfare, on one side and high territorial and natural resources sensitiveness on the other. The proper development of these sectors is a critical factor for resilience and sustainability. Inefficient development of these sectors will certainly lead towards critical societal loses in the long-term. On the other hand, projects for the development these sectors constitute also typical regional development projects, due to their economic support and boosting effect, but also to the scope of the impact, which often overpasses local administrative boundaries. Energy Data on national energetic independence are available only at a national level. According to the data, the national energy independence has increased progressively and steadily over time, from 56.4% in 2003 to 96.2% in 2013. In 2014, the preliminary data show a slight decrease in the energy independency (93.7%). Table 139. National energetic independence (ktoe) Production of primary products – Lignite – Crude oil – Natural gas

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014*

1,016

1,179

1,149

1,237

1,080

1,159

1,263

1,643

1,494

1,676

2,041

2,021

360

444

418

500

564

578

577

744

895

1,031

1,207

1,368

– Electric power

422

472

469

475

258

327

450

666

358

406

598

406

– Fuel wood

198

233

230

215

213

205

208

207

202

Available for final consumption – Lignite

– Others

1,802

2,079

2,050

1,827

1,809

1,915

1,945

1,968

1,952

1,848

2,123

2,157

– Crude oil

1,208

1,366

1,352

1,281

1,256

1,261

1,207

1,172

1,044

1,235

1,287

– Natural gas

– Electric power

377

458

447

296

314

410

462

487

486

495

593

561

– Fuel wood

198

233

230

215

213

205

208

207

202

193

56.4

56.7

56.1

67.7

59.7

60.5

64.9

83.5

76.5

90.7

96.2

93.7

– Others Energy independency (in %)

Source: Instat *Preliminary data for year 2014. Final data will be published in September 2016

152

From the primary products the biggest contributor is the crude oil production (making the most relevant element of our exports). Electric power is the second primary product contributing to overall energy independency. However, the above table is built around non-renewable and/or non-environmentally sound energy sources. Thus, inclusion of renewable sources and environmental use of water energy and crude oil potential may change the above picture. Current analysis at national level shows that Albania has good potentials for sun, thermal and wind energy, mainly focused along the coastal areas, which on the other side is the area that has the highest risk of impact from climate change effects (especially flooding). The territory of Fier qark and half of Vlorë qark are considered as those having the best position in terms of renewable energy potential sources overlap. Transport and Infrastructure Transport of people and goods play an important role in increasingly specialized economies and represents an important factor that may hinder or foster overall economic development. Access to goods, services and employment opportunities is key to the development of regions. Access play also a significant role in the strengthening of the polycentric development profile of a country and regions. Regional transport and mobility are analysed through the following aspects: road network, travel time from different settlements to the major qark urban centres, distance from different settlements to the main national road axes, travel distance to the main airport (assuming also the main port due to close distance), transportation indicators measured in absolute figures and number per 1,000 inhabitants (road vehicles for passengers and goods; cars), and indicators of maritime and air transport. Some of the indicators (especially those measuring time and access) are analysed in deep in the polycentrism and accessibility section of this chapter. The data on road network is based on INSTAT publications on indicators at Prefecture Level for 2002-200824 . Since 2008, major road investments have taken place on a national level, such as the Durrës-Kukës, Mamurras-Milot segment of the north highway, a segment of Rruga e Arbrit to the east (Peshkopi), the road Qafë Thanë – Qafë Plloçë, etc. which are not represented data-wise in this report, because INSTAT is not reporting any more on the road network at qark level. However, the most important of these segments (Durrës-Kukës) was inaugurated in June 2009, so its length actually appears in the 2008 data. It is 153

very important, that each development Region compiles an inventory of the national, regional and rural roads for a proper analysis of the investments needs and internal disparities in terms of length. The data of this report for roads length, based on INSTAT classification, is organized in two main groups: roads administered nationally and rural roads – or “sub-national roads”. The Albanian road network resulted in about 13,051 km in 2008, up by 5.8% compared to the road network length in 2003. Total road density (ratio of total road length for 1,000 km2) has also increased due to both, increasing absolute figures because of investments and decreasing population. Of course, this means more need for maintenance and increasing related costs. In 2008, road density was about 454 km/1,000 km2, higher than the value of 429.3 km/ 1,000 km2 in 2003. It should be kept in mind that quantitative indicators of length of road network and density of roads in the country do not permit to make assessments relative to their quality. The travel time and accessibility analysis (latter on in the text) suggest for still high inefficiencies of the road network and uneven quality across the country25. The inefficiency of the road network is strongly related to the mountainous terrain in some areas of the country and its age (since 1940s). Sub-national roads have a much lower quality than national ones (assuming also that new national segments are being built currently), although they account for the majority of the total road network length. Nationally administered roads represented about 27.6% of total roads in 2008 and this figure has increased during 2009-2014. The highest level of nationally administered roads against total nationally administered roads is found in the qark of Shkodër (14.1%) followed by the qark of Vlorë (12.3%). The lowest one is in the qark of Berat with only 4.3% of the total, followed by the qark of Durrës with 4.6%. From 2003 to 2008, the indicator of nationally administered roads shows for important changes over time especially in qarks of Elbsan (+75 km), Shkodër (+60 km) and Gjirokastër (+30 km). Accessibility has also improved for Lezhë and Kukës since 2009, with the construction and inauguration of the Durrës-Morinë highway. However, in the following table the increase of the ration of nationally administered roads towards the total, is explained (in some of the cases) with the decreasing number of total roads (due to decreasing rural roads) and the constant value of nationally administered roads. Table 140. Road network indicators, at qark level Nat. adm. roads 2003 (%)

Nat. adm. roads 2008 (%)

Total Roads km/ 1000 2 km 2003 2008

Nationally Administered Roads km/ 1000 2 km Index 2003 2008 2003 2008

154

Sub - Nationally Administered Roads km/ 1000 2 km Index 2003 2008 2003 2008

Berat Dibër Durrës Elbasan Gjirokastër Fier Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

29 22 28 16 26 43 29 48 32 20 30 39 28

30 29 26 20 28 46 28 30 23 22 30 39 28

276 442 877 545 443 219 536 158 444 617 537 426 429

282 336 843 569 455 230 599 252 614 648 533 426 454

80 98 249 89 115 94 157 77 143 126 163 164 119

85 98 215 112 127 105 166 77 143 143 160 164 125

67 83 210 75 97 79 132 64 120 106 138 138 100

68 78 172 90 101 84 133 61 114 114 128 131 100

197 344 628 456 328 125 379 82 301 491 373 262 311

197 238 628 456 328 125 432 175 471 505 373 262 329

63 111 202 147 106 40 122 26 97 158 120 84 100

Source: Instat

The data on nationally administered roads per 1,000 km2 show that in Albania there are about 125.2 km of roads per 1,000 km2 in 2008, up by the level of 118.7 km of roads per 1,000 km2 in 2003. The highest level of the indicator is registered in the qark of Durrës (215.4 in 2008, down by 249.3 km per 1000 km2 in 2003). The lowest level of the indicator is in the qark of Kukës (76.5 km of roads per 1,000 km2 in 2008, unchanged from 2003). This remains a curious fact (needs further information and accurate analysis) as the total length of road network has increased for some qarks (Lezhë, Shkodër and Kukës, which are the qarks where the Durrës-Kukës highway is located) and this is attributed to the rural (nationally administered) roads. The increase has happened in 2008 (data entry), which is the year when the highway was almost finalised. To facilitate comparisons among qarks some indexes were constructed with regard to the indicator of nationally administered roads for 1,000 km2. Figure 97. Nationally administered roads (km/1000km2) index, at qark level 250

2003

2008

Albania = 100

200 150 100

50 0 Berat

Diber

Durres

Elbasan Gjirokaster

Fier

155

Korce

Kukes

Lezhe

Shkoder

Tirane

Vlore

60 72 191 139 100 38 131 53 143 154 114 80 100

Source: Instat & Authors calculations

The sub-nationally administrated roads represented 72.4% of total roads in Albania, (both in 2003 and 2008). During 2008, the highest share of subnationally administered roads (against total sub-nationally administered roads is found in the qark of Shkodër (19.0%), Elbasan (15.4%) and Korçë (10.9%). %). The lowest one is found in the qark of Berat with only 3.7% of the total, followed by the qark of Gjirokastër with 3.8% of total sub-nationally administered roads. From 2003 to 2008, the indicator of sub-nationally administered roads shows for important changes over time, especially in Dibër (-273 km), Kukës (+346 km) and Lezhë (+275 km). The data on sub-nationally administered roads per 1,000 km2 show that in Albania there were about 328.8 km of roads per 1,000 km2 in 2008 and 310.6 km per 1,000 km2 in 2003. The highest level of the indicator is registered in the qark of Durrës (627.9 km per 1,000 km2 in 2008, unchanged from 2003) followed by the qark of Shkodër (504.8 km of roads per 1,000 km2 in 2008). The lowest level of the indicator is in the qark of Fier (124.8 km of roads per 1,000 km2 in 2008, unchanged from 2003) followed by the qark of Kukës with about 175.2 km per 1,000 km2 in 2008, higher though than the level of 81.9 km of roads per 1,000 km2 in 2003. To facilitate comparisons among qarks some indexes were constructed with regard to the indicator of sub-nationally administered roads for 1,000 km2. The index shows that Durrës, Shkodër, Elbasan are the main qarks standing above the national average. This may be due to their location, geography, territorial morphology and investments. Tirana is also above the national average, but a much lower level compared to the other qarks. This may be explained with its size and the morphology of the terrain. Still it shows for a lower penetration within the territory, that it is needed for this qark, given its population and size of settlements. The index shows also for high disparities among regions. Fier and Kukës remain highly disadvantageous, though for different reasons respectively.

156

Figure 98. Sub - nationally administered roads (km/1000km2) index, at qark level 250 2003

Albania = 100

2008

200 150 100 50 0 Berat

Diber

Durres

Elbasan Gjirokaster

Fier

Korce

Kukes

Lezhe

Shkoder

Tirane

Vlore

Source: Instat & Authors calculations

At development regions’ level, there are sound differences on roads distribution within the respective territories. Thus, about 32.4% (or 4,235 km) of total road network (length) is distributed within Region 1 in 2008. Region 3 accounts for about 28.7% (or 3,747 km) of total length of the road network in Albania, maintaining almost the same level as in 2003. The worst served for this indicator is Region 2 accounting for 18.4% (or 2,397 km). Total road density (length/1,000 km2) varies among regions. Region 3 had the highest density in 2008 (508 km/1,000 km2), while Region 4 had the lowest (357 km/1,000 km2). Road density of Region 1 increased from 394 km/1,000 km2 in 2003 to 476 km/1,000 km2 in 2008, due to increases reported above at qark level for Shkodër, Lezhë and Kukës. Table 141. Road network indicators, at development regions level

Region 1 Region 2 Region 3 Region 4 Albania

Nat. adm. roads 2003

Nat. adm. roads 2008

28 26 23 36 28

24 28 24 37 28

Total Roads 2

km/ 1000 km 2003 2008 394 476 540 479 477 508 351 357 429 454

Nationally Administered Roads 2

km/ 1000 km 2003 2008 108 115 143 136 108 123 125 132 119 125

Source: Instat & Authors calculations

157

Index 2003 2008 91 92 120 109 91 98 105 105 100 100

Sub - nationally Administered Roads 2

km/ 1000 km 2003 2008 286 361 397 343 368 385 226 226 311 329

Index 2003 2008 92 110 128 104 119 117 73 69 100 100

Disparities between nationally administered road densities for 2008, are low, with Region 2 having the highest score and Region 1 the lowest. The density of sub-nationally administered roads has a different pattern. All region, but 4, stand slightly above the national average, while Region 4 is below by 31 percentage points. Figure 99. Nationally administered roads (km/1000km2) index, at regions level 140 120

2003

Albania = 100

2008

100

80 60 40 20 0 Region 1

Region 2

Region 3

Region 4

Source: Instat & Authors calculations

Figure 100. Sub-nationally administered roads (km/1000km2) index, at regions level 140 120

2003

Albania = 100

2008

100 80 60 40 20 0 Region 1

Region 2

Region 3

Region 4

Source: Instat & Authors calculations

Accessibility within Albania is measured in different ways. Two methods are followed, one used by the Regional Disparities in Albania 26 (in this section below) and the other based on ESPON accessibility study (presented in the following section). In this section, travel distances (km) and time and access to hubs are used determine the access of qarks, especially those considered peripheral. The study of ISD on Regional Diparities in Albania shows that all

158

qark centres (excluding Peshkopi and Dibër) and the main cities along the coast have direct access to national corridors. However, these national corridors are not classified based on the hierarchy defined by the Road Code (law no. 8378, date 22.7.1998, “The road code of the Republic of Albania”, as amended), but based on their function (direct connection role rather than distribution and collection of traffic). As a result, the travelling time in the different segments of the national corridors is different. This pattern is in fact considered in the accessibility analysis presented in the next section. However, in this respect is important to notice that mountainous qarks (Dibër, Gjirokastër, Korçë and Berat) have access to second and mainly to third category of national roads/corridors. In Dibër the distance of different settlements (apart from those situated along the road) to the national roads is mainly above 25 km, while in the three other southern qarks, this distance varies between 11 and 25 km. On the contrary, both the qarks of Tirana and Durrës benefit from the presence of two major hubs of international freight and passenger traffic (though there is a good chance for Vlorë too), respectively Tirana International Airport and Durrës harbour (Regional Disparities in Albania, 2010). From a travel time point of view, the inhabitants of more than 90% of the settlements in the qarks of Tirana and Durrës travel less than 1 hour to the airport/port, and travelling distances are within the range of 12-40 km. A higher travel time between 1 and 2 hours is observed for the qark of Fier, the coastal areas of Shkodër and Lezhë, the south-western part of Dibër and Kukës, the northern part of qark of Berat and most of the qark of Elbasan. For these cases, the travelling distance is between 41 and 140 km. Location, topography and the highway investments are reasons behind these travelling distances and time. The improving accessibility is not in a positive correlation with the economic performance of these qarks though. This means that while infrastructure networks (especially roads) are key to economic accessibility, development and welfare, these alone are not sufficient. The strong monocentric development pattern on Albania (high disparities between Tirana and the rest of the country) demonstrates that the infrastructure development policy is not implemented hand in hand with an economic development/boosting strategy. The qarks that score the lowest in terms of both, time and distance to the airport/port, are Gjirokastër, Korçë and Dibër (centre and north-east), though several road improvement have taken place in the last 5 years. Regardless of these improvements, high-speed roads heading towards these qarks are still missing and the geography of the territory is a factor against good accessibility. Gjirokastër and Korçë have good mutual access with the cross-border cities in Greece and this has helped to a certain extent in improving (genuinely) the

159

social-economic indicators of these qarks. Dibër is in a more disadvantageous condition in this respect, because the adjacent area in FYROM is also very mountainous and not well accessible. In these qarks, travel time exceeds 2 hours and can be extended to 7 hours, while travel distance ranges between 150 km and 310 km.

Vehicles The total number of vehicles (passengers and freight) allows for some qualitative assessments with regard passengers and good flows within the same qark and between qarks. Often, these indicators are used as a proxy for economic activity (especially those for goods) assessments. Thus, the first two years after the global economic crisis of 2008, the number of total road vehicles decreased cumulatively by 6.1%, following the overall economic shrinking. Since 2013, a positive trend was registered and in 2014 there were about 490,899 road vehicles, up by 10.3% compared to the previous year. There are considerable differences among qarks with regard to the number of vehicles. The highest number of total vehicles is present in the qark of Tirana and the lowest one in the qark of Kukës and this is primarily linked to the unequal concentration of population, services and businesses in these qarks. Table 142. Road vehicles, at qark level 2010

2011

2012

2013

2014

Road vehicles (passengers + goods), number Berat Dibër

17,316

17,713

16,507

17,658

20,000

2010 2011 2012 2013 2014 Road vehicles (passengers + goods) per 1000 inhabitants 113.1

118.3

112.6

121.6

137.8

7,651

8,512

8,155

9,592

10,884

51.7

59.0

57.9

69.3

78.7

Durrës

46,304

42,224

41,667

48,879

55,657

174.3

156.5

151.9

177.4

202.2

Elbasan

26,007

25,799

24,305

27,336

30,217

84.0

84.1

79.7

90.2

99.8

Fier

40,724

44,547

41,016

46,152

49,794

123.3

137.1

128.1

145.1

156.7

Gjirokastër

14,065

19,644

11,394

14,119

15,008

171.0

250.5

152.5

191.8

204.0

Korçë

22,597

21,770

20,772

23,291

24,897

96.6

94.5

91.4

102.9

110.1

Kukës

4,694

6,709

6,638

7,838

8,916

51.5

75.0

75.6

90.6

103.1

Lezhë

16,565

17,975

17,289

20,166

22,747

117.7

128.6

124.4

145.8

164.6

Shkodër

29,737

30,348

33,335

37,179

40,894

129.8

134.6

149.8

167.9

184.8

Tiranë

160,734

142,315

145,016

160,546

176,272

215.1

186.4

185.7

203.4

223.6

Vlorë

33,499

33,073

28,384

32,400

35,613

178.7

178.8

155.3

177.0

194.8

419,893

410,629

394,478

445,156

490,899

143.9

141.2

135.9

153.6

169.5

Albania

Source: Instat & Authors calculations

At the national level, the total road vehicles per 1,000 inhabitants was the highest in the last five years during 2014 with about 169.5 road vehicles per

160

1,000 inhabitants. Differences between qarks and qarks and the national average are significant. Thus, the highest level of the road vehicles per 1,000 inhabitants was registered in the qark of Tirana (223.6), followed by Fier (204) and Durrës (202.2). These three qarks stand above the national average. The lowest level is recorded in the qark of Dibër with only 78.7 road vehicles for 1000 inhabitants.

Figure 101. Road vehicles per 1000 inhabitants, at qark level 250

2010

2014

200

Albania = 169.5

150 100 50 0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: Instat & Authors calculations

In terms of development regions, Region 2 has the highest concentration of road vehicles for both indicators – totals and per 1,000 inhabitants (correlated positively with the contribution of the region to economic development indicators). The lowest total number is registered in Region 1, but due to higher population of Region 3, the latter has the lowest figure in per 1,000 inhabitants. Table 143. Road vehicles, at regional level 2010

Region 1 Region 2 Region 3 Region 4 Albania

2011 2012 2013 2014 Road vehicles for passengers (number) 50,996 55,032 57,262 65,183 72,557 214,689 193,051 194,838 219,017 242,813 65,920 65,282 61,584 68,285 75,114 88,288 97,264 80,794 92,671 100,415 419,893 410,629 394,478 445,156 490,899

2010 2011 2012 2013 2014 Road vehicles for passengers per 1000 inh 111 121 127 146 163 185 164 163 182 202 95 95 91 101 111 147 165 140 161 175 144 141 136 154 170

Source: Instat & Authors calculations

Figure 102. Road vehicles per 1000 inhabitants, at regional level

161

250 2010

Albania = 170

2014

200

150 100 50 0 Region 1

Region 2

Region 3

Region 4

Source: Instat & Authors calculations

Passenger road vehicles have followed an increasing trend from 2010 to 2014. In fact, passenger vehicles are the main reason behind increasing figures for totals. Vehicles for goods have experienced a decreasing trend over the last 5 years (see below). In 2014 there were about 415,121 passenger road vehicles, up by 11% compared to the previous year. Passenger road vehicles are distributed all over the country recording the maximum in the qark of Tirana (154,224 vehicles) and the minimum in Kukës (7,310 vehicles). Table 144. Road vehicles for passengers, at qark level 2010

2011

2012

2013

2014

Road vehicles for passengers (number)

2010

2011

2012

2013

2014

Road vehicles for passengers per 1000 inh

Berat

12,690

13,459

12,909

13,785

15,949

82.9

89.9

88.0

94.9

109.9

Diber

5,319

6,654

6,603

7,901

9,037

35.9

46.1

46.9

57.1

65.3

Durres

35,038

33,808

34,882

41,350

47,477

131.9

125.3

127.2

150.1

172.5

Elbasan

19,603

20,269

19,766

22,401

24,944

63.3

66.0

64.8

73.9

82.4

Fier

30,077

34,185

32,534

37,078

40,300

91.0

105.2

101.6

116.6

126.8

Gjirokaster

10,074

14,443

8,527

10,810

11,637

122.5

184.2

114.1

146.8

158.2

Korce

16,498

16,784

16,464

18,600

20,078

70.6

72.9

72.4

82.2

88.8

Kukes

3,215

5,173

5,288

6,385

7,310

35.2

57.9

60.2

73.8

84.5

Lezhe

12,054

14,040

13,950

16,525

18,911

85.6

100.5

100.4

119.4

136.8

Shkoder

24,533

25,983

28,924

32,418

35,847

107.1

115.2

130.0

146.4

162.0

131,848

121,265

125,423

139,594

154,224

176.5

158.8

160.6

176.9

195.6

Tirane Vlore Albania

24,834

25,618

22,842

26,425

29,407

132.4

138.5

125.0

144.4

160.8

325,783

331,681

328,112

373,272

415,121

111.6

114.1

113.1

128.8

143.3

Source: Instat & Authors calculations

Similarly, Tirana had the highest figure of passenger road vehicles per 1,000 inhabitants during 2014 (195.6) and significantly higher than the national average of 143.3. The qark of Vlorë, Durrës and Gjirokastër were as well ranked

162

above the national average, while the minimum value was recorded in Dibër (63.5). Figure 103. Passenger road vehicles per 1000 inhabitants, at qark level 250 2010

Road vehicles for passengers per 1000 inhabitants Albania 2014 = 143

2014

200 150 100

50 0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: Instat & Authors calculations

Region 2 has the highest concentration of passenger road vehicles (about 210,738) and Region 3 has the lowest (60,971). The same patter holds true for the indicator of passenger vehicles for 1,000 inhabitants. With the exception of Region 2, all the other three stay below the national average of number of passenger vehicles per 1,000 inhabitants. Table 145. Road vehicles for passengers, at regional level 2010

2011

2012

2013

2014

Road vehicles for passengers (number)

2010

2011

2012

2013

2014

Road vehicles for passengers per 1000 inh

Region 1

39,802

451,96

48,162

55,328

62,068

86.3

99.4

107.2

124.0

139.2

Region 2

172,205

161,727

166,908

188,845

210,738

148.3

137.3

139.5

157.0

175.3

Region 3

48,791

50,512

49,139

54,786

60,971

70.0

73.5

72.4

81.2

90.5

Region 4

64,985

74,246

63,903

74,313

81,344

108.3

126.2

110.6

129.3

141.7

Albania

325,783

331,681

328,112

373,272

415,121

111.6

114.1

113.1

128.8

143.3

Source: Instat & Authors calculations

Figure 104. Passenger road vehicles per 1000 inhabitants, at qark level

163

180 160

2010

2014

Albania 2014 = 143.3

140 120 100

80 60 40

20 0 Region 1

Region 2

Region 3

Region 4

Source: Instat & Authors calculations

Inside the category of road vehicles for passengers, cars are an important fraction and constitute a representative indicator for welfare levels, access to independent mobility and culture of individual/household expenditures. Table 146. Total cars and cars per 1000 inhabitants, at qark level 2010 Berat Dibër Durrës Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

10,210 5,083 32,908 16,652 26,345 9,651 15,279 3,082 11,145 19,862 121,976 22,536 294,729

2011 2012 2013 Total number of cars 10,919 10,411 12,012 6,432 6,366 7,622 31,665 32,806 38,898 17,281 16,986 19,493 29,893 28,647 32,998 13,874 8,167 10,399 15,811 15,604 17,688 4,981 5,121 6,207 12,977 12,868 15,471 21,072 23,490 27,071 112,978 116,335 129,858 23,091 20,540 23,978 300,974 297,341 341,695

2014

2001

13,100 8,709 44,350 21,766 36,032 11,221 19,103 7,110 17,634 30,089 142,219 26,720 378,053

24.1 10.2 74.1 21.4 28.5 51.5 25.7 11.4 45.2 39.4 71.8 68.2 42.9

2005 2008 2010 2011 2012 2013 Total number of cars per 1,000 inhabitants* 36.5 50.4 66.7 73.0 71.0 82.7 19.8 29.8 34.3 44.6 45.2 55.1 77.1 88.3 123.9 117.4 119.6 141.2 34.8 42.4 53.8 56.3 55.7 64.3 48.9 60.1 79.7 92.0 89.5 103.7 58.8 70.2 117.4 177.0 109.3 141.2 42.3 51.2 65.3 68.7 68.6 78.2 20.8 31.0 33.8 55.7 58.3 71.7 46.2 58.6 79.2 92.9 92.6 111.8 51.1 76.2 86.7 93.4 105.6 122.2 106.3 128.5 163.3 148.0 149.0 164.6 76.0 91.7 120.2 124.8 112.4 131.0 62.1 78.2 101.0 103.5 102.5 117.9

Source: Instat & authors calculations *Data for the number of cars per 1,000 inhabitants for 2001, 2005 and 2008 are derived from the Regional Disparities in Albania (2010).

The overall number of cars has increased during 2010-2014, with Tiranë, Durrës and Fier having (historically) the highest levels. Among the three, the qark of Tirana stands higher with almost tripling or quadrupling the values of the other two. Kukës, Dibër and Gjirokastër have had the lowest figures. In terms of cars per 1,000 inhabitants, the trend is rather different as it depends on the population number, showing for their overall economic ability to invest in purchasing private cars. Tirana, Durrës and Vlorë have values higher than the

164

2014 90.3 63.0 161.2 71.9 113.4 152.6 84.5 82.2 127.6 136.0 180.4 146.2 130.5

national average. Gjirokastër qark has had a significant jump in 2014, exceeding the national average, while Kukës, Fier and Lezhë, though remaining below the national average, have doubled their figures in 2014 as compared to 2008. The lowest level of cars per 1,000 inhabitants is registered in the qarks of Dibër (63) and Elbasan (71.9), showing a correlation with the location of a significant portion of the population in remote rural areas within the qark and thus demonstrating low internal access to independent mobility. Figure 105. Cars per 1,000 inhabitants, at qark level 200

2001 2008 2014

150

Total number of cars per 1000 inahbitants Albania 2014 = 130.5

100

0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: Instat & authors calculations

The data on qark level were re-arranged to obtain the above indicators at the development regions level. The highest number of cars is present in Region 2 and the lowest one in Region 3, during 2014. The same pattern holds true for the indicator of cars per 1,000 inhabitants. Region 1 is the only positioned above the national average for 2014. Table 147. Total cars and cars per 1000 inhabitants at regional level 2010

2011

2012

2013

2014

2001

Total number of cars (number)

2005

2008

2010

2011

2012

2013

2014

Total number of cars per 1000 inhabitants

Region 1

34,089

39,030

41,479

48,749

54,833

32.0

39.4

55.2

73.9

85.8

92.3

109.2

123.0

Region 2

159,967

151,075

155,507

176,378

195,278

52.0

67.8

82.2

137.8

128.3

130.0

146.6

162.5

Region 3

42,141

44,011

43,001

49,193

53,969

23.7

37.8

48.0

60.5

64.1

63.3

72.9

80.1

Region 4

58,532

66,858

57,354

67,375

73,973

49.4

61.2

74.0

97.5

113.7

99.3

117.2

128.8

Albania

294,729

300,974

297,341

341,695

378,053

42.9

62.1

78.2

101.0

103.5

102.5

117.9

130.5

Source: Instat & authors calculations

Figure 106. Cars per 1000 inhabitants, at regional level

165

180 160 140

2001 2008 2014

Albania 2014 = 130.5

120 100 80

60 40 20

0 Region 1

Region 2

Region 3

Region 4

Source: Instat & authors calculations

As mentioned earlier, the number of road vehicles for goods (trucks and road tractors, agriculture tractors and trailers) has decreased during 2010-2012 and increased again in 2013-2014, but having still lower levels than 2010. the contraction between 2010 and 2014 is around 19.5%. Table 148. Road vehicles of goods, at qark level 2010

2011

2012

2013

2014

Road Vehicles of Goods (number) Berat Dibër

2010

2011

2012

2013

2014

Road vehicles for goods per 1000 inhabitants

4,626

4,254

3,598

3,873

4,051

30.2

28.4

24.5

26.7

27.9

2,332

1,858

1,552

1,691

1,847

15.7

12.9

11.0

12.2

13.4

11,266

8,416

6,785

7,529

8,180

42.4

31.2

24.7

27.3

29.7

6,404

5,530

4,539

4,935

5,273

20.7

18.0

14.9

16.3

17.4

10,647

10,362

8,482

9,074

9,494

32.2

31.9

26.5

28.5

29.9

Gjirokastër

3,991

5,201

2,867

3,309

3,371

48.5

66.3

38.4

44.9

45.8

Korçë

6,099

4,986

4,308

4,691

4,819

26.1

21.7

19.0

20.7

21.3

Kukës

1,479

1,536

1,350

1,453

1,606

16.2

17.2

15.4

16.8

18.6

Lezhë

4,511

3,935

3,339

3,641

3,836

32.0

28.2

24.0

26.3

27.8

Shkodër

5,204

4,365

4,411

4,761

5,047

22.7

19.4

19.8

21.5

22.8

Tiranë

28,886

21,050

19,593

20,952

22,048

38.7

27.6

25.1

26.6

28.0

Vlorë

8,665

7,455

5,542

5,975

6,206

46.2

40.3

30.3

32.6

33.9

94,110

78,948

66,366

71,884

75,778

32.2

27.2

22.9

24.8

26.2

Durrës Elbasan Fier

Albania

Source: Instat & authors calculations

The contraction pattern holds true for all qarks, but Kukës and develops seemingly for the indicator of goods’ vehicles per 1,000 inhabitants. The qark with the highest number of vehicles per 1,000 inhabitants is the qark of

166

Gjirokastër (low population figures compared to other qarks, but still shows for good levels of household income). The lowest level of the indicator is registered in the qark of Dibër with 13.4 vehicles per 1,000 inhabitants. Figure 107. Road vehicles for goods per 1,000 inhabitants, at qark level 60

2010 2014

Albania 2014 = 26.2

40 30 20

10 0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: Instat & authors calculations

Disparities are pretty pronounced at qark level, but a regional level there is an almost equal division between Region 1 and 3 in one side (below the national average) and Regions 2 and 4 on the other (slightly above), regarding goods’ vehicles per 1,000 inhabitants. Region 4 has the best value for this indicator, while the highest total number of vehicles is found in Region 2 (despite following a declining trend over time). The differences between regions and indicators may be explained with both, the population numbers, and the structure of the economy. While most of the services are provided in the coastal and central locations (especially qark of Tirana), most of the material extraction and industrial activity is located elsewhere. Table 149. Road vehicles for goods, at regional level 2010

2011

2012

2013

2014

Road Vehicles of Goods (number)

2010

2011

2012

2013

2014

Road vehicles for goods per 1000 inhabitants

Region 1

11,194

9,836

9,100

9,855

10,489

24.3

21.6

20.3

22.1

23.5

Region 2

42,484

31,324

27,930

30,172

32,075

36.6

26.6

23.4

25.1

26.7

Region 3

17,129

14,770

12,445

13,499

14,143

24.6

21.5

18.3

20.0

21.0

Region 4

23,303

23,018

16,891

18,358

19,071

38.8

39.1

29.2

31.9

33.2

Albania

94,110

78,948

66,366

71,884

75,778

32.2

27.2

22.9

24.8

26.2

Source: Instat & authors calculations

Figure 108. Road vehicles for goods per 1000 inhabitants, at regional level

167

45 40 35

2010

Albania = 26.2

2014

30 25 20 15 10 5 0 Region 1

Region 2

Region 3

Region 4

Source: Instat & authors calculations

Other transportation modes that are worth analysing include maritime and air transport. Their presence and size is a demonstration tool for economic development capacity, exports/imports, tourism and location of Albania in the European map. Albania has a coastline of about 362 kilometres connecting the qarks of Lezha, Durrës and Vlorë with each other and with the rest of the Balkan Peninsula. The size of the coastline is quite small in absolute terms, but very satisfactory in relative terms (compared to the size of the country) due to the geographic form of Albania. Maritime transport plays an important role especially in the carriage of goods facilitating trade integration of the country. According to Instat 201527, during 2014, 74.8 % of exported and about 51.3% of imported goods were carried out/in by sea. The biggest port in the country is located in the qark of Durrës, which has the highest volume of loading and unloading of goods and movement of passengers. This positions Durrës very high compared to other qarks, in terms of economic and physical accessibility. However, the port has insufficient capacities to deal with the loading volumes that would correspond to the desired/planned import/export capacities. The port does not have as yet capacity to accommodate large tourist’s cruiser ships. Total passengers to on and off the Albanian ports during 2010-2015 registered the number of 5,490,352 persons including Albanian citizens and foreigners. Durrës has the absolute largest share of passengers transited from its port (about 68%) followed by the port of Vlorë (32%). Freight transport shows for higher disparities among the ports (Durrës 87% of the total volume of work and Lezha only 8%). This means that while the infrastructure of the Durrës port needs improvement, it still allows for both passenger and freight transport. The

168

other ports have very limited capacities for both passengers and freight, with the latter at extremely low levels.

Durres

Goods

Vlore

Lezhe

Thousands

Hundreds

Figure 109. Maritime transport of passengers, by ports

450 400

Passengers

Durres

Vlore

Lezhe

350 300 250

200

150

100

0 2010

2011

2012

2013

2014

Off 2010

Off 2011

Off 2012

Off 2013

Off 2014

Source: Instat & authors calculations

With regard to air transport, thereâ&#x20AC;&#x2122;s only one operational airport in Albania located in the qark of Tirana. During 2014 there were about 17 air companies operating in the Tirana International Airport (passengers, goods and mail services). Since the obtaining of the visa liberalization regime, total number of passengers has increased over time accounting for approximately 1.8 million in 2014. During the last year there were about 625 passengers flying for 1,000 inhabitants. Table 150. Indicators of air transport 2010

2011

2012

2013

2014

20,775

22,932

20,408

19,799

18,385

158,644

172,055

172,768

178,989

179,117

1,536,822

1,817,084

1,665,331

1,757,342

1,810,305

526

625

574

606

625

1,940

2,290

1,875

1,778

1,845

409

366

386

480

Airlines Number of Flights Over flights Passengers air transport Average number of air passengers per 1000 inhabitants Total Freights (tons) Total post ( tons)

Source: Instat & authors calculations

The overall length of the railway is about 346 km in 2014, down from 399 km in 2010. Rail transport activity has been diminishing over time both for goods and passengers. Currently, the existing railway infrastructure is focused mainly on goods carriage. The number of passengers travelling by railway has been decreasing from 18,659 passengers in 2010 to about 7,714 passengers in 2014

169

(or on average 3 passengers for 1,000 inhabitants). Rail transport is concentrated in the qarks of Durrës, Elbasan, Shkodër, Tiranë, Vlorë. Decreasing values are dedicated to the very low capacity and quality of the railway, lack of maintenance, the limited distribution of the network and the very low priority allocated by the national government. Table 151. Indicators of railway transport Item

Unit of measures

2010

2011

2012

2013

2014

The length of railway line

399

346

Railway freight transport from which: international transport

000/tons, km

66,177

50,122

25,307

22,975

39,889

000/tons, km

57,651

48,060

25,117

17,344

25,041

18,659

18,230

11,725

4,615

7,714

Passenger rail transport 000/passing, km Passengers per thousand inhabitants 000/inhabitants Source: Instat & authors calculations

Environment and services Regional development in Albania takes place on a rich natural resources setting, but at high risk of pollution, extinction, or devastation and decay. This is so due to several development factors being present the last 25 years, such as consumption and waste production patterns, informal exploitation of natural resources, lack of coordination among strategies on the use of natural resources as linked to the development priorities of Albania, etc. The current environmental risks would place sustainability and resilience for that matter, at high peril. Information on environmental development and risk is not easily accessible, due to changing patterns for data collection, times series, and areas of interest. However, certain indicators are worth analysing at qark and regional level, due to the embodiment they construct on development potential and environmental risk. The following section considers data on waste, air pollution and seawater pollution. River and river basin pollution/water quality information is present in environmental monitoring reports of the Ministry of Environment (as well as on other focused reports), but data collection happens yearly at different points along the river, thus making it difficult to draw a picture at qark or development region level. It is worth mentioning at this point that individual studies have shown among others, a high concentration (above norms) of heavy metals (mainly lead, iron, copper, cadmium, chromium and nickel) and nitrates in water. Heavy metals

170

originate from industrial sources and are also an effect of the crude oil drilling/spilling industry, while nitrates have mainly agricultural activity as source. These pollutants cause serious damage to water sources, aquifers, agricultural land and product, biodiversity and as a result to human health. Regional studies, programs and investments are key to tackling these kind of environmental issues because these by nature exceed local administrative boundaries. Thus, region is the best scale to understand causes and effects and inject investments for protection of environment and prevention of pollution and negative effects. Finally, this study reports some data on seawater quality, which is a good indicator for tourism potential, as well as for mirroring the human activities along the water bodies (rivers, aquifers, etc.) that flow into the sea. The urban waste per capita (tons per inhabitants) at the national level has increased progressively during 2003-2012. In 2008, the data doubled those of 2003 (0.118 tons/inhb.) and in 2012 the production was 3.3 times higher than in 2003. Table 152. Urban waste per capita (ton per inhabitant) by qarks Berat

2003 0.062

2004 0.106

2005 0.200

2006 0.185

2007 0.189

2008 0.185

2009 0.200

2010 0.355

2011 0.342

2012 0.341

Dibër Durrës Elbasan Fier Gjirokastër

0.018 0.150 0.076 0.080 0.097

0.046 0.162 0.079 0.102 0.103

0.150 0.239 0.153 0.184 0.165

0.134 0.307 0.199 0.207 0.212

0.137 0.308 0.202 0.210 0.219

0.084 0.290 0.181 0.200 0.340

0.147 0.303 0.210 0.218 0.238

0.211 0.503 0.286 0.375 0.349

0.214 0.353 0.210 0.367 0.524

0.235 0.513 0.266 0.360 0.583

Korçë Kukës Lezhë Shkodër

0.099 0.068 0.069 0.105

0.104 0.065 0.057 0.100

0.190 0.133 0.166 0.167

0.216 0.105 0.204 0.200

0.219 0.250 0.207 0.202

0.151 0.098 0.132 0.261

0.226 0.055 0.214 0.209

0.245 0.204 0.307 0.268

0.283 0.245 0.223 0.233

0.273 0.197 0.272 0.296

Tiranë Vlorë Albania

0.212 0.181 0.118

0.231 0.190 0.131

0.285 0.302 0.210

0.329 0.310 0.241

0.326 0.312 0.248

0.382 0.454 0.258

0.448 0.521 0.292

0.456 0.469 0.366

0.543 0.490 0.371

0.491 0.584 0.392

Source: Instat & authors calculations

The increase is evident in all qarks, with the highest level of waste generation in the qark of Vlorë (0.584 ton per capita) followed by the qark of Gjirokastër (0.583), Durrës and Tiranë. The lowest level of urban waste generation is in the qark of Kukës with only 0.197 ton per inhabitants. Figure 110. Urban waste per capita (ton per inhabitant) by qarks

171

Berat 0.6

Albania

Dibër

0.5 0.4

Vlorë

Durrës

0.3 0.2

0.1

Tiranë

Elbasan

0.0

Shkodër

Fier 2003 Lezhë

Gjirokastër Kukës

2008 2012

Korçë

Source: Instat & authors calculations

Usually, urban waste generation is higher in those qarks or regions presenting better economic conditions and thus having higher consumption per capita. In correlation to other indicators analysed so far, the qarks of Tirana, Vlora, Gjirokstra and Durrës have the highest levels of urban waste generation per capita (above the national average), while the qarks of Kukës and Dibër have the lowest levels and below the national average. Figure 111. Urban waste per capita in 2012 (ton per inhabitant) by qarks 0.700

0.600 0.500

Albania = 0.392 ton/inh

0.400 0.300

0.200 0.100 0.000 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: Instat & authors calculations

Region 2 has the highest level of urban wastes per capita (0.466 ton), followed immediately by Region 4 (0.460 ton per capita). Regions 1 and 3 have lower levels of urban waste generation, 0.269 and 0.284 ton per capita respectively in 2012. Table 153. Urban waste per capita (ton per inhabitant) by regions 2003

2004

2005

2006

2007

172

2008

2009

2010

2011

2012

Region 1 Region 2 Region 3

0.086 0.165 0.080

0.079 0.184 0.093

0.159 0.253 0.176

0.182 0.295 0.202

0.213 0.294 0.205

0.189 0.320 0.172

0.180 0.374 0.213

0.267 0.435 0.287

0.232 0.459 0.263

0.269 0.466 0.284

Region 4 Albania

0.112 0.118

0.128 0.131

0.216 0.210

0.239 0.241

0.242 0.248

0.298 0.258

0.315 0.292

0.401 0.366

0.426 0.371

0.460 0.392

Source: Instat & authors calculations

Figure 112. Urban waste per capita (ton per inhabitant) by regions (left) and Urban waste per capita in 2014 (right) Region 1 0.5

0.500

0.4

0.450

0.3

0.400

0.2

0.350 0.300

0.1 Region 4

0.0

Albania = 0.392 ton/inh

0.250

Region 2

0.200 0.150 0.100 2003

0.050

2008

0.000

2012

Region 3

Region 1

Region 2

Region 3

Source: Instat & authors calculations

The reasons suggested for higher urban waste generation vary across the studies, but in general terms higher urbanization and non-agricultural economic activities are assessed as the main sources. While qarks and regions try to enhance their overall contribution to national economic growth stimulating nonagricultural sectors of the economy, at the same time they contribute to increasing negative environmental impacts over time. Thus, besides stimulating and encouraging economic activities, the government agencies should also take strategic measures to address negative impacts of economic development, such as urban waste generation. While urban waste is related mainly to consumption and some specific economic sectors (services, trade, etc.), there are also other types of waste that have a very negative impact on environment, reflect economic activities and need treatment and minimization strategies. Inert waste is a considerable waste fraction in Albania, due to the lively construction sector, especially in the previous decade. Inert waste per capita presents a high volatility rate over the 2003-2012 period. High values of waste generation reflect the dynamic of construction activity. This is shown by the relatively good correlation between building permits and inert waste, and can be explained as well with the contraction periods of the building industry due to changing planning legislation. The level of inert waste was 0.209 tons per capita in 2003, it decreased to 0.112 ton per capita in 2010 (the year after the approval of the new planning law), it 173

Region 4

increased again in 2011 to 0.245 tons per capita – the government approved the new planning regulations and municipalities felt the urge to deliver as many permits as possible, due to perceiving the new regulations as very obstructive for the land development processes. In 2012 inert waste per capita in Albania registered the value of 0.114 ton per capita, one of the lowest levels registered. Table 154. Inert/solid waste per capita (ton per inhabitant) by qarks 2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

Berat

0.016

0.198

0.217

0.188

0.194

0.102

0.105

0.356

0.620

0.233

Dibër

0.061

0.030

0.009

0.045

0.046

0.032

0.033

0.168

0.134

0.114

Durrës

0.219

0.111

0.169

0.096

0.104

0.103

0.022

0.029

0.021

Elbasan

0.026

0.017

0.059

0.089

0.091

0.106

0.108

0.163

0.156

0.050

Fier

0.027

0.029

0.075

0.096

0.098

0.082

0.084

0.086

0.062

0.027

Gjirokastër

0.127

0.235

0.123

0.179

0.186

0.321

0.334

0.742

0.678

0.282

Korçë

0.132

0.155

0.166

0.132

0.135

0.026

0.033

0.051

0.036

Kukës

0.092

0.071

0.033

0.072

0.074

0.057

0.059

0.167

0.150

0.084

Lezhë

0.054

0.021

0.015

0.055

0.056

0.052

0.053

0.058

0.095

0.105

Shkodër

0.039

0.047

0.020

0.077

0.078

0.059

0.060

0.027

0.030

0.052

Tiranë

0.484

0.185

0.107

0.337

0.329

0.313

0.306

0.016

0.250

0.015

Vlorë

0.860

0.896

1.960

0.327

0.328

0.312

0.314

0.280

1.274

0.974

Total

0.209

0.154

0.214

0.169

0.170

0.154

0.155

0.112

0.245

0.114

Source: Instat & authors calculations

The breakdown of the data by qarks emphasizes the high divergence among qarks and as compared to the national average. Thus, Vlorë had a very high level of inert waste per capita in 2012 (about 0.974 ton), while the qark of Tiranë had the lowest one (0.015 tons per capita), followed by Durrës and Fier with 0.021 and 0.027 tons per capita respectively.

Figure 113. Inert/solid waste per capita (ton per inhabitant) by qarks

174

Vlorë

Berat 1.0 0.8

Dibër

0.6

Tiranë

Durrës

0.4 0.2 Shkodër

Elbasan

0.0

Lezhë

Fier 2003 Kukës

2008

Gjirokastër

2012

Korçë

Source: Instat & authors calculations

Figure 114. Inert/solid waste per capita in 2012 (ton per inhabitant) by qarks 1.000 0.900 0.800 0.700

0.600 0.500 0.400

0.300

Albania = 0.114 ton/inh

0.200 0.100

0.000 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: Instat & authors calculations

Organization of data at regional level shows that the highest level of inert/solid wastes per capita is present in Region 4 (0.360 ton per capita) during 2012 and the whole time series. There are no big differences among the other three regions in terms of solid waste per capita, all of them standing below the national average. Table 155. Inert/solid waste per capita (ton per inhabitant) by regions 2003 2004 2005 Region 1 0.055 0.044 0.021 Region 2 0.350 0.142 0.106 Region 3 0.058 0.104 0.130 Region 4 0.282 0.314 0.639 Albania 0.209 0.154 0.214 Source: Instat & authors calculations

2006 0.069 0.237 0.126 0.177 0.169

2007 0.071 0.234 0.129 0.180 0.170

175

2008 0.056 0.226 0.078 0.187 0.154

2009 0.057 0.223 0.080 0.190 0.155

2010 0.064 0.037 0.162 0.237 0.112

2011 0.074 0.185 0.222 0.526 0.245

2012 0.075 0.028 0.085 0.360 0.114

Figure 115. Inert/solid waste per capita (ton per inhabitant) by regions (left) and inert/solid waste per capita in 2012 (right)

Region 4

Region 1 0.4

0.400

0.3

0.350

0.2

0.300

0.1

0.250

0.200

Region 2

0.0

Albania = 0.114 ton/inh

0.150 0.100 2003

0.050

2008

0.000

2012

Region 3

Region 1

Region 2

Region 3

Region 4

Source: Instat & authors calculations

Table 156. Soil erosion in 2010 - 2013 Years Unit 2010

Losing ton/ha 3 Losing m /ha 2011 Losing ton/ha 3 Losing m /ha 2012 Losing ton/ha 3 Losing m /ha 2013 Losing ton/ha 3 Losing m /ha Source: Instat

Vithkuq (Korçë) 17 9.44 8.9 4.94 10.11 5.62 8.2 4.56

Monitoring stations Qaf-Shul Radhimë (Librazhd) (Vlorë) 18 23.32 10 12.96 9.5 12.3 5.28 6.83 10.35 18.05 5.75 10.03 8.35 10.09 4.64 5.61

Kallmet (Lezhë) 22.67 12.59 11.9 6.61 15.9 8.84 11.45 6.37

Average values 20.25 11.25 10.65 5.92 13.6 7.56 9.5 5.3

Environmental data on urban air pollution provide values for a number of air quality/pollution indicators, such as sulphur dioxide, particular matter, lead, carbon oxide, ozone, etc. Most of these pollutants have industry and traffic as a source. However, household activities (heating, etc.) are other ke sources, together with the construction activity (for instance for particular matter). Data is provided for the period 2003-2013, making use of Instat publications. The original source of data is the Ministry of Environment and related agencies that monitor air quality in cities. Regular monitoring takes place in Tiranë, Shkodër, Durrës, Elbasan, Fier, Vlorë and Korçë. Monitoring takes place in key locations within each city, or nearby (for instance the ex-metallurgical plant in Elbasan), and it is not representative at qark or any regional level. There are also cases in which the locations change from one year to the subsequent one. Nevertheless, the following data are quite indicative and worth referring to. Also, as most of the mixed economic activities take place in the urban areas, this environmental pollution information is a good indication of the current technological

176

development and environmental protection efforts that each local government does, to protect sustainability of the whole region. Data collection for some of the indicators has happened later in time, but it is still helpful to provide an overview of the different representation of air quality and its pollutants. Particulate matter is the only pollutant that according to Instat exceeds the EU rate and World Health Organization recommendations in all cities and almost all years of monitoring. This is recognizable in the following tables through airborne particles with an aerodynamic diameter equal or smaller than 10 micrometres (PM10) and equal or smaller than 2.5 micrometres (PM2.5), as well as through the total suspended particulates (TSP) in the air. TPS values are often and in all cities twice to four times higher than the value of WHO recommendation, while PM10 is always exceeding the EU rate and in certain cases doubling the value. There is very little monitoring on PM2.5 compared to the other dust particles and mainly in Tirana. The values have been over the EU rate for 2010 and 2011 and have decreased in 2012 and 2013. TSP has had a more fluctuating pattern of values over time, but it is difficult to draw conclusions as in some cases the TSP is missing for the last 2-3 years of the reported period. However, in overall, TSP values are either constant or slightly increasing. PM10 values on the other hand demonstrate a slightly decreasing tendency, though there are specific years during the time curve, where data make a jump (increasing). The other indicators have also oscillating tendencies overtime, with ShkodĂŤr and KorĂ§ĂŤ having mostly lower values and Elbasan and Fier having higher ones. Ozone is also an important indicator to look at as, though it stands within the recommended rates, it reaches the norm in few cases (i.e. Tirana in 2005-2006), or it has significant values close to the high end of the norm. The presence of these high values has a correlation with the economic activities that take place in the cities. For instance, TSP and PM originate from a series of sources such as traffic (motor vehicle use, fuel combustion), combustion products from space heating (households and enterprises), industrial processes and related fuel combustion, power generation (fossil fuels), dust from construction processes. Ozone originates as well from combustion processes, but also from organic compound evaporation from consumer products such as paints, solvents and cleaners. The sources are also correlated among each other, summing up into: transportation and related traffic, construction industry, unsustainable use of energy (fossil fuels) and increasing consume on construction/cleaning products. There are a series of negative health effects caused by these pollutants, with respiratory and lung diseases heading the list. From a regional development perspective, public transportation strategies and 177

infrastructure investments, and environmentally sound use of natural resources for construction, together with integrated waste management, are considered some of the key interventions to help indicators slow down and remain within the norms and standards. Table 157. Content of some pollutions of air in Tirana

Tirana SO₂ NO₂ Pb O₃ TSP PM10 PM2.5 CO Benz en

WHO Recom mendati ons

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

EU rate

µg/m³ µg/m³ µg/m³

17.00 35.00 1.10

16.00 35.00 1.10

20.00 36.00 0.00

24.00 34.00 0.32

20.00 38.00 0.35

12.50 34.26 0.06

13.04 33.52 0.05

12.72 32.47 0.055

7.61 39.94 -

6.3 23.83 -

27.30 -

125 (<24h) 40.00 0.50

50.00 40.00 1

µg/m³ µg/m³ µg/m³ µg/m³ mg/m ³

79.00 217.5 159.5 -

99.00 190.0 167.0 -

100.0 365.0 172.0 -

100.0 338.0 163.0 -

97.00 334.0 160.0 -

41.80 138.5 68.44 -

50.00 154.7 33.50 -

56.98 135.5 72.81 30.95

38.98 82.56 32.80

55.79 35.44 19.24

51.03 32.56 16.45

40.00 25

110.00 80.00 50.00 -

0.356

0.466

0.559

0.43

10(<8h)

µg/m³

0.921

0.506

1.773

3.95

Source: Instat

Table 158. Content of some pollutions of air in Shkodër

Shkodër

2003

2004

2005

2006

2007

2008

2009

2010

2011

201 2

EU rate

WHO Recomm endations

SO₂

µg/m³

125 (<24h)

50.00

NO₂

µg/m³ µg/m³

24 0

14 0

18 0

21 0

22 0

28 0

24 0

27 0

26 0

7 -

40.00 0.50

40.00 1

Pb O₃

µg/m³

110.00

TSP

µg/m³

226

229

224

216

212

228

230

182

192

80.00

PM10 PM2. 5

µg/m³

102

103

107

100

101

108

112

40.00

50.00

µg/m³ mg/m ³

10(<8h)

µg/m³

EU rate

WHO Recomm endations

CO Benz en

Source: Instat

Table 159. Content of some pollutions of air in Durrës

Durrës

2003

2004

2005

2006

2007

2008

2009

2010

2011

201 2

SO₂

µg/m³

15.1

125 (<24h)

50.00

NO₂

µg/m³

40.00

Pb O₃

µg/m³ µg/m³

0 83

0 99

0 98

0 99

0 64

0 72

0 67

0 79

0.50 -

1 110.00

TSP

µg/m³

241

209

201

211

234

250

192

217

80.00

178

PM10 PM2. 5 CO Benz en

µg/m³

110

100

116

121

104

40.00

50.00

µg/m³ mg/m ³

10(<8h)

µg/m³

EU rate

WHO Recomm endations

Source: Instat

Table 160. Content of some pollutions of air in Elbasan

Elbasan SO₂ NO₂

µg/m³ µg/m³

2003

2004

2005

2006

2007

2008

2009

2010

2011

201 2

29.00 29.00

20.00 25.00

27.00 33.00

22.00 22.00

19.00 24.00

8.67 22.25

14.41 23.98

18.40 29.39

15.5 22.6

125 (<24h) 40.00

50.00 40.00

Pb O₃

µg/m³

0.24

0.32

0.00

0.27

0.31

0.06

0.05

0.50

µg/m³

26.00 191.0 0

110.00

204

80.00

90.00

57.16

51.39

116.4 4

µg/m³

95.00 216.0 0 103.0 0

46.24 144.6 5

PM10 PM2. 5

26.00 268.0 0 120.0 0

µg/m³

96.00 304.0 0 119.0 0

TSP

76.50 335.0 0 147.0 0

97.24

89.7

40.00

50.00

µg/m³ mg/m ³

10(<8h)

µg/m³

0.413

EU rate

WHO Recomm endations

CO Benz en

Source: Instat

Table 161. Content of some pollutions of air in Fier

Fier

2003

2004

2005

2006

2007

2008

2009

2010

2011

201 2

SO₂

µg/m³

125 (<24h)

50.00

NO₂

µg/m³ µg/m³

18 0

15 0

23 0

25 0

24 0

33 0

27 0

31 0

32 0

25 -

40.00 0.50

40.00 1

Pb O₃

µg/m³

100

110.00

TSP

µg/m³

215

172

203

219

213

238

225

195

185

221

80.00

PM10 PM2. 5

µg/m³

106

102

112

110

40.00

50.00

µg/m³ mg/m ³

10(<8h)

µg/m³

EU rate

WHO Recomm endations

CO Benz en

Source: Instat

Table 162. Content of some pollutions of air in Vlorë Vlorë SO₂

µg/m³

2003

2004

2005

2006

2007

2008

2009

2010

2011

201 2

179

125 (<24h)

50.00

NO₂

µg/m³

7.3

40.00

Pb O₃

µg/m³ µg/m³

0 82

0 103

0 100

0 68

0 70

75.3

0.50 -

1 110.00

TSP

µg/m³

155

157

161

187

193

176

180

80.00

PM10 PM2. 5

µg/m³

34.4

40.00

50.00

µg/m³ mg/m ³

16.1

10(<8h)

µg/m³

CO Benz en

Source: Instat

Table 163. Content of some pollutions of air in Korçë

Korçë

2003

2004

2005

2006

2007

2010

2011

2012

2013

EU rate

WHO Recomm endations

SO₂

µg/m³

125 (<24h)

50.00

NO₂

µg/m³

40.00

Pb O₃

µg/m³ µg/m³

0 75

0 90

0 86

0 85

0 62

0 67

0.50 -

1 110.00

TSP

µg/m³

146

137

140

172

185

186

180

80.00

PM10

µg/m³

40.00

50.00

PM2.5

µg/m³ mg/m ³

10(<8h)

µg/m³

CO Benz en

Source: Instat

Referring again to Instat data on bacteriological pollution (Ministry of environment as source of information), it is noticeable that both faecal coliforms and intestinal enterococcus exceed the norms in almost every beach and city along the coast. Some monitoring points have better values (within the norm), for instance Shëngjin in Lezhë, Dhërmi and Borsh in Vlorë. Other locations have very high values and in the case of Durrës, Kavajë and Vlorë (the most urbanised coastal areas in Albania) these values exceed the allowed norm by 40-100 times. This kind of pollution is caused by the discharge of wastewater into the sea, without any prior treatment. So, far there are only 3 wastewater treatment plants built in Albania, dedicated to limited territories and capacities. The rate of urbanization and the missing response (institutional and investments) of the government regarding wastewater infrastructure and treatment facilities have followed reverse paths. The negative impact is enormous and multidimensional – thus economic (tourism for instance), social, environment and human health.

180

Under these circumstances, the allocation of funds for wastewater systems and treatment facilities remains a very high priority for all regions.

Table 164. Bacteriological pollution of sea water in beach 2012-2013 2012 Beaches FC-90% I 1 2 3 4 5 6 7 II 1 2 3 4 5 III 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21

Velipojë Belavista Hotel Adriatiku B.R.Fantazia Hyrja në plazh Pallatet e reja Lokali Dolce Vita Para lagunës së Vilunit Norm/100 ml Shëngjin Kabinat e vjetra Hotel Dora Hotel Kristian B.R Gjahtari Kune Norm/100 ml Durrës Currila 1 Currila 2 (Lokali kashtor) Plazhi Zhiron (Tora) Ura Dajlanit Filadelfia Plazhi Teuta Plazhi lok. Gostivari Plazhi Apollonia Plazhi Hekurudha (Trieste) Hotel Adriatik 1 Iliria (pista vjetër) Iliria pranë bllokut Ministria Rendit Ish kampi pionierëve (Tropikal) Bar Rest Tirana Shkëmbi Kavajës Hotel Hoti Benilva Hotel Andi Kompleksi Xixa Giardino Norm/100 ml

181

2013

Content in 100 ml water IE-95% FC-90%

IE-95%

24 104 148 347 130 87 49 250

8 11 33 474 49 53 7 100

76 76 127 66 68 38 16 250

40 45 40 93 57 16 40 100

34 28 22 16 12 250

20 16 13 5 9 100

44 84 33 27 20 250

28 30 15 11 10 100

342 339 3142 651 125 235 229 343 321 366 330 379 517 592 10167 6309 3012 2447 1961 1993 2286 250

638 897 24605 568 278 228 243 379 254 372 569 354 376 489 16454 11376 5810 4972 5123 3812 4307 100

1436 1733 4177 127 125 171 162 142 99 119 110 208 137 181 2573 840 555 615 1023 1458 2524 250

2599 4567 11325 188 155 262 487 362 200 113 220 332 274 379 3769 1364 1033 993 2772 1860 5935 100

IV 1 2 3 4 5 6 7 8 9 10 V 1 2 3 4 5 6 7 8 9 10 11 VI 1 2 3 VII 1 2 3 4 VIII 1 2 3 IX 1 2 3 4 5 6

Kavajë Majami R. Vjena P.Golemit Vapori Mbytur Piceri Argjendi Piceri Jurgen Para Mak.Albania Lok.Reshatit Bunkeri Bardhë Fusha e Sportit (Qerret) Norm/100 ml Vlorë Plazhi Vjetër Kampi Plazhi Vjetër Kabinat Shkolla Marinës Plazhi i ri Ish vilat bllok Plazhi Jonufër Radhime - Melisa Lokali Lame Borshi Radhimë - Hoteli Grand Radhimë - Lokali Boja 1 Radhimë - Lokali Boja 2 Norm/100 ml Dhërmi Tek lisi Hotel Anastasia K.punët.Majtas Norm/100 ml Himarë Himarë qëndër Pas shkëmbit (Karburant) Potam - Alqi Hotel Likoka Norm/100 ml Borsh Borsh Djathtas Borsh Qendër Borsh Majtas (Panorama) Norm/100 ml Sarandë Limion Plazhi Pllakat Plazhi Ri Plazhi fëmijëve Hotel Grant Kanali i Cukës

182

4110 662 719 1219 810 110 103 86 58 58 250

12074 10414 2315 2315 9776 1970 212 81 31 39 100

5529 2362 1578 2492 3037 2102 913 990 417 306 250

6855 4543 3891 3589 3684 7952 1895 2353 583 557 100

6627 4755 7477 1634 116 171 115 53 25 35 43 250

11781 10202 18885 2463 74 312 172 13 13 22 11 100

618 975 3 3130 375 61 62 71 63 62 47 250

1079 1314 4140 4164 179 43 29 34 58 30 55 100

82 45 64 250

26 4 22 100

10 16 38 250

4 5 11 100

28 116 182 122 250

17 12 88 10 100

22 27 9 13 250

9 4 6 6 100

49 36 34 250

30 9 24 100

17 6 15 250

29 6 8 100

65 63 369 183 25 1313

25 15 1591 267 45 386

45 132 437 340 135 2603

27 127 488 318 75 2638

Norm/100 ml Gjiri i Lalzit 1 Kepi i Rodonit 2 Fshati Turistik Lura 3 Plazhi publik pas LurĂŤs Norm/100 ml Source: Instat

250

100

250

100

19 40 145 250

2 4 115 100

71 75 90 250

68 150 130 100

Tourism and agriculture Tourism represents one of the most promising sectors for future economic development of Albania. There are several initiatives and resources allocated for this sector of the economy, but results require time to materialize, also because the service per se depends on the proper education and the touristic products are still limited or underdeveloped. Tourism represents an important potential for the development of all qarks/regions due to natural amenities that Albania has, its history and geography, presence of a rich territorial morphology (mountain and sea) and proximity to other touristic sites in the Balkans. Development of tourism can have a significant contribution to the overall welfare and employment, sustainable development of local and regional economies and resilience capacity of the country. However, as figures show in the above chapters, the contribution of tourism to the national GDP is still very low. On one side this happens due to yet underdeveloped tourism offer, and on the other due to still weak coordination among tourism and other sectors, land and natural resources protection and infrastructure investments. For instance, most precious water resources (glacial biodiversity rich rivers), which constitute valuable touristic attractions and the core of the touristic product, are assigned as suitable for the construction of private hydropower plants (small to big capacity). Some construction is already taking place and other plants are approved or will be approved in the future. This is a result of the energy strategy of the country, under the frame of resilience, but is in fact not well coordinated with tourism as a priority development sector, neither with efforts and programs for environmental and natural resources protection. Data on tourism are not available at qark level and it is not possible to make quantitative regional assessments. The number of tourists visiting our country may be one potential indicator, or proxy used for tourism activity evaluation, especially foreign ones. Nevertheless it would be a quantitative indicator that has not qualitative reasoning behind.

183

Table 165. Arrivals and departures of foreign citizens (by border) 2010 Albania Total (I+II+III)

Arrivals

2011

Departures

Arrivals

2012

Departures

Arrivals

2013

Departures

Arrivals

2014

Departures

Arrivals

Departures

2,417,337

2,362,267

2,932,132

2,564,921

3,513,666

2,918,185

3,255,988

3,222,566

3,672,591

3,675,196

I. By Air Tirana (Rinas)

245,756 245,756

263,763 263,736

267,359 267,359

275,537 275,537

273,071 273,071

281,856 281,856

314,074 314,074

319,338 319,338

337,161 337,161

343,225 343,225

II. By Sea

216,153

211,560

191,379

191,742

181,789

182,018

186,542

177,942

201,529

196,431

1. Durrës

162,322

158,667

139,950

138,927

129,262

130,764

111,786

106,874

118,918

113,859

2. Lezhë 3. Vlorë

1,010 52,821

400 52,493

0 51,429

0 52,815

0 52,527

0 51,254

0 74,756

0 71,068

7 82,604

11 82,561 3,135,540

III. By Land

1,955,428

1,886,944

2,473,394

2,097,642

3,058,806

2,454,311

2,755,372

2,725,286

3,133,901

1. Dibër

25,200

23,910

32,972

31,514

41,239

38,038

32,413

32,285

57,174

51,791

2. Gjirokastër

74,321

76,586

108,132

109,110

165,701

168,545

351,654

346,571

302,034

301,669

345,764 1,135,482

285,686 1,164,577

380,069 1,435,231

322,454 1,192,093

452,808 1,745,955

391,101 1,210,336

509,494 1,286,320

481,171 1,292,485

611,631 1,466,209

599,728 1,478,852

374,661

336,185

516,990

442,471

653,103

646,291

575,491

572,774

696,853

703,500

3. Korçë 4. Kukës 5. Shkodër

Source: Instat

184

Data show that the number of tourists arriving from abroad to Albania during 2010-2014 has increased, with arrival by land contributing the most to both, the total number of tourists and the increasing pattern. Arrivals by sea score the second and those by air, the third. The same dynamic is observable for the Albanian citizens as well.

185

Table 166. Arrivals and departures of Albanian citizens (by border) Albanian citizens Albania Total ( I+II+III) I. By Air Tirana ( Rinas) II. By Sea 1. Durrës 2. Lezhë 3. Vlorë III. By Land 1. Dibër 2. Gjirokastër 3. Korçë 4. Kukës 5. Shkodër

2010 Arrivals 3,160,592 481,376 481,376 331,569 241,719 1,582 88,268 2,347,647 73,567 901,660 812,048 296,968 263,404

Departures 3,443,510 514,781 514,781 362,906 267,767 1,330 93,809 2,565,823 89,075 1,035,810 822,353 316,763 301,822

2011 Arrivals 3,750,460 621,919 621,919 421,044 287,475 0 133,569 2,707497 93,555 979,719 1,021,717 339,246 273,260

Departures 4,120,199 643,229 643,229 437,013 297,005 0 140,008 3,039957 110,486 1,190,738 1,061,802 370,695 306,236

2012 Arrivals 3,620,665 517,835 517,835 379,336 276,104 0 103,232 2,723,494 107,369 951,347 960,671 374,050 330,057

Departures 3,959,265 552,370 552,370 401,245 294,719 0 106,526 3,005650 124,365 1,064,317 981,445 460,344 375,179

2013 Arrivals 3,653,972 556,475 556,475 375,057 253,927 0 121,130 2,722440 84,843 974,034 956,556 393,180 313,827

Departures 3,928,245 564,450 564,450 390,065 261,503 0 128,562 2,973730 100,859 1,027,470 962,884 510,916 371,601

2014 Arrivals 3,872,010 562,376 562,376 353,301 271,004 240 82,057 2,956333 112,648 825,310 974,175 620,313 413,987

Departures 4,145,608 577,900 577,900 373,079 285,536 218 87,325 3,194629 133,589 870,875 999,519 730,204 460,442

Source: Instat

These patterns may be explained with the following: 1) there is only one airport in Albania, with good access to the low plain areas (as described in the transportation section), but low access to the rest of the country; 2) ports infrastructure is still lagging behind in terms of capacities. Most of the passengers’ traffic is focused in Durrës, which has the same accessibility features as Tirana airport. Furthermore, port capacities are not sufficient to accommodate massive touristic ships such as cruiser lines. The latter would improve significantly the touristic product/offer and contribute to good connection of Durrës and Albania into the Mediterranean touristic map; 3) Touristic facilities within the country and in each region are not sufficient to accommodate high touristic demand, in terms of both quantities (no. of tourists) and quality per different touristic segments. Many foreign tourists prefer to cross the country by RVs (recreational vehicles / caravan), thus crafting individual solutions instead of making use of a complete local offer. In fact the latter is not satisfactory enough as to respond to the demand; 4) last, but not least, penetration within the country (different precious localities) is difficult due to low access. Thus several tourists (foreign and Albanians) look for individual travelling means, in absence of organised internal tours, let alone Balkan tours that include Albania in the program.

186

Agriculture is one of the most important sectors of the economy in Albania, with a significant share of the GDP and presumably positive impact on tourism development, under the framework of rural development. Agricultural products are part of the regional identities in Albania, due to a wide range of environmental, natural and climatic differences. In 2014 there was a slight increase in the number of registered farms (0.2% compared to the previous year). The highest number of farm is located in the qark of Fier, representing in 2014 about 14.8% of total farms, down by 0.7 percentage points in annual terms. Shkodër also accounts for a substantial share of agricultural holdings in 2014, about 11.0%, slightly higher compared to 2013. The lowest level of agricultural holdings is registered in the qark of Kukës. The other qarks have similar numbers of agricultural holdings. Table 167. Number of agricultural holdings by qarks 2013 Berat Dibër Durrës Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

No. 24,929 25,717 30,128 31,636 54,638 23,110 29,220 9,940 23,005 38,202 32,930 28,151 351,605

2014 24,176 25,658 28,770 31,326 52,169 18,918 29,500 10,108 25,585 38,812 34,454 32,839 352,315

2013 2014 % of total 7.1 6.9 7.3 7.3 8.6 8.2 9.0 8.9 15.5 14.8 6.6 5.4 8.3 8.4 2.8 2.9 6.5 7.3 10.9 11.0 9.4 9.8 8.0 9.3 100.0 100.0

Source: Instat & Authors calculations

Region 4 has the highest level of agricultural holdings (about 29.5% in 2014) due to the contribution of Fier qark. Differences between regions 2 and 3 are very moderate and Region 1 has the lowest number due Lezhë and Kukës contributions. Table 168. Number of agricultural holdings by qarks 2013 No.

2014 % of total

2013 No.

2014 % of total

Region 1 Region 2 Region 3

71,147 88,775 85,785

74,505 88,882 85,002

20.2 25.2 24.4

21.1 25.2 24.1

Region 4

105,899

103,926

30.1

29.5

Albania

351,605

352,315

100

Source: Instat & Authors calculations

187

The main crops cultivated in Albania are wheat, corn, rye, barley and oats. Vegetables, potatoes and white beans comprise as well a considerable share in the production of field crops. The main groups of fruit plants cultivated are fruit trees (apples, pears, peaches, plums, cherries, nuts, etc.), olives, citrus and grapes. At regional level, information is given on the number of roots in production, the production and yield. Table 169. Production of field crops at qark level (in ton), 2014 Cereals

Vegetables

Potatoes

White bean

Tobacco

Sunflower

Soya

Forage

Berat

49,354

90,408

6,363

1,307

Diber

43,531

54,741

28,598

995

Durres

43,110

91,722

9,499

2,576

602,545

Elbasan

93,095

75,165

31,756

4,509

2,007

666,154

Fier

382,709 447,965

155,153

296,417

35,044

8,472

1,930

1,710,079

Gjirokaster

19,650

14,194

5,606

394

206,854

Korce

91,576

68,746

64,164

3,557

101

403,321

Kukes

24,639

14,138

14,350

1,065

91,188

Lezhe

38,862

32,911

8,705

1,318

283

419,478

Shkoder

50,754

75,308

21,834

1,251

723

496,228

Tirane

46,580

104,460

11,057

3,612

436,069

Vlore Total

44,067

31,792

3,024

945

237,408

700,370

950,000

240,000

30,000

3,000

2,000

351

6,100,000

Source: Instat & Authors calculations

Table 170. Production of field crops at regions level (in ton), 2014 Cereals Region 1 Region 2 Region 3 Region 4 Total

Vegetables

Potatoes

White bean

114,254

122,357

44,890

3,634

730

133,221

250,922

49,154

7,182

100

234,025

234,318

102,282

9,373

2,122

218,870

342,402

43,674

9,811

700,370

950,000

240,000

30,000

3,000

Tobacco

Sunflower -

Soya

Forage

283

1,006,895

1,486,579

1,452,184

2,154,342

351

6,100,000

1,930 2,000

Source: Instat & Authors calculations

The information on the expansion of urban growth on agriculture land is missing on a national level and at local level is quite fragmented. Instat data prior and after 2008 show for minor variations. For instance the following table shows that the arable land with field crops has increased with a total of 11,000 ha from 2008 to 2013, and has decreased again with 4,000 ha in 2014. An explanation to this can be that farmers have decided to buy unused agriculture land by local owners and put it into the production chains. It could also be assumed that local

188

owners themselves have decided to cultivate land, due to some legal provisions of the Ministry of Agriculture that allow municipalities to auction land that remains uncultivated for more than 2 years28. However, these facts remain still at a speculative reasoning level, because the Ministry of Agriculture has not provided an official statement regarding the changing size of the cultivated area. On the other hand, informal construction in Albania has been and still is one of the main reasons for diminishing agriculture land and there are other studies that demonstrate this through GIS analysis. For instance a Co-PLAN study of 2009 analysed the urban expansion of 10 main cities in Albania (Korçë, Tiranë, Shkodër, Durrës, Fier, Sarandë, Elbasan, Lushnje, Vlorë and Lezhë). This expansion has taken place on agricultural land and in all cases, but Korça and Lushnja, the cities have grown at least the double of their size prior to 1990. For instance the extra construction footprint that Shkodra has gained in 19 years is around 154 ha and this figure does not include the area of plots that were converted from agriculture to urban, neither the size of the public infrastructure area. Kamza as a municipality prior to the territorial reform of 2015 had an area of 22 km2, which prior 1990 used to be agriculture land and it was almost fully urbanised. The above reasoning reveals that more facts finding and alternative structural analysis is needed and it is hard to show without this analysis before hand, what is the real size of the agricultural area in Albania and how did this change in years. Nevertheless, the following figures provide an evidence of the differences between qarks (and then regions) in terms of agriculture land and in this specific case of arable land. The greatest share of arable land is concentrated in the qark of Fier (about 23.0% in 2008 and 22.2% in 2014). To follow, the qark of Elbasan with about 12.1% of total sown arable land and the qark of Korçë with about 11.9% of sown total arable land. These percentages mirror the public perception of agricultural potential of each qark, based on their geographical features. Table 171. Arable land with field crops by qarks 2008

2009

2010

2011

Berat

29.9

Dibër

24.8

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

2012

2013

2014

2008

2014

27.9

28.1

27.9

7.6

6.8

34.4

33.9

24.4

5.9

6.0

29.8

29.5

30.2

30.7

6.9

7.5

49.2

48.1

48.4

49.5

12.0

12.1

94.8

89.6

91.0

90.9

23.0

22.2

18.3

19.0

18.0

18.7

4.8

4.6

46.8

46.2

47.8

48.6

11.6

11.9

13.0

12.4

12.6

3.1

Sown arable land in 000 ha

189

Lezhë

23.4

24.8

23.6

22.0

5.9

5.4

Shkodër

31.1

30.8

31.0

34.1

7.8

8.3

Tiranë

34.5

34.4

34.8

35.0

8.4

8.6

Vlorë Albania

13.2

12.9

13.8

14.5

2.9

3.5

402

404

409

410

413

409

100.0

Source: Instat & Authors calculations

From a regional point of view, the largest share of arable land with field crops is located in Region 3 (about 30.8%, main contribution provided by Korça and Elbasan) and Region 4 (about 30.3%, main contribution provided by Fier). On the contrary, the smallest share of arable land is found in Region 1 (only 16.8% in 2014). Table 172. Arable land with field crops by regions 2008

2009

2010 2011 2012 2013 Sown arable land in 000 ha Region 1 68 68 67 67 68 67 Region 2 85 85 87 89 98 99 Region 3 126 126 126 126 122 124 Region 4 123 123 124 126 122 123 Albania 402 402 404 409 410 413 Source: Instat & Authors calculations

2014 69 90 126 124 409

2008 % of total 16.8 21.2 31.3 30.7 100

2014 16.8 22.1 30.8 30.3 100

2.2.4 Demography and Spatial Development Demography Albania is facing two major challenges in terms of demographic developments since the beginning of the 1990s: i) the overall population of Albania is in continuous decline; ii) internal population migration and displacement has altered tremendously the territorial structure, the urban-rural relationship and the economic structure and potential of the cities. Population contraction has been higher during the period between 2001 and 2010, whereas afterwards population decreased at a slower pace. Net migration (negative) and less natural population increase (positive but very low) have affected considerably the diminishing pattern of the population over time.

Figure 116. Population trends (in %) 190

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 0.0 -‐0.1 -‐0.2 -‐0.3 -‐0.4 -‐0.5 -‐0.6 -‐0.7 -‐0.8 -‐0.9

-‐0.09 -‐0.13 -‐0.11 -‐0.22

-‐0.72

-‐0.79

Source: Instat & Authors calculations

191

-‐0.74

Table 173. Population by qarks (number) Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Albania

2001

192,667

189,275

244,753

361,980

381,841

112,726

264,902

110,858

158,920

255,898

596,704

192,796

3,063,320

2002

188,982

184,167

248,358

357,044

377,857

109,519

261,549

108,011

158,055

252,699

617,550

193,227

3,057,018

2003

185,063

180,595

250,512

350,862

373,090

106,691

258,555

106,286

156,266

249,678

633,713

193,682

3,044,993

2004

181,155

176,827

252,380

345,762

368,056

103,399

255,264

104,866

154,193

247,916

650,767

193,646

3,034,231

2005

176,994

172,590

254,243

339,461

362,086

100,179

251,918

103,173

152,360

245,800

667,405

193,425

3,019,634

2006

172,383

168,150

256,839

333,636

355,766

96,634

248,587

101,084

150,094

243,246

683,927

192,983

3,003,329

2007

167,428

163,074

258,572

327,189

349,570

93,017

244,583

98,773

147,583

239,750

700,163

192,053

2,981,755

2008

162,519

157,999

260,386

321,098

342,638

89,343

240,875

96,304

145,240

235,667

715,328

190,869

2,958,266

2009

157,597

152,783

262,867

314,757

336,356

85,885

236,904

93,626

142,872

232,013

731,004

189,691

2,936,355

2010

153,077

148,074

265,639

309,657

330,378

82,238

233,820

91,226

140,755

229,140

747,169

187,501

2,918,674

2011

149,672

144,194

269,784

306,939

324,863

78,405

230,259

89,400

139,734

225,548

763,560

185,003

2,907,361

2012

146,649

140,788

274,258

305,140

320,216

74,720

227,328

87,841

138,992

222,494

781,019

182,745

2,902,190

2013

145,211

138,427

275,425

303,069

318,048

73,615

226,244

86,540

138,326

221,422

788,995

182,971

2,898,293

2014

145,050

138,276

275,115

302,728

317,695

73,532

225,992

86,444

138,169

221,163

788,071

182,765

2,895,000

2015

142,644

136,443

276,124

301,324

314,935

72,183

224,111

85,440

136,781

218,470

800,791

183,056

2,892,302

2016

139,815

134,153

278,775

298,913

312,448

70,331

221,706

84,035

135,613

215,483

811,649

183,105

2,886,026

Source: Instat

192

Free movement, cities expansion, [informal] sprawl over the agriculture land and establishment of new settlements after 1990 changed considerably the geography of development. Massive displacements from remote and peripheral mountainous areas towards the western coast and central Albania resulted into: increased population density and concentration of economic activities in the recipient areas; dynamic but chaotic urbanization; and significant relocation of the workforce, economic resources and investments. This displacement resembles the waterfall metaphor, with people from rural areas approaching qark centres (main cities) and those in the qark centres approaching Tirana and Durrës area. Of course there were also several cases where people from the more remote rural parts of the country settled informally on agriculture land in the peripheries of Tiranë and Durrës, thus giving birth to Paskuqan, Kamza and Këneta settlements as we know them today. This population reallocation resulted initially into two major typologies: i) fast growing cities, suffering the pressure of development, lack of infrastructure and services investments – insufficient to respond to the development pressure, and negative environmental consequences; ii) depressive cities, loosing population, inheriting vast areas of previous industrial activity that were either abandoned, or shut down for future decision making and privatization, in lack of a development strategy for their reintroduction into production and market chains, and being faced with lack of public infrastructure and services investments as very inefficient due to shrinking population. Next to these two major typologies, it is noticeable a third one, still in formation and transformation, without yet clear distinct features, often composed of settlements established in the outskirts of the traditional cities, or new mixed residential-economic islands and strips along the main national road axes or just in the middle of agricultural land. This third typology tends to be closer to the more developed centres, but still far enough and immersed into the naturalagricultural setting as to benefit from lower land prices, vast space for the individual economic activities and sufficient proximity to infrastructure and services. Because of the introduction of this third typology, it is possible to recognise on the map that the whole area from Shkodër to Vlorë and the coastline to Lezhë, Krujë, Tiranë and Elbasan, is developing as a mixed urbanrural area, with key urban poles and several secondary cities functioning in a network among them and the natural-agricultural setting. As a result of the above phenomena, despite overall decline in population, some qarks have been experiencing an increase in their population. This is the case of the qark of Tirana and Durrës (except 2013). Meanwhile the other qarks have 193

been experiencing a contraction of their population, with Gjirokastër leading this trend, followed by Dibër, Berat and Kukës. It is important to emphasize that depopulation and overpopulation are linked to both internal and external migration. So, though the total urban area of the country has increased and so has the urban population in overall, the total population has decreased due to emigration abroad. Figure 117. Population changes 2016/2001 (as by January 1) by qarks (in %)

40 36.0

30 20

13.9

10 0 -‐10

-‐5.8

-‐20 -‐30 -‐40

-‐37.6 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Albania

Source: Instat & Authors calculations

Data on population by qarks were re-arranged to obtain data at the level of the development regions. Table 174. Population by development regions (number) Region 1

Region 2

Region 3

Region 4

Albania

2001

525,676

1,030,732

819,549

687,363

3,063,320

2002

518,765

1,050,075

807,575

680,603

3,057,018

2003

512,230

1,064,820

794,480

673,463

3,044,993

2004

506,975

1,079,974

782,181

665,101

3,034,231

2005

501,333

1,094,238

768,373

655,690

3,019,634

2006

494,424

1,108,916

754,606

645,383

3,003,329

2007

486,106

1,121,809

739,200

634,640

2,981,755

2008

477,211

1,133,713

724,492

622,850

2,958,266

2009

468,511

1,146,654

709,258

611,932

2,936,355

2010

461,121

1,160,882

696,554

600,117

2,918,674

2011

454,682

1,177,538

686,870

588,271

2,907,361

2012

449,327

1,196,065

679,117

577,681

2,902,190

2013

446,288

1,202,847

674,524

574,634

2,898,293

2014

445,776

1,201,462

673,770

573,992

2,895,000

2015

440,691

1,213,358

668,079

570,174

2,892,302

2016

435,131

1,224,577

660,434

565,884

2,886,026

194

Source: Instat & Authors calculations

The data show that overall population has decreased in 2016 as compared to the population data in 2001 by approximately 5.8%. Population has decreased in three regions (as shown in the following graph) and has increased in Region 2 by 18.8%. The increase of population in Tirana and Durrës has outpaced significantly the decrease of other qarks, so that the contribution of Dibër in Region 2 (though large) cannot bring the overall population change into negative figures. Figure 118. Population changes 2016/2001 (as by January 1) by qarks (in%)

30 18.8

20 10 0 -‐10 -‐20 -‐30

-‐40

-‐5.8 -‐17.2

Region 1

Region 2

-‐19.4

-‐17.7

Region 3

Region 4

Source: Instat & Authors calculations

195

Albania

The latest released data on population developments show for a high concentration of population, where about 59% of total population is located in the qarks of Tiranë, Fier, Elbasan and Durrës (with Durrës having the lowest concentration among the four and Elbasan and Fier standing on almost equal levels). Table 175. Distribution of the population at qark level (weights versus total population) Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Albania

2001

6.3

6.2

8.0

11.8

12.5

3.7

8.6

3.6

5.2

8.4

19.5

6.3

100

2002

6.2

6.0

8.1

11.7

12.4

3.6

8.6

3.5

5.2

8.3

20.2

6.3

100

2003

6.1

5.9

8.2

11.5

12.3

3.5

8.5

3.5

5.1

8.2

20.8

6.4

100

2004

6.0

5.8

8.3

11.4

12.1

3.4

8.4

3.5

5.1

8.2

21.4

6.4

100

2005

5.9

5.7

8.4

11.2

12.0

3.3

8.3

3.4

5.0

8.1

22.1

6.4

100

2006

5.7

5.6

8.6

11.1

11.8

3.2

8.3

3.4

5.0

8.1

22.8

6.4

100

2007

5.6

5.5

8.7

11.0

11.7

3.1

8.2

3.3

4.9

8.0

23.5

6.4

100

2008

5.5

5.3

8.8

10.9

11.6

3.0

8.1

3.3

4.9

8.0

24.2

6.5

100

2009

5.4

5.2

9.0

10.7

11.5

2.9

8.1

3.2

4.9

7.9

24.9

6.5

100

2010

5.2

5.1

9.1

10.6

11.3

2.8

8.0

3.1

4.8

7.9

25.6

6.4

100

2011

5.1

5.0

9.3

10.6

11.2

2.7

7.9

3.1

4.8

7.8

26.3

6.4

100

2012

5.1

4.9

9.5

10.5

11.0

2.6

7.8

3.0

4.8

7.7

26.9

6.3

100

2013

5.0

4.8

9.5

10.5

11.0

2.5

7.8

3.0

4.8

7.6

27.2

6.3

100

2014

5.0

4.8

9.5

10.5

11.0

2.5

7.8

3.0

4.8

7.6

27.2

6.3

100

2015

4.9

4.7

9.5

10.4

10.9

2.5

7.7

3.0

4.7

7.6

27.7

6.3

100

10.4

10.8

2.4

7.7

2.9

4.7

7.5

28.1

6.3

100

2016 4.8 4.6 9.7 Source: Instat & Authors calculations

The qark of Gjirokastër and the qark of Kukës have the lowest concentration of population over time. At the beginning of 2016, only 2.4% and 2.9% of total population is found in these qarks respectively.

196

Figure 119. Population by qarks (weights vs total populations, in %) Berat Korçë

Dibër Kukës

Durrës Lezhë

Elbasan Shkodër

Fier Tiranë

Gjirokastër Vlorë

100 90

80 70 60 50 40

30 20 10 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: Instat & Authors calculations

Over the last five years more than 40% of the population is located in Region 2, the only one recording progressive increase in its population. Table 176. Distribution of the population at qark level (weights versus total population) Region 1

Region 2

Region 3

Region 4

Albania

2001

17.2

33.6

26.8

22.4

100

2002

17.0

34.3

26.4

22.3

100

2003

16.8

35.0

26.1

22.1

100

2004

16.7

35.6

25.8

21.9

100

2005

16.6

36.2

25.4

21.7

100

2006

16.5

36.9

25.1

21.5

100

2007

16.3

37.6

24.8

21.3

100

2008

16.1

38.3

24.5

21.1

100

2009

16.0

39.1

24.2

20.8

100

2010

15.8

39.8

23.9

20.6

100

2011

15.6

40.5

23.6

20.2

100

2012

15.5

41.2

23.4

19.9

100

2013

15.4

41.5

23.3

19.8

100

2014

15.4

41.5

23.3

19.8

100

2015

15.2

42.0

23.1

19.7

100

2016

15.1

42.4

22.9

19.6

100

Source: Instat & Authors calculations

197

Population of Region 4 did not experience major changes during the period between 2001-2016, representing in average 20.9% of total population. The lowest share of the total population is located in Region 1 with 16.1% in average over the considered period. Figure 120. Population by regions (weights vs total populations, in %)

Region 1

Region 2

Region 3

Region 4

100

80 60 40

20 0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Instat & Authors calculations

Based on Instat data over the last 5 years, population density in Albania had an average density of 100 inhabitants per km2. Differences among qarks are pretty high with only three qarks that have a density of population above 150 inhabitants per km2 and all others standing below the national average. The highest and growing over time population density is present in the qark of Tirana with 491.3 inhabitants per km2 at the beginning of 2016 from 484.7 inhabitants per km2 in the same period of the previous year.

198

Table 177. Population density by qarks (inhabitants per km2) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Berat

Dibër

Durrës

Elbasan

107.2

73.2

319.5

113.2

105.1

71.2

324.2

102.9

69.8

100.8

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Albania

202.0

39.1

71.4

46.7

98.1

71.8

361.2

71.2

106.6

111.6

199.9

38.0

70.5

45.5

97.6

70.9

373.8

71.4

106.3

327.0

109.7

197.4

37.0

69.7

44.8

96.5

70.1

383.6

71.6

105.9

68.4

329.5

108.1

194.7

35.9

68.8

44.2

95.2

69.6

393.9

71.6

105.5

98.4

66.7

331.9

106.1

191.6

34.7

67.9

43.5

94.0

69.0

404.0

71.5

105.0

95.9

65.0

335.3

104.3

188.2

33.5

67.0

42.6

92.7

68.3

414.0

71.3

104.5

93.1

63.1

337.6

102.3

185.0

32.3

65.9

41.6

91.1

67.3

423.8

71.0

103.7

90.4

61.1

339.9

100.4

181.3

31.0

64.9

40.6

89.7

66.2

433.0

70.5

102.9

87.7

59.1

343.2

98.4

178.0

29.8

63.8

39.4

88.2

65.1

442.5

70.1

102.1

85.1

57.3

346.8

96.8

174.8

28.5

63.0

38.4

86.9

64.3

452.3

69.3

101.5

83.2

55.8

352.2

95.9

171.9

27.2

62.0

37.7

86.3

63.3

462.2

68.4

101.1

81.6

54.4

358.0

95.4

169.4

25.9

61.3

37.0

85.8

62.5

472.8

67.5

101.0

80.8

53.5

359.6

94.7

168.3

25.5

61.0

36.5

85.4

62.2

477.6

67.6

100.8

80.7

53.5

359.2

94.6

168.1

25.5

60.9

36.4

85.3

62.1

477.0

67.5

100.7

79.3

52.8

360.5

94.2

166.6

25.0

60.4

36.0

84.4

61.3

484.7

67.6

100.6

77.8

51.9

363.9

93.4

165.3

24.4

59.7

35.4

83.7

60.5

491.3

67.7

100.4

Source: Instat & Authors calculations

199

Figure 121. Index of population density by qarks 500

2001

450

2006

2011

2016

400 350 300 250 200 150

Albania =100

100 50 0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: Instat & Authors calculations

The second qark with the highest density of population in Albania is Durrës with 363.9 inhabitants per km2, followed by Fier with 165.3 inhabitants per km2. The lowest levels of population density and below the national average are recorded in the qarks of Gjirokastër (24.4 inhabitants per km2), Kukës (35.4 inhabitants per km2) and Dibër (51.9 inhabitants per km2). The same patter of extreme divergence is noticed among development regions with Region 2 having about 244.7 inhabitants per km2 and Region 1 having 57.6. Regions 3 and 4 stand on very similar levels (around 75 inhabitants per km2). Table 178. Population density by development regions (inhabitants per km2) Region 1

Region 2

Region 3

Region 4

2001

69.6

206.0

94.1

91.9

106.6

2002

68.7

209.8

92.7

91.0

106.3

2003

67.8

212.8

91.2

90.0

105.9

2004

67.1

215.8

89.8

88.9

105.5

2005

66.3

218.7

88.2

87.7

105.0

2006

65.4

221.6

86.7

86.3

104.5

2007

64.3

224.2

84.9

84.8

103.7

2008

63.2

226.6

83.2

83.3

102.9

2009

62.0

229.1

81.4

81.8

102.1

2010

61.0

232.0

80.0

80.2

101.5

2011

60.2

235.3

78.9

78.6

101.1

2012

59.5

239.0

78.0

77.2

101.0

2013

59.1

240.4

77.5

76.8

100.8

2014

59.0

240.1

77.4

76.7

100.7

2015

58.3

242.5

76.7

76.2

100.6

200

Albania

2016

57.6

244.7

75.8

75.7

100.4

Source: Instat & Authors calculations

Figure 122. Index of population density by development regions 250

2001

2006

2011

2016

200

150

Albania =100

100 50 0 Region 1

Region 2

Region 3

Region 4

Source: Instat & Authors calculations

The aforementioned data (both at qarks and development regions level) confirms the huge population movement from mountainous areas to coastal and central areas (especially the area of Tirana and Durrës, or Region 2). The rapid and unidirectional concentration of population in both of qarks/region entails both positive and negative aspects. In the recipient areas, the negative side of population shifts, was materialized in higher pressure on infrastructure, lack of sufficient public services, higher environmental pollution etc. The origin qarks/regions have experienced a depopulation of their territories, loss of labor force, lower efficiency in providing public services and low stimulus or demotivation for investments and entrepreneurship. On the benefit side, according to the Urban Sector Review (2007), the spatial structure that was established under the central planning system prior to 1990, has been naturally corrected by the demographic movement as an adjustment to the market economy: “The swell of migration, seemingly chaotic and spontaneous, has reflected Albanians natural and practical responses to the new geography of opportunities”. Though, rapid urbanization and population growth in the qarks of Tiranë and Durrës, very positive for the economic agglomeration, is a common market phenomenon. Preventing it would be costly and most probably ineffective (ISD Regional Disparities Analysis, 2010). Demographic changes in Albania will bring about considerable changes for the next decade as foreseen by Instat population projections for 2011-2031. “By 2027, it is forecasted a decline in the number of births and natural increase of population will be equal to 0, thus births will be equal to deaths. Another factor to be considered in population dynamics is the migration rate, where Albania continues and is projected to continue to experience internal and external

201

population flows. At some extend outward flows will be counterbalanced by inward flows of migrations as suggested by population projections. The aging process is looming due to birth rate decline and higher life expectancy coupled by migration flows entailing especially young population. Population projections at qark level are based on the medium scenario of projections at national level (medium fertility, medium mortality and medium international migration according to Instat 2015)” (Instat 2015). Table 179. Population projections at qark level (number) Berat Dibër Durrës Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

2016 138,625 129,434 275,027 290,680 308,070 70,532 224,872 80,635 131,871 213,992 833,088 192,180 2,888,996

2021 129,354 116,812 278,305 276,326 293,223 64,136 217,996 73,423 125,959 204,898 888,786 194,093 2,863,311

2026 121,017 105,741 279,954 263,059 279,070 58,478 210,114 67,220 120,986 196,915 932,349 192,666 2,827,567

2031 113,370 95,680 279,796 250,275 265,633 53,508 201,976 61,341 116,345 188,816 965,108 190,461 2,782,309

Source: Instat

Table 180. Population projections at development regions level (number) Region 1 Region 2 Region 3 Region 4 Albania

2016 426,498 1,237,549 654,177 570,782 2,889,006

2021 404,280 1,283,903 623,676 551,452 2,863,311

2026 385,121 1,318,044 594,190 530,214 2,827,569

2031 366,502 1,340,584 565,621 509,602 2,782,309

Source: Instat

The data on urban and rural population show that, regardless “positive” change (urban population increasing steadily over time, from 42.2% in 2001 to 52.4 in 2010 and about 58.0% in 2016), Albania still presents the patterns of a rural country. The highest urbanization ratio (the ration between urban populations versus total population) at the national level was recorded in 2016.

202

Table 181. Urban population per qark and total Albania (in %) Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Albania

2001

39.9

20.0

54.3

34.5

32.4

39.1

36.6

24.6

31.0

37.4

63.8

53.9

42.2

2002

40.4

20.7

56.3

35.1

33.1

40.0

37.1

25.7

32.8

38.4

64.5

55.1

43.4

2003

40.8

21.1

58.4

35.8

33.8

40.7

37.5

26.4

34.8

39.1

65.4

56.0

44.5

2004

41.2

21.5

60.7

36.2

34.5

41.6

37.8

27.1

36.9

39.6

66.3

57.0

45.6

2005

41.6

22.0

63.0

36.8

35.3

42.4

38.1

27.8

39.0

40.2

67.1

58.1

46.7

2006

42.1

22.5

65.0

37.3

36.1

43.4

38.4

28.6

41.3

40.7

68.0

59.1

47.8

2007

42.6

23.1

67.2

37.8

36.8

44.4

38.7

29.5

43.8

41.4

68.7

60.2

49.0

2008

43.1

23.7

69.4

38.3

37.6

45.5

38.9

30.4

46.3

42.1

69.5

61.3

50.2

2009

43.6

24.3

71.4

38.7

38.3

46.5

39.1

31.4

48.9

42.7

70.2

62.4

51.3

2010

44.0

24.9

73.4

39.0

38.9

47.7

39.2

32.4

51.5

43.1

70.9

63.7

52.4

2011

44.1

25.3

75.0

39.0

39.5

49.1

39.3

33.2

53.9

43.7

71.6

65.2

53.4

2012

44.0

25.7

76.5

38.8

40.0

50.5

39.3

33.8

56.2

44.2

72.1

66.6

54.3

2013

44.0

26.2

79.8

39.1

40.6

50.8

39.4

34.8

59.1

44.7

74.4

67.8

55.8

2014

43.4

26.1

83.3

39.0

40.8

50.2

39.2

35.1

61.8

44.9

77.3

69.0

57.0

2015

44.2

26.5

83.1

39.3

41.2

51.3

39.6

35.6

62.5

45.6

76.2

69.0

57.2

2016

45.6

27.3

83.3

40.0

42.1

53.2

40.5

36.6

63.8

46.7

76.0

69.8

58.0

Source: Instat & Authors calculations

203

In terms of urbanization, there is a significant differentiation between qarks, varying from 83.3% in the qark of Durrës to 27.3% in the qark of Dibër. The most urbanized qarks according Instat population data for 2016 are Durrës (83.3%), Tiranë (76.0%), Vlorë (69.8%), and Lezhë (63.8%). The lowest urbanization level is noted in Dibër (27.3%), Kukës (36.6%), and Elbasan (40.0%). Table 182. Index of urban population per qark and total Albania Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Albania

2001

128

151

128

100

2002

130

149

127

100

2003

131

147

126

100

2004

133

145

125

100

2005

135

144

124

100

2006

136

142

124

100

2007

137

140

123

100

2008

138

139

122

100

2009

139

137

121

100

2010

140

135

122

100

2011

140

101

134

122

100

2012

141

103

133

123

100

2013

143

106

133

122

100

2014

146

108

135

121

100

2015

145

109

133

121

100

2016

144

110

131

120

100

Source: Instat & Authors calculations

The indexation of urbanization data shows that the two most urbanised qarks have different tendencies in time. Thus, the urbanization ratio of Durrës has increased during 2001-2016 compared to the national average, while the one for Tirana has decreased. Nevertheless, both qarks stand above the national average.

Figure 123. Index of urban population per qark

204

200

2001

2006

2011

2016

180 160 140 120 100

Albania =100

80 60 40 20 0 Berat

Dibër

Durrës

Elbasan

Fier

Gjirokastër

Korçë

Kukës

Lezhë

Shkodër

Tiranë

Vlorë

Source: Instat & Authors calculations

It is also interesting to notice that though all qarks have higher urban population rates in 2016 compared to those of 2016, for some of them the difference with the national average has increased over time (Tiranë, Berat, Korçë, Vlorë). This means that the following phenomena have happened: urban population has increased in all qarks and this has contributed to the increased urban population of Albania. Some qarks have had higher rates than others and as a result the differences in urban population among qarks have also increased during 20012016. Thus disparities among qarks in terms of urban population have increased together with the national average, but not at the same pace. The same pattern is visible for the 4 development regions as well. The fact that the difference of urban population rate from the national average is increasing with time, though urbanization process is in a positive trend, means that the urbanization rate is slowing down and the related qark or region is displaying some “ruralisation” features. Table 183. Urban population per region and total Albania (in %) Region 1

Region 2

Region 3

Region 4

2001

32.8

53.5

36.4

39.5

42.2

2002

34.0

54.8

37.0

40.5

43.4

2003

35.2

56.3

37.5

41.3

44.5

2004

36.2

57.6

37.9

42.2

45.6

2005

37.3

59.1

38.4

43.1

46.7

2006

38.4

60.4

38.8

44.1

47.8

2007

39.7

61.7

39.2

45.0

49.0

2008

41.0

63.1

39.6

46.0

50.2

2009

42.3

64.4

39.9

46.9

51.3

205

Albania

2010

43.6

65.6

40.2

47.9

52.4

2011

44.8

66.7

40.2

48.9

53.4

2012

45.9

67.7

40.1

49.8

54.3

2013

47.3

70.1

40.3

50.6

55.8

2014

48.2

72.8

40.0

51.0

57.0

2015

48.9

72.2

40.4

51.4

57.2

2016

50.1

72.4

41.4

52.4

58.0

Source: Instat & Authors calculations

The regional analysis shows again that Region 2 has the highest percentage of urban population and this trend has kept unchanged in time. Region 3 has the lowest rate because all three composing qarks (Elbasan, Berat and Korçë) have not exceed 45% in 15 years. Region 1 is just at the value of 50% because of the contrasting values between Lezhë in one side (over 63%) and Kukës and Shkodër on the other (below 47%). Table 184. Index of urban population per region Region 1

Region 2

Region 3

Region 4

2001

77.6

126.6

86.3

93.5

100

2002

78.4

126.4

85.3

93.2

100

2003

79.0

126.4

84.2

92.8

100

2004

79.4

126.5

83.2

92.5

100

2005

79.8

126.4

82.1

92.3

100

2006

80.4

126.2

81.0

92.1

100

2007

81.0

126.0

80.0

91.8

100

2008

81.7

125.8

78.9

91.6

100

2009

82.5

125.5

77.8

91.4

100

2010

83.1

125.2

76.6

91.3

100

2011

83.8

124.9

75.3

91.5

100

2012

84.5

124.6

73.9

91.7

100

2013

84.8

125.7

72.2

90.7

100

2014

84.6

127.5

70.1

89.4

100

2015

85.5

126.2

70.7

89.9

100

2016

86.4

124.7

71.3

90.4

100

Source: Instat & Authors calculations

206

Albania

Figure 124. Index of urban population per region 140

2001

2006

2011

2016

120 100

Albania =100

80 60 40

20 0 Region 1

Region 2

Region 3

Region 4

Source: Instat & Authors calculations

Population dynamics are analysed also by using population data broken down by age and gender. The population pyramid is an interesting tool for this purpose. The population is distributed along the horizontal axis, with males shown on the left and females on the right. The youngest age groups are presented at the bottom of the pyramid and the oldest at the top. The shape of the population pyramid gradually evolves over time based on fertility, mortality, and international migration trends. Figure 125. Population pyramid for 2016 85+ 80-‐84 75-‐79 70-‐74 65-‐69 60-‐64 55-‐59 50-‐54 45-‐49 40-‐44 35-‐39 30-‐34 25-‐29 20-‐24 15-‐19 10-‐14 5-‐9 0-‐4

MALE

Population (in thousands)

140

120

100

Source: Instat & Authors calculations

AGE 0 GROUP 0

Thousands

FEMALE

Population (in thousands)

100

120

Thousands

Albania has yet a relatively young population according to the CIA Factbook 2016. The median age is about 32 years old, for males the median age is 30.8 207

years old and for females 33.3 years old (the data refer to 2015). Compared to the median age of EU-28 population, about 42.2 years (Eurostat, 2014), Albania still enjoyes young a population On average, based on INSTAT data for 2016, the population in the age group of 0-14 years is 17.7%, population; the age group 15-24 constitutes about 15.3%, population; the age group 25-64 constitutes 54.2% and the population over 65 years old represents 12.9% of the total population. Figure 126. Population structure according to main age groups (in %) 100

0-‐14

15-‐24

25-‐64

65…

90 80 70 60 50 40

30 20 10 0

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: Instat & Authors calculations

The young population group (those comprised in the group 0-14 years old) is 1.4 higher than the elderly one (those comprised in the group +65 years old). This is the historical lowest value for this indicator, which registered the value of 4 in 2001 and might be used as a signal for Albania moving towards population ageing and thus redirecting public policies in terms of health and social services. Figure 127. Age dependency ratio (rhs) and young/old ratio (lhs)

208

4.5

Age dependency

4.0

Young/Old

60 50

3.5

3.0

2.5

2.0 1.5

1.0

0.5 0.0

0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source: Instat & Authors calculations

Age dependency ratios are usually used to study the level of support given to younger/older persons by the working age population. The total age dependency ratio (comprising the population in the age groups of 0-14 and +65 years old) has followed a declining trend over time, reaching the lowest level in 2016 (43.9%). The current age structure of the population might have important implication, since young population is an essential asset. It determines some relative comparative advantages for the future in terms of labour force availability and pension system refining. It is important to invest also on social policies that do not favour ageing of the population, in order to avoid facing the social-economic challenges that many of EU countries are coping with currently. On the other hand, the availability of young population requires more public investment in education and new jobs being created. If not the case, the quality of the workforce may decrease, thus impacting the overall competitiveness of the country and a future brain drain process is to be expected/continued. The latest data available in population by age groups and qarks relate to the year 2014. Table 185. Average population by age groups, 2014 Berat Dibër Durrës Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë

0-14 27,568 26,815 50,571 58,156 60,790 13,859 43,326 16,617 25,826 42,057 146,791 34,097

Total 15-64 98,660 93,644 191,604 206,819 216,745 50,090 154,123 58,744 94,885 150,841 551,046 126,540

65+ 17,660 16,940 33,523 37,137 38,871 8,929 27,667 10,575 16,803 26,981 96,821 22,326

0-14 14,308 13,943 26,958 30,098 31,624 7,255 22,499 8,597 13,510 21,515 76,514 17,953

209

Males 15-64 50,164 48,437 96,642 105,291 110,726 25,529 78,687 29,989 47,861 75,486 273,249 63,858

65+ 8,530 8,289 16,204 17,941 18,850 4,329 13,407 5,115 8,085 12,831 45,956 10,761

0-14 13,260 12,872 23,614 28,058 29,166 6,605 20,827 8,026 12,316 20,542 70,278 16,144

Females 15-64 48,495 45,207 94,962 101,528 106,019 24,561 75,435 28,785 47,024 75,354 277,797 62,682

65+ 9,130 8,650 17,319 19,196 20,021 4,600 14,261 5,460 8,719 14,150 50,865 11,565

Albania

546,473

1,993,770

354,232

284,766

1,005,921

170,298

261,708

987,850

183,925

Source: Instat & Authors calculations

The distribution of population by age groups in the 12 qarks follows almost the same patterns as the distribution of population of Albania.

Figure 128. Average population by age groups at qark level (in %) 0-‐14

15-‐64

65+

Albania Vlorë Tiranë Shkodër Lezhë Kukës Korçë Gjirokastër Fier Elbasan Durrës Dibër Berat

100

Source: Instat & Authors calculations

Seemingly to age structure, it is possible to observe the patterns of male/female distribution among qarks and by age group. Figure 129. Average population by age groups and gender at qark level (in %)

210

0-‐14

MALES

15-‐64

65+

0-‐14

FEMALES

Albania Vlorë Tiranë Shkodër Lezhë Kukës Korçë Gjirokastër Fier Elbasan Durrës Dibër Berat

15-‐64

65+

Albania Vlorë Tiranë Shkodër Lezhë Kukës Korçë Gjirokastër Fier Elbasan Durrës Dibër Berat 0

100

Source: Instat & Authors calculations

The reclassification of data on population by age groups into development regions do not show for high differentiation among the regions and between the regions and the national average. Table 186. Average population by age groups and development regions (number)

Region 1 Region 2 Region 3 Region 4 Albania

0-14 84,500 224,177 129,050 108,746 546,473

Total 15-64 304,470 836,294 459,602 393,375 1,993,741

65+ 54,359 147,284 82,464 70,126 354,233

0-14 43,622 117,415 66,905 56,832 284,774

Male 15-64 153,336 418,328 234,142 200,113 1,005,919

65+ 26,031 70,449 39,878 33,940 170,298

0-14 40,884 106,764 62,145 51,915 261,708

Female 15-64 151,163 417,966 225,458 193,262 987,849

Source: Instat & Authors calculations

Figure 130. Average population by age groups and development regions level (in %)

0-‐14

15-‐64

65+

Albania

Region 4 Region 3 Region 2 Region 1 0

211

100

65+ 28,329 76,834 42,587 36,186 183,936

Source: Instat & Authors calculations

The same patterns are present in population breakdown by gender. All four regions present almost the same characteristics and they follow the national average patterns. Figure 131. Average population by age groups and gender at development regions (in %)

Males

0-‐14

15-‐64

Fenales

65+

Albania

Region 4

Region 3

Region 2

Region 1

Region 1 0

100

0-‐14

15-‐64

65+

Source: Instat & Authors calculations

Structural changes in the population of Albania may be further analysed using the age dependency ratio calculated as the ratio between the youngsters aged 0-14 years and elderly over 65 years, against the total working age population (those 15-64 years). In 2014, the age dependency ratio in Albania registered 45.2% (with regard to population groups 0-14 and +65 years old). The highest level of age dependency ratio is found in Dibër (46.7%), Kukës (46.3%), Korçë and Elbasan (46.5%), Fier (46.0%). The lowest age dependency ratio is registered in Durrës and Tiranë, both standing below the national average.

212

100

Figure 132. Age dependency ratio at qark level 2014 (in %) Vlorë Tiranë Shkodër Lezhë Kukës Korçë Gjirokastër Fier Elbasan Durrës Dibër Berat

Albania = 45.2

40.0

42.5

45.0

47.5

Source: Instat & Authors calculations

Age dependency disparities are visibly higher in the case of female than male population. The highest level of female age dependency ratio is registered in the qark of Dibër in 2014 (about 47.6%) and the lowest ones are recorded in Durrës (43.1%) and Tiranë (43.6%). Age dependency ratios for males do not present these differences and are close to the national average (with somehow the exception of Durrës). The situation is similar in the case of development regions. For female population, the age dependency ratio reaches its highest level in Region 3 (46.5%) and the lowest one in Region 2 (43.9%). Figure 133. Age dependency level by gender, 2014 (in %) Vlorë Tiranë Shkodër Lezhë Kukës Korçë Gjirokastër Fier Elbasan Durrës Dibër Berat

Males = 45.2

40.0

42.5

45.0

Vlorë Tiranë Shkodër Lezhë Kukës Korçë Gjirokastër Fier Elbasan Durrës Dibër Berat

47.5

Females = 45.1

40.0

42.5

45.0

47.5

Source: Instat & Authors calculations

Age dependency at regional levels shows for different patterns among the development regions. Region 2 has an age dependency ratio of 44.4% and below the national value. Region 3 has an age dependency ratio of 46.0% and stands above the national average. Disparities are more moderate than at qark level. 213

Figure 134. Age dependency ratio at regions level 2014 (in %) Albania = 45.2

Region 4

Region 3

Region 2

Region 1 40.0

42.5

45.0

47.5

Source: Instat & Authors calculations

Figure 135. Age dependency level by gender, 2014 (in %) Male = 45.2

Region 4

Region 3

Region 2

Region 1

Region 1 40.0

42.5

45.0

Female = 45.1

Region 4

47.5

40.0

42.5

45.0

47.5

Source: Instat & Authors calculations

Land use The analysis of the land use has a double interest. On one side is helpful to understand correlation with other indicators, especially the economic growth ones; on the other, it provides a picture of the future potential and the risks (especially environmental ones) that may be posed by the population and national/local development strategies on this potential. Based on Instat data, the land use by qark and development region comprises 3 categories: agricultural; forests, pastures, meadows; other uses. The following tables make a distinction between agriculture and forests and other. Soil sealing

214

on the other hand (based on Corine 2006 LUCL for Albania and buildings and infrastructures footprint) provides an idea on the urban land. Being mostly a mountainous country, Albania has a low share of agricultural land versus other typologies. Thus, agricultural land accounts for about 24.2% of total land and the rest of 75.8% is somehow distributed among forestry pasture, meadow and other land. Table 187. Land use by qarks (in %) 2009

Berat Dibër Durrës Elbasan Fier Gjirokastër Korçë Kukës Lezhë Shkodër Tiranë Vlorë Albania

Agricul ture 29.4 16.4 53.2 22.2 64.6 15.6 24.5 10.5 21.6 14.3 34.5 23.2 24.2

Forest, pasture, meadow, other 70.6 83.6 46.8 77.8 36.0 84.4 75.5 89.5 78.4 85.7 65.5 76.8 75.8

2010 Agricul ture land 29.4 16.4 53.2 22.2 64.6 15.6 24.5 10.5 21.6 14.3 34.5 23.2 24.2

2011

Forest, pasture, meadow, other 70.6 83.6 46.8 77.8 35.4 84.4 75.5 89.5 78.4 85.7 65.5 76.8 75.8

Agricu lture 29.4 16.4 53.2 22.2 64.6 15.6 24.5 10.5 21.6 14.3 34.5 23.2 24.2

Forest, pasture, meadow , other 70.6 83.6 46.8 77.8 35.4 84.4 75.5 89.5 78.4 85.7 65.5 76.8 75.8

2012

Agricu lture 29.4 16.5 53.9 22.3 64.6 15.6 24.5 10.5 21.2 14.3 34.5 23.2 24.2

Forest, pasture, meadow , other 70.6 83.5 47.4 77.7 35.4 84.4 75.5 89.5 78.8 86.0 66.1 76.8 75.8

2013

Agricu lture 29.4 16.5 53.9 22.3 64.6 15.6 24.5 10.5 21.2 14.3 34.5 23.2 24.2

Source: Instat & Authors calculations

The highest share of agricultural land is found in the qark of Fier (about 64.6%) followed by Durrës (53.9%). The lowest value of agricultural land is found in the qark of Kukës, where about 89.5% of total land is classified under forestry pasture, meadow and other land.

215

Forest, pasture, meadow , other 70.6 83.5 47.4 77.7 35.4 84.4 75.5 89.5 78.8 86.0 66.1 76.8 75.8

Figure 136. Land use by qarks (in %) Agricultural land

Forestry, pasture, meadow and other

Vlore Tirane Shkod… Lezhe Kukes

Korce Gjirok… Fier Elbasan Durres

Diber Berat

2009

2011

2010

2012

2013

Source: Instat & Authors calculations

At the regional level, the highest level of agricultural land is present in Region 4 (about 30.7% and due to Fier) followed by Region 2 (with about 28.4% and due to Durrës). The lowest level of agricultural land is present in Region 1 (only 14.6%, due to the very mountainous character of the territory). Table 188. Land use by regions (in %) 2009

2010

2011

Agricul ture

Forest, pasture, meadow, other

Agricu lture land

Forest, pasture, meadow, other

Agric ultur e

Forest, pasture, meadow, other

Region 1

14.7

85.3

14.7

85.3

14.7

Region 2

28.3

71.7

28.3

71.7

Region 3

24.7

75.3

24.7

Region 4

30.7

69.4

Albania

24.2

75.8

2012

2013

Agric ulture

Forest, pasture, meadow, other

Agric ultur e

Forest, pasture, meadow, other

85.3

14.6

85.5

14.6

85.5

28.3

71.7

28.4

72.0

28.4

72.0

75.3

24.7

75.3

24.7

75.3

24.7

75.3

30.7

69.3

30.7

69.3

30.7

69.3

30.7

69.3

24.2

75.8

24.2

75.8

24.3

75.9

24.3

75.9

Source: Instat & Authors calculations

Forests, pasture, meadow and other land occupy the largest share in Region 1, accounting for about more than 85% of total land. This analysis is further completed with the one on the altitude above sea level, presented in the following chapter of regional profiling.

216

Figure 137. Land use by regions (in %) Agricultural land

Forestry, pasture, meadow and other

Albania

Region 4

Region 3

Region 2

Region 1

2009

2010

2011

2012

2013

Source: Instat & Authors calculations

As mentioned above, soil sealing could help in understating patterns of urbanization distribution on the territory, from a land use perspective. Based on the study for the designation of development regions29, there are no appropriate figures to calculate the soil sealing in Albania. However, an approximation is made following two methodologies: i) the area covered by buildings (the footprint) and roads; ii) the artificial land cover from Corine 2006 for Albania. The first method reveals that soil sealing (m2 per capita) is higher in the north and in Gjirokastra than it is in the most urbanized qarks. This can be interpreted as a result of the very low population figures in these qarks compared to the center ones, and the (still) low investments in infrastructure in the center qarks compared to the population needs. The second methodology shows that Kukës and Dibër have the lowest figures, while all 5 coastal Qark (excluding Tirana) and Gjirokastra have the highest soil sealing figures. This shows that though (as in the 1st method) the infrastructure investments may be low, the fragmentation of the natural and agriculture land by the settlements is very high. The second methodology considers as “sealed” not only footprints and infrastructure, but also the area among buildings, in all settlements, including the rural ones.

217

218

Figure 138. Land cover by municipality (in %)

Source: Corine 2006 & Co-PLAN`s calculations

219

Figure 139. Soil sealing per capita based on Corine LULC 2006 (in %)

Source: Corine 2006 & Co-PLAN`s calculations

Building permits The construction sector represented one of the most important sectors of the economy so far in Albania. In the aftermath of the global financial and economic

220

crisis, including the legislative changes that have happened to the planning and land development system during the last 7 years, the construction sector (for residential purposes) has slowed down significantly (as a share of total GDP). A proxy indicator to assess the activity of this sector is the number of construction permits issued by the competent institutions in the country. During the last 5 years a total of 4,266 permits for new buildings have been approved. Still, most of construction permits have been issued for dwellings purposes, about 2,842 or about 67.3% of total permits issued during 2010-2014. Table 189. Building permits issued for new buildings by qarks 2010 Albania 1,845 Berat 37 Dibër 35 Durres 253 Elbasan 162 Gjirokaster 54 Fier 248 Korce 133 Kukes 53 Lezhe 105 Shkoder 95 Tirane 313 Vlore 357 Source: Instat

2011 2012 2013 Total new buildings (no) 1,604 147 360 42 0 5 13 0 0 328 9 91 150 24 15 68 3 1 165 0 22 74 0 4 21 2 35 126 0 0 63 2 70 266 46 87 288 61 30

2014

2010

270 3 0 10 6 3 33 0 5 6 26 110 68

1,283 11 18 177 112 31 135 104 16 50 61 222 346

2011 2012 2013 Dwellings (no) 1,059 101 203 22 0 1 8 0 0 228 7 32 93 13 10 49 2 1 97 0 14 64 0 3 7 1 8 76 0 0 32 1 59 128 25 50 255 52 25

2014 196 3 0 1 4 3 14 0 1 2 15 90 63

The distribution of construction permits by qarks earmarks a concentration in the qark of Tirana with about 822 new building permits issued (representing about 19.5% of total permits issued over the five years period). The qark of Vlorë also accounts for about 19.0% of total permits issued followed by the qark of Durrës with 16.4% of the total permits. In all the three qarks, most of the new building permissions were delivered for dwelling purposes. The data at regional level show that the largest number of new building permits is delivered in Region 2 (about 1,561 permits during 5 years) out of which 63.2% for dwelling purposes. Region 4 follows with about 1,401 out of which about 1,087 for dwellings. Region 1 and region 3 have approved respectively 609 and 655 building permits over the considered period. Table 190. Building permits issued for new buildings by regions 2010 Region 1 Region 2 Region 3 Region 4 Albania

253 601 332 659 1,845

2011 2012 2013 Total new buildings (no) 210 4 105 607 55 178 266 24 24 521 64 53 1,604 147 360

2014

2010

2011

37 120 9 104 270

127 417 227 512 1,283

115 364 179 401 1,059

221

2012 2013 Dwellings (no) 2 67 32 82 13 14 54 40 101 203

2014 18 91 7 80 196

Source: Instat & Authors calculations

2.2.5 Accessibility and Polycentric Development30 Polycentrism Polycentrism is an objective of the European Union territorial development and is profoundly rooted in key policy documents that aim at fostering balanced and cohesive development. Polycentrism is initially presented as an objective of the European Spatial Development Perspective (ESDP), assuming that “polycentric urban systems are seen as more efficient, more sustainable and more territorially balanced than both monocentricity (all activities concentrated in one center) and dispersion (all activities equally distributed over space)”. Thus, (according ESPON 1.1.1) a polycentric urban/regional/national system would ensure: (i) efficiency – large centers can exploit economies of scale, but suffer negative effects of over-agglomeration, while dispersed centers are too small to support efficiency; (ii) cohesion – spatial polarization and dispersal stand as two extremes of a relationship between competitiveness and segregation, in ones side and equality and lack of social mobility opportunities for citizens; (iii) environment – the use of energy for services and transport in a highly polarized or dispersed system are bound by advantages and several disadvantages that do not support one, or the other. At the national level, polycentric development is mainly about encouraging regional specialization and the division of labor between urban regions, and improving access to urban services across the national territory. Co-PLAN’s analysis of the polycentrism features and opportunities in Albania is based on the ESPON project 1.1.1 “Potential for a polycentric development in Europe” methodology. Following this methodology, a first step was that of defining the geographical polygons of the analysis, namely the Functional Urban Areas, the 45 minutes isochrones (from FUA centers), the Potential Urban Strategic Horizons (PUSH) and the Potential Integration Areas (PIA). The indicators for each area are built and analysed31. Indicators for FUAs show the features of the morphological and functional polycentrism (seven indicators/indexes for each of them)32.

222

Figure 140. The 17 Functional Urban Areas of Albania

Source: Instat and Co-PLAN 2015

The morphological polycentricity index is composed of the size, location and connectivity indexes, each with an equal weight. Table 191. The morphological polycentricity indexes in Albania and Europe â&#x20AC;&#x201C; 27 Country

No.FUAs

Size Index

Location Index

Connectivity Index

Polycentricity Index

Albania

97.0

28.0

72.2

65.1

Austria

63.3

39.3

77.1

57.4

223

Belgium

86.6

60.5

67.1

70.3

Bulgaria

77.1

80.2

52.6

68.5

Switzerland

82.9

57.9

62.3

66.6

75.7

100.0

89.1

87.3

79.2

51.7

63.5

63.6

Germany

186

86.4

56.1

75.2

71.2

Denmark

71.6

90.9

59.3

72.5

Estonia

64.7

94.8

26.4

54.3

Cyprus Czech Republic

Spain

105

81.6

30.7

62.3

53.6

Finland

73.9

32.1

50.6

49.1

France

211

66.4

77.3

60.9

67.6

Greece

36.6

95.9

73.6

63.4

Hungary

61.6

57.7

50.4

56.1

Ireland Italy Lithuania Latvia

63.1

100.0

70.6

76.1

253

87.5

52.0

65.0

66.3

76.5

83.5

18.5

48.9

35.5

97.0

52.4

56.3

Netherlands

86.0

60.2

73.8

72.2

Norway

75.1

22.3

52.7

44.4

Poland

84.1

83.1

58.7

74.0

Portugal

49.0

55.8

73.3

58.3

Romania

78.3

80.9

46.6

66.3

Sweden

80.4

37.3

69.0

58.9

Slovenia

76.0

91.6

72.0

79.1

Slovakia

83.5

77.0

41.6

64.2

United Kingdom

146

77.3

55.5

70.6

66.8

ESPON Space

1588

88.5

57.9

56.2

Source: ESPON 1.1.1, 2005 and Co-PLANâ&#x20AC;&#x2122;s calculations for Albania

The analysis of the size index shows that Albania is extremely monocentric, with 26% of the national population and 36% of the countryâ&#x20AC;&#x2122;s GDP is concentrated in the Functional Urban Area of Tirana, and respective primacy rates of 1.3 and 1.933.

224

Figure 141. Regression lines for the population of FUAs, with and without Tirana

Source: INSTAT, Census 2011 and Co-PLANâ&#x20AC;&#x2122;s calculations.

225

Figure 142. Regression lines of FUAs GDP for 2012, with and without Tirana

Source: INSTAT, Census 2011 and Co-PLANâ&#x20AC;&#x2122;s calculations.

The picture of policentricity is a reversed one with regard to the location index, if compared to size index. The location index assumes that a policentric urban system is one, where the main urban centers are equally spaced from each-other and not clustered in one small part of the country. Because of historical reasons and especially as a result of the national policy for a uniform spatial distribution of the urban centers during 1950s-1980s, the location index of Albania shows for a moderate policentrism. Tecnically speaking, the location index (in this case) is the Gini coefficient of inequality of the size of the thiessen polygons of the 17 FUAs centers. The closer the Gini is to 0, the more equal is the distribution of the sizes of the areas of the 17 FUAs and the more polycentric a region/country is. The map of the thiessen polygons and the Gini coeficient (included in the Lorenz

226

curve of the polygonsâ&#x20AC;&#x2122; sizes values) show that the centres are rather evenly located over the territory. However, this should not be interpreted as an indication of polycentrism, but as a good opportunity for Albania to develop in a polycentric manner due to favourable locations of the urban centers. A uniform distribution of cities across a territory is more appropriate for a polycentric urban system than a highly polarized one. Figure 143. Thiessen polygons of the 17 FUAs

Source: Co-PLAN 2015

227

Figure 144. The Lorenz curve of the FUAs size and Gini coefficient of inequality

Source: Co-PLAN, 2015

The third index is the connectivity34 one, which assumes that there should be e functional division of labor between cities. The latter implies that the channels of interaction between urban centers must be short and efficient. The connectivity index of Albania is 72.2 and shows for week polycentricity patterns. The dominant FUA is (interestingly) that of Laç, which stands around 30% above the average. The FUA of Saranda has the lowest accessibility, more than 40% below the average. Laç is the second largest FUA in terms of population and is better located than Tirana in terms of time connections with the largest FUAs in the country. On the other hand, the accessibility of Laç to Tirana is higher than the other way around, because Tirana has a larger population. This argument reinforces the fact that the Tirana remains dominant and forces the overall system to be polarized rather than polycentric. Last, but not least, the FUAs of Durrës, Tiranë, Laç and Lezhë are the ones to have overlapping areas of influence among each-other and this shows for their higher potential of creating a polycentric system, getting thus polarized more and more from the rest of the country. 228

Figure 145. Potential accessibility of 17 FUAs

Source: INSTAT Census 2011, Co-PLAN 2015, Google map

Figure 146. Regression line and slope of potential accessibility

Source: INSTAT Census 2011, Co-PLAN 2015, Google map

229

Figure 147. The Lorenz curve of potential accessibility and the Gini coefficient

Source: INSTAT Census 2011, Co-PLAN 2015, Google map

In conclusion to this section of the polycentricity analysis, Albania is a rather polarized country in overall and it is extremely polarized in terms of economic potential. This has a good correlation with the findings of the analysis in the previous sections of this chapter. Still, because of the low values of the location index, it has a good potential to become polycentric. However, it will fail to do so, if the economic potential will remain locked in Tirana and in the Durrës – Tirana – Laç triangle. The latter will contribute to further increase of domestic regional disparities and further weakening of the territorial cohesion patterns. A next step in the polycentric system/potential analysis is the one of the functional specialization (and as a result relations between) of the regions (FUAs). Functional specialization is important as it ensures the diversity among cities, while also making sure that there is integration, synergies and cooperation. The mapping of the functional specialization of the FUAs in Albania is faced with data limitations. The analysis conducted so far (within the limitations) for the following dimensions reveals that: 1. Decision-making in the public sector: All of the 17 urban cores are municipalities – local governments that function within a decentralization policy and legislation. 12 out of the 17 are Qark centers (the 2nd tier of local governance in Albania); all 17 urban cores used to be district centers (previous units and denominations for local governance); in some of the

230

FUAs there are more than one district center. Because of the last three classifications, within the territory of these FUAs are located several regional branches of the national government / line ministries. So, from a decision-making in public sector point of view, the FUAs do not differ in specialization. Decision-making in the private sector: The figures are given on the location of the 50 biggest companies in Albania. 28 out of them are located in Tirana (municipality) and 14 in Durrës (municipality). The large companies do influence the development of an urban system, and the strength of the latter relies also on its current attractiveness to private investors and companies. In the case of Albania, the current location shows that decision-making in the private sector remains highly concentrated in the Tirana-Durrës metropolitan area. Population: the number of inhabitants represents the level of economic activities in a region, both for intensity and diversity. In Albania, at least 1/3 of the population is located in the Tirana-Durrës metropolitan area, thus in two overlapping FUAs, and so are most of the services and activities provided to/delivered from the population. Tourism: this sector is an indicator for the attractiveness (current or potential) of the regions. Albania has an enormous touristic potential in terms of natural resources to offer. However, the development of infrastructures and accessibility, including the concentration of the private investments in the Tirana-Durrës metropolitan area, are correlated with the location of the hotels. Thus, 42 of the hotels (+3 stars) are located in the metropolitan area. Only 11% of the hotels are located in the North (from Kruja and above). There is also a concentration of hotels along the western coast cities/FUAs with 70% of the hotels. From a geographical point of view, it is clear that there is no correlation between the location of hotels (investments and services) and the touristic attractions (natural sites and leisure activities). Industry: The strongest FUAs in terms of the gross value added in the industry sector are Elbasan, Fier, Shkoder and Durrës. This is certainly are linked to the industrial activities located in these Qarks and show for a potential of further urban transformations to take place in these areas (see sections on economic growth and development above). Knowledge: For this function we have calculated the number of students attending higher education institutions. The capital/FUA of Tirana is clearly the strongest in terms of knowledge, but there is a relatively uniform distribution in some of the Qark (FUA) centers across the territory. While figures show for some balance, the quality of the institutions is not 231

necessarily uniform, and these figures include only the public universities.

232

Figure 148. Distribution of hotels / FUA

Figure 149. Population potential within 30 km radius

Figure 150. No. of students per FUA

Population Potential within 30 km

Polycentrism Analysis

Number of persons reachable from FUA centers, within 30 km of linear distance

Distribution of 3+ star hotels in Albania per FUA

Number of students attending tertiary education

MALËSI E MADHE

TROPOJË

SHKODËR

HAS FUSHË ARRËS

KUKËS

SHKODËR KUKËS

SHKODËR

PUKË

KUKËS

VAU I DEJËS

LEZHË

MIRDITË DIBËR

PESHKOPI

LEZHË

MAT

KURBIN

BULQIZË

DURRËS

DURRËSDURRËS VORË DURRËS

TIRANË

DURRËS

TIRANË

Legend

1 2

Qark border

TIRANË

TIRANE

PUSH Areas

5 ELBASAN

Population potential Population within 30 km linear distance

FIER

11 BERAT

95172

FIER

GJIROKASTËR

KORÇË

¯ Kilometers 0 5 10 20 30 40

POGRADEC

MALLAKASTËR

2233

737035

3156 9627

1210740

10092 14447

GJIROKASTËR

14829

1252360

SARANDË

312078

0 5 10

Prepared by: Co-PLAN, 2015 Source: Google Maps, own calculations

233

MALIQ

BERAT

POLIÇAN

728

149659

40 Kilometers

68170 71922 Municipality 61 Border

Prepared by: Co-PLAN Source:

SELENICË

PUSTEC

GRAMSH

ROSKOVEC PATOS

458

VLORË

100495

217601

CËRRIK

KUÇOVË

FIER

540646

PRRENJAS

BELSH

URA VAJGURORE

436

206718

VLORË

LUSHNJE

435

BERAT

ELBASAN

DIVJAKË

0 474882

167664

RROGOZHINË PEQIN

no. of students

POGRADEC

81381

Prepared by: Co-PLAN, 2015 Source: www.albania-hotel.com

Legend

LUSHNJE

351684

74482 KORÇË

Qark Border

LIBRAZHD KAVAJË

ELBASAN

FUA centers

Municipality 61 Border

KAVAJË

317117

Municipality 61 border

KAMËZ

SHIJAK

number of hotels

KLOS

KRUJË

DIBËR

Legend

KORÇË

DEVOLL

SKRAPAR

MEMALIAJ KËLCYRË KOLONJË

TEPELENË

VLORË

PËRMET HIMARË GJIROKASTËR LIBOHOVË

DELVINË DROPULL

SARANDË FINIQ

KONISPOL

¯ 0 5 10 20 30 40 Kilometers

Figure 151. Population of FUA versus PUSH

Source: INSTAT, Census 2011 and Raster cells, Co-PLAN calculations 2015

The morphological and functional analysis of polycentrism (conducted so far) is descriptive to the current situation, which could be kept alike, or changed in the future. The future changes would depend on several factors, but at least, we need to know where there could be more potential for development towards a more polycentric urban system. This ways is possible to identify potential for new functional entities and increased territorial cooperation, rather than refer only to current urban nodes/centers. The analyses for this purpose are still morphological, and as such, the results do not guarantee that cooperation will happen right where the analysis identifies the potential. However, this could be an indication to planning (spatial, development and financial) policies and instruments and future territorial cooperation and development35. The following analysis is based on Potential Urban Strategic Horizons (PUSH) and Potential Integration Areas (PIA) that derive from PUSH. In Albania, 20% of the new municipalities or 23% of the territory are not covered by any PUSH polygon at all. This is also the most mountainous area of the country. The municipalities in the middle of Albania (from Durrës and Tirana in the north to Fier and Lushnje in south) remain advantageous in overall (similarly to the FUAs situation). However, the most interesting finding is that the highest number of intersections is found for Krujë, Shijak, Peqin, Lushnje, Belsh, Cërrik, Roskovec and Ura Vajgurore. These are some of the smallest municipalities with 11% of the population of Albania and with the exception of Lushnje, are not 234

urban cores to any agglomerate or FUA. However, their location is very strategic and they are in the commuting basins of at least 5 FUAs/Urban cores. This increases the opportunity for these municipalities to be integrated in a polycentric urban system, through serious investments in infrastructure and services. If investment strategies would follow the logic of this analysis Tirana, Fier, Shkodra and Elbasan (some of the biggest FUAs and major urban cores currently) could in fact be just the corners of a future urban core for Albania. On the other hand, the above secondary or even tertiary cities do have a potential for hosting functional specialization that the current urban cores do not have, but do need to complement with their major functions and activities. As a conclusion of the polycentrism analysis so far, we notice that Albania has a monocentric spatial structure. This is strongly supported by the figures on population and GDP. It also has a good potential for developing a polycentric urban system and spatial structure, supported by the uniform location of urban centers across the territory, the potential of the secondary and tertiary urban for more development due to their advantageous location between and close to the main centers, and the diverse distribute of the specialized functions. The latter represents both, an opportunity (not every function is concentrated in Tirana) and a risk (most of the functions are located along the coastal cities) due to accessibility and geographical patterns. Making use of the potential and avoiding risks (also the increase of disparities) requires for instruments to push further the development towards the inland and eastern/more mountainous urban centers. These should be policy, planning and financial instruments. The latter should be used based on programs that aim at enhancing the development potential of the development regions that this proposal will help designating. Last, but not least, the strengthening of the polycentric system (resulting on reduced disparities, strengthening of the economic development, competitiveness and cohesion) requires also for healthy flows of cooperation between urban centers, regardless of their level in the network of the urban nodes. The information on flows of cooperation is extremely limited, but as limited as it is, it shows that most of the interactions (often donor supported or promoted by) happen in the central part of Albania and ShkodĂŤr. Thus, while natural resources may be well located across Albania, capacities and cooperation flows (needed to make uniform use of resources) are concentrated in some major urban centers, leaving the 2nd and 3rd tier weak and un-stabilized in this regard.

235

Figure 152. PIA intersections

Source: INSTAT, Census 2011, Co-PLAN calculations 2015

Accessibility of Regions The analysis of accessibility is partially considered by the polycentricity assessment and partially by the analysis of roads and transport based on Instat data. However, the analysis of regionsâ&#x20AC;&#x2122; accessibility, based on TRACC 2015 methodology, explores further the accessibility and directs better towards investments needs. Because of data limitations not all TRACC indicators are exploited. There are three types of indicators: the travel costs, the cumulated opportunities and again potential accessibility 36 . Through looking at the indicators (below) we do not simply verify (to a certain extent) the locational

236

advantage or disadvantage of the regions, but also draw a straightforward conclusion on the regions that the future transport policy should focus more and redirect most of the investments. The travel cost indicator (in this case measured as time of people living in the 61 municipalities to motorway exits) assumes that not all possible destinations are relevant for the accessibility of an area, but only a specified set. The destinations in this case are the motorway exits, assuming that once people reach the exit to a high speed road, they either enter the commuting area of main urban centers, or are able to travel to their destinations and back within the day. For this map we considered only those axes where the travel speed can remain unchanged at values above 70km/hr for more the 50% of the trip. Figure 153. Access time of people to motorways exists

Source: Co-PLAN, 2015

The map of accessing motorways exits is helpful in identifying the regions that are not accessible and have low access. It also helps understanding that

237

Albania needs a transport network investment strategy that will ensure the penetration of the motorway axes from west to east, meaning further integration into the Balkan area and better connections between the Western Europe and the eastern countries. The highway segment from LaĂ§ to KukĂŤs and the one from Tirana to Elbasan, are clear evidence supporting the reinforcement of this conclusion. Figure 154. Travel time of people to regional centers by road and public transport

Source: Co-PLAN, 2015

Cumulated opportunities increase: This indicator is based on the assumption that people are interested to go to destinations that they can reach with a fixed budget for travel (in this case expressed as the time limit that one accepts to travel â&#x20AC;&#x201C; 60 minutes). Thus people who commute or travel on daily/routine basis

238

would prefer to travel not more than a given amount of time, and as a result go to those destinations / urban centers than can be reached within that time (conclude a business trip). In this analysis we have identified the urban centers equal to or with more than 10,000 residents that can be reached within 60 minutes by the Qark centers. The following figure x shows for a clear dominance of Tirana and DurrĂŤs, then a vertical division between west and east and coast and mountainous areas. Korca is the only one to make a difference in the picture, due to the fact that a good proportion of its territory is rather plain, though in high altitude above the sea levels. Figure 155. Cities with at least 10,000 residents within 60 minutes by road

Source: Co-PLAN, 2015

239

Figure 156. Access to higher secondary schools

Source: Co-PLAN, 2015

The cumulated opportunities are analyzed also for the number of higher secondary schools reached within 30 and 45 minutes of travel (walk and public transportation). In the second case we see that the opportunities are concentrated in the coast (Shkodra to Vlora) and especially in Tirana. Apart from better accessibility of these areas, this may also be due to the fact that most of the high schools are located in these regions where the population density is the highest.

240

As it was presented in the polycentricity analysis, potential accessibility measures the accessibility of a region to the other/s based on the size (population or GDP) of the regions to be accessed and the travel time to go there. The analysis in the section 4.2.6 reveals that the triangle Lezhë – Elbasan – Fier has the highest accessibility. Figure 157. Potential Accessibility of FUAs Polycentrism Analysis Accessibility Potential Index

KUKËS SHKODËR

LEZHË

DIBËR DURRËS

Legend TIRANË

index 0.618 0.672

ELBASAN

0.748 0.759 0.87 0.927

FIER

0.94

BERAT

KORÇË

0.948 1.021 1.111 1.116 1.197 1.218

GJIROKASTËR VLORË

1.23 1.246 1.25

1.296 Kufiri_i_Qarkut Prepared by: Co-PLAN, 2015 Source: Google Map & own calculations

0 5 10 20 30 40 Kilometers

Source: Co-PLAN, 2015

Local finances Local finances represent an important dimension of local development. Their analysis allows for: better knowledge on the economic situation at local level,

241

including divergences; assessment of the (financial and more) capacity of subnational authorities to carry out development actions; the impact of the national fiscal policy on the disparities among local government units. During the last years, there were two major novelties concerning local governments: • The Administrative and Territorial Reform (TAR) executed through the law no. 115/2014 “On the Administrative-Territorial Division of the Local Government Units in the Republic of Albania”. Based on TAR, the 373 local governments in the Republic of Albania were reorganized and merged into 61 municipalities, administering larger and rural-urban consolidated territories. The aim of this territorial organization was to lead towards provision of more qualitative public services, while increasing the efficiency of local governments’ resource management. • The law no. 139/2015, date 17.12.2015, “On local self-governance” replaced the law no. 8652, date 31.07.2000 on “Local Government organizations and functioning”. This law has two strategic objectives: i) “to maximize operational efficiency, including performance standards, quality of the service, services’ access for citizens and the community; ii) secondly, strengthen the effectiveness of democratic representation, including democratic control of the political leadership of municipalities and councils, their accountability, transparency and responsiveness towards the involvement of local communities.”37. This law defines 56 exclusive local government services, organized into 7 areas of competency. Most of the exclusive functions are inherited from the related articles of the previous law; others come as clarity of the specific local governments competencies within the previous shared functions. Some of the new exclusive functions include: environmental protection (exclusive); agriculture, rural development, forests and pastures (exclusive); health and education facilities. The law has omitted the shared functions and defines only exclusive and delegated one. Several exclusive functions can be carried out by municipalities in compliance with the provisions of the respective sectorial legislation. Exercising the new and existing competences requires a prudent management of limited financial resources and thus the necessity to exploit new financing opportunities in order to enable for capital investments. The financial analysis of the newly constituted 61 Municipalities will be carried out on two territorial levels: •

Development regions: the analysis on this level provides insights on general patterns of development and disparities between them;

242

Within development regions, Qarks and Municipalities level to provide a better understanding on the differentiation and disparities within the region. Aiming to understand local finances structure and management at 61 Municipalities level and also to ensure comparability, data was drawn from the Financial Informatics System of the Government (Treasury System) of the Ministry of Finance for 2013 and 2014 (since thereâ&#x20AC;&#x2122;s not a standardized way of financial reporting). â&#x20AC;˘

Disparities between development regions, revenues side Total local government revenues during 2014 recorded about All 56,637.0 million or about Euro 408 Million, representing about 4% of nominal GDP and rose by 13.7% compared to total revenues during 2013. All regions have contributed positively but at different extends to overall revenues upward trend between 2013 and 2014. Table 192. Main revenue data at regional level (All) /000 All

Region 1

Region 2

Region 3

Region 4

Total Albania

2013 TOTAL REVENUES

9,097,094

19,110,612

11,343,421

10,244,561

49,795,688

Own Revenues

1,108,133

7,570,247

1,771,057

2,533,753

12,983,190

Non Tax Revenues

179,323

962,099

373,747

454,536

1,969,704

Tax Revenues

928,810

6,608,148

1,397,310

2,079,217

11,013,486

Small business tax

145,740

1,251,942

336,523

339,095

2,073,300

Infrastructure impact tax

226,962

1,384,778

74,948

109,330

1,796,018

Building tax

107,410

883,533

203,919

328,641

1,523,503

16,699

55,309

98,077

146,238

316,324

Cleaning and greening fee

135,910

1,038,267

242,691

238,906

1,655,774

Vehicles Circulating Tax (used)

Agriculture land tax

165,595

741,778

197,270

404,648

1,509,292

Billboard tax

18,399

291,129

34,510

28,497

372,536

Real estate transactions tax

26,310

481,232

31,020

75,390

613,951

Public space occupation tax

26,526

157,625

54,451

108,167

346,769

6,471

50,390

6,239

15,145

78,246

52,789

272,165

117,661

285,160

727,773

Unconditional transfer

2,213,455

3,437,592

2,802,771

2,362,694

10,816,511

Conditional transfer

Hotel tax Other taxes

5,661,874

7,529,165

6,706,020

5,280,658

25,177,717

Min. Social Welfare (individuals)

4,328,021

5,893,153

5,223,515

3,911,235

19,355,924

Min. Social Welfare (institutions) Min. Transport and Infrastructure

116,012

67,773

61,432

107,402

352,619

524,697

604,228

766,896

771,640

2,667,461

424,397

597,233

402,832

269,625

1,694,088

Min. Education and Sports

243

Min. Interior Min. Agriculture

129,654

173,809

96,690

100,224

500,376

46,974

43,319

19,040

109,333

Min. Culture

57,141

26,161

28,849

112,151

Min. Economy

12,219

13,835

12,676

13,730

52,459

Min. Health

641

10,038

10,013

5,088

25,779

Central Elections Commission

37,052

80,857

58,222

53,825

229,956

Min. Environment

32,039

15,105

30,426

77,570

Min. EU integration

Donations

Min. Urban Development

97,349

68,678

21,674

24,004

211,705

Borrowing

16,285

366,250

41,899

43,451

467,885

2014 TOTAL REVENUES

9,755,815

21,232,554

13,572,112

12,076,246

56,636,728

Own Revenues

1,156,155

8,427,275

2,010,261

3,002,610

14,596,301

Non Tax Revenues

159,642

1,027,361

409,193

522,338

2,118,534

Tax Revenues

996,513

7,399,914

1,601,067

2,480,272

12,477,767

Small business tax

144,474

940,337

313,018

280,788

1,678,617

Infrastructure impact tax

249,349

2,052,576

44,402

92,291

2,438,619

Building tax

146,373

1,568,238

342,293

530,091

2,586,995

Agriculture land tax

25,028

88,302

158,374

242,655

514,359

Cleaning and greening fee

181,387

1,169,098

321,575

329,000

2,001,060

Vehicles Circulating Tax (used)

124,822

487,974

136,499

315,903

1,065,198

Billboard tax

19,531

283,439

38,593

32,020

373,582

Real estate transactions tax

23,767

457,126

32,749

67,091

580,733

Public space occupation tax

18,905

133,574

58,762

207,066

5,563

53,017

7,827

18,197

418,307 84,603

Hotel tax

57,315

166,233

146,976

365,170

735,694

Unconditional transfer

Other taxes

2,317,661

3,953,224

3,109,272

2,748,285

12,128,442

Conditional transfer

6,116,469

8,622,525

7,994,051

6,300,659

29,033,704

Min. Social Welfare (individuals)

4,767,215

6,886,610

6,581,639

4,518,216

22,753,680

Min. Social Welfare (institutions) Min. Transport and Infrastructure

125,441

72,912

70,968

110,702

380,022

355,721

311,369

320,244

783,710

1,771,045

Min. Education and Sports

727,022

1,071,792

737,748

645,377

3,181,939

Min. Interior

109,294

201,847

128,228

110,539

549,908

7,629

30,469

3,936

42,033

Min. Agriculture Min. Culture

56,320

23,818

33,484

113,622

10,965

14,047

12,656

12,876

50,544

576

Central Elections Commission

Min. Environment

27,010

Min. EU integration

4,102

20,234

57,169

81,818

159,222

Min. Economy Min. Health

Min. Urban Development

244

Donations

118,106

39,894

26,577

39,653

224,229

Borrowing

47,424

189,637

431,951

-14,961

654,051

Source: Ministry of Finance & Authors calculations

The aggregated data on development regions level show for a significant differentiation between regions with regard to total revenue generation. Due to the higher urbanization ratio, population and businesses demography, and infrastructure dotation, Region 2 has a leading position contributing with about 37.5% of total revenues. Region 3 and Region 4 present similar patterns with regard to total revenues representing respectively about 24% and 21.3% of total revenues during 2014. The lowest level of revenues is generated by Region 1, only about 17.2% in 2014 driven by the low number of population and low number of businesses operating in the area. Table 193. Total revenues at development region level Total revenues (000/ALL) 2013 Region 1 Region 2

9,097,094 19,110,612

2014 9,755,815 1,232,554

Share vs Total Albania (%) 2013 18.3 38.4

2014

Total revenues Per capita (ALL)

Annual change % 2014/2013

Contribution Percentage points 2014

17.2

2013 20,929

2014 22,444

7.2

1.3

37.5

16,630

18,476

11.1

4.3

20,622

Region 3

11,343,421

3,572,112

22.8

24.0

17,236

19.6

4.5

Region 4

10,244,561

2,076,246

20.6

21.3

18,355

21,636

17.9

3.7

100

17,783

20,226

13.7

ALBANIA

49,795,688

6,636,728

100

Source: Ministry of Finance & Authors calculations

In average, total revenues per capita recorded 22,226 ALL in 2014 up from the level of 17,783 ALL the previous year. The highest level of overall revenues per capita is registered in region 1 with about 222,444 ALL (base effect due to the lower number of population) and the lowest one in region 2 with about 18,476 ALL (driven by the high concentration of population in this region). Between the two extremes, region 3 and region 4 present similar levels on revenues per capita generation, respectively 20,622 ALL and 21,636 ALL (very close to the national average) Figure 158. Index of total revenues per capita by development regions38

245

Albania = 100 2013 2014

Region 4 Region 3

Region 2 Region 1 0

100

120

140

Source: Ministry of Finance, Instat & Authors calculations

Total revenues available to local governments in each of the regions are generated from a diversified number of sources: own revenues (tax and nontax), unconditional transfers, conditional transfers, donations and borrowing. Total revenues analysis by sources can be conducted in two directions: (i) analysis of the distribution of financial resources among regions against the total revenues (Albania = 100 per each category) to account for regional disparities in the distribution of resources and (ii) composition of total revenues in by sources (Region = 100) to evaluate on financial autonomy and leverage capacity of each region. Table 194. Contribution of development regions in total revenues (weights in % vs total revenues) Own revenues

Unconditional transfers

Conditional transfers

Donation s

Borrowin g

Region 1

7.9

19.1

21.1

52.7

7.3

Region 2

57.7

32.6

29.7

17.8

29.0

Region 3

13.8

25.6

27.5

11.9

66.0

Region 4 20.6 22.7 ALBANI A 100 100 Source: Ministry of Finance & Authors calculations

21.7

17.7

-2.3

100

Own revenues represent financial resources generated by the local governments in each of the development regions and used/spent independently without restrictions (broadly categorized in tax and non-tax revenues). About 57.7% of overall own revenues is generated within region 2 and the lowest level of 7.9% is generated in region 1. Region 3 and region 4 are between the two

246

extremes but far from region 2 level. The overall inequalities between development regions with regard to own revenues generation mirror some of the disparities discussed in terms of population number, number of active enterprises, level of income, poverty distribution etc., Yet, attention should be paid also to the local government overall financial management quality and tax collection ability between regions. Figure 159. Revenues by sources at development regions (Albania =100, in %) Region 1

Region 2

Region 3

Region 4

100 90 80 70 60 50 40 30 20 10 0 -‐10 Own revenues

Uncond. transfers

Cond. transfers

Donations

Borrowing

Source: Ministry of Finance, Instat & Authors calculations

In absolute terms, own revenues per capita in Albania account for about 5,212 ALL. In region 2 own revenues per capita register the highest value at 7,333 ALL while in region 1 the lowest one with about 2,660 ALL according to the data for 2014. The capacity to generate independently financial resources determines also the financial autonomy of the local governments in each of the regions and their ability to improve and contribute to overall development and wellbeing of its citizens. Figure 160. Index of own revenues per capita by regions

Albania = 100

2013 2014

Region 4 Region 3

Region 2 Region 1

100

247

150

Source: Ministry of Finance, Instat & Authors calculations

In addition own revenues, LG are in need to other financial resources like the conditional and unconditional transfers from the government (both determined and distributed according to a set of criteria). While conditional transfers are channeled to fulfill exclusive and delegated functions to the local governments, unconditional ones tend to reduce financial disparities and promote equalization among local government units39. The disaggregation of total revenues by main sources point to relevant differentiations among the regions according to data for 2014. In average, total revenues structure is dominated by the conditional transfers from the central government accounting for about 51.3% of total revenues in 2014, followed by own revenues (25.8%) and unconditional transfers 21.4%). Donations and borrowing account only for a small share on total revenues, thus result to be marginal during the period under analysis. Table 195. Composition of revenues by main sources (Region =100, in %) Region 1

Own revenues 11.9

Unconditional transfers 23.8

Conditional transfers 62.7

Region 2

39.7

18.6

40.6

Region 3

14.8

22.9

Region 4

24.9

Albania

25.8

Donations

Borrowing

Total

1.2

0.5

100

0.2

0.9

100

58.9

0.2

3.2

100

22.8

52.2

0.3

-0.1

100

21.4

51.3

0.4

1.2

100

Source: Ministry of Finance & Authors calculations

With regard to the composition of the revenues, development regions present quite different profiles. In region 1, the one accounting for the lowest number population and active enterprises and low level of urbanization, revenues are highly dependent on governmental transfers (conditional and unconditional ones accounting for more than 85% of total revenues in 2014). Figure 161. Composition of revenues by main sources at development regions (Region =100, in %)

248

Own revenues

Unconditional transfers

Conditional transfers

Donations

Borrowing

100 80 60 40 20 0 Region 1

Region 2

Region 3

Region 4

Albania

Source: Ministry of Finance & Authors calculations

Namely, conditional transfers represented about 62.7% of total revenues, about 11.4 percentage points above the national average and are allocated mostly to individuals (direct transfers to individuals). The own financial capacity of region 1 results to be very low pointing to 11.9% of total revenues, about 13.9 percentage points below the national average level. As a result of high dependency form governmental transfers, in region 1 capital investments result to be subject to central government decisions. Thus, local governments in region 1 cannot substantially contribute to spur economic growth and improve living conditions of citizens in their territory (since conditional transfers mostly are allocated to individuals). In region 2, the most endowed in infrastructure and services, accounting for the highest number of population and businesses, almost 40% of total revenues was represented by own revenues suggesting for a more balanced structure of revenues. This indicator shows for the highest financial autonomy among regions and allowing to some extent for higher investments, apart from intergovernmental transfers (conditional and not) from the central government. Conditional an unconditional transfers both accounted for about 59% of total revenues in 2014. Region 3 presents a similar profile to that of region 1, highly dependent on intergovernmental transfers (conditional and unconditional) which represented about 82% of total revenues. The own financial capacity points to about 14.8% of own revenues, about 11 percentage points below the national average. With regard to total revenues composition, region 4 profile is very close to the national average one. High dependency on intergovernmental transfers 249

(conditional and non-conditional) persists (about 75% of total revenues) and own revenues account for about 25% of total revenues in 2014. Delving deeper into the composition of own revenues at regional level it results that local governments have relied substantially in the building tax, the solid waste collection and cleaning fee, the new buildings infrastructure impact tax and the small businesses tax. On average, the building tax represented about 18% of own revenues with low differences among regions. The new building infrastructure impact tax has been volatile and with relative relevance among the regions mainly guided by construction sector developments. While it has a leading position in region 1 and region 2, with about 22% and 24% of own revenues in 2014, in region 3 and 4 its contributions to own revenues is limited. The small business tax (representing 12% of own revenues, 3% of total revenues, and 0.12% of nominal GDP during 2014) has contributed sizably to own revenues during 2014 but it proved to be a not very stable source of income over time. Frequent changes from national authorities concerning the base and base rate of the tax, VAT thresholds for small businesses to file profit tax made it an instable and not predictable source of income. Table 196. Composition of own revenues at regional level during 2014 Region 1 Own revenues (%)

Region 2

100

Index of own income per capita

Region 3

100

Region 4

100

Tota l

100

141

103

100

Non tax revenues (%)

13.8

12.2

20.4

17.4

14.5

Tax revenues (%)

86.2

87.8

79.6

82.6

85.5

Billboard tax

Real estate transactions tax

Public space occupation tax

Hotel tax

as % of own revenues

Small business tax New buildings infrastructure impact tax Building tax Agriculture land tax Solid Waste Collection/Cleaning Fee Vehicles Circulating Tax (used)

Other taxes Source: Ministry of Finance & Authors calculations

Overall, the distribution of revenues against total (Albania =100) and their composition by sources (Region =100) both suggest for the existence of relevant disparities between regions and between regions and the national

250

average. The correlation analysis suggests that the higher the level of conditional transfers, the lower the level of own revenues, the lower the financial autonomy of the regions. With regard to conditional transfers, most of them go directly to individuals (transfers from the Ministry of Social Welfare to individuals, more than 75% during 2014) and only a small amount (about 11%) conveys in local public investments (infrastructural investments). These resources tend to smooth/alleviate somewhat poverty among regions but do not stimulate economic development and promote persistent improvement of living conditions. Financial autonomy is low, as measured by the ratio between own revenues versus total (in average 25.8% of total revenues at national level) suggesting for low independence from central government and limited capacity to undertake locally driven projects. In these conditions, local governments must exploit more robust and reliable sources of income and orientate efforts to improve the collection side to boost their financial position. Potentially, the property tax (representing about 21% of own revenues, 5.5% of total revenues and about 0.23% of nominal GDP for 2014) is assessed as one of the taxes to be further exploited, conditioned on the expansion of registration of immovable properties. Local fees also are an important component of the revenues structure accounting for about 13.7% of own revenues, 3.5% of total revenues and 0.15% of nominal GDP in 2014). Actually, water utilities now under local government’s ownership are being used as tax collections agents for other taxes and fees. Besides own revenues, conditional and unconditional transfers, there are also two other sources of financial resources available: borrowing and donations. Compared to the other sources of finance, both of them seem marginal according to the data for 2014. Borrowing represented in average 1.2% of total revenues, registering the highest share in region 3 (3.2%). The figure shows that there is room for LG to make use of borrowing for capital investments but so far the national government, while trying to reduce the overall public debt, has given little space for them because of their own needs.

Disparities within development regions, revenues side Alongside disparities between developments regions there are also substantial differences within the regions (at Qarks and municipal levels). Region 1 is composed by the qarks of Lezhë (Lezhë, Mirditë and Kurbin municipalities), Shkodër (Shkodër, Malësi e Madhe, Vau i Dejës, Pukë and Fushë Arrëz municipalities) and Kukës (Kukës, Has and Tropojë municipalities).

251

According to the data for 2014, region 1 total revenues amounted to about All 9,756.0 million, up by 7.2% compared to total revenues of the region during 2013. The dis-aggregated data on municipal level show for a significant differentiation between municipalities with regard to total revenue generation driven by multiple factors such as the number of population, active enterprises, infrastructure endowment, territorial characteristics etc. Thus, the Municipality of Shkodër has a leading position contributing with about 26.7% of total revenues of the region followed by the municipalities of Lezhë (13.7%) and Kukës (12.4%) during 2014. These three municipalities account for more about 53% of total revenues in region 1. On the contrary, the municpalities of Fushë Arrëz, Pukë and Has generated the lowest level of revenues driven by the low number of population and low number of businesses operating in the area. Table 197. Revenue indicators for Region 1, at municipal level Region 1

Lezhë

Qark

Shkodër

Share of municipalities as a % of total revenues

Total revenues per capita (All)

Annual change (%)

Contribution (percentage points)

2013

2014

2013

2014

2013

2014

2014/2013

2014

9,097,094

9,755,815

100

20,929

22,444

724.1%

7.2

Lezhë

1,088,393

1,334,262

12.0

13.7

16,583

20,329

22.6%

2.7

Mirditë

666,669

767,452

7.3

7.9

30,162

34,722

15.1%

1.1

Municipalities

Kurbin

764,344

894,561

8.4

9.2

16,512

19,325

17.0%

1.4

2,624,439

2,608,080

28.8

26.7

19,353

19,232

-0.6%

-0.2

Malësi Madhe

555,522

601,907

6.1

6.2

18,023

19,528

8.3%

0.5

Vau Dejës

666,676

700,919

7.3

7.2

21,903

23,028

5.1%

0.4

Pukë

328,244

348,204

3.6

29,654

31,458

6.1%

0.2

Fushë Arrëz

247,531

257,329

2.7

2.6

33,428

34,751

4.0%

0.1

1,126,793

1,241,862

12.4

12.7

23,482

25,880

10.2%

1.3

Has

392,373

462,760

4.3

4.7

23,369

27,562

17.9%

0.8

Tropojë

636,110

538,480

7.0

5.5

31,004

26,246

-15.3%

-1.1

Shkodër

Kukës

Total revenues (in 000 All)

Kukës

Source: Ministry of Finance, Instat & Authors calculations

In per capita terms, these municipalities have the highest level of overall revenues i.e: Fushë Arrëz about 34,751ALL, Mirditë about 34,722 ALL per capita. On the contrary, those municipalities with higher contribution in total revenues for the region have the lowest revenues per capita levels i.e: Shkodër (19,232 ALL). While the average total revenues per capita have increased, municipality’s deviation from the regional average has been narrowing during 2014. Figure 162. Index of total revenues per capita by regions

252

Q. Kukës

Tropojë Has Kukës

Q. Shkodër

Fushë Arrëz Pukë Vau Dejës Malësi Madhe

Q. Lezhë

Shkodër Kurbin Mirditë Lezhë 0

100

125

150

Source: Ministry of Finance, Instat & Authors calculations

Disparities within region one can be witnessed in two directions: (i) disparities in the distribution of financial resources among municipalities against the total revenues (Region 1 = 100 per each category) and, (ii) composition of revenues by sources (Municipality = 100) to evaluate the financial autonomy and leverage capacity of each Municipality. Table 198. Contribution of municipalities in total revenues (weights in % vs total revenues, region = 100) Own revenues

Unconditional transfers

Conditional transfers

Donatio ns

Borrowi ng

Lezhë

29.1

10.5

11.5

5.8

100

Mirditë

3.4

8.2

8.8

0.0

Kurbin

6.0

8.9

9.9

11.8

Shkodër

37.6

27.2

24.8

21.8

Malësi Madhe

2.5

7.1

6.1

29.8

Vau Dejës

6.3

6.1

7.5

24.0

Pukë

3.8

4.3

3.2

4.5

Fushë Arrëz

1.4

3.3

2.7

0.0

Kukës

6.2

12.9

14.3

0.0

Has

1.2

4.5

5.6

0.0

Tropojë 2.6 7.0 REGION 1 100 100 Source: Ministry of Finance & Authors calculations

5.6 100

2.2 100

0 100

Shkodër Kukës

REGION 1

Lezhë

Qar k

Municipality

The capacity to generate own revenues posts significant differences within the municipalities included in Region 1. The Municipality of Shkodër and Lezhë generate more than 65% of total own revenues in the region (Shkodra accounts

253

for about 37.6% and Lezha 29.1% of total own revenues in Region 1). Given the high concentration degree on these 2 municipalities, the other 9 ones lag far behind in terms of own revenues generation suggesting for differences in endowment in natural resources, population and businesses demographics, management capacities etc. Figure 163. Revenues by sources at municipal level (Region 1 =100, in %) Lezhë Malësi Madhe Kukës

Mirditë Vau Dejës Has

Kurbin Pukë Tropojë

Shkodër Fushë

100 80 60

40 20 0 Total revenues Own revenues

Uncond. transfers

Cond. transfers

Donations

Borrowing

Source: Ministry of Finance, Instat & Authors calculations

Disparities in revenue generation result more emphasized when own revenues per capita at municipal level are considered (conditioned also from the population number). While in average own revenues have increased in 2014, deviation from the average of the municipalities has widened. For region 1, the average of own revenues per capita is 2,660 ALL, while the maximum value is 5,124 ALL (registered in the municipality of Lezhë) and the minimum 832 ALL (registered in the municipality of Has).

Figure 164. Index of own revenues per capita, at Municipality level

254

Region 1 = 100

Q. Kukës

Tropojë Has Kukës

Q. Shkodër

Fushë Arrëz Pukë Vau Dejës Malësi Madhe

Q. Lezhë

Shkodër Kurbin Mirditë Lezhë 0

100

125

150

175

200

Source: Ministry of Finance, Instat & Authors calculations

Within region 1, municipalities present different profiles in terms of composition by sources of total revenues. In average, municipalities’ revenues structure is dominated by transfers from the central government (conditional and unconditional) accounting for more than 85% of total revenues in 2014. Especially the conditional transfers ranged from a minimum of 52.5% to the maximum of 74.2% of total revenues of the municipalities under Region 1. Table 199. Revenues by main sources (Municipality =100, in %)

Kukës

REGION 1

Shkodër

Lezhë

Qark

Own revenues

Unconditional transfers

Conditional transfers

Donations

Borrowing

Lezhë

25.2

18.2

52.5

1.2

3.6

Mirditë

5.2

24.7

70.1

0.5

0.0

Kurbin

7.7

23.1

67.7

0.0

Shkodër

16.7

24.1

58.2

1.6

0.0

Malësi Madhe

4.8

27.2

62.1

1.0

0.0

Vau Dejës

10.3

20.2

65.4

5.8

0.0

Pukë

12.6

28.9

57.0

4.0

0.0

Fushë Arrëz

6.3

29.9

63.8

1.5

0.0

Kukës

5.7

24.0

70.3

0.0

Has

3.0

22.8

74.2

0.0

5.6 11.9

30.0 23.8

63.9 62.7

0.0 1.2

0.0 0.5

Municipality

Tropojë REGION 1

Source: Ministry of Finance & Authors calculations

255

Figure 165. Composition of revenues by main sources at Municipal level (Region =100, in %) Own revenues

Unconditional transfers

Conditional transfers

Donations

Borrowing

100 80 60 40 20 0

Lezhë

Mirditë

Q. Lezhë

Kurbin

Shkodër

Malësi Vau Dejës Madhe

Q. Shkodër

Pukë

Fushë Arrëz

Kukës

Has

Tropojë

Q. Kukës

Source: Ministry of Finance, Instat & Authors calculations

As aforementioned, total revenues structure is dominated by the conditional and unconditional transfers from the central government in all the considered municipalities. Cumulatively these two financial sources are absolutely dominant in the qark of Kukës, representing in average more than 95% total revenues in the composing municipalities (Municipality of Has has the maximum 97%) of total revenues is represented by these kind of transfers). With slight differences, the pictures results similar also in the other municipalities. The low level of generation of own revenues leaves no room for financial autonomy and capital investment programing for most of the municipalities (in the municipalities of Has, Kukës, Tropojë, Mirditë, Kurbin and Fushë Arrëz in particular). The municipalities of Lezhë and Shkodër present a higher degree of financial autonomy when compared to the other municipalities. Own revenues represented about 25.2% (driven by the contribution of the infrastructure impact tax and small business tax) and 16.7% (driven by the cleaning and greening fee, the building tax, and the small businesses tax) of total revenues respectively..

256

Table 200. Composition of own revenues at regional level during 2014 Qarku Lezhë

Qarku Shkodë Malësi Vau Pukë Madhe Dejës

Fushë Arrëz

Kukës

Has

Tropojë

100

Lezhë

Mirditë

Kurbin

Shkodër

100

Non tax revenues (%)

Tax revenues (%)

as % of own revenues

Own revenues (%)

Qarku Kukës

Small business tax

Infrastructure impact tax

Building tax

Agricultural land tax

Greening/Cleaning Fee

Vehicles Circulating Tax

Billboard tax

0 1

0 0

0 5

1 8

0 0

0 9

0 10

0 0

0 3

0 6

0 5

Real estate transactions tax Public space occupation tax Hotel tax Other taxes

Source: Ministry of Finance & Authors calculations

257

Overall, there’s a common trend or an evident reliance on governmental transfers like the conditional – unconditional and a marginal role of own revenues in all the considered municipalities (with the exception of the municipality of Lezhë, Shkodër and Pukë to some extent). The distribution of revenues against total (Region 1 =100) and their composition by sources (Municipality =100) both suggest for the existence of relevant disparities within the region or between the municipalities, reflecting socio – economic and territorial underdevelopment. The situation can exacerbate further due to low management capacities of local administration to improve their financial management and access external financial resources as way to soothe disparities and provide better living standards in their territories. Region 2 is composed by the qarks of Tiranë (Tiranë, Kamëz, Vorë, Kavajë and Rrogozhinë municipalities), Durrës (Durrës, Shijak and Krujë municipalities) and Dibër (Dibër, Bulqizë, Mat and Klos municipalities). According to the data for 2014, region 2 total revenues amounted to about ALL 21,223.0 million, up by 11.1% compared to total revenues during 2013. Data on municipality level show for a significant differentiation and concentration between municipalities with regard to total revenue generation driven by multiple factors such as the population and enterprises demography, infrastructure endowment, services availability etc. The municipality of Tirana has an absolute leading position contributing for about 49% of total revenues of the region. The second biggest municipality, but lagging far behind Tirana, is the Municipality of Durrës accounting for about 14.9% of total revenues. On the contrary, the Municipalities of Shijak, Rrogozhinë and Klos represent the lowest level of revenues (less than 2%) on the back of restricted number of resident population and low number of businesses operating in the area. Table 201. Revenue indicators for Region 2, at municipal level

Tiranë

Qarks

Municipalities

Total revenues per capita (All)

Annual chang e (%)

Contribution (percentage points)

2013

2014

2013

2014

2013

2014

2014/2 013

2014

Tiranë

9,360,939

10,391,304

49.0

48.9

16,793

18,642

11.0

5.4

Kamëz

1,538,125

1,456,976

8.0

6.9

14,763

13,984

-5.3

-0.4

Vorë

474,287

473,322

2.5

2.2

18,591

18,554

-0.2

0.0

Kavajë

780,030

870,900

4.1

19,455

21,721

11.6

0.5

Rrogozhinë Durrës

Share of municipalities as a % of total revenues

Total revenues (in 000 All)

288,168

334,988

1.5

1.6

13,011

15,125

16.2

0.2

Durrës

2,851,562

3,167,317

14.9

16,284

18,088

11.1

1.7

Shijak

357,719

452,996

1.9

2.1

12,839

16,259

26.6

0.5

Krujë

842,463

988,662

4.4

4.7

14,085

16,529

17.4

0.8

258

Dibër

1,100,813

1,286,141

5.8

6.1

17,865

20,872

16.8

1.0

Bulqizë

581,020

762,813

3.0

3.6

18,616

24,441

31.3

1.0

Mat

551,093

670,677

2.9

3.2

19,967

24,300

21.7

0.6

384,394 19,110,612

376,459 21,232,554

2.0 100

1.8 100

23,131 16,630

22,654 18,476

-2.1 11.1

0.0 11.1

Klos Region 2

Source: Ministry of Finance, Instat & Authors calculations

In average, total revenues per capita in Region 2 recorded 18,476 ALL in 2014 up from the level of 16,630 ALL the previous year. The highest level of overall revenues per capita is registered in the Municipality of Bulqizë with about 24,441 ALL followed by the municipality of Mat with about 24,300 ALL per capita, both of the cases determined broadly by the low number of population in the area. On the contrary, the lowest level of total revenues per capita is registered in the Municipality of Shijak (13,984 ALL) followed by the Municiaplity of Rrogozhinë (15,125 ALL). Figure 166. Index of total revenues per capita in Region 2, year 2014 Region 2 = 100

Q. Dibër

Klos Mat Bulqizë

Q. Durrës

Dibër Krujë Shijak Durrës

Q. Tiranë

Rrogozhinë Kavajë Vorë Kamëz

Tiranë 0

100

125

150

Source: Ministry of Finance, Instat & Authors calculations

Municipality’s relative weights by sources in total revenue generation highlight clear patterns within region 2. Within region 2, almost 70% of own revenues is generated by the municipality of Tirana on the back of a more favorable position, better equipped in infrastructure, higher availability of services, population and businesses demographics but also a better financial management. The high concentration of own revenues generation in one (even though big municipality) determines a large gap between Tirana and the other municipalities in the regions. The second municipality generating about 13.2% of total own revenues is the municipality of Durrës, presenting a large gap in terms of own revenues generation compared to Tirana. Cumulatively the municipalities of Tirana and Durrës generate about 83% of total own revenues in the region suggesting for a higher financial capacity both in terms of investments and borrowing. 259

Table 202. Contribution of municipalities in total revenues (weights in %, region 2 = 100, year 2014)

Dibër

Durrës

Region 2

Tiranë

Qark

Municipality

Own revenues

Unconditional transfers

Conditional transfers

Donations

Borrowing

Tiranë

69.8

37.9

32.5

52.1

100.0

Kamëz

4.2

8.2

9.0

0.0

Vorë

3.0

2.0

1.6

0.0

Kavajë

3.0

4.2

5.3

0.0

Rrogozhinë

0.9

2.2

2.0

0.0

Durrës

13.2

16.5

16.2

5.0

0.0

Shijak

1.2

2.5

2.9

1.5

0.0

Krujë

2.2

5.4

6.8

3.7

0.0

Dibër

1.1

7.8

10.3

1.5

0.0

Bulqizë

0.5

6.3

5.4

11.7

0.0

Mat

0.6

4.7

4.9

18.2

0.0

Klos

0.2

2.3

3.1

6.2

0.0

100

Region 2 100 Source: Ministry of Finance & Authors calculations

Given the high concentration degree on these 2 municipalities, the other 10 ones lag far behind in terms of own revenues generation against total regional own revenues suggesting for differences in factors endowment, low number of businesses operating in the area, overall financial management quality and the effectiveness of collecting ability of local governments. Figure 167. Revenues by sources at municipal level (Region 2 =100, in %, year 2014)

Tiranë Shijak

Kamëz Krujë

Vorë Dibër

Kavajë Bulqizë

Rrogozhinë Mat

Durrës Klos

100 80 60 40 20 0 Total revenues

Own revenues Uncond. transfers Cond. transfers

Source: Ministry of Finance, Instat & Authors calculations

260

Donations

Borrowing

Disparities within the region become more accentuated when own revenues per capita are considered. Thus, own revenues per capita registered in average about 7,330 ALL and with a maximum value of 10,549 ALL in the Municipality of Tiranë and a minimum of 800 ALL in the Municipality of Klos. The other municipalities’ laying between the two extremes and below the national average resulting in high disparities between the municipalities composing region 2. Figure 168. Index of own revenues per capita Region 2, year 2014 Region 2 = 100

Q. Dibër

Klos Mat Bulqizë

Q. Durrës

Dibër Krujë Shijak Durrës

Q. Tiranë

Rrogozhinë Kavajë Vorë Kamëz Tiranë

100

125

150

Source: Ministry of Finance, Instat & Authors calculations

Within region 2, all municipalities present quite different profiles in terms of composition by sources of revenues. Dissimilarities become more accentuated when look at the data of the municipalities within the qark of Tirana, those within the qark of Durrës and those within the qark of Dibër, shifting progressively from more financially independent to less financially independent. While in region 1 the municipality’s revenue structure was clearly dominated by transfers from the central government (conditional and unconditional), within region 2 this is not completely valid. Within region 2, in the municipality of Tirana and Vorë, revenues structure is dominated by own revenues generated by the municipalities.

REGION 2

Table 203. Revenues by main sources in region 2 (Municipality =100, in %, year 2014) Qark

Tiranë

Municipality Tiranë Kamëz Vorë Kavajë

Own revenues 56.6 24.2 54.2 28.6

Unconditiona l transfers 14.4 22.3 16.9 19.2

261

Conditional transfers 27.0 53.4 28.8 52.2

Donations

Borrowing

0.2 0.0 0.0 0.0

1.8 0.0 0.0 0.0

Rrogozhinë 23.6 Durrës 35.2 Durrës Shijak 22.9 Krujë 19.1 Dibër 7.0 Bulqizë 5.7 Dibër Mat 8.0 Klos 3.5 Total Region 2 39.7 Source: Ministry of Finance & Authors calculations

25.8 20.6 21.9 21.5 23.8 32.8 27.5 24.4 18.6

50.6 44.1 55.1 59.2 69.1 60.9 63.4 71.4 40.6

0.0 0.1 0.1 0.2 0.0 0.6 1.1 0.7 0.2

0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.9

Figure 169. Composition of revenues by main sources at Municipal level (Region =100, in %, year 2014) Own revenues

Unconditional transfers

Conditional transfers

Donations

Borrowing

100 90 80 70 60

50 40 30 20 10

0 Tiranë

Kamëz

Vorë

Kavajë Rrogozhinë Durrës

Qarku Tiranë

Shijak Qarku Durrës

Krujë

Dibër

Bulqizë

Mat

Klos

Qarku Dibër

Source: Ministry of Finance, Instat & Authors calculations

With the exclusion of the municipalities of Tirana and Vorë, in all the other municipalities within region 2, total revenues structure is dominated by the unconditional and conditional transfers from the central government. This is particularly evident in the municipalities of Dibër, Bulqizë, Mat and Klos, the poorest ones within the region, where conditional and unconditional transfers represented more than 90% of the revenues. In all of these municipalities, own revenues represented less than 10% out of total revenues. The municipality of Durrës presents the third highest degree of financial autonomy within the municipalities in region 2, where own revenues represented about 35.2% of total revenues during 2014. In a more detailed analysis of own revenues composition, in the municipality of Tirana, the high level of own revenues was largely determined by the

262

infrastructure impact tax (30% of own revenues), the building tax (17% of own revenues) and the cleaning and greening fee (15% of own revenues). Own revenues in the municipality of Vorë derived mostly from the building tax (30% of own revenues) and the infrastructure impact tax (15% of own revenues). In the municipality of Durrës, the level of own revenues was broadly determined from revenues generated from the building tax (25% of own revenues), infrastructure impact tax (14. % of own revenues) and the small businesses tax (14% of own revenues). In smaller municipalities like Mat, Klos, Bulqizë the compostition of own revenues points more on the small businesses tax, the cleaning and greening fee and the vehicles circulating tax.

263

Table 204. Composition of own revenues in Region 2, year 2014 Own revenues (%)

Tiranë

Kamëz

Vorë

Kavajë

Rrogozhinë

Durrës

Shijak

Krujë

Dibër

Bulqizë

Mat

Klos

100

Tax revenues (%)

as % of own revenues

100

Non tax revenues (%) Small business tax Infrastructure impact tax Building tax Agriculture land tax Greening/Cleaning Fee Vehicles Circulating Tax Billboard tax Real estate transactions tax Public space occupation tax Hotel tax Other taxes

Source: Ministry of Finance & Authors calculations

Overall, the distribution of revenues against total (Region 2 =100) and their composition by sources (Municipality =100) both suggest for the existence of relevant disparities within the region or between the municipalities, especially between Tirana and the other municipalities. Despite posting the best level of financial indicators as a region, the gap between the composing municipalities is high. There’s a mix of financial profiles of the municipalities, going from Tirana and Vorë with the highest level of financial autonomy to the municipalities of Klos and Bulqizë on the other extreme.

264

Region 3 is composed by the qarks of Elbasan (Elbasan, Belsh, Cërrik, Peqin, Gramsh, Librazhd and Prrenjas), Berat (Berat, Ura Vajgurore, Kuçovë, Skrapar and Poliçan Municipalities) and Korçë (Korçë, Maliq, Pustec, Kolonjë, Devoll and Pogradec Municipalities. Region 3 total revenues in 2014 amounted to about ALL 13,572.0 million, up by 19.6 % compared to total revenues during 2013. The three largest municipalities account for more than 45% of total revenues in region 4. Namely, the municipality of Vlorë weighted for about 18.8%, the municipality of Fier accounted for about 16.8% and the municipality of Lushnjë for aout 11.5% of total revenues. With the exclusion of these three municipalities, the distribution of total revenues among the other 17 municipalities does not present major dissimilarities. Table 205. Revenue indicators for Region 3, at municipal level Qark

Municipalities

Gjirokastër

Fier

Share of municipalities as a % of total revenues

Total revenues per capita (All)

Annual change (%)

Contribution (percentage points)

2013

2014

2013

2014

2013

2014

2014/2013

2014

1,748,246

2,034,690

17.1

16.8

14,490

16,864

16.4%

2.8

Patos

483,445

589,792

4.7

4.9

21,057

25,689

22.0%

1.0

Roskovec

522,537

640,800

5.1

5.3

24,034

29,473

22.6%

1.2

Lushnjë

1,192,224

1,386,657

11.6

11.5

14,251

16,575

16.3%

1.9

Divjakë

452,975

512,637

4.4

4.2

13,224

14,966

13.2%

0.6

Mallakastër

609,247

714,259

5.9

22,513

26,393

17.2%

1.0

Gjirokastër

476,794

585,592

4.7

4.8

16,629

20,423

22.8%

1.1

Libohovë

75,466

81,528

0.7

20,580

22,233

8.0%

0.1

Tepelenë

195,510

265,763

1.9

2.2

21,847

29,697

35.9%

0.7

Memaliaj

225,727

265,228

2.2

21,181

24,888

17.5%

0.4

Përmet

251,237

329,972

2.5

2.7

23,670

31,088

31.3%

0.8

Këlcyrë

160,595

146,769

1.6

1.2

26,271

24,009

-8.6%

-0.1

Dropull

126,550

148,131

1.2

36,126

42,287

17.1%

0.2

1,795,099

2,266,611

17.5

18.8

17,124

21,622

26.3%

4.6

Selenicë

453,035

375,895

4.4

3.1

27,631

22,926

-17.0%

-0.8

Himarë

255,757

308,270

2.5

2.6

32,714

39,431

20.5%

0.5

Sarandë

613,746

737,798

6.0

6.1

30,343

36,476

20.2%

1.2

Konispol

153,270

189,978

1.5

1.6

18,589

23,042

23.9%

0.4

Finiq

283,422

322,000

2.8

2.7

26,918

30,582

13.6%

0.4

Delvinë

169,679

173,875

1.7

1.4

22,332

22,884

2.5%

0.0

10,244,561

12,076,246

100

18,355

21,636

17.9

Vlorë

Total revenues (in 000 All)

Region 3

Source: Ministry of Finance, Instat & Authors calculations

In average, total revenues per capita in Region 3 recorded 20,622 ALL in 2014 up from the level of 17,236 ALL the previous year (mainly due to higher 265

transfers from the central government). While in average total revenues per capita have increased, dissimilarities with regard to regional average have become more accentuated compared to 2013 data. The highest level of overall revenues per capita is registered in the Municipality of Skrapar with about 32,328 ALL followed by the municipality of Kolonjë with about 28,565 ALL per capita. On the contrary, the lowest level of total revenues per capita is registered in the Municipality of Ura Vajgurore (12,610 ALL) followed by the Municiaplity of Pustec (12,772 ALL), driven by the low number of population in the area. Figure 170. Index of total revenues per capita by regions Region 3 = 100 Pogradec Devoll

Korçë

Kolonjë Pustec Maliq Korçë

Berat

Poliçan Skrapar

Kuçovë Ura vajgurore Berat

Prrenjas

Elbasan

Librazhd Gramsh

Peqin Cërrik Belsh

Elbasan 0

100

125

150

175

Source: Ministry of Finance, Instat & Authors calculations

The capacity to generate own revenues post significant differences within the municipalities included in Region 3. Thus, the highest level of revenues is generated in the the biggest municipalities such as the municipality of Elbasan (25%), Korçë (18.3%) and Berat (13.0%) of total own revenues, showing also differences among each other.. The gap between these three municipalities and the other 17 is quite significant with values ranging from a minimum of 0.1% in the municipality of Pustec to 7.9% in the municipality of Pogradec. The municipality of Pogradec generates a very low level of own revenues as compared to its potential (very touristic and frequented almost all year).

Table 206. Total revenues composition by Municipalities (weights in %, region 3 R E GI O N 3

= 100) 2014

Own revenues

Unconditional transfers

266

Conditional transfers

Donations

Borrowing

Elbasan

25.0

19.2

22.9

0.0

69.2

Belsh

1.2

2.8

3.2

0.0

Cërrik

3.3

3.6

5.0

0.0

Peqin

2.1

3.3

3.1

0.0

Gramsh

3.2

5.1

5.3

0.0

Librazhd

2.4

4.8

5.4

4.1

0.0

Prrenjas

1.8

3.3

4.2

0.0

13.0

9.5

7.3

3.8

0.0

Ura Vajgurore

4.5

3.0

2.2

0.0

Kuçovë

5.8

4.4

3.7

0.2

0.0

Skrapar

2.0

4.2

2.4

11.9

0.0

Berat Berat

Korçë

Poliçan

1.7

2.5

1.5

0.0

Korçë

18.3

11.6

12.1

63.6

31.6

Maliq

3.1

5.7

4.7

0.0

Pustec

0.1

0.8

0.2

0.0

Kolonjë

1.8

3.8

2.0

0.0

Devoll

2.6

4.3

2.8

0.0

8.2

11.9

16.4

-0.7

Pogradec 7.9 Source: Ministry of Finance & Authors calculations

Figure 171. Revenues by sources at municipal level (Region 3 =100, in %) Elbasan Prrenjas Korçë

Belsh Berat Maliq

Cërrik Ura vajgurore Pustec

Peqin Kuçovë Kolonjë

Gramsh Skrapar Devoll

Librazhd Poliçan Pogradec

90 70 50 30 10

-‐10 Total revenues

Own revenues

Uncond. transfers

Cond. transfers

Donations

Borrowing

Source: Ministry of Finance, Instat & Authors calculations

Disparities within the region become more accentuated when own revenues per capita are considered. Thus, own revenues per capita registered in average about 3,055 ALL and with a maximum value of 4,846 ALL in the Municipality of Korçë and a minimum of 729 ALL in the Municipality of Pustec. While the higher level of own revenues per capita generated suggests for a better financial

267

management, differences with regard to the national average became more accentuated from year to year. Figure 172. Index of own revenues per capita in region 3 (year 2014) Region 3 = 100 Pogradec

Devoll

Korçë

Kolonjë Pustec Maliq Korçë

Berat

Poliçan Skrapar Kuçovë Ura Vajgurore Berat Prrenjas Librazhd

Elbasan

Gramsh Peqin Cërrik Belsh Elbasan 0

100

125

150

Source: Ministry of Finance, Instat & Authors calculations

With regard to the composition of revenues by main sources a common trend might be observed among the municipalities constituting region 3: in all of them, transfers from the central government represent the most important source of financial resources. Table 207. Revenues by main sources in Region 3 (Municipality =100, in %, year 2014) Qark

Own revenues

Unconditional transfers

Conditional transfers

Donations

15.6

18.4

56.7

0.0

9.3

Belsh

6.8

24.1

69.1

0.0

Cërrik

11.5

19.1

69.4

0.0

Peqin

10.6

25.8

63.6

0.0

Gramsh

10.1

24.5

65.4

0.0

Librazhd

7.6

23.5

68.8

0.2

0.0

Prrenjas

7.8

21.5

70.7

0.0

Berat

23.0

25.8

51.1

0.1

0.0

Ura Vajgurore

25.4

25.7

48.8

0.0

Kuçovë

21.2

24.9

53.9

0.0

Skrapar

10.7

35.8

52.6

0.9

0.0

Poliçan

14.8

32.6

52.6

0.0

Municipality

REGION 3

Elbasan

268

Borrowing

Korçë

19.9

19.6

52.3

0.9

7.4

Maliq

10.1

28.8

61.1

0.0

Pustec

5.7

57.5

36.8

0.0

Kolonjë

11.6

37.6

50.8

0.0

Devoll

12.8

33.0

54.2

0.0

Pogradec

11.6

18.7

69.6

0.3

-0.2

22.9

58.9

0.2

3.2

Region 3 14.8 Source: Ministry of Finance & Authors calculations

Structurally, revenues are dominated by conditional and unconditional transfers from the central government. These transfers range from at least 74.6% of total revenues in the municipality of Ura Vajgurore to a maximum value of 94.3% of total revenues in the Municipality of Pustec (which has been recently constituted). In average, own revenues of region 3 represent about 14.8% of total revenues suggesting for a very low financial autonomy. The Municipalities of Elbasan and Korçë have accessed external financial resources as suggested from the data for 2014. Figure 173. Revenues by main sources in Region 3 (Municipality =100, in %, year 2014) Own revenues

Conditional transfers

Donations

Borrowing

Q. Korçë

Source: Ministry of Finance, Instat & Authors calculations

Own revenues composition in region 3 presents differences between municipalities. In the municipality of Ura Vajgurore, the inflow of own financial resources was broadly determined by the agricultural land and building tax (cumulatively about 34.5% of own revenues) followed by the small business tax (about 15.1%). The same patterns might be noticed also in the municipalities of

269

Pogradec

Devoll

Kolonjë

Pustec

Maliq

Korçë

Poliçan

Q. Berat

Skrapar

Q. Elbasan

Kuçovë

Ura Vajgurore

Berat

Prrenjas

Librazhd

Gramsh

Peqin

Cërrik

Belsh

Elbasan

100 90 80 70 60 50 40 30 20 10 0 -‐10

Unconditional transfers

Berat, Korçë and Kuçovë. The agricultural land and building tax results to be important (although at different extents) almost in all municipalities. Also, revenues generated from the small business tax have contributed positively to own income. Recent legislative provisions on dried up this source of income, thus municipalities have to rely of the other sources of financial resources or exploit new ones to counterbalance. In common, in all municipalities of region 3 there’s a limited relevance of the infrastructure impact tax.

270

Table 208. Composition of own revenues in Region 3, year 2014 % of own revenues Qark

Municipality

Elbasan Berat

Korçë

Elbasan Belsh Cërrik Peqin Gramsh Librazhd Prrenjas Berat Ura Vajgurore Kuçovë Skrapar Poliçan Korçë Maliq Pustec Kolonjë Devoll Pogradec REGION 3

Own revenues

Nontax

Tax

100 100 100 100 100 100 100 100

28.6 10.5 29.6 11.1 41.8 18.5 34.9 9.3

71.4 89.5 70.4 88.9 58.2 81.5 65.1 90.7

SBT 15.0 23.1 15.5 20.4 12.9 19.2 16.6 16.4

100 100 100 100 100 100 100 100 100 100 100

3.6 30.4 24.6 6.8 13.6 21.1 33.2 28.1 20.5 18.5 20.4

96.4 69.6 75.4 93.2 86.4 78.9 66.8 71.9 79.5 81.5 79.6

15.1 16.4 11.7 15.4 13.7 15.9 0.4 19.1 20.6 16.1 15.6

Infra impact tax 3.5 1.3 0.8 0.1 3.8 5.1 2.8 0.8

Building tax 20.8 8.2 13.6 10.3 9.4 15.1 7.4 17.8

Agri. land tax 3.1 39.0 19.0 15.4 4.2 3.0 5.0 6.0

2.0 1.3 0.6 0.2 1.4 2.7 0.0 2.7 1.4 3.5 2.2

11.1 17.4 8.7 31.4 20.2 9.5 14.6 11.4 6.8 16.5 17.0

23.4 8.0 10.7 23.3 4.4 28.7 20.6 7.9 18.4 1.6 7.9

Cleaning and greening fee 12.9 4.3 10.3 14.4 9.3 17.1 15.8 22.4

Vehicles Circulating Tax 6.9 11.1 6.9 11.4 3.7 6.5 5.6 6.4

13.2 10.1 11.5 9.5 22.4 8.5 9.4 12.2 16.5 19.9 16.0

8.6 6.1 10.4 6.8 6.1 9.8 14.0 4.8 9.0 5.4 6.8

Source: Ministry of Finance & Authors calculations

271

Billboard tax 1.5 0.2 0.3 1.2 0.4 2.6 1.6 0.9

Real estate transact. tax 3.3 0.0 0.0 0.0 0.8 0.9 0.2 1.1

Public space occupation tax 3.6 1.0 3.7 1.1 3.8 6.0 1.4 5.4

Hotel tax 0.3 0.0 0.0 0.0 0.0 0.1 2.3 0.8

Other taxes 0.5 1.5 0.4 14.8 9.9 5.9 6.4 12.6

0.3 0.2 0.7 0.2 5.2 0.7 0.1 0.4 4.8 1.7 1.9

0.0 0.1 0.1 0.3 1.5 0.0 0.0 0.0 0.1 3.9 1.6

0.3 9.1 1.8 0.3 0.1 0.7 0.0 2.5 1.7 1.9 2.9

0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.3 0.0 0.9 0.4

22.4 0.9 19.3 5.6 11.0 2.2 7.8 10.5 0.2 10.1 7.3

Region 4 is composed by the qarks of Fier (Fier, Patos, Roskovec, Lushnjë, Divjakë and Mallakastër), Gjirokastër (Gjirokastër, Libohovë, Tepelenë, Memaliaj, Përmet, Këlcyrë and Dropull Municipalities) and Vlorë (Vlorë, Selenicë, Himarë, Sarandë, Konispol, Finiq and Delvinë Municipalities). Overall revenues of region 4 for 2014 recorded about ALL 12,076.0 million, about 17.9% higher compared to the previous year. Almost all of the constituting municipalities have contributed positively to total revenues increase (excluding the municipalities of Këlcyrë and Selenicë). The three largest municipalities (Vlorë, Fier and Lushnjë) represented cumulatively about 47.1% of total revenues of region 4 in 2014, broadly on the back of governmental transfers. Differences become more accentuated when these three municipalities are compared to the other ones in the region. Table 209. Revenue indicators for Region 4, at municipal level Qarks

Total revenues (in 000 All) Municipalities

Gjirokastër

Fier

Total revenues per capita (All)

Annual change (%)

Contribution (percentage points)

2013

2014

2013

2014

2013

2014

2014/2013

2014

1,748,246

2,034,690

17.1

16.8

14,490

16,864

16.4%

2.8

Patos

483,445

589,792

4.7

4.9

21,057

25,689

22.0%

1.0

Roskovec

522,537

640,800

5.1

5.3

24,034

29,473

22.6%

1.2

Lushnjë

1,192,224

1,386,657

11.6

11.5

14,251

16,575

16.3%

1.9

Divjakë

452,975

512,637

4.4

4.2

13,224

14,966

13.2%

0.6

Mallakastër

609,247

714,259

5.9

22,513

26,393

17.2%

1.0

Gjirokastër

476,794

585,592

4.7

4.8

16,629

20,423

22.8%

1.1

Libohovë

75,466

81,528

0.7

20,580

22,233

8.0%

0.1

Tepelenë

195,510

265,763

1.9

2.2

21,847

29,697

35.9%

0.7

Memaliaj

225,727

265,228

2.2

21,181

24,888

17.5%

0.4

Përmet

251,237

329,972

2.5

2.7

23,670

31,088

31.3%

0.8

Këlcyrë

160,595

146,769

1.6

1.2

26,271

24,009

-8.6%

-0.1

Dropull

126,550

148,131

1.2

36,126

42,287

17.1%

0.2

1,795,099

2,266,611

17.5

18.8

17,124

21,622

26.3%

4.6

Selenicë

453,035

375,895

4.4

3.1

27,631

22,926

-17.0%

-0.8

Himarë

255,757

308,270

2.5

2.6

32,714

39,431

20.5%

0.5

Sarandë

613,746

737,798

6.0

6.1

30,343

36,476

20.2%

1.2

Konispol

153,270

189,978

1.5

1.6

18,589

23,042

23.9%

0.4

Finiq

283,422

322,000

2.8

2.7

26,918

30,582

13.6%

0.4

Delvinë

169,679

173,875

1.7

1.4

22,332

22,884

2.5%

0.0

Region 4

10,244,561

12,076,246

100

18,355

21,636

Vlorë

Share of municipalities as a % of total revenues

Source: Ministry of Finance, Instat & Authors calculations

272

17.9

The higher level of total revenues per capita in Region 4 from 18,355 ALL in 2013 to about 21,636 ALL in 2014, was accompanied by a higher level of deviation of municipalities from the average. The highest level of overall revenues per capita is registered in the Municipality of Dropull with about 42,287 ALL followed by the municipality of Himarë with about 39,431 ALL per capita, both of the cases determined broadly by the low number of population in the area (0.6 and 1.4% of total population of the region). On the contrary, the lowest level of total revenues per capita is registered in the Municipality of Divjakë (14,966 ALL) followed by the Municiaplity of Lushnjë (16,575 ALL). Figure 174. Index of total revenues per capita by municipalities, year 2014 Region 4 = 100 Delvinë Finiq

Vlorë

Konispol Sarandë Himarë

Selenicë Vlorë Dropull

Gjirokastër

Këlcyrë Përmet Memaliaj Tepelenë Libohovë Gjirokastër

Mallakastër Divjakë

Fier

Lushnjë Roskovec Patos Fier 0

100

125

150

175

200

Source: Ministry of Finance, Instat & Authors calculations

The differences on own revenue generation capacity evident between the municipalities constituting region 4 depend on several factors ranging from the more favorable geographical position, dotation in infrastructure and services, population and businesses demographics to natural resources endowment. The highest level of own revenues is generated from the municipality of Vlorë (about 23.7% of the total) followed by the municipality of Fier (about 17.6%) and the municipality of Lushnjë (10.6%). Cumulatively the municipalities of Vlorë, Fier and Lushnjë generate more than 50% of total own revenues in the region suggesting for a higher financial capacity both in terms of investments and borrowing (actually used by the municipality of Vlorë).

R E G I O N

Table 210. Contribution of municipalities in total revenues (weights in %, region 2 = 100) 2014

Own revenues

Unconditional transfers

273

Conditional transfers

Donations

Borrowing

Fier Fier

Gjirokastër

Vlorë

17.6

16.6

8.5

0.0

Patos Roskovec

6.5 6.4

3.9 2.6

4.5 6.0

5.9 0.0

0.0 0.0

Lushnjë

9.7

10.7

12.7

12.8

0.0

Divjakë

2.9

4.9

4.6

1.5

0.0

Mallakastër

4.8

4.9

6.9

0.0

Gjirokastër

4.8

6.3

4.2

10.7

0.0

Libohovë

0.3

1.5

0.5

2.4

0.0

Tepelenë

0.6

2.8

2.7

0.1

0.0

Memaliaj

0.4

3.1

2.7

1.3

0.0

Përmet

1.3

3.7

3.0

0.0

Këlcyrë

0.5

1.8

1.3

0.0

Dropull

1.2

2.0

0.9

0.0

23.7

16.5

17.7

2.9

100.0

Selenicë

1.7

4.1

3.3

0.0

Himarë

3.5

2.9

1.9

5.6

0.0

Sarandë

10.6

4.6

0.9

0.0

Konispol

1.0

1.6

1.8

9.0

0.0

Finiq

1.6

3.6

2.6

35.7

0.0

Delvinë

0.9

1.8

1.6

2.8

0.0

Vlorë

Source: Ministry of Finance & Authors calculations

Given the high concentration degree on these 3 municipalities, the other 17 ones lag far behind in terms of own revenues generation against total regional own revenues suggesting for differences in factors endowment and overall financial management quality of local governments. Figure 175. Revenues by sources at municipal level (Region 2 =100, in % for year 2014) Fier Mallakastër Përmet Himarë

Patos Gjirokastër Këlcyrë Sarandë

Roskovec Libohovë Dropull Konispol

Lushnjë Tepelenë Vlorë Finiq

Divjakë Memaliaj Selenicë Delvinë

90 70 50 30 10 -‐10

Total revenues

Own revenues

Uncond. transfers

Cond. transfers

Donations

Borrowing

Source: Ministry of Finance, Instat & Authors calculations

Disparities within region 4 from the revenues side become more pronounced when own revenues per capita are considered. Thus, own revenues per capita

274

registered in average about 5,380 ALL and with a maximum value of 15,703 ALL in the Municipality of Sarandë and a minimum of 1,098 ALL in the Municipality of Memaliaj. The other municipalities’ laying between the two extremes and below the national average suggesting constrained and limited investment capacities. Figure 176. Index of own revenues per capita, at Municipality level for 2014 Region 4 = 100 Delvinë

Vlorë

Finiq Konispol Sarandë Himarë Selenicë Vlorë Dropull

Gjirokastër

Këlcyrë Përmet Memaliaj Tepelenë Libohovë Gjirokastër Mallakastër

Fier

Divjakë Lushnjë Roskovec Patos Fier

100

125

150

175

200

Source: Ministry of Finance, Instat & Authors calculations

All the municipalities within region 4 present quite different profiles in terms of composition by sources of revenues. Most of the municipalities relay heavily transfers from the central government (conditional and unconditional) like the municipalities of Memaliaj and Tepelenë, while some othes like the municipalities of Sarandë, Himarë and Patos have generated higher levels of own revenues. . Table 211. Revenues by main sources Region 4, (Municipality =100, in %, year 2014) Own revenues

REGION 4

Fier

Gjirokastër

Unconditional transfers

Conditional transfers

Donations

Borrowing

Fier

26.0

22.4

51.4

0.2

0.0

Patos

33.1

18.4

48.1

0.4

0.0

Roskovec

29.9

11.4

58.7

0.0

Lushnjë

20.9

21.2

57.5

0.4

0.0

Divjakë

17.1

26.5

56.3

0.1

0.0

Mallakastër

20.1

18.9

61.0

0.0

Gjirokastër

24.5

29.6

45.2

0.7

0.0

Libohovë

11.3

51.1

36.4

1.2

0.0

Tepelenë

6.7

28.5

64.8

0.0

275

Memaliaj

Vlorë

4.4

32.4

63.0

0.2

0.0

Përmet

11.8

30.9

57.2

0.0

Këlcyrë

10.3

33.4

56.3

0.0

Dropull

24.5

37.2

38.3

0.0

Vlorë

31.4

19.9

49.2

0.1

-0.7

Selenicë

13.8

30.0

56.1

0.0

Himarë

34.5

25.9

38.9

0.7

0.0

Sarandë

43.0

17.3

39.6

0.0

Konispol

15.5

23.1

59.5

1.9

0.0

Finiq

14.8

30.6

50.3

4.4

0.0

Delvinë

14.9

27.9

56.5

0.6

0.0

22.8

52.2

0.3

-0.1

Region 3 24.9 Source: Ministry of Finance & Authors calculations

Figure 177. Composition of revenues by main sources at Municipal level (Region 4 =100, in %, year 2014) Total revenues

Own revenues

Uncond. transfers

Cond. transfers

Donations

70 50 30 10 -‐10

In the municipality of Sarandë, the high level of own revenues (43% of total revenues of the municipality) was broadly determined by the public space occupation tax (40.1% of own revenues), the building tax (11.6% of own revenues) and the cleaning and greening fee (11.1% of own revenues). Likely, own revenues in the municipality of Himarë derived mostly from the public space occupation tax (45.9% of own revenues) and the cleaning and greening fee (10.3% of own revenues). In the case of Patos, about 30% of own revenues is generated from the building tax and about 33.8% from the vehicles circulating tax. The building tax accounts for about 51% of total own revenues generated in the municipality of Roskovec. 276

Delvinë

Finiq

Konispol

Sarandë

Himarë

Selenicë

Vlorë

Dropull

Këlcyrë

Përmet

Memaliaj

Tepelenë

Libohovë

Gjirokastër

Mallakastër

Divjakë

Lushnjë

Roskovec

Patos

Fier

Source: Ministry of Finance, Instat & Authors calculations.

277

Vlorë

Gjirokastër

Fier

Qark

Table 212. Composition of own revenues in Region 4, year 2014 Own revenues

Nontax

Tax

Fier

100

15.4

84.6

8.7

Patos

100

11.5

88.5

2.4

Roskovec

100

20.7

79.3

Lushnjë

100

13.3

Divjakë

100

Mallakastër

100

Gjirokastër

Municipality

% of own revenues Cleaning and Vehicles Bill greening fee Circ. Tax board tax

Building tax

Agric. land tax

Hotel tax

Other taxes

8.3

25.4

10.4

13.9

13.7

0.4

3.1

1.4

30.1

3.6

16.1

33.8

0.3

0.0

0.4

0.0

0.3

0.6

0.0

0.2

2.2

0.1

50.9

5.8

4.9

14.4

0.1

0.0

0.8

0.0

0.1

86.7

13.4

5.7

17.7

14.8

17.3

12.5

1.9

2.2

1.0

0.0

0.2

15.5

84.5

12.7

1.8

9.4

37.8

11.5

60.7

39.3

6.2

0.0

3.6

6.0

3.1

8.5

0.1

0.2

1.0

0.7

0.9

4.9

0.7

0.0

0.4

0.0

14.4

100

22.4

77.6

15.5

0.7

17.6

2.2

13.4

8.9

3.3

1.6

1.9

0.3

12.1

Libohovë

100

34.8

65.2

9.7

0.0

19.4

Tepelenë

100

16.6

83.4

22.6

2.8

15.2

14.4

3.5

12.9

0.1

0.0

5.1

13.9

7.7

15.4

2.3

0.6

0.0

2.2

Memaliaj

100

26.4

73.6

10.8

3.2

16.7

15.4

6.0

11.7

1.7

0.0

2.0

0.0

6.0

Përmet

100

25.8

74.2

15.1

9.3

12.9

4.9

13.8

6.6

0.7

0.0

0.7

0.3

9.9

Këlcyrë

100

13.8

86.2

Dropull

100

39.6

60.4

12.4

9.8

23.0

14.3

5.5

0.9

0.0

3.6

0.0

11.3

7.5

4.1

16.5

16.0

8.2

6.0

1.9

0.0

0.1

Vlorë

100

12.1

87.9

10.2

0.3

9.7

3.0

9.0

5.0

1.0

5.6

2.4

0.7

41.1

Selenicë

100

6.4

93.6

7.1

0.0

12.1

30.3

3.1

26.3

0.2

0.0

0.5

0.0

14.0

Himarë Sarandë

100

9.5

90.5

5.6

3.3

5.1

3.2

10.3

3.1

0.2

0.4

45.9

3.1

10.3

100

11.1

88.9

11.2

3.4

11.6

1.0

11.1

4.6

2.6

0.5

40.1

2.6

0.1

Konispol

100

49.4

50.6

6.9

0.4

6.4

23.0

5.9

7.9

0.0

0.1

Finiq

100

21.6

78.4

8.9

3.2

13.7

29.3

4.8

6.5

0.7

0.0

1.3

0.0

10.2

Delvinë

100

44.7

55.3

14.2

2.5

8.1

7.8

9.9

11.0

0.7

0.0

0.8

0.0

0.2

100

17.4

82.6

9.4

3.1

17.7

8.1

11.0

10.5

1.1

2.2

6.9

0.6

12.2

REGION 4

SBT

Infrast. impact tax

Real estate trans. tax

Public space occ. tax

Source: Ministry of Finance & Authors calculations

Overall, the distribution of revenues against total (Region 4 =100) and their composition by sources (Municipality =100) both suggest for the existence of relevant disparities within the region or between the municipalities.

278

Natural resources endowment, touristic determined some financial autonomy for profiles of the municipalities, going from highest level of financial autonomy to Memaliaj on the other extreme.

potential, infrastructure dotation has the region. There’s a mix of financial Saranda, Himara and Patos with the the municipalities of Tepelenë and

The Regional Development Fund (RDF) Besides own source revenues, the conditional and unconditional transfers the Government has established a Regional Development Fund to support capital investments at local/regional level. The fund is distributed on competitive basis to support infrastructure improvements (i.e: roads, education, health, water and sanitation, irrigation and drainage etc.) and are allocated to line ministries or other relevant institutions for capital expenditures. Though intended to support projects with regional impact the RDF has been mainly supporting projects with local relevance. To evaluate how capital investment projects from RDF are distributed among local governments and their impact at local/regional level detail data is needed. Actually, RDF data are not available at local government’s level but only at an aggregated level. From the analysis we can see that the overall RDF has increased over time, marking an important jump in 2015. The RDF allocated about ALL 14,979.0 million during 2015 from ALL 5,850.0 million in 2014. Figure 178. Main financial resources available for investments (in ALL million) Own revenues

Unconditional transfers

RDF

50,000 45,000 40,000 35,000 30,000 25,000

20,000 15,000 10,000 5,000 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Ministry of Finance & Authors calculations

Since 2002, the unconditional transfers (distributed based on population data and equalization criteria) from the central government have been increasing steadily 279

marking a substantial jump in 2006. Despite being called unconditional, municipalities cannot use it according to their needs, often there have been restrictions on its usage, thus like recently constraining municipalities to use 40% of the unconditional transfer for capital investments (in 2016). From 2006, the overall unconditional transfers have been increasing steadily (with exception of 2010 and 2015) supporting local governments in their capital investment needs on one hand. At the same time, while providing some space for local government to carry our capital investments they do not provide space for large scale investments with high economic development impact. While unconditional transfers have increased steadily and are comparable to own revenues generated from local governments, the RDF size allocated from the central to local government has been volatile over time. This kind of financial resources might enable local governments to engage in larger scale investments involving more than the own territories, thus creating a breeding ground for future sustainable economic development. Figure 179. Regional Development Fund (in ALL million) 16,000

14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Source: Ministry of Finance & Authors calculations

The first time RDF was introduced in 2006 and recorded about All 300 million and recording the first substantial jump in 2009 to All 5.5 billion. From 2010 to 2014, the regional development funds have ranged from All 2 billion to All 5.8 billion in 2014. The highest level ever allocated for local infrastructure development was registered in 2015. Total funds recorded about All 14.9 billion, 2.5 times higher the previous year and represented about 0.9% of nominal GDP and are almost equal to overall own financial resources generated by the 61 municipalities. Being constrained only on aggregated level data on its size, and 280

missing the information with regard to investment projects financed over time, cannot make assessments on potential effects in local economies. Whether this instrument has fulfilled its main objective, mitigating disparities and promoting growth in less developed areas through capital investments, it still remains an issue to be exploited (when data will be available at benefiting municipality level). Disparities between development regions, expenditures side Alongside revenues, it is important to analyze also expenditures allocation in order to create a full picture of financial resources management and their allocation by the local government units. Total expenditures of local governments during 2014 recorded about All 60.2 billion, up by 12.3% in annual terms mainly on the back of higher operative expenditures. Table 213. Expenditures by categories at regional level (in %) 2013

2014

Personnel

Operative

Capital Investments

Personnel

Operatives

Capital Investments

Region 1

16.0

61.7

22.3

15.7

64.3

20.0

Region 2

21.8

50.6

27.5

20.5

51.9

27.6

Region 3

19.0

58.6

22.5

15.7

58.7

25.6

Region 4

22.1

55.6

22.3

18.9

54.1

26.9

Albania 20.2 55.5 24.3 Source: Ministry of Finance & Authors calculations

18.2

56.1

25.7

In general, the local governments units allocate more than 50% of total expenditures in operative expenses. Capital investments, with some differences between the regions, account in range in average between 20-28% of total expendituresxl . Figure 180. Expenditures by categories, year 2014 (in %)

281

Personnel

Operatives

Capital Investments

100 90 80 70 60 50 40 30 20

10 0

Region 1

Region 2

Region 3

Region 4

Albania

Source: Ministry of Finance & Authors calculations

In region 1, operative expenditures dominate on the other categories representing about 64.3% of total expenditures and standing about 6.2 percentage points above the national average. Instead, capital investments represented about 20% of total expenditures, 5.7 percentage points below the national average. This is the lowest investment level between development regions latter on translated in other deteriorated economic indicators. On the contrary, in region 2 is registered the highest level of capital investments (about 27.6% of total expenditures) and the lowest level of operative expenditures (about 51%) for 2014. Region 3 and region 4 allocate almost similar levels of expenditures to capital investments but different shares in operative expenditures. In region 2, personnel costs account for more than 20% of total regional expenditures. Expenditures allocated to this category are proportional to the size of the local government in each of the regions. Overall expenditures in region 1 rose by 2.2% in annual terms, mostly due to higher expenditure levels registered in the municipalities of Lezhë and Kurbin. Within the municipalities constituting region 1 there might be evidenced some common patterns in the allocation of financial resources. Table 214. Expenditure allocation by categories, region 1 (in %)

Lez hë

Region 1

2013

2014

Personnel

Operating

Capital Investments

Personnel

Operating

Capital Investments

Region 1

16.0

61.7

22.3

15.7

64.3

20.0

Lezhë

20.7

59.4

20.0

17.3

54.6

28.1

Mirditë

15.6

58.6

25.8

15.6

56.1

28.3

282

13.9

67.9

18.3

12.1

67.5

20.4

Shkodër

17.7

65.0

17.3

16.6

68.5

14.8

Malësi Madhe

13.3

61.8

24.9

13.6

66.5

19.9

Vau Dejës

14.8

53.5

31.6

14.8

59.5

25.7

Pukë

16.4

54.8

28.8

21.1

64.7

14.3

Fushë Arrëz

16.7

62.3

21.0

18.5

67.3

14.2

Kukës

14.6

69.0

16.3

14.2

70.8

15.0

Has

15.8

60.0

24.2

14.1

58.1

27.8

Tropojë 11.9 52.4 Source: Ministry of Finance & Authors calculations

35.7

16.6

70.7

12.7

Kukës

Shkodër

Kurbin

In all the municipalities, despite differences among them, the highest share of expenditures goes for operating expenses (more than 55% in 2014) and together with personnel expenses account for more than 70% of total expenditures of the municipalities. Extreme cases are those of the Municipalities of Kukës and Tropojë both registering more than 70% of operating expenses during 2014. The municipality of Lezhë allocated about 54.6% of total expenditures in operating expenses. Figure 181. Expenditures by categories for region 1, year 2014 (in %) Personnel

Operating

Capital Investments

100 90 80 70 60 50 40 30 20

Lezhë

Shkodër

Tropojë

Has

Kukës

Fushë-‐Arrëz

Pukë

Vau -‐Dejës

Malësi e Madhe

Shkodër

Kurbin

Mirditë

Lezhë

Kukës

Source: Ministry of Finance & Authors calculations

In average, capital expenditures of local governments in region 1 have represented about 20% versus total expenditures. The highest level of capital investments is registered in the municipalities of Lezhë (28.1%), Mirditë (28.3%), Has (27.8) and Vau Dejës (25.7%) and the lowest levels in the municipalities of Tropojë (12.7%), Fushë Arrëz (14.2%), Pukë (14.3%) and Shkodër (14.8%). The gap in terms of investments between the two groups of municipalities is large and

283

volatility high, which might be attributable to various factors (needing further analysis on longer time series) Figure 182. Capital expenditures per capita, region 1 (in ALL) Capital investments per capita Region 1 = 4,567.0

12000 Mirditë 10000 8000

Has

6000

Lezhë

Vau -‐Dejës Kurbin

4000

Pukë Malësi e Madhe

Fushë-‐Arrëz Kukës

Shkodër

2000

Tropojë

Source: Ministry of Finance & Authors calculations

Within region 2, the expenditures allocation by categories shows that municipalities have allocated more than 65% of total resources in personnel and operating expenses. Capital investments account in average for 57.6% of total expenditures for 2014. Personnel expenses are the most stable component of expenditures presenting the lowest volatility between the municipalities. On the contrary, municipalities differ substantially in terms of operating and capital expenditures. More resources channeled into investments the higher the probability for the municipality to promote overall economic and social development in their territory. Table 215. Expenditure allocation by categories, region 2 (in %)

Tiranë

2014

Personnel

Operating

Capital Investments

Region 2

21.8

50.6

27.5

20.5

51.9

27.6

Tiranë

23.8

47.5

28.8

23.9

51.2

24.9

Kamëz

14.9

46.6

38.5

15.3

50.0

34.7

Vorë

18.1

37.4

44.5

22.1

48.3

29.6

Kavajë

24.8

55.5

19.7

18.8

45.9

35.3

Rrogozhinë

21.0

62.2

16.8

20.6

63.8

15.6

25.7

52.2

22.1

20.0

46.0

34.0

D u r r ë s

Region 2

2013

Durrës

284

Personnel

Operating

Capital Investments

Dibër

Shijak

17.9

54.8

27.4

15.6

52.9

31.5

Krujë

19.5

54.7

25.8

17.9

49.2

32.8

Dibër

16.7

67.7

15.5

15.2

75.6

9.3

Bulqizë

17.9

56.6

25.5

13.6

51.0

35.4

Mat

17.2

56.3

26.5

14.8

59.0

26.2

35.5

13.5

65.0

21.5

Klos 11.2 53.3 Source: Ministry of Finance & Authors calculations

The highest share of expenditures at municipal level goes to the operating expenses which account for more than 45% in 2014 and the data show for a high deviation from the regional average. Extreme cases are those of the Municipalities of Dibër, Klos and Rrogozhinë allocating in this category of expenditures about 75.6, 65.0 and 63.8% respectively during 2014.Given the current state of economic development and overall living conditions in these areas, allocating more than 60% of expenditures for operating expenses (which do not bring growth) seems inefficient. On the other hand, the municipalities of Durrës and Kavajë have minimized operating expenses in favor of more productive use of resources. Figure 183. Expenditures by categories for region 2, year 2014 (in %) Personnel

Operating

Capital Investments

100 90 80 70 60 50 40 30 20

Tiranë

Durrës

Mat

Bulqizë

Dibër

Krujë

Shijak

Durrës

Rrogozhinë

Kavajë

Vorë

Kamëz

Tiranë

Dibër

Source: Ministry of Finance & Authors calculations

In average, capital expenditures of local governments in region 2 represented about 27.6% versus total expenditures. The level of capital investments differ significantly between municipalities: those dedicating more than 30% of their budget to capital investments like the municipalities of Bulqizë (35.4%), Kavajë (35.3%), Kamëz (34.7) and Durrës (34.0%); municipalities channeling in investments a level of financial resources close to the regional average like the

285

municipalities of Vorë (29.6%) and Mat (26.2%); and municipalities dedicating a small share of their budget to investments like Dibër (9.3%) and Rrogozhinë.

Figure 184. Capital expenditures per capita, Region 2 (in ALL, year 2014) Capital investments per capita Region 2 = 5,301.7

10000

Kavajë

9000

Bulqizë

8000

Durrës

7000

6000 5000 4000

Vorë Tiranë

Shijak

Kamëz

Mat

Krujë

Klos

3000 2000

Rrogozhinë

Dibër

1000 0

Source: Ministry of Finance & Authors calculations

Capital investments per capita in 2014 registered about 5,301.7 Lek and account for high differentiation between municipalities. Almost the same categorization of municipalities can be noticed as when the share of capital expenditures versus total expenditures were considered. Total expenditures realized by local governments in region 3 increased sharply in 2014 by 21.5% in annual terms, mostly due to higher expenditure levels registered in the municipalities of Elbasan and Korçë. Expenditures allocation among categories shows for a mixed distribution of financial resources between personnel, operating and capital investments by municipalities. Personnel expenses are the most stable component of expenditures presenting the lowest volatility when compared to the other components. Table 216. Expenditure allocation by categories, region 3 (in %)

Elbasan

Region 3

2013

2014

Personnel

Operating

Capital Investments

Region 3 Elbasan

19.0 17.1

58.6 64.8

22.5 18.2

15.7 12.2

58.7 58.5

25.6 29.4

Belsh

13.8

45.2

41.0

12.9

53.6

33.5

Cërrik Peqin

13.3 16.9

42.6 55.7

44.1 27.4

13.5 19.2

55.5 71.6

31.0 9.2

286

Personnel

Operating

Capital Investments

17.7 17.2

64.1 58.5

18.2 24.2

16.3 15.9

67.2 69.3

16.5 14.8

Prrenjas

13.1

56.9

30.0

15.1

75.7

9.2

Berat Ura Vajgurore

25.6 25.1

61.6 57.2

12.9 17.7

17.5 25.5

53.4 61.3

29.1 13.3

Kuçovë

13.1

43.3

43.7

16.0

55.9

28.2

Skrapar Poliçan

21.7 26.0

44.3 63.8

34.0 10.2

22.6 25.8

42.6 61.8

34.8 12.4

Korçë

22.5

66.5

11.0

13.6

47.3

39.1

Maliq Pustec

21.4 39.2

61.6 38.8

17.0 21.9

18.5 33.9

66.9 46.5

14.6 19.6

Kolonjë

23.0

55.6

21.5

20.8

57.3

21.9

Devoll 20.4 48.0 Pogradec 19.3 63.5 Source: Ministry of Finance & Authors calculations

31.6 17.2

19.9 16.4

56.8 70.0

23.3 13.7

Korçë

Berat

Gramsh Librazhd

The highest share of expenditures at municipal level goes to the operating expenses which account for more than 45% in 2014 (with exception of the municipality of Skrapar) and the data show for a high deviation from the regional average. The highest level of financial resources channeled in operating expenses is found in the Municipalities of Prrenjas (75.7%), Peqin (71.6%) and Pogradec (70%). On the contrary, the municipalities of Skrapar, Pustec and Korçë have minimized operating expenses in favor of more productive use of resources. Figure 185. Expenditures by categories for Region 3, year 2014 (in %) Personnel

Operating

Capital Investments

100 90

80 70 60 50 40 30 20

Elbasan

Berat

Source: Ministry of Finance & Authors calculations

287

Korçë

Pogradec

Devoll

Kolonjë

Pustec

Maliq

Korçë

Poliçan

Skrapar

Kuçovë

Ura vajgurore

Berat

Prrenjas

Librazhd

Gramsh

Peqin

Cërrik

Belsh

Elbasan

In average, capital expenditures of local governments in region 3 represented about 25.6% versus total expenditures. With regard funds engaged in investments, municipalities present different profiles and choices classified as: group of municipalities that have dedicated more than 30% of their budgets to investments like Korçë (39.1%) and Skrapar (34.8); municipalities channeling in investments a level of financial resources close to the regional average like the municipality of Elbasan (29.4%) and the municipality of Berat (29.1%); and municipalities dedicating a small share of the budget to investments like Prrenjas (9.2%) and Peqin (9.2%). Capital investments per capita in 2014 registered about 5,897.6 Lek and account for high differentiation between municipalities. Almost the same categorization of municipalities can be noticed as when the share of capital expenditures versus total expenditures were considered.

Figure 186. Capital expenditures per capita, Region 3 (in ALL) Capital investments per capita Region 3 = 5,897.6 Lek 16000 14000

Skrapar

12000

Korçë

10000 8000

Elbasan Belsh Cërrik

Berat

6000 4000

Kolonjë Kuçovë

Gramsh

Librazhd 2000

Peqin

Prrenjas

288

Devoll

Poliçan Ura vajgurore

Maliq

Pustec Pogradec

Source: Ministry of Finance & Authors calculations

Overall expenditures in region 4 rose by 17.4% in annual terms, mostly due to higher expenditure levels registered in the municipalities of Vlorë, Fier and Gjirokastër. The distribution of financial resources according to the categories shows a mixed picture. Being constituted by 20 municipalities entails per se differences between them in terms of size, budgets etc. Personnel expenses are the most stable component of expenditures presenting the lowest volatility when compared to the other components. On the contrary, municipalities differ significantly in terms of operating and capital expenditures, both decisions determined by the local government’s themselves. Table 217. Expenditure allocation by categories (in %)

Gjirokastër Vlorë

Region 4

Fier

Qark

2013 Region 4

Personnel

2014 Capital Investments

Operating

Personnel

Operating

Capital Investments

22.1

55.6

22.3

18.9

54.1

26.9

Fier

28.1

62.2

9.7

25.9

57.5

16.6

Patos

21.6

53.7

24.6

19.6

57.3

23.1

Roskovec

14.5

32.0

53.5

13.0

33.1

53.9

Lushnjë

21.6

59.7

18.7

16.7

60.6

22.7

Divjakë

17.1

50.5

32.5

15.1

50.5

34.4

Mallakastër

17.2

41.2

41.5

14.4

34.5

51.1

Gjirokastër

31.8

45.6

22.5

23.6

38.6

37.7

Libohovë

23.4

48.8

27.8

28.7

57.6

13.7

Tepelenë

25.3

66.3

8.4

18.8

59.7

21.5

Memaliaj

17.4

60.3

22.3

16.5

73.1

10.3

Përmet

28.1

47.2

24.7

21.6

45.1

33.3

Këlcyrë

15.5

44.1

40.4

16.5

56.6

26.9

Dropull

24.8

52.4

22.8

21.6

52.9

25.5

Vlorë

19.7

70.2

10.0

15.3

63.6

21.2

Selenicë

18.6

40.2

41.1

20.5

46.1

33.4

Himarë

23.8

43.4

32.8

18.7

38.6

42.7

Sarandë

25.6

57.5

16.9

22.2

62.5

15.2

Konispol

21.0

43.7

35.4

15.4

45.3

39.3

Finiq

24.3

60.5

15.1

20.1

63.6

16.2

Delvinë

14.9

59.9

25.2

15.2

63.4

21.4

Source: Ministry of Finance & Authors calculations

As abovementioned, allocation of financial resources from local governments in the regions has posts important disparities: from one side we have municipalities like Roskovec and Mallakastër which have channeled less than 35% of their

289

expenditures in operating expenses and on the other hand we have municipalities like Memaliaj that has dedicated more than 70% of their expenditures to operating expenses. Figure 187. Expenditures by categories for Region 1, year 2014 (in %) Personnel

Operating

Capital Investments

100 90 80 70 60 50 40

30 20

Fier

Gjirokastër

Delvinë

Finiq

Konispol

Sarandë

Himarë

Selenicë

Vlorë

Dropull

Këlcyrë

Përmet

Memaliaj

Tepelenë

Libohovë

Gjirokastër

Mallakastër

Divjakë

Lushnjë

Roskovec

Patos

Fier

Vlorë

Source: Ministry of Finance & Authors calculations

In average, capital expenditures of local governments in region 4 have represented about 26.9% versus total expenditures. With regard to capital investments expenditures, municipalities have followed different strategies and thus we have: municipalities that have prioritized investments, shifting resources from less to more productive usage, such as the municipalities of Roskovec (53.9%), Mallakastër (51.1%) and Himarë (42.7%); municipalities channeling the lowest level of financial resources to investments like the municipality of Memaliaj (10.3%) and other municipalities standing below/above the regional average. Capital investments per capita in 2014 registered about 6,295.9 Lek and account for high differentiation between municipalities. According to this indicator the municipality of Himarë presents the highest level in absolute terms (21,920 Lek) and looks like an outlier. The other municipalities might be classified in other three groups: the one comprising the municipality of Roskovec and Mallakastër with little differences between each other but very different compared to the other groups and the regional average; group of municipalities standing above the national average but do not present high differences among each other like the municipalities of Gjirokastër, Konispol and Përmet; group of municipalities standing below the national average thus presenting lower levels of capital investments per capita.

290

Figure 188. Capital expenditures per capita, Region (in ALL, year 2014) Capital investments per capita Region 4 = 6,295.9 Lek 25000 Himarë 20000

Roskovec

15000

Mallakastër

Gjirokastër

10000

Përmet

Dropull

Këlcyrë

Selenicë

Konispol

Tepelenë Patos

5000 Fier

Sarandë

Divjakë Lushnjë Libohovë Memaliaj

Source: Ministry of Finance & Authors calculations

291

Vlorë

Finiq Delvinë

3 PROFILES OF REGIONS AND STRATEGIES 3.1 CONCLUSIONS OF THE ANALYSIS Conclusion 1: Territorial disparities exist and have a different representation for different levels of analysis. Investments strategies and projects should be designed to reflect the different territorial levels and not only the 4 development Regions. Investments and funds’ allocation should seriously consider the internal regional disparities by targeting the most those areas (municipalities and qarks) that are more disadvantageous: •

Disparities between Tirana and the rest of qarks are severe. The Qark of Tirana is an outstanding position compared to other qarks in more than 90% of the cases/indicators and can be considered often as an outlier in the analysis, by increasing national averages and hiding the reality of the other qarks.

•

Disparities among the Qarks (excluding Tirana) are at an average level. Divergences are high for some indicators and low for others.

•

Disparities among the four development regions are even lower, through showing always Region 2 (Tiranë, Durrës and Dibër) as the best positioned in terms of development level. It should be kept in mind that Dibër is the most disadvantageous qark, but its figures (reality) is hidden behind the figures of Tirana and Durrës for the same indicators, when merged at regional level.

•

Disparities between rural and urban areas are very pronounced. This is reflected by the analysis at local level (61 municipalities) for local finances, environmental pollution and topography and territorial barriers. It is also shown by the Instat analysis on poverty, which provides separate comparative findings for urban and rural areas.

•

Disparities do not reflect the economic/natural resources and potential. As a matter of fact all qarks have abundant natural resources, including those of great economic value due to use in industry, energy sector, etc. Qarks that score lowest and are categorised as least developed have more natural resources (and thus economic potential – for instance Dibra, Kukës, etc.) than those categorised at upper levels at development (Tirana and Durrës). This means that the real untapped economic resources (and thus potential for development) are located in the more peripheral qarks, and not in Tiranë.

292

However, this shows that disparities arise due to historical economic development patterns and location of administration and national government institutions, as well as factors that were born with the shift of the economic regime. Migration and accessibility have played also a major role in concentrating most of the population and services in one area (Tirana and Durrës), by increasing also GDP and economic activity intensity in this area. Seemingly, though at a lower pace, population and economic potential/activities were displaced from rural and remote areas to the closest urban centres (from villages to qark centres). This concentration of population, labour force, services and businesses (thus a large part of the economic capital) in one area is negative for both, Tirana and the rest of the country. Tirana may experience development, but at a high social and environmental pressure, while the rest of the country may experience serious economic and demographic depression, if the current pattern is kept. The current scenario suggests also for an unhealthy future of the economic development in Tirana, because by being isolated and with little cooperation with the rest of the country, there is little sustenance base for the (so far) “services and construction economy” of Tirana. The above facts show that the national and regional strategies for dealing with territorial disparities should be diverse and target the different (territorial) levels of analysis, by focusing the most in the worst scoring municipalities and qarks. It is not enough to conclude on regional disparities by comparing the 4 regions only, because not only divergences are lower in this case, but also reality is often hidden behind figures. For instance, Region 2 scores always higher (for most of the indicators), due to the outlier position of Tirana and often Durrës as well. The figures of Tirana are so high compared to other qarks that when merged into the Region 2 profile, they absorb the very low figures of Dibër, thus hiding the development needs of this qark. If regional development projects would reflect the profile of Region 2 without looking at internal disparities, or qark/local disparities, then Dibër would most likely keep remaining disadvantageous in terms of benefiting from more investments and its divergence from the rest of the region/qarks would increase further. Similarly, integrated scores of Regions 3 and 4 hide the reality for Berat and Gjirokastër respectively.

•

Figure 189. A summary of the disparities analysis per qark Tiranë' Durrës' Shkodër' Lezhë' Kukës' Dibër'

Fier'

Vlorë' Gjirokastër' Berat'' Korçë' Elbasan'

293

1.1 Economic Development

1.2 Social Development

1. Social and Economic

2. Spatial & Environment

1. Social and Economic

Typology

Lezhë; Kukës; Dibër; Berat; Gjirokastër Shkodër & Korçë

Least Developed

Peripheral

Durrës; Fier; Vlorë; Elbasan Tiranë

Medium Developed – Lower Rank Medium Developed – Upper Rank Most Developed – Hub

Intermediate

2. Spatial and Environment Kukës, Dibër, Berat

Central Core

Gjirokastër, Vlorë, Korçë, Elbasan Shkodër, Lezhë, Fier

Metropolitan area

Tiranë & Durrës

Figure 183 shows two different typologies-groupings of qarks: one based on the social and economic indicators (policy objectives 1 and 2) and one based on the indicators of the other policy objectives (environment, spatial development, demography). The differences are not huge between the two typological groups and the qark of Lezhe is the only one that changes its category by two levels when moving from one typological group to the other. In both typological groups, Tiranë, Fier, Korçë, Dibër, Kukës and Berat keep the same positions/levels, with Tirana being the most advantageous and the three last qarks standing at the most disadvantageous level. Table xx (defining typologies) provides a short profile for each typology in both groups. Conclusion 2: Infrastructure investments are progressing, but rather slowly and yet not evenly distributed across the territory, affecting development to a large degree, through accessibility potential. Capital investments for infrastructures remain a high regional development priority: •

Figures show that the overall accessibility has improved significantly during the last 10 years, due to national investments on new transport (road) corridors.

•

However, most of the improvement brings advantages to Tirana rather than the rest of the qarks. Thus, national corridors intend to link Tirana with qark centres in a radial shape, increasing its accessibility and emphasising the monocentric development pattern. The qarks’ centres (those connected so far) have an improved access to Tirana, but not among them. Further more, accessibility of rural areas towards the qark centres has improved to a much lesser degree, without bringing any development progress at cross-local and regional level. 294

•

Furthermore, infrastructure investments were not matched by economic enhancement strategies (for instance Kukës in the case of the DurrësMorine highway, or Dibër in the case of Arbri road, etc.). The construction of roads is key to reducing travel time and improving communication. Nevertheless, if it is not harmonised with business support for boosting the local economy of the least advantageous location, than it will only lead to more population/workforce drain from the least developed to the more developed centre. This means that commuting will increase, together with the social and environmental pressure over the most developed area, and eventually may steer towards reduction of population in the less developed centre.

•

Underdeveloped physical communication and infrastructure network leads also to inefficient use of internal economic potential and resources. This is reflected in the figures of the least developed qarks (Dibër, Kukës and Berat), but also in the profiling of the cross border qarks that have a very good cooperation with neighbouring countries (i.e. Korçë & Gjirokastër with Greece). The latter have a high potential for economic autonomy due to cooperation with neighbour cities beyond the border, but are isolated from Tirana and the rest of the country due to underdeveloped infrastructure corridors. It actually takes 3.5-5 hours to reach the main cities of these qarks from Tirana. The direct effect is felt on tourism (these qarks have a high yet underutilised potential), as well as on the local economy and social development;

•

The low investments on transport infrastructure are the main reason behind the isolation of the mountainous rural areas. So, there are two types of communication, which in an ideal setting would represent two overriding alternative networks: i) the one among urban centres, regardless of their location; ii) and the one among rural areas east to west and north to south. The latter is so lagging behind because of dilapidated, or missing transport infrastructure and this has a tremendous impact on the development level of rural areas, low accessibility, higher poverty levels, isolation and fragmented touristic products.

Conclusion 3: Development potential among areas is yet unexploited and as a result, the profitable value chains are either incomplete or missing at all. There are also several cases of sectorial conflicts that become apparent once projects’ implementation takes place on the territory. This leads to inefficient exploitation of natural resources, as well as lack of coordination

295

between development regions in terms of benefiting from the common economic potential and products: •

The need for coordination is relevant for both sectorial development strategies/investments among one-another and with territorial development instruments, as well as among development regions and the other local and national institutions that carry out any sort of planning instruments and investments. The achievement of such coordination is based on a solid framework of multilevel governance, so its absence shows for weak of missing multilevel governance approach. The lack of sectorial and territorial coordination brings about unsustainability and thus no regional development. For instance, the construction of several hydropower plants (and more others planned), may well serve the energy sector purposes, but is in pure conflict with the tourism industry. The latter would extremely benefit of the rivers as natural sites for eco-tourism and all related activities, thus completing the tourism value chains extending and diffusing from the coastal area towards the hinterland. Seemingly, there are large agricultural areas (in Fier, Lushnje and Kuçovë – Regions 4 and 3) that are faced with oil extraction industry pressures. These areas are some of the most qualitative ones (for agriculture soil) and at the same time host valuable resources of crude oil and natural gas. Both sectors constitute a national priority, while agriculture sector is particularly important for the regional and local development. The plans for the expansion of crude oil extraction are currently conflicting with the local plans for enhancing the agriculture sector and protecting the land through environmentally sound practices.

•

Tourism is a national priority sector and all municipalities claim it as a priority axis in their local strategies and plans. The recently established development regions also intend to include tourism as one of the key investments areas, because: i) regional profiles show that there is plenty of potential for tourism development (all kinds); ii) is in line with national development objectives and overall profile of Albania as new international touristic destination; iii) it is a good basis for boosting both local and regional economies and thus increasing welfare next to growth indicators (such as GDP); iv) it is in line (at least in principle) with the environmental sustainability and resilience objectives. However, the current analysis shows that tourism has still a low effect on overall (national-regional-local) economic development. Tourism has a low contribution to GPD. The number of tourist entering the country has

296

increased and most of them enter by land, rather than air and sea. The message in this regard is twofold: i) accessibility by air and sea has yet to improve. So far the port of Durrës and Tirana airport are the only alternatives to land borders, and are either pricy or do not offer proper quality facilities; ii) there is a great potential for introducing Albania into the Balkan and European map of touristic roads. Apparently, those who visit other Balkan countries have an interest to cross Albania as well. They include Albanian territories into their routes because of its favourable geographical location and the unique sightseeing experience it offers. Further more, tourism as a sector has not developed full products’ oriented value chains and regions remain isolated from one-another in terms of the product. For instance, those who come to Albania from Corfu to visit Saranda have no possibility to advance further into the hinterland, or the rest of the southern coast, because of the inadequate transport infrastructure and the absence of activities that could be otherwise offered for at least a full 24 hours experience. Likewise, it is difficult to benefit within a short time from both the coastal-urban touristic experience and the mountain-natural-rural one, though areal distances are short. Again, this is so, because of two key reasons: i) the poor transport infrastructure – trips last longer than 2 hours in most of the cases; ii) the inferior quality of services – the hotels of different qualities are not evenly distributed within the territory, and in fact the hinterland (rural areas) are totally missing medium to high quality hotels. In addition to that, value chains are incomplete in terms of the offer of activities. This suggests for a very modest touristic product from a sectorial perspective, and for a deficient local economic base from a development perspective. This profile is further insinuating that the natural resources within the rural-mountainous area are not only underutilised by tourism, but are also at risk of environmental failure due to overexploitation by other sectors. •

Las, but not least, transport infrastructural barriers and underdeveloped tourism, decrease tremendously the potential for strengthening the linkages of Albania into the Balkan and European network of cities, protected areas, touristic sites and products.

Conclusion 4. The national development profile is monocentric, with most of the GDP, population and accessibility concentrated in the Tirana-Durrës area. The national monocentric development is further complemented by a cascade pattern of population and economic activities location. Thus, most of the

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potential has drained from the rest of the country to Tirana-Durrës metropolitan area, and in addition, the population of remote rural areas is displaced from their setting to the qark centres. Of course, the intensity of the latter is fairly small compared to the previous: •

Polycentrism is analysed for the current context from a morphological (physical) and functional (relational) perspective, and for its potentiality. Both, morphological and functional polycentrism pin down the same finding – that Albania is highly monocentric, but has a good probability to reverse this picture by making use of one positive factor, i.e. the locational index of polycentrism. Thus, the main urban centres of Albania (highly divergent from Tirana, but similar among them) are evenly distributed over the territory. These urban centres hold moderate population levels, services and infrastructures that are sufficient to encourage the shaping of a minimal economic core. This core could grow and be sustained by economic policies that promote decentralised, but integrated and complementary development, based on the competitive advantages of the regions. On the other hand, the study of potential polycentrism, based on current commuting accessibility, discloses the area of Peqin-Cërrik-BelshRoskovec (Regions 3 and 4) as the one for robust future centrality. This is due to overlying interests from more than 5 functional areas (around 15 municipalities). This is an indication that good transport infrastructure strategy and investments can expose several areas in Albania that currently suffer remoteness and exclusion from the national economic network;

•

National infrastructures are incomplete and do not achieve as yet the objective of 2-hours travel distance from the furthest urban centre to Tirana, the international airport and Durrës port. Good access to motorways’ exits is limited to settlements located within the narrow strips along the national corridors (Lezhë – Vlorë and Durrës – Kukës). These corridors do cover limited areas of the territory, while the inhabitants of the mountainous villages, though close to the corridors in an aerial distance, take often 3 or more hours to reach an exit.

•

The highly pronounced monocentric profile is further complemented by the weak rural development patterns. This is reflected in poverty, local finances, and agriculture and tourism figures of the statistical analysis as well. Likewise, the lack of complementarity, or presence of conflicts over resources among sectors (industry-tourism; industry-agriculture; energy-

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tourism; etc.) indicates for a missing functional relation between urban and rural centres and among settlements in general, and thus an absence of the polycentric network of regions.

3.2 REGIONAL TYPOLOGIES Regional typologies are drawn as a result of the analysis and its conclusions. So, 3 major types of regional typologies are identified, namely: i) dichotomies; ii) the grouping of qarks based on the 4 policy objectives of regional development; iii) and the typologies of the 4 development regions. The analysis identifies two major types of dichotomies: Mountain – Coast (or urban – rural); Peripheral – Central; and Polycentric – Monocentric. The aim for using dichotomies as a typological classification is to shed some light on the contrasts that exist among areas in the country, regardless of the local administrative boundaries, or the clustering created through the development regions. These contrasts represent a highly pronounced level of territorial disparities among areas that belong to one typology, or the other. The dichotomies-based classification provides input to the policy thinking and decision-making process, by: i) emphasising how important it is not to channel funds for regional investments based on clearly distinct and mono-profile areas, as this leads to further increase of territorial disparities; ii) and enabling a more profound comprehension of disparities, which are presented in several ways, and thus displayed through diverse models on the territory. Albania has a clear distinction between the mountainous area and the coastal one, both laying parallel to each other from the north to the south. The differences are visible in geographical terms, such as the changing terrain, altitudes above sea level, climate zones (vertical belt-shaped) and biodiversity, hydrographical network (rivers heading from east to west, flowing into the sea), and a coastal line almost as long as the length of the country from north to south. This geographical epitome is fully reflected into the social and economic model of the territory as well. The most developed and urbanised area of the country is located along the coast (most parts of it are a plain field), reaching its climax in the Tirana-Durrës metropolis. As a result of the concentration of population and economic (active enterprises) and financial activities in the coastal area, the highest values of GDP are also generated within it. Accessibility and access have their highest figures in the coast, while the mountainous area is still facing the challenges of the natural

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barriers to transport and communication. This is further mirrored into more social exclusion, higher poverty figures, lower employment and higher unemployment. Figure 190. National population and territory per altitude

The second dichotomy, centralperipheral has a different spatial representation, resembling that of a network with central nodes and peripheral areas surrounding these nodes. The nodes are the main urban areas, thus the 18 urban agglomerations already identified by Instat upon a specific methodology. These urban areas are however different in terms of population, economic power, concentration of urban functions and accessibility, as shown in the polycentrism analysis, meaning that their centrality is not uniform and some (Tirana, Durrës, Vlorë, Fier, Elbasan, Shkodër, Korçë) are more disadvantageous than the others. Source: Instat and Co-PLAN 2016

Nevertheless, all of them are centralities and represent a good opportunity for their surroundings (composed of rural and small urban settlements) to shift from a peripheral classification to a central and thus accessible one. The fact that these central nodes have a uniform distribution across the territory, is a positive factor in favour of future enhanced accessibility and equal development. Infrastructure and business promotion investments that target the relation between each urban centre (agglomeration) and the surrounding rural region lead to coordinated regional development within the qark and reduction of local disparities.

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The last dichotomy, polycentric-monocentric, builds on the previous two and it depicts a very monocentric development model of Albania. Spatially speaking, Tirana-DurrĂŤs metropolitan area has a very dominant profile over the rest of the country and urban agglomerations, representing a focal zone that attracts activities, population, workforce and capital. If regional development strategies were feeding significant funding portions towards this area, this would favour further the monocentric development model and deepening regional disparities.

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Figure 191. Share of local territories for altitudes above sea level: 0-100m and 100-300m

Source: Co-PLAN, 2016

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Figure 192. Share of the local territories for altitudes above sea level: 300-500m, 500-800m and above 800m

Source: Co-PLAN, 2016

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Table 218. Regional and territorial typologies Typologies of Qarks based on grouping of indicators Groups of Qarks

Tiranë and Durrës

Shkodër, Lezhë and Fier

Environment and Spatial Capital Metropolitan area: the best access for all transport modes and other services, also the best accessibility in terms of polycentrism analysis; Best supplied with infrastructures; Total indicators’ values usually always high, but sometimes low per capita figures due to high population levels; Very good potential for all sorts of land development including agriculture and natural parks; Concentration of 1/3 of population and as a result, heavy traffic and congestion, informal settlements on agriculture land and high development and environmental pollution pressure. High number of commuters, high levels of urban solid waste generation and untreated wastewater, concentration of polluting industries including construction activity, pose high environmental polluting risks. Central Core: These qarks contain significant levels of population, though not comparable to the Tirana-Durrës area; Respective urban centres are well located along the coast with very good access to the international airport and Durrës port; Lezhë has the port of Shëngjin as well, while Shkodër has easy land connection to Montenegro as a cross border region/city; Abundant resources for agriculture development

Socio-Economic potential Most Developed – Hub: Tirana is an exceptional case for social and especially economic development indicators; Highest GDP and GNDI per capita (totals as well); Highest participation in GVA formation; It scores the best in terms of total employment and total active enterprises as well as enterprises/10,000 inhabitants; So far is the most competitive, also due to highest population number and best access; Very low employment in private agriculture sector and the highest in private non-agriculture; Social indicators may have lower values when expressed in per capita levels, due to high population number; Remains yet the most attractive place for living and working and the most preferred for foreign direct investments (foreign companies).

Medium Developed – Upper Rank: Economic performance is well below Tirana, but the region is attractive for local and foreign businesses, for agriculture sector development, tourism and industry, as well as for new settlers; It hosts the 4 biggest and most important urban centres (except Tirana), with a variety of functions and mixed development character, vast urban areas doubled or tripled in size during the last

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Groups of Qarks

Tirana

Durrës, Fier, Vlorë, Elbasan

Vlorë, Gjirokastër, Korçë & Elbasan

Kukës, Dibër &

and great tourism potential, of all sorts; Flat and hilly-to-mountainous terrain combined, access to sea and medium accessibility from a polycentrism perspective; Good road infrastructure (with few exceptions in the remote areas); environmental pollution pressures are high in the urban centres and medium in the most rural parts; Informal settlements on agriculture land; Conflicting economic sectors (agriculture-industry-oil extraction-environment-tourism).

twenty years and well accessed and 2 ports; The most intensive land development (construction activity) except for Tirana, happens in these urban centres and the adjacent secondary centres belonging to the qarks; Values of GDP and GNDI per capita stand at medium levels as well as social indicators (in most of the cases).

Intermediate: Relatively good access to motorways but still weak access to the central area of the country; even distribution of urban centres, but long travel time (+3 hrs.) from the rural setting to the qark centres and major cities to Tirana and Durrës, with the exception of Elbasan; Low to medium accessibility from a polycentrism perspective; Elbasan and Vlorë with good population figures, but still low critical mass compared to the other above groups; Urban centres for Elbasan and Vlorë pretty developed and mixed in charater, but the rural setting very remote; Gjirokastër and Korçë with very good accessibility across the borders but rather isolated from Tirana, the urban area still small and environmental pressures are low; The terrain is mainly mountainous or hilly at best; industrial pollution in Elbasan; historical sites at risk of low maintenance. Peripheral: the most mountainous areas of the

Medium Developed – Lower Rank: Moderate economic base, but with structural problems, high unemployment; agriculture based; plenty of natural resources as a good basis for tourism development, but the latter quite underdeveloped; Reduction of population with the exception of Shkodër city; Low economic performance and values of the social indicators; Most agriculture and services based GVA; Medium to low GDP and GNDI per capita; Active enterprises per 10,000 inhabitants at medium-tolow levels, the same for foreign and foreign-joint enterprises; Medium levels for social indicators per capita, mainly impacted by the low population number and pretty low totals – social capital underdeveloped. Least Developed: Indicators have very low

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Shkodër and Korçë

Lezhë, Kukës,

Berat

country, with very low access to the Tirana-Durrës metropolitan area; low access to motorways, with the exception of Kukës; very low accessibility from a polycentrism analysis; access of rural setting to the urban cores is also very low and similarly there is low access to other services (health, education, etc); Lowest population levels in the country, with low urbanization and also draining of population; Plenty of natural resources, very qualitative and unexplored, a great untapped potential for tourism development; Urban environmental pressures are very low, but natural sites are at risk of underutilization or overexploitation by sectors such as industry and energy production.

figures in most of the cases, with 30-40% (or more) below the national averages; Very low population levels; lowest GDP and GNDI per capita; low value added and GVA is mainly agriculture based, but in some cases Industry appears due to the mining sector; Employment levels very low, with some focus on private-agriculture; also very high levels of poverty and especially in some of the cases with extreme levels of depopulation.

Dibër, Berat & Gjirokastër

Table 219. Summary of the typological profiles of the 4 Development Regions Regions Region 1 (Sh-Le-Ku)

Short typological profiles of the Development Regions Natural Capital Social Capital and Institutional Development The region has a low urbanization with It had a decreasing rate of population urban population around 15 % points between 2001 and 2016, by 17.2%; The below national average; Soil sealing per lowest population density with 40 % capita very low in Kukës and very high in points below national average; It has the the rest of qarks, due to low urban land vs. youngest population, but high population; Nationally administered roads unemployment; females unemployment is slightly below the national average and slightly lower than male unemployment; sub-national ones are slightly above; The Quality of education is questionable number of road vehicles/1,000 inhb. has though it has the highest no. of increased and is almost equal to the

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Economic Potential It is the most disadvantaged region in terms of economic development and has the highest levels of poverty. It has the lowest GDP, GNDI and GVA, in per capita and totals; GDP/capita usually 30-25 percentage points below the national average in 15 years; It has the

national value. Abundant natural resources, but at risk of uncoordinated use and overexploitation; It has access to sea and is a cross-border region, surrounded by Montenegro, Kosovo and FYROM; The low land is at high risk of flooding from climate change effects, lack of maintenance of flooding and agriculture land infrastructure and informal developments on agriculture land. Very low accessibility in terms of polycentrism analysis; Good access for the three urban centres (qark centres), but very poor for the rest of the region. Has the lowest quantity of waste per capita and below national value. Inert waste stands below national value; Seawater is polluted from waste discharge along the coast in the most urban part and where rivers flow. Region 2 (Tr-Du-Di)

This is the most urbanized region with urban population around 25 % points above national average; Soil sealing per capita is very low in Dibër and high-tomedium in the rest of the Region. Nationally and sub-nationally administered roads stand slightly above the national average; There is the highest number of road vehicles /1,000 inhabitants and above the national value.

teachers/10,000 inhb., due to low population; Pupils enrolled/teacher at upper secondary education are around 5 % points below national average. No. of hospital beds/10,000 inhb. is slightly above national average, though the residents frequent mostly the hospitals in Tirana, showing for low quality of the health care in the region. Poverty headcount 4 % points above Albania’s level; Poverty gap and severity are the highest among the regions; The region has the highest number of families receiving social assistance (100 % points above national average).

The population has increased by 18.8 % between 2001-2016; Population density is the highest with 150 % points above national average; However, social inclusion is at high risk, due to unmanaged urbanization patterns, informal development of residential settlements, lack of urban integration and a strong tendency for social segregation between “old” settlers and “new comers”.

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lowest share in GVA formation (less than 11%). Agriculture has the dominant weight in GVA formation (34%). The region has the lowest contribution in total employment (10% or less); It is dominated by private agriculture employment. The number of active enterprises /10,000 inhb. stands 40-50 % points below national average.

This is the most advantageous region for economic development; It has a very mixed functional character; GDP/capita stands with 20-50 percentage points above national average in 15 years; It has the highest participation in GVA formation (approx. 50%); Most of banks and financial services concentrated in Region 2; Total

Has good coastal access and is at high risk of flooding from climate change effects; Has the highest environmental pollution, and good figures in Dibër are hidden behind Tirana and Durrës; Seawater is highly polluted from waste discharge along the coast in the most urban part and wherever rivers flow. Tirana and Durrës aquifers are also polluted due to high urbanization. Together with Region 4 has the highest quantity of waste/capita & above the national value. Inert waste/capita is the lowest, almost ¼ of national value, though totals are high, due to high population. It has the best accessibility in terms of polycentrism analysis (GDP and population concentrated in the area) and services.

It offers so far the best level of education activities, also due to the highest offer on education alternatives, but still has the lowest no. of teachers/10,000 inhb., because of very high population levels; Pupils enrolled/teacher at upper secondary education are around 10 % points above national average; Health services are heavily concentrated in one qark of this region – Tirana, not because facilities do not exist in other regions, but due to quality and alternatives offered in Tirana. As a result Tirana offers service for those living in other regions as well; Still, no. of hospital beds/10,000 inhb. is around 10 % points below national average, due to high population number.

deposits always above 50% while other regions always below 20% Trade, transport & communication have the dominant weight in GVA formation (29%). It has the highest contribution in total employment (around 40%) & similarly in public administration, due to concentration of the later in Tirana and Durrës area; It is dominated by private non-agriculture employment. Active enterprises /10,000 inhb. stand 25-30 % points above the national average.

Poverty gap and severity are below the national values, but headcount is equal to Albania’s; No. of families receiving social assistance around 30 % points below national average; Region 3 (Ko-El-Br)

The region has very low urbanization with urban population around 25 % points below national average; Soil sealing per capita is at medium levels and uniform across qarks; Nationally administered roads almost at national average, while sub-national ones around 10 % points above; Has the lowest number of road

It has the highest decreasing rate of population between 2001 & 2016, by 19.4%; Population density around 25 % points below national average; Underdeveloped social capital, but with good potential for strengthening it; No. of pupils enrolled/teacher at upper

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The region has great untapped touristic potential; It can be considered as medium-lower rank for social and economic development, with good representation of the urban centres, but quite low in rural areas; GDP/capita usually stands 30-20 percentage points below the

vehicles per 1,000 inhabitants and is below the national value.

secondary education is almost equal to national average;

It has abundant hidden natural resources, either underutilised risk of overexploitation because of no control; Waste/capita, both urban and inert/construction is below national value; Underground water and rivers pollution is low in the upper lands, especially compared to other qarks as it has no sea access â&#x20AC;&#x201C; the only region with no coastline. However, pollution of rivers and aquifers in Berat and Elbasan (urban areas) is high due to current and inherited industrial activity.

The no. of hospital beds/10,000 inhb. is around 10 % points above national average, due to low population levels; Health care quality is lagging behind. Poverty headcount, gap and severity are the lowest among the regions and below the national values; No. of families receiving social assistance is slightly above national average.

national average in 15 years; It has a decreasing share in GVA formation (18-20%); Agriculture sector has a dominant weight in GVA formation (38%); The region is dominated by private agriculture employment. Active enterprises /10,000 inhb. stand 25-15 % points below national average.

Accessibility is low in terms of polycentrism analysis, but the region is cross border and has very good relations with neighbour cities in Greece â&#x20AC;&#x201C; this constitutes a key factor in its development, though currently underutilised from a national perspective. Region 4 (Vl-Gj-Fr)

This region has a relatively low urbanization with urban population around 10 % points below national average; Due to low population, it has the highest soil sealing per capita; Nationally administered roads are slightly below the national average, but subnational ones are around 30 % points below the national average; The number of road vehicles per 1,000 inhb. has increased and is almost equal to

This region has a decreasing rate of population between 2001 and 2016, by 17.7%; Population density is around 25 % points below national average; Similarly as for Region 2, social inclusion is at risk. The number of pupils enrolled/teacher at upper secondary education is around 1015 % points below national average. No. of hospital beds/10,000 inhb. is

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It has a mixed urban-rural character and medium level economic development; GDP/capita fluctuating -20 to +10 % points in relation to national average in 15 years; It has an increasing share in GVA formation 18-20%; Agriculture has the dominant weight in GVA formation (33%); Tourism, agriculture and industry are in a

the national value.

slightly above national average;

conflicting arena in this region.

It has most of the potential for renewable energiesâ&#x20AC;&#x2122; resources; It is at high risk of flooding (sea from climate change effects; abundant natural resources at high risk of pollution; Together with Region 2 has the highest quantity of waste/capita & above the national value; It has the highest amount of inert waste per capita, almost triple the national value; Seawater is polluted from waste discharge along the coast in the most urban part and where rivers flow.

Poverty headcount, gap and severity stand below the national values; It has the lowest no. of families receiving social assistance (60 % points below national average).

The region is dominated by private agriculture employment, though Fier has good employment in industry as well, apparently due to oil extraction and refining activities. The number of active enterprises /10,000 inhb. is almost equal to national average.

It has a good to medium level accessibility from a polycentrism analysis and is currently the most preferred area for tourism development;

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3.3 REGION 1 DEVELOPMENT PROFILE AND STRATEGY The natural capital Region 1 is composed of 11 municipalities, located in the territories of qarks of Shkodër, Lezhë and Kukës, with a total area of approximately 7,200 km2 and the lowest population among the four development regions. It has abundant natural resources, of high ecological and touristic value, though at risk of uncoordinated use and overexploitation (urban and industrial activities versus eco-tourism). Table 220. Administrative Composition of Region 1

Shkodër

Lezhë

Kukës

Population 2011

Qark and Municipality

Area (km )

Population density 2 (inh/km )

Shkodër

903

135,612

150

Malësi e Madhe

941

30,823

Vau i Dejës

486

30,438

Pukë

513

11,069

Fushë Arrëz

549

Total

3,392

7,405 215,347

Qark population in 2016

215,483

Lezhë

477

65,633

138

Mirditë

881

22,103

Kurbin

267 1,625

46,291 134,027

173

Total

Qark population in 2016

135,613

Tropojë

1063

20,517

Has

393

16,790

Kukës

927

Total

2,383

47,985 85,292 84,035

Qark population in 2016

Source: Instat and Authors calculations in GIS

Region 1 is located over three (out of four) morphometric areas of Albania, namely the northern part of the Coastal Lowland, the Albanian Alps and the northern part of the Central Mountainous Region. The coastal lowland lays above and below Shkodra and due to the presence of sea in the lower part and the penetration towards the alps area, it has a fast changing climate, from typical Mediterranean towards the continental effect. The lower part of the lowland is poor in terms of natural vegetation, due to several factors: urbanization, lack of maintenance of the natural sites, the river deltas and flooding’s, and the conversion of land into agriculture use. Because of these unfavourable ecological

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conditions, this part of the region is not reach in fauna either. The area is rich though on water sources. The upper part on the other hand, has valuable water sources of karst origins, agriculture land and also natural vegetation. Its geological formation and ecological development is impacted by both the formation of Shkodra lake and the northern rivers such as Kiri, that flow from the alps towards Shkodra city, to join Drini and Buna towards the Adriatic sea. The Alps area, on the other hand has a spectacular scenery and is composed of a variety of ecological sites, habitats and landscapes. The genetic types of the topography are karst formations, river valleys, glacial lakes, erosive structures, etc. The Alps are very high and rather fragmented structures, with a good opening towards the northern part and thus have a cold long lasting winter and cool and wet summer. Because of the geological structures, the region has a number of beautiful river valleys such as Cemi, Kiri, Shala Rrjolli, Nikaj-Mërtur, and Valbona. Government plans (Ministry of Energy) show for the tendency to built hydropower stations (of different capacities – from very low to large) along these rivers. This is in full contradiction with the necessity or the plan to use their valleys as an essential part of the touristic value chains and products (to be developed) in Albania, according also to the National Territory Plan (2016-2013). Out of the four, Valbona is the longest and most beautiful and has water during summer as well, due to the impermeable riverbed formation from Rragam downward. The other rivers have karst formations beneath and while carrying high water quantities in winter and spring; they are almost dry in summer. A number of villages and important rural settlements are located along each river, thus turning these valleys into very important sites, from a natural and socialeconomic perspective. The hydric network of Alps has 33 glacial lakes, most of which are in a drying process over limestone formations. 32% of the Alps area is covered by boreal vegetation, beech, oak and alpine pastures. The northern part of the Mountainous Central Region has a very cold continental climate and the main geographical formations are the highlands of Gjakova (in Kosovo) and Has (Albania); the Drini River valley; Korabi mountains chain whose environmentally protected area extends also south to the Region 2 territories; and the highlands of Pukë-Mirditë. The latter is one of the most distinct in Albania for vegetation, including Mediterranean shrubs, pine forests, beech, oak and alpine pastures. Drini River (composed of Drini i Zi – source in FYROM and Drini i Bardhë – source in Kosovo) is the biggest in Albania and his waters are used for the production of electric power. 4 major hydropower plants (Fierza, Koman, Vau i Dejës and Ashta) are built on Drini River, changing its character from a river to a lake from Kukës to Vau i Dejës.

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Because of lower population levels, but also due to lower welfare and economic development figures (as shown in the following sections), it has so far the lowest quantity of waste per capita (0.269 ton/capita in 2012) and below the national value of 0.392 ton/capita. Inert waste (0.075 ton/capita) stands also below the national value and has a low total value, but due to low population level, is higher than that of Region 2, where most of the construction activity has happened in years. Seawater is polluted from waste discharge along the coast in the most urban part and where rivers flow. Some of the best beaches, such as Velipojë are in a high risk of pollution and unsustainable exploitation due to rapid and unguided urbanisation taking place along the coast. The low land is also at high risk of flooding from climate change effects, lack of maintenance of flooding and agriculture land infrastructure and informal developments on agriculture land. Due to geographical and topographical conditions and expected climate change effects, flooding cannot be fully eliminated, but its expected effects should however be mitigated. This would include related infrastructure investments (flood protection and agriculture drainage and irrigation), as well as a population reallocation program and a good information system for both awareness raising and dealing with emergencies. Soil sealing per capita very low in Kukës and very high in the rest of qarks, due to low urban land versus population. In terms of land use, Region 1 has the lowest internal share of agriculture land (14.6% of its territory) and this is because all of its composing qarks have low percentages of their territories used for agriculture, though a high share of their GDP and employment is related to agriculture activities. Forest, pastures and meadows constitute the dominant land use of the territory in Region 1. Region 1 is reach in areas that are environmentally protected by law and international conventions. So, apart from the national classification, the region includes also one Ramsar42 area (Shkodra lake) and an Emerald network. The Emerald network for Areas of Special Conservation Interest (ASCI) supports the implementation of the Berne Convention (1979) for the conservation of species and natural European habitats. The establishment of this network in Albania was initiated in 2002. As a result, so far 15% of the territory is environmentally protected by legislation. Table 221. Environmentally protected areas for Region 3 Category I. Strict Nature Reserve II. National Park

Area (ha)

Location

3,000

Gashi River in Tropojë

10,630

Theth, Valbona river valley, Albanian Alps

313

III. Nature Monument IV. Managed Nature Reserve/Natural Park

71,724

Bërzane-Lezhë, Korab-Koritnik, Kune-Vain-Tale, Patok-Fushëkuqe-Ishëm, Liqeni I Shkodrës, Tej Drini Bardhē

V. Protected Landscape

23,027

Buna River – Velipojë

4,745

Bjeshka e Oroshit

VI. Multiple Use Protected Area Total Area

113,126

RAMSAR

49,562

EMERALD/ASCI Areas

Source: Ministry of Environment

Shkodra Lake – Buna River

5 areas (Shkodra lake, Alps, Buna river, Korab, Berzane) 43

and Authors’ calculations

Some of the environmentally protected areas include44: Thethi (2,630 ha) and Gashi river (3,000 ha), which are respectively a national park and a strict scientific nature reserve - 1st category in the Albanian legislation. This is a cross border area and has endemic and sub-endemic species and is reach in diverse habitats, alpine pastures and glacial lakes; The environmentally protected area of Valbona river valley with around 8,000 ha. This is also a cross-border park with high biodiversity, landscape and scientific values, endemic and sub endemic species; The lake of Shkodër (cross-border with Montenegro and an area of 26,535 ha) is both a national park and Rasmar area. This is the biggest lake of the Balkans and very important at European level for birds (around 40 species), including the globally endangered Phalacrocorax pygmeus. Around 45 types of fishes live in the lake, as well as water plants such as three types of water lilies; Korab-Koritnik is located in both, Region 1 and 2 and connects through a biocorridor to the national park of Sharri in Kosovë. It is reach in biodiversity and it houses endangered species that need immediate protection and management. The park itself needs protection, not simply from erosion processes that happen widely, but due to location and large size, it hosts various villages and settlements, while people use it for timber and nature tourism; etc. The three urban centres (qark centres) of Region 1 have a very good access to the rest of the country, while two of the respective qarks are cross-border areas (surrounded by Montenegro, Kosovo and FYROM). However, the access for the rest of the region (rural surroundings) is very poor. It takes sometime 7-9 hours for the residents of a remote village to reach the respective urban/qark centre, let alone the rest of Albania. Nationally administered roads (measured in km) stand slightly below the national average and sub-national ones are slightly above. However, the data should be revised to include latest investments, as based on Instat 2009, they might not depict the reality. In any case, this would not change the picture as far as access and transport is regarded for the rural areas of Region 1. The number of road vehicles/1,000 inhabitants has increased overtime and is almost equal to the national value. 314

From a polycentrism analysis, this region has a mostly peripheral profile, with its southern part (municipalities of Lezhë and Kurbin), located very close to the Tirana-Durrës metropolitan area, as its northern continuation. As a result, this part of the region has a very good accessibility potential, is positioned on a plain coastal area and the north-south highway constitutes the back bone of the road network for Lezhe qark ensuring quick access to the Tirana market. As a result, Laç (Kurbin) has the highest accessibility potential among all urban agglomerations (30 percentage points above the national average), while Lezhë has an accessibility index of 122%, very similar to Tirana with 126%. Because of the rapid transit to Tirana (which has the highest population and GDP), Shkodër stands 3 percentage points above the national average and Kukës 4 percentage points below the national average. Otherwise, these two urban agglomerations would have very low accessibility potentials, as they are very distant to the other agglomerations in the south and east. Region 1 has 4 Functional Urban Areas (FUAs of Shkodër, Lezhë, Kurbin and Kukës) out of the 17 that exist in Albania. The FUAs were defined from Co-PLAN in 2015, based on the ESPON45 methodology of polycentrism analysis and the agglomeration areas and commuter catchment areas identified by Instat in 2014. One of these functional areas (FUA of Laç) has very good indicators of morphological polycentrism at national level, meaning that it is ranked as second (out 17 FUAs) for GDP and population. The Laç FUA has a population of 697,000 inhabitants, very close to that of Tirana (which is the highest) and more than tripling the following FUA, that of Durrës. Compared to the other FUAs of Region 1, Laç FUA has a population six times higher than Shkodër, 10 times higher than Lezhë and 24 times higher than Kukës. From a GDP perspective, Laç FUA is as much as half of the GDP of Tirana`s FUA, and the differences with the other 3 FUAs in Region 1, are almost the same as for the population indicator. This means that though Laç and Tirana’s FUAs have almost equal levels of population, they produce very different GDP levels as the economic potential and active enterprises in each area are very different (as shown in the disparity analysis). On the other hand, the differences between Laç and the other 3 FUAs of Region 1 are the same for each indicator, i.e. population and GDP, showing that if Laç FUA has a higher GDP, this is the effect of the higher population and GDP/capita is at similar levels among the 4 FUAs. Finally the potential polycentrism analysis, realised on the basis of the overlap of commuter catchment areas (45 minutes walking distance from each urban agglomeration core), shows that from a regional perspective: Lezhë and Mirditë municipalities have the highest number of overlaps (3); Shkodër, Vau i Dejës and Kurbin have two overlaps Malësi e Madhe, Has and Kukës have one overlap46 315

and the remaining three municipalities Tropojë, Fushë Arrëz and Pukë have no overlaps of commuter catchment areas at all. This means none of the commuter catchment areas of the urban agglomerations extends to these three municipalities, leaving them in a very peripheral position, as long as no further infrastructure investments to increase access are made. Social capital and institutional development The three qarks of this region have the lowest population levels over time out of 12, with the exception of Gjirokastër (Region 4), as well as the lowest population density with 40 percentage points below national average. As a result, Region 1 constitutes the lowest share in the total population of Albania. All of the qarks present a decreasing population trend, but in the case of Lezhë this is very insignificant so its population could be considered almost constant during the last 15 years. The population decline rate is -17.2%, very similar to Region 4, but slightly lower. The main factor that has favoured decline is emigration towards the Tirana – Durrës metropolitan area and abroad. Still, the region has a very young population compared to the rest of the country, showing for human potential in economic development as well as posing a challenge in terms of education of the workforce. The aging index is often below 30%, and it is lower in the remote rural and eastern areas than the urban and western ones. Age dependency is also high on the other end (slightly higher for females), which is also related to the presence of young population (apparently the highest among regions). The highest age dependency ration is found in Kukës (46.3%) and then Shkodër, while Lezhe has its age dependency below the national value of 45.2%. Region 1 has low levels of urbanization with urban population standing around 15 % points below national average. However, it is interesting to notice that Lezhë and Kukës show for positive dynamics towards urbanization, while Shkodër is loosing urban population. Again this may be explained with the decreasing rural population due to emigration for Kukës and Lezhë, while in the case of Shkodër both tendencies (emigration and immigration) are visible. Education is a key aspect of social development and its quality remains questionable in Region 1, though some of the quantitative indicators show better values compared to other regions. Expenditures related to education are the lowest among all four regions (15% of the total) and this might be related to the overall number of pupils and students, which is lower in Region 1. However, the expenditures do not reflect the quality of education facilities, neither do match the need. The number of schools is also the lowest and the major impact on this indicator is provided by Kukës and Lezhë (5.7% and 5.5% respectively for 2014). 316

Due to low population levels, the number of teachers of the primary and lower secondary education per 10,000 inhabitants is the highest among 4 regions (105 for Region 1 and 85.5 at national scale). For Kukës qark this indicator has a value of 135 and is the highest in the Region as well as in Albania. Shkodë and Lezhë have also values higher than the national one. This picture holds similar for Region 1 and Kukës in the case of upper secondary education, while values for Lezhe and Shkodër drop slightly under the national average. Pupils enrolled/teacher at upper secondary education are around 5 % points below national average, while the number of those graduated is 23 percentage points above the national average and Region 1 is the only one to have a graduation level above national average. Regarding Vocational Education and Training (VET) schools, there are two public schools in Lezhë (the industrial school, while the other one offers is profiled in information technology, communication and banking services) one in Kukes (mixed profile) and five in Shkodër (the industrial school, veterinary services, forestry, technological school, and construction)47. There are also private VET schools, such as the Austrian school of information technology in Shkodër and the agriculture professional school in Zadrimë (Lezhë). In the recent years, there has been more interest on vocational education, because people living in the more remote and rural areas, acknowledge the opportunity that vocational education provides to young people in accessing jobs. The profiles of these schools are oriented to a multitude of professions, but have also a good focus on rural development related subjects, such as agriculture, agribusiness, tourism, veterinary services and forestry. University of Shkodër “Luigj Gurakuqi” with 6 faculties (social sciences, education, nature sciences, economics, justice and foreign languages) is the main and only high education centre for the north of Albania (and Region 1). The University of Kukës, which was operating few years ago, is currently out of the activity, due to the high education reform undertaken by the Government of Albania during 2014-2015. A good and uniform distribution of health care facilities is inherited since the `90s. However, the quality of the health services needs tremendous improvement. Regardless of key investments that have taken place (or are planned) in the Region, the health service is still lagging behind. Region 1 consumes the lowest share of state budget for healthcare expenditures (8.2% in 2015, while Region 2 consumes 70% and regions 3 and 4 consume 11 and 10% respectively). Region 1 has the lowest number of hospitals (8 in total) and healthcare providers48 (19.2% of the total in 2013). There are 3 regional hospitals, one for

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each qark, located in Shkodër, Kukës and Lezhë, and there are 5 district hospitals located respectively in Pukë, Rrëshen (Mirditë), Laç (Kurbin), Tropojë and Has. The quality of service in the hospitals remains still inferior to Tirana tertiary hospitals, regardless of the investments that have been made in time. For instance, investments in the regional hospital of Shkodra have been available through the cooperation of the Government of Albania with the European Council Development Bank (CEB) since 1996. The related project went through phases and was finalised in 2011-2012, consisting in serious investments regarding facilities (reconstruction of the buildings, refurbishments, apparatuses/technical devices, etc.). Recently, the government has invested on the establishment of the cardiology department in Kukës regional hospital, etc. The number of hospital beds per 10,000 inhabitants is slightly above national average, but the total number of beds (16% in 2013) is lower than any other region (Region 4 is the second lower and has 20.3%). The social picture of Region 1 so far, is reflected by the poverty data as well. This region contains a significant portion of the mountain strata (which has the worst scoring values of poverty indicators). However, Shkodër and Lezhë urban areas (part of the coastal strata) are also located within Region 1, thus improving slightly the poverty indicators. Still the poverty headcount for 2012 is 4 % points above Albania’s level, and poverty gap and severity are the highest among the regions (4.1% compared to 3% for Albania’s gap and 1.4% compared to 1% for Albania’s severity). Kukës and then Lezhë are the highest contributors in the poverty headcount, while Lezhë and Shkodër are the main contributors in poverty severity and gap. They have also the highest levels amongst qarks for 2012. The way these 3 qarks are positioned among them shows for the differences that exist among urban – rural and mountain – coast dichotomies in Albania. The poverty figures are further matched by the social assistance data. Region 1 has the highest number of families receiving social assistance (100 percentage points above national average in 2014). Institutionally speaking, local and regional (qark) governments of Region 1 have been quite active during the last 10 years and have also received/are receiving substantial technical assistance from various donors and the Government of Albania. In addition to this, a considerable number of non-governmental organizations is active in Shkodër. Lezhë and Kukës have less local civil society organization than Shkodër. Some key organizations that operate in the area on issues of rural development include: the Mountain Areas Development Agency (MADA, located in Tirana); Agropuka (an association of agriculture and livestock producers in Puka); RASP, which is located in Tiranë, but has provided substantial support to farmers and local governments in Kukës district (prior to

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the territorial reform); the branch of the Italian organization VIS-Albania in Malësi e Madhe, working on different aspects of rural development; LERDA (the Regional Development Agency Lezha – non for profit) aiming at contributing to the improvement of the socio-economic wellbeing and living standards for citizens in the qark of Lezhë. These organizations are also members of the Albanian Network for Rural Development, a membership organization established in 2015, aiming at promoting community-led rural development for the improvement of the quality of lire in rural communities. There are several studies, strategies and plans drafted for the territory of these two qarks. The qark of Kukës is not in the same exact position as the other two, but has however benefited from donor support as well. The following table provides an overview (without being exhaustive) of the existing or in progress key strategic development documents for Region 1.

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Table 222. A summary of key and strategic planning documents for the territory of Region 1 The document

Purpose

Target area

The Regional Plan Shkodër-Lezhë 20052020 (KE/EPTISA)

Regional infrastructures; Economic strategies for development; Environmental measures; Proposals on buildable land.

Territory of Shkodër and Lezhë qarks

Regional Development Strategies for Shkodër and Lezhë qarks (UNDP 2005, MDGs)

Monitoring of the 8 MDG’s objectives and proposal of instruments on achieving the objectives and the related indicators. The key strategic planning document for each qark council. Priority areas: Education; Infrastructure and Services; Tourism and Agribusiness; Cross-regional cooperation; Floods Review of the strategic concepts and elaboration of the related Action Plans.

Territories of Shkodër and Lezhë qarks

The Qark Councils and the Government of Albania

Territories of Shkodër and Lezhë qarks

The Qark Councils

2 strategic documents approved by the respective Qark Councils in 2005; out-dated because of exceeded timeline.

Territories of Shkodër and Lezhë qarks

The Qark Councils

2 Action Plans for the Regional Development Strategic Concepts; approved by the respective Qark Councils, in force.

Analysis of tourism development potential and market demand in the Albanian Alpss; preparation of

East and Northeast: border with Tropoja catchment and the valley of Valbona River; South:

Government Albania

A Regional preparation.

Regional Development Strategic Concepts for Shkodër and Lezhë qarks (GIZ support 2010-2015)

Sub-regional development Scenarios for Shkodër and Lezhë qarks (ADA and SDC support, 2015) Master Plan and Feasibility Study for Communal Infrastructure Works in

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Institutional ownership The Qark Councils and the Government of Albania

Status 1 document, approved in 2006, in force, enforcement lagging behind and dependent on the willingness of Municipalities to make use, slightly out-dated as no revision have taken place since it was drafted; however a visionary plan and very relevant to the respective territory 2 documents, approved by the respective Qark Councils in 2005; out-dated; informative.

plan

and

Strategy

under

Albanian Alps area (WBIF, CEB, GoA, ADF, 2016)

a suitable tourism development strategy in the frame of a regional territorial plan

Regional Development Strategy for Kukës Qark (EU/UNDP, 2012-2016)

Strategic document leading development in the areas of: regional economic growth; environmental protection; institutional development; social cohesion; health services; and infrastructure and improved access for the region. In compliance with EU environmental requirements, proposing measures regarding: geology and energy; hydrology; agriculture and fishing; biodiversity and protected areas; territory planning; tourism. Provide municipalities with a short-term program of key strategic and priority investments.

Regional Environmental Action Plans for Drini River Delta in Shkodër and Lezhë (REC 2006)

Functional Areas Programs for Kukës, Lezhë, Malësi e Madhe

stretch to Drini Valley; West: border with the plain of Mbishkodra; the border states with Montenegro in the north and Kosovo in northeast, though continuing beyond. The qark of Kukës territory

The Qark Council

1 strategic document approved by the qark council; timeline ending in 2016, need for review.

Drini river delta

The Qark Councils and the Government of Albania

Approved an in force.

The functional areas coincide often with the previous districts borders and in some cases with the new municipalities, resulting from the territorial

Interested concerned municipalities

Being transferred to municipalities and transformed into strategic plans for further use in the territory planning process of the related municipalities

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and

Strategic Plan for Sustainable Tourism in the qarks of Shkodër (UNDP ART GOLD 2 TEULEDA, 2011) Strategy of tourism and agro-tourism for Lezhë Qark, 2011

The Cross-sectorial Integrated Plan for the Albanian Coast

Promote endogenous tourism and increase the value of the region as a touristic destination. The document provides a vision and related actions for implementation. There are four objectives: sustainable annual tourism; all encompassing tourism (sea, mountain, ethnographic and historical); image and branding; agro-tourism. A strategic and territory plan based on the territory planning legislation. It provides a framework for the GLTPs

reform. The territory of Shkodër qark

The Qark Council

Approved by the qark council and in force; the action plans covers a period till 2017.

The territory of Lezhë qark

The Qark Council

Approved by the qark council and in force.

The Albanian coast from north to south, covering costal territories of the municipalities that have sea access

The Government of Albania

Drafted and to be approved soon by the National Territory Council.

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In addition to the above planning documents (all of them at a regional scale) there are also other planning initiatives that have taken or are in progress locally. Almost all local governments (municipalities and communes) located within the three qarks prior to the administrative and territorial reform had some sort of planning instruments, either a strategy or an urban plan. Most of these documents have been prepared during the last 5 years, and in the more rural areas the support was provided through rural development CSOs or networks. These documents provide valuable insight on the development of the areas to the respective dates. However, because of the changing administrative boundaries, soon after local elections in 2015, each new local government should/is engaged in a strategic and territory planning processes that matches their new territorial and administrative reality. So, the current process for drafting the General Local Territory Plans for the Municipalities of Shkodër, Lezhë, Kurbin and Kukës, is initiated since March 2016, supported by the Government of Albania. dldp49 will soon start supporting the drafting of a GLTP for Malësi e Madhe and the local detailed operation plans (LDOPs) for the municipalities of Mirditë, Has, Bulqizë, Vau i Dejës, Pukë and Fushë Arrëz have been already finalised. Regarding the latter (LDOPs), the respective municipalities have received support through the implementation of the second phase of the STAR50 project. LDOPs are quick, but strategic tools for a rapid analysis of the territory, local resources and opportunities, and setting forth a list of priority projects for implementation by municipalities. These priority projects would be implemented in 2-3 years time period, till territorial plans and long-term strategies are in place. From an environmental viewpoint, there are at least 3 environmental management plans; two of them for environmentally protected areas, namely Kune-Vain-Tale (2010), Shkodra lake (2012); and the 3rd plan is about the management of the Mati river basin. UNDP as well has supported an environmental planning process regarding the establishment of measures to protect the Mati river delta; while lately, a plan on the management and protection of the flood risk areas in the coastal part of the Region 1 has been prepared and adopted by the government. Shkodër and Lezhë qarks as well the Municipality of Tropoja (coinciding with the district borders before June 2015) are the eligible Albanian territories for participating in the IPA Cross-border Montenegro-Abania 2014-2020. In the case of IPA Cross-border Kosovo-Albania 2014-2020, qarks of Kukës and Lezhë are eligible territories. The 1st call for Kosovo-Albania was planned to be launched during the 1st half of year 2016. Albanian partners participating in projects approved for Montenegro-Albania include civil society organization 323

(such as Democratic Integration and Development Centre in Kukës), as well as national and local government and semi-public organizations (Komune of Kelmend, Minister of Innovation, Albanian Investment Development Agency, Albanian Development Fund, etc.). Projects are focused on subjects related to environmental protection of rivers or Shkodra lake, well being of preschool children, economic development through tourism, rural development through strengthening women, internet broadband in the Accursed Mountain border area, etc.

The economic potential Region 1 has great development potentials as far as natural resources are concerned, but still remains the most disadvantaged in terms of overall economic development and growth, while also having the highest levels of poverty. It has the lowest GDP, GNDI and GVA, in per capita and totals. GDP/capita stands at 30-25 percentage points below the national average in 15 years, as a result of the respective contributions of the composing qarks. Though the regional contribution to national GDP has always (but in 2013) been positive, it has still been the lowest among all four regions. It has the lowest share in GVA formation (less than 11%) and the dominant weight belongs to agriculture sector (34%). All other sectors have very similar shares falling between 11% and 13.6%. This is correlated with the fact that more than 60% of the employment is in the private agriculture sector, but goes against the data on agriculture holdings (the lowest share at national level among the 4 regions – 21%), arable land (some of the lowest values in hectares – 69,000 or 16.8% of the national total value in 201451) and land use (as the region with the lowest internal share of land dedicated to agriculture – 14.6% in 2013, while all other regions stand above 24%). These divergent tendencies, with agriculture potential being so less significant within the region (if compared to the rest of country) and still regional GVA being dominated by agriculture sector, show for both: high levels of poverty and low economic growth so far. However, it is interesting to notice that the industry GVA share is also very low, while the region reach in minerals (mainly chromium, limestone, copper and some other minerals to a lesser degree) and a lot of minerals extraction activity is going on in the area. However, most of the enterprises active in the minerals extraction industry are registered in Tirana. Region 1 has the lowest contribution in total employment (10% or less) and also the highest unemployment level. The total number of unemployed job seekers in 2014 (according Instat) was 41,154, while all other regions were below 37,000. 324

As a result, female unemployment was also higher, though internally the number of female unemployed job seekers was lower than the males one. The opposite is true for the other three regions. More than 50% of the unemployed job seekers have a primary education level, while those with a tertiary degree constitute less than 5%. This could be interpreted as both positive and negative. In one hand, those with tertiary education have good access to the employment market, and in the other the unemployed workforce is dominated by the primary education level and thus making it more and more difficult for this strata to find jobs. Structurally speaking, out of the three qarks, Kukës has the highest dominance of private agriculture sector employment and with a very low share of the private nonagriculture, while Lezhë is the opposite for both sectors. Shkodër stands in between the two. Still private agriculture is the dominant employment sector for the region as a whole. The number of active enterprises per 10,000 inhabitants stands 40-50 percentage points below national average for 2014, with Kukës contributing the most to this trend (70 percentage points below the national average) and Shkodër and Lezhë having an almost equal rank (37 percentage points below the national average). Among the three, Lezhë has the highest birth rate of new enterprises for 2014, and all three have the highest at national level, thus contributing to Region 1 being ranked as 1st in terms of new enterprises birth rate (22.8% versus 15.4% for Albania). From a structural perspective though, more than 70% of the active enterprises belong to trade (40%) and services (32%).

3.4 REGION 2 DEVELOPMENT PROFILE AND STRATEGY The natural capital Region 2 is the smallest development region in terms of size, around 4,800 km2, but has gathered more than 1/3 of the population of Albania, around 1.2 million. It also hosts most of the businesses and public administration and government’s entities. It has 12 municipalities and it includes the only metropolitan area (as per Instat classification in 2012) of Albania, the Tirana-Durrës area. The region has good coastal access as due to the location of both Tirana and Durrës qarks along the Adriatic sea, and it extends into the hinterland towards the eastern mountains in Dibër qark (cross-border with FYROM and Kosovo).

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Table 223. Administrative Composition of Region 2

Tiranë

Area (km )

Dibër

Population density 2 (inh/km )

Tiranë

1,119

557,422

498

Kamëz

104,190

2605

Vorë

25,511

315

Kavajë

199

40,094

201

Rrogozhinë

222

100

Total

1,661

22,148 749,365

Qark population in 2016

811,649

489

337

175,110

520

Shijak

27,861

293

Krujë

335

179

Total

767

59,814 262,785

Qark population in 2016

278,775

363

Durrës Durrës

Population 2011

Qark and Municipality

451

343

Dibër

941

61,619

Mat

501

27,600

Klos

330

16,618

Bulqizë

669

Total

2,441

31,210 137,047 134,153

Qark population in 2016

Source: Instat and Authors calculations in GIS

The morphometric analysis shows that the 1/3 of the region (mostly Durrës qark and partially Tirana) is located in the Coastal Plainfield, while the rest is located in the central part of the Central Mountainous Region. Skanderbeg mountains’ chains constitute the boundary between the two morphometric regions. As a result of this location, the region is composed of a variety of hypsometric structures and geological formations and landscapes. So the lowland (in west) is mainly composed of the fields and hills of Tirana and Durrës, while 3 major river valleys (lower streams and deltas) cut through it parallel to each other. The rivers that flow from east to west are Mati (in the north of the region), Ishmi and Erzeni (in the south of the region) rivers. Mati and Ishmi collect other affluents in their upper streams such as Fani and Urata for Mat and Zeza, Tërkuza and Tirana rivers for Ishmi. Drini i Zi (flowing from Ohrid lake in FYROM) enters the region in the south of Peshkopi and flows towards the north to Kukës. Korabi mountain chain lays to the east of Drini i Zi and Lura mountains chains lay to the west. The highlands of Martanesh, Çermenikë and Gollobordë constitute the most southern geological and hypsometric formation of Region 4. 17% of the territory is environmentally protected by legislation. Thus Dajti Mountain (part of the Scanderbeg mountains’’ chain) has landscape and cultural 326

values. Forests of walnuts and chestnuts as well as Bovilla reservoir are found within the boundary of the Dajti Park. Bovilla reservoir is the largest artificial lake in Albania that provides drinking water for Tirana. The environmentally protected area of Lura park has a an area of 1,280 ha, is located in the Lura mountains’ chains and holds landscape, tourism and scientific values. However it has no management plan and vast areas of the park have experienced deforestation putting the park at a high environmental risk. This area has beautiful glacial lakes, snow in winter till late in spring and its vegetation is composed of oak, beech, pines and alpine pastures. Table 224. Environmentally protected areas for Region 3 Category

Area (ha)

Location

I. Strict Nature Reserve 33,548

Lura, Qafë Shtamë-Krujë, Zall Gjoçaj-Mat, Mali I Dajtit, Shebenik-Jabllanicë - Bulqizë

III. Nature Monument

Dibër-Vlashaj

IV. Managed Nature Reserve/Natural Park

21,313

Liqeni I Ulëzes, Korab-Koritnik

V. Protected Landscape

25,266

Mali me Gropa Bizë Martanesh

5,900

Luzni Bulaç - Dibër

II. National Park

VI. Multiple Use Protected Area Total Area

86,077

RAMSAR EMERALD/ASCI Areas

Source: Ministry of Environment

7 areas (Allaman, Dajt, Bizë, Shëngjin-Ishëm, Lurë - Valmurë, Korab, Rrushkull-Ishëm)

and Authors’ calculations

The polycentrism analysis provides a very favourable profile for western part (Tirana-Durrës metropolitan area) of the Region 2 and a peripheral one for the eastern part (qark of Dibër). Nationally and sub-nationally administered roads stand slightly above the national average and the number of road vehicles per 1,000 inhabitants is the highest in the country and above the national value. The region has 4 urban agglomerations and as a result 4 functional urban areas (FUAs)54. The FUA of Tirana is the most advantageous one (not only at regional level but national as well) showing for a high level of monocentrism countrywise. It has a population of 761,814 inhabitants (calculations based on census 2011 data) and a GDP of 472 million lekë (estimation of authors based on 2012 qark data). Durrës FUA (ranked second in the region) has a population and GDP, which are respectively 3 and 5 times smaller than those of Tiranë. The FUA of Peshkopi has 20,000 inhabitants more than that of Kavajë, but its GDP is around 60% of that of Kavaje FUA. Thus. Though the latter has less population, is stronger in economic performance and growth potential. However,

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both are very distant from Tirana and Durrës, and Tirana’s FUA itself constitutes a outlier at national level. However, accessibility potential (measuring the connectivity index of polycentrism) is equally high for Tirana, Durrës and Kavajë FUAs (126%, 124% and 123% respectively) and is extremely low for Peshkopi (67%) showing not only a high level of monocentrism within the region, but also the peripherality of Dibër qark in terms of access to markets, productive activities and employment. One of the reasons behind this is definitely population (very low in the eastern part of the country), but another strong factor is the still long travelling time from Peshkopi to Tiranë (more than 4 hours), as well as slow access to the surrounding area and vice versa. The construction of the “Arbri” road would provide very quick mutual access to Peshkopi and Tirane, thus increasing the connectivity and mass indexes of polycentrism for both, and ensuring better economic performance for Dibër qark. However, the latter depends also on the so far missing regional connections within Dibër qark. Finally the potential polycentrism analysis, realised on the basis of the overlap of commuter catchment areas (45 minutes walking distance from each urban agglomeration core), shows that from a regional perspective: Krujë and Shijak municipalities have the highest number of overlaps (4); Durrës, Vorë, Kamëz, Tiranë, Kavajë and Rrogozhinë have three overlaps; Dibër has one overlap55 and the remaining three municipalities Mat, Klos and Bulqizë have no overlaps of commuter catchment areas at all. This means tha none of the commuter catchment areas of the urban agglomerations extends to these three municipalities, leaving them in a very peripheral position, as long as no further infrastructure investments to increase access are made. All in all, Tirana and Durrës have a high potential for future concentration of development, while Dibër is the complete opposite, and both missing economic support and infrastructures are the key factor behind this situation. Due to coastal location, but also the high urbanization and growth of cities and settlements in its lowland part, Region 2 is at high risk of flooding from climate change effects. Soil sealing per capita is very low in Dibër and high-to-medium in the rest of the Region. Rapid and intensive urbanization have made this area prone to the highest environmental pollution and hazards in the country. The good figures of Dibër qark in this regard are hidden behind Tirana and Durrës situation. So, seawater is highly polluted from waste discharge along the coast in the most urban part and wherever rivers flow. Ishmi River is the most polluted in Albania and carries urban and industrial wastes with it. Tirana and Durrës aquifers on the other hand, are also polluted due to the intensive urbanization that has taken place on the agriculture land above the aquifer.

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Region 2 has the highest quantity of waste/capita (0.466 ton/capita in 2012) & above the national value. Inert waste/capita is the lowest, almost ¼ of national value, though totals are high, and this due to high population levels. There are two major hydropower stations in the Mati cascade, namely those of Shkopet and Ulza. The installed and effective capacities are 10 or 15 times lower compared to the hydropower stations in the Drini cascade. Dibër and especially the area of Bulqizë is being exploited for extraction of chromium. The Scanderbeg Mountains’ chains are exploited for limestone.

Social capital and institutional development This region has the highest share of the total population of Albania as well as the highest population density (244.7 inhabitants/km2 in 2016), growing continuously and more doubling the national population density (150 percentage points above the national average in 2016). Durrës and Tirana are the only qarks with an increasing trend of population during the last 15 years. As a result, the overall population change in this region is positive (+18.8% in 15 years), being thus the only one to show population growth. Tirana’s contribution alone is so high (+36%) that it hides the negative contribution of Dibër (-29%). Durrës qark, on the other hand, had 13.9% increase of population in the last 15 years. The ageing index is much lower compared to the other regions, often less than 30% and the more moving towards the east, the lower it is, showing for an increasing young population in the more remote areas of the region. Age dependency is the lowest among the four regions and it is lower for females than males. Region 2 is also the most urbanized one with urban population around 25 % points above national average. However, in terms of dynamics, urban population has remained almost constant overtime at regional level and this is due to the opposing tendencies of Tirana in one side (urban population in decline) and Durrës on the other (urban population in progress). Dibër does not play a role in the urban-rural regional population model, as its urban population has also remained constant overtime. It is worth noticing that Tirana has a declining urban population, while being the core of the only metropolitan area in Albania. This is due to the sprawling patterns of population distribution over the qark territory. Poverty has a very mixed and controversial portrayal in this region. The blend exists at a regional scale, for instance the differences between Dibër and the other two qarks; at the level of dichotomies – the mountain area and the plain

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(coastal) area; and at urban scale (centre – periphery). So, Tirana and Durrës as part of the coastal area have lower values of poverty indicators compared to the mountainous strata. In 2005, when the first poverty study took place56, the mountainous area was doubling the values of poverty indicators in Tirana. There was an overall decrease of poverty indicators in all strata till 2008 and then an increase in 2012. The headcount of the 2012 is the lowest in Tirana and the highest in coastal area. Mountainous areas stand in between. However, the differences between the strata in 2012 are not as huge as they were in 2002. At qark level, among the three in Region 2, Durrës has the highest headcount in 2012 (16.5%), Dibër has the lowest (12.7%) and Tirana stands in between with 13.9%. The same pattern is kept for poverty depth and severity. This can be explained first with the differences in population – thus Tirana and Durrës have extremely higher population levels compared to Dibër; and second with the internal disparities that exist in the urban areas of Tiranë and Durrës. These internal disparities are highly pronounced and they are visible among the core urban area and the informal settlements established in the cities outskirts. So, Region 2 has the best accessibility in Albania and the highest concentration of GDP and GVA, but in addition to that, it has the highest internal disparities, reflected in high poverty figures. In fact, as a region, it is the second poorer if assessed for poverty indicators (headcount, depth and severity), with Region 1 being the first. The very high internal disparities, the unmanaged urban growth and related environmental pollution, the existence of the informal developments (two largest settlements in Albania are Këneta in Durrës and the Municipality of Kamëz), the so far lack of integration of these informal settlements into the urban core (there have been some projects during years in this regard, but not enough as to achieve integration) and the physical and social barriers between the coastal and mountainous parts of Region 2, bring social inclusion at a high risk. The segregation tendency is thus visible at both, the regional and the micro urban scales. From an employment perspective, Region 2 has the highest internal share of private non-agricultural (more than 50%) and the lowest private agriculture (less than 25%) in 2014. This is due to Tirana qark, which in years has contributed to around 45% of the employment in private non-agricultural sector at a national scale and has internally (within the qark) the lowest share of private agricultural (les than 10%). Dibër, on the other hand represents a reversed picture, but due to very low population levels cannot affect the weight of Tirana in the overall regional representation. Durrës, on the other hand, is more rural and agricultural than Tirana, but still remains the second qark for the highest internal private 330

non-agricultural share in employment. These employment patterns show that more than 2/3 of the region is of a very urban character (already depicted in previous paragraphs as well) and social issues need to be addressed from a urban development perspective. However, on the other hand, Dibra is very rural and the social development strategy for this qark of the region should be differentiated from that of Tirana and Durrës. Dibra remains a peripheral area in the region, which needs tremendous investments for further integration with the metropolitan core and elimination of natural barriers to overall social and economic development. The above tendencies are reflected on public services indicators as well, such as health and education. Region 2 offers so far the best level of education activities, it provides the highest number of schools and the best offer on education alternatives and it has absorbed 47% of public expenditures in education in 2015. Still, it has in some cases low per capita quantity indicators. Thus, the number of teachers of public schools per 10,000 inhabitants remains the lowest among the 4 regions, because of very high population levels. This is certainly dedicated to Tirana and Durrës that stand below national average and have the lowest levels (among all qarks) in the case of basic education (primary and lower secondary). The trend is similar for secondary education (upper secondary). Enrolment at basic education is again below the national average (the second lower), but in the case of secondary education, enrolment rate is the highest (and 7 percentage points above the national average). This may be explained with a tendency of decreasing enrolment in secondary education in the other qarks, as well as the better accessibility that citizens have to secondary education in Tiranë and Durrës compared to other areas in the country. Vocational education is another option in secondary education that has relatively god representation in Tiranë, but rather low in Durrës. Dibër ad Durrës have 2 public VET schools each offering programs on (information) technology and communication, industrial processes and tourism, but not in agriculture. The latter used to be a subject in Dibër till 2011. There are 7 public VET schools in Tirana providing training and education on several subjects related to construction, agriculture, tourism, industrial processes, agribusiness and economics. Higher (university and more) education is best accessed in Tirana than elsewhere in the country. Tirana has 6 universities and Durrës has one. There is not any in Dibër. So, the University of Tirana has 6 faculties specialised on economics, history and philology, social sciences, jurisprudence, nature sciences, and languages; the Polytechnic University of Tirana has 7 faculties; 331

the University of Sports in Tirana has 2 faculties; the University of Medicine in Tiranë has 3 faculties; the Agriculture University has 3 faculties specialised on agriculture, economics and forestry; and the Arts University has 3 faculties. The University of Durrës “Alexander Moisiu” has 6 faculties specialised in tourism, business and economics, education sciences, jurisprudence, information technology, and professional studies (bachelor degrees). What both, VET schools and universities would need in terms of investments with a regional impact, is the increase of capacities in terms of facilities and the establishment of practice centres and institutes, where not only students can work and get practical knowledge, but a better link with businesses and industries can be established in favour of the knowledge economy. Similarly as for education, Tirana qark alone absorbed 67% (in 2015) of the state budget expenditures for healthcare, while Region 2 absorbed 70%. Tirana and because of it also Region 2, has the highest total number of health care providers (public and private), the highest number of hospital beds and hospitals for that matter (6 tertiary hospitals in Tirana qark). However, the number of hospital beds per 10,000 inhabitants is the lowest (country wise in 2013) in Durrës qark (40 percentage points below the national average) and 5 percentage points below the national average in Tirana. Dibër on the other hand, has its value of hospital beds per 10,000 inhabitants at a level of 30 percentage points above the national average. The above discrepancies are linked to the divergences among qarks in terms of population numbers. However, they show on one side for the huge territorial disparities that exist regarding healthcare services, and on the other for the high quality risk, due to concentration of services and demand in one single area (the urban area of Tirana qark) in the country. Region 2 has the highest number of government institutions, due to the location of the national government and most of the public administration agencies in the Tirana urban area. The Tirana-Durrës metropolitan area has often been subject to territory and strategic planning processes undertaken by the Government of Albania or the respective qark councils, with the support of donors. The qark of Dibër (both local governments and qark council) has also received extensive donor support, especially from the Dutch government and the EU/UNDP project on Integrated Support for Decentralization. The latter supported the qark council in drafting a regional development strategy in 2012. However, because of the territorial and administrative reform, the national and almost all local governments are engaged into new planning processes.

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Thus, GoA has recently drafted a regional territory plan for the Tirana-Durrës corridor (an integrated cross-sectorial plan as recognised by the planning legislation). GoA is providing support to 8 municipalities out of the 12 in the region, in preparing General Local Territory Plans (GLTPs for Tiranë, Vorë, Rrogozhinë, Kavajë, Durrës, Krujë, Shijak, and Dibër). GoA has drafted also a integrated cross-sectorial plan for the coastal area of Albania, which covers partially Region 2 as well. The Municipality of Kamëz has received GoA and donor support in drafting an LDOP57, while dldp is planning to support Mat municipality in transforming its the functional area plan into a territorial strategy, worth being considered and used as the first phase on the territorial plan. So far, Klos remains as the only municipality of the Region that has not received any sort of planning support, neither is engaged itself in a planning process. From an environmental point of view, there are two management plans for the protected areas of Mali me Gropa – Bizë – Martanesh (since 2014) and Korab-Koritnik (since 2014), and one management plan for Mati river basin (since 2010). The economic potential Region 2 is the most advantageous in terms of economic growth and development. It has historically had the highest GDP (totals and per capita), with 705 million lekë in 2014, out of which 526 million lekë is the GDP of Tirana qark alone58. Regional GDP per capita for 2014 is estimated to be 595,920 lekë and stands 23 percentage points above the national average, while the values of the last 15 years have been between 20-50 percentage points above the national average. Region 2 has a very mixed functional character. GVA figures show for a dominance of the wholesale and trade, transport, communications and hotels, which in 2012 constituted 29.2% of the total regional GVA weight. Financial activities and real estate constituted for 18% of the total regional GVA and construction was ranked third with 15%. Agriculture had the lowest share (9.3%) and industry was 11.9%. Differently from other regions, the differences among sectors were displayed in balanced hierarchy from the more dominant sector to the less dominant. A quick comparison among the three qarks of the regions, shows that Tirana has an extremely low share of agriculture (4.7% of the qark GVA), while wholesale, trade, transport, communication, financial services, real estate and other services altogether compose around 66% of the qark GVA, and construction alone stands at 17%. While industry has a low share of qark GVA in Tirana (10% in 2012), its role in the case of Durrës and especially Dibër is significantly higher, with 15.5% and

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20.3% respectively. This could be explained, among others, with the presence of the mining industry in Dibër. Durrës has a relatively more balanced distribution of sectorial shares in GVA, while Dibër has a dominance of agriculture with 42% in 2012. These sectorial dynamics are explained and also reflected by the figures on employment by sectors as described in the social capital section of this Region. Last, but not least, Region 2 has the highest participation in GVA formation (in average 51% during 2010-2014), which is equally shown by the GDP figures. Again in respect to these tendencies, financial activities are highly focused in Tirana and then to a lesser degree in Durrës and finally to an extremely low degree in Dibër. Banks and GDP distribution by qarks and regions are fully correlated as well. Total deposits stand always above 50%, while other regions always below 20% Tirana qark had the highest number of active enterprises among all qarks in 2014, counting for 49,467. All other qarks had a 4-digit number and these large differences between Tirana and the rest of qarks have been stable, since at least 2005. Durrës had 9,578 active enterprises in 2014, while Dibër had the second lowest value with 2,164 active enterprises. The same pattern holds true for active enterprises per 10,000 inhabitants, though the difference between Tirana and the other qarks diminishes significantly because of the very high population levels in the qark of Tirana and very low in Dibër. However, the birth rate of enterprises for Region is not the highest among the four, and stands below the national value. Tirana has a lower birth rate than Durrës (14.3% and 19.2% respectively in 2014), while Dibër had a birth rate of active enterprises by 11.7% in 2014, and that was the lowest among the 12 qarks. Birth rates are calculated as newly created enterprises over the total stock, so though Tirana and Durrës had the highest number of newly created enterprises in 2014, their low birth rates are the effect of the high total stock. The low value of Dibër is an impact of both, the low total stock and the low number of the newly created enterprises.

3.5 REGION 3 DEVELOPMENT PROFILE AND STRATEGY The natural capital Region 3 is situated in the centre-south-east Albania and comprises the qarks of Elbasan, Berat and Korçë, with a total area of around 8,619 km2. The region is composed of 18 municipalities (as constituted after the territorial-administrative

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reform and local elections of June 2015). The overall population based on Instat data for 2016, is 221,706 inhabitants. Most of the area of the region is situated over a hilly and mostly mountainous terrain. However, its territory corresponds with 3 out of the four morphometric subdivisions of Albania, namely the coastal lowland, the central and the southern mountainous areas. The central mountainous area itself represents a long north-to-south stretch and east-to-west expansion and Region 3 matches with its southern part. These geo-physical coincidences represent a major impact factor on the climate, biodiversity, abundance of natural assets and resources and opportunities for tourism and rural development in the region. These features experience dramatic alterations while diffusing towards east and further inland from the major access roads, as well as with the increase of the altitude above sea level. Table 225. Administrative Composition of Region 3 Elbasan

863

141,714

Population density 2 (inh/km ) 164

Belsh

183

19,503

107

Cërrik

188

27,445

146

Qark and Municipality

Elbasan

Area (km )

Population

Peqin

196

26,136

133

Gramsh

727

24,231

Librazhd

773

31,892

Prrenjas

353

24,906

Total

3,283

295,827

Qark population & density in 2016

298,913

Berat

416

60,031

144

Ura Vajgurore

147

28,301

193

Kuçovë

166

31,262

188

Skrapar

787

11,397

Poliçan

290

10,953

Total

1,806

141,944

Qark population & density in 2016

139,815

Korçë

795

75,994

Maliq

697

41,757

Pustec

177

3,290

Kolonjë

820

11,070

Devoll

430

26,716

Pogradec

611

61,530

101

Total

3,530

220,357

Qark population & density in 2016

221,706

335

Source: Instat and Authors calculations in GIS

Hypsometric elevations and terrain fractures cause more than 60% of the terrain (aerial view) to have a slope of 20-40%. Slopes over 60% are found in the mountains peaks, while terrain slopes of 0-5% are found in the opening of the river valleys and in the core of each qark, where the main cities (the qark centres – Elbasan, Berat and Korçë) are located. These flat terrain areas are known as the fields of Elbasan, Korçë and Berat and the upper and lower stream valleys of the Devolli river, all important parts of the agricultural land system in Albania. The distinguished fields of Korçë and Devoll represent an extensive arableagricultural area located on a high plateau 700-800 m above sea level. These lands have been for centuries cultivated with grains and mixed farming products such as potatoes, vegetables, orchards (mainly apples) and also tobacco and sugar beets, as well as used for breeding livestock. The lowest part of the area used to be a wetland till late 1940s, which is why it is very fertile and suitable for agricultural use. The field of Berat, Devolli lower streem valley, and Elbasan field have been cultivated with permanent crops such as orchards of olives, citrus and grapes and mixed crops (grains, potatoes, vegetables, cotton and tobacco), respectively60. Statistical information from the respective Qark Councils shows that the focus on agriculture products has experienced temporal shifts over the last 20 years, due to the need of local producers to adapt to the market and make profit in a more efficient way. For instance, the cultivation of sugar beet in Korçë has decreased and been replaced mainly by corn and apples. However, according the studies carried out by experts of the Agriculture University and the Ministry of Agriculture in 2015, a higher priority based on suitability could be given to the following crops: for Elbasan to grains, corn and beans, grapes, olives and cherries; for Korça: grain, beans, potatoes, medicinal plants and apples; for Berat: greenhouse vegetables, medicinal plants, cherries, olives and grapes. Other crops are also suitable, but with a lower priority. This means that the local and national governments would better direct their investments’ support on agriculture towards the above products rather than on other crops, so as to stimulate a more efficient rural development economy based on agriculture and soil suitability. The region is very reach in water resources. The Ohrid lake and the two Prespa lakes (big and small-micro Prespa) are located in the north-east of the region and constitute valuable natural resources. Ohrid and Prespa lakes are classified as protected areas from the environmental legislation. All three lakes are in

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cross border location and Albania shares these resources with Greece and FYROM. Ohrid lake is one of the oldest in Europe, with an area of 358 km2, depth of 288m and around 87 km of shoreline61. The lake has around 200 endemic species and is declared UNESCO World Heritage Site in 1979. Environmental pollution caused mainly in the Albanian site of the lake is a key concern regarding conservation measures. Prespa lakes have a total area of 285 km2, out of which around 50 km2 belongs to Albania, and is situated at an altitude of 853 m above sea level, being thus the highest lakes ecosystem in the Balkans. It has several small islands and 39 endemic species. Micro-Prespa is particularly recognised as an important wetland ecosystem for rare water birds species breeding and feeding. Fishing outside the allowed season remains a key problem in the conservation efforts to the Prespa lakes62. Shkumbin, Devoll and Osum are the main rivers flowing through the region. The river basins areas are 2,445 km2, 3,130 km2 and 2,150 km2 respectively63 . Shkumbin has the character of a typical mountain river within the region and changes it when crossing towards the coastal area. Its upper streams and affluents are impetuous and worth exploring during hiking and touristic trips. Osum and Devoll on the other hand flow through dramatic scenery, which is reflected also by the high drainage density of the respective watersheds64. Both rivers constitute valuable assets for tourism, though Devoll may be compromised in this regard, due to two major hydropower plants being built on its stream (above and below the municipality of Gramsh) and smaller ones built on the affluents, such as the hydropower station exploiting the waters of the famous Sotira waterfall. The overlay of the region with the main river basins shows that the watersheds of Devolli and Osumi are located entirely within Region 3, while around 20% of Shkumbini river basin remains outside the region. The Qark of Elbasan has almost 50% of its territory within the Shkumbini river basin and the rest with Devolli river basin. Region 3 entails the lower streams of both Devolli and Osumi river, but as the two join to form a third river (Seman, which flows to the sea through Fier qark/Region 4) just at the border of the region, the latter has no access to the sea. In fact, Region 3 is the only one among the four not to have sea access. Berat, Elbasan and Kuçovë are the cities/municipalities located in the western part of the region and have the nearest distance to the coastal area and the port of Durrës, (1.5 hours travel time at the best). The above accessibility features are due to the steep terrain and a (yet to be developed) road network that the more enters the hinterland, the more follows topography and thus increases travel time. Korça and Pogradec, the main cities located in the eastern part of the region, are 3-4 hours travel time from the coast 337

and port of Durrës, and the time increases further when making a way into the mountainous and rural setting. These prolonged travel times are quite discouraging to the demand for touristic products in the area. As most of the Albanian territory, this region has a rather Mediterranean climate, which for a vast part of the area is classified under hilly and mountainous Mediterranean subzones. Following the Devolli river flow upward, the impact of the Mediterranean climate is strongly present on the territory and hydrography network till the entrance of the fields of Korça and Maliq. From this point onward, the climate of the region has a strong continental influence and this is why Korça is one of the coldest cities in Albania (annual average of 10.5 Celsius degree; July average of 20oC and January average of 0.5oC)65. Because of the location and being surrounded by mountains, summer temperatures are also high in Korça (city and surrounding field). This climatic combination makes it a great location for development of different types of tourism during all seasons. The area is rich in terms of biodiversity. According the Ministry of the Environment, a significant number of environmentally protected sites (of different categories) is found within the region. The total protected area (classified based on the Albanian legislation66) constitutes around 15% of the region’s territory, which is almost equal to the national average. The national target by 2020 is 25%, according the biodiversity national strategy and action plan. The environmental, ecological, esthetical and economical functions and values of the protected areas are various and of great importance to the overall development of the region. Most of these areas are located along the border with Greece and FYROM and classified as of cross-border significance, because of allowing for movement of species at regional/Balkan level and functioning as bio-corridors and core habitats. Vegetation in these areas reflects climate and altitude, apart from soil and hydrological features, thus varying among alpine and subalpine forests and pastures, to intact natural oak forests and Mediterranean macchia (a typical shrub-land biome for the Mediterranean area). Existence of endemic and sub endemic species (for both flora and fauna) is a high added value to these protected areas67. Next to these areas, there are also other classifications, whose areas overlap in most of the cases with those protected by the national legislation, by either exceeding or falling within their boundaries. These classifications include: the Ramsar68 area of Prespa’s lakes and 8 Emerald (current and proposed) areas. The Emerald network for Areas of Special Conservation Interest (ASCI) supports the implementation of the Berne Convention (1979) for the

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conservation of species and natural European habitats. The establishment of this network in Albania was initiated in 2002. Table 226. Environmentally protected areas for Region 3 Category

Area (ha)

Location

I. Strict Nature Reserve 88,808

Korçë, Librazhd, Kolonjë, Berat, Skrapar, Gramsh

6,835

Devoll, Skrapar, Korçë, Librazhd, Berat, Elbasan, Kolonjë, Librazhd

V. Protected Landscape

27,833

Devoll, Pogradec

VI. Multiple Use Protected Area

7,600

Kolonjë, Pogradec

II. National Park III. Nature Monument IV. Managed Nature Reserve/Natural Park

Total Area Ramsar Emerald/ASCI Areas

Source: Ministry of Environment

131,076 ha or 15% of the Region’s territory 15,118 Liqeni i Prespës – Korçë & Devoll 8 areas (Tomorr, Shebenik, Hotovë, Pogradec-Ohrid, Prespa, Kuturman-Qafë Bushi, Gërmenj Shelegur)

and Authors’ calculations

The environmentally protected areas constitute an ecological and socialeconomic valuable asset for the region. For instance the Gërmenj national park, located in the southern part of the Korça qark (Kolonjë), which is very reach in fauna and has vast stunning forests, is very suitable for eco-tourism and hiking trails. The national park of the Prespa lakes is famous for the diversity of terrestrial and aquatic ecosystems, including rare water bird species (for instance the Dalmatian pelican), but constitutes as well the largest environmentally protected area in the country, while hosting rural settlements. This mixture of habitats makes it a very unique tourist destination. The mountainous areas, such as Gramozi, Morava, Dardha, and Tomorri offer opportunities for all-year tourism, from hiking and alpinism to skiing and pilgrimage, though no significant touristic accommodations and facilities are built to match these opportunities and increase access to the area. The access to Jabllanicë-Shebenik and Valamare (north and centre of the region respectively) as unexplored integral ecosystems is almost inexistent. Not only appropriate infrastructure to reach the destinations is missing, but related information is lacking as well. The rivers on the other hand (Osumi and Devolli upper streams) are suitable for rafting and hiking, partially swimming and fishing, but in a high risk from urban pollution and exploitation for hydropower plants. The overall sustainability and environmental resilience of these territories depends on the health of these habitats and their physical relation with the surrounding villages, cities and infrastructure networks. The economic growth of the region is also depended on the protected areas as key resources in the tourism value-chain strengthening and diversity (eco-tourism especially) and their impact on soil quality, erosion risk and stability of the agricultural land 339

system. So far, few of the areas have a management plan (drafted or under development) and some of them are in critical conditions due to fires and informal logging activity, or pollution discharged directly into rivers. The region is one of the less accessible in terms of polycentrism and mobility analyses. 4 out of the 17 Functional Urban Areas (as identified based on Instat agglomerations) are located in this region, namely the FUAs of Elbasan, Berat, Pogradec and Korçë. So, the population and GDP of the FUAs of Elbasan, Korçë and Berat are positioned at medium levels in the size distribution index of polycentrism, while Pogradec is ranked very low (the 4th and 2nd last position for population and GDP/capita respectively). The positioning of the 3 first FUAs is not to be seen as positive though, because all 15 FUAs but Tirana and Laç have moderate to low differences among them, while Tirana and Laç represent outliers. So the 4 FUAs of Region 3 do not contribute to the slope of the size index; on the contrary, all together they show how large the differences are between Tirana and Laç FUAs in one side and all the other 15 FUAs in the other. All in all, this shows for a highly pronounced monocentrism at national level. The accessibility is higher the faster the population of Albania can reach a FUA and the more population that FUA has. This means that the respective FUA offers a larger and more diverse market and more jobs. In this respect, the FUA of Elbasan has a higher accessibility compared to the other 3 in the Region and its index stands 16 percentage points above the national average. The FUA of Korçë has one of the lowest indexes (accessibility) in the country (73%), while Pogradec and Berat have indexes of 88% and 95% respectively. This analysis positions the FUA of Korçë (its urban agglomeration and the respective commuting catchment area) in a very peripheral position and shows for the high need on infrastructure investments. In the case of Region 3, each FUA is almost matching the commuter catchment area of the respective agglomeration. This means that the population (density as well) is mostly located within the commuter catchment area and the Region is lagging behind in terms of regional infrastructure. Key villages of Korçë qark (Dardhë, Voskopojë, Boboshticë, Vithkuq, Prespa villages, Lin, Drilon, Tushemisht, Pustec, Rehova and Borova – all valuable as touristic destinations) are located in a distance of 40 minutes or more by car (except for Boboshticë) from Korça agglomeration centre. Each village has natural and historical/cultural attractions and has an adjacent natural park or site, worth visiting and including in the touristic products value-chains. All together with Korçë and Pogradec cities they compose the network of settlements touristic destinations, but linkages among them are poor in terms of: communication infrastructure, 340

branding, evidencing of value chains, touristic accommodations. The geography of the qark poses barriers to the communication and touristic product integration and exchange between these areas. On the other hand, Elbasan and Berat have an economy that is even more focused inwardly – thus in the respective urban centres and the smaller villages and settlements within the catchment area (Cërrik, Peqin, Librazhd for Elbasan and Kuçovë and Ura Vajgurore for Berat). Other municipalities (smaller urban centres and villages) such as Gramsh, Belsh, Librazhd villages, Prrenjas, Poliçan and Skrapar, are all in a travel distance of more than 40 minutes from the respective core agglomeration. As a result, access to remarkable touristic sites fades to a degree that they “disappear” from the destinations map. Nevertheless, the region (especially Korça for its geographical proximity) is cross-border and has very good relations with neighbour cities in Greece. This constitutes a key factor in its development, especially for those settlements that are closer to the border (Devoll, Pustec, Pogradec and Korçë urban areas and some villages in Kolonjë). However, as these areas are currently underutilised from a national perspective, the cross-border relationship is also still weak and not yet very beneficial at regional and national level. Finally, the risks to natural and territorial capital are high and can be evidenced throughout the document. Region 3 has abundant natural resources, which constitute a key asset for economic and social development, though being often unexplored, or underutilised. However, the latter constitutes a risk for their protection as lack of knowledge and control on these resources may lead to informal, or uncoordinated overexploitation. This is the case with some of the forests and rivers as mentioned above. Systems of real-time monitoring of natural resources (forest and water sources) should be built, fetching information to the environmental agencies, but also municipalities and civil society organizations and institutes that have a scientific interest on the ecological development and conservation of the resources. Solid waste and wastewater as environmental pollution sources decrease the quality of the habitats, while contributing to deterioration of the image for the region (and specific localities within it). Waste/capita, both urban and inert/construction is below national value in this region and underground water and rivers pollution is low in the upper lands, especially compared to other qarks. The latter is due to lack of sea access, as this is the only region with no coastline. However, pollution of rivers and aquifers in Berat and Elbasan (urban areas) is high due to current and inherited industrial activity. The waste borne pollution raises strongly the need for investments related to both: i) regeneration

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and/or rehabilitation of the inherited brownfileds, while also investing on new clean technologies for the current industries; ii) and completion of infrastructure on solid waste treatment (transfer stations, landfills and incinerators) and wastewater treatment plants (bio and mechanical treatments, based on the territory properties and the amounts generated). Soil sealing70 per capita is at medium levels and uniform across qarks. This reflects the territorial development typology with four distinct urban centres (Elbasan, Korçë, Pogradec and Berat) and several rural settlements distributed over the territory, with higher densities the closer they are to the 4 urban centres and lower densities and sizes the more remote and peripheral these villages are. Soil sealing (current and potential) should be further evaluated, to understand not only the phenomenon, but its chain effects to the natural and urban environment as well. Erosion and flooding are highly linked to soli sealing and deforestation, next to climate change. However, the latter would have impacts mainly in the lower part of Berat qark (where Devolli and Osumi rivers join to create Seman), due to the extending valley from the sea (Seman delta) to the hinterland. The rest of the region risks experiencing draughts (because of climate change) and floods that are borne mainly due to human activities (urbanization and deforestation).

Social capital and institutional development Region 3 has no development pressures (with the exception of Elbasan city) and it is typical for a presence of stagnation and/or depression in terms of social development. So, population in this region has been in constant decline since 2001. Similarly has been the case with the population density, with a value of 75.8 inhabitants/km2 in 2016 and around 25 percentage points below the national value. All three qarks present similar trends, but being distant from each other, with Elbasan having the highest population level out of the three and Berat having the lowest. Elbasan is also the third qark in terms of population in Albania, while Berat is in line with the low scoring qarks. As the decline dynamic has been constant for all three of them, at medium levels for Elbasan and Korçë and relatively severe in the case of Berat, Region 3 has the highest percentage of population decline (-19.4%) out of the four regions. This decline is widely attributed to different factors: the rural areas, which constitute a very large portion of the territory of each qark, have experienced major population decrease due to internal and external migration; the proximity of Elbasan city to Tirana has induced the local population to settle and live in Tirana, while still being able to work in Elbasan; external migration has been a 342

key tendency for the population of Korça (both urban and rural), due to the proximity with Greece. It is noticeable that in this Region population movement has different patterns in each qark, and this is also reflected in the economic and welfare structure and performance, which is unevenly distributed across the regional territory. This means that strategies and investments to increase economic performance and retain population in the region should be different in different qarks and sometimes, also municipalities. Though this region has the second largest share of total population in Albania, in fact has very low urbanization with urban population around 25 percentage points below national average and decreasing since 2001. This is because each qark has been experiencing a decline in urban population, similarly as for the respective total population. The ageing index varies from a very low one in the northern part of the region to a very high one in the south (mainly the qark of Korçë). Age dependency is the highest among the 4 regions, because all three composing qarks have high age dependencies and significantly above the national value. Females’ age dependency is higher than the males one. Education is a key aspect of the region in two dimensions: i) the potential for investing further into this sector as a basis for boosting economic growth from other production sectors; ii) in terms of the yet underdeveloped social capital, but with good strengthening potential. The potential is born in the specific profiles of two qarks, namely Korça and Elbasan. Both have a long and consolidated history of education institutions that starts centuries ago. To date, each qark has a public university, namely the University of Korçë “Fan Noli” specialised in education, tourism and human/nature sciences and University of Elbasan “Alexandër Xhuvani” with 5 faculties, specialised in nature sciences, economics, foreign languages, education, social and human sciences and some medicine specializations. Next to higher education institutions, there are also 4 public VET schools in Elbasan with a focus on industrial and technological process, tourism and some arts; 6 in Korçë with various specializations and among others also agribusiness and food processing technologies; and another 4 in Berat where agribusiness and tourism are some of the subjects. The profiles taught at the universities are important not only to the regional dynamics and needs, but to the national jobs’ market as well. VET schools, on the other hand, provide a unique opportunity for educating the local and regional workforce on professions that are key to the overall development profile of the region, such as tourism, agriculture, food processing industry and related agribusiness. These profiles are available in all three qarks of the region and this shows for a need to: i) integrate the curricula and make the subjects (taught

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in the different schools) complementary to each other and to the contribution in the agriculture and tourism value-chains. The analysis of the lower levels of education provides a mixed profile. State budget expenditures devoted to education in this area, constitute 20% of the total and the region is ranked second, with Tirana-Durrës-Dibër (Region 2) consuming 47% of the expenditures. The portion consumed by Region 3 is composed by 10.4% for Elbasan qark, 6.1% for Korçë qark and 4.1% for Berat qark. While Elbasan is ranked second after Tirana (35.2%), Berat is one of the qarks that consumes some of the lowest values. Similarly, Elbasan is ranked second (among 12 qarks) for the total number of teachers in in basic education schools (primary and lower secondary) and third for the secondary education (upper secondary), while Berat has some of the lowest figures among qarks. However, the number of teachers per 10,000 inhabitants is almost equal for Korçë and Elbasan (113% and 118% respectively for basic education in 2014) and higher for Berat (126% for basic education in 2014). These reversed figures are due to the higher population levels in Elbasan, as compared to Korçë and Berat. In the case of the upper secondary education, this indicator is almost equal in all three qarks and above the national average by 25-30 percentage points in 2014. As a result, for both education levels, this indicator is above the national average for Region 3 and ranks it as second among the 4 regions. However, general enrolment rates for both levels of education remain below the national averages for these three qarks, while Region 3 ranks 3rd among the four regions. The picture is similar for healthcare services. The region has benefited from 11% of the state budget expenditures in 2015, being ranked second, but with a huge difference from Region 2 (70.5%). Elbasan as a qark has the highest number of the total health care service providers (12.2% in 2013) among the 12 qarks, Korçë is very similar to Tirana (with 11.3%) while Berat qark has some of the lowest values (7.2%). The number of hospitals in Region 3 is the highest among the 4 regions and the number of beds per 10,000 inhabitants is also high for Elbasan and Korçë (16-18 percentage points above the national average) and very low for Berat (14 percentage points below the national average in 2013) and it reflects the total number of beds in each qark. Still, the number of hospital beds per 10,000 inhabitants remains the highest in Region 3 and this is due to both, the total number of hospitals (the highest) and the lower population levels when compared to Region 2. The poverty analysis ranks this region at the best position among the four, with the lowest poverty gap (12%), poverty depth (2.4%) and poverty severity (0.7%).

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Albania has values of 14.3%, 3% and 1% for each indicator respectively. These better figures could be dedicated to the lower population levels in this region, combined with average or higher economic development levels. However, the reason could also be the good interaction that the population of this region has with the settlements across the national borders in Greece. Still, the number of families receiving social assistance is slightly above national average. Each qark has gone at least once through a strategic planning process, usually supported by donors. As a result all three have prepared (with the support of UNDP in 2002-2003) a development strategy as a response to the achievement of the Millennium Development Goals. Both Elbasan and Korça (qarks) have tourism development strategies and related action plans, while Elbasan and Berat have received UNDP/EU support in 2011-2012 for drafting regional development plans for the qark territories. The main urban centres, Elbasan, Korçë and Berat have drafted (in years) city development strategies and urban plans for their territories. Similarly, other local governments (prior to the administrative and territorial reform) have had strategic and urban plans drafted and approved. However, due to the physical merge of the previous municipalities and communes in June 2015, as a result of the territorial reform, all newly established local governments are or need to be engaged in territory planning processes. The latter encompasses both the strategic and the regulatory planning for the whole administrative territory of each municipality. So far, the municipalities of Elbasan, Kuçovë and Berat are drafting their territorial plans with the support of the USAID Planning and Local Government Project – the respective municipal councils have already approved their territorial development strategies. Ura Vajgurore, Poliçan, Skrapar, Librazhd, Prrenjas, Cërrik, Korçë and Pogradec are also in a process of drafting territorial plans and about to submit for approval the related strategies. These municipalities have received support from the Government of Albania through the Ministry of Urban Development. So, 11 out of the 18 municipalities composing Region 3 are currently engaged in territorial and strategic planning. Finally, during the second phase of the STAR71 project the municipalities of Belsh, Peqin, Gramsh, Maliq, Devoll, Pustec, Kolonjë received support in drafting Local Development Operational Plans. These are quick, but strategic tools for a rapid analysis of the territory, local resources and opportunities, and setting forth a list of priority projects for implementation by municipalities. These priority projects would be implemented in 2-3 years time period, till territorial plans and long-term strategies are in place. From an environmental viewpoint, there are at least 4 environmental management plans for environmentally 345

protected areas drafted/in process (since 2014), namely on: Prespa lakes, Tomorri Mountain, Bredhi i HotovĂŤs (located in both, region 3 and 4) and Pogradec land/water protected landscape. Besides these planning instruments, each qark council and several local governments within each qark in Region 3 (before and after the territorial reform) have been active in implementing development projects. For instance, IPA cross-border projects are some of the most significant cases that show for good efforts of local governments and qark councils engaging in development activities. The region is eligible for IPA CBC with Greece and FYROM. Projects selected since 2007 have focused on themes such as: promotion of new and renewable energy sources, eco-tourism destinations, biomass exploitation for energy, health issues, education and technology, biotourism for economic development, economic clusters, promotion of Prespa lakes cultural heritage, management of water resources in cross-border areas, cultural and musical traditions in the CBC areas, vocational education, employment of vulnerable groups and ethnic minorities etc. Implementation partners (lead or not) from Albanian side, include not only the qark councils, or key municipalities, but also Government`s institutions (i.e. the Ministry of Economic Development, Tourism, Trade and Entrepreneurship, the Prefectures, etc.), local and regional universities (for instance the university of KorĂ§a Fan Noli and the University of Elbasan Alexander Xhuvani), the Orthodox Church of Albania, local/Albanian non-governmental organizations, etc. Elbasan and Berat on the other hand, benefit also from other projects, which are related to forests management, cultural heritage as a UNESCO city for Berat, etc.

The economic potential The region can be considered as medium-lower rank for social and economic development, with relatively good representation of the urban centres, but quite low in rural areas. Total GDP for 2014 was around 239 million lekĂŤ72, with qark of Elbasan having the highest value among the three qarks and doubling that of Berat. GDP/capita usually stands 30-20 percentage points below the national average in 15 years and this level holds equal for all three qarks. The regional GVA has been increasing from 2000 to 2007, and since then has been experiencing several fluctuations (up and down), ranked as 3rd out of the 4 regions for its share to the total GVA formation. The weight of sectors in internal regional GVA is dominated by agriculture with 37.5%, followed by trade, transport and communications with 16.1% (in 2012). This is due to the high agrarian profile that each qark has, with 42.6%, 38.7% and 34.1% in Berat, 346

Korçë and Elbasan respectively. As a matter of fact, Berat represents the qark with the highest internal share of agriculture in the qark GVA. Among the three, Elbasan has the highest internal share of GVA in industry (14.2%) and trade and transport and communications (19.8%). The agriculture focus (as well as the structure of this sector in Albania, including high fragmentation of land and farms) is a factor for ranking Berat, Korçë and Elbasan qarks below the national average (20-30 percentage points in 2014) for active enterprises per 10,000 inhabitants. Higher population levels is a reason for placing Elbasan in a lower position than Korçë and Berat, while the enterprises stock number in 2014 was higher in Elbasan (7,859 or 7% of the total in Albania) compared to Korçë and Berat with 6.5% and 3.8% of the total stock (in Albania) respectively. Birth rates of new enterprises are also low (below the national average) placing Region 3 at the lowest position among the four regions for 2014. Though the region has a dominance of the agriculture sector, 44% of the active enterprises are focused on trade, around 39% in services (combined) and 11.3% in industry. Agriculture holds for 0.8% of active enterprises. This means that: i) the sector is not yet consolidated yet and though it produces most of the regional GVA, most of the farmers carry out this activity in an “informal” manner; ii) there are very few registered business with agriculture activity, and these are most probably big businesses. These figures are reflected in the employment/unemployment profile of the region and could be further analysed in terms of economic interactions among the urban and rural settlements. So, the region is dominated by private agriculture employment (70% of the total internal employment) and it dominates private agriculture of Albania as well (the highest figure among the 4 qarks and 36 of total agriculture employment in Albania in 2014). At qark level, Elbasan seems to contribute more than Korçë and Berat to the total agriculture employment, but this is due to the higher population level of this qark. This is further supported by the fact that Elbasan has higher contributions to the private non-agriculture and public administration employment than the other two, while also being ranked 3rd (after Tirana and Fier) for overall contribution to total employment in 2014. Again, among the three qarks composing Region 3, Elbasan has the highest unemployment. According Instat73 Elbasan, Berat and Korçë (urban centres) have less than 25% of their population engaged in the agriculture sector, while the population active in the services sector constitutes 30-80% (the highest group identified by Instat). The other administrative units (previous communes and municipalities), with the exception of Maliq, Peqin, Devoll and Prrenjas (previous local governments) have more than 50% of their population engaged in agriculture. 347

All of the mountainous administrative units of the [current] municipalities stand at 85% and more. Urban centres in all three qarks ofer a mix of services and economic functions and have the best infrastructures, ressembling the most to agglomeration economies. The rural areas are specialised in agriculture, mainly farming and to a lesser degree in processing and are classified as locations with agrarian economies. Still, Berat, Korçë and Elbasan differ in character as urban centres. The latter has a more pronounced mix of urban functions, with more population employed in active industries, larger urban settlement and several services. The other two are of a smaller size, have inherited industrial sites, a more pdistinct agriculture and tourism character. The three are complementary in character to each-other, but the transport communication is still lagging behind and each centre serves to its surroundings, without interacting beyond the physical geogrpahical barriers. Thus, the cooperation between urban and rural centres is so far a closed network for each qark and (as mentioned in the natural capital session) falls mainly within the funcional urban area, weakining gradually the further fromt he aglomeration core a rural settlement is. For instance in the case of Elbasan, most of the economic interaction happens between the Elbasan city and Shirgjan and between Elbasan and Labinot Fushë (commutters at a level of 2740% according Instat and the dldp Report on functional areas). The interaction of Elbasan city with Gjinar, Zavalinë, Shushicë, Labinot Mal, Funarë, Bradashesh and Tregan (12-26% of the commutters). The rural areas have a very week interaction among them (Gracen-Bradashesh, Funarë-Bradashesh, Shirgjan-Tregan, Shirgjan-Zavalinë at levels of 3-11% of commutters). Similarly, Berat city has most of the work related interactions with some of the surrounding administrative units (Otllak, Velabisht, Sinje) and Ura Vajgurore. The interactions among the rural areas of Berat qark are extremely weak (if not existant) due to the difficult access by road. Korçë city is well linked and has interaction with Pogradec (urban area) and Drenovë, Qendër-Bulgarec, Pojan, Libonik, Maliq, and Pirg (thus most of the plain area). Rural interactions are weak and appear in the case of Hudenisht-Trebinje and Bilisht with all of the administrative units composing the current municipality of Devoll. The challenges to the economic development potential are both, internal, thus the performance of the economic activities, and external, thus deriving from from other development dimensions. The internal challenges are already identified through facts and figures analysed above and are reflected in incomplete or weak value chains across the regions. The current value chains have either missing components or components that are not yet able to build one upon the

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another and be complementary among them, with the final aim of reinforcing the economic outcome. This is further interlinked with the still weak tourism sector, with untapped touristic potential, but valuable resources; the low number of active enterprises and low new enterprises birth rates; poor or missing information on local and regional markets and business inovations; the weak agriculture sector, though it is the main contributor to the regional GVA; and poor links among sectors, mainly those that contribute to rural development. Not only the agriculture sector is not making proper use of the potential of this region (for both cultivation and processing), but crops have experienced shift in time. The latter, as an individual initiative, was based on some incomplete knowledge and individual analysis of the market, but did not receive support from an overall regional strategy for agriculture. Farms are yet very fragmented, so consolidation is needed and may be promoted through related projects. The external challenges are related to the support sectors and infrastructures. For instance, the drainage and irrigation system, which is a regional system supporting agriculture, is poorly functioning due to lack of maintenance and further investments for its expansion and modernisation. Transport and communication infrastructure is another factor that by being absent or dilapidated, holds farmers back from accessing markets outside the region (in Tirana-DurrĂŤs metropolitan area, where most of the consumers are located). Road infrastructure is also a factor for businesses location decision-making and thus key to the development of urban and rural settlements. For instance Elbasan municipality has 7 collection centres for agriculture products and 6 out of the total are located in Bradashesh, while the last one is in Gjergjan. This extreme concentration in one location is due to the proximity of Bradashesh with Elbasan city and to the highway exit to Tirana. Thus access to rapid communication by road is crucial in businesses decisions and the future profiling of certain location as economic poles. In the case of Elbasan, the industrial and services areas are all located within the Shkumbini valley, along the communication corridors with Tirana and east-west. Finally, the existence of inherited industrial sites represents a potential as valuable property to be used for a variety of economic activities. However, exindustrial sites constitute an environmental concern as well. On the other hand, the ownership fragmentation they have been through and the lack of regional and local strategies to make use of these sites, has contributed to a current physical abandonment of the sites.

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Vision and Objectives Korçë-Berat-Elbasan region resurges resiliently to be the most attractive and competitive area for hinterland and niche tourism in Albania, with stable economic growth, based on agriculture and sustainable and smart use of natural resources. This development vision of the Region 3 (Korçë-Berat-Elbasan) builds on fundamental principles: i) The region is a unique territorial organism, where administrative boundaries of any kind/level do not interfere in the final purpose, that of territorial and balanced social-economic development for the community. On the contrary, governance entities, community and any interest group are in a harmonious cooperation, building steadily a frame for successful partnerships and multilevel governance. Historical flows of human interaction within the region and the territorial structuring upon two major river basins (Shkumbin and DevollOsum) are revealed to enable integration. ii) The region is internally integrated and externally well positioned in the national and cross-border development net, through a supple road and transportation system. This system provides fast connection between the three major urban centres and among them and Tirana, Peshkopi, Fier, Vlorë, Sarandë, Gjirokastër, Ohrid in FYROM, and Thessaloniki and Ioannina in Greece. The travelling time between Tirana and Korça is reduced to 1.5 hours and each village and remote area can reach the respective qark centre in not more than 1,5 hours. This cascade-like road network is bringing inter-local, regional and national communication of the region at a best performance level, by breaking any physical and psychological barriers to mobility and making use of valleys where possible. Increasing access to the region will increase its internal and external accessibility to markets, jobs and knowledge. iii) The flourishing regional perviousness, enabled by a best performing communication system, reveals the core potential for the economic growth of the region. The captivating atmosphere of enhanced alternative historical and natural itineraries, agriculture corridors, historical sites and cities, pastoral landscapes and vernacular architecture, natural monuments and parks will grasp not only visitors and tourists, but nourish a genuine bond among inhabitants themselves and between them and their territory. Linking the agriculture functional area, to mountain-ecological-cultural tourism packages, and to the network of urban services concentrations, through a physical and events’ network, will increase the internal economic fluidity and welfare of the region.

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iv) The agriculture system and the natural resources are well preserved, protected and sustainably used. The network of environmentally protected areas surround the region by playing a role of natural boundaries between the river basins, but also as bio-corridors among them. People and institutions safeguard them as the key to their region’s resilience, while struggling to minimize erosion, to restore and conserve riparian areas and to protect the quality of the agriculture land. v) The region has a healthy net of education facilities and alternatives, providing support to the knowledge based society and the development of the social capital. Vocational training and university education are harmonised to craft the jobs’ market and shape the future workforce. Information systems are in place to facilitate societal integration within the region, release access to markets, support entrepreneurs in creating niches, and bring services closer to the citizens. v) Elbasan and Kuçovë provide ground to the development of industry, not simply through former assets and sites, but through resources as well. Crude oil extraction and processing industry is present in Kuçovë and measures to protect agriculture land and the health of the citizens from the effects of this sector are taken. All cities provide space and facilities for businesses incubators and start-ups, food processing and packaging industry (Berat and Korçë), and innovative ideas on information technologies. vi) The cities are the engine of the economic growth for the region. The four major cities of the region provide specialised services and facilities to economic activity, while operating in a complementary network. Proximity enhanced by decreasing travel times, increased urban GDP, increased population and decreasing migration, increased number of economic entrepreneurships, show for an evolving pattern of polycentric development within the region and visà-vis the rest of the country. The functional areas of Berat, Elbasan and Korçë have augmented and communication among the three has restored to overcome any physical or social and psychological barrier. The accomplishment of the development vision will take place through the implementation of the following objectives: 1. Enable regional infrastructure investments that promote, or facilitate economic growth, social development and environmental protection. 2. Develop an integrated, effective and highly productive system of tourism value chains and niche products and agriculture that will place the Region as the most competitive and leading one at national

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level, and will increase the annual growth of the Regional GDP by at least 5% compared to the national average growth. 3. Establish a network of complementary education and knowledge alternatives in order to increase access to the jobs’ market, boost the quality of the workforce and reduce gender disparities. 4. Create an economically dynamic region by encouraging entrepreneurship, supporting SMEs and building an information society. 5. Foster a vibrant and vigorous regional network of settlements and smart urban centers, as complementary multifunctional nodes and territorial belts that nurture the fundamentals of the regional economic growth, by increasing welfare and ensuring access to high-quality services.

Programs – Priority Axes Programs – Priority Axes and indicators per each objective are identified as the following: Objective 1. Enable Regional Infrastructure Investments: Priority Axes (PA) % of total Objective Indicators OP* 1.1 Environmental infrastructures and risks prevention 1.2 Roads and Transport 1.3 Drainage and Irrigation 1.4 Renewable Energy production

45%

Rate of erosion decreased Density of regional roads as km/km2 Density of national roads as km/km2 Travel time decreased to max 1.5 hours for any origin-destination trip Average annual energy generation in MW from renewable sources Quality of Devolli and Osumi in their middle to lower streams (heavy metals, nutrients, BOD5, coliforms) % of irrigated agriculture area during summer

*The total OP expressed in financial terms is the amount budgeted from the government for regional development in the respective region. It does not include funds that can be generated from bilateral projects, participation in IPA, and any donor or businesses borne fund.

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Objective 2. Develop an integrated, effective and highly productive system of tourism value chains and niche products and agriculture: Priority Axes (PA) % of total Objective Indicators OP* 2.1 Cultural tourism

20%

2.2 Rural Development 2.3 Branding 2.6 Nature conservation

Increased no. of agriculture enterprises by 50% Budget expenditures on promotion of historical sites and monuments of culture increased by x% 2 local products (food industry) branded and accessed international markets, with a contribution to national GDP by x% Average annual no. of either Albanian or foreign tourists frequenting the region doubled Length (km) of safe and marked nature and cultural itineraries established Environmentally protected area increased to at least 20% of the territory

Objective 3. Establish a network of complementary education and knowledge alternatives: Priority Axes (PA) % of total Objective Indicators OP* 3.1 Vocational Education and Training 3.2 University and Research Centre 3.3 Gender

10%

No. of new jobs over the period Average no. of years of education increased from x to y Women participation to VET No. of new jobs based on VET Graduation in university education increased by 50% No. of women led new enterprises increased by 30%

Objective 4. Create an economically dynamic region: Priority Axes (PA) % of total Objective Indicators

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OP* 4.1 SMEs support and promotion

10%

4.2 Development of clustered businesses locations 4.3 Innovation, start-ups and local patents 4.4 Information Society

GDP per capita index from 71.9% in 2014 to 90% in 2020 Increase rate of employment by x% Decreased rate of unemployment by x% New enterprises birth rate increased with x% Private non-agriculture employment increased with x% Increased share of regional GVA by productive sectors No. of innovations that have stabilised in the market over the whole period

Objective 5. Foster a vibrant and vigorous regional network of settlements and smart urban centres: Priority Axes (PA) % of total Objective Indicators OP* 5.1 Brownfields regeneration 5.2 Urban Regeneration and BIDs 5.3 Health and education for rural settlements 5.4 Housing 5.5 Energy efficiency

15%

No. of established and fully operational BIDs % of capital investments and operational expenses covered by BID schemes % of population having full access to primary health care % of population having full access to primary and secondary education No. of remediated or reclaimed brownfields No. of regenerated brownfields in use for economic activities % of urban and/or rural population benefiting from enhanced energy efficiency of housing and/or institutional buildings

Content of Priority Projects/Operations Priority Axes (PA) Content of Priority Projects/Operations Objective 1. Enable Regional Infrastructure Investments 1.1 Environmental

1.1.1 Restoration of riparian areas for Devoll, Osum and

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infrastructures and risks prevention

1.2 Roads and Transport

Shkumbin 1.1.2 Restoration of rivers and streams 1.1.3 Erosion protection and mitigation measures 1.1.4 Climate change effects adaptation and risks prevention 1.1.5 Regional landfills and incinerators 1.1.6 Regional wastewater treatment plants 1.2.1 Elbasan-Korçë highway 1.2.2 The central south corridor (Elbasan-Kuçovë-BeratSarandë) 1.2.3 Regional routes: • • • • • • •

1.3 Drainage and Irrigation 1.4 Renewable Energy production

Elbasan-Gjinar, Elbasan – Labinot Mal, Qukës – Valamare, Berat – Këlcyrë, Gramsh – Elbasan (the historical route), Kolonjë – Skrapar, Gramsh – Sotirë, Gramsh – Skrapar, Prrenjas – Skëndërbej, Librazhd – Steblevë

1.2.4 Multimodal stations for Elbasan, Korçë and Berat 1.2.5 The regional transportation system (buses and train) 1.3.1 The drainage and irrigation network of fields of Korçë and Maliq 1.3.2 The drainage and irrigation network of Devolli 1.4.1 Solar energy systems 1.4.2 Wind energy parks

Objective 2. Develop an integrated, effective and highly productive system of tourism value chains and niche products and agriculture 2.1 Cultural and city tourism

2.2 Rural Development and Tourism

2.1.1 Restoration of sites and monuments 2.1.2 The digital tourist information (map, leaflets, books, libraries, museums’ shops, etc.) 2.1.3 Integrated cultural tourism product (itineraries restored, sites, information, troponins, experience the past, services, city and site museums) 2.1.4 Pilgrimage: Experience culture and nature (Tomorr, Voskopojë, etc.) 2.1.5 360degree events (all year round) 2.2.1 Agriculture land and product consolidation 2.2.2 Get the niche (agr. product identification, value chains study, training farmers, financial support for development) 2.2.3 Agro-tourism’s farms network 2.2.4 Alternative hiking and biking itineraries 2.2.5 Active tourism: skiing, rafting, canoe, alpinism (resorts, safety infrastructures, signs and information) 2.2.6 The eco-experience: enhanced attractions and safety

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2.3 Branding

2.4 Nature conservation

infrastructure 2.2.7 Regional markets and collection centres for agriculture products 2.3.1 Made-in Albania (at least 2 products, raki and nuts) 2.3.2 Authentic Albania (hotels and services quality and authenticity mark, traditional products and souvenirs) 2.4.1 Protected areas management plans 2.4.2 Forestation 2.4.3 Ecosystems and Climate monitoring

Objective 3. Establish a network of complementary education and knowledge alternatives 3.1 Vocational Education and Training 3.2 University and Research Centre 3.3 Gender and social enhancement

3.1.1 Agriculture and food processing 3.1.2 The touristâ&#x20AC;&#x2122;s package 3.1.3 Handicrafts 3.2.2 Agriculture research 3.2.1 Environmental Sciences 3.3.1 The family care-giving network (facilities and service) 3.3.2 Training and coaching women and young people to access market opportunities and employers to equally offer them 3.3.3 Women and SMEs (support establishment) 3.3.4 Women and media (training journalists in gender sensitive reporting, local radio on gender dynamics, etc.) 3.3.5 The libraries network

Objective 4. Create an economically dynamic region 4.1 SMEs support and promotion

4.2 Development of clustered businesses locations 4.3 Innovation, start-ups and local patents 4.4 Information Society

4.1.1 The counselling net 4.1.2 Microcredit access support 4.1.3 Promotion and information exchange nucleus (including fairs) 4.2.1 Sites identification and preparation 4.2.2 Study on value chains and agglomeration potential â&#x20AC;&#x201C; continuous activity 4.2.3 Collection, conservation and packaging industry 4.3.1 The innovations and start-up portfolio (competitive financial support and incubators) 4.4.1 Broadband 4.4.2 Farmers information society (the network, counselling services, database for information exchange, etc.) 4.4.3 Rural areas internet infrastructure (hot-spots, internet clubs, etc.) 4.4.4 E-governance (services provision and training)

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Objective 5. Foster a vibrant and vigorous regional network of settlements and smart urban centres 5.1 Brownfields regeneration 5.2 Urban Regeneration and BIDs 5.3 Health and education for rural settlements 5.4 Housing and integration of informal settlements 5.5 Energy efficiency

5.1.1 Former metallurgical plant of Elbasan 5.1.2 Berat industrial sites 5.1.3 Oil, Housing and Agriculture – Kuçovë 5.2.1 BIDs and Pedestrian (bazar, traditional services neighbourhoods, historical neighbourhoods, etc.) 5.2.2 The hostels net 5.3.1 Primary health care (new centres and/or dedicated transport) 5.3.2 Primary and secondary schools net (new schools and/or dedicated transport) 5.4.1 Relocation plan for climate change adaptation 5.4.2 Transfer of development rights for agriculture land protection 5.4.3 Infrastructure upgrading in large informal settlements 5.5.1 Energy efficiency restored old housing neighbourhoods 5.5.2 Energy efficient schools

3.6 REGION 4 DEVELOPMENT PROFILE AND STRATEGY The natural capital Region 4 is located along the Adriatic-Ionian coast, with around 7,000 km2 and around 566,000 inhabitants in 2016 (Instat estimations as provided in the following table). Table 227. Administrative Composition of Region 4 2

Qark and Municipality

Fier

Vlorë

Area (km )

Population 2011

Population density 2 (inh/km )

Fier

659

120,655

183

Patos

22,959

298

Roskovec

122

21,742

178

Lushnjë

394

83,659

212

Divjakë

253

34,254

135

Mallakastër Total

342

1,847

27,062 310,331

168

Qark population in 2016

312,448

169

Vlorë

596

104,827

176

Selenicë

573

16,396

357

Gjirokastër

Himarë

555

7,818

Sarandë

20,227

493

Konispol

206

8,245

Finiq

461

10,529

Delvinë Total

218

2,650

7,598 175,640

Qark population in 2016

183,105

Gjirokastër

459

28,673

Libohovë

231

3,667

Tepelenë

443

8,949

Memaliaj

361

10,657

Përmet

620

10,614

Këlcyrë

312

6,113

Dropull Total

458

2,884

3,503 72,176

Qark population in 2016

70,331

Source: Instat and Authors calculations in GIS

Due to its geographical location, it has a changing topography that lays from the north (Plainfield) to the south (mountainous and rocky) displaying not only various geological formations and landscapes, but diverse settlements, urban settings and economic developments as well. Fier qark is fully located on the Coastal Plainfield and Gjirokastër belongs to the Southern Mountainous Region. Vlorë qark is located between the two others, with parts of its territory in each of the two morphometric regions. The Plainfield is alluvial and has been created due to the deposition processes of the rivers that cross through it towards the sea. Some of the parts have been previous wetlands that have been drained. These processes have played a major role in the formation of the lowland and surrounding hills with very good agricultural properties. The topsoil horizon varies from 40 to 60 cm thick and the all kinds of cultures can be cultivated on these lands (orchards, cotton, tobacco, greenhouse vegetables, grains, onions, etc.). As a result of land cultivation, the natural vegetation (some forests and the Mediterranean macchia) has almost disappeared. This is the case in the fields of Fier and Lushnje, the hills of Mallakastra, Belshi hill (the Dumre plateau with beautiful carstic lakes), which till the `60s used to be covered with natural beech forests, etc. To date, the preserved natural sites are the environmentally protected areas and lagoons as described in the following paragraphs. The region is reach in water sources, with some exceptions as the hills of Mallakastra. The underground aquifers are very close to the surface in the

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lowland areas, just beneath the major urban centres and settlements, such as Fier. This constitutes a major risk to underground water pollution. The major rivers of Region 4 are Shkumbini (its lower stream and delta in DivjakĂŤ), Seman (created after Devolli and Osumi rivers join each-other just before entering Region 4), Vjosa River (initiating beyond the borders, in Greece, and entering Albania through GjirokastĂŤr qark) and Bistrica in the very south of Albania. Bistrica water have been for years used to generate electrical power, through two rather small hydropower plants with installed and effective capacities of around 15-20 times lower than the HEC-es established in the Drini cascade. Differently from other rivers in Albania, Bistrica has an almost constant water flow during the year. This is because of the underwater springs that supply it next to the seasonal water flows. There are also other independent streams, such as Borshi River, etc., which have seasonal flow and typical Mediterranean character. As a matter of fact, Region 4 has most of the potential for sources of renewable energies (solar, thermal and wind). This potential is not yet exploited. However, on the other side, due to location and topography, it also has the highest risk of flooding from sea, if the climate change scenarios are to happen. Currently the region has experienced flooding in the Fieri field and along Vjosa river (in the wider openings of the valley) due to high and intensive precipitation in wintertime, facilitated also by the lack of maintenance in the drainage and irrigation network and the informal construction on the agriculture land. From a topographic point of view the southern part of the Region 4 is composed of mountainsâ&#x20AC;&#x2122; chains and related river valleys, almost parallel to each other. Villages and small towns are located along the rivers in the valleys. The climate is typical Mediterranean and the vegetation too, starting with the macchia (a typical shrub-land biome for the Mediterranean area), continuing with beech and then coniferous. There are very few areas of alpine pastures and in heights of 2000 or more meters above sea level. In overall, the fauna is not so rich, and this is due to both, the ecological conditions and the uncontrolled hunting. However, there are certain areas, such as the environmentally protected ones (described below) that are biodiversity rich. Vjosa River vally is one of the most important ones within the region. The middle stream (166 km) 75 of the river is included entirely within the Southern Mountainous morphometric region in Region 4 and the lower stream is in the Coastal Plainfield. The entire valley (within Albania) has a warm climate, due to the warm sea winds that enter it from the northwest. The agriculture land has been cultivated mainly with some orchards, olives, vegetables and grapes. The river provides water for irrigation and the diverse landscape is very distinct. The 359

river and the valley constitute a bio-corridor and an area of great potentials for tourism development. Regardless of these diverse values and the opposing views, a license for building a hydropower plant on this river has been provided by the Government recently. As already described, Region 4 has abundant and valuable natural resources, but these are at high risk of pollution from the current urbanization and economic development patterns. So, together with Region 2, it has the highest quantity of waste/capita (0.460 ton/capita) & above the national value. Furthermore, it has the highest amount of inert waste per capita (0.360 ton/capita), almost tripling the national value. This high value is dedicated to the contribution of Vlorë qark (0.974 ton/capita in 2012). Seawater is polluted from waste discharge along the coast in the most urban part and where rivers flow. This is mostly present in the Adriatic coast of the region than in the rocky Ionian one – Adriatic has sandy formations and all river deltas (which carry waste) flow to the Adriatic coast. 17% of the territory of Region 4 is environmentally protected by law. There is a variety of habitats and ecosystems that are valuable and protected, either by the respective Albanian legislation, or through the classification as Ramsar76 and Emerlad Areas. The Emerald network for Areas of Special Conservation Interest (ASCI) supports the implementation of the Berne Convention (1979) for the conservation of species and natural European habitats. The establishment of this network in Albania was initiated in 2002. The areas, according to the different classifications are listed in the following table. Table 228. Environmentally protected areas for Region 3 Category

Area (ha)

I. Strict Nature Reserve

Location

1,800

Kardhiq Gjirokastër

77,512

Llogara, Butrint, Divjakë-Karavasta, Bredhi I HotovësDangëlli Përmet Kolonjë, Karaburun-Sazan,

III. Nature Monument

3,420

Gjirokastër, Delvinë

IV. Managed Nature Reserve/Natural Park

22,900

Karaburun, Pishë Poro, Levan, Rrëzomë-Delvinë

V. Protected Landscape

19,738

Vjosë-Nartë

II. National Park

VI. Multiple Use Protected Area Total Area

125,370

RAMSAR

33,500

7 areas (Divjakë, Llogara, Butrint, Vjosë-Nartë, Bredhi i Hotovës, Karaburun-Orikum-Dukat, Karavasta)

EMERALD/ASCI Areas

Source: Ministry of Environment

Karavasta Lagoon_Divjaka Pine, Kanali Çukes-ButrintKepi Stillos

and Authors’ calculations

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Divjakë-Karavasta (a national park and Ramsar area) is the most important environmentally protected area along the coast of the Region 4, with 22,230 ha. It has various habitats, such as lagoons, river deltas, pine forests, hygrophyte plants, etc. The park and the surrounding areas include also cultural and historical sites and all together constitute a valuable tourism development potential. Vjosë-Nartë lagoon is also important, among others for the habitat it provides to birds – around 20,000 winter birds and 40 species. Llogara park is also reach in biodiversity and hosts high pine forests and Mediterranean macchia. Karaburun-Sazan is valuable for its terrestrial landscape and biodiversity, as well as for the underwater habitats. Endangered and rare species of the Mediterranean, such as Posidonia oceanica, monachus monachus, some type of fishes, sea turtles and sharks, habit or visit the underwater habitats of Karaburun-Sazan. Butrin on the other hand, apart from ecological values, it offers one of the most important and better-preserved archaeological sites of Albania 78 . Nevertheless, all areas need proper management, have a low to moderate access and are not well inserted within a tourism package, which would otherwise increase their (sustainable) use and protection and would valorise them. The polycentrism analysis shows that Fier, Lushnje and Vlorë functional urban areas (FUAs) are in a more advantageous position compared to Gjirokastër and Srandë. The latter two have very similar GDP and population figures (approximately 21 million lekë and 18 million lekë respectively for GDP79 in 2012 and approximately 44,000 and 39,000 respectively for population). The first three FUAs on the other hand have a population range between approximately 170,000 for Fier and 80,000 for Lushnje, with Vlorë in between. GDP data for these three FUAs are ranked in the same order (Fier the highest and Lushnje the lowest), but the differences between GDP figures are lower than between population figures. This means that Fier, which has the highest population level does not make full use of this advantage, when compared to other FUAs within the region. Lushnje, on the other hand, due to its location and geography and access to some of the most populated surrounding areas, has the highest accessibility potential (116%), having thus a good position at country level as well. Fier is ranked second with 104%. Both, Lushnje and Fier stand above the national average, while Vlorë is 10 percentage points below the national average. Gjirokastër and Sarandë have the lowest vales in the region (70% and 58% respectively) with Saranda being ranked as the last among the 17 FUAs in the country. This positioning of Sranda and Gjirokastra shows not only for a high monocentrism development pattern at country level, but a high peripherality of

361

these two FUAs (and qarks for that matter) within the region and compared to other areas in Albania. This is due to the lack of fast connection routes between Saranda and Gjirokastra in one side and the rest of the country in the other. It still takes more that 4-5 hours to reach each of the two respective urban centres, while their rural areas are even more distant (time wise). Both, Gjirokastër and Srandë FUAs have good access to the adjacent areas across the borders in Greece, which is very stimulating to the internal economy and household welfare, but not properly-exploited at national level, due to poor communication and links with Tirana-Durrës metropolitan area. Both, the poor connection to the rest of the country and proximity to Greece, have plaid a major role on the continuing depopulation of these areas through migration, thus decreasing furthermore the potential for a polycentric development. Finally the potential polycentrism analysis, realised on the basis of the overlap of commuter catchment areas (45 minutes walking distance from each urban agglomeration core), shows that from a regional perspective: Lushnje and Roskovec are the best positioned municipalities and have the highest number of overlaps (5); Divjakë, Fier and Patos have three overlaps; Vlorë and Finiq have two overlaps; Memaliaj, Këlcyrë and Përmet have no overlaps at all, thus not being part of any potential integration area at all; and the remaining 9 municipalities have only one overlap80 of commuter catchment area. This profile of potential polycentrism is so far depended on the missing or undersupplied transport infrastructure in the southern part of Region 4, and the very good central location and flat terrain in its northern part. In conclusion, Region 4 is the most preferred one for tourism so far in Albania and this is mainly due to the distinct coastal line and beaches in the southern part, but also historical cities, monuments of culture and [archaeological] sites (Gjirokastër old town – UNESCO world heritage site, Butrint and Apollonia archeological sites, Ardenica, etc.). However, the current human-borne activity, such as the oil extraction and processing industry in the northern part of the region, the hydropower plants in the south and in the hinterland, the informal settlements and rapid urbanization patterns, next to lack of proper management of natural resources and poor transport infrastructure in the south, raise a number of conflicts in how the territorial values are used across the region. Region 4 has the highest soil sealing per capita in Albania. This is partially due to low population, but also to intensive construction activity that has taken place in Fier, Vlorë and recently in the southern coast. Nationally administered roads are slightly below the national average, but subnational ones are around 30 percentage points below the national average. As a result, the rural area has a

362

very low accessibility. The number of road vehicles per 1,000 inhabitants has increased and is almost equal to the national value. Regardless of the very steep and fragmented terrain in the southern and eastern part of its territory, Region 4 has the largest internal share of agriculture land (30.7%). This is all dedicated to Fier that has 65% of its territory under agriculture land use. Still, this agriculture land is in tough conflict with the oil extraction industry, which is also very important at national level.

Social capital and institutional development This Region is composed of the qarks with the lowest population level in 15 years (Gjirokastër) and Fier qark, which has had the second highest level of population for the last 15 years (the first is Tirana). Both, Fier and Gjirokastër have experienced significant population decline since 2001, while Vlorë (the 3rd qark) stands between the two in terms of overall population, but in contrast to them presents a very minor decrease, thus having an almost constant population since 2001. The overall population decline rate of Region 4 is 17.7%, very similar to Region 1, but slightly lower. Population density has been also decreasing to reach a value of 75.7 inhabitants/km2 in 2016 and around 25 percentage points below the national value. This region has a relatively low urbanization with urban population around 10 % points below national average. Fier is more rural than Gjirokastër (the latter has lost population due to emigration towards Greece), while the urban population of Vlorë stands more than 20 percentage points above the national average (in 15 years), though with a decreasing rate overtime. Structurally speaking, Region 4 has some of the highest aging index (disaggregated at municipal level), reaching levels of higher than 100% while moving towards the south. In terms of age dependency, it has a value almost equal to the national one because of the opposing values between Fier (high age dependency) and Vlorë (lower than the national value), with Gjirokastër standing in between. High aging index and age dependency almost equal to the national average, together with decreasing population figures show for a soon to come young population vacuum, that may be translated in less workforce and economic growth. Gender wise, age dependencies are almost equal for males and females. Region 4 is ranked 3rd (out of 4) in terms of education expenditures from state budget (7,595 million lekë in 2015 according the Ministry of Finance). This low allocation of expenditures is dedicated to lower allocations made for Gjirokastër

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qark (3.9% of the total in 2015) and Vlorë (5.8%). Fier has a higher share (8%) and is ranked 3rd after Tirana with 35.2%. At basic education level (primary and lower secondary), the number of teachers per 10,000 inhabitants is high for Gjirokastër (ranked 2nd among 12 qarks in 2014) and stands 6 percentage points above the national average. This is due to the very low population levels in Gjirokastër. Vlorë and Fier have lower levels (25-30 percentage points below the national average), and in both cases this is so due to the very high population levels compared to Gjirokastër, keeping in mind that the total number of teachers in both qarks, triples that of Gjirokastër. In the case of secondary schools, the number of teachers per 10,000 inhabitants is almost the same in all three qarks, showing for a more balanced distribution in proportion to the population level. So, Fier has almost the double of the total number of teachers of Vlorë and Vlorë doubling that of Gjirokastër. In this case, this indicator ranks Region 4 at the second level and the number of teachers of secondary education per 10,000 inhabitants stands above the national average. However, the number of pupils enrolled per teacher in both levels of education does not reflect the number of teachers. So, the differences among qarks are the same for this indicator in both education levels, with Gjirokastër having the lowest position among the 12 qarks and around 30-40 percentage points below the national average, and Vlorë and Fier standing close to the nation average but below it. Graduation per 10,000 inhabitants is at good levels for Fier (equal to national average for basic education and 7 percentage points above national average for upper education in 2014); moderate for Gjirokastër (13 percentage points below national average in 2014) and Vlorë (8 percentage points below national average) in the case of basic education; and very low for Gjirokastër (23 percentage points below national average) and Vlorë (30 percentage points below national average) in the case of upper secondary education. Figures and comparisons among qarks show that quantitative and qualitative indicators do not match each other. While Gjirokastër may have a very good rate of teachers per inhabitants, the quality of the education system is much lower in this qark. The region has two well-known universities, namely the University of Vlorë “Ismail Qemali” with around 5000 students and 4 faculties (social sciences, engineering, economics and medicine – nursing), and the University of Gjirokastër “Eqerem Çabej” with faculties specialised in social sciences and education. There use to be a branch of the Tirana Agriculture University in Lushnje (opened in 2008) of Lushnje, which ceased to exist in 2014 due to a higher education reform undertaken by the government. Currently, the Agriculture University of Tirana is cooperating again with the Municipality of Lushnje to reopen this branch in Lushnje. 364

There are 3 public schools for vocation education and training (VET) in Fier, two of which have programs specialised on agriculture production and technology; and another 3 in Vlorë with a focus on trade, tourism and industrial/technical processes. Healthcare service indicators show for differences among qarks, at least in terms of facilities. State budget expenditures for healthcare in 2015 were some of the lowest in Gjirokastër (2.7% of the total), moderate for Fier (3.6%) and relatively high for Vlorë (4.1%) if excluding Tirana, which is an outlier (67%). Due to these dynamics, Region 4 is ranked 3rd out of four regions, in terms of state budget expenditure allocated to the healthcare services. The total number of health service providers81 is in middle levels (7.8%, 8.3% and 8.5% for Vlorë, Gjirokastër and Fier respectively in 2013 according Instat) and the number of hospitals is higher in Vlorë than in the other two qarks. The total number of hospital beds is very low in Gjirokastër (4.5% of the total), but the number of beds per 10,000 inhabitants is the highest among the 12 qarks (177% in 2013). Vlorë has also a high number of hospital beds per 10,000 inhabitants (123.5% in 2013), while Fier stands 27 percentage points below the national average. The factors behind these indicators’ dynamics, include: the varying population levels among qarks (very low for Gjirokastër and the highest for Fier); and the higher number of hospitals in Vlorë, including one tertiary hospital. Because of the high disparities among the qarks within the region, Region 4 stands only 2 percentage points above the national average for the number of hospital beds per 10,000 inhabitants. The quality of healthcare services and facilities is yet lagging behind in these qarks. However, the government has made investments recently, trying to improve the service. For instance a new cardiology departments is active recently in the regional hospital of Gjirokastër and a new polyclinic (various specialised services, including cardiology) is active in Divjakë (the qark of Fier). While services’ provision seems to be at lower levels in Gjirokastër compared to the other two qarks of Region 4, poverty indicators for 2012 are lower for this qark than the others. In fact, Gjirokastër had the lowest headcount (10.6%) among all 12 qarks in 2012, depth was 2.4% compared to the 3% for Albania and severity was equal to that of Albania (1). Vlorë has similar levels to Gjirokastër with headcount slightly higher, equal depth and the second lowest severity among all qarks (0.8%). Fier on the other hand has a different picture, with severity equal to that of Albania (1%) and headcount and depth higher than those of Albania (17.1% compared to 14.3% for headcount and 3.4% compared to 3% for depth). Figures show that Fier is the poorer among the three, but has also the highest inequalities. Furthermore, is clear that those qarks that have 365

less population and more external migration (more dependent on remittances), though with lower total GDPs, or being far more distant from Tirana, have lower poverty indicators and score better from an individual welfare perspective. From a planning and strategic development point of view, Region 4 shows for different levels of intervention and this is linked to the geography (from plain and coast in the north and north west to very mountainous and cross-border in the south/south-east), as well as to the distance from Tirana. Various planning initiatives have happened before 2015 (when the territorial and administrative reform was executed), but all planning instruments at local level should go through a review process because of the changing administrative boundaries. So far, the government is supporting the municipalities of Gjirokastër, Divjakë, Vlorë, Himarë, Sarandë, Konispol to draft comprehensive territorial plans (visionary-strategic and regulatory), while the Planning and Local Government Project of USAID is supporting the municipalities of Fier and Lushnje for the same purpose. The government has also drafted an integrated cross-sectorial plan (regional plan) for the coastal area of Albania, which addresses some of the territories of Fier and Vlorë (qarks with sea access). Further on, the government, with the financial and technical support of donors, has facilitated the preparation of Local Development Operational Plans (priority/strategic projects for a 2-3 years time span) for the remaining municipalities of the Region 4, namely: Patos, Roskovec, Mallakstër, Përmet, Këlcyrë, Tepelenë, Memaliaj, Libohovë, Dropull, Selenicë, Delvine and Finiq. Environmental management and protection plans are prepared for the protected areas of Karaburun-Sazan (2015), Llogora – Rrëza e Kanalit – Dukat – Orikum – Tragjas – Radhimë – Karaburun (2004), Butrint (2010), Vjosë-Nartë protected landscape (2004), and Divjakë-Karavasta (2015). From a regional perspective, UNDP has supported in 2005 the preparation of the Regional Development Strategies, addressing the achievement of the millennium challenges objectives. However, these documents are out-dated. Similarly, the Qark Council of Vlorë has prepared in 2011 a qark development strategy (supported by UNDP ART GOLD 2) and a Strategy and Action Plan for Children (2011-2013) with the support of UNICEF. These documents are also out-dated, but again they provide a good basis for future work on development at regional level. The institutions (public, local and national government, and non-governmental) of this region have been very active in cooperating with Greek partners and benefiting from IPA cross-border program (the previous and the current 20142020, programs). The University of Gjirokastër, the regional hospital in Gjirokastër, the Ports of Vlorë and Sarandë, Auleda (local organization in Vlorë), the qark councils of Gjirokaster and Vlorë, etc. have participated (as lead, or 366

not) in the majority of the Albania-Greece CBC projects (Korça from Region 3 is active in less projects of this branch). The economic potential Region 4 is very mixed in terms of the economic growth and potential. So, Fier qark has the second highest total GDP (184,276 million lekë)82 among the 12 qarks (Tirana being 1st), while Gjirokastër has the second lower value (36,382 million lekë). Due to Fier contribution, Region 4 is ranked second for total GDP and is slightly lower than half of Region 2 (which has the highest value among the four regions). Because of the respective population levels, Fier has the second highest GDP/capita (122% versus Tirana 146.9%), Gjirokastër is equal to the national average and Vlorë is 97.2%. Region 4 is again ranked second with 10 percentage points above the national average for GDP/capita. Nevertheless, the contribution of Fier qark in t the national GDP is not related simply to the higher population this qark has in comparison to others, but also to the economic activity in both agriculture and industry, as described below. Total GVA figures show the same trend as total GDP, with Fier being ranked second among the 12 qarks (160.923 million lekë in 2014), Gjirokastër having the second lowest value (31,771 million lekë in 2014), and Vlorë standing in between (with 73,165 million lekë in 2014). The share of Region 4 in GVA formation since 2000 has fallen between 18.8% and 20%. The GVA by economic sector within the qark shows for a dominance of the agriculture sector in both Fier and Gjirokastër (34.9% and 37.2% respectively). The agriculture GVA of Vlorë is lower (27.5%) and the other sectors are more balanced among them in the case of this qark (wholesale and transport is ranked second with 18.5% and industry is the lowest with 11.9%). Fier has the largest internal share of GVA from industry (33.2%) while Gjirokastër has a very low share of industry (4.6%), which is the lowest among all qarks. Construction has been an important sector in Vlorë (12.7%) compared to Fier and Gjirokastër (5.6% and 6.7% respectively). As a region, the dominant GVA belongs to agriculture (33%) and the second more dominant sector is industry (24%). In fact, Region 4 has the highest share of industry in its GVA formation and the other three regions are between 11% and 12%. This is because of Fier qark GVA, which has a high share of industry, due to the oil extraction and processing, natural gas and bitumen extraction. On the other hand, because the region is at the same time also very agriculture based, the other sectors have much lower shares. As a matter of fact, agriculture and industry are in a conflicting situation in the area of Fier and sooner or latter the government of Albania should take a 367

decision on how to advance with both sectors in the region, without risking natural resources and public health. Wholesale and transportation stands for 13.1% of the regional GVA, construction for 7.7% (the lowest share among all regions and within the region) and financial and real-estate activities for 9.8%. The weight of Region 4 for the total deposits is 18% and is ranked second after Region 2 (53%). The better positioning of Region 4 compared to 3 and 1 could be due to remittances, but also to the higher stock of active enterprises (98% in 2014 and ranked second after Region 2 with 131%). Most of the active enterprises in Region 4 are focused on trade (41.9%) and services in general constitute 80% of active enterprises. Active enterprises focused on agriculture constitute a low share (3.6%). However, Region 4 is the one with the highest internal share of active enterprises focusing on agriculture (for Albania this figure is 1.7%, and for Region 1, 2 and 3 is 3.1%, 0.8% and 1.8% respectively in 2014). This means that within Region 4 there are more agriculture related businesses that are registered in the formal market and see added value in the agriculture sector, 4 compared to other regions (though industry is also high in comparative terms 10.1% in 2014). The higher figures of Region 4 for agriculture are dedicated to Vlorë and Fier, while Gjirokastër has an internal higher share of industry related enterprises (12.3%) compared to all qarks but Berat. The latter does not match with the higher share that agriculture as a sector holds for Gjirokastër, showing for the informal and household based structure of agriculture. On the other hand, the higher number of industry related enterprises may be dedicated to the businesses registered in food processing industry and stronger cooperation of related businesses in Gjirokstër with companies in Greece. The birth rate of new enterprises in the three qarks composing Region 4 is almost equal to the national average and slightly lower. Fier has the third highest contribution to the overall employment (in absolute figures for 2014 and half of the contribution of Tirana qark); Gjirokastër has the lowest among all 12 qarks (25,550 for 2014) and Vlorë (51,757 in 2014) almost half of that of Fier. The same trend is observable for the number of the registered unemployed jobseekers at qark level, thus linking the findings to the total population number.

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4. NATIONAL REGIONAL DEVELOPMENT STRATEGY AND PLAN 4.1 OBJECTIVES AND INDICATORS 4.2 PRIORITY AXES 4.3 TOWARDS PROGRAMMING 4.4 COHERENCE AND COMPLIANCE BETWEEN EU AND NATIONAL POLICIES 4.4.1 EU policies 4.4.2 National policies 4.4.3 Cohesion and gradual merge

4.5 COMPLEMENTARITIES WITH OTHER FUNDING SCHEMES

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5. FINANCIAL AND INSTITUTIONAL CONSIDERATIONS Explanatory Note: This chapter will be drafted by the national agency for regional development based on the policy paper and decisions taken by law with regard financial mechanism and institutional structure. Financing criteria (ideas to be considered in this chapter) • Windows for types of projects (Scope of the Action) – Local – Regional – National – Cross-border – Combination of 2 or more • Partnership factor as per type of project • Relevance according sectorial initiatives/actions/pipelines • Compliance with national, sectorial, cross-sector and EU integration objectives, next to the regional and local ones – position in the planning/programming hierarchy • Government`s program relevance • Competition based and conditional • Contribution to key indicators (GDP, employment, innovation, access, reduction of GHGs, enhancing of natural resources/protected areas, gender and poverty, disparity index) • Implementation time and impact

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5. IMPLEMENTATION AND PARTNERSHIP Explanatory Note: This chapter will be drafted by the national agency for regional development based on the policy paper and decisions taken by law with regard financial mechanism, institutional structure and required partnerships. Ideas to consider in this chapter: • [N]RDAs promote partnerships for projects: – Inter-municipal – Inter-regional – Cross-border • Government/s Sources – Ministries – RDF – Municipalities • Donors (Bilateral) • IPA II • WBIF • Co-financing between the above mechanisms

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6. ANNEXES 6.1 METHODOLOGY FOR DOP/ROPS

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NOTES AND REFERENCES 1

Regional Disparities Analysis, Integrated Support implemented by UNDP, funded by EU and UNDP.

for

Decentralization,

2009-2011,

This study was conducted at two levels: regional level – 12 qarks, defined by the Constitution of Albania as the second tier of local government; local – 373 municipalities and communes, as the study was conducted prior to the territorial reform of 20155.

Decision of the Council of Ministers no. 961, date 2.12.2015 on “The Establishment, Organisation and Operation of the National Agency for Regional Development, Regional Development Agencies and the Agency for Regional Economic Development”, December 2015.

This means the level of 61 local governments, i.e. the municipalities created as a result of the territorial reform.

For details on methodological aspects regarding GNDI calculations please check: Boka. M., Hoxholli. R., “Constructing a proxy for private disposable income”, Annual Report 2011, Bank of Albania, February 2012 available at: https://www.bankofalbania.org/web/Annual_Report_2011_6417_2.php?kc=0,27,0,0,0

The labor force survey is a household based survey including all individuals from 15 years and above in the selected units’ part of the sample, in accordance to Eurostat methodologies. Administrative data on employment and unemployment are collected based on the Official Statistical Programme of Instat. On the contrary of labor force survey, data regarding the nonagricultural private sector are obtained from the National Employment Service which collects the data from employment offices and from the General Directorate of Taxation. Also, in Albania there is not any administrative source for the agricultural private sector employment. For this reason, the main sources for measuring agricultural employment in this sector are the household based surveys. Starting from 2007 employment in agriculture sector is estimated based on the labour force surveys.

INSTAT, after the publication of the revised population estimates for the years 2001-2014 in May 2014, (http://www.instat.gov.al/al/themes/popullsia.aspx), which reflected the population changes derived by the Population and Household Census 2011, has revised the Quarterly Labour Force Survey time series. There is a significant change in the demographic information as regards to the structure of population and households, which in turn has had its impact on the change of the labour market indicators starting from the first quarter of 2012 to the first quarter of 2014.

The World Economic Forum's Global Competitiveness Report uses this definition based on the work of Michael Porter, who’s Institute for Strategy and Competitiveness at Harvard Business School is the leading academic authority on the subject.

World Economic Forum; Global Competitiveness Report 2015-2016; Date of data collection or release: 1st September 2015; www.weforum.org/gcr

The real effective exchange rate is calculated as a weighted geometric mean of Albanian consumer prices as compared to the index of consumer prices in the main trading partners and the nominal effective exchange rate. A lower value of the index suggests for a real appreciation and a higher value of the index suggests for a real depreciation of the Albanian currency.

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http://www.bis.org/ifc/events/6ifcconf/lauroschmitz.pdf

Lauro., B., Schmitz., M., “Euro area exchange rate-based competitiveness indicators: a comparison of methodologies and empirical results”, ECB WP Papers, 2012 available at http://www.bis.org/ifc/events/6ifcconf/lauroschmitz.pdf

Instat: In Albania, according the one and latest survey on labour costs, the average labour cost per employee in full time units is about 314 ALL per hour, about 55,007 ALL per month or 660,093 ALL per year (converted in Euro with an average exchange rate of 140.3 ALL per Euro for 2013): 2.2 Euro per hour; 392 Euro per month; 4,706 Euro per year). Average labour costs vary by economic activities registering the highest level in those more knowledge based such as financial and insurance activities (3.9 Euro per hour or 8067 Euro per year), professional scientific and technical activities (2.8 Euro per hour or 5765 Euro per year) and electricity, gas, steam, and air conditioning (2.8 Euro per hour or 5844 Euro per year). The lowest average labour costs are observed in more labour intensive economic activities like water supply, sewerage, waste management and remediation (1.5 Euro per hour or 3228 Euro per year), accommodation and food service activities (1.54 Euro per hour or 3269 Euro per hour), administrative and support service activities (1.6 Euro per hour or 3455 Eur per year).

Source: WB indicators, 2013

Balance of Payment Statistics, Bank of Albania

Privatization of two large hydroplants for about Euro 120 million.

Stratum 1 – Coastal Area, Stratum 2 - Central Area, Stratum 3 – Mountain Area, Stratum 4 – Tirana.

Tirana urban.

Costal Strata includes the districts of Lezhë, Kurbin, Kavajë, Mallakastër, Lushnjë, Delvinë, Sarandë, Durrës, Fier, Vlorë.

Central strata includes the districts of Devoll, Kolonjë, Pogradec, Mirditë, Pukë, Malësi e Madhe, Mat, Kuçovë, Skrapar, Krujë, Peqin, Gjirokastër, Përmet, Tepelenë, Shkodër, Elbasan, Berat, Korçë, Tirana rural.

Mountain strata includes the districts of Kukës, Has, Tropojë, Bulqizë, Dibër, Gramsh, Librazhd.

Cost of obtaining a certain minimum amount of calories augmented allowing for non-food basic necessities – Source Instat.

Those with difficulties meeting basic nutritional needs – Source Instat.

Prefecture is the deconcentrated government body that represents government at Qark level. Data at prefecture level mean data at qark level.

“Regional Disparities in Albania”, November 2010

In terms of travel time within the qark, a distinction is made between settlements that can reach the qark centre (the major urban centre within the qark, where most of the services are provided) within 1 hour or more. While travel distance to a qark centre provides an idea of the sub-national roads and emphasizes geographical location as a crucial factor in determining

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periphery effects, travel distance and time to national roads may somehow reverse the picture. For the purpose of the study, national roads were classified into 5 layers, namely: national corridors (also international ones, close to EU standards,1st priority for government); national roads (important national axes to ensure internal connection between major urban centres, nationally administered, moderate quality); peripheral national roads (nationally administered, provide access to some regionally important urban centres, the only access for certain parts of the country, poor quality); regional roads (regardless of type of administration, these roads serve at a certain regional level only – to connect a series of villages and small urban centres, very poor quality); proposed national roads (these could become very important corridors in the future, still in plans or just procured). Travel distance of main settlements to national roads is measured only for the 3 first categories (from Regional Disparities in Albania, 2010). 27

Regional Statistical Yearbook 2015

Law no. 10263, date 8.4.2010, “On the use of uncultivated agricultural land”

Co-PLAN 2015, Study and Proposal for the Designation of the Development Regions in Albania.

This section deals with an analysis that is already carried out by Co-PLAN in 2015 and provided to the Government of Albania in order to carry out a process of designating the four development regions. This sections provides an excerpt of this study.

The mapping of FUAs has made use of the INSTAT definitions of the Urban Cores, Urban Agglomerations and commuters’ catchment areas in Albania, based on the respective data from 2 Census 2011, including the 1km grid (raster cells). The (base) maps were accessed through the ASIG platform on line. For the designation of the PUSH areas, the calculation of the 45 minutes (road public transport) isochrones from the FUA center is made through own calculations on the Google map.

The morphological polycentricity could be constructed by the overall polycentrism analysis is not fully finalized, due to missing data on the 7 indicators of the relational polycentrism. Out of these 7, six are shown in this text.

The size index is built on the prerequisite of polycentricity that there should be a distribution of large and small cities and that a polycentric urban system should not be dominated by one large city. The ideal rank-size distribution in a territory is log-linear and the flatter the rank-size distribution (regression line) is the more polycentric a region is. The indicators analyzed are two – GDP per capita and population, and for both we calculate the slope of the regression line and the deviation of the largest city from it. The reason for using two indicators is that the size is measured for both population and economy importance of the regions (FUAs).

To measure the connectivity index, we used the potential accessibility of FUAs, i.e. the potential accessibility that each urban core in a FUA has to the rest of the country (all the other FUAs). The potential accessibility of an urban center is higher, the higher the population (or GDP) that it reaches in the other urban centers is and the fastest the reaching routes are (travel time used for travel costs). The slope of the potential accessibility regression line and the Gini coefficient are the two sub-indicators used on this regard. The two sub-indicators have a similar meaning: the flatter the regression line, the more accessible are lower-level centers compared to the primary city, and the lower the Gini coefficient, the less polarized is the distribution of accessibility.

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Based on ESPON 1.1.1, this analysis designates for each FUA, areas that can be reached within 45 minutes by road travel (the 45 min isochrones). This time limit is widely recognized as the most appropriate for daily commuting (work catchment areas), and the areas included within the commuting radius provide cities with a better opportunity for functional integration. The hypothesis is that “cities with overlapping travel-to-work-areas have the best potential for developing synergies” (ESPON 1.1.1, 2005). These areas are then approximated to municipal boundaries, as municipalities are the potential building blocks in polycentric development strategies. The areas thus established are called Potential Urban Strategic Horizons (PUSH) and their further integration forms the so-called Potential Integration Areas (PIAs).

According to the reference study, “accessibility is the main product of a transport system and it determines the locational advantage of an areas relative to other areas” (TRACC, ESPON, 2015)

Minister of State for Local Issues, http://www.reformaterritoriale.al/en/home/12-newsinformation/265-approved-draft-law-on-local-self-government

The population data used to build indicators in this chapter refer to that of Census 2011, Instat.

As a general rule, the unconditional transfers should provide local government units with the difference between the cost of exercising their functions exclusive or delegated (expenditure needs) and the revenues they may generate independently (fiscal capacity). Given that local governments per region are very different both in expenditures needs and fiscal capacities, an efficient and equitable allocation of unconditional transfers should take into account both of the dimensions.

It comprises RDF investments which cannot be separated from the total capital investment data.

The data in this table refer to Census 2011 population for figures at municipal level and Instat population data for 2016 in the cases where totals per qark are specified to belong to the year 2016. The area was calculated in GIS based on Instat map for local governments boundaries prior to the finalization of the official administrative map of Albania (still in progress). This is why there are some differences between the areas of qarks in this table and those used in the previous chapters of the RDOP. The reason for using own calculations of the municipal areas is because these data are not made available at local level by the current accessible official sources.

Based on the Ramsar Convention (1971) as an international treaty for the conservation and sustainable use of wetlands.

National ASCI list for Albania:

http://www.mjedisi.gov.al/files/userfiles/Biodiversiteti/EMERALD_LISTA_KOMBETARE_E_ASCI. pdf and the summary table of environmentally protected areas: http://www.mjedisi.gov.al/files/userfiles/Biodiversiteti/Tabela_RRJETI_I_ZONAVE_TE_MBROJT URA&RAMSAR_NE_SHQIPERI_Nentor_2013.pdf. 44

Information on the characteristics, quality and management of the national environmental protected areas is based on the respective description provided by the Ministry of the

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Environment, http://www.mjedisi.gov.al/files/userfiles/Biodiversiteti/ZM&PK-Pershkrim.pdf. The link was accessed in March 29, 2016. 45

European Spatial Planning Observatory Network, https://www.espon.eu/main/Menu_Projects/Menu_ESPON2006Projects/Menu_ThematicProjects /polycentricity.html

“One overlap” means that there is only one commuter catchment area covering the respective municipality, “two overlaps” means that there are two commuter catchment areas overlapping on the territory of a certain municipality, and so on. If the current commuter catchment area covers more than 30% of the territory of a municipality, then the whole territory of that municipality is considered as part of the “potential commuter catchment area”. This is built on the hypothesis that in case of new infrastructure investments the area to be reached within 45 minutes from the core of the urban agglomeration will increase.

Information accessed through http://www.vet.al/ofruesit_arsimit_profesional/publike/teknike, April 2016.

It refers to the total number of polyclinics, healthcare centres, health posts, consultation clinics for pediatric purposes and women (please refer also to the analysis sections.). Based on Instat and Ministry of Health data.

Decentralization and local development program, funded by the Swiss Government through the Swiss Development Cooperation office in Albania.

Support to Territorial and Administrative Reform project is an agreed upon arrangement of donor financial support through a pooled trust fund to cover necessary ATR implementation costs. The project is funded to-date by the Government of Sweden channeled through SIDA, the Government of Switzerland through Swiss Development Cooperation Office in Albania, USAID and UNDP. UNDP plays the fund manager role and disburses funds. The Government of Albania implements the project through the direct leadership of the Minister of State for Local Issues. (www.al.undp.org).

Instat data, please refer to previous analysis chapters.

National ASCI list for Albania:

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Defined from Co-PLAN in 2015, based on Instat urban agglomeration and the methodology of ESPON on polycentrism – European Spatial Planning Observatory Network, https://www.espon.eu/main/Menu_Projects/Menu_ESPON2006Projects/Menu_ThematicProjects /polycentricity.html

Living Standards Measurment Survey, undertaken by Instat with the support of the World Bank.

Local Detailed Operational Plan – please refer to Region 1 section on social development for further information on LDOPs.

As mentioned earlier, the latest GDP data are provided by Instat at national level and are preliminary (thus subject to revision). We have computed the distribution of the national data at Qark level, by making use of the 2013 qark weights to total GDP.

Country Pasture/Forage Resource Profile, http://www.fao.org/ag/agp/agpc/doc/counprof/Albania/albania.htm#3.CLIMATE

Tourism in the Korça Region, The strategy for the development of tourism, Qark Council, 2014, http://www.korcaregion.com/index.php?lang=1&idm=105&idr=52&mod=1, accessed, May 2016.

Pasuritë ujore të Shqipërise, 2008, Niko Pano, Akademia e Shkencave

Gjeografia fizike e Shqipërisë, 1991, Farudin Krutaj, Valin Gruda, Mevlan Kabo, Nasip Meçaj, Perikli Qirjazi, Skënder Sala, Trifon Ziu, Vasil Kristo, Vasil Trojani.

Law no. 8906, date 06.06.2002, “On protected areas”, as amended.

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Information on the characteristics, quality and management of the national environmental protected areas is based on the respective description provided by the Ministry of the Environment, http://www.mjedisi.gov.al/files/userfiles/Biodiversiteti/ZM&PK-Pershkrim.pdf. The link was accessed in March 29, 2016.

Based on the Ramsar Convention (1971) as an international treaty for the conservation and sustainable use of wetlands.

National ASCI list for Albania:

Soil sealing is calculated following two methods/database: the land cover from Corine 2006 (the urban layer) and the urban system composed by layers of buildings and infrastructures based on the GIS database of ASIG and NTPA in Albania. It was done so as these are the only information sources that can be used for this purpose.

Instat 2014, Tipologjia e Komunave dhe e Bashkive.

Gjeografia fizike e Shqipërisë, 1991, Farudin Krutaj, Valin Gruda, Mevlan Kabo, Nasip Meçaj, Perikli Qirjazi, Skënder Sala, Trifon Ziu, Vasil Kristo, Vasil Trojani.

Based on the Ramsar Convention (1971) as an international treaty for the conservation and sustainable use of wetlands.

National ASCI list for Albania:

http://www.mjedisi.gov.al/files/userfiles/Biodiversiteti/EMERALD_LISTA_KOMBETARE_E_ASCI. pdf and the summary table of environmentally protected areas:

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http://www.mjedisi.gov.al/files/userfiles/Biodiversiteti/Tabela_RRJETI_I_ZONAVE_TE_MBROJT URA&RAMSAR_NE_SHQIPERI_Nentor_2013.pdf. 78

the GDP data for FUAs are calculated as an estimate of the GDP at qark level for 2012.

The total number of polyclinics, health centers, health posts, consultation clinics for children, and consultation clinics for women.

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