Economic Growth and Institutional Strengthening in Albania

Our work in Albania started in fall 2013 as a way to tackle the slowdown in economic development. At that time, the external sources of growth – remittances and exports – had stalled. Solvency constraints and unfavorable credit market conditions restricted the effectiveness of the fiscal and monetary policies. These factors conspired against an economic recovery and demanded that Albania rethink the processes leading to its growth.

See also: Albania

To address this situation, in cooperation with the Government of Albania and the Open Society Foundations, the Growth Lab at the Center for International Development (CID), led by professor Ricardo Hausmann, launched the first project, titled, "Economic Growth in Albania" (2014-2017). The initial project focused on three key areas: (1) ensuring short-term macroeconomic and fiscal stability, (2) building fiscal strength over the medium term, and (3) developing sectors that can be sustainable drivers of growth in exports and jobs.

Over the years, the project has gone through different stages of evolution, from helping Albania gain macroeconomic stability, to targeted interventions in sectors with growth potential, such as agriculture, fasons, tourism, special economic zones, energy, and investments. Recognizing the transformative potential that rests with the Albanian diaspora, the project worked hand in hand with the government and diaspora groups in the United States to find ways of engaging Albanians abroad with social and economic development in Albania.

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In 2017, a second project, titled, “Institutional Strengthening and Economic Diversification in Albania” (2017-2019), was launched to advance the work started in the previous four years, and more specifically to: (1) help the government maintain macroeconomic stability, (2) assist with the emergence of new growth actors, and (3) increase government’s capability to implement policies and reforms. The second project was funded by Open Society Foundations. In 2019 and 2020, Consulting and Management Albania sponsored our continued engagement in Albania in the areas related to aviation and energy.

In fulfilling the project objectives, the Growth Lab brought together a team of prominent researchers, experts, and faculty in the fields of macroeconomics, energy policy, public finance, agriculture, labor markets, public administration, infrastructure development, and law, among other areas.

The outcomes of the Albania project include Growth Lab working papers, case studies, analyses, reports, policy briefings and recommendations, trainings, and executive education courses. Since 2014, every year, graduate students from Harvard University have participated in Growth Lab summer internship programs in Albania. 

Project Dates

2014 - 2020

FUNDED BY

Open Society Foundations (2014-2019)

Consulting and Management Albania (2019-2020)

Diaspora Engagement

At least one-third of Albanians live outside the borders of their home countries in Southeastern Europe. In countries where they live and work, many of them have achieved levels of professional and economic success that would not have been possible at home.

From 2015 through 2016, the Growth Lab undertook an initiative to raise the awareness and make diaspora engagement one of the Albanian government’s priorities. We were driven by the idea of the impact of connecting this wealth of knowledge and economic capital with the home country.

The objectives of our Diaspora Program were:

  • Facilitate relations between the home government and the diaspora community organizations abroad.
     
  • Support the home government with building capacities to engage the diaspora and develop strategies for leveraging its potential to promote economic and social development in Albania, and more largely, in Southeastern Europe.

Our Diaspora Program started with reinforcing the relations with the Albanians in the U.S., but it could serve as a blueprint for other diaspora engagements.

Our action plan evolved in various stages:

  • The first stage involved a series of meetings in the U.S. between the diaspora groups on the one hand and government officials and private sector representatives on the other. A high-level meeting took place in New York City on September 26th, 2015, with the Albanian Prime Minister, Minister of Foreign Affairs, diaspora representatives, and the Growth Lab team headed by Professor Ricardo Hausmann. In that meeting, the Albanian Prime Minister committed to holding a first-ever Diaspora Summit in Tirana in 2016.
     
  • In the second stage, Diaspora leaders visited Albania and other Southeastern European countries to scope the possibility of creating a strategy for engaging the diaspora in the country’s development.
     
  • The third stage involved supporting the Albanian government in organizing the Diaspora Summit and mobilizing diaspora networks to participate in it. To that end, Growth Lab hosted the Albanian Foreign Minister in September 2016 in an event with diaspora members and actively participated in the Diaspora Summit held in Tirana in November 2016.

Since then, the Growth Lab has continued to support the diaspora engagement in different ways, such as hosting the State Minister of Diaspora at Harvard, sending one of our graduate students to Tirana to support the Minister’s team with research on diaspora engagements, participating in the second Diaspora Summit which was held in February 2019, and hosting events at Harvard with visiting Albanian dignitaries and diaspora groups in the Boston area.

The Diaspora Program is jointly organized with the following individuals and their organizations:

Atlas of Economic Complexity

Blogs

Accelerating Sustainable Growth in Albania through Targeted Investment Promotion

Authors: Daniela Muhaj and Tim O'Brien

"[Targeted investment promotion] requires people in and out of government to imagine
what is not yet there, figure out what is needed to establish it, and determine whether
it would be both feasible and valuable to society."

-...

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The Diaspora Brain Trust: A Study of Albanian Talent Around the World

Prepared by Daniela Muhaj

The Growth Lab Albania team is working on better understanding the causes and consequences of youth and high skilled migration post 2000s. There is a perception that the loss in knowhow has been exacerbated in the past decade especially for selected professions or skill segments in high demand by more advanced economies. This study aims to understand the magnitude of the...

Read more about The Diaspora Brain Trust: A Study of Albanian Talent Around the World
See also: Albania
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AIC: A Summer in Albania Working for Investment Capabilities Development

By Damian Galinsky

According to CID’s growth diagnostic findings on Albania, the country has the need to diversify and increase the complexity of the economic base.

As a Harvard Kennedy School student, I spent last summer as a CID intern working on the initial asset analysis and project selection for the Albanian Investment Corporation (AIC). The main objective of AIC is improving growth in Albania through the generation of the capability to identify, prepare, and develop vital projects for Albania.

My analysis was carried out by working...

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News

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Team Members

Head shot of Ricardo Hausmann

Ricardo Hausmann

Director
Rafik Hariri Professor of the Practice of International Political Economy, HKS
Matt Andrews head shot

Matt Andrews

Edward S. Mason Senior Lecturer in International Development, HKS
Faculty Director, Building State Capability, CID
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