A theoretical assessment of Albania’s post-transition economy, structural weaknesses, and framework for sustainable productivity-led growth - Economicus

By Geida KALIA

Abstract
This paper assesses whether productivity-led growth can drive economic convergence in Albania’s small transition economy by analysing the existing neoclassical and endogenous growth literature, utilizing a theoretical and comparative methodology
based on descriptive statistics. The results show that Albanian economic convergence is conditional to structural constraints unique to the country – such as low productivity sector predominance, lack of innovation, low knowledge absorption capacity, brain drain, and skill mismatches – which suppress total factor productivity growth in the country. This paper’s novel contribution resides in its proposal of a qualitative productivity-led growth framework tailored to the Albanian structural characteristics, demonstrating that the path to convergence is through coordinated policy interventions and private sector engagement.

Keywords: productivity-led growth; economic convergence; Albania; structuraltransformation; human capital; innovation