Albania : Poverty Assessment

Despite the impressive performance of
the economy in the last five years, however, poverty in
Albania has remained high, and per capita income, at around
US$1,230 in 2002, has remained one of the lowest among
transition economies. In an effort to adopt policies to
share widely the benefits of growth, and reduce poverty, the
Government outlined a poverty alleviation strategy in the
2000 Interim Poverty Reduction Strategy Paper (I-PRSP), and
developed it in detail two years later in the Growth and
Poverty Reduction Strategy (GPRS), the precursor to the
current National Strategy for Socio-Economic Development
(NSSED). However, in recognition of the data limitations,
the first round of a five-year Living Standards Measurement
Survey (LSMS) program was launched in 2002. This survey
provides valuable information on a variety of issues related
to living conditions in Albania, including details on income
and non-income dimensions of poverty in the country, and,
forms the basis of the present assessment of poverty in
Albania. The poverty line used for this assessment is the
first absolute poverty line based on nationally
representative, household level expenditure data ever
estimated for Albania, and is based on an actual consumption
data. Poverty in Albania has marked spatial and regional
dimensions, with rural areas and the Mountain region being
consistently poorer than rest of the country, stipulating
the depth of poverty in the Mountain area is much more
pronounced than in any other region, with a poverty gap
index of over 11 percent. The study reviews the determinants
of poverty, through the main characteristics of poor
households, and labor market characteristics of the poor,
noting widespread unemployment rate in urban areas. It then
examines the non-income dimensions of poverty, health and
education inequalities, and reviews the role of social
transfers, determining pensions - and remittances from
Albanian relatives - are the largest sources of transfer
income. The results of the analysis point priority areas,
namely, that coverage under health insurance needs to be
increased; secondary school enrollments need to be
increased, and quality of education at this level improved;
provision of basic services and infrastructure should be
improved, including access to quality health and education
services and to basic sanitation services; and, it is
imperative that the Government develops a rural development
strategy focused on poverty reduction in the short run,
since a large number of the poor live in rural areas.
Agriculture is the key income generating activity in these
areas, thus locally adapted rural extension service should
be provided. In terms of future growth, attention must
necessarily shift to the manufacturing sector, for
stimulating the manufacturing sector could potentially
create increased employment opportunities, while another
area that deserves great attention is tourism.