FLASH
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Albania remains one of the countries with the lowest percentage of research and development (R&D) spending in relation to GDP, both at the overall level and in all key sub-sectors that typically support innovation, such as businesses, government, and higher education.
According to the latest Eurostat data, in 2024, total R&D spending in Albania will reach only 0.2% of GDP, a very modest level compared to the EU average of 2.24% and the euro area average of 2.28%. The difference is almost 15 times in favor of the EU, which shows the deep technological and innovation gap between Albania and European economies.
The business sector, which is usually the main engine of innovation in developed countries, is almost non-existent in Albania. Its investments amount to only 0.02% of GDP, compared to 1.49% in the EU, while advanced countries such as Sweden and Belgium go to 2.61% and 2.43% respectively. Other Balkan countries also have a much greater commitment of the private sector.
For example, in Turkey business investment in research and development reaches 0.91%, in Greece 0.85%, while in Italy 0.79%. In Albania, companies almost do not invest in new technologies, scientific research or product development, significantly limiting the competitiveness of the economy.
The public sector also presents significant weaknesses. The Albanian government spends only 0.07% of GDP on research and development, much less than the European average of 0.24%. Even countries in the region, such as Serbia, Croatia, Bulgaria or Romania, have significantly higher investments. This reinforces the idea that R&D is not yet a strategic priority of state policies, despite the need for economic diversification, increased productivity and orientation towards sectors with higher added value.
Higher education, another key pillar of innovation, also turns out to be underfunded. Universities and research institutions spend 0.06% of GDP, compared to 0.48% in the EU and over 0.7% in countries like Sweden, Finland or Austria.
Even countries with similar or slightly higher incomes, such as Croatia (0.36%), Estonia (0.62%), Czech Republic (0.35%) or Hungary (0.48%), invest much more. Albania still has major limitations in scientific production, research capacities and in attracting international funds.
Globally, the most innovative countries are South Korea with 4.01% of GDP in research and development, the US with 3.44%, Japan with 3.48% and Switzerland with 3.22%.
The difference is so great that the country risks remaining disconnected from technological trends, digital transformations and global value chains and, consequently, labor productivity and labor income will remain in the red./Monitor
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