Bridging Borders:Human Capital and Education as Catalysts of Economic Development - december 2025

Moderator: In this excellent panel, we will attempt to tackle the following challenge, a topic called “Bridging Borders”, focusing on human capital and education as the catalyst of economic development. Today we explore how Albania and its neighbours can shape the human capital needed for sustainable European-level development. The Western Balkans' competitiveness will not be defined by geography or natural resources, but by the skills, creativity, and aspirations of its people. For Albania to become a regional economic hub, it must treat human capital not as a societal sector, but as a core engine of its economic strategy. In short, we believe that regional interconnectedness involves talent, education, and labour markets that certainly don't stop at national borders. There is great value in reforming education, digital governance, diaspora mobilization, and linking universities with industry, R&D, and aiming to produce final products. With this short introduction, I want to come to you, Mrs. Rama, and welcome you very warmly again, and ask you how does Albania's current human capital constraints shape the kind of investment the country can attract. And let me tell you that this angle was a little bit absent from the previous panel, so this panel has to deep dive in that area.

LR: Thank you very much for having me. I was very happy when I saw the agenda, after I got the invitation, due to the fact that, if this event would stick to its previous content, I think that foregoing the most important development aspect, would make everything from the previous discussion irrelevant. I saw it with great interest, and I was thinking, before coming here, how to address it. I have been all my life very much focused on the economic and human capital development. I am an economist, but that was a decision I took in the late 1990s, because I understood very clearly that looking deep at the economy was not sufficient in a country that produced social problems every day.

I was thinking about the title of the panel, “Human Capital and Education as a Catalyst for Economic Development.” We could also put it differently, “Economic Development as a Foundation for Empowering Human Capital and Education,” because they clearly can be mutually reinforcing, both the economy and the human capital. At the same time, if they don't connect, they can also undermine one another, and I'm going to explain why. We have seen the full picture for a long time, how the economy undermined the development of human capital, and by that I refer to the beginning of transition, when together with the huge economic problems and the collapse of the system, we inherited a demographic gift, the size of the working-age population, with the prospects of increasing with five percent over one decade, one decade and a half. We also inherited the youngest population in Europe, and we were saying that, in fact foreigners were telling us all the time, “you have a big treasure in the country, because you have a very young population, the youngest”.

At the time, we did not understand what kind of treasure we had, as we were looking for other treasures. Our age was 11 years younger than the average of Europe, but we did not have the economy, the economy had collapsed. Public employment went down from 100 percent to 40 percent, in only two years. Just imagine that. It only became stable by the middle of 2005, at 20 percent, which is also the current rate. In the meantime, we had so many definitions about labour market, with several categories, like registered unemployment, underemployment, informally employed, discouraged workers who brought the long-term unemployment, and we had something else, an economy that was not creating jobs, or was creating very few jobs. Imagine if all this working-age population had stayed in the country. It would have been chaos. People went abroad, they started to emigrate, so, year by year, we lost working-age population in big numbers and youth, as well. Thus, we lost the advantage of the numbers, and of age, just because we didn't have the economy. With emigration - and this what figures tell, not my narrative - we also lost the better-educated people, because it was easier for them to gain high-paying employment. In those days and for many years, we have been talking about the high number of adults who were neither working, nor looking for work, while long-term unemployment went up to 90%. We inherited non-standard employment from that time, which continues to be a current fact. We have a lot of employment in family-run activities, self-employment businesses, which is not typical of the modern economy. Thus, we need to correct what we inherited from the past and that is very important. In 2005, a long time ago, the World Bank spoke for the very first time not only about job creation, but also about productivity, and we continue talking about productivity, while job creation is still on the agenda. We have made a lot of efforts, and I like it very much when I hear all the discussions about the structure of the economy, but we have made a lot of efforts to have a clear picture of what our economy would look like. There have been many changes over time, and we heard this morning from the opening remarks that we are clear and certain that at least innovation, energy, tourism, and infrastructure, all well-connected to each other in terms of vision, would be the pillars on which the country can rely, of course, together with agriculture, we should not forget that. According to the studies we have been conducting, Agriculture will continue for a long time to come to be one of the sectors that will contribute a large share of the GDP. What should do, at this point? We are no longer talking about adults who are neither in employment, nor looking for work, because for the first time after three decades of transition, and many, many efforts, our unemployment rate is down to a one-digit figure. Currently, it is around nine percent, and we are very happy that the reforms have brought us to this point. But we are talking about needs, and that involves the youth who are neither in employment, nor in education. Of course, youth employment is a problem everywhere in Europe. In some countries, EU countries, I mean, it is at the same levels as here, but there are other countries where it is half of what we have. I think attention in the future should absolutely be placed on youth and early childhood. Innovation and startups are areas where we have to promote talents. There is something else that becomes clear from all the studies, that the modernization of education in the times of innovation and digitalization is crucial. Our traditional education systems are very rigid and overloaded, and sometimes confusing. And the most important thing is not infrastructure - of course, infrastructure is a must - but continuous education and training, and the approach we should choose on education. Are we going for an integrated digital approach, or a standalone approach? These are the conversations that should take the attention in the future, to ensure clarity. You said that we are in time for upskilling and reskilling. Yes, we are still in time. There are many efforts in this direction. Nonetheless, I would like to mention that adult education is a huge problem everywhere, as it is in Albania. As such it is also something very high on the agenda, as it should be. I can bring a figure to you. We are about to complete the final results of the Skills’ Needs Analysis for 2024 and around 50 percent of the companies are not delivering any on-the-job training, while businesses are the big training repositories in the country – that is the case everywhere. We need to have more data on adult education, because the last data from INSTAT go back to 2017, so we need to update the information. Another very important issue is how does the business respond to the times we are living. I am particularly referring to innovation. The reason I am bringing it up is that 60 percent of the business across Europe expect to transform themselves and in terms of the tech impact. Our findings indicate the exact opposite, namely that the business seems to be very passive in this respect, with 60 percent of the companies having no technological touch - and I'm talking about technology, not simply about digitalization, and that is an issue. Let me remind you that these are times where we talk about a tech literacy problem. We have been facing for a long time the financial literacy issue and still lag far behind where that is concerned. Now, the Government has decided to include the cashless economy into the agenda and has been taking many actions that have led to a very advanced stage of digitization of the public services. I think that this is a great drive for the financial literacy of people that will open opportunities in the future. In the case of businesses that are not responding to whatever the train of digitalization, train of innovation is, we need all together to find ways - and I think this is relevant for all economies - how to make companies cooperate in this respect, and how to help them think in broader terms that do not just focus on whatever they bring for the employment economy, and for themselves. I would like to briefly mention two more things. Yesterday, another report came out, the OECD Skills Outlook. This was very important for me, because it contained many findings, but I singled out two of them: skills versus chances. The study shows that people with the same skills have a different economic status just because of their family background. By that, I want to say that if we fail to give equal opportunities to every child since early childhood, so that they benefit from the opportunities and get out of the various complex and socio-economic situations they are in, we will be creating a huge burden for the economy and for the future generations, at a time where we are already struggling because of aging and a very unstable pension system everywhere in Europe. I want to conclude by adding something. I think that we have members of the Government here, maybe not ministers, but I am sure there are representatives from the Government. I would call on everyone who sits at the tables of the Government to add the human capital development to whatever the priority list is, and start with it, because we do not want to lose it anymore. We have the economy now, we are much clearer in terms of economic structure, and we want this economy to help and support the human capital development, so that we are further able to handle the agenda for the future.

Moderator: Mrs. Rama, we will close together. As we opened, a whole cycle has gone by, and I've seen that you've been taking your notes, but resisting the temptation to comment. Now is the time to comment on everything we heard, and if you feel that we did shed light a bit more on the compass for the way forward, as you had set the stage, have we set the stage a bit more for the future?

LR: I would like to bring a little bit of relax at the end of the panel with what I am going to say. In 1990, when we were coming out of communism, it was a hell, but at the same time, the world started globalization, which was a huge opportunity for us. I think, we have drawn so many benefits from that process the world was going through. Now, I fully agree with you, we are lucky again. Imagine a country living for five decades under communism, after five centuries of being under the Ottoman Empire, and in only 40 years, is twice as lucky, because it is keeping pace with the world in terms of opportunities. If we see all the current world reports about how labour market will evolved, if you looked at where you will be five years from now, you would be scared, because many of the jobs will become outdated very quickly. Nonetheless, there is good news concerning that, reality is not following those expectations. These are the findings of many organizations that are monitoring the labour market. That means that we have some more time, and we need to use it very cleverly. That said, I am going to leave you with something that is relaxing. I want to recall a very interesting conversation I had with my son – he is 11 years old. For the first time, I took him a few weeks ago to a book-launching event, that preceded the book fair - I open these windows for him - and he stayed for one hour, listening to things he was even not able to understand, in respect of the whole event. During the event, the speakers were mentioning several times how bad the young generation is, how lazy they are, how indifferent they are. And he was there listening to that. When we finished, he said to me, “mom, why were they complaining so much about us? I told him, “because they don't know you, and they do not even wish to know you. I think that this passive approach in terms of all expectations of what will happen in the labour market and with all this advancement, is a big challenge reality has brought us. So, I fully believe, that we have a different generation coming up. We have created and placed a great burden on the shoulders of this generation, by putting more on their plates in terms of rights. I fully agree with Michele. Our children have many more rights than what we had, and protecting these rights, knowing these rights and using these rights is much more difficult than seeking them. I think that we need to fully understand how to empower the young generation and give them trust to go forward with a very difficult agenda they have ahead. But I fully believe in them. I am a big believer in the young generation. We do not have much time to correct the past, but we are completely in time to project the future.

Moderator: Thank you so much.