The initiative for a new territorial reform by the government is seen by experts as an opportunity to restore governance with three or two large North-South regions, instead of the 12 counties that exist only on paper, without competences and with high administrative costs. The North, Center and South regions, which now serve only for statistical purposes, if turned into government units or development agencies, will bring Albania closer to the standards of regional governance of the European Union and will help in absorbing cohesion funds from the EU. How can regions become functional. The Slovenian model, more suitable

Local services to citizens have deteriorated with the new territorial division of 2015, so the government has announced its plan for new changes aimed at re-categorizing municipalities and new ways of administering certain functions. As the debate on the changes has begun, experts believe that in the framework of the country's integration into the EU, the government should turn the North, Center and South (NUTS 2) regions into full-fledged administrative units. Currently, Albania is divided into three regions, North (Shkodër, Lezhë, Kukës, Dibër, Durrës), Center (Elbasan and Tirana), South (Fier, Berat, Korçë, Gjirokastër, Vlorë), which serve only for the harmonization of data with Eurostat and for the measurement of economic development, but have neither administrative powers nor independent budgets.

The creation of development agencies for each of the regions, North, Center and South, would mitigate economic differences and help for a better absorption of cohesion funds, said economic expert Selami Xhepa. In 2014, when the implementation of the new territorial reform began, the North region contributed 23.6% of the country's GDP, while in 2021, when the latest data is available, it was 22,3%. The center region with only two counties, Tirana and Elbasan, contributed 47% of GDP in 2015, while 10 years later, their weight in the country's economy expanded further, reaching 50% of the total.

The share of the South Region in the country's GDP was 29.4% in 2024, while in 2021 it was 27.1%. The sharp decline in the contribution to the South economy -2.2 percentage points over 6 years is related to the decrease in the contribution of the Fier Region. The closure of ARMO, the state-owned oil processing enterprise, and the bankruptcy of related services negatively affected the entire economy of the South Region.

The data show that economic growth over the years has not been evenly distributed among the regions. The trend is in line with the displacement of population and investments towards the capital and surrounding areas, overshadowing the sustainable development of the North and South. For example, the Kukës Region, the poorest in the country in terms of per capita consumption and the highest percentage of people in extreme poverty, is the richest in natural resources, energy production and minerals. Regional agencies can develop more capacity to manage large infrastructure-changing projects compared to today's municipalities, says Mr. Xhepa.

Experts suggest that the Slovenian model seems suitable for us, as it is a country with a small population and operates with local government based on two large regions and over 200 smaller local units that provide services very close to communities.

“The 2014 reform put Albania in line with countries that have followed a centralized approach to territorial consolidation. The positive results – such as increased revenues, expanded services and more rational management of resources – are evident. But the impacts on other areas, such as the quality of services, citizen participation or local economic development, remain unclear. In order to prepare for the second phase of territorial reform, it is essential that decision-making is based on evidence and real performance measurements, as well as on the involvement of local communities in the process”, said Dr. Valbona Karakaçi, strategic advisor to the “Stronger Municipalities” project.

Over the last three decades, the capital's economy has developed "on the back" of other cities, due to the shift towards it of talent, labor, and consequently, a more favorable environment for business.

Following the 2014 territorial reform, Tirana has further strengthened its role as the country's main economic center, going from 38% of the country's GDP in 2014 to over 43% in 2021, an increase of over 5 percentage points, while Durrës has maintained its positive pace, going from 9.2% to 10%.

All other regions have seen a decline in economic contribution, including Elbasan, from 7.4% in 2014 to 6.7% in 2021.

On the other hand, some traditional industrial and agricultural regions have suffered significant declines. Fier leads with a loss of over 2.5 percentage points, dropping from 13.5% in 2014 to just 10.8% in 2024.

Dibra, Lezha and Shkodra have also suffered reductions, losing part of their contribution to the economy. Korça, known for its agricultural and agro-processing tradition and tourism, has also fallen slightly from 5.75% to 5.22% between 2014 and 2021.

Meanwhile, regions such as Kukës, Gjirokastra, and Vlora have remained with limited weight in the national structure, showing a tendency of stagnation or slight contraction.

The structure of GDP by region reflects the demographic movements that have occurred in the country over the last ten years. The significant growth of Tirana and Durrës is directly related to the concentration of population in these areas.

This flow has increased consumption, private investments, and construction development, automatically increasing the weight of these two regions in the national economy.

In contrast, regions such as Fier, Dibra, Lezha, Shkodra or Korça have experienced high emigration and population depletion, especially of young people. The loss of the workforce and the aging of the population have weakened productive capacity and reduced domestic demand, leading to a decline in their share in GDP.

In areas like Gjirokastra or Kukës, this effect is even more visible, as local economies rely mainly on agriculture or remittances, without managing to create sustainable development engines.

Economic developments in the country have deepened regional disparities, with the expectation that this trend will deepen further in the coming years. However, EU membership places great importance on social and regional cohesion, focusing on policies aimed at the balanced development of the Regions.

 Regional Governance, a solution for Albania

The most appropriate model of the second level of government would be a simple regional model, based on traditional values ​​– says Agron Haxhimali, an expert on local affairs. According to him, the essence is not in the number of regions, but in the way they will be elected and what competencies they will exercise.

Regions should have elected councils and clear responsibilities in economic development, territorial planning, transport, regional health and especially in the management of EU funds, said Mr. Haxhimali. This level of governance would avoid unnecessary bureaucracy, but would bring new capacities that municipalities cannot currently handle alone, such as the construction of inter-municipal infrastructure, waste management, the development of regional tourism or vocational education, he said.

By putting regional governance (NUT-2) into operation, Albania would gain a governance closer to citizens, more efficient in attracting funds, more balanced in development, and a concrete step towards fulfilling Chapter 22 of the negotiations with the EU.

In the European Union, this level of regionalisation (NUTS 2) usually corresponds to genuine administrative units that manage large development funds and sectoral policies. Italy, for example, has its own regions with wide autonomy such as Lombardy or Lazio, which possess elected institutions and perform functions. Poland has 16 regions which it has made responsible for the administration of structural funds, while Romania has organised eight regions (NUTS 2) as intermediate units for the management of development, without however giving them full political power.

In this perspective, Albania is facing a strategic choice. With a population that, according to INSTAT, has fallen to around 2.37 million inhabitants in 2025, the current division of 61 municipalities and 12 regions seems overburdened and fragmented.

Creating administrative regions in line with NUTS 2 with two or three regions would simplify the local government map and give the country a more functional middle level of organization, said Selami Xhepa.

These regions can gain competences in managing EU funds, drafting economic and infrastructure development plans, coordinating education and health policies, bringing governance standards closer to European practices.

Such a step would require constitutional reform and a review of public finances. It would be necessary to clearly define which fiscal resources go to the regional level and how power will be divided between the central government, regions, and municipalities.

The political challenge is not small, because the creation of administrative regions can also be seen as a transfer of power from the center to larger territorial units that can exert significant political weight.

Administrative regions would be able to absorb more EU funds, design differentiated policies according to the specific needs of the North, Center and South, and guarantee more direct representation in EU structures, including the Committee of the Regions.

If this reform is implemented carefully, Albania would have a simpler, more functional and closer to EU standards system of governance./Monitor