An Analysis of the Economic System of Albania

What is the economic system of Albania? The economy of Albania is based on a mixed economy. The country’s economic system combines elements of a market economy and a planned economy.

In Albania, the economy is composed of a private sector, consisting of individuals and businesses that make autonomous decisions based on self-interest, and a public sector, where the state determines the production and distribution of certain goods and services. No country is purely capitalist or purely communist.

What do the freedom indexes tell about the economic system of Albania?

Now, to determine if a country is mostly a market economy or a planned economy, it is useful to examine some economic indexes. For instance, according to the 2026 Index of Economic Freedom, which measures the ability of every human to control his own labor and property, Albania is ranked 46th globally (up from 50th in 2025) and leads the Western Balkans in economic freedom, indicating that the country has a moderately free economy.

In a similar way, the Freedom in the World 2026 index evaluates the state of political rights and civil liberties globally. Generally, market economies tend to align more with democracy and freedom, while command economies tend to be characterized by greater state control and fewer democratic and civil liberty protections. Albania gets a score of 69/100 (As of 2026), which qualifies it as Partly Free. Albania is considered to have a government that does not control what people do, and people can make their own economic decisions, but it is only considered an electoral democracy, lacking full liberal democratic protections.

The Link Between Public Sector Employment and the Economic System of Albania

An indicator of the extent to which the State is involved in the economy is the number of public sector employees. In Albania, according to ILOSTAT, the number of public sector employees as a percentage of the total workforce is 14.4% (2019). In the country’s mixed economy, the number of public sector employees as a percentage of the total workforce varies based on the specific policies and practices adopted by the State. Some economic activities are left to the private sector while others are under government control. The bigger the public sector the closer is the economy to being a command economy.

What does the biggest company in Albania say about the country’s economic system

The biggest company in Albania should also be looked at, as well as whether it is a state-owned or private company. In this case, OSHEE (Operatori i Shpërndarjes së Energjisë Elektrike) is Albania’s largest company by revenue (approximately $3.9 billion). OSHEE is a state-owned electricity distribution operator, responsible for the construction, operation, maintenance, and development of Albania’s electricity distribution network. Its dominant scale illustrates the significant role of state-owned enterprises in Albania’s mixed economy.

The historical factors that have influenced the economic system of Albania

The mixed economy system of Albania in the past century has been caused by a combination of political, social, and economic factors. Political factors such as the fall of communism and the transition to a market economy have been key in the development of the mixed economy system. Social factors such as increased foreign investment and increased levels of education have also had an impact. Economic factors such as the privatization of state-owned enterprises and the liberalization of foreign trade have also been important. All of these factors have led to the current mixed economic system in Albania.

Sources

• List of countries by the public sector size
• ILOSTAT Country Profiles
• 2026 Index of Economic Freedom — Albania
• Freedom in the World 2026 — Albania
• OSHEE — Operatori i Shpërndarjes së Energjisë Elektrike

Last updated: June 20, 2026