Western Balkan economies do not rely on the same engines of development. Some countries have maintained a relatively strong industrial base, while others depend more heavily on trade, tourism and services. Albania, meanwhile, stands out for the large contribution of agriculture and, in particular, construction to its economy.
Monitor processed Eurostat data and compared the structure of gross value added by economic activity (excluding net taxes on products and subsidies) across the Western Balkan countries and against the European Union average for 2024, the latest year for which data are available.
Growth models across the region differ significantly, not only from one country to another, but also from the structure of the average EU economy. In the European Union, economic activity is distributed more broadly across industry, professional services, public administration, real estate and finance. Western Balkan economies, by contrast, remain more heavily concentrated in traditional sectors.
The comparison shows that Western Balkan countries continue to rely more strongly on agriculture, construction, trade and traditional industry, while the European Union has a larger share of professional and financial services, as well as knowledge-based activities.
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Albania has the highest share of construction
Albania is the country where construction accounts for the largest share of the economy. According to the data, the sector generates 13.8% of gross value added, more than twice the European Union average of 5.5% and significantly above all other Western Balkan countries.
Constructionâs share of the Albanian economy is also the highest in Europe. In Kosovo, the sector accounts for around 10% of the economy, compared with 7.2% in North Macedonia, 5.9% in Serbia, 5.6% in Bosnia and Herzegovina, and approximately 5% in Montenegro.
The rapid expansion of construction, supported by investment in housing, tourism facilities and large-scale developments in urban and coastal areas, has been one of Albaniaâs main sources of economic growth in recent years. However, excessive dependence on construction does not necessarily represent a sustainable long-term development model.
Construction can create jobs, attract capital and stimulate related industries, but it offers less scope for sustained productivity growth, exports and innovation than manufacturing, technology or professional services. Once an investment cycle is completed, the sectorâs ability to generate a continuous flow of new value is more limited.
Moreover, construction has also served as a channel for the inflow of informal money into the country, as indicated by recent investigations conducted by the Special Structure against Corruption and Organised Crime, SPAK. This has been one of the factors contributing to the sharp rise in property prices, making housing increasingly unaffordable for local residents.
In addition to construction, Albania also has the highest share of agriculture in the region. The sector generates around 17â18% of gross value added, compared with less than 2% in the European Union. This gap shows that a considerable proportion of economic activity and employment remains concentrated in sectors with relatively low productivity.
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Despite agricultureâs high contribution to the economy, food prices in Albania are now higher than the European Union average, an indication of the sectorâs low productivity.
Industry accounts for around 12% of the Albanian economy, a level considerably below both the EU average and the shares recorded in other countries in the region. Its contribution is particularly low when compared with Kosovo, Bosnia and Herzegovina, Serbia and North Macedonia, where industry accounts for between 20% and 23% of gross value added.
Trade, transport, accommodation and food services together generate more than one-fifth of the economy, reflecting the growing role of tourism and consumption in Albaniaâs economic model.
Another weakness is the relatively limited development of financial intermediation. Finance and insurance account for only around 2% of Albaniaâs gross value added, compared with 6.2% in Serbia, 5.7% in Montenegro, 4.4% in Bosnia and Herzegovina and an EU average of 4.7%.
This low share reflects not only the limited size of the financial market, but also the economyâs almost complete dependence on the banking system. Capital markets, investment funds, insurance and alternative financing instruments remain underdeveloped.
On a more positive note, Albania has performed relatively well in professional, scientific and technical activities, together with administrative and support services. This group of activities reached 8.4% of gross value added, the second-highest share in the region after Serbiaâs 9.4%, and has moved closer to the EU average of 11.8%.
This development points to a gradual expansion of services that require greater knowledge, specialisation and a more highly qualified workforce. The category includes legal and accounting services, management consultancy, architecture and engineering, technical testing and analysis, scientific research, advertising and market research, design, translation and other specialised activities. It also includes administrative and support services such as employment agencies, leasing, travel agencies, security, cleaning, building maintenance, office support and call centres.
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Serbia builds a more technology-oriented model
In contrast with Albania, Serbia stands out for the development of its information and communication sector. The activity now generates around 10% of gross value added, the highest share in the Western Balkans and almost twice the European Union average.
In Albania, information and communication account for only 2.6% of gross value added, the lowest share in the region alongside Kosovo, where the figure stands at 2.5%.
The expansion of information technology has helped Serbia build an economic model that is more oriented towards exports of higher-value-added services, skilled employment and investment in knowledge.
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Unlike construction, the technology sector can expand without requiring major investment in land and real estate. It also offers greater potential for increasing productivity, wages and exports, while supporting integration into international service-sector value chains.
The structure of the Serbian economy is also more diversified. Industry generates around one-fifth of gross value added, or 21.2%, significantly more than in Albania, while construction has a more moderate share of approximately 6%.
Serbia also has a stronger presence in financial services, real estate and professional activities. Agriculture, although still important, accounts for only around 4% of the economy, far less than in Albania.
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Montenegro, the economy most dependent on trade and tourism
Montenegro has the economic model most strongly oriented towards trade, transport, accommodation and food services. Together, these activities account for around one-third of gross value added, the highest proportion in the region.
Montenegro records a 32.6% share for trade, transport, accommodation and food services, well above the EU average of 18.9%. This structure reflects the economyâs strong dependence on tourism.
In years of high tourist arrivals, the sector generates income, employment and foreign-currency inflows. However, such dependence also leaves the country vulnerable to external shocks, changes in tourism demand and wider international uncertainty.
Montenegro has the lowest industrial share in the region, at around 10â11%, while construction accounts for approximately 5% of the economy.
Financial and real-estate activities also play a relatively important role, partly reflecting foreign investment in property and tourism-related developments. The respective shares cited in the data are 5.7% and 7.5% of gross value added.
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Kosovo relies on Industry, Trade and Construction
Kosovo has an economic structure in which industry, trade and construction account for a substantial share of activity. Industry generates more than one-fifth of gross value added, at 22.8%, one of the highest proportions in the Western Balkans.
Trade, transport, accommodation and food services account for around one-quarter of the economy, while construction contributes approximately 10%. This is the second-highest share in the region after Albania and also one of the highest in Europe.
Agriculture remains relatively important, accounting for 9.3% of gross value added.
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By contrast, information and communication, finance and professional services remain less developed than elsewhere in the region and below the European average. Kosovo therefore displays a structure similar to Albaniaâs, with the main exception being the much greater contribution made by industry.
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North Macedonia has a more balanced structure
North Macedonia has a relatively more diversified economic structure, with activity distributed across industry, trade, construction and services.
Industry accounts for around 21% of the economy, while trade, transport, accommodation and food services have a broadly similar combined share.
Construction represents 7.2% of gross value added, above the EU average but below the levels recorded in Albania and Kosovo.
Agriculture retains a share of around 7%, while real-estate activities are relatively important, accounting for 11.6% of gross value added. This is the highest share in the region and is also above the European Union average of 10.8%.
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Bosnia and Herzegovina retains its industrial base
Bosnia and Herzegovina has one of the largest industrial shares in the region, with industry generating around 21% of gross value added. The country relies on manufacturing, energy and activities linked to exports to the European market.
Trade, transport, accommodation and food services also play a major role, accounting for close to one-quarter of the economy.
Agriculture generates 5.4% of gross value added, while construction has a considerably smaller share than in Albania and Kosovo, also standing at 5.4%.
Trade, transport, accommodation and food services contribute 24.7% of total gross value added, the third-highest share in the region after Montenegro and Kosovo.
However, professional services, at 5.5%, and finance, at 4.4%, have yet to reach the scale recorded in the more advanced economies of the European Union.
O.Liperi
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