The Albanians faced daunting developmental challenges when they declared independence in 1912 after some 500 years as part of the Ottoman Empire. Their medieval, patriarchal social structure necessarily stunted the growth of anything beyond the most rudimentary economic relationships. Subsistence and feudal agriculture so dominated Albania's economy in the state's early years that even trained carpenters, joiners, and blacksmiths were in short supply. Each family generally produced its own bread and meat as well as flax, wool, and leather. Many peasants used wooden plows and knew little about manures, artificial fertilizers, or crop rotation most had no incentive to produce cash crops because they had no way to transport their output to a reliable market. A complete absence of good roads made interregional commerce almost impossible. The trip from Tiranė to Vlorė, for example, involved a sea journey and although Shkodėr's tradesmen exported skins by boat to Italy, their compatriots in Gjirokastėr had to cross the Strait of Otranto to buy them from the Italians (see fig. 1). There were also no roads across the Greek or Yugoslav borders capable of handling commercial traffic.

Albania's leaders lacked accurate data on the country's agricultural output, as well as on the extent and characteristics of its farmland, livestock herds, and oil and mineral deposits. President Ahmed Zogu (later king Zog) sought Italian protection for Albania 1925, entering into economic agreements that Italy used to exploit Albania's oil, chromite, copper, and iron-ore reserves. Albania remained backward, however. In the late 1920s, agriculture contributed over 90 percent of the national income although only 8 percent of the country's land area was under cultivation and the entire farm sector could boast only thirtytwo tractors (see Table 3, Appendix). Even in 1938, Albania's industrial output amounted to less than 4 percent of national income, and annual per capita industrial production totaled about US$8. However, Italy did carry out extensive geological exploration, gauging for the first time the extent of Albania's mineral wealth. The Italians also improved Albania's infrastructure, modernizing Tiranė and constructing 1,500 kilometers of roads and several hundred bridges as well as Durrės harbor. World War II dealt Albania's economy severe setbacks except in the mining sector, where the mineral-hungry Italian and German occupying forces actually added to productive capacity. Durrės harbor and many of the country's roads and bridges, however, sustained damage during the war.

Data as of April 1992