The Correlation between Governmental Spending and Sustainable Economic Growth in Albania

This article conducts an empirical analysis of the relationship between government expenditure and economic growth in Albania, as indicated by GDP per capita, gross capital formation, foreign direct investments, and unemployment rates. It utilizes yearly time series data of the relevant variable from 1997 to 2023. The study used a conventional econometric methodology, namely the Ordinary Least Squares multiple regression model, for data analysis. The empirical evidence in this research demonstrates a significant association between public spending and sustainable development in Albania. In recent years, public expenditure has assumed a more crucial role in fostering sustainable economic development. When appropriately distributed, public expenditure may serve as a potent instrument to encourage sustainable development, enhance economic resilience, provide employment opportunities, attract investment, and reduce environmental harm. This paper gives a contribution to suggesting effective ways for public expenditure initiatives. The findings of the study highlight the key public investments necessary for attaining the SDGs and positioning Albania for EU membership. In conclusion, Albania's economic framework demonstrates potential in sectors like tourism and energy; however, it necessitates a shift towards sustainable development to address unemployment, reduce environmental impact, and build lasting resilience. By implementing sustainable development decisions, Albania can create a cohesive strategy for economic growth that promotes environmental conservation and social stability, thereby ensuring an enhanced quality of life for its population.