State and Donor Financing as Drivers of Startup Ecosystem Development in Albania

Abstract

The study examines how donor and public funding mechanisms shape the development of startup ecosystems in Albania, a country transitioning toward an innovation-driven economy. It aims to identify how state- and international-donor-supported financial instruments contribute to entrepreneurial activity, innovation capacity, and ecosystem maturity. Grounded in the theoretical frameworks of the entrepreneurial state and the national innovation systems approach, the paper conceptually analyses the relationship among state intervention, donor support, and the private-sector response. The research synthesises recent literature, national policy documents, and strategic frameworks to assess alignment between public initiatives and donor priorities. Results highlight that, although donor and state interventions have stimulated early-stage entrepreneurship and improved access to resources, structural challenges persist—such as weak institutional coordination, fragmented policy implementation, and limited leverage of private investment. The paper concludes by offering strategic recommendations to strengthen innovation governance, improve funding synergy, and build a resilient, self-sustaining startup ecosystem in Albania and the wider Western Balkans region.