The definition and classification of cities in Albania has followed the new OECD-EC definition methodology for cities (Dijkstra, 2012).

The methodological criteria for this classification are subject to four subsequent steps:

1. All grid cells of 1 km² with a population density of more than 1,500 inhabitants (high-density cells) are first selected.
2. The contiguous high-density cells are then grouped. The groups with a minimum population of 50,000 inhabitants are identified as “urban centres”. Contiguous high-density cells include cell gaps if at least five out of the eight cells surrounding a high-density cell are also high-density cells (Figure 5.8). Diagonal cells (i.e. cells with only the corners touching) are not included.
3. Local administrative units (LAU2) with at least half of their population inside the urban centre are also selected to be part of the city.
4. A city is then defined ensuring that:
5. a) There is a link to the political level (e.g. presence of a Local Government Unit),
6. b) That at least 50 % of the overall city population lives in an urban center and
7. c) That at least 75 % of the population of the urban center lives in a city.

According to the methodology used above, only 5 cities can be classified as urban audit cities, Tirana, Durrës, Elbasan, Shkodra and Vlora, and that because these cities have more than 50% of the population in the Urban Center, and their Urban Centers contain more than 75% of the city's population.

*A further and optional step is the definition of a “Large Urban Zone” which consists of the city and its commuting zone. However, since this would involve a detailed analysis of employment data for the high-density cells and the identification of “functional areas” in Albania, is not included in this study.

The new urban-rural classification of the territory of the EU countries at sub-regional level is based on Local Administrative Units level 2, such as municipalities, communes, local authorities. However, the new classification considers as basic units of classification 1 km² grid cells, instead of LAU2. The new approach ensure, also for this territorial level, a more accurate information and comparability in terms of degree of urbanization of the local units. The concept of degree of urbanization was first used in 1991 to classify areas according to their population densities.

The new degree of urbanization (DEGURBA) has been approved by Eurostat in 2011 and applied to the EU local administrative units.

In Albania, communes and municipalities correspond to LAU2s in EU countries, and they vary also considerably in size and population. Small size municipalities are generally high-density populated places, while large size communes are usually scarcely populated, and of rural characteristics.

Therefore, the new EU approach of LAU2 classification based on 1 km² population grid seems also appropriate for the country, allowing comparability of Albania with EU countries also at the very local territorial level.

It classifies LAU2s into the following three categories:

1. Densely populated areas (cities or large urban areas): at least 50 % of the population lives in high-density clusters
2. Intermediate density areas (towns and suburbs or small urban areas): less than 50 % of the population lives in rural grid cells and less than 50 % lives in high-density clusters
3. Thinly populated areas (rural areas): more than 50 % of the population lives in rural grid cells.