BAKU, Azerbaijan, November 24. Countries in Europe and Central Asia (ECA) could significantly raise economic growth and create millions of new jobs by improving productivity, the World Bank said, Trend reports.
In its new report, TIDES of Change: Igniting Productivity Growth in Europe and Central Asia, the World Bank argues that simply adding more capital or labor is not enough to drive growth. Productivity — how efficiently resources are used - is the key driver, the report finds.
A 10% rise in productivity across the region could generate nearly 2 million jobs, highlighting the strong link between efficiency and employment, according to the report.
The report traces the region’s post-2008 growth slowdown mainly to falling productivity, alongside weak reforms, high shares of less efficient state-owned enterprises, limited global integration, and low firm capabilities. It notes that without productivity improvements, returns on new capital investments are lower than in the past.
“If competition is robust, firms can access technology and finance, trade and investment are open, and workers have the skills to adopt technologies, productivity rises,” said Asad Alam, World Bank Regional Director for Europe and Central Asia. “Firms grow, employ more people, and show greater business dynamism. This propels incomes and national success.”
The report highlights that the region’s most productive firms are exporters, which, though few in number, disproportionately contribute to jobs, investment, and value added. On average, ECA countries trade 45% less than their potential, indicating untapped opportunities in trade integration and foreign direct investment.
The World Bank calls for renewed reform momentum across trade, investment, digitalization, efficiency, and skills - collectively referred to as TIDES - to unlock the region’s potential. Governments play a crucial role by embedding productivity into national plans and budgets, promoting competition, ensuring transparency in public procurement, and monitoring reform progress.
The findings draw on more than 40 million firm-level observations from 16 countries between 2008 and 2023, offering new insights into productivity trends and bottlenecks.
With targeted reforms and commitment from policymakers and business leaders, ECA countries could regain growth momentum and transform their economic prospects, the report concludes.