World Bank: Productivity Growth Is Key to Accelerating Economic Expansion in Europe and Central Asia

Tashkent, Uzbekistan (UzDaily.com) — A new World Bank report published on 24 November stresses that countries in Europe and Central Asia (ECA) must urgently step up reforms aimed at boosting productivity in order to accelerate economic growth and unlock the potential of businesses and people across the region.

According to the study, “Turning the Tide: Boosting Productivity Growth in Europe and Central Asia,” simply increasing capital and labor is not enough to drive faster economic expansion. Productivity — the efficiency with which resources are used — is the decisive factor. The report finds that a 10 percent increase in productivity could generate nearly two million new jobs across the region.

The World Bank notes that since the 2008 global financial crisis, the slowdown in growth in ECA countries has been driven almost entirely by a decline in productivity. This drop is linked to the slowdown of structural reforms, a large share of inefficient state-owned enterprises, limited integration into global markets, and the weak capacity of local firms. As a result, returns on additional investment have decreased, limiting countries’ ability to sustain GDP growth.

Experts estimate that if post-2008 productivity growth had matched pre-crisis levels, the region’s GDP today would be roughly 62 percent higher.

The report highlights high-productivity export-oriented firms as a key engine of growth. Although they represent a small share of all enterprises, they contribute disproportionately to employment, investment, and value added. Average trade turnover in ECA countries is 45 percent below its potential, pointing to significant untapped opportunities in trade and foreign direct investment.

The World Bank emphasizes that unlocking this potential requires improving the business climate, advancing digitalization, strengthening workforce skills, and integrating domestic companies into the value chains of multinational corporations. The report proposes a comprehensive TIDES strategy — trade, investment, digitalization, efficiency, and skills — as a roadmap for accelerating productivity growth.

“The region is at a critical moment. By reinvigorating reforms and focusing on productivity, countries can create more high-quality jobs, raise living standards, and build a resilient future,” said Asad Alam, the World Bank’s Regional Director for Europe and Central Asia.

The findings are based on more than 40 million firm-level observations from 16 ECA countries spanning 2008–2023, drawing on data from national statistical agencies, tax authorities, and other sources. The report stresses the need to reinvigorate reforms, ensure transparency in public procurement, foster competition, and embed productivity-enhancing policies into national budgets and development plans.

According to World Bank experts, adopting these measures would allow countries in the region to restore economic growth and significantly improve the welfare of their populations.