ALMATY — Strengthening productivity could accelerate economic growth and generate nearly two million new jobs across Europe and Central Asia, according to a new World Bank report released on Nov. 24.
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The study urges countries in the region to focus on using existing economic assets more efficiently and investing in the capabilities of their firms and workforce to unlock faster and more resilient growth.
The report underscores that while expanding capital and labor inputs is important, it is productivity that ultimately drives economic performance. The World Bank notes that the region’s economic slowdown since the global financial crisis has been driven almost entirely by weakening productivity, a trend linked to slowed reforms, persistent market distortions and incomplete integration into global markets.
According to the analysis, a 10% rise in productivity would generate additional jobs, demonstrating the strong link between firm efficiency and employment growth.
The World Bank highlights that exporters in the region are among the most productive firms, contributing disproportionately to investment, employment and value added, despite representing only a small share of all businesses. Yet European and Central Asian countries trade about 45% less than their potential, revealing substantial room to benefit from deeper global integration and more effective participation in value chains.
The report notes that the ongoing restructuring of multinational supply chains offers a strategic opportunity. Countries stand to gain from nearshoring trends, but only if they undertake meaningful reforms to improve the business environment, enhance digitalization, boost skills and strengthen firms’ ability to absorb new technologies.
“When competition is robust, when firms can access technology and finance, when trade and investment is open, and when workers have the skills to adopt technologies and adapt, productivity rises. Firms grow, employ more people, and show greater business dynamism. This propels the growth of incomes and the success of countries,” said Asad Alam, regional director for Europe and Central Asia, Prosperity at the World Bank.
The report incorporates more than 40 million firm-level data points from national statistical offices, tax authorities and other sources across 16 countries covering 2008–2023 period.
The findings also emphasize the crucial role of governments in creating conditions for productivity growth. This includes incorporating productivity goals into national strategies, ensuring fair market competition, strengthening transparency in procurement and monitoring progress on reforms.
According to the World Bank, a renewed push across five key areas such as trade, investment, digitalization, efficiency and skills could help the countries regain momentum and reshape their economic future.