World Bank Addresses Economic Growth in Europe, Central Asia
"Countries in Europe and Central Asia (ECA) should urgently push to make more efficient use of existing economic assets and invest in the capabilities of its firms and people to unlock faster growth," the World Bank said in a statement.
The report indicated that merely increasing capital and labor is essential but not adequate for stimulating economic expansion.
According to the World Bank, a 10% rise in productivity has the potential to create nearly 2 million new jobs across the region, highlighting the strong connection between productivity improvements and employment growth across different nations and industries.
The slowdown in regional growth following the global financial crisis was largely attributed to declining productivity.
The World Bank pointed out that this stagnation coincided with a slowdown in reforms, which maintained market inefficiencies such as the high proportion of less productive state-owned enterprises, and prevented resources from being directed toward areas with the highest potential returns.
The statement further highlighted that limited integration into global markets and weak corporate capabilities also hindered productivity, restricting the economic potential of countries in the region.
Finally, the report emphasized that returns on additional capital investments without productivity improvements are lower than in previous years.
Boosting productivity ultimately leads to greater prosperity, higher employment, and increased wages, according to the World Bank.
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