Expanding productivity key to faster economic growth in Europe, Central Asia: World Bank – Anadolu Ajansı

World Bank Report on Productivity and Sustainable Development in Europe and Central Asia

Executive Summary: Aligning Economic Growth with Sustainable Development Goals

A recent World Bank report highlights the urgent need for countries in Europe and Central Asia (ECA) to enhance productivity to achieve robust economic growth and create better employment opportunities, directly aligning with the objectives of Sustainable Development Goal 8 (Decent Work and Economic Growth). The report posits that while increasing capital and labor is necessary, it is insufficient for sustainable growth without a parallel increase in productivity. Enhanced efficiency in the use of existing economic assets and strategic investment in the capabilities of firms and people are identified as critical drivers for unlocking the region’s economic potential and advancing multiple SDGs.

Key Findings on Productivity, Employment, and SDG 8

• A 10% increase in productivity has the potential to add nearly 2 million jobs in the ECA region, demonstrating a direct correlation between productivity and the employment targets of SDG 8.
• The economic growth slowdown experienced by the region since the 2008 global financial crisis is attributed almost entirely to a decline in productivity.
• Without productivity gains, the returns on additional capital investments are diminishing, hindering progress towards sustainable economic development.
• The report estimates that if the region’s post-2008 productivity growth had matched its pre-crisis pace, the regional Gross Domestic Product (GDP) could be approximately 62% higher today.

Barriers to Productivity and Sustainable Growth

The report identifies several structural impediments that have suppressed productivity and limited the region’s progress towards its development potential, including goals related to SDG 9 (Industry, Innovation, and Infrastructure) and SDG 10 (Reduced Inequalities).

• Stalled Reforms: A slowdown in reform initiatives has perpetuated market distortions, such as the high share of less efficient state-owned enterprises.
• Inefficient Resource Allocation: Resources are not being directed to sectors where they could generate the highest returns, stifling innovation and growth.
• Limited Global Integration: A lack of full integration into global markets has constrained economic opportunities and knowledge transfer.
• Weak Firm Capabilities: Underdeveloped capabilities within firms have suppressed overall productivity and limited their potential to innovate and compete.

Recommendations for a Renewed Reform Agenda

To revitalize economic performance and achieve sustainable development objectives, the World Bank calls for a renewed reform agenda with targeted actions across several key areas.

1. Revitalize Reform Momentum: Governments must urgently push forward with structural reforms to unlock the region’s latent productivity potential.
2. Implement Targeted Policies: Focus on specific areas to create a virtuous cycle of productivity, employment, and wage growth, thereby supporting SDG 8 and SDG 10.
   • Trade: Deepen integration into global markets to foster competition and efficiency.
   • Investment: Ensure capital investments are coupled with measures to enhance productivity.
   • Digitalization: Promote digital transformation to improve firm capabilities, a key component of SDG 9.
   • Skills: Invest in human capital to equip the workforce for higher-productivity jobs.

Analysis of SDGs, Targets, and Indicators

1. Which SDGs are addressed or connected to the issues highlighted in the article?

   The article primarily addresses issues related to economic growth, productivity, and employment, which are central to several Sustainable Development Goals. The most relevant SDGs are:

   • SDG 8: Decent Work and Economic Growth: This is the most prominent SDG in the article. The text focuses on boosting Gross Domestic Product (GDP), increasing productivity, and creating “more and better job opportunities.” The entire premise of the World Bank’s report, as described, is to promote sustained and inclusive economic growth.
   • SDG 9: Industry, Innovation, and Infrastructure: The article touches upon this goal by highlighting the need to “invest in the capabilities of its firms,” push for “digitalization,” and address the slowdown in reforms that has “perpetuated market distortions.” These elements are crucial for building resilient infrastructure and fostering innovation.
   • SDG 10: Reduced Inequalities: While not a primary focus, the article implies a connection to this goal. It mentions that increased productivity leads to “higher wages” and that market distortions, such as the “high share of less efficient state-owned enterprises,” need to be addressed. Tackling such distortions and improving wages can contribute to reducing economic inequalities within countries.

2. What specific targets under those SDGs can be identified based on the article’s content?

   Based on the article’s discussion, several specific targets can be identified:

   • Target 8.1: Sustain per capita economic growth in accordance with national circumstances. The article directly addresses this by stating that expanding productivity would “increase gross domestic product (GDP)” and that if post-2008 productivity had matched the previous pace, “the region’s GDP could be roughly 62% higher.”
   • Target 8.2: Achieve higher levels of economic productivity through diversification, technological upgrading and innovation. This is the core theme of the article. The World Bank’s call to “urgently push to make more efficient use of existing economic assets” and the statement that the region’s growth slowdown was “almost entirely due to a decline in productivity” directly align with this target. The call for “digitalization” also supports the technological upgrading aspect.
   • Target 8.5: By 2030, achieve full and productive employment and decent work for all. The article establishes a clear link between productivity and employment, noting that a “10% increase in productivity could add close to 2 million jobs” and that increasing productivity “leads to more employment, and higher wages.”
   • Target 9.b: Support domestic technology development, research and innovation. The recommendation to “invest in the capabilities of its firms” and pursue “digitalization” as part of a renewed reform agenda supports the goal of enhancing technological capabilities within the region’s countries.

3. Are there any indicators mentioned or implied in the article that can be used to measure progress towards the identified targets?

   Yes, the article mentions or implies several indicators that can be used to measure progress:

   • Gross Domestic Product (GDP): The article explicitly uses GDP as a key metric for economic growth. This serves as a direct indicator for Target 8.1. The statement that “the region’s GDP could be roughly 62% higher” uses GDP to quantify the impact of productivity.
   • Productivity Growth Rate: The entire article is centered on productivity. The “decline in productivity” is cited as the reason for the slowdown in growth, making the rate of productivity growth a critical, albeit implied, indicator for Target 8.2.
   • Job Creation / Employment Growth: The article provides a specific metric: “a 10% increase in productivity could add close to 2 million jobs.” This directly measures the impact on employment, making it a clear indicator for Target 8.5.
   • Wages: The article mentions that increased productivity leads to “higher wages.” The level and growth of wages can therefore be used as an indicator to measure progress towards the “decent work” aspect of Target 8.5.

4. Create a table with three columns titled ‘SDGs, Targets and Indicators” to present the findings from analyzing the article.

   SDGs	Targets	Indicators
   SDG 8: Decent Work and Economic Growth	Target 8.1: Sustain per capita economic growth.	Gross Domestic Product (GDP) growth.
   SDG 8: Decent Work and Economic Growth	Target 8.2: Achieve higher levels of economic productivity.	Productivity growth rate.
   SDG 8: Decent Work and Economic Growth	Target 8.5: Achieve full and productive employment and decent work for all.	Job creation numbers (e.g., “2 million jobs”) and wage levels (“higher wages”).
   SDG 9: Industry, Innovation, and Infrastructure	Target 9.b: Support domestic technology development, research and innovation.	Investment in firm capabilities and digitalization efforts.

Source: aa.com.tr