ISTANBUL

The World Bank said Monday that expanding productivity would increase gross domestic product (GDP) in European and Central Asian countries and create more and better job opportunities.

"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.

It said that the World Bank's new report revealed that increasing capital and labor is necessary but not sufficient to boost economic growth.

The bank noted that a 10% increase in productivity could add close to 2 million jobs in the region, underscoring the strong link between productivity and employment growth across countries and sectors.

The slowdown in growth experienced by the region after the global financial crisis was almost entirely due to a decline in productivity, it said, noting that this slowdown coincided with the slowdown in reforms, which perpetuated market distortions such as the high share of less efficient state-owned enterprises, and that resources were not being allocated to areas where they could generate the highest returns.

The statement also noted that the lack of full integration into global markets and weak firm capabilities also suppressed productivity and limited countries' potential.

The returns on additional capital investments made without productivity gains were lower than in the past. It emphasized that increasing productivity ultimately increases prosperity, leads to more employment, and higher wages, according to the report.

"If ECA countries’ post-2008 productivity growth had matched its pre-financial crisis pace, the region’s GDP could be roughly 62% higher," it said.

Pointing to the urgent need for a renewed reform agenda, the statement noted that reform momentum should be revitalized to unlock the region's productivity potential with targeted steps in the areas of trade, investment, digitalization, productivity, and skills.