The World Bank has released a report emphasizing the need for middle-income countries in Europe and Central Asia to adopt robust technology, foster innovation, improve education, and enhance energy efficiency to reach high-income status. The report, titled "Greater Heights: Growing to High Income in Europe and Central Asia," calls for reducing economic inefficiencies and removing obstacles to growth.
Since 1990, ten countries in the region have attained high-income status and joined the European Union. However, 20 other nations have experienced slower progress towards this goal due to sluggish structural reforms and a challenging global environment post-2007–09 financial crisis.
Ivailo Izvorski, Chief Economist for the Europe and Central Asia region and lead author of the report, states that "to achieve high-income status, governments will need to continue to focus on foundational reforms." He highlights the importance of fostering private sector involvement and innovation as critical strategies for these countries.
The report underscores the role of firms and productivity in reaching high-income levels. It suggests policies should support dynamic startups rather than focusing solely on small and medium enterprises (SMEs). Improving access to long-term credit through venture capital markets is essential for firm innovation.
A lack of skilled workforce is also identified as a barrier. The report recommends revamping vocational and university education while strengthening ties with the private sector. Reforms should include delaying educational track specialization, enhancing industry links, consolidating universities with research centers, and focusing on merit-based graduation.
Social mobility is another focal point. The quality of education must surpass that of previous generations to ensure future opportunities for well-paying jobs. Without social mobility, public support for necessary policy changes may wane.
Energy security is crucial for growth in this region known for its energy intensity. Middle-income countries need strategies to reduce energy inefficiency by adopting lower-cost production methods while addressing political concerns about subsidy reductions.