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World Bank: Better resource allocation could boost productivity in South Caucasus and Central Asia by up to 80%

24 November 2025 12:35 (UTC +04:00)

If countries in the South Caucasus and Central Asia can reach the level of developed countries in terms of efficient allocation of resources, productivity could increase by 35–80 percent, APA-Economics reports, citing a World Bank report.

The new report shows that inefficiencies in the labor market significantly limit economic growth. It is noted that there are structural problems in the labor market. According to the World Bank, in Western Europe, work experience strongly affects wages, and employees with 20–25 years of experience earn 60–70 percent higher salaries. However, in the South Caucasus and Central Asia, the impact of experience on wages is either very weak or, in some cases, negative. This indicates that experience is not recognized as a valuable economic resource in the market.

Experts note that the inefficient allocation of labor and capital prevents productivity growth in these countries. According to World Bank calculations, eliminating distortions in factor and product markets could sharply increase economic efficiency in the region and generate real growth without additional investment. Proper economic policy, strengthening the competitive environment, and increasing investment in labor skills are the main directions to unlock the productivity potential of the region.