The World Bank Group’s latest EU Regular Economic Report says Bulgaria, Croatia, Poland, and Romania could increase labor productivity by 10 to 15 percent through wider adoption of digital technologies, especially software and AI-enabled tools. At a time when the European Union economy is growing at only about one percent annually, productivity gains of this scale could play a major role in boosting economic growth, raising wages, and making jobs more resilient across the region.
According to the report, Innovation Rising: Lifting Central and Eastern Europe’s Jobs and Growth Potential, Central and Eastern Europe is entering a new stage of development. While the region has benefited significantly from economic convergence with the EU, future progress will increasingly depend on mobilizing private investment and ensuring that capital is directed toward the most productive firms. The report highlights that faster and broader adoption of new technologies—particularly among small and medium-sized enterprises—will be critical for sustaining competitiveness and long-term growth.
Over the past two decades, Bulgaria, Croatia, Poland, and Romania have achieved strong income growth through trade integration and their role in European supply chains. However, the World Bank notes that this model is now approaching its limits. With shrinking working-age populations and already tight labor markets, these countries can no longer rely as heavily on labor force expansion or lower-cost competitiveness. Instead, future economic convergence will depend more on productivity growth driven by innovation, digital transformation, and movement up the value chain into higher-value industries and jobs.
The report also stresses that the speed at which innovation spreads across the wider economy is becoming increasingly important. Research and development spending in the four countries remains below the EU average, at under 1.5 percent of GDP compared with 2.2 percent across the bloc. Businesses in these countries also invest less in intangible assets such as software, research, data, and management improvements, which are essential for modern productivity gains and business transformation.
One example highlighted in the report is Poland, where 26 percent of corporate investment goes toward intangible assets, compared with 37 percent across the EU. The report further notes that smaller firms, especially in Bulgaria and Romania, are lagging in digital adoption, which limits their ability to improve productivity and compete effectively. Closing these gaps would help the region unlock a new phase of economic growth while also creating more productive, higher-quality, and more resilient jobs.
Overall, the World Bank argues that sustaining Central and Eastern Europe’s development momentum will require stronger investment in innovation, wider use of digital tools, improved skills, and a predictable policy environment that supports business growth and competitiveness. By accelerating digital adoption and enabling firms to innovate more effectively, the region can strengthen productivity and secure long-term gains in jobs, wages, and economic resilience.
