WB: Western Europe Countries Need Innovations

YEREVAN, July 2. /ARKA/. Countries of Eastern Europe and the former Soviet Union have put the crisis of the 1990s behind them, but they need to innovate, include all their citizens in the development of their countries, and integrate with the broader global economy if they want to sustain growth, says a new World Bank report.

The report says that productivity growth – the only viable route to lasting prosperity – depends on there being a supportive business environment, specifically one that delivers competition, a deep financial sector, good governance, and superior skills and infrastructure.

“Key aspects of the business environment, such as competition and finance, that shape the behavior of firms are maturing and converging towards those in the developed market economies of Western Europe. This convergence is more pronounced in the new member states of the European Union. The Commonwealth of Independent States (CIS) are followers, though some distance behind”, the WB said in its report.

According to the World Bank’s report many countries in Eastern Europe and the former Soviet Union now face a third transition – aging populations.

“Demographic projections suggest that by 2025 the average Slovene will be 47 years old, giving the country one of the oldest populations in the world. Ukraine’s population will shrink by a fifth, and Russia’s by more than a tenth. Aging will lead to the share of the working age population (15-64 years) in total population declining rapidly after 2015 – less than a decade from now – in the EU8, Southeastern Europe, and middle income CIS countries”, the report says.

The World Bank thinks it is necessary to involve a huge number of people in labour activities, upgrade of effectiveness of exploiting resources and reform pension security system. Otherwise, it will become an unbearable burden for the state budget hobbling economic growth.-0---