Fostering growth in transition economies
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Improving and sustaining growth potential over the longer term remains a major challenge for the transition region. It is now widely accepted that the ability of an economy to innovate– whether by imitating existing technologies or inventing new ones– is central to this objective, and to achieve it, the promotion of competition and better-quality education are essential prerequisites.
If countries are to sustain higher productivity growth rates, they will need to entrench product market competition by removing barriers to entry and trade and by maintaining transparent and effective competition agencies. Within the transition region, this is particularly true for the resource-rich countries of the Commonwealth of Independent States and Mongolia. At the same time, the governments of the transition countries will need to invest more in quality education at all levels to ensure that workforce skills match the evolving technological demands of their economies. A more educated and skilled population will, by definition, be better able to adapt and contribute to growth and innovation. A complementary challenge will be to improve monitoring and evaluation systems in order to increase the effectiveness of educational investment.
While many transition countries face a macroeconomic situation that allows limited room for higher spending on education, there is scope for changing the overall composition of spending so that education receives greater attention and investment. In addition, the private sector’s growing role in boosting training and skills acquisition would be strengthened if access to finance can be improved.
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