Iacovone, LeonardoAviomoh, HenryBelacin, MatiasBossavie, LaurentCusolito, Ana Paulade Hoyos, RafaelOttaviano, GianmarcoScheifele, FabianTorre, IvánYoshino, Yutaka2025-10-252025-10-25978-1-4648-2287-2https://hdl.handle.net/10986/43788Europe and Central Asia (ECA) is at a turning point. After a period of convergence and reform-driven growth during the first decade of the 2000s, the region’s productivity engine has lost momentum. Total factor productivity growth has halved since the global financial crisis, and the gains from capital deepening and labor expansion are no longer sufficient to sustain economic growth. If pre- 2008 trends in productivity growth had continued, average incomes would be around 60 percent higher today. Instead, misallocated resources, incomplete integration into global markets, and weak firm capabilities during a period of stalled reforms have left the region below its potential. This report lays out a new agenda for boosting productivity. Drawing on unique firm-level data from across the region, it shows how deeper trade integration, smarter investment, and adoption of technology, coupled with improved firm capabilities and investments in workers’ skills, can unlock significant productivity gains. The report highlights the need to face the challenges of the unrealized potential of exports and foreign direct investment, insufficient level of digital technology adoption, and limited investment in skills training (offered by only one in five firms in ECA today), coupled with weak foundational skills. The evidence is clear: Addressing these challenges through targeted reforms in improving market functioning, technology adoption, export promotion, and skills development is crucial for unlocking the region’s productivity potential. The path forward is captured by the policy framework of trade, investment, digitalization, efficiency, and skills (TIDES)—the levers that can help boost the region’s productivity. This flagship report is not just a diagnosis of what went wrong; it is a call to action for what must come next. Focusing on TIDES, with the right policies and political will, ECA can reclaim its momentum and deliver a new era of shared prosperity.en-USCC BY 3.0 IGOBookWorld Bank10.1596/978-1-4648-2287-2