Baku 25° C
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For sustainable economic growth, it is important for the countries of Europe and Central Asia not only to attract investment, but also to actively adapt and disseminate technologies, Ivailo Izvorski, chief economist of the World Bank for Europe and Central Asia, said at the presentation of the global WB “World Development Report 2024," Report informs.
“In a number of Central Asian countries, 70-80% of state-owned enterprises operate in competitive sectors, such as retail. This slows down the development of private businesses. Financing also plays a key role. If access to long-term capital is limited or the financial system does not effectively allocate resources between depositors and borrowers, business expansion becomes impossible,” he noted.
Izvorski emphasized that there is an excess of small enterprises in Europe and Central Asia.
“If companies do not grow, they cannot implement foreign technologies and do not have the necessary scale for innovation. This is often due to small domestic markets, so integration into the global economy and regional markets becomes critical. Many enterprises in the region remain small even five years after their creation,” he explained.
The WB chief economist also noted the difference in the competitive environment between regions. In his opinion, in Central Europe, where countries have successfully moved into the high-income category, competition remains high, while in the Caucasus and Central Asia it is significantly lower.
“Countries that have achieved a high level of income have gone through two key stages: first, investment growth, then innovation. Most countries in Europe and Central Asia are now in the second stage. They need not only to attract investment, but also to adapt technologies. There remains the problem of financing, especially venture capital. Banks often avoid risks, while innovative projects are initially associated with a high degree of uncertainty,” the expert added.
