Better Education, Stronger Economy: Key Insights from the World Bank's 2024 Report

The World Bank’s Fall 2024 report, “Better Education for Stronger Growth,” highlights how enhanced education quality across Europe and Central Asia (ECA) can fuel economic growth. The report emphasizes the need for educational reforms and policies to tackle vocational and higher education challenges, improve skill alignment, and foster talent retention. As ECA faces a slowing economy and skills mismatches, targeted education investment is key to sustaining future growth.

The World Bank's latest report, "Europe and Central Asia Economic Update, Fall 2024: Better Education for Stronger Growth," unveils a pressing message: investing in education quality across Europe and Central Asia (ECA) is essential to sustaining economic growth. The report sheds light on the region’s economic trends, focusing on how an improved education sector can help meet the demand for skilled workers and mitigate future economic challenges.

ECA Economic Overview: Challenges and Opportunities

The ECA region, encompassing diverse economies from Central Asia to the Western Balkans, saw growth decelerate to 3.3% in 2024. Economic pressures, including sluggish demand and reduced trade with the European Union, dampened this growth. Even with supportive policies, including increased real wages and fiscal measures that bolstered private consumption, the region faces looming headwinds. Inflation rates have dropped, yet remain high, driven by rising labor costs.

The World Bank’s report projects a further slowdown in growth to 2.6% by 2025, largely influenced by Russia’s weakening economic output. A gradual recovery in key trade markets and continued inflation reduction could provide relief, but geopolitical uncertainties and potential financial volatility are significant risks. For ECA, the question of sustainable growth is now closely linked to its ability to nurture a more educated and adaptable workforce.

Education: The Key to Unlocking ECA’s Economic Potential

One of the report’s central themes is the critical role of education in ECA’s economic development. While enrollment rates in primary, secondary, and tertiary education remain high across the region, the quality of education, particularly at primary and secondary levels, has notably declined. This quality gap is reflected in underwhelming test scores and weak foundational skills in core subjects like math and reading.

Vocational training (VET) programs have also become a focus of scrutiny. Although many students in ECA pursue VET, these programs often lack practical alignment with industry needs, leaving graduates underprepared for the workforce. Without a stronger connection to evolving job market demands, VET graduates face challenges in securing well-paying jobs, and talent remains underutilized.

Higher Education Faces Unique Challenges

The report points out that higher education in ECA is underperforming compared to global standards. Many universities lack essential infrastructure, modern curricula, and effective management, leading to lower-quality education and fewer globally competitive institutions. Only nine universities in ECA are ranked among the top 500 worldwide, which underscores the need for institutional reform. As a result, there is a significant skills mismatch, with graduates lacking the soft and technical skills required by employers.

This misalignment of educational outcomes with workforce needs has spurred a "brain drain," as young, skilled individuals increasingly migrate abroad for better educational and job opportunities. This talent loss further hampers innovation and economic growth across ECA, intensifying the need for immediate action to strengthen local higher education.

Strategic Policy Recommendations to Foster Growth

The World Bank report outlines a series of recommendations aimed at boosting the ECA region’s educational quality and economic trajectory:

Reforming Education Quality: The report stresses the importance of investing in teacher training, curriculum modernization, and educational infrastructure. Such investments would support interactive, engaging classrooms and better equip students with essential skills.

Reevaluating Vocational Training: Transitioning from a classroom-focused VET approach to one integrated with private sector involvement could help graduates meet industry demands more effectively. By fostering collaboration between educational institutions and businesses, ECA countries can improve job outcomes for VET graduates.

Overhauling Higher Education: Consolidating universities, enhancing infrastructure, and integrating research and innovation programs are all crucial steps. Addressing “academic capture”—where political or business elites influence university operations—is also essential to improving educational outcomes and restoring public trust in these institutions.

Focusing on Talent Retention: By prioritizing quality education and addressing mismatches between graduate skills and labor market needs, ECA countries can reduce talent migration and retain skilled workers, fueling local innovation and productivity.

The Path Forward: Sustained Growth through Education

As ECA nations look toward long-term economic sustainability, the World Bank’s report offers a clear path: prioritize education to unlock human capital and drive growth. Countries in the region must act decisively to tackle educational shortcomings, reconfigure vocational training, and revitalize higher education. In doing so, they can better position themselves to achieve a stable, growth-oriented future.

The "Europe and Central Asia Economic Update, Fall 2024" by the World Bank underscores that only through transformative educational investment can ECA achieve sustainable economic growth, meet future workforce demands, and retain valuable talent. As the region grapples with current economic challenges, strengthening its education sector could be the key to unlocking lasting prosperity.