European Bank for Reconstruction and Development on Capacity Building Challenges in the JVI Region

Convergence between living standards of the JVI region and those of advanced countries has slowed down in recent years. As a result, GDP per capita in the region continues to lag significantly behind levels in Western Europe or North America. A slight pick-up in growth is evident over the past year and short-term prospects are improving, but full convergence remains a distant dream for most countries.

Much of the slowdown in recent years is due to trends in total factor productivity. Changes in the overall productivity of an economy reflect developments at the level of individual firms. There are many ways in which firms can increase their productivity but an especially important one is to improve management practices.

International institutions can help boost productivity

International institutions such as the European Bank for Reconstruction and Development (EBRD) can play a vital role in helping countries to boost productivity, because they bring funding and expertise that is not readily available elsewhere.

According to recent research, differences in management quality can be at least as important as R&D or innovation, and more important than IT, in explaining the dispersion of productivity among firms. Firms in the region where the JVI operates have, on average, worse management practices than firms in advanced countries. Here lies a clear challenge for JVI, EBRD and other organisations alike. Helping firms to not only access finance but also high-quality consulting and business advisory services will be key in this regard.

Moreover, helping firms to be better managed will also be crucial to support countries in central, eastern and south-eastern Europe, the Caucasus, and Central Asia to become more energy efficient and to proceed with their transition to greener economies. The EBRD’s Green Economy Transition approach supports projects that promote the sustainable use of resources and protection of natural assets, brings suppliers of new technologies and equipment into the markets and makes use of public delivery channels to maximise impact.

The EBRD training at the JVI

For the past 25 years, the key focus of EBRD courses at the JVI has been to enhance general business practices by providing management training for senior managers for its, predominantly, private sector clients and prospective clients. Topics have included managing a business, business planning, project management, risk management, delivering successful projects and we consider that this type of training is essential, and will continue to be essential, for the future of the JVI region.

Helena Schweiger, Peter Sanfey and Angela Thompson, European Bank for Reconstruction and Development