Bulgaria, Croatia, Poland, and Romania could raise labor productivity by up to 10 to 15 percent through wider adoption of digital technologies, particularly software and AI-enabled tools, according to the World Bank Group’s latest EU Regular Economic Report released today. With the EU economy expanding at roughly one percent annually, gains of that scale could boost growth, raise wages, and help make jobs more resilient.

The report, Innovation Rising: Lifting Central and Eastern Europe’s Jobs and Growth Potential, finds that the region is entering a new phase of development. Convergence with the EU has helped build a foundation for innovation, but sustaining growth will increasingly depend on mobilizing private investment and ensuring that capital flows to the most productive firms. Faster and broader adoption of new technologies—especially among small and medium-sized enterprises—would help accelerate growth and strengthen competitiveness across the region.

“Central and Eastern Europe has made impressive progress over the past two decades, bringing incomes closer to EU levels and expanding opportunity for millions of people,” said Anna Akhalkatsi, Division Director for the European Union at the World Bank Group. “Sustaining that progress will depend on raising productivity — through wider use of digital technologies, stronger investment in skills, and clear, predictable rules that help businesses innovate, grow, and compete. This is how economies create more and better jobs while building resilience for the future.”

Over the past two decades, Bulgaria, Croatia, Poland, and Romania achieved rapid income gains through trade integration and participation in European supply chains. That growth model is now reaching its limits. With working-age populations shrinking and labor markets already tight, further gains from expanding the labor force or competing on lower costs are becoming harder to achieve. Sustaining convergence will increasingly depend on productivity growth—driven by innovation, faster digital adoption, and firms moving up the value chain to create higher-value jobs.

The analysis also highlights the importance of how quickly innovation and technology spread across the economy. Research and development spending in the four countries currently remains below the EU average—under 1.5 percent of GDP compared with 2.2 percent across the EU. Firms also invest less in intangible assets such as software, research, data, and management improvements. In Poland, for example, 26 percent of corporate investment goes to these intangible assets, versus 37 percent across the EU. Smaller firms, particularly in Bulgaria and Romania, lag in digital adoption, limiting productivity gains. Closing these gaps would help Central European economies reach new stages of growth while creating more productive and resilient jobs.