Contents -- Foreword -- Acknowledgments -- Abbreviations -- Overview -- Introduction -- What Are the Patterns of Productivity Growth? -- What Are the Sources of Productivity Growth? -- Which Policies Drive Productivity Growth? -- Going Forward: Productivity Growth Requires a Differentiated Policy Agenda across Countries -- Conclusion -- 1. Patterns of Aggregate Productivity Growth -- Patterns of Growth -- Sources of Growth: The Role of Productivity -- The Overall Record of Policy Reform -- The Impact of Policy Reform -- Conclusions -- 2. Sectoral Patterns of Productivity Growth -- Cross-Sectoral Shifts -- Productivity Growth within Sectors: A Bird's-Eye View -- Agricultural Productivity -- Manufacturing Productivity -- Service Productivity -- The Role of ICT in Productivity Growth -- Conclusions -- 3. Firm Productivity Growth -- Firm Dynamics and Productivity Growth -- Firm Dynamics and Job Flows -- Policy Drivers of Firm Productivity Growth -- Conclusions -- 4. The Future Role of Public Policy -- Sustained Productivity Growth Will Accelerate the Convergence toward Advanced Economies -- Fostering Productivity Growth Requires a Differentiated Policy Agenda across Countries -- Governance and Macroeconomic Stability -- Competition and Market Entry -- Labor, Infrastructure, and Technology Development -- Financial Development -- Conclusions -- Appendix 1: Macro Analysis of Productivity: Data and Methodology -- A. Growth Accounting -- B. Estimating the Impact of Structural Reforms: Cross-Country Growth Regressions -- Appendix 2: Sectoral Analysis of Productivity: Data and Methodology -- A. Benchmarking the Structural Transformation of Transition Economies -- B. Shift-Share Analysis: Decomposing Aggregate Labor Productivity Growth -- C. Estimation of Service Input Usage in the Agriculture Sector -- D. Manufacturing Productivity.

E. Service Productivity -- F. The Role of ICT in Productivity Growth -- Appendix 3: Micro Analysis of Productivity: Data and Methodology -- A. Firm Productivity Dynamics and Demographics -- B. Policy Drivers of Firm Productivity Growth -- Bibliography -- Index -- Box 1.1 The Growth Accounting Methodology -- Box 1.2 Estimating the Impact of Structural Reforms -- Box 2.1 Shift-Share Analysis: Decomposing Aggregate Labor Productivity Growth -- Box 2.2 The Product Space in Russia and Poland -- Box 3.1 The Decomposition of Productivity Growth Using Firm-Level Data -- Box 3.2 Empirical Analysis of Policy Drivers of Firm Productivity Growth -- Box 3.3 Competition, Productivity, and Distance to the Technological Frontier -- Box 3.4 Innovation Leads the Catching-Up Process -- Figure 1 A Large Income Gap Divides the Region, Which Also Lags behind the EU-15, 1999-2005 -- Figure 2 Productivity and Progress in Reform in the Region -- Figure 3 Gross Domestic Product Rose, and Poverty Fell Dramatically -- Figure 4 TFP, More Than Labor or Capital, Has Boosted Growth -- Figure 5 TFP Has Rebounded across the Region Since 1990 -- Figure 6 Labor Productivity, More Than Employment or Population Growth, Raised per Capita Income, 1999-2004 -- Figure 7 The Share of Workers in the Working-Age Population Has Fallen -- Figure 8 Investments in ICT Contributed to Labor Productivity Growth, 1995-2004 -- Figure 9 TFP in the Poorest Countries in the Region Is Only Half the Level in the EU-10 -- Figure 10 The Share of Services in Value Added and Employment Has Risen -- Figure 11 Higher Value Added per Worker in Services Raised Overall Labor Productivity in Most Countries, 1999-2004 -- Figure 12 Labor Productivity Growth Was High, Particularly in the CIS, 1999-2004 -- Figure 13 As Transition Proceeds, Productivity Growth Is Driven Mainly by Efficiency Gains within Firms.

Figure 14 Business Start-Ups Have Exceeded Business Exits in Most Countries -- Figure 15 Hungary's Reforms Led to Increased Firm Entry, While the 1998 Crisis Prompted Firm Exit in the Russian Federation -- Figure 16 In Slovenia, the Largest Manufacturing Firms Have Shrunk, While in Mexico, They Have Expanded -- Figure 17 Entrants' Survival Rates Are Higher in the Region Than in Advanced Economies -- Figure 18 Entrants with Higher Labor Productivity Are More Successful at Maintaining the Workforce -- Figure 19 The Role of Reallocation and Firm Turnover in Productivity Growth in Early Reformers Is Now Similar to That in Advanced Market Economies -- Figure 20 In Late Reformers, Firm Turnover Has Not Spurred Productivity Gains in Existing Firms -- Figure 21 Allocative Efficiency Remains Low in the Region -- Figure 22 Labor Shedding at Existing Firms Was the Main Source of Job Destruction -- Figure 23 Sometimes Unsynchronized Job Flows Gave Rise to Net Employment Losses -- Figure 24 In Services, Job Creation Outpaced Job Losses -- Figure 25 Policy Reforms Boost Firm Productivity -- Figure 26 Privatization Has Raised TFP, Especially in Countries That Attracted FDI -- Figure 1.1 Recent Growth Has Been Strong in the Region -- Figure 1.2 Growth Has Rebounded across All Country Groups -- Figure 1.3 TFP Growth Is the Primary Driver of Growth in Transition Countries -- Figure 1.4 Higher Capacity Utilization Partly Explains High TFP Growth Rates -- Figure 1.5 TFP Levels and Growth Vary across the Region -- Figure 1.6 Productivity Growth Rates Are Now Converging in the Region -- Figure 1.7 The Region Is Catching Up with Comparators -- Figure 1.8 The Record on Policy Reform Is Mixed -- Figure 1.9 The Region Lags behind Comparators in Several Key Structural Reforms -- Figure 1.10 Infrastructure and Financial Depth Improvements Would Do the Most to Boost Productivity.

Figure 1.11 Productivity Gains from Policy Improvements Vary across Countries -- Figure 1.12 Infrastructure Upgrading Shows High Returns -- Figure 2.1 A Substantial Shift of Output and Employment to Services -- Figure 2.2 During Transition, Labor Shifted to Agriculture in the Low Income CIS Countries -- Figure 2.3 Labor Shifted to Services in the Middle Income CIS and the EU-10 -- Figure 2.4 Higher Value Added per Worker in Services Raised Overall Labor Productivity in Most Countries, 1999-2004 -- Figure 2.5 Within-Sector Productivity Is the Main Driver of the Productivity Surge, 1999-2004 -- Figure 2.6 The Share of Services in Valued Added and Employment Has Risen -- Figure 2.7 Relative to the EU-15, Labor Productivity Gains Were High, but Levels Lagged, 1999-2004 -- Figure 2.8 Labor Productivity in Agriculture Is a Problem -- Figure 2.9 Average Farm Efficiency Is Highest in the EU-10 -- Figure 2.10 The Efficiency of Service Industries Is Important in Agricultural Productivity -- Figure 2.11 Average Labor Productivity in the EU-8 Was Less Than 30 Percent of That in the EU-15 -- Figure 2.12 Labor Productivity Growth in Manufacturing Is Higher in the EU-8 Than in the EU-15, 1999-2004 -- Figure 2.13 Only a Few Manufacturing Industries Sustained Strong Productivity Growth -- Figure 2.14 Policy Drivers of Manufacturing TFP Growth, 1999-2004 -- Figure 2.15 ICT Industries Showed More Rapid Productivity Growth, 1999-2004 -- Figure 2.16 Industries with High-Skilled Workers Displayed Higher Productivity, 1999-2004 -- Figure 2.17 Human Capital Moved from Less- to More-Productive Activities in Early Reformers -- Figure 2.18 The Supply of ICT-Skilled Labor Was Expanding and Was Used More in Services -- Figure 2.19 The ECA Region Still Lags behind the OECD in Labor Market Flexibility, and Late Reformers Lag Even Further -- Figure 2.20 Trade and FDI Have Grown.

Figure 2.21 Poland: FDI and Exports Are Linked to Productivity Growth in Manufacturing -- Figure 2.22 The Technology Differentiation in Exports Was Stark across Countries -- Figure 2.23 The EU-10 and Turkey Are Developing Producer-Driven Networks -- Figure 2.24 Early Reformers Also Display More Export Discoveries -- Figure 2.25 A Gap in Export Sophistication and Capabilities Remains between Early and Late Reformers, 1990-2005 -- Figure 2.26 The Gap in Productivity Was Associated with a Gap in Export Sophistication, 1999-2005 -- Figure 2.27 Service Labor Productivity in the EU-8 Increased, but Still Lagged Behind the EU-15 -- Figure 2.28 Variations Were Wide in Productivity Performance across Service Industries -- Figure 2.29 ICT Service Industries Displayed Higher Productivity, by ICT Taxonomy, 2000-04 -- Figure 2.30 Service Industries with Skilled Workers Show Higher Productivity, by Skill Taxonomy, 2000-04 -- Figure 2.31 Service Inputs into Manufacturing Vary across Countries -- Figure 2.32 ICT Capital, Labor Productivity Growth, and GDP per Person Employed -- Figure 2.33 ICT Capital Contribution to Labor Productivity Growth, 1995-2004 -- Figure 2.34 The Contribution of ICT-Producing Industries to Labor Productivity Growth, 1995-2004 -- Figure 2.35 ICT-Using Services Contribute Less to Productivity Growth Than Do ICT-Using Manufacturing -- Figure 3.1 The Sources of Productivity Growth Differ Substantially across Countries and Sectors -- Figure 3.2 Productivity Gains Have Arisen Primarily from Improvements within Firms -- Figure 3.3 Firm Start-Ups Have Exceeded Exits in Most Countries over the Past Decade -- Figure 3.4 Hungary and the Russian Federation Have Varied in Rates of Firm Churning -- Figure 3.5 Entrants Showed Higher Productivity than Incumbents -- Figure 3.6 Transition Economies Show Higher Survival Rates Than Many Advanced Economies.

Figure 3.7 As the Transition Matures, Markets Grow Harsh, and Entrant Survival Rates Drop.