This section presents strategic perspectives on advancing sustainable growth in developing countries by encouraging stronger engagement with the private sector. It introduces practical approaches and partnerships that contribute to job creation, expanded access to infrastructure, and the development of future-oriented industries. Through knowledge sharing and collaboration, this section aims to highlight how inclusive engagement with private actors can complement national development goals and support resilient, self-sustaining economic progress.
Compiled by: Kyoungshin Kim, KGGTF Consultant
Productivity Revival and Growth Outlook
In recent global economic outlooks and policy discussions, the key issue increasingly raised is not merely a cyclical slowdown, but a weakening of long-term growth potential. In this context, the OECD and the World Bank, while using different analytical frameworks, present remarkably similar diagnoses and policy implications.
The World Bank’s Latest Growth Outlook: The “New Normal” of Low Growth
Global Economic Prospects -- January 2026
Image Source : Global Economic Prospects, January 2026
The World Bank’s recently published Global Economic Prospects (January 2026) warns that the global economy is entering a phase in which low growth rates are likely to persist structurally over the coming years. According to the report, despite short-term rebounds, global growth is expected to remain below historical averages, with the recovery in many developing economies projected to fall short of expectations.
The World Bank does not view this slowdown as merely a cyclical phenomenon. Rather, it identifies a set of structural factors as the core drivers:
- A long-term deceleration in productivity growth
- Weakening competitiveness across firms and industries
- Policy uncertainty and institutional bottlenecks
- Structural constraints that prevent technological progress and investment returns from diffusing across the real economy
In this sense, the World Bank’s outlook naturally links the question of why growth is recovering so slowly to underlying productivity challenges.
OECD 2024 Report: The Root Cause of the Growth Slowdown—“Diffusion Failure”
Reviving productivity growth | OECD
Image Source : Reviving Productivity Growth 2024, OECD
This diagnosis by the World Bank closely aligns with the OECD’s 2024 policy synthesis report, Reviving Productivity Growth: A Review of Policies. The OECD argues that the recent slowdown in growth is not driven by a lack of innovation or technology, but by the failure of existing innovations to ‘diffuse sufficiently across the broader economy’.
Advanced technologies and managerial innovations tend to be concentrated among a small number of frontier firms and specific sectors, while failing to spread to the majority of firms and countries. The OECD characterizes this phenomenon as a “failure of productivity diffusion”, reframing the productivity challenge not as a technological issue, but as one rooted in ‘institutions’, ‘firm capabilities’, and ‘human capital’.
OECD 2025 Productivity Indicators Report: Structural Stagnation Confirmed by Data
OECD Compendium of Productivity Indicators 2025 | OECD
Image Source : 2025 Compendium of Productivity Indicators, OECD
The OECD’s 2025 Compendium of Productivity Indicators provides empirical support for this diagnosis. Based on a comprehensive analysis of labour productivity and multifactor productivity (MFP) trends across OECD member countries, the report shows that:
- Productivity growth remains subdued across most economies
- Gaps between countries and between firms continue to widen
- Efficiency gains relative to capital and labor inputs remain limited
These findings quantitatively confirm that the low growth outlook presented by the World Bank is not a temporary phenomenon, but rather reflects structural constraints embedded in current productivity dynamics.
Growth Is a Matter of Structure
From the OECD and the World Bank outlook, today’s growth slowdown is a question of how to improve the structures in which productivity actually operates; institutions, firm capabilities, and human capital.
- Improving the policy environment : Regulatory and institutional reforms are needed to lower barriers and constraints that hinder technology diffusion.
- Strengthening firm capabilities :In particular, greater support is required to enable small and medium-sized enterprises to more easily adopt new technologies and engage in innovation.
- Developing skills and human capital :Expanding workers’ skills and capabilities is essential, and labor markets and education systems must be aligned to support this process.
Implications for KGGTF
This analysis aligns closely with KGGTF’s core priorities of capacity building, policy transfer, and scalability. By strengthening human capacity as the foundation for organizational capability development, KGGTF supports the effective absorption and application of knowledge. As these capacities mature, successful policies and practices can be institutionalized, transferred, and adapted across contexts, enabling development solutions to spread across countries and regions and deliver scalable and lasting impact.
KGGTF will orient its performance management toward medium- to long-term outcomes, with a focus on productivity, diffusion, and capacity development, and will seek to ensure that its operations go to support structural transformation in growth.