From Transition to Transformation Decomposing Regional Productivity Growth in Central and Eastern Europe

This study investigates the structural drivers of regional productivity change across 156 NUTS-3 regions in six Central and Eastern European countries – Czechia, Poland, Hungary, Slovakia, Slovenia, and Romania – between 2000 and 2019. Employing a refined shift-share decomposition-based simulation, the research disaggregates total productivity change into three components: the composition effect, the competition effect, and the reallocation effect. The analysis reveals significant spatial disparities and temporal shifts in regional productivity dynamics. During the pre-crisis period (2000-2007), rapid productivity growth across the area, especially in Romania, was largely driven by sectoral reallocation and labour reallocation. In contrast, the post-crisis period (2012-2019) witnessed more spatially fragmented patterns, with competition-based productivity gains increasingly concentrated in urban centres and industrial hubs – especially those integrated into global automotive value chains. The findings underscore the importance of sectoral specialization and the differentiated impact of labour productivity. The study concludes that while structural convergence is evident in some lagging regions, spatial inequality persists.