This blog series takes a look at some of the issues in focus at our upcoming Istanbul Development Dialogues, a global development forum for shaping sustainable development futures through policy and innovation in Europe and Central Asia, bringing together leaders, experts and changemakers to forge new partnerships and solutions.  `

For the first time in three decades, global progress in human development has stalled.

According to UNDP’s 2025 Human Development Report, between 2020 and 2023, the world’s Human Development Index (HDI) grew at its slowest pace in thirty years, leaving us “off track by nearly a generation” compared to pre-pandemic trends.

What is causing this? Global progress faces a triple squeeze: jobless industrialization, mounting debt and fractured trade systems.

The Europe and Central Asia (ECA) region actually continues to lead among developing regions, with an average HDI of 0.818, above both global average (0.756) and developing-country average (0.712). But beneath these averages lie diverging realities across the region. 

In the South Caucasus and Western CIS, progress has slowed under conflict spillovers, high debt service and energy dependence. For example, in Ukraine years of stagnation and war have kept the HDI around 0.78. In Central Asia, we are seeing steady gains, but they are constrained by low economic diversification and climate vulnerability. The Western Balkans shows solid HDI levels but a shrinking workforce: the region has lost 14 percent of its working-age population since 2000. The structural demographic change – shrinking working-age population and increasing aging population – puts pressure on their social care system and pose a challenge to future gains.

Our region’s progress remains impressive, but fragile. Human development gains can no longer be taken for granted.

Gender and inclusion: closing persistent gaps

ECA holds the lowest Gender Inequality Index worldwide.  Despite improving by 3.4 percent since 2020, women’s labour-force participation remains only 45.7 percent, below the global average. 
The HDR 2025 identifies this as both a structural constraint and an untapped opportunity, particularly as women’s participation has yet to return to pre-pandemic levels. 

We see this challenge in North Macedonia, with female labour-force participation still below its 2019 level — a reminder that without stronger care systems, recovery remains uneven across the region. Investing in the care economy, as Moldova has done through expanded childcare and Serbia and Albania are beginning to explore with integrated care pilots and service access improvements respectively, can turn demographic decline into inclusive growth by increasing women’s participation in the labor market and thus their economic well-being.`

After all, gender equality is not only a social imperative — it is an economic one.

Future readiness: education, digital skills and AI preparedness

In education and skills preparation, the region holds its levels quite well. Education remains one of the region’s strongest assets, with expected years of schooling reaching 15.6, second only to OECD averages. Yet the mean years of schooling (10.7) reveal persistent urban–rural divides.

ECA is the most digitally connected developing region, but digital skills lag behind infrastructure. Curricula and training systems in the Western Balkans and Central Asia are still catching up with the AI capabilities frontier, which blends computational, creative and critical-thinking skills. AI preparedness varies widely — leaders such as Kazakhstan, Türkiye and Serbia outperform peers, yet still remain below advanced-economy benchmarks. 
On the policy side, the current landscape also lags behind. Only 38 percent of ECA countries have a national AI strategy, compared with 60 percent among OECD members.

Without coordinated frameworks, digital transformation could deepen inequality rather than bridge it.

AI for human development and inclusion

In this human development context, technology — especially artificial intelligence — is both a promise and a test of policy choices. This year’s HDR theme — “A Matter of Choice: People and Possibilities in the Age of AI” — looks at how AI can be a powerful equalizer, but only if we make deliberate choices to use it for the common good. AI has moved from laboratories to living rooms. The HDR 2025 finds that nearly one in five people globally already use some form of AI — from digital assistants and translation tools to education platforms and health diagnostics. 
But an AI paradox is observed in low/medium-HDI and high-HDI countries: people in these countries expect more AI use in their life, but they may not have the necessary digital infrastructure and skills to materialize AI’s benefits. 
People are broadly optimistic about AI’s potential to improve daily life, yet they express concerns about fairness, privacy and control.

AI’s promise lies in its ability to amplify human capabilities. In education, adaptive learning can personalize instruction and bridge learning gaps. In healthcare, predictive analytics can detect diseases earlier and support smarter resource allocation. In climate action, AI can enhance forecasting, optimize renewable-energy use and support disaster-risk reduction.

Yet the same systems can reinforce bias and exclusion if left unregulated, replicating the inequalities it promises to solve. The HDR warns that AI development remains concentrated in a handful of countries and firms, creating new asymmetries in knowledge, capital and influence. The divide is not only technological, but also social and institutional. Global cooperation on AI governance, ethics, and capacity building is therefore essential.

A turning point for human progress

For Europe and Central Asia, there is opportunity to strengthen digital infrastructure and skills and ensure that AI becomes a tool for inclusion and empowerment. This means investing in AI literacy, establishing trust frameworks and promoting open-source and public-good AI applications that directly address development priorities — from urban planning to early-warning systems.

At the same time, however, we cannot ignore the challenges from sovereign debts and the demographic structure. The region has seen increasing public debts, and the world has entered an era of persistent inflation and high interest rates. The aging population places higher burden on government budgets to finance the social care system. These ongoing trends will continue to narrow the governments’ fiscal space for supporting development goals.

These downside risks to human development can be mitigated if countries harness innovative financing instruments and strengthen inclusive public services through sustainable, human-centred digital transformation and AI —an agenda that already has found a place in major global discussions.