Growth and development matter. But what matters even more is what growth delivers, specifically better jobs, rising incomes and more opportunities for people.

As UNDP Administrator Alexander De Croo put it in his Annual Session of the UNDP Executive Board 2026, “jobs are created by markets. Innovation comes from enterprise. And growth lasts only when local economies and sustainable practices are integrated into value chains.”

This goes to the heart of UNDP’s Prosperity for All vision: more productive, innovative economies; businesses that can grow and compete; and people with the skills and opportunities to prosper.

For the Western Balkans, three interconnected levers and strategic priorities can help turn this vision into action: upgrade businesses, upskill people and integrate economies.

Upgrade businesses

Small and medium-sized enterprises are the backbone of the region’s economies. Yet they operate at only around a quarter of the productivity of their EU counterparts. At the same time, high-technology products account for only a small share of manufactured exports across much of the region. The region’s competitive advantage can no longer rest on cost alone. It must increasingly be anchored in innovation, technology and value.

That means identifying sectors and value chains with the greatest potential to create better jobs and helping businesses innovate, use resources more efficiently and move towards higher-value products and services.

In Montenegro, UNDP is partnering on the development of the country’s Smart Specialisation Strategy, while also helping partners advance more resource-efficient industry through industrial symbiosis.

In Bosnia and Herzegovina, North Macedonia and Serbia, we are working with financial institutions to help businesses invest in greener, more productive technologies.

This is not just policy on paper. It is about making strategic choices that help businesses become more productive, mobilizing the finance needed to turn those choices into investment and growth, and ultimately creating better jobs.

Upskill people

Ask businesses what is holding back their growth and one answer comes up again and again: they cannot find the labour and skills they need.

Yet millions of potential workers, many of them women and young people, remain outside the labour market. Here lies both a challenge and an opportunity to build human capital for the future, and the development of artificial intelligence perfectly captures this landscape of shifting industries and new job opportunities.

About half of SMEs in the region already use some form of AI, while only around a third of adults have basic digital skills. As UNDP’s 2025 Human Development Report underscores, the future will depend less on what AI can do and more on the choices we make to ensure people have the capabilities and skills to make the most of it.

In Albania, UNDP is linking skills policy to economic priorities to help ensure vocational education and training builds the talent needed for the higher-value jobs of tomorrow, not just today. In Serbia, we are supporting efforts to build an AI-ready workforce.

Integrate markets

Businesses need markets to grow. Connecting firms to larger markets, investment networks and value chains can help them reach new customers, attract investment and become more productive. Those connections can be within the Western Balkans, across Europe or globally.

Our forthcoming Western Balkan Futures: Development Pathways study, developed with the Vienna Institute for International Economic Studies, explores several possible futures for the region through 2040, from continuing along today’s course, to deeper integration through the Common Regional Market and greater access to the EU Single Market, to EU membership.

The scenarios point to an important finding: greater integration could generate significant gains.  But access alone is not enough. Businesses need the capabilities to compete. They need skills, technology and finance, and increasingly they need to adapt to changing environmental and responsible-business requirements.

In Bosnia and Herzegovina, for example, UNDP is helping businesses decarbonize, adapt to new requirements affecting international trade and remain competitive.

And when we think about industries driving growth, we should not think only about manufacturing and energy. What about one of the region’s most valuable assets: creativity? In Kosovo*, seed finance and mentorship are helping creative entrepreneurs turn talent and ideas into competitive businesses that can reach regional and international markets while creating jobs at home.

Integration is not an end in itself. The question is how regional and international economic connections can help businesses grow and create greater prosperity at home.

From growth to prosperity

Upgrade. Upskill. Integrate. More productive and innovative businesses create better jobs. Better skills help businesses innovate, grow and compete. And larger, more integrated markets open new opportunities for businesses and people.

The good news is that this transformation is already underway. UNDP can help accelerate it by working with partners to identify where productivity can grow and better jobs can be created, strengthen skills and productive capacities, bring public and private actors together, and mobilize investment.

Because development is not abstract, it ultimately depends on whether economic progress translates into better jobs, higher incomes, and greater prosperity for people.
 

* All references to Kosovo shall be understood to be in the context of the Security Council Resolution 1244 (1999).