 Prior to the transition, the education systems of Central and Eastern Europe and the former Soviet Union could be characterized as nearly perfectly relevant or externally efficient to their labor markets. Schools and universities produced workers for a centrally-planned economy and nearly everyone moved from the education system into some form of employment related to his or her field of study. However, as the centrally planned economies of the region transformed themselves rapidly into dynamic market economies, most public education systems were slow to recognize that the new economic environment demands broader, more flexible skills than those associated with the previous system. The lack of new skills and aptitudes has been a constraint to productivity growth and a contributor to unemployment throughout the region.
The top-down governance models used in the region's education systems were an important contributor to this delayed transition in education. Non-participatory governance prevented administrative and teaching staffs from shifting resources in response to local priorities; from choosing curricula according to local needs; and from targeting pedagogical resources to the areas which need them most. By contrast, decentralization, which has been primarily driven throughout the region by political, as opposed to educational motivations, has been marked by abrupt implementation which was not accompanied by adequate local financial autonomy. Inadequate investment in education by complacent policy makers has led to an erosion in physical infrastructure, the quality of teaching personnel and the availability of teaching materials.
 Improving quality and relevance in the the region's education systems requires effort in four broad areas of reform: (1) curriculum and teaching methodologies should be updated to focus on improving learning skills among students at all levels. Results of the OECD's Programme for International Student Assessment (PISA) assessment initiative show that, while students in the region are strong in terms of accumulated knowledge, they are much weaker than their counterparts in developed economies in terms of higher order thinking skills and applying their knowledge in new areas; (2) children need to be equipped with broad and flexible skills, delaying occupational specialization until tertiary levels where it can be funded both privately and publicly and where youth can make better choices about career opportunities; (3) in the context of declining birth rates throughout the region, education administrators will need to put more focus on using scarce public resources more efficiently – through development of per student funding mechanisms – so that more resources can be made available to invest in improving quality and relevance; and (4) scarce public resources for education should be better targeted to the students from high poverty areas which are nearly always correlated with underperformance in education. Education systems in the region should stop judging themselves only by how well their top performing students do, and start judging their performance by how well they improve the educational opportunities for the full distribution of students, including, those least able to help themselves.
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