This paper explores the role of productivity gains in driving economic growth in Brunei Darussalam, a resource-rich economy. While Brunei’s growth has traditionally relied on primary inputs such as labor and capital, boosting total factor productivity (TFP) is increasingly critical for sustaining long-term economic growth. The analysis highlights significant improvement in labor productivity following the COVID-19 pandemic, primarily driven by TFP gains in the non oil-and-gas sector. This reflects tangible gains from capital deepening through economic diversification efforts in new technologies and infrastructure.

Despite progress, challenges remain. Continuing reforms are crucial to foster greater competition and flexibility in the labor market. Deliberate policies that align education and training with industry needs are essential for closing manpower gaps and enhancing human capital development. Promoting technological innovation is vital for sustaining productivity gains in non oil-and-gas sector. A “whole-of-nation” approach, aligned with the Digital Economy Masterplan 2025, will remain key to enhancing digital infrastructure, fostering innovation, and encouraging MSMEs to adopt digital technologies. Complementary policies to improve access to finance, reduce regulatory barriers, and incentivize research and development are critical for modernizing industries and creating high-value jobs. By prioritizing these strategic approaches, Brunei can address structural challenges, reduce resource dependency, and pave the way for sustainable economic growth.