Private Sector Development, Privatization, and Industrial Policy
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Publication
Bringing HOPE to Haiti's Apparel Industry : Improving Competitiveness through Factory-level
(World Bank, 2009-11-01)In October 2008 the United States Congress enacted legislation that gave the Republic of Haiti expanded, flexible access to the U.S. market for its apparel exports. The Second Haitian Hemispheric Opportunity through Partnership Encouragement act of 2008 (HOPE II, updated from the original legislation passed in 2006) was welcomed for its potential to revitalize a decaying industry, attract new foreign investment, expand formal sector employment, and jumpstart growth and opportunity for Haiti's people. The purpose of the analysis of Haiti's apparel value-chain in this report is to provide a comprehensive view of the advantages and challenges of manufacturing in Haiti relative to manufacturing in the Caribbean and Central America and elsewhere. It situates Haiti's attributes and suggests priorities for improving its competitiveness relative to that of other suppliers. An apparel buyer in the United States today juggles an impressive list of potential suppliers from China and elsewhere in Asia and from Latin America and beyond. Each country offers a unique combination of workforce skills, business environment, costs, 'full-package' services, proximity to raw material or to end markets, preferential access to the U.S. market, and thus competitiveness. This report helps readers to see how Haiti fits into this ever-changing global apparel market kaleidoscope. -
Publication
Costa Rica : Competitiveness Diagnostic and Recommendations
(World Bank, 2009-07-01)Costa Rica is a clear success story. The country enjoys the highest standard of living in Central America and one of the highest in Latin America and the Caribbean (LAC). Not surprisingly, poverty levels are among the lowest in LAC. Indeed in 2004, Costa Rica had the second lowest poverty headcount in LAC with just nine percent of households below the US$2 poverty line. This report is a contribution to those efforts. Based on multiple data sources, it assesses the main obstacles that affect private sector growth in Costa Rica and provides policy options and targeted interventions for improving the business environment and increasing competitiveness, with the goal of achieving sustained and broad-based growth. In this regard, the main focus of the report is on the long-term instead of on cyclical issues. This report outlines a program to address the critical bottlenecks that hamper Costa Rica in diverse fields including infrastructure, technological innovation and quality, human capital, red tape, and access to credit. The result is a rich and encompassing agenda. The rest of the report is structured in the following way. In section two, the report diagnoses the principal obstacles to export growth and of competitiveness in Costa Rica. The diagnostics reveal four areas most in need of reform: infrastructure, human capital and innovation, business regulation, and access to finance. Sections three to six cover each of these areas. Finally, the report closes with a section on conclusions and recommendations. -
Publication
Organization of Eastern Caribbean States - Increasing Linkages of Tourism with the Agriculture, Manufacturing, and Service Sectors
(Washington, DC, 2008-09)Tourism has become the leading economic sector of the Organization of Eastern Caribbean States (OECS) islands, thus expanding linkages with the local economy seems crucial going forward. Tourism has replaced agriculture as the main economic driver within all the islands comprising the OECS. In the early 1990s, agriculture contributed nearly 12 percent of Gross Domestic Product (GDP) overall; however by 2007 its share dropped to only 5 percent of GDP. Conversely, in the same year the tourism sector of these islands accounted for an estimated 45 percent of GDP, and around 60 percent of foreign exchange earnings, as a result of the more than 2.6 million tourists that visited these islands. This study analyzes the purchasing patterns and demand for agriculture, manufacturing and services by the tourism industry, both directly and indirectly, through a structured survey and in-depth interviews. A detailed survey covering 70 hotels, marinas, and other tourism operators analyzed the current purchasing pattern of agricultural and food products (13 categories from fruits to canned goods), services (12 categories, from legal support to flower arrangements), and manufactured goods (8 categories). From the supply side, 16 small and medium enterprises were surveyed on the obstacles they were facing for their development, and on their revenue and cost structures. Three different missions covered the 6 largest OECS islands, conducted over 80 interviews and included experts from the agricultural sector including Food Agriculture Organization (FAO) and Private Sector Development (PSD). Additionally, a value chain analysis evaluated the economics of key products. This combined approach provided an extensive source of data and information on linkages that was not available in the islands, as well as insights to improve them going forward. Overall, there seem to be interesting opportunities to increase linkages between tourism and other sectors of the OECS economies. Most hospitality operators, particularly hotels, demonstrate high willingness to increase the share of products and services purchased from local origin; and in addition, local suppliers of goods and services are willing to focus more their offer on the needs of the tourism industry. This study intended to provide some initial conclusions about specific economic activities and particular ways to increase such linkages in the agricultural and food, manufacturing, and services sectors. -
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South Africa : Enhancing the Effectiveness of Government in Promoting Micro, Small and Medium Enterprise
(Washington, DC, 2007-02)This study focuses in particular on the question of whether incentives and support programs have: (a) been correctly targeted to address the diverse and specific needs of small, especially micro, enterprises; (b) been implemented efficiently by the responsible agencies in terms of their delivery and impact, and (c) have been effective in helping smaller firms access a wider market for their products and services. The findings of the micro-enterprise survey, the review of the various incentive programs and the value chain analyses indicate that: (a) among specific constraints faced by the small, micro and medium enterprises (SMME) sector, the skills gap and the issue of access to finance are of particular relevance; and (b) while the economic rationale that existed in 1995 for SMME support remains valid, there is a need to find cost-effective and well-targeted programs that meet that rationale. The issue of skills development, in particular, is central to the medium-term agenda as a means of raising productivity and, hence, employment in segments of industry - both in the formal and informal sectors. As regards the Department of Trade and Industry (DTI) programs, there is a need to improve the effectiveness of promotion, strengthening selection criteria, and modulate the process of scaling up of individual programs. As regards other incentives, implementation of the Duty Credit Certification Scheme (DCCS) incentives has not been highly effective in ensuring the compliance of beneficiaries with the training and skills development requirements of the scheme; and this will need to be tightened up in the future. -
Publication
International Workshop on Public-Private Dialogue : Proceedings Including the Charter of Good Practice in Using Public-Private Dialogue for Private Sector Development
(Washington, DC, 2006-05)There has been growing interest from stakeholders around the world in recent years in how to build momentum for private sector development in states with poor investment climates. Dialogue between the public and private sectors, in various forms, has often been integral to attempts to build such momentum. It became increasingly clear that there was a demand from the field for guidance based on international best practice. In 2004-2005, responding to this demand, the World Bank, Department for International Development (DFID) and Organization for Economic Co-operation and Development (OECD) development centre independently conducted or commissioned reports drawing together lessons learned from field experiences in using public-private dialogue to promote private sector development reform efforts. While numerous case studies had existed, this was the first time comprehensive efforts had been made to synthesize lessons. The papers were: competitiveness partnerships, reforming the business enabling environment, and dialogue public-prive dans les pays en developpement. The development of the three papers in a short period indicated a growing recognition among the international donor community of the importance and potential of public-private dialogue as a tool for promoting private sector development with the ultimate aim of poverty reduction. -
Publication
Proceedings Including the Charter of Good Practice in Using Public-Private Dialogue for Private Sector Development
(Washington, DC, 2006-05)There has been growing interest from stakeholders around the world in recent years in how to build momentum for private sector development in states with poor investment climates. Dialogue between the public and private sectors, in various forms, has often been integral to attempts to build such momentum. It became increasingly clear that there was a demand from the field for guidance based on international best practice. In 2004-2005, responding to this demand, the World Bank, Department for International Development (DFID) and Organization for Economic Co-operation and Development (OECD) development centre independently conducted or commissioned reports drawing together lessons learned from field experiences in using public-private dialogue to promote private sector development reform efforts. While numerous case studies had existed, this was the first time comprehensive efforts had been made to synthesize lessons. The papers were: competitiveness partnerships, reforming the business enabling environment, and dialogue public-prive dans les pays en developpement. The development of the three papers in a short period indicated a growing recognition among the international donor community of the importance and potential of public-private dialogue as a tool for promoting private sector development with the ultimate aim of poverty reduction. -
Publication
The Cost of Doing Business in Africa : Evidence from the World Bank’s Investment Climate Data
(Washington, DC, 2005-11)This paper looks at firm-level evidence on the African business environment from surveys undertaken for Investment Climate Assessments by the World Bank in 2000-2004. These surveys confirm a pattern of generally low "factory-floor" productivity, and show that this is partly due to business environment-related losses. The surveys also show the importance of high indirect costs in further depressing the "net" productivity of African firms relative to those in other regions. Reforms are moving forward but more slowly than is needed to accelerate growth; this raises the possibility that countries settle into a low-level political equilibrium sustained partly by structural and ethnic cleavages. -
Publication
China : Integration of National Product and Factor Markets, Economic Benefits and Policy Recommendations
(Washington, DC, 2005-06)Lack of market integration has been a long-standing concern in China. The existing empirical evidence on the degree and trend in local protectionism and market fragmentation, has painted a mixed picture - some concluding to increasing fragmentation, others pointing at increasing integration. This report uses a comprehensive set of survey data, and a provincial data set to examine the extent and trends in market fragmentation. It finds mixed results across the three key markets in product, labor and capital: Since the early 1990s, the product market is increasingly integrating, with converging prices across the country, and increasing regional specialization. The survey data suggests strongly that regional protectionism declined significantly over the past 10 years. The labor market, while getting more integrated over the reform period, still shows significant fragmentation across regions and across sectors. The remains of the hukou system, the limited access migrants have to social services, and the highly uneven quality of public services reinforce labor market segmentations. The capital markets still show large misallocations in capital across industries, and across China's regions. More significantly, the empirical evidence indicates that the degree of capital market fragmentation has actually increased in the 1990s compared to the 1980s. As China is moving towards a Xiaokang Society, national market integration takes on increasing prominence. Indeed, the gains for China of better integration of goods and factor markets can be huge - much larger than the gains expected from the World Trade Organization (WTO) accession for which the country worked so hard. The report conducts policy simulations to estimate these gains. The report also estimates the economic gains from greater financial market integration. It conducts a simulation by changing the long standing urban bias policy through the movement of investment from cities to rural areas, while keeping the total amount investment constant. As a continental economy, it is time China starts its own determined effort to more rapidly integrate its markets, to maximize efficiency and growth, and ensure that the welfare gains get distributed more evenly across the nation. -
Publication
Kenya : Growth and Competitiveness
(Washington, DC, 2005-01)The conclusions of the recently-conducted Kenya Investment Climate Assessment (ICA), based on a survey of 368 firms, have a bearing on the country's growth agenda. The results have a bearing on the key issue of labor productivity and its implications on firm performance, revealing that capital-intensity in Kenya was relatively high, compared to the rest of Sub-Saharan Africa (SSA) and also to firms in China and India, but also relatively less productive. Labor productivity in Kenya had not improved materially over the past decade or so, so that unit labor costs compared very unfavorably with those prevailing in Asian countries like India, China, Indonesia or Thailand. Major constraints to doing business cited by firms in the survey related to infrastructure, tax administration and corruption. On infrastructure, power supply was seen as the most problematic, on account of the high number of outages, compounded by high losses in transmission and distribution. 64 percent of firms reported damage to equipment on account of power outages or fluctuations valued at nearly $15,000 per firm per year. To cope with these outages 70 percent of firms had acquired generators, further adding to the cost of doing business. Road and rail services were reported by most firms as being of very poor quality, and nearly a quarter of firms reported having to spend their own resources to improve the quality of roads in surrounding areas. On corruption, three quarters of firms surveyed reported this as a problem, though only about half reported having to spend resources in terms of unofficial payments. -
Publication
Peru - Microeconomic Constraints to Growth: The Evidence from the Manufacturing Sector
(Washington, DC, 2004-06-15)This study looks at the investment climate in Peru using a unique database of manufacturing firms. Through detailed analysis, it establishes four key areas that pose constraints to investment and growth in Peru and proposes solutions. The four main areas are: 1) an uncertain legal and regulatory framework, 2) low level of market integration and high logistics costs; 3) low levels of investment and activity in innovation and technology absorption and, 4) difficulties in accessing finance. The main findings and the full set of policy recommendations center on reducing uncertainty by more clearly articulating the Government legislative agenda; continuing and intensifying efforts to improve court processes; facilitating the registration and operational regulation of firms by further reducing red tape; reducing corruption awarding public goods and services contracts through a revision of public procurement at the central, regional and municipal levels; increasing the focus on quality and exports; and reforming moveable asset registries.