Private Sector Development, Privatization, and Industrial Policy
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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. -
Publication
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
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
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. -
Publication
Zambia : The Challenge of Competitiveness and Diversification
(Washington, DC, 2003-01-10)This study was designed to go below the radar of Zambia's macroeconomic developments to examine trends, constraints, and opportunities in specific economic subsectors. It sought to build upon existing and planned analyses within the country in order to better understand: 1) the underlying bases for competitive advantage and disadvantage in the evolving Zambian economy; 2) the likely sustainability of those patterns of economic diversification which have already taken place; 3) what linkages have and have not been formed within the agricultural and mining sectors which might still be a basis for future growth; 4) the specific effects of certain macroeconomic developments and "external" events on different stakeholders and the types of responses they have made to these; and 5) what measures could be taken to improve competitiveness within the Zambian economy and accelerate future growth. The work was designed to complement on-going analytical work, especially by the Export Board of Zambia and the Zambia National Farmers Union, ans also complement on-going work to assess the constraints and opportunities facing Zambia's tourism sector. The present study draws upon available data, an updated analysis of agricultural production costs and profitability, and surveys of private agribusiness, non-traditional export, and mining (and mining-related companies. A parallel analysis was undertaken on the food and agricultural import demand into South Africa, a potential trade destination. -
Publication
Indonesia : Private Sector Development Strategy
(Washington, DC, 2001-01-04)The report reviews the Bank's private sector development strategy in Indonesia, stipulating that the country's potential will not be realized without a pattern of private sector activity, - different from the past - but, taking the opportunity offered by the crisis to make fundamental changes in the business environment, and in how business is conducted. The first priority calls for the banking, and corporate sectors to speed up the resolution of corporate debt, and ease financial flows for investment, and working capital to resume. Second, the structural inefficiencies, partly conducive to the crisis, and to its long lasting effect, need to be overcome; therefore, reforms should enable Indonesia to become a modern market economy, able to avoid future crises. This encompasses fighting corruption in the public administration, ensuring the rule of law through the court system, reinforcing property rights, and dispute resolution mechanisms, and, ensuring transparency and corporate governance. Third, broad-based, and sustainable economic growth need to be ensured by measures such as removal of obstacles to small, and medium enterprise (SME) activity, as well as SME development promotion, including physical, and social infrastructure building. Finally, the creation of an infrastructure, and regulatory framework to take full advantage of new information/communications technologies, is paramount. -
Publication
Republic of Tunisia - Private Sector Assessment Update : Meeting the Challenge of Globalization, Volume 1. Executive Summary and Proposed Reform Agenda
(Washington, DC, 2000-12-14)This private sector assessment (PSA) aims at evaluating conditions for private sector development in Tunisia, how they evolved since 1994, and what are the remaining constraints to private investment. It lays out an elaborate framework, placing private sector development in Tunisia, within the context of global economic integration, while facing increased competition from international competitors (particularly those accessing the European market). The analysis of characteristics, and performance of the private sector reveals that although traditionally, Tunisian exports to Europe have been strong, they are now challenged by competition from Asian, and Central/Eastern European countries, a factor exacerbated by the continued anti-export bias of the domestic economy, in light of other countries' rapid investment incentives, which enable private activity to access the opening European market. Thus, improved competitiveness in the country is a major issue. The report proposes reforms in incentives for private sector growth, and in governance; discusses the need, and measures to expand financial access for small/medium enterprises; and proposes options to lay the foundation of a long-term private sector growth strategy. The report contains three volumes, the Executive Summary, and Proposed Reform Agenda; the Main Report; and, Annexes. -
Publication
Republic of Tunisia - Private Sector Assessment Update : Meeting the Challenge of Globalization, Volume 2. Main Report
(Washington, DC, 2000-12-14)This private sector assessment (PSA) aims at evaluating conditions for private sector development in Tunisia, how they evolved since 1994, and what are the remaining constraints to private investment. It lays out an elaborate framework, placing private sector development in Tunisia, within the context of global economic integration, while facing increased competition from international competitors (particularly those accessing the European market). The analysis of characteristics, and performance of the private sector reveals that although traditionally, Tunisian exports to Europe have been strong, they are now challenged by competition from Asian, and Central/Eastern European countries, a factor exacerbated by the continued anti-export bias of the domestic economy, in light of other countries' rapid investment incentives, which enable private activity to access the opening European market. Thus, improved competitiveness in the country is a major issue. The report proposes reforms in incentives for private sector growth, and in governance; discusses the need, and measures to expand financial access for small/medium enterprises; and proposes options to lay the foundation of a long-term private sector growth strategy. The report contains three volumes, the Executive Summary, and Proposed Reform Agenda; the Main Report; and, Annexes.