Private Sector Development, Privatization, and Industrial Policy

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    Innovation Agencies: Cases from Developing Economies
    (World Bank, Washington, DC, 2019-11-13) Aridi, Anwar ; Kapil, Natasha
    Many high-income and developing countries have established agencies to promote innovation. This study examines the origin and evolution, organizational structure, policy interventions, delivery challenges, and evaluation mechanisms of 13 innovation agencies in developing countries and one case (SPRING in Singapore) for comparison purposes. This study does not assume that the only approach to improving innovation lies in a dedicated agency – each innovation system is governed differently and the same intervention may have very different results in different contexts. Rather, our goal is to capture how these agencies dealt with the major challenges that confront establishing an innovation agency in a developing country context, where innovation is often hampered by significant market, coordination, and institutional failures, investments in innovation tend to be limited, and the capabilities required for effective innovation are often lacking. The analysis is presented according to seven building blocks that emerged from the analysis of the cases’ patterns and dynamics as pre-requisites for the success of innovation agencies, including a clear but adaptable mission, capable staff, effective governance and management structures, diagnostic-based interventions, robust monitoring and evaluation (M&E), sustainable funding, and strategic partnerships and networks. A diagnosis of NIS gaps and global trends is required to design policy interventions.
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    Czech Republic: Assessment of the SME Policy Mix
    (World Bank, Washington, DC, 2019-10-01) World Bank Group
    This report provides an assessment of the policies devoted to supporting small and medium enterprises (SMEs) in the Czech Republic. It presents an original analysis of all national-level SME-related policy instruments, totaling 93 instruments operational from 2013 to 2017 and disbursing 108.5 billion CZK (4.71 billion USD), using an analytical framework that compares the SME policy mix to the country needs (see Annex 1 for framework and methodology). The analysis integrates three interrelated segments: 1) A country needs assessment to determine the national needs for SME policies. The needs assessment included a macro-level analysis of the Czech Republic's performance in productivity and trade; an analysis of national- and firm-level innovation performance; a firm-level analysis of productivity across firm sizes, sectors, and regions (leveraging original data from the Czech statistics office); and an analysis of market and institutional conditions that influence resource allocation and firm productivity. 2) A policy mix analysis to determine if the Czech Republic's SME policy mix matches the needs identified in the country needs assessment. The policy mix analysis included a review of relevant SME policy stakeholders, institutions, and governance; a review of national-level strategies; identification of the characteristics of SME policies instruments (administering agency, mechanism of support, beneficiaries, etc).; and a cluster analysis to evaluate the internal consistency of the policy mix and identify overlaps. 3) Recommended areas for policy action were developed using the needs assessment and policy mix analysis to improve the effectiveness of the policy mix and the business environment.
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    The Untapped Potential of Mauritania’s Entrepreneurial Ecosystem: Lessons from the Entrepreneur's Marathon
    (World Bank, Washington, DC, 2019-08) World Bank Group
    In Mauritania – a country dominated by the Sahara Desert and defined by tradition – players from across society are coming together to encourage innovation and set a new path for the country's development. From the public sector to local and international businesses, as well as the donor community, entrepreneurship is beginning to emerge as a crucial element in any strategy to address Mauritania's greatest challenges: socio-economic inclusion, poverty reduction, youth employment, economic diversification and climate change. Since independence, the country has pursued a traditional state-driven model that has failed to catalyze the necessary investments and private sector-driven solutions to these problems. Due to structural limitations of competition in the economy, the country's private sector is a concentration of large business groups that dominate the trade, banking and procurement markets. New entrants are crowded out, with formal micro, small and medium enterprises (MSMEs) in Mauritania numbering a mere 3,000. Informal self-employment and micro-businesses in agriculture, livestock and commerce currently make up the vast majority of jobs among the poorest households in Mauritania. Smaller independent firms continue to encounter obstacles, discouraging the emergence of local suppliers and directly impacting international investors who face higher operating costs. Poor quality in education and professional training reinforce these challenges, limiting job opportunities even in expanding sectors in the economy. A lack of expertise and practical skills are compounded by complex labor regulations, making it even harder for businesses to recruit and retain young job-seeking Mauritanians.
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    Creating Markets in Kenya: Unleashing Private Sector Dynamism to Achieve Full Potential
    (International Finance Corporation, Washington, DC, 2019-07-31) International Finance Corporation
    Kenya has the opportunities and resources to stimulate sustainable economic growth and development, but its potential has been constrained by under-investment and low firm-level productivity. Altogether, its development has not been sufficiently sustainable or equitable to transform the lives of ordinary citizens. Poverty remains high, with thirty-six percent of Kenyans living under the national poverty line, whereas the richest ten percent of the population receive forty percent of the nation’s income. This country private sector diagnostic (CPSD) sheds light on how the private sector can more effectively contribute to advancing the country’s developmental goals. Applying a sectoral lens, it puts forward operational recommendations highlighting strategic entry points for diversification and growth and addresses key constraints to private sector engagement. It also seeks to inform World Bank and IFC strategies, paving the way for joint programming to create markets and unlock private sector potential.
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    Creating Markets in Burkina Faso: Growing Burkina Faso’s Private Sector and Harnessing it to Bolster Economic Resilience
    (International Finance Corporation, Washington, DC, 2019-07-01) World Bank ; International Finance Corporation
    A small landlocked economy in the heart of West Africa’s French-speaking Sahel, Burkina Faso is characterized by its modest economic size, with a rapid population growth, with one of the highest per capita birth rates in the world. Burkina Faso needs to create 300,000 jobs annually to match its demographic growth, while about ninety percent of its workers are in the informal sector. Despite sustained robust economic growth over the past two decades driven by cotton and gold exports, private investment is low. Compounding the considerable development challenges that it faces, Burkina Faso is currently confronted by acute security and climatic threats, together with emerging fiscal risks. This country private sector diagnostic (CPSD) therefore investigates whether opportunities exist for the private sector to contribute more substantially to Burkina Faso’s development. The CPSD proposes a platform for action aimed at boosting Burkina Faso’s development through greater private sector investment. The remainder of the report provides an overview of: (i) the private sector environment; (ii) the cross-cutting constraints to the private sector; (iii) the critical enabling sector bottlenecks to the private sector; (iv) the opportunities for the private sector; and (v) a series of priority private sector focused recommendations.
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    Yemen Bringing Back Business Project: Risky Business - Impact of Conflict on Private Enterprises
    (World Bank, Washington, DC, 2019-06) Sofan, Sami A
    Escalating in March 2015, the conflict spanning across Yemen has resulted in massive casualties, a wave of internally displaced persons, substantial infrastructure damage, and hampered service delivery across both the economy and society. The business climate across Yemen has dramatically deteriorated as a result of the conflict, and businesses throughout the country experienced severe disruptions that for many firms constituted a force majeure situation, hindering their ability to either operate effectively or plan ahead for the future. Addressing these challenges requires substantial effort by the GoY and the international community to support the resilience of the private sector and prevent its further deterioration and losses. The loss of private sector wealth and activity of this magnitude is part and parcel to the food insecurity, poverty, public health issues, and defunct service provision that plagues the war-fatigued population. As such, both in the future post-conflict setting and at present, engaging and revitalizing the Yemeni private sector is a crucial and indispensable step towards the successful reconstruction and recovery of Yemen, and the long-term well-being of the population.
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    Creating Markets in Morocco: A Second Generation of Reforms - Boosting Private Sector Growth, Job Creation and Skills Upgrading
    (International Finance Corporation, Washington, DC, 2019-06-01) International Finance Corporation ; World Bank
    Morocco has steered significant resources towards large investments in economic sectors identified as strategic to growth, and for increased productivity and value addition. Despite Morocco’s strikingly high investment rate, one of the highest in the world at an average of thirty-four percent of gross domestic product (GDP) annually since the mid-2000s, the returns in economic growth, job creation and productivity, have been disappointing. The Moroccan economy has performed particularly poorly in terms of job creation. A more vibrant private sector is needed to create more jobs. This CPSD identifies policy recommendations and investment opportunities that would foster job creation by the formal private sector and improve labor supply in skills that would anchor Morocco as an emerging economy, to continue its path of growth, and to move into higher value-added and innovative sectors.
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    Towards a Private Sector led Growth Model: Bosnia and Herzegovina Innovation and Entrepreneurship Assessment
    (World Bank, Washington, DC, 2019-04-20) Aridi, Anwar ; Ong Lopez, Anne
    The growth landscape of Bosnia and Herzegovina (BiH) is undermined by adverse productivity developments and weak private sector development. BiH is still finding a pathway to rebalance its current public sector-led growth model to a private sector-led one. In this light, enhancing innovation and entrepreneurship (I and E) is a key priority for BiH. This report provides a comprehensive assessment of the current I and E landscape in BiH and offers a roadmap for innovation policy reforms. It showcases current I and E outcomes in BiH and provides analysis of whether current support policies and programs in BiH (including public budget allocations) address existing market failures. The report concludes that recent policy measures have not effectively addressed BiH's needs for supporting I and E, specifically in terms of access to skills, ease of business regulations, and predictability of business environment. To this end, this report offers a roadmap for policy reforms as well as suggestions for pilot programs.
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    Creating Markets in Angola: Opportunities for Development Through the Private Sector
    (International Finance Corporation, Washington, DC, 2019-04-01) International Finance Corporation
    This Country Private Sector Diagnostic (CPSD) identifies opportunities to stimulate sustainable economic growth and development by harnessing the power of the private sector in Angola. Applying a sectoral lens, it leverages the private sector’s knowledge and experience to accelerate transformational investment. It also puts forward operational recommendations highlighting strategic entry points for diversification and growth, while addressing key constraints to private sector engagement. The CPSD discusses implementation principles inspired by international good practices. It informs World Bank and IFC strategies, paving the way for joint programming to create markets and unlock private sector potential.
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    Creating Markets in Ethiopia: Sustaining Progress Towards Industrialization
    (International Finance Corporation, Washington, DC, 2019-03-20) World Bank ; International Finance Corporation
    Ethiopia has made impressive strides along its developmental path. Job creation is now the critical development challenge, raising the importance of the private sector agenda. After more than a decade of sustained public sector-led growth, the government is revising its growth strategy to allow for a much greater role for the private sector in driving growth and job creation. Broadening the base for job creation beyond light manufacturing toward a wider range of high productivity agricultural and services activities will help to overcome the uneven spatial distribution of manufacturing jobs across the country. Ethiopia has a number of advantages that it can leverage to attract the investment needed for job creation. These include rapidly improving transport and energy infrastructure, low labor costs, a large and growing domestic market, cheap power, an ideal climate, and preferential market access to the European Union, the United States, and other major markets. The purpose of the Ethiopia country private sector diagnostic (CPSD) is to support the transition to a private sector- driven growth model that advances the country’s development objectives and, in particular, delivers the necessary jobs. It identifies investment opportunities that can materialize in the short term, and the reforms that are needed to enable these opportunities to emerge. It also discusses how specific actions by the public sector, in collaboration with the private sector, in filling gaps in public investment, reforming business regulations and trade policy, addressing market failures, and enhancing the efficiency of key backbone services and sectors, while tackling gender inequalities, can fully unleash the potential of private sector investment.