Private Sector Development, Privatization, and Industrial Policy
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Publication
Vietnam: Science, Technology, and Innovation Report 2020
(World Bank, Washington, DC, 2021)The science, technology, and innovation (STI) report provide analytical support for Vietnam’s upcoming ten-year STI strategy 2021-2030 and the socio-economic development strategy (SEDS) 2021-2030. The STI report has been prepared in response to a request from the Ministry of Science and Technology (MOST). The new STI strategy is expected to contribute to a strengthened national innovation system (NIS) that will promote a more innovation-driven enterprise sector, and in turn lead to sustained high-growth in Vietnam. As the Coronavirus disease 2019 (COVID-19) triggered economic shock continues to spread globally and its impact deepens in Vietnam, the importance of innovation and technology adoption for business resilience as well as for productive growth has been amplified. This report will highlight specific changes in policies and present institutional options to strengthen technology adoption and innovation in enterprises to inform the new STI strategy 2021-2030 and the SEDS 2021-2030 in section one. Towards this end, section two presents the conceptual framework for the study. A brief overview of the current STI policy institutional framework is presented in section three. Section four reviews the state of Vietnam’s developing NIS and identifies the recurring gaps that hinder Vietnamese enterprises from adopting and applying technology. The coherence and quality of STI policies - the last pillar of the NIS - is examined in section five. Section six reviews the implication of the emerging domestic and global shifts and how they inform the new STI strategy. Section seven provides a roadmap of priority reform actions that are needed to reset the new STI strategy towards business innovation and technology adoption. -
Publication
Czech Republic: Assessment of the SME Policy Mix
(World Bank, Washington, DC, 2019-10-01)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. -
Publication
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)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. -
Publication
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)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. -
Publication
Towards a Private Sector led Growth Model: Bosnia and Herzegovina Innovation and Entrepreneurship Assessment
(World Bank, Washington, DC, 2019-04-20)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. -
Publication
Creating Markets in Ethiopia: Sustaining Progress Towards Industrialization
(International Finance Corporation, Washington, DC, 2019-03-20)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. -
Publication
Creating Markets in Nepal: Country Private Sector Diagnostic
(International Finance Corporation, Washington, DC, 2018-11)The purpose of this Country Private Sector Diagnostic (CPSD) is to assess opportunities and constraints holding back private sector growth. It conducts a diagnostic of the main cross-cutting constraints to private sector competitiveness and growth through data analysis, synthesis of existing research and stakeholder consultations. This exercise also identifies sectors that could play a key role in enabling Nepal’s growth, by either enabling other sectors or capitalizing on Nepal’s inherent comparative advantage to tap global markets. Sector deep dives help identify private sector constraints specific to these sectors, including sector-specific manifestations of cross-cutting constraints. The CPSD analysis finally identifies key recommendations on policy reforms and investments in public goods (including public-private partnerships) that could enable growth of a competitive private sector. -
Publication
Looking Beyond the Horizon: A Case Study of PVH’s Commitment in Ethiopia’s Hawassa Industrial Park
(World Bank, Washington, DC, 2017-06)The story of how the PVH Corp. (referred to throughout this document as PVH) came to leada group of its top suppliers to build factories and a fabric mill in Ethiopia’s Hawassa IndustrialPark (HIP) is the study of a strong collaboration between a private company looking to optimizeits business model and a government aiming to transform its economy through global strategic repositioning. The success of this story hinges upon the intersection of their goals and a shared vision of development that includes a strong commitment to social and environmental goals.PVH was motivated to invest in Ethiopia to respond to shifts in the global apparel sector, its growing desire to retool its business model and to address its concerns about compliance with social and environmental standards in its traditional sourcing locations. PVH had decided to rethink its business model and to look beyond the horizon towards a new region in which tolocate its manufacturing base. To have better oversight and enforcement, PVH moved to adopta fully integrated vertical supply chain, including direct investment in one of the manufacturingfacilities.Key to Ethiopia’s success in attracting this important investor was the government’s ability and willingness to strategically evaluate its foreign direct investment (FDI) needs and strategy and to take steps to evolve into an attractive location for higher value-added export-oriented investment.This case study explains a private investor’s site selection process. It assesses the elements PVH prioritized when deciding to commit to Ethiopia, and specifically to HIP. The case study further assesses the government of Ethiopia’s strategy, level of readiness, interest, and commitment, and sets out some key challenges that lie ahead for this partnership. The case study is structured in ten sections. Section second offers a brief background on the textile and apparel industry, including an explanation of its value chain. It provides a brief corporate profile of PVH and its current global footprint and business model. Section third describes the site selection process: PVH´s initial explorations in Africa, its consideration of several African countries, and its initial conversations and negotiations with Ethiopian authorities. Section fourth discusses the Ethiopian government’s strategy to attract and expand export-oriented investments, including efforts to bolster the country’s competitiveness. This section attempts to offer some explanation why Ethiopia was the right fit at the right time and its level of readiness to land such an investment. It provides a brief profile of PVH’s Africa point of entry, the HIP. Section sixth covers the challenges that lie ahead for this-project---potential setbacks that will affect not only the consolidation and growth of the textiles and apparel industry in Ethiopia, but also the government’s vision of becoming the “manufacturing powerhouse of Africa.” Section eighth concludes with some key lessons from PVH’s decision to invest in Ethiopia. Such lessons may be relevant to countries or regions interested inattracting FDI and may be of particular interest to other African countries in their quest to attract major investments in the textile and apparel sector. -
Publication
Shifting Kenya's Private Sector into Higher Gear: A Trade and Competitiveness Agenda
(World Bank, Washington, DC, 2016-04-01)Shifting Kenya’s private sector into higher gear: a trade and competitiveness agenda’ was born out of the World Bank’s Trade and Competitiveness (T&C) Global Practice recent stock taking of its work in Kenya. This was part of a Programmatic Approach that aimed to organize T&C’s knowledge, advisory, and convening services to address Kenya’s development challenges in the private sector space. By Sub-Saharan African standards, Kenya has a large private sector, which accounts for around 70 percent of total formal employment. As a result, the dynamics of the private sector are a key determinant of the trajectory of the Kenyan economy. The country’s product market regulations a restrictive for domestic competitors and foreign entrants, and the actions of cartels and behavior of dominant firms across sectors undermines competition and hurts consumers. The Kenyan Government recognizes these challenges and has invested significantly in unlocking these bottlenecks with impressive results so far and several important laws passed. Additional efforts to ease regulatory constraints and expedite important legislative changes could improve the investment climate at national and county levels. -
Publication
The Additionality Impact of a Matching Grant Program for Small Firms: Experimental Evidence from Yemen
(World Bank, Washington, DC, 2016-02-05)Matching grants are one of the most common types of private sector development programs used in developing countries. But government subsidies to private firms can be controversial. A key question is that of additionality: do these programs get firms to undertake innovative activities that they would not otherwise do, or merely subsidize activities that will take place anyway? Randomized controlled trials can provide the counterfactual needed to answer this question, but efforts to experiment with matching grant programs have often failed. This paper uses a randomized controlled trial of a matching grant program for firms in the Republic of Yemen to demonstrate the feasibility of conducting experiments with well-designed programs, and to measure the additionality impact. In the first year, the matching grant is found to have led to more product innovation, firms upgrading their accounting systems, marketing more, making more capital investments, and being more likely to report their sales grew.