Private Sector Development, Privatization, and Industrial Policy
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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. -
Publication
Ukraine : Opportunities and Challenges for Private Sector Development
(World Bank, Washington, DC, 2014-01-13)Ukraine has untapped growth potential. Ukraine has one of the most fertile agricultural lands in the world, an attractive geographical location in Europe, bordering the European Union, the largest market in the world with a Gross Domestic Product (GDP) of more than $16 trillion, and a large domestic market of almost 50 million consumers. This note argues that the stunted growth of the private sector goes a long way in explaining Ukraine's poor growth performance. The tepid private sector growth is reflected in: the stagnant structure of the country's exports, where old industries such as steel, machine building and chemicals continue to predominate, operating at low levels of industrial productivity, which has grown at a much slow pace than in peer countries in the last decade; the low inflow of high value-added Foreign Direct Investment (FDI), especially in export-oriented manufacturing; and the relatively limited role of Small Medium Enterprises (SMEs) in the development of the economy. All of these factors suggest that the market-driven process of entrepreneurship, innovation and productivity does not seem to work properly, undermining Ukraine's growth prospects. The note identifies weaknesses in the regulatory environment, limited access to finance and lack of competition as the main constraints to private sector development and offers short-and medium-term policy reform options. The note is structured as follows. The first chapter uncovers the roots of the tepid private sector growth. The following three chapters focus on the three main constraints to private sector development, reviewing weaknesses on the business regulatory framework, access to finance, and competition, and providing recommendations. The last chapter concludes. -
Publication
Sierra Leone Growth Pole Diagnostic : The Growth Poles Program
(Washington, DC, 2013-08)This First Phase Report on Sierra Leone growth poles is the result of a 9 months consultative process led by the Office of the President which specifically requested that the output of this diagnostic be in an engaging format. The fundamental concept of growth poles is that they exploit agglomeration economies and spillover effects to spread resulting prosperity from the core of the pole to the periphery. At the basis of this theory is the assumption that economic development is not uniform over a region. Rather, it concentrates around a geographic feature or economic hub. In particular, it frequently concentrates around a key industry, around which linked industries develop. A growth pole can be used to nurture direct and indirect linkages from the flagship industry to supporting sectors, which vastly expands the employment generation potential of new investments in said flagship industry. The expansion of this key industry implies the expansion of output, employment, related investments, as well as new technologies and new industrial sectors. -
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Zambia - More Jobs and Prosperity in Zambia : What Would it Take? Based on the Jobs and Prosperity : Building Zambia’s Competitiveness Program
(World Bank, 2011-06-01)While Zambia's economy performs well, in macroeconomic terms, low levels of productivity plague industry, and this constrains growth, diversification and prosperity. In recent years, economic growth has averaged 5-6 percent a year, business reforms are being implemented, and investment levels are at an all time high. However, according to the World Economic Forum's global competitiveness index 2010-2011, Zambia is not a competitive place in which to do business (ranking 115th out of 139 countries). Not surprisingly, business productivity tends to be low, and few Zambian industries are internationally competitive. Formal employment is shrinking and rural poverty is increasing. In summary, there is an urgent need to increase productivity, growth and employment. These questions continue to preoccupy policy makers, businesses and civil society especially in light of government's strategy to embrace private sector-led growth and facilitate competitiveness and diversification. The Jobs and Prosperity: Building Zambia's Competitiveness (JPC) Program is an effort to answer these questions and, at the same time, to achieve some concrete results that improve industry productivity and competitiveness. The Zambian government, with support from donors, has, for a long time, been trying to raise prosperity by encouraging more productive businesses, more competitive and diverse industries, and greater employment. Yet these efforts have not generated the results sought. The goal of the JPC Program is to achieve some meaningful progress towards improving industry productivity and competitiveness. The Program focuses on four industries so as to build traction and keep the scope of work manageable. The industries were selected by a group of Zambian stakeholders. The Program facilitated a process through which Zambian stakeholders identified some narrowly defined target results that, if achieved, could help these industries become more productive and then supports initiatives to achieve these results. -
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
Argentina - Small and Medium-Sized Enterprises in Argentina : A Potential Engine for Economic Growth and Employment
(Washington, DC, 2002-08)The convertibility law, and economic liberalization in the early 1990s in Argentina, brought about dramatic changes in economic performance. To adjust to increasing globalization, and a series of external shocks, small and medium size enterprises (SMEs) were confronted with the task of developing business strategies to secure their niches in the new arena. However, such strategies were obstructed by constraints in the legal, and economic framework, weak information and technology aspects, and insufficient access to finance. The report builds on the following issues: 1) the critical aspect of the SME sector to the Argentine economy, both from a growth/efficiency, and equity standpoint; yet on average, SMEs have failed to attain their potential; 2) the highly heterogeneous configuration, particular organizational, and technological characteristics of SMEs; 3) the high degree of institutional rigidity of the country's business environment; 4) the need to develop policy actions to deepen financial markets for SMEs; 5) the significant knowledge constraints - by and large, no training nor technical assistance services are available, mainly because of high costs; 6) the striking multiplicity of SME programs, yet with uncertain impact; and, 7) the need to overhaul SME policies, and programs to prod more incentive- and demand-driven approaches. Elements for effective SMEs assistance programs include the development of a standard set of metrics to measure performance of SMEs, and, entrepreneurial management, deemed of critical importance. As well, cost recovery growth should be targeted, extensively using follow-up techniques, and leveraging their effectiveness through the use of information, and communications technology. Most importantly, the policy challenge lies in taking initiatives to develop institutions at the national, and local levels, to encourage transition from inward-looking firms, narrow search routines, and information-poor markets, to learning-oriented firms, and mature, information-rich markets. -
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.