Private Sector Development, Privatization, and Industrial Policy

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  • Publication
    Costa Rica : Competitiveness Diagnostic and Recommendations
    (World Bank, 2009-07-01) World Bank
    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) World Bank
    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
    Infrastructure in Latin America : Recent Developments and Key Challenges, Volume 1
    (Washington, DC, 2005-08) Morrison, Mary; Fay, Marianne
    In the last decade, most countries in Latin America and the Caribbean (LAC) have not spent enough on infrastructure. Total investment has fallen as a percentage of GDP, as public infrastructure expenditure has borne the brunt of fiscal adjustment, and private investment has failed to take up the slack. Most infrastructure services have therefore lagged behind East Asian comparators, middle income countries in general and China, in terms of both coverage and quality, despite the generally positive impacts of private sector involvement. This lackluster performance has slowed the LAC region's economic growth and progress in poverty reduction. Countries of the region therefore need to focus on upgrading their infrastructure, as this can yield great dividends in terms of growth, competitiveness and poverty reduction, as well as improving the quality of life of their citizens. Catching up requires significant new investment. But first, measures need to be taken to ensure that infrastructure spending produces higher returns, both economic and social. Both these tasks involve multiple challenges. The first section of the main report reviews progress made in infrastructure coverage and quality and discusses the impacts this has had on growth, competitiveness and the fight against poverty. The second section argues that the main issue has been that there has not been enough improvement in the management of resources, which have been insufficient anyway, and also reviews the region's experiences with private participation in infrastructure. The third section builds on the lessons of the last decade to tackle the key challenges: improving social and economic returns from infrastructure, managing private participation in infrastructure better and raising new finance for infrastructure.
  • Publication
    Peru - Microeconomic Constraints to Growth: The Evidence from the Manufacturing Sector
    (Washington, DC, 2004-06-15) World Bank
    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
    Argentina - Small and Medium-Sized Enterprises in Argentina : A Potential Engine for Economic Growth and Employment
    (Washington, DC, 2002-08) World Bank
    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.