Competitiveness Projects in E&E: Past, Present and Future

1. Competitiveness Projects in E&E:Past, Present and Future Neal Nathanson USAID/E&E Bureau 3rd Regional Competitiveness Conference Budva, Montenegro May 22, 2008

2. What is “Competitiveness?” The ability of enterprises, industries, or countries to sell goods and services profitably in global markets over a sustained period of time

3. What are the characteristics of competitiveness projects? • An explicit consideration of products and markets in the design of activities and interventions • Competitiveness increases the market value of outputs, and results in economic growth driven by gains in productivity • Success brings increases in revenues (at the firm and industry level) and GDP (at the national level) • Economic growth leads to increased employment; productivity gains lead to higher wages

4. Mix of activities is the primary difference among projects Policy Level Goal: Improve industry conditions and remove constraints to productivity in the business environment in the long-term Industry Level Goal: Help individual firms or groups of firms increase sales and invest in enterprise growth in the short-term Enterprise Level

5. Enterprise-level assistance requires safeguards Effective, but often costly and can be market distorting • Considerations: • Require cost-sharing • Aim for catalytic effect • Abide by transparent selection process • Limit eligible uses for assistance • Select those that will facilitate learning about general constraints

6. Industry-level assistance is more than just reaching firms efficiently Firm-level assistance provided more efficiently in a group setting Assistance to groups of businesses in order to benefit the group as a whole • Considerations: • Firms should see a clear benefit to participating • Activities should not favor one segment of the sector over another

7. Policy reform tend to focus on specific industries Policy reform can be high impact, but is difficult to measure and attribute • Considerations: • Involve the private sector in the policy process • Public-private dialogue forums are means rather than ends

8. Impact measurement requirements affect design “Transformational” “Transactional” Impact 0 1 2 3 4 5 6 7 Years

9. Focus of projects is evolving Past Future Dominant role with substantial impact on a limited number of firms Reduced role, mainly for better understanding systemic issues EnterpriseLevel Sometimes focused more on organizational structure than substance Increased role in addressing constraints that affect many firms IndustryLevel Limited role due to the difficulty of measuring and reporting on progress Greater role with more effective measurement of intermediate results PolicyLevel

10. Role of common activities is also changing Past Future Little direct provision of services; expanded markets to serve more diverse client base Sometimes interfered with the development of local services markets Business Services Greatly expanded role addressing causes of imbalance at industry and policy levels Limited efforts mainly addressing effects of demand-side imbalance WorkforceDevelopment Appropriate for post-conflict reconstruction, but often habit-forming Grants Little or no role

11. Key challenges for future projects • Increasing effectiveness of industry-level activities • Demonstrating results of policy-level activities • Expanding the role of workforce development • Developing business services markets