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

Neal NathansonUSAID/E&E Bureau

3rd Regional Competitiveness ConferenceBudva, MontenegroMay 22, 2008

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

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

Mix of activities is the primary difference among projects

Policy LevelPolicy Level

Industry LevelIndustry Level

Enterprise LevelEnterprise Level

Goal: Help individual firms or groups of firms increase sales and invest in enterprise growth in the short-term

Goal: Improve industry conditions and remove constraints to productivity in the business environment in the long-term

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

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

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

Impact measurement requirements affect designIm

pa

ct

0 1 2 3 4 5 6 7

Years

“Transactional”

“Transformational”

Focus of projects is evolving

EnterpriseLevel

IndustryLevel

PolicyLevel

Past Future

Dominant role with substantial impact on a limited number of firms

Reduced role, mainly for better understanding systemic issues

Sometimes focused more on organizational structure than substance

Increased role in addressing constraints that affect many firms

Limited role due to the difficulty of measuring and reporting on progress

Greater role with more effective measurement of intermediate results

Role of common activities is also changing

Business Services

WorkforceDevelopment

Grants

Past Future

Sometimes interfered with the development of local services markets

Little direct provision of services; expanded markets to serve more diverse client base

Limited efforts mainly addressing effects of demand-side imbalance

Greatly expanded role addressing causes of imbalance at industry and policy levels

Appropriate for post-conflict reconstruction, but often habit-forming

Little or no role

Key challenges for future projects

Increasing effectiveness of industry-level activities

Expanding the role of workforce development

Developing business services markets

Demonstrating results of policy-level activities