OECD Private Sector Development Division OECD Eurasia Competitiveness Programme
description
Transcript of OECD Private Sector Development Division OECD Eurasia Competitiveness Programme
OECD Private Sector Development 1
OECD Private Sector Development DivisionOECD Eurasia Competitiveness Programme
June 2008
Fadi FarraHead
OECD Eurasia Program
OECD EURASIA COMPETITIVENESS PROGRAMMEEnhancing Investment, Competitiveness and Private Sector Development in Central Asia,
South Caucasus and Ukraine
OECD Private Sector Development 2
1. The OECD Eurasia Competitiveness Programme
2. Promotion job creation in Eurasia – A sector specific approach
Promotion job creation in BSEC and CA countriesWhat role for the private sector?
OECD Private Sector Development 3
Eurasia: The need to improve the business climate
Strong economic performance in both Central Asia and South Caucasus/UkraineRegions
• However strong economic growth disparities and fluctuations across countries
FDI levels and growth still relatively low• Average FDI per capita up to 6 times lower than South East Europe or
CEE• Average FDI growth a third lower than regions like South East Europe• Limited FDI diversification in most countries
Need to improve business climate to attract investment and develop the private
sector and employment further
OECD Private Sector Development 4
OECD Eurasia Competitiveness ProgrammeNew OECD Mandate (2008) covering two regions and 11 countries
Partnership withBSEC and EC
Partnership withOSCE and EC
Armenia
Azerbaijan
Georgia
Ukraine
Observers: Moldova and Belarus
The South Caucasus and Ukraine
Afghanistan
Kazakhstan
Kyrgyztan
Mongolia
Tadjiskistan
Turkmenistan
Uzbeskistan
Central Asia
OECD Private Sector Development 5
Focus on results and implementation to improve investment and competitiveness
Improving NationalCompetitiveness
Enhancing RegionalBusiness Climate
Identification and prioritisation of regional barriers to investment and how to remove themCreation of policy networks in specific policy areas like investment policy, trade, enterprise development, financial sector development Development of “how to” guidelines at the regional level to implement specific policy reforms
Surveys of investors and private sector perception to assess and measure impactEvaluation of policy reforms to improve the business environment Time-bound and measurable priorities for reforms Country-specific assistance in implementing reforms
OECD Private Sector Development 6
Four pillars to improve the business climate
Annual Ministerial meetings for South Caucasus, Ukraine and Central Asia Regions
Sector Specific Sources of Competitiveness
A. Enterprise and SME Development
4. Political Support
1. Monitoring and Evaluation
2. Implemen-tation Support
3. Private Sector Support
B. Policy and Promotion Specific to FDI
Investment Reform Index (IRI)
SME Policy Index
Thematic Working Groups
Sector Specific Regional Investment Promotion
Sector Specific Studies
Enterprise Forum
Structured Public/Private Debate
Improving the business climate and Competitiveness in Eurasia
4 A
reas
Regional Foreign Investors Council, White Book and
Investor Forum
OECD Private Sector Development 7
An example: Monitoring policies at the regional level… and addressing reforms through working groups
DRAFT NOT FOR DISTRIBUTION
The OECD Investment Reform Index
Chaired by a country of the region and OECD country
Strong involvement of regional policy makers, private sector and OECD experts
Focused on delivering a “How To” guidelines on implementation of
skills development programmes
Policy Working Group
Example for South
East Europe
OECD Private Sector Development 8
1. The OECD Eurasia Competitiveness Programme
2. Promotion job creation in Eurasia – A sector specific approach
Promotion job creation in BSEC and CA countriesWhat role for the private sector?
OECD Private Sector Development 9
The cost competitiveness trap
Key sectors in the Eurasia regions are able to compete based on low cost
• Labour cost in services [e.g. Business Process Outsourcing (BPO), Information and Communication Technology (ICT)] is up to 5 times lower than in Eastern Europe.
• Manufacturing cost up to 5 times lower than Western Europe
However cost competitiveness is not sustainable
• Markets like India and China are clear low-cost alternatives.
• Cost levels in some sectors are increasing by up to 15% annually, impacting negatively on margins and potentially eroding market share levels.
• Limited access to finance and strategies to reinvest capital in technology and human capital is a risk.
To sustain competitiveness, the countries in of the Central Asia region and Black Sea regions need to start moving up the value-chain and diversify their sources of FDI
OECD Private Sector Development 10
Three challenges need to be addressed to sustain competitiveness at the regional level
Significant gaps in human capital and the need for human capital reform linking education and market needs
• Skills gaps in high growth industries such as ICT reach 60%.• Coordination between ministries of education and economy and dialogue with civil society are limited.
Limited focus on value-added services and innovation and the need to further link research and businesses
Lack of longer term sector-specific reforms and the need for institutional methods to continuously identify and remove sector specific policy barriers
OECD Private Sector Development 11
Example for a sector: Business Process Outsourcing (BPO)Example for the Republic of Moldova
Source: International Labour Organization; zdnetasia; Wall Street Journal, OECD interviews
Leveraging their competitive labour costs in services
100
88
104
40 37 3431
21.9 21.515
4.4
Relative comparison of average monthly labor cost in services (2005)
HungaryHungary PolandPoland CroatiaCroatia Bosnia&H
Bosnia&H
MontenegroMontenegroSerbiaSerbia Republic
of Moldova
Republic
of Moldova
IndiaIndia
Index(100:
Hungary)
Index(100:
Hungary)
(1)(1)
Sample of CEE countries
FYR Macedonia
FYR Macedonia
AlbaniaAlbania UNMIKUNMIK
Note: Monthly wages have been calculated on 2003-05 or 2003-06 average; using the LABORSTA Labour Statistics Database and covering, unless specified only the category J (financial intermediation) and K (business activities, real estate and renting). For Albania overall figures are based on category I (transport, storage and communications) due to the absence of statistics on J/K in the ILO databases(1) average monthly wages in all services
OECD Private Sector Development 12
The human capital gap
Source: OECD 2008
50% of BPO firms have difficulties finding skilled and educated workers
70% of BPO firms find education and training to be key policy issues
50%
Skills and education of available workersSkills and education of available workers Key issues within human capital policyKey issues within human capital policy
OECD Private Sector Development 13DRAFT NOT FOR DISTRIBUTION
During Pre-employment through offering of internships, intervention in university courses, exchange programs with foreign vendors and universities
During employment through linkage programs, company training including sector/technical-specific training like CAD, ERP, Vendor Managed Inventory for textile or Design for Manufacturability Software and Computer Aided Engineering for automotive
Post employment through the usage of e-courses in particular on new applications and processes like PHP/MYSQL, Ajax, PHP-.Net , XML, Flash Animation & Action Script
How to address the lack of skilled resources in the short term?
Short term actions: Engaging the private sector
• Review government practices and private sector practices to upgrade skills e.g. government sponsored coaching programmes; tax relief for training, company sponsored trainings; exchange programmes
• Implementation of policies through a sector specific approach e.g. internships, coaching, vocational training, digital learning)
• Development of linkage programs
Engaging the private sector for short term results
OECD Private Sector Development 14
Policy reforms to move up the value chain and diversify FDIThe Republic of Kazakhstan example
SustainedCompetitiveness
Match supply and demand• Align ministries• Develop tools to analyse skills gaps and shortages• Review the labour market regime • Develop a mechanism for dialogue with civil society
Remove sector specific policy barriers on a continuous basis• Set-up sector specific working groups• Develop sector specific monitoring tools
Channel innovation efforts• Assess the success levels of current cluster initiatives• Develop an organisational structure and governance model at the national level• Map out the objectives and scope of competitive clusters to channel innovation efforts
How to improve sector competitiveness for the Republic of Kazakhstan
OECD Private Sector Development 15
15
Key Success factors
Clear links with the National Development Plan and priorities to ensure sustainability
Close partnership with the private sector to accelerate reforms at the sector level
Inclusion of all relevant donors efforts to avoid any overlap
Practical approach with a gradual implementation based on pilots and championing stakeholders to deliver tangible results
A focus on policy priorities, execution and communication
OECD Private Sector Development 16
Appendix
OECD Private Sector Development 17
Governance: Strong collaboration with regional bodiesSouth Caucasus and Ukraine
Regional Offices and presence:
-Istanbul-Moldova
SCU
Competitiveness Programme
SCU
Competitiveness Programme
SCU Competitiveness Committee
SCU Competitiveness Committee
OECD donor countries
Eurasia- SCU country
economic teams
Internationalorganisations
Private sector
Co-chairs: OECD Country + SCU Country + OECD
Regional Working Groups*:Human Capital
Investment PromotionTransportation
Trade
* Note: Tentative groups being discussed with countries of the region
Partners: Black Sea Economic Cooperation (BSEC) and EC Partners: Black Sea Economic Cooperation (BSEC) and EC
OECD Private Sector Development 18
Governance: Strong collaboration with regional bodies (II)Central Asia
Regional Offices and presence:
-Istanbul
CA
Competitiveness Programme
CA
Competitiveness Programme
CA Competitiveness Committee
CA Competitiveness Committee
OECD donor countries
Eurasia- CA country
economic teams
Internationalorganisations
Private sector
Co-chairs: OECD Country + CA Country + OECD
Regional Working Groups*:Human Capital
Investment PromotionInfrastructure
TradeFinancial Markets
* Note: Tentative groups being discussed with countries of the region
Partners: OSCE and EC Partners: OSCE and EC
OECD Private Sector Development 19
1. How to find relevant local and foreign companies: Sector database
Building a database with company profiles and offering
DATA CREATION AND STORAGE
• Creation and maintenance of the reference company databases
• Automatic update of Moldova statistical databases
• Automatic update of registered information by company (in coordination with the National Statistical Bureau)
• Automatic feedback between MIEPO and company included in the database
COMPANY PROFILES:Includes:• General information• Financial information• Key contacts• History• Subsidiaries• Activities• Actions in Moldova and abraod• Organisation changes• Founders• Actions with international players
DATA ANALYSIS AND
MINING
• Search by company offering and segments
• Group/ Community management together with international companies
• Possibility to leverage the database for lead generation: identification of company having representatives in Moldova ‘active’ and those that are ‘prospect’
OECD Private Sector Development 20
61
0
100
200
230
13 2335 26
43
150
250
2003 2004 2005 2006 2007 F2008
0
5
Entreprises
Students
Qualitative performanceLanguage students and company demand
Evolution of demand and supplyItalian language
Excluding salary expectations, major discrepancy between supply and demand
Su
pp
ly/Dem
and
Eq
uilib
rium
Su
pp
ly/Dem
and
Eq
uilib
rium
Aw
aren
ess
Aw
aren
ess
Quality of graduatesQuality of graduates
DemandDemand
SupplySupply
# of people# of people
Quality of curricula (1)Quality of curricula (1)
Notes (1): Ranking: (1) Poor; (5) outstandingSource: OECD field surveyNotes (1): Ranking: (1) Poor; (5) outstandingSource: OECD field survey
2. How to identify and prioritise skills improvement efforts: Skill gap analysis Example for call centers - languages