CIIP Competitive Industries and Innovation Program Annual Report 2013-14 Financed by in partnership with ©2014 The World Bank Group 1818 H Street NW Washington, DC 20433 Telephone: 202-473-1000 Internet: www.worldbank.org All rights reserved. This volume is a product of the staff of the World Bank Group. The World Bank Group refers to the mem- ber institutions of the World Bank Group: The World Bank (International Bank for Reconstruction and Development); International Finance Corporation (IFC); and Multilateral Investment Guarantee Agency (MIGA), which are separate and distinct legal entities each organized under its respective Articles of Agree- ment. We encourage use for educational and non-commercial purposes. The findings, interpretations, and conclusions expressed in this volume do not necessarily reflect the views of the Directors or Executive Directors of the respective institutions of the World Bank Group or the gov- ernments they represent. The World Bank Group does not guarantee the accuracy of the data included in this work. Rights and Permissions The material in this publication is copyrighted. Copying and/or transmitting portions or all of this work without permission may be a violation of applicable law. The World Bank encourages dissemination of its work and will normally grant permission to reproduce portions of the work promptly. All queries on rights and licenses, including subsidiary rights, should be addressed to the Office of the Publisher, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; fax: 202-522-2422; e-mail:pubrights@worldbank.org. Cover page picture: Man working in a steel pipe at an industrial plant in India. About the Competitive Industries and Innovation Program (CIIP) The CIIP partnership was created to enhance country growth and employment prospects by supporting public policies and investments that promote competitiveness and innovation within and across industries. The partnership’s resources are focused on supporting governments’ efforts to develop transformational economic development projects and to aggregate cutting-edge knowledge that can be implemented as part of targeted pro-growth initiatives. As the Trustee and Administrator for CIIP, the World Bank Group is responsible for program development, implementation, and monitoring and evaluation. For more informa- tion, visit www.theciip.org 2 TA B LE O F CO N T E N T S Abbreviations 5 Foreword 7 Results at a glance 8 Introduction 1 Chapter 1: CIIP Achievements through FY 2014 13 Chapter 2: CIIP Project Results: Operational Highlights 23 Chapter 3: CIIP Financial Portfolio and Resource Use 35 Chapter 4: Managing CIIP’s Partnership 37 Annex 1: CIIP Results Chain 42 Annex 2: CIIP Progress by Project - Project Level Narratives and Updates 43 Annex 3: Multitrack Approach to Country Engagement 72 Annex 4: CIIP’s 2014 Call for Proposals 73 Annex 5: CIIP Financial Details & Performance by Window 74 Annex 6: CIIP Disbursement by Month 76 3 4 A B B R E V I AT I O N S ACP The African, Caribbean and Pacific Group of States IPF Investment Project Financing Secretariat IPP Innovation Policy Platform AfDB African Development Bank ISR Implementation Status Report BDI Business Development and Investment Project ITTPA Tourism Investment Promotion Agency BES Partnership Secretariat & TF Administration IZ Industrial Zones CAF SME Competitiveness and Access to Finance KP Knowledge Product CCKB Competitive Cities Knowledge Base KIDI Kazakhstan Industry Development Institute CEDP Competitiveness and Export Development Project LNG Liquefied Natural Gas CI Competitive Industries MDTF Multi-Donor Trust Fund CIIP Competitive Industries and Innovation Program MENA Middle East and Northern Africa Region CJC Competitiveness and Job Creation Project MIGA Multilateral Investment Guarantee Agency CoP Community of Practice MINT Ministry of Industry and New Technology DFID Department for International Development (government of Kazakhstan) DMO Destination Management Organizations MRD Ministry of Rural Development DPL Development Policy Loan NL-TA Non-Lending Technical Assistance EDF EU European Development Fund NSSEZ Nghi Son Special Economic Zone EIDZC Ethiopian Industrial Development Zone OECD Organisation for Economic Co-operation and Corporation Development EIP Eastern Industrial Zone PAMCI Program of the Ministry of Commerce and ESIF European Union Structural and Investment Funds Industry (Haiti) ESW Economic and Sector Work PEMANDU Performance Management & Delivery Unit EU European Union PPD Public-Private Dialogue FCS Fragile and Conflict States PPP Public Private Partnerships FDI Foreign Direct Investment QER Quality Enhancement Review FIAS Facility for Investment Climate Advisory Services R&D Research and Development FITD Fund for Innovations and Technological RAS Reimbursable Advisory Services Development RICP Vietnam Industry Competitiveness Project FY Fiscal Year RTDI Research, Technological Development and FYROM Former Yugoslav Republic of Macedonia Innovation GCI Global Competitiveness Index S3 Smart Specialization Strategy GEDA Georgia Enterprise Development Agency SAE Entrepreneurship Support Services GITA Georgia’s Innovation and Technology Agency SDTF Single-Donor Trust Fund GIZ Gesellschaft für Internationale Zusammenarbeit SECO State Secretariat for Economic Affairs GoK government of Kazakhstan SEZ Special Economic Zones GRM Grant Reporting and Monitoring SIDS Small Island Developing States GVC Global Value Chain SME Small and Medium-sized Enterprises IADB Inter-American Development Bank TA Technical Assistance ICI2014 Invest in Côte d’Ivoire 2014 TE External Training ICT Information and Communication Technology TH Thanh Hoa IDA International Development Association TIDZ Technological Industrial Development Zone IEZs Integrated Economic Zones Program IFC International Finance Corporation TVET Technical Vocational Education and Training IO Internal Order UGTT Tunisian General Labour Union USAID US Agency for International Development UTICA Union Tunisienne de l’Industrie, du Commerce et de l’Artisanat WBG World Bank Group 5 FOREWORD Message from the Senior Director It is my pleasure as head of the World Bank Group’s new Trade and Competitiveness (T&C) Global Practice to present to you the first Annual Report of the Competitive Industries and Innovation Program (CIIP), a multi-donor partnership among the World Bank Group, the European Union, the African Caribbean and Pacific Group of States Secretariat, and the governments of Austria and Switzerland, that is housed within the T&C Global Practice. Since its inception in late 2012, CIIP has experienced strong demand for its policy support and knowledge services. In CIIP’s first year of operation, the program began implementing 12 high-potential country operations alongside an ambitious global knowledge agenda. The client work and knowledge-building activities are already helping shape an emerging growth paradigm that can deliver integrated solutions, tai- lored to the particular needs of each client country, as they strive to meet the challenge of maximizing growth and job creation. CIIP helps innovate far from the usual traps of industrial policy and brings the best expertise to countries and development policy practitioners. It is difficult to report on the results of a newly launched program with medium to long term ambitions, such as CIIP. However, through end of FY14, CIIP country operations leveraged $5 billion in public finance, and supported the creation of over 5000 new jobs. CIIP-funded initiatives supported new national legislation and regulatory reforms to promote competitiveness in Ethiopia, Georgia, and Macedonia. Through its institutional capacity building and infrastructure development, CIIP supported policy reforms that enhanced the governance of a technological industrial development zone in Macedonia, and the establishment of innovation and enterprise development agencies in Georgia, among others. CIIP plays an instrumental role in the Trade and Competitiveness Global Practice by providing needed integrative solutions in response to requests from client governments for support in design and implementation of industry-focused competitiveness strategies and policy reform initiatives in key sectors such as agribusiness, tourism, extractive industries, and light manufacturing. These targeted solutions leverage financial input, promote institutional know-how and build development knowledge in ways that can create an enabling environment for stronger industry growth. As industries become more innovative and more competitive, they tend to attract more private investment, thus strengthening productivity gains, generating jobs and creating “spillover effects” that reinforce their growth trajectory. CIIP greatly benefited from the advice and support of its donors and partners, in particular in the pro- cess of conceptualizing CIIP’s strategy and business plan, but also in active collaboration and engage- ment on the ground in project implementation. We greatly value that partnership with donors as well as collaboration with teams across the World Bank Group, with client countries, and with other global stakeholders. Looking ahead, the CIIP team is about to select a new set of country operations and knowledge initiatives, which will enable it to expand geographic reach and thematic focus as per the CIIP strategy. As the CIIP brand and quality reputation develops, requests for support far exceed the amount of re- sources that it currently enjoys. I see 2015 as a critical year to expand CIIP to build on its earlier success in beneficiary countries. We are proud of what this young partnership has already achieved, and we are looking forward to continuing to work together on the ongoing projects and initiatives and on the future engagements to help countries spur economic growth and propel job creation. Anabel Gonzalez Senior Director Trade and Competitiveness Global Practice World Bank Group CIIP Annual Report 2013-2014 7 Results at a glance During the fiscal year 2014, CIIP-funded activities have supported the design and implementation of industry- focused competitiveness strategies and policy reform initiatives in 12 carefully selected project countries. Through its knowledge, learning and publishing activities – including a high-profile conference at the World Bank in October 2013, which assembled some of the world’s leading scholars on economic policy– CIIP’s ideas have influenced the thinking of thousands of policymakers, private-sector executives and academic scholars. COUNTRY OPERATIONS KNOWLEDGE 5 billion USD in public finance The CIIP has produced six Competitive Industry Notes and a dozen blogs, along with a number of leveraged globally for competitive knowledge projects that inform client operations. industry approaches including $722 million in active projects. 27 sectoral, local or national A global conference featuring Nobel Prize Laureate Joseph Stiglitz PPD mechanisms set up. 22 in-depth sector level Competitive Cities Project creating a knowledge= base on analyses completed. interventions which 16 can enhance city competitiveness strategies or reform programs Innovation Policy informed and 5 laws or Platform connecting regulations supported, e.g. policy makers to global Ethiopia – Investment Law experts for practical Amendment and Tanzania – advice 4 client agencies informed and Local Content Policy. Global value chains using value chain analysis techniques to help clients move into institutional capacity built, e.g. higher value-added Macedonia – Technological activities that extract Industrial Development Zone and more from global Georgia – Innovation and Enterprise markets Development Agencies. 8 CLIENT SUPPORT Spatial The CIIP has assisted both country clients analysis and private sector beneficiaries. Strategy formulation Value chain and regulatory analysis Client training advice Empowering stakeholders to advance institutional reforms & improve private-sector capacity. Analytics Sector Technical assistance and analytical inputs Trade analysis and diagnostics prioritization Using expert analytical inputs to bridge spatial, industrial and governance solutions Feasibility studies CIIP project solutions by sectors Project Value chains Clusters Economic Growth poles zones and corridors Agribusiness Manufacturing Tourism Extractives and local content Other FY12-13 COMMITMENTS AND DISBURSEMENTS As a share of country window commitments, the CIIP has experienced rapid growth in piriority countries, including: 60% 34% 53% to IDA countries to Fragile and Conflict States to ACP States $7.142 million $4.076 million $6.117 million CIIP Annual Report 2013-2014 9 Enhancing connectivity to global markets in Côte d’Ivoire (see Quay crane24 pages onand 44)in Sri Lanka docks 10 INTRODUCTION Program context This document is the first Annual Report of the Competitive Industries and Innovation Program (CIIP), a multi-donor partnership among the World Bank Group (WBG); the European Union (EU); the African, Caribbean and Pacific Group of States Secretariat (ACP); and the governments of Aus- tria and Switzerland. This report outlines the progress that CIIP has made in implementing the main objectives set out in the CIIP Strategy and Interim Business Plan, and it summarizes the partnership’s key milestones and achievements through June 30, 2014 – including its approach to delivering integrated solutions to catalyze economic growth; its focus on synthesizing and asserting the best global knowledge about job creation and policy reforms; its emphasis on maximizing the leverage of public-sector and private-sector investments; its management of the trust funds’ resources; its program implementation; and its operational results. As the Trustee and Administrator for CIIP, the WBG is responsible for program development, im- plementation, and monitoring and evaluation. The WBG also hosts the Secretariat that oversees CIIP. The partnership’s resources are focused on supporting governments’ efforts to develop transformational economic development projects and to aggregate cutting-edge knowledge that can be implemented as part of targeted pro-growth initiatives. CIIP aims to enhance economic growth, propel the creation of jobs, and maximize client coun- tries’ capacity to design and implement pro-growth investments by helping shape public policies and by helping design investment programs that promote competitiveness and innovation within and across industries. In its first year of operations, CIIP-funded investment and knowledge initiatives have begun to fulfill the ambitions of its founding partners, helping client governments develop and implement co- ordinated programs that include rigorous analysis, significant policy reforms and innovative investment strategies. Since its inception in late 2012, CIIP has experienced strong demand for its policy support and knowledge services. Launched through multi-donor and single-donor trust funds over the period from November 2012 to July 2013, CIIP within its first year began implementing 12 high-potential country operations and an ambitious global knowledge agenda (for details see Annex 1 of the Strategy and Interim Business Plan), seek- ing to analyze and actively build upon the world’s most reliable scholarship about the factors that drive economic competitiveness, inspire innovative industries, and propel inclusive growth. By the time of its first Steering Committee meeting in September 2013, CIIP had designed an implementation framework – the engine that helps it achieve its operational strategy. At the second Steering Committee meeting in February 2014, the partnership endorsed its interim Business Plan for FY 2014, agreeing on CIIP’s delivery model, its program commitments, and its early deliverables. Those priorities have guided CIIP’s efforts throughout Fiscal Year 2014. Through its combination of hands-on project work with client countries and pioneering knowl- edge-building on economic development policy, CIIP has sought to create an identity as a leader in conceiving and implementing development strategies. With this first Annual Report as a summary of its progress so far, CIIP continues to pursue approaches that deliver value to its client countries and development partners in their quest for stronger job creation and shared prosperity. 11 12 CHAPTER 1 CIIP Achievements through FY 2014 Providing targeted strategies and hands-on implementation support to potentially high-achieving development initiatives, CIIP has completed its first year of delivering direct operational assistance and advisory services to its low-income and middle-income client countries. Beyond its direct work with clients, CIIP has also sought to expand the global knowledge frontier on the “how to” of develop- ment, designing and implementing competitiveness-building strategies – pursuing the market-attuned, strategy-driven Competitive Industries approach. CIIP’s client work and knowledge-building activities are helping shape an emerging growth paradigm that can deliver integrated solutions, tailored to the particular needs of each client country, that help meet the challenge of maximizing growth and job creation. Women working in George Shoes in the Bole Lemi Industrial Zone in Ethiopia (see pages 25 and 48) 13 Box 1.1 A Pragmatic Approach to Competitive Industries The Competitive Industries approach harnesses the ability • Public-Private Dialogue Mechanisms: CIIP of firms and industries to attract new investments and to provides the catalytic resources that enable collabora- increase their market share in goods and services through tive governance arrangements with public and private improved productivity. Modern competitiveness strategies, stakeholders, helping them engage in effective, transpar- having analyzed the shortcomings of past attempts to imple- ent and consultative decision-making at the country and ment pro-growth plans, have gained traction by focusing on sub-national levels. Each CIIP engagement necessarily the industry level of the economy. They prioritize economic involves collaborative governance with key decision- reform policies; channel public investments; catalyze private makers, private-sector representatives, labor representa- investments; and foster innovation systems with the goal of tives, investors and citizen groups in the design of large- expanding targeted industries and thus spurring job creation. scale reform programs and project preparation. CIIP’s approach emphasizes that the bundling and deliv- • Support for Public Finance and Firm Innovation ery of support for basic elements of Private Sector Develop- Financing. As the necessary analytics and consultations ment, within an industry context, can help accelerate growth have taken place, CIIP also finances the project-design and can help intensify development impact – especially when phases to ensure that government expenditures are in- such interventions are centered on spatial solutions (includ- formed by global “best practice.” As clients move toward ing Special Economic Zones, innovation clusters, growth implementing their programs, CIIP further provides poles, Competitive Cities and even geographically dispersed support to ensure that the implementing authorities value chains). These integrative solutions leverage financial are properly incentivized, that the work is meticulously input, promote institutional know-how and build develop- monitored, and that outputs are measured. Ensuring ment knowledge in ways that can create an enabling envi- that projects are properly financed throughout their ronment for stronger industry growth. As industries become preparation and implementation greatly enhances the more innovative and more competitive, they tend to attract chance of success, particularly for investment opportuni- increasing amounts of private investment, thus strengthening ties that have higher-than-average risk ratios. productivity gains, generating jobs and creating “spillover • Evaluation and Feedback. To gain an understanding effects” that reinforce their growth trajectory. of the causal link between the change in outcomes and By helping propel a virtuous cycle of growth, CIIP specific policy actions, CIIP is helping clients and the operations support the twin goals of the WBG: contributing broader development community by measuring cause- to the elimination of extreme poverty and promoting shared and-effect relationships. Financing such work helps CIIP prosperity. CIIP provides vitally needed support in response understand the economic pathways that lead from inte- to requests from client governments, allowing for the incor- grated solutions to job creation by supporting systematic poration of a wide array of operational instruments across its feedback loops and real-time learning. activities. In this respect, CIIP finances the following types of • Global Knowledge Platforms: CIIP has established inputs: a number of global knowledge platforms that engage the development community, policymakers and practitioners • Analysis. CIIP provides the resources to conduct analy- in an open exchange of knowledge. Specific activities ses that identify market failures and constraints that limit include supporting the design and maintenance of web- firms’ growth within and across industries. Throughout based tools for the creation of specialized databases; its portfolio, CIIP funds have been used to ensure that conducting targeted research; developing best-practice expert and diverse technical inputs are informing market materials and analytical tools; conducting knowledge-ex- analytics, institutional capacity assessments, and policy change activities; and convening training sessions, work- and regulatory reviews that have the ability to influence shops, seminars, conferences and web-based dialogues. the policy dialogue and design of government programs. • Technical Assistance: CIIP provides structured Tech- CIIP provides funding for these instruments at various stages nical Assistance (TA) programs for a variety of country of engagement with clients including, project identifica- clients’ ministries and beneficiary enterprises. The most tion, preparation and implementation. Such instruments are successful TA engagements have been providing inputs integrated through a number of government-owned devel- into the design and implementation of comprehensive opment operations, including through public finance and reform programs. Such TA also contributes to the estab- governance arrangements. Public financing instruments not lishment of new institutional frameworks and regulatory only serve as a necessary catalyst for enabling the private sec- regimes that help drive global integration, enable invest- tor, but also serve as a vehicle for sustained, global knowledge ment, enhance technology transfer and release financing transfer and technical assistance. Countries that are not yet constraints. Technical assistance is also commonly taking ready to implement public programs are supported with the form of client/beneficiary training, which is aimed CIIP’s Knowledge and Advisory Services to ensure that their at empowering external stakeholders to advance insti- institutions are ready for governance of such competitiveness tutional reforms and improve private-sector capacity by programs. facilitating knowledge transfer from world-class experts. 14 During the fiscal year 2014, the program’s first full year of operation, CIIP-funded activities have supported the design Box 1.2 Deepening Internal Partnerships and implementation of industry-focused competitiveness strategies and policy reform initiatives in 12 carefully selected Multi-sectoral interventions that bundle and sequence projects in 12 countries. Through its knowledge, learning and a variety of instruments are at the core of the CIIP publishing activities – including a high-profile conference approach. As such, working partnerships with other at the World Bank in October 2013, which assembled some World Bank Global Practices (GPs) and Cross-Cutting of the world’s leading scholars on economic policy – CIIP’s Solution Areas (CCSAs) are essential to achieving ideas have sought to influence the thinking of thousands of CIIP’s operational and knowledge goals. In its strategy, policymakers, private-sector executives and academic schol- CIIP has committed to working in a number of joint ars. In FY 14, CIIP has focused on five related activities: areas, including agribusiness (with the Agriculture GP), tourism and competitive cities (with the Social, Urban, • CIIP Has Conducted Project Selection and Made Rural and Resilience GP), trade facilitation and logis- Project Commitments — CIIP’s initial call for propos- tics, as well as resource corridors (with the Transport als drew applications for 44 potential projects. Through and ICT & Extractives GPs), SME Finance (with the CIIP Achievements a rigorous selection process, CIIP chose 12 projects to Finance and Markets GP), and skills and productivity receive strategic support, crafting a multi-track approach (with the Education and Social Protection GPs). CIIP’s to country engagement. operational and knowledge agenda also cross-pollinates to a significant extent with the work of a number of • CIIP Has Worked to Establish Thematic Reach — CIIP Cross-Cutting Solutions Areas, such as climate change, has assembled a portfolio of activities with extensive public-private partnerships (PPPs), fragility, conflict and thematic reach by product and sector. CIIP’s over-arch- violence, gender, and particularly jobs. The Jobs CCSA ing goal has been to help its clients accomplish tangible provides a global platform to address the jobs challenge results in growth and job creation by strengthening their based on data, results and evidence, and its goal is to economic competitiveness, and to expand the global develop methodologies and advance global knowledge knowledge frontier on the “how to” of effectively design- on the most effective policies and actions for sustainable ing and implementing competitiveness strategies. job creation. Given CIIP’s mandate, all synergies with the Jobs CCSA will be maximized on an ongoing basis (e.g. a member of the core team of the Jobs CCSA has just joined the CIIP Tanzania growth poles team). In addition, as an integral part of the Trade and Competitiveness Global Practice (T&C), CIIP is uniquely positioned to utilize T&C’s strong partnership Figure 1.1 Multitrack resources allocation with the IFC. This relationship allows CIIP to bring to- Country readiness gether the traditional public policy focus of the World Bank with the High Track 4 private sector investment focus of Significant investment the IFC, and to strengthen efforts Project design support Technical assistance and capacity building to help client countries coordinate interventions across economy-wide, Substantial Track 3 sectoral, and firm-level engage- Substantial investment ments. CIIP will deepen this Project design support partnership by leveraging IFC’s Tehcnical assistance and capacity building knowledge of industry and country constraints, and engaging IFC Modest Track 2 Substantial investment investees in its dialogue with repre- Project design support sentatives of local private sectors. Technical assistance and capacity building Low Track 1 Sensitization Training Affirmative efforts Demand-driven CIIP responsiveness CIIP Annual Report 2013-2014 15 • CIIP Has Sought to Develop a Distinctive Approach with policy research institutions, and to publish articles to Market-Sensitive, Policy-Supported Growth Strate- and policy notes in selected media, to help raise CIIP’s gies — With guidance from leading policy analysts and profile as an emerging thought leader in economic-devel- academic scholars, CIIP has developed an approach that opment strategy. promotes Public-Private Dialogue (PPD) to maximize the pro-growth combination of private-sector-led invest- • CIIP Has Organized a Secretariat and Deployed a Team ment, public-sector consensus-building efforts, targeted Global Experts—The program has formed a Secretariat policy reforms and industry-focused interventions. The to manage CIIP operations and to oversee the cost- Competitive Industries approach seeks to overcome effective management of its twin trust funds, and it has the limitations of earlier techniques that often disap- deployed teams to support day-to-day operations with pointed policymakers’ and industry leaders’ pro-growth CIIP’s clients. ambitions. Aiming to turn expert knowledge into action on the ground, CIIP has leveraged the expertise of its First-Year Commitment of CIIP Resources network of development practitioners, the WBG’s staff, CIIP’s “multitrack” approach to client countries (Figure 1.1) and the resources of its partner organizations to pioneer allows for a great degree of flexibility and customization of new approaches to crafting successful interventions at the engagement based on the countries’ varying degrees of the industry level, thus pushing the knowledge frontier readiness to apply competitiveness-building strategies (Figure of the economic-policy discipline. 1.2). For example, one vital element of each country’s capac- ity to adopt and execute a successful competitiveness strategy • CIIP Has Established Its Identity and Raised Its Global is its ability to pursue sustained PPDs through institutional- Profile — CIIP has worked with its international ized mechanisms that promote cooperation and coordination development partners to establish a global identity as between the public and the private sector. a leading resource for expertise on economic develop- ment through industry-focused strategies. It has created • CIIP engaged with Track 1 countries through a series of and nurtured a growing network of policy analysts, knowledge initiatives, notably in small and fragile states practitioners and scholars whose insights can inform the (Box 1.2) through “Targeted Sensitization.” decisions of policymakers and private-sector executives across a wide range of industries.[1] CIIP’s staff and affiliates have sought opportunities to build a dialogue Figure 1.2 CIIP Countries by Track Europe and Central Asia Croatia Georgia Kazakhstan FYR of Macedonia Russian Federation Middle East and North Africa Tunisia East Asia and the Pacific Vietnam Latin America and the Caribbean Sub-Saharan Africa Haiti Côte d’Ivoire Ethiopia Tanzania Sierra Leone Legend Track 2 Track 3 Track 4 IBRD 41278 October 2014 This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information shown on this map do not imply, on the part of The World Bank GSDPM Map Design Unit Group, any judgment on the legal status of any territory, or any endorsement or acceptance of such boundaries. 16 • In FY14, three CIIP-financed operations (Haiti, Tanza- Thematic Reach of CIIP nia, and Vietnam) were categorized as Track 2. CIIP en- CIIP has assembled a portfolio of activities with extensive gages such countries through the approach of “Early CI thematic reach by product and by sector (Figure 1.3). CIIP’s Dialogue.” For instance, CIIP’s operation in Haiti has overarching goal has been to help its clients accomplish tan- focused on reforming an outdated approach to Special gible results by strengthening their economic competitiveness, Economic Zones. Haiti’s past approaches to zones have and to expand the global knowledge frontier on the “how to” largely failed. While the government of Haiti has put of effectively designing and implementing competitiveness private sector development at the center of its longer- strategies. term development strategy, weak public sector capacity, especially in the area of investment management and The CIIP team strives to provide integrated solutions to PPD place Haiti as a track 2 country. country programs to meet client’s specified development out- comes. Figure 1.3 highlights CIIP inputs and solutions that • Half of CIIP operations are in Track 3 countries (Cote are used to support client needs, with an illustrative example d’Ivoire, Ethiopia, Georgia, Kazakhstan, Sierra Leone, by sector. and Tunisia). CIIP works with Track 3 countries through CIIP Achievements the approach of “Capacity-Building and Sustained CIIP has developed a range of potential project solutions to CI Dialogue.” Kazakhstan highlights an example of help improve competitiveness. Each of those solutions has a track 3 country. CIIP team is helping strengthen the been successfully used in country operations that are now competitiveness of higher-added-value production and under way: private-sector activities in non-extractive industries in and around priority areas (agglomerations, cities and • Growth Poles— concomitant, coordinated investments towns) with a secondary focus on SME development in in many sectors to support self-sustaining industrializa- these industries. tion in a country—often form naturally around popula- tion centers or the natural endowments of a particular • CIIP supports three operations in Track 4 countries: geographic location. CIIP offers Growth Pole Diagnostic Croatia, the Former Yugoslav Republic of Macedonia tools to help identify and establish country growth poles. (FYROM) and Russia. Designated as “Track 4,” some counties have a strong state of readiness, having made • Clusters have the potential to be powerful tools for in- a deep leadership commitment to enacting competi- novation as the shared resources for industrial upgrad- tiveness strategies. CIIP works with Track 4 countries ing (often through public R&D or Export/Investment through “Implementation Support for Industry-Level Promotion) can facilitate increased firm access to foreign Efforts.” FYROM is an illustrative case of a Track 4 markets,. country. The government has developed a track record of executing a successful competitiveness program • Special Economic Zones are known to be high-risk/ through a Development Policy Loan (DPL) series with high-reward operations that require significant public the WBG. CIIP has significantly enhanced the design management capacity. With CIIP’s support 5 projects of the DPL series, which simultaneously deploys cross- are working to establish greenfield SEZs or to reinvigo- cutting and sector-specific reforms to maximize the rate brownfield SEZs. potential to improve growth and job creation. Box 1.3 Track 1 Country Engagement: Affirmative Efforts for Small States and Fragile States The Competitiveness Summer School and Training Program Through its affirmative efforts in small and fragile states, these concepts to real-world examples from CIIP project CIIP has made in-roads in the Eastern Caribbean and portfolio, for example, the agribusiness value chain in the Pacific. A key pillar of CIIP’s knowledge and train- Haiti and pharmaceuticals in Tunisia. Available globally, ing activities is the roll-out of the annual Competitiveness the course has attracted participants from a broad range Summer School training program, jointly administered of lower and middle income countries including Brazil, in CIIP’s first year, with the Inter-American Development Nigeria, Sierra Leone, and Trinidad and Tobago. CIIP Bank. As it has evolved into a full-fledged CIIP program, is tailoring these training offerings for public and private the course syllabus has been progressively elaborated to sector officials in fragile states such as Haiti as well as for focus squarely on the challenges facing developing coun- staff in partner agencies such as the EC and SECO. It is tries. Its case-based methods are used to introduce the key anticipated that e-learning platforms may also be deployed concepts (industry strategic segmentation, industry analysis in the near future. and value chain). Participants are in turn asked to apply CIIP Annual Report 2013-2014 17 • Value Chains across geographically dispersed areas create logistical challenges for businesses, particularly Agribusiness. CIIP support to agribusiness is intended when infrastructure is lacking. CIIP is working in seven to optimize sector productivity, leveraging the agricultural of its projects on value-chain analysis and is supplying endowment in the articulation of interventions that will make tools to help countries overcome logistical supply-side the most of each location’s comparative advantages to facili- challenges. tate a transition to higher-value-added activities. About half of the countries in the current CIIP portfolio feature support These spatial solutions, while conceptually defined, are not to the agribusiness sector. In Sierra Leone and Cote d’Ivoire, mutually exclusive. Rather a combination of these solutions for example, the sector is integral to the development of can be fitted and tailored within a given project to allow growth poles. In terms of design and implementation, the cohesive industry-level support through the specific institu- various country-level engagements differ widely, depending tions that govern the economic geography. Engaging these on the sector context and development goals. In FYROM, project solutions in FY14, nine out of the 12 CIIP project CIIP’s engagement has centered on improving agricultural teams helped establish Public Private Dialogues (PPD) in land administration and on strengthening incentives for pro- client countries; 11 out of the 12 CIIP project teams helped ducers. In Georgia, the work has been at a strategy level with facilitate regulatory changes and policy reforms to promote a secondary focus on capacity-building and innovation; an in- client countries’ competitiveness. depth value-chain analysis will focus on agro-processing. In As an integral part of its approach to competitiveness Kazakhstan, the approach is to conduct sector-level, in-depth strategies, almost all country engagements are financing analysis to explore the potential for cluster development, for rigorous diagnostics to identify and select sectors. Methodical improving the business environment, and for promoting con- sector selection is essential to CIIP’s approach, and project sultations between public-sector officials and private-sector teams are utilizing a variety of frameworks and diagnostic stakeholders. In Croatia, where the engagement’s focus is on approaches for sector prioritization. In the case of Geor- meat production, case studies are evaluating potential areas gia, CIIP implemented a three stage analytical approach to of specialization and comparative economic advantage. identify and prioritize sectors. The process involves an initial assessment of sectors across economic, social, environmen- Tourism. The tourism sector figures prominently in CIIP’s tal, and feasibility dimensions with emphasis on measurable current engagements, with five (Cote d’Ivoire, Sierra Leone, criteria such as growth, equity, costs etc. This is followed by FYROM, Georgia and Tunisia) of the 12 portfolio engage- an in-depth sector analysis and specific time-oriented action ments targeting different types of tourism to drive growth plans and implementation and support. This structured ana- and job creation. The nature of each engagement varies lytical framework for sector selection is instrumental for the from country to country, taking account of the sector’s success of a competitive industries approach as it is nuanced degree of development in each country and the available with rich contextual intelligence related to political economy, array of CIIP instruments. Preliminary analytical and diag- macro and micro indicators of economic performance/ nostic work, in support of sector identification and selection growth, and financial considerations highlighting an invest- through the tourism sector, has been an especially impor- ment orientation. The process is re-iterative supported by tant feature of CIIP projects in the tourism sector. This has analytics and project staff involvement. resulted in specific sector-selection studies, the mapping of constraints and potential opportunities for economic gains, Five specific industry sectors have dominated CIIP’s Portfolio and initial spatial and related diagnostic work around growth during the program’s first year. Below is an assessment of poles with a tourism focus (such as the project in Sierra Le- sector level engagements: one). Sector selection, in projects related to tourism, and of- ten in other sectors as well, is itself an intermediate outcome Figure 1.3 CIIP Projects by Sector indicating the growing reliance and role of market analytics Number of CIIP projects by sector and pre-intervention assessments in growth and competitive- 0 1 2 3 4 5 6 ness projects. Agribusiness In the area of capacity-building for design and imple- Light manufacturing mentation, CIIP has offered support through spatial analysis, Tourism Extractives and local content infrastructure-related PPDs, the identification of growth IT poles, the facilitation of PPD and the training of hotel-indus- Pharmaceuticals Innovation systems try professionals and tourism consultants. CIIP’s engagement Construction materials in FYROM’s tourism sector is aimed at enhancing local and Machinery Material sciences regional competitiveness through increased private-sector Biotechnology investments. CIIP’s Tunisia engagement, meanwhile, has tar- Clean energy Laser and radiation geted competitiveness and employment generation through Aeronautics the expansion of “medical tourism.” Steel Power Petrochemicals Cement 18 Extractive Industries and Local Content. Three of the ence in textile manufacturing by emphasizing the potential 12 current CIIP engagements are focused on the extractives revival of light-manufacturing industries. In Tunisia, ana- sector. The initiative in Cote d’Ivoire focuses on establishing lytical work has identified the potential of manufacturing growth pole, while the Tanzania engagement, which is at garments and textiles; there is the potential for PPD on such a more mature stage, focuses on local-content analysis and issues as productivity growth, wages and job creation. In building downstream linkages. The Tanzania initiative, build- FYROM, the emphasis is on strengthening the Technologi- ing on natural-gas reserves in the Mtwra and Lindi regions, cal Industrial Development Zone (TIDZ) Program and PPP is also aimed at stimulating local economic and enterprise arrangements in the manufacturing sector. In Georgia, an development along the resource corridor. In both Cote analysis of the manufacturing value chain is currently being d’Ivoire and Sierra Leone, initial diagnostic work dealt with conducted. the identification of growth-pole and Special Economic Zone opportunities, with an eye toward attracting private-sector Innovation systems. Promoting innovation systems is a investment. focus in three of CIIP’s 12 current country engagements. Early results in the extractives-sector engagements have In the FYROM engagement, for example, the project’s included promoting a dialogue between the public and focus has been to develop financial instruments in support CIIP Achievements private sectors: In Cote d’Ivoire, consultation about local- of entrepreneurship, commercialization and business in- content development have also paved the way for the devel- novation: The stage is now set for technical assistance and opment of an institutional strengthening roadmap designed capacity-building to boost innovation. Moreover, such PPD to improve execution capabilities around the growth poles, by mechanisms as the Fund for Innovation and Technologi- providing technical support to the zones development agency, cal Development have promoted continuing collaboration key ministries involved in growth poles, and PPD mecha- among Macedonian officials and industry leaders. The Geor- nisms with a diverse group of stakeholders across various gia engagement is now finalizing the “Georgia 2020 Innova- agencies. tion Strategy.” CIIP is supporting innovation in the country by promoting a PPD, and by convening innovation forums. Light manufacturing. About one-third of CIIP’s current These efforts are informing the design of the innovation portfolio targets the light-manufacturing sector. Sector selec- agency and the enactment of the first-ever budget allocation tion in Cote d’Ivoire’s Abidjan-to-Ouagadougou regional for innovation and technology absorption. corridor (the Bouake pole) seeks to build on the area’s experi- Figure 1.4 Tanzania LNG Plant: Total Project Cost vs. Likely Market Capture 1,600 1,400 Total aggregate demand 1,200 Local Capture - High Estimate 1,000 Expected Local Capture Estimate USD$ MN 800 600 400 200 0 Q1 Q2 Q3 Q4 Q5 Q6 Q7 Q8 Q9 Q10 Q11 Q12 Q13 Q14 Q15 Q16 Q17 Q18 Q19 Q20 Q21 Q22 Q23 Q24 Q25 Q26 Q27 Q28 Project Construction Timeline (in quarters) Source: DAI Figure 1.6: Based on estimated market demand and measurements of competitiveness of local Database firms, likely local capture could range around 8-16% of total project cost. The graph depicts the total estimated cost of the LNG project over 7 years with bulk spending occurring between Q8 and Q24. CIIP Annual Report 2013-2014 19 Cross-cutting themes Box 1.4 Collaborative Governance and PPDs Four cross-cutting themes have emerged across the current engagements in CIIP’s portfolio: Collaborative governance is defined as the ability of the government to “leverage private expertise, energy, • Collaborative Governance and money by strategically sharing control — over the • Public Sector Management for Private Sector Develop- precise goals to be pursued and the means for pursu- ment ing them — between government and private players” • Innovative Funding Mechanisms (Donahue and Zeckhauser 2012, 4). • Clusters and Sub-National Institutions PPDs are the primary vehicle fueling collaborative governance in CIIP operations. Nine of the current 12 Collaborative Governance. CIIP projects aim to pro- CIIP-funded projects have PPD mechanisms, which mote collaborative governance and operational learning have helped create pathways for immediate informa- through active knowledge-sharing among project teams, tion-sharing and long-term learning across CIIP’s partners and country stakeholders. Embedded in most CIIP portfolio. operations are PPD mechanisms and harmonized donor For example, in Tunisia PPDs are organized on two processes, all of which promote a spirit of partnership and levels: (1) a high-level task force comprised of ministry an atmosphere of open dialogue. PPD has been one of the staff, the private sector and some development partners, key platforms and vehicles driving CIIP process of change. which is responsible for cluster selection and major deci- Nine of the current 12 CIIP-funded projects have PPD sion making, which meets weekly; and (2)a sectoral-level mechanisms, which have helped create pathways for im- PPD addressing sector-specific work that will soon have mediate information-sharing and long-term learning across sub-PPDs for each of the ten sectors with completed CIIP’s portfolio. In addition, these mechanisms have served analytics. The main stakeholders of the PPD are the as platforms helping government prioritize sectors for policy public sector led by the Ministry of Economy, the signa- intervention and growth in at least five of the 12 projects. tories of the National Pact (government, the trade union Almost every CIIP project team has worked with client coun- and the major private sector association UGTT, and tries’ governments to craft customized PPD mechanisms that UTICA), the private sector, in addition to a specially respond to the local political-economy context. In Tanzania, created Independent Council of National Expertise. for example, the PPD is focused on developing local-content The PPD process is allowing participants to voice priori- policy, while in Haiti PPD has focused on institutional ties and challenges within the specific industries and re- strengthening and sector prioritization. gions where there may be particular measures that can PPD mechanisms supported by CIIP project teams increase productivity, wage growth, or jobs. In addition, are custom-designed to each country context. Across these the involvement of permanent civil society organiza- engagements, some commonalities have emerged, includ- tions such as UGTT and UTICA is a critical element of ing: (1) Working across multiple public-sector institutions, as the reform process as they have served as deal brokers well as private-sector organizations, to achieve inclusive and between the various parties of the political dialogue collaborative design processes; (2) Bringing together public- since the revolution. The use of a committee of local sector and private-sector actors to propel SME growth; and experts in the PPD has provided a dilution of political (3) PPDs on sector prioritization. preferences in the process and reform and allowed the CIIP team to focus on growth and job creation. 1. CIIP projects have worked across institutions and bridge multiple public-sector agencies, as well as private-sector Source: Source: Donahue, John D. & Richard J. Zeckhauser. 2012. actors, to achieve inclusive and collaborative design Collaborative Governance: Private Roles for Public Goals in Turbu- processes. This, in turn, has numerous benefits. Coor- lent Times. Princeton, N J: Princeton University Press. dination across different actors increases efficiency and improves capacity to plan and govern. Input from the private sector means better and more relevant design. been successfully established and, in May 2014, the Coordination can also increase transparency and ac- team launched an SMEs survey to support economic- countability in the process of selection to avoid capture diversification efforts. In Vietnam, CIIP’s team has by one group. helped promote PPD between the government and SMEs to improve SMEs’ access to finance. A planned 2. Some projects have brought both the private and public Business Development Facility will support SME sectors in interventions designed to propel SME growth. development and increase participation of local SMEs in In Sierra Leone, anchor investors are poised to make regional value chains and clusters. financial contributions to SME-support programs (TVET, Suppliers, etc.), and early steps have been 3. CIIP has worked with country governments to prioritize taken to secure these investments, notably through and sequence sectors to fit into each country’s platform technical assistance. A PPD on SME development has for industrial policy. In some instances (such as Croatia, 20 manufacturing) and has been establishing financial and non- Box 1.5 Public Sector Management for Private financial instruments to support entrepreneurship in those Sector Development: Macedonia and Cote d’Ivoire sectors, including leveraging government financing. Highlights Public Sector Management for Private Sector Devel- Macedonia. In Macedonia PPD mechanisms have opment. Two themes have emerged through CIIP’s efforts: included regular participation by senior advisors and (1) CIIP’s efforts have contributed to advancing new strate- Ministers of agriculture and finance; the heads of gies for policy-focused interventions at the industrial level departments in ministries and the office of the Deputy and engagement through private sector development, and Prime Minister for Economic Affairs; the heads and (2) CIIP has helped create new national institutions support management boards of agencies (e.g., the Directorate private sector development. for Technological Industrial Development Zones, the In terms of new strategies: CIIP has helped promote Agency for Foreign Investment and Export Promotion, new strategies in such countries as Croatia, where the the Food and Veterinary Agency, the State Sanitary engagement has helped improve the government’s capacity and Health Inspectorate, the Agency for Promotion for absorbing EU structural funds by proposing a simplified CIIP Achievements and Support of Tourism, and the Fund for Innova- typology relating availability of information on the economic tion and Technological Development); and university specialization. faculty members, foreign investors and business cham- CIIP’s initiative in Kazakhstan also proposes an inno- bers in the country. All partners have become carriers vative approach to competitive industries, which examines for the message of reform, which benefits the growth transactions and dynamics between firms and produces ac- and competitiveness of Macedonia’s economy as a tionable plans and implementation mechanisms building the whole. Roundtable discussions have brought public- and government’s capacity for a more market-oriented approach. private-sector representatives together to discuss the In terms of new structures: CIIP has also helped cre- challenges and opportunities for investment and job ate new structures and institutions through which private creation in the automotive and agribusiness sectors. sector development can be steadily pursued. In Georgia, for example, CIIP has contributed to the creation of two Cote d’Ivoire. A key feature of Côte d’Ivoire’s growth- agencies, GEDA (entrepreneurship and export development) poles effort has been the involvement of multiple institu- and GITA (innovation), and in the drafting of their structure, tions across the public sector (the Presidency; the Prime strategies, mandate and implementation arrangements. Al- Minister’s Office; the Ministries of Planning, Industry locations were made in the state budget of Georgia for both and Mines, and Tourism; and the agencies oversee- of those agencies. Knowledge-building events and technical- ing SEZ development and investment promotion) as consultation meetings were also held with participation well as the private sector. Inclusive and collaborative of experts from Chile, Poland, Croatia and Israel to help design processes around two SEZ initiatives (in Bouake transfer knowledge to GITA and GEDA on such matters as and San Pedro) are part of the process that is building types of products, distinct features, organization of selection Côte d’Ivoire’s capacity to plan, execute and govern process and the creation of an independent Selection Com- growth poles. These efforts bode well for such sectors mittee. as agribusiness, where the lack of coordination among In FYROM, CIIP’s engagement has helped develop new public- and private-sector actors has, in the past, been models for the TIDZ (a special economic zone) including the source of failure. PPP arrangements that can attract private management and investment, and the transfer of the management of indus- Haiti and Tunisia), CIIP has helped develop strategies trial zones to municipal governments. CIIP’s engagement is that will focus on sector prioritization. In Tunisia, for also supporting measures to strengthen the accountability example, the government is currently developing a “Vi- framework for state aid, to ensure a predictable environment sion and Sector” development strategy, for which sector for investors and more effective monitoring of associated fis- analytics conducted by CIIP have provided the foun- cal costs. dation, while in Croatia, CIIP informed the country’s In Cote d’Ivoire, CIIP-financed efforts are helping the Smart Specialization Strategy which is predicated on government develop an institutional strengthening road- competitive advantage and innovation. map designed to improve execution capabilities around the growth poles, including a number of organizational devel- In other cases, CIIP has helped identify sectors with com- opment activities, for instance, of the zones development parative advantages that then support other interventions (in agency, and key ministries involved in growth poles. Knowl- such engagements as Russia and Cote d’Ivoire) or support edge-sharing around sectoral and spatial solutions, as well sectors through direct analytical work. In Russia, four clus- as lessons learned from other countries with pilot agencies ters were selected by region, based on areas that had sectoral or delivery units, is an important feature of CIIP-financed comparative advantages. The CIIP team in Georgia has institutional-development activities also been working on financing innovation and technology In Ethiopia, the CIIP project is informing a law on absorption in key sectors (such as ICT and high-value-added Special Economic Zones, which provides support and regula- CIIP Annual Report 2013-2014 21 tion for all zones across the country. In addition, with CIIP ments in Ethiopia’s greenfield (and possibly, in the future support, the government established the Ethiopian Industrial brownfield) zones. Development Zone Corporation (EIDZC) and a regula- tory body within the Ministry of Industry to oversee zone Clusters and subnational institutions. CIIP’s engage- development and operations with performance and selection ments are developing a greater awareness of the develop- criteria for zone developers, managers, service providers, and ment potential of sector-specific clusters, helping debunk investors. misperceptions and dogmas about market-oriented growth. In its engagement in Russia, for example, CIIP has made Innovative Funding Mechanisms. CIIP is engaged in a significant contribution to the policy dialogue of select a series of innovative funding mechanisms to spur innova- Russian regions where the project had engagements. The tion and competitiveness across its portfolio. For instance, In project has helped position the development of dynamic Haiti, CIIP is promoting innovative cluster funding mecha- and sustainable clusters as a key pillar of regional economic- nisms. The proposed Competitiveness Facility will provide an development strategies, and it has provided tangible advice incentive for the local PPD efforts and eventually, for cluster on how to strengthen cluster development. Similarly, in development. Specifically, it will provide access to finance for Haiti, CIIP has been working with subnational institutions enabling infrastructure and capacity building to local clusters on cluster development. The team has identified industries in with a view to leveraging private investment and promoting agriculture and light manufacturing where there are regional firm level competitiveness. comparative advantages. The Ethiopia country engagement is also promoting Within the CIIP portfolio, nine projects are working with innovative fiscal design. Over the course of project prepara- clusters and a third of them are using government institu- tion, the government developed and adopted an innovative, tions to develop innovation systems in support of those rules-based approach for developing industrial infrastructure clusters (Figure 1.4). The institutions which govern cluster in a sustainable manner. A federally managed ”IZ financ- development are particularly suited to managing innovation ing window” offers access to hard IDA financing for those systems in support of industry level efforts. For example, in industrial zones that that meet such eligibility criteria as Croatia CIIP is making use of industry-specific analytics to implementation of IZ policies and procedures, completion of inform the country’s Smart Specialization Strategy, which feasibility studies, and compliance with safeguards. The IZ will in turn see the improvement of production processes in window has the potential to serve as a policy lever to ensure at least three agribusiness clusters. the efficiency and effectiveness of public and private invest- 22 CHAPTER 2 CIIP Project Results: Operational Highlights In FY14 CIIP support to country operations focused on developing a process of change around com- petitive industries. This process is a complex one which has involved creating awareness and under- standing about the benefits of competitive industries and potential gains of undertaking a variety of competitiveness strategies. As highlighted throughout this chapter CIIP’s portfolio has a broad global reach with multiple methods and tools for promoting competitiveness. Several early indicators highlight the success of CIIP in creating awareness of competitive industries across its portfolio—from the adop- tion of new private sector development strategies and sector prioritization activities in country opera- tions to the learning and research activities generating new knowledge around competitive industries. Through its operational activities, CIIP has not only generated new support for competitive industries, it has generated substantial leverage. The operational and analytical work of CIIP is setting a prec- edent for the trust fund’s activities in the years to come, and it is creating a new and unparalleled global agenda on Competitive Industries and Innovation. This chapter highlights the achievements of the 12 CIIP-financed projects, as well as of CIIP-financed knowledge and learning activities in FY14. It has been informed by the CIIP Secretariat’s regular moni- toring of active grants as well as the Bank’s annual Grant Reporting and Monitoring (GRM) exercise. The chapter’s first section highlights achievements of each project on the ground. The second section provides a review of knowledge products financed by CIIP. In addition, Annex 2 provides detailed reports on the country context, achievement of objectives, implementation progress and early results of each project through June 30, 2014. Additional information on the projects’ financials is included in Chapter 3. Harvesting Rubber in Côte d’Ivoire (see pages 24 and 44) 23 CIIP-financed Operations: Project Summaries and FY14 Achievements COTE D’IVOIRE Flagship Transformational Growth, Competitiveness, and Jobs Program Leverage FY15 IDA Growth Pole operation ($50 million) Partner Coordination African Development Bank, European Commission Instruments Emerging from a decade of economic and sociopolitical crisis, Cote d’Ivoire has endorsed an ambitious Sector analyses program of accelerated and sustained private-sector-led growth, focused on a number of high-potential Spatial analyses sectors (e.g. cashews, rubber, palm, textiles and manufacturing) through a “growth poles” approach that PPD aims to exploit agglomeration economies and foster spatial development. Through a range of analyti- Institutions cal and consultative activities, the CIIP grant has helped the government identify two growth poles in TA Bouake and San Pedro. The sectoral and spatial analyses conducted by CIIP have shaped the design of Integrated Solutions the growth poles approach and are leveraging tangible early investments. At the government’s request, Value chains IDA is preparing an FY15 operation to design the two growth poles, to which other donors, such as the Zones EU and ADB, are expected to contribute. Given the relevance of Special Economic Zones (SEZs) to Growth poles growth poles in Cote d’Ivoire, CIIP has also provided technical assistance on setting up a zones agency and on implementing a step-by-step approach to zone development at the request of the government. Industries Agribusiness CIIP helped build investor confidence through a high-level Investor Forum held in Abidjan in January Manufacturing 2014 which, together with the strong support signaled by the Ministry of Industry, is expected to build Extractives a strong investor pipeline. One of the most significant early achievements of CIIP is the involvement of Tourism multiple institutions across the public and private sectors: The inclusive and collaborative design pro- cesses around the two growth poles are expected to significantly increase the country’s capacity to plan, execute and govern enclave approaches. CIIP has also financed a series of institutional development activities, including the zones agency, ministries, and a PPD mechanism with diverse stakeholders. The grant has substantially leveraged ongoing and planned investments from across the World Bank Group in relevant engagements such as agriculture, transport and ICT, energy and extractive industries, and education. CROATIA Smart Specialization Project Leverage Absorption of EU structural funds ($2.5 billion), Science and Technology Project II ($31.6 mil) Partner coordination Organisation for Economic Co-operation and Development, European Commission Instruments CIIP has supported Croatia’s efforts to expand exports, enhance firm-level competitiveness and create Trade outcome analysis sustainable jobs through the preparation of a Smart Specialization Strategy (S3), which aims to focus Competitiveness assessment national and regional resources on areas of competitive advantage. The CIIP grant has substantially PPD informed Croatia’s S3 and will leverage approximately $ 2.5 billion from the EU’s Structural and Invest- Strategy formulation ment Funds, for which the S3 is an ex-ante condition for access. The CIIP analysis is also informing an TA existing World Bank loan of $31.6 million (“Science and Technology Project II”), which aims to support Integrated solutions Croatia in the absorption of EU funds in the research and innovation sector. Value chains Clusters The CIIP engagement has significantly influenced the policy dialogue through a number of analytical and consensus-building activities with a broad range of public and private stakeholders. The CIIP team Industries prepared a number of analytical reports on trade, productivity and innovation, examining the main Clean Energy constraints and opportunities for growth. Those reports contributed to an informed decision-making Agribusiness process with a number of major implications: (i) ex-post allocation of resources based on results and Biotechnology flexibility for policy and program experimentation; (ii) gradualism in the expansion of programs; and (iii) Material sciences full integration of monitoring and evaluation mechanisms in design and implementation. The consensus- building and analytical work have also significantly enhanced the government’s capacity to design and implement growth strategies, and they have shifted the policy dialogue in the country. The typology proposed by the CIIP analysis encourages the process of self-discovery and iterative learning through ex- perimentation and adaptation. In addition, the national and regional workshops organized by the team mobilized and informed public debate and built consensus around the proposed strategy. 24 ETHIOPIA Competitiveness and Job Creation Project Leverage Competitiveness and Job Creation Project ($270 million) Partner coordination UK Department for International Development, US Agency for International Development, European Commission Instruments The government of Ethiopia aims to attract investments in light manufacturing in order to boost Feasibility studies exports, spur job creation and promote SME development. The government’s strategy employs Special Regulatory framework Economic Zones (SEZs) as the instrument of choice. That approach would be supported by a sound Institutions and PPD legal and institutional framework, a clear industry focus, an ecosystem approach, and a focus on social Financing Window and economic spillovers. CIIP has the opportunity to support Ethiopia’s structural transformation Industrial infrastructure through accelerating the implementation of the $270 million IDA Competitiveness and Job Creation Integrated solutions Project. CIIP, jointly with DFID, USAID and the EU, has supported early implementation efforts, such Value chains as putting in place a legal framework for zones, creating the new Ethiopia Industrial Development Zone Project Results Zones Corporation (EIDZC) and rolling out the IZ strategy. The grant has supported a detailed review of fea- sibility and design studies, related to zones, drafted policies and government manuals, and has informed Industries the country’s light-manufacturing strategy with policy notes on skills, access to finance and investment Agro-processing climate. Leather goods Textiles/garments CIIP’s efforts have had a direct impact on policy and institutional reforms. The proclamation on SEZs, as well as the newly established EIDZC, forms the overall governance framework for all zones in the country, and the IDA project provides technical support to the regulatory function governing all zones. In addition, CIIP and IDA have been instrumental in incorporating lessons learned from existing zones in Africa into IZ design which is likely to boost impact and sustainability and to enhance linkages to the broader economy. Those design elements include a skills-development center, a day-care facility, a Business-to-Business Linkages Fund, an initiative to strengthen linkages between the firms in the zones and the local private sector enterprises, and a program that provides matching grants to enhance local firms’ capacity. CIIP also contributed to the government’s innovative rules-based approach to develop- ing industrial infrastructure through a federally managed IZ financing window with a set of eligibility criteria, which has the potential to serve as a policy lever to ensure the effectiveness and efficiency of public and private investments in zones. FYR MACEDONIA Competitive Industries and Innovation Support Program Leverage Two DPLs ($100 million), a third one under preparation ($68 million), Skills Development and Innovation Support Project ($24 million), Western Balkans Regional Trade Logistics Project (IFC), Local and Regional Competitiveness in Tourism (EU, EUR 18 million) Partner coordination US Agency for International Development, European Commission Instruments In order to address unemployment and promote shared prosperity, Macedonia is pursuing a growth Institution building agenda aimed at transitioning the country to a higher growth economy based on advanced manufactur- Export promotion ing capabilities and more competitive export-oriented enterprises. The CIIP grant has been supporting Zone governance the government’s agenda by leveraging reforms supported by two World Bank DPLs in the amount of SME support services $100 million, with a third one under preparation. The CIIP engagement has contributed significantly PPD to the process of change through attracting greenfield investments and scaling up export-promotion Integrated solutions activities in high value-added manufacturing, and enhancing the governance of the Technological Value chains Industrial Development Zone (TIDZ) Program by including the private sector in the governance of the Clusters zones and improving the targeting of investment resources. The reforms supported by CIIP have also Zones strengthened the government’s capacity to manage state-owned agricultural land and allocate financial support to agricultural producers. CIIP also helped improve the efficiency of trade logistics services by Industries facilitating transport of goods at border crossings and increasing the export readiness of the transport Agribusiness industry. CIIP provided critical assistance to the design and establishment of the Fund for Innovations Manufacturing and Technological Development and helped develop the pilot financing instruments in support of Tourism entrepreneurship, innovation commercialization and in-house business innovation. In tourism, CIIP helped identify the binding constraints and development opportunities for increased competitiveness of the sector. The CIIP engagement has significantly strengthened the capacity of government institutions, and created sustainable PPD mechanism that have been the conduits of reform. The successful implemen- tation of the policy reforms leveraged under the first two DPLs has contributed to the increase of net export of manufacturing firms located in the SEZs or located outside but receiving tax breaks under the law from EUR 87 billion in 2013 to EUR 190 billion in 2014, and employment from 5,000 workers in 2013 to 9,000 workers in 2014. The share of medium and high-tech exports in total exports has also increased from 40.7 percent to 45 percent over the period. CIIP Annual Report 2013-2014 25 GEORGIA Competitiveness and Innovation Program Leverage A series of three DPLs (amount TBD), Innovation Operation ($40 million), State budget allocation for new agencies ($24 million) Partner coordination European Commission, US Agency for International Development , United Nations Development Program, European Bank for Reconstruction and Development, GIZ Instruments The government of Georgia has requested World Bank support in pursuing its competitiveness agenda, Trade diagnostic and developing the institutional framework for innovation and export promotion, entrepreneurship Strategy formulation and SME development and internationalization. With the support of CIIP, the policy and implementa- Institution building tion focus in the country has been transformed. Following its initial sector and trade diagnostic, CIIP is PPD substantively informing the innovation and competitiveness architecture of the country and establishing SME support public-private dialogue mechanisms that will be instrumental to the successful sequencing of reforms Integrated solutions and public investments. The CIIP engagement will leverage a series of three DPLs for 2015-2017 and a Clusters new investment lending operation for ICT and Innovation in 2015. Value Chains The CIIP team has provided extensive policy advice, knowledge transfer and capacity building support Industries through capacity building seminars, Innovation Forums, detailed input to the creation and operation- Agro-processing alization of two agencies, GITA (innovation) and GEDA (SME and export development), as well as Manufacturing contributions to the draft Economic Development Strategy and the Innovation Strategy. For the first Electronics time in the country’s history, allocations were made in the State Budget for innovation and technology Pharmaceuticals absorption for GITA ($7 million) and for SME and export development for GEDA ($17 million). CIIP IT/ICT has been working on financing innovation and technology absorption in key sectors and establishing financial and non-financial instruments to support entrepreneurship in those sectors. In addition, CIIP has been working to facilitate a PPD (through the Competitiveness Council and the ICT and Innova- tion Council) and to ensure that businesses (particularly domestic firms) are well represented in the decision making process. A number of task forces and working groups have also been established for consultations and policy formulation in selected areas. In early 2014 the Economic Reform Advisory Council was established as a permanent mechanism for public-private dialogue. HAITI Strengthening Competitiveness Implementation Capacities Leverage Business Development and Investment Project ($20 million) Partner coordination US Agency for International Development, Inter-American Development Bank, European Commission - PAMCI initiative Instruments The government of Haiti has put private sector development at the center of its post-disaster recovery Sector prioritization and long term development strategy. Enclave initiatives have played a central role in the government’s Regional development efforts to promote investment and decentralize growth outside of Port au Prince promoting regional Competitiveness Fund development. CIIP has taken the opportunity to help the government thoroughly rethink its approach Local PPD to the design and implementation of competitiveness strategies and move towards a more inclusive Competitiveness training “governance approach” to industrial development that draws on country capacities and local institu- Integrated Solutions tions across the public and private sectors, and relies on implementation mechanisms that empower, Zones test, and reward the domestic private sector and subnational authorities. CIIP’s engagement has lever- Clusters aged IDA’s $20 million Business Development and Investment Project that was restructured to reflect Growth Poles the government’s evolving approach. Value Chains The CIIP grant has influenced the strategy of the Ministry of Commerce and Industry, which Industries in recognition of the limitations of IEZs is implementing a cluster approach based on continual Agribusiness identification of new global opportunities and support for emerging local clusters. With CIIP’s help, Manufacturing the government is developing collaborative institutions with the private sector. Inclusive PPDs have supported sector prioritization and the design of competitive strategies in ten different provinces. The PPD process will be further formalized and enhanced through the Entrepreneurship Support Services (SAE) Program through which Enterprise Competitiveness Agents from the Ministry will work with local entrepreneurs to carry out competitiveness initiatives. In addition, CIIP has launched the first module of an innovative competitiveness training program which will create a cadre of local enterprise agents and private sector actors trained in contemporary value chain and cluster develop- ment methodologies and approaches. The innovative Competitiveness Facility, designed by CIIP, will provide access to finance for enabling infrastructure and capacity building to local clusters with a view to leveraging private investment. 26 KAZAKHSTAN Competitiveness and Economic Diversification Project Leverage Component in SME Competitiveness and Access to Finance Project ($20 million), inform approximately $2.1 billion of the Partnership Framework Agreement for Sustainable Development and Inclusive Growth Partner coordination Organisation for Economic Co-operation and Development, European Commission Instruments The government of Kazakhstan has expressed a commitment to economic growth, competitiveness Sector prioritization and diversification into non-extractive industries and has developed an industrial policy focused on the Trade diagnostic growth of manufacturing and the development of a knowledge-based economy. The CIIP grant aims Strategy formulation to pilot an approach to support the competitiveness of higher value-added production in non-extractive Regional development sectors in and around priority areas, with a particular focus on SME development in those sectors. PPD CIIP’s engagement has shaped and informed the policy dialogue in Kazakhstan and helped the govern- Integrated Solutions ment to develop a sound understanding of policy priorities, characteristics and weaknesses of past and Project Results Value chains current approaches. The grant has supported technical assistance, an analysis of the economic condi- Clusters tions in each of the 14 regions of the country, just-in-time high level trade competitiveness diagnostic and analyzed data on SMEs in Kazakhstan. Industries Agriculture The team has developed an innovative approach to competitive industries in Kazakhstan that reflects Machinery the context in the country and draws on international good practices. CIIP will examine the clusters Food processing proposed for development by the government and inform the selection of industries in which to pilot Construction materials the recommended approach. A wide variety of public and private stakeholders will participate in the pi- lots. Through its analytical work and technical assistance to date, the CIIP grant helped inform approxi- mately $2.1 billion of the total $5 billion Partnership Framework Agreement between the government and the World Bank. CIIP specifically informed spending priorities around the role of the private sec- tor, SMEs and business climate; innovation; and addressing the skills gap. In addition, CIIP has directly contributed to the design and inclusion of a $20 million component on Regional Competitive Industries in the $100 million SME Competitiveness and Access to Finance Project. RUSSIA Stimulating Investment and Jobs through Innovative Clusters Leverage Forthcoming SEZ Lending operation ($200 million), Two RAS Partner coordination European Commission, The government of Switzerland, The government of Austria Instruments Current public efforts at fostering innovation in Russia through instruments such as technology parks, Cluster selection incubators, venture parks etc. have not yielded results, partly because these instruments are not always Cluster management tailored to the local needs of regions, and are funded through federal channels. Cluster initiatives in Regional development Russia hold the promise of bringing more relevant regional policy responses and support mechanisms SME linkages to firms, and the CIIP grant aimed at improving the effectiveness of cluster governance and manage- PPD ment and helping firms create high quality jobs through better products and services exported to global Integrated Solutions markets. CIIP identified four clusters – the Novosibirsk information technology cluster, the Tomsk IT Clusters and pharmaceuticals cluster, the Troitsk new materials, laser and radiation technology cluster, and the Ulyanovsk aeronautics cluster – and helped them strengthen their management and governance Industries through a number of activities. Pharmaceuticals IT CIIP’s engagement made a significant contribution to the policy dialogue in the four regions. It helped Laser and Radiation position the development of dynamic and sustainable clusters as a key pillar of regional economic Aeronautics development and provided tangible advice and implementation know-how on how to strengthen cluster development. Public-private dialogues were held in each region involving firms, cluster leadership, regional government officials from various ministries, regional cluster development centers, research institutions and innovation support infrastructure. The project used a mix of technical assistance includ- ing knowledge transfer and learning by doing, small pilots implementing collaborative activities with the selected clusters and the development of concrete action plans and recommendations for public and private stakeholders. The project raised awareness about the benefits of collaboration through clustering and has thus catalyzed a demonstration effect. Two separate Reimbursable Advisory Services (RAS) projects for two of the regions are currently under preparation between the World Bank and the government of Russia. In addition, the team has been able to use the PPDs in the clusters to help set up a forthcoming $200 million SEZ lending operation, which will include two of the clusters. CIIP Annual Report 2013-2014 27 SIERRA LEONE Growth Poles Program Leverage Forthcoming IDA Growth Poles operation ($15 million) Partner coordination UK Department for International Development, GIZ, African Development Bank, European Commission Instruments The industrial mining boom has significantly improved Sierra Leone’s short-term prospects, but to Spatial analyses reach middle income status the country needs to diversify the economy away from extractives in part Strategy formulation by leveraging scale and agglomeration economies. The government’s growth strategy is focused on Local content and SME support enhancing industrial competitiveness in key sectors such as agriculture, manufacturing, fisheries and Institution building and tourism through extractive-driven growth poles and corridors. CIIP has been supporting the govern- knowledge transfer ment’s growth pole program through identification of the growth poles and designing investments PPD through public-private dialogue. The team produced an analytical report, a “slideument,” identifying Integrated Solutions three different growth poles with different groupings of growth sectors, which has had a significant im- Value chains pact on strategy formulation and decision-making in the country, and will leverage a forthcoming IDA Clusters operation on Growth Poles. Growth poles CIIP’s multi-sectoral analysis has helped design a long-term growth poles strategy, select interventions Industries and signal commitment along the grant’s four work streams: (1) a proposed delivery system will address Agriculture the current lack of effective inter-ministerial collaboration and capacity to support the approach; (2) the Fisheries deals orientation of the proposed growth poles approach focuses on developing shared infrastructure to Extractives Tourism encourage spillovers; (3) catalytic interventions directed at the private sector will be informed through sector analyses, local content compact and an SME support program; (4) social capital development in the growth poles has been informed by CIIP analysis defining the environmental and risk framework that will govern the IDA and other donor growth pole projects. Through the range of interventions so far, the CIIP grant has promoted an inclusive public-private dialogue around the design and imple- mentation of growth poles and built the government’s cross-sectoral coordination capacity. In addition, CIIP’s study on the commercial viability of Sierra Leone’s deep sea port has informed the government’s intention to expand its ‘deals horizon’ on shared transport infrastructure which has the potential to be a game-change for Sierra Leone and neighboring countries. TANZANIA Developing Local Industries Connected to Natural Gas Discoveries Leverage Forthcoming IDA Growth Poles operation ($20 million) Partner coordination UK Department for International Development, The government of Norway, European Commission Instruments In 2012 Tanzania tripled its appraisal of natural gas reserves, the majority of which are off-shore and Scoping and diagnostics require exploration below sea level. To develop these reserves international gas companies plan to Strategy formulation invest between $20 and $25 billion in Tanzania over the coming decade, including the construction of Local content a large liquefied natural gas (LNG) plant. The CIIP grant aims to help Tanzania capitalize on the local Institution building and economic and enterprise development opportunities linked to the natural gas discoveries through the knowledge transfer development of a natural gas strategy, as well as through leveraging a private sector gas value chain PPD project in close collaboration with the main investors (British Gas, ExxonMobil, and StatOil), which is Integrated Solutions currently under discussion. Value chains Clusters Over the past year, CIIP’s team has conducted an in-depth analysis of local content opportunities and Growth poles identified local industries that can benefit the most from natural gas-related investments. The analyti- cal work includes a demand forecast, gap analysis, supplier development strategy, and a series of case Industry studies and seminars. This thorough analysis has helped inform the government’s draft Local Content Extractives Policy which could potentially leverage private investment of around $1.6 billion. In addition, CIIP’s team has catalyzed a series of public-private dialogue discussions with the private sector, civil society organizations, academia, and donor organizations, sharing experiences from other resource-rich coun- tries and proactively helping the country navigate the political economy risks typically associated with natural gas investments. CIIP will conduct analysis of downstream opportunities arising from the gas discoveries, which will additionally enrich the policy dialogue and allow lead time for the development of cross-sectoral interventions and prudent measures to avoid the resource curse. 28 TUNISIA Sector Competitiveness Diagnostic and Public-Private Dialogue Leverage Third Export Development Project ($100 million) Partner coordination African Development Bank, European Commission Instruments Tunisia’s per capita growth continues to be lower than a sample of regional and global comparators and youth Sector analyses unemployment continues to be a major challenge. The CIIP grant aims to contribute to the development of a Strategy formulation comprehensive package of reforms to promote exports and foster private investment. The team aims to identify Sector and help strengthen promising clusters in Tunisia based on cross-sectoral diagnostics and extensive public-private PPD dialogue. The grant has helped transform the government’s strategy towards the development of sector-specific Competitiveness Fund industrial policies and the PPDs supported by CIIP have underpinned all sectoral analytical work. The output of TA these analyses is informing the World Bank’s newly approved Competitiveness and Export Development Project, Integrated Solutions of $100 million. Project Results Value chains Clusters Over the first year of implementation, CIIP’s team conducted an extensive consultative process and selected a long list of 10-12 sectors on which to focus. CIIP conducted the initial analyses for four sectors – pharmaceuti- Industries cals, IT, garments and textiles, and medical tourism – focusing on employment, competitiveness (using Porter’s Pharmaceuticals diamond analysis) and exports. The government has hired external consultants to complete the remaining sector IT analyses which will be a substantive input to a sector development strategy, which is currently under preparation. Garments/Textiles One of the most significant accomplishments of the CIIP grant to date is the creation of a long-term sustainable Medical Tourism PPD process in Tunisia. PPDs in the country are organized on two levels: high level task force responsible for sec- tor selection and decision-making and sectoral PPDs for each of the sectors being analyzed. The involvement of civil society organizations has been particularly critical to the reform process as they have served as deal brokers between the various political parties since the revolution. In addition, a committee of local experts in the high- level PPD is helping build collaborative governance and to promote industry-led growth through regular weekly meetings. VIETNAM Regional Competitiveness and Job Creation Project Leverage Forthcoming Regional Competitiveness and Job Creation Project ($100 million) Partner coordination The government of Switzerland, The government of Japan, The government of Korea, European Commission Instruments Despite Vietnam’s recent strong economic performance, there are significant regional disparities in the country, Sector analyses with lagging and poor regions such as Thanh Hoa (TH) showing more pronounced development needs. Thanh Investor promotion Hoa province has an opportunity to enhance private sector and SME growth around the $21 billon of planned Regional development investment in the Nghi Son Special Economic Zone (NSSEZ), allowing for regional growth and job creation in SME linkages the province and potentially having a demonstration effect for the rest of the country. The CIIP grant is leverag- PPD ing the proposed IDA Vietnam Industry Competitiveness Project of $100 million and aims to enhance competi- Integrated Solutions tiveness around the value chain of anchor investments in the zone and create linkages to SMEs through targeted Value chains interventions. CIIP funds also support the building of the private investment pipeline for anchor and supporting/ Economic zones supplier industries in the zone. Industries Since its inception, the CIIP grant has been instrumental in shaping the policy dialogue and significantly contrib- Cement uting to the effective utilization of public funds. The team has completed the identification of high impact, high Petrochemicals feasibility sectors in the province and has conducted detailed sector analyses of four sectors: cement, petro- Power chemicals, power and steel. The grant has also supported the detailed case studies of international benchmarks, Steel an assessment of existing SME linkages programs, an initial assessment of the zone master plan, an assessment of FDI trends, design of a PPD mechanism and creation of an expert advisory group, as well as a number of forums and workshops. CIIP interventions have enhanced the government’s understanding of investor services, and in particular the relevance of safeguards and environmental issues, as well as the role of SMEs in industrial policy. A planned Business Development Facility will support SME development and linkages between the local economy and anchor investors through the provision of business development opportunities, an accelerator program and a cluster development program. CIIP Annual Report 2013-2014 29 Knowledge Management and Learning Activities ment competitiveness strategies. It pushes the knowledge In FY14, CIIP financed two types of knowledge and learn- frontier on “what works” in competitiveness and innovation ing activities: (1) Activities undertaken as part of CIIP- by sharing real lessons in real time from its active country Financed Operations; and (2) Global knowledge activities. engagements with its clients and partners, and by motivating CIIP country operations employ a series of analytical tools cutting edge operational research across its global network of that aim to push the knowledge frontier on “what works” academic, policy, and industry actors. in competitiveness and innovation by sharing lessons in real All CIIP global knowledge activities aim to promote op- time through active country engagements. In addition, the erational learning through active knowledge sharing among global knowledge activities, financed by CIIP, aim to as- project teams, partners and country stakeholders. The sert cutting-edge operational research across CIIP’s global ultimate goal is to inform the design and improve the overall network. CIIP’s knowledge agenda fully leverages expertise effectiveness of country programs. In FY14 CIIP allocated across the program’s network of experts and practitioners, resources for knowledge activities that aim to help identify the WBG and the other partners’ staff. Joint approaches are lessons about the “nuts and bolts” of implementation issues, intended to reduce duplication and redundancy, and also to as well as resources to applied research that advances the enhance the quality of knowledge and operations. state of theory and empirical research on competitiveness. CIIP also organized a number of high profile knowledge and training events – including an annual global conference Operational Analytics and Support – at which it actively disseminated knowledge products to its CIIP project teams provided technical assistance and expanding network of contacts. CIIP’s new website features analytical work customized to fit the demands of country all its knowledge products. CIIP has also frequently used governments within each CIIP-financed country operation. the WBG’s Private Sector Development blog and its Twitter Analytical and advisory work inform the design and sequenc- account to promote the knowledge activities to an even wider ing of CIIP operations. Just-in-time analytics are a necessary global audience. part of all project preparation; all of the types of analyses Global Knowledge Activities in FY14 showcase how conducted by CIIP for evidence-based project design in- CIIP’s work contributes to expanding the reach and existing crease chances of success and adds value for the operational knowledge on competitive industries globally. In FY14, CIIP work - one of the innovative aspects of CIIP’s approach to financed six global knowledge activities. These are summa- the “new growth strategies.” CIIP utilizes different types rized below. of knowledge and analytical work across countries to meet country demand (e.g . sector analytics, value chain analysis Implementing Industrial Policy — Lessons Learned. and spatial analysis). Details of the types of analytical work This project seeks to influence the dialogue among global financed for each project are highlighted in the project sum- thought leaders and regional actors through high-profile maries provided in Annex 2. learning events, knowledge exchange, training, and knowl- edge generation. CIIP has helped to distill and widely dis- Global Knowledge Activities seminate the latest body of knowledge on how to find and CIIP seeks to provide valuable support to expand the global implement the right instrument for each unique political knowledge frontier on “how to” effectively design and imple- economy. Based on extensive research, the team has identi- Box 2.1 “Making Growth Happen” Conference The flagship CIIP conference, “Making Growth Happen: Implementing Policies for Competitive Industries,” was held on October 16 and 17, 2013, at WBG headquarters in Washington. The conference focused on the nuts and bolts of implementing industrial policy, providing an im- portant opportunity for practitioners in the development community and academics to take stock of current think- ing on industrial policy and competitiveness. With job creation at center stage, as policymakers seek new solu- tions to increase productivity and create jobs, the confer- ence provided a venue for inspiring discussions about the latest in the “how” of growth and competitiveness, with an emphasis on local context and “learning by doing.” Nobel Prize-laureate Joseph Stiglitz was the keynote speaker, and Janamitra Devan, World Bank Group Vice President for Private Sector a number of senior EU, WBG and other donor officials Development (former) with Professor Joseph Stiglitz participated in the event, along with many internationally recognized academics and practitioners. 30 fied the main area of focus, which is to compile a set of is anticipated that the Community of Practice will be able comprehensive case studies and structured comparisons of contribute to the development of innovation policy thinking, the implementation of the most widely used instruments in test new ideas and potentially can be used to co-create policy private-sector-development-focused projects. In particular, approaches. the grant: (1) provided a series of papers on flexible delivery and implementation as well as hosted a competition for best Competitiveness Summer School training program. papers; (2) started work on a comprehensive case study on In October 2013, CIIP jointly administered its Competi- delivery units using Malaysia PEMANDU as an example; tiveness Summer School training program with the Inter- and (3) organized an international conference on “Making American Development Bank. As it has evolved into a full- Growth Happen” to address the “how” of industrial policy fledged program, the course syllabus has been continuously implementation. These activities have helped develop a improved to meet the real-life challenges facing developing global network of practitioners and thinkers around industry- countries. Its case-based methods were used to introduce the focused strategies for fostering growth. The dissemination of key concepts (industry strategic segmentation, industry analy- these activities and the active involvement of CIIP experts sis and value chain). Participants were asked to apply these in WBG country teams is ensuring that lessons learned are concepts to specific examples from CIIP project portfolio, Project Results incorporated into project design in real-time. for example, the agribusiness value chain in Haiti, pharma- ceuticals in Tunisia, as well as other real-world examples, Industry-Specific Global Value Chain (GVC) Analy- for example automotive industry in Myanmar. The course ses. Through this project, CIIP and the IFC aim to de- has attracted individual participants from a broad range of velop a joint approach to GVC analysis across high-priority lower and middle income countries including Brazil, Nigeria, industries that are relevant and applicable to developing- Sierra Leone, and Trinidad and Tobago. CIIP is also in country contexts. The ultimate goal has been to enhance the the process of tailoring its training offerings for public and relevance and quality of public and private investments in private sector officials in fragile states such as Haiti as well as priority industries with a view to enhancing productivity and for staff in partner agencies such as the EC and SECO. It is competitiveness. The team reviewed WBG portfolio data to anticipated that e-learning platforms may also be deployed in determine demand, and sought to ensure that the selected the near future. industries were relevant to a wide range of countries and regions and could benefit from GVC investment and sourc- Affirmative Efforts for Small States and Fragile ing plans. It is envisaged that these GVC analyses will deepen States. At the prompting of the ACP, CIIP set up a dedi- WBG and donor dialogue at the country level, and signifi- cated grant which aims to support flagship knowledge events, cantly expand countries’ understanding of evolving market preliminary scoping missions, and just-in time technical opportunities. A potential benefit of increased knowledge of assistance in countries that can progressively “move up the GVC investment plans is the expansion of pipeline projects ladder” of readiness. Given that 2014 is the year of the and evolution of industry structure through integration of Small Island Developing States (SIDS), CIIP has committed domestic firms into GVCs. to two major knowledge events in the Caribbean and the Pacific respectively in the calendar year. Through a number Knowledge Exchange Initiative. CIIP, in partnership of affirmative efforts in small and fragile states undertaken with the OECD, decided to fill the existing knowledge and so far, CIIP has made inroads in the Eastern Caribbean and data gaps on the “how-to” of innovation policy, through the the Pacific. As part of larger SIDS agenda, CIIP knowledge development of an Innovation Policy Platform (IPP) that activities and early operational engagements have helped is accessible to policymakers and researchers in develop- progressively shift the focus of WBG and donor dialogue ing countries. The IPP was formally launched by the World away from high public indebtedness and vulnerability to Bank President and the Director General of the OECD in competitive advantage and growth. the spring of 2014. As a fully functioning platform, the IPP The Small Island Developing States (SIDS) conference has been actively used to develop a body of innovation policy held in Apia, Samoa, from September 1-4, 2014 brought knowledge on its website; and to form a broad Community together Heads of State from the Caribbean and Pacific of Practice (CoP) with open membership for interested Islands, the UN Secretary General, and the President of the practitioners. It serves as an important example of how the European Union. UNIDO and CIIP partnered for a side WBG can realize its vision of “a solutions bank’ that distills, event titled “Enhancing Competitiveness in SIDS – Chal- captures, and deploys actionable knowledge on a global scale. lenges and Opportunities” on September 1. In addition, The IPP’s existing clients and potential clients are global CIIP participated in a Private Sector Forum on August 31. policy makers located in different levels of government, or As a follow up engagement to the SIDS conference, CIIP is in institutions providing advice and support to governments. preparing to host a knowledge event for the Organization The look, feel and operational structure of IPP platform has of Eastern Caribbean States and a regional operation that gone through detailed user testing. WBG and OECD clients will focus on tourism and agribusiness. It is envisaged that and staff have used the site to inform their policy develop- the knowledge shared through this engagement will facilitate ment activities, although it is challenging to link specific demand and help generate momentum towards a regional knowledge gathering to specific WBG/client strategies. It project. CIIP Annual Report 2013-2014 31 In addition, affirmative efforts have included just-in-time In FY14 the team has engaged in a number of parallel technical assistance to WBG operational teams on innova- activities. Several work streams of the project are on track tive approaches to project design, and for preparation of a to create the expected foundational body of evidence that strong CIIP pipeline going forward. These funds have been will assist city leaders in formulating and implementing their instrumental in putting forth the rationale for investment economic development strategies. Preliminary analytic find- and in onboarding various clients and stakeholders to this ings have been drawn both at a global and a country-specific agenda, including in countries that eventually emerged as level. Country-specific analytical reports have been pro- major clients of CIIP such as Ethiopia and Haiti. duced for Ethiopia and China, and will shortly also include a detailed report on Turkey. Technical reports were drafted Competitive Cities Initiative. CIIP’s Competitive Cities and will be available by the end of 2014. Three compre- Knowledge Base (CCKB) program aims to provide guid- hensive case studies will be completed in FY15 from cities in ance to practitioners about how to respond to client demand Colombia, India, and Rwanda (with four more to come from by city governments and municipal authorities, and how to Indonesia, China, Morocco, and Turkey). A draft diagnostic stimulate economic growth and job creation, by developing tool has been produced and will undergo consultations with diagnostic tools and by compiling a set of case studies and operational staff and experts inside and outside the Bank in structured comparisons of different typology of cities. A key FY15. Implementation guidance is under preparation. A priority of the program has been to strengthen knowledge of conceptual framework has been developed for developing a good-practice approaches to implementing city-level com- research base on city leadership, and mayors in particular. petitiveness strategies. The grant is organized around three Case reviews will be conducted in FY15 on day-to-day man- work streams that focus on the determinants of job creation, agement, economic development agencies, and turnaround priority-setting, and implementation methods and modalities. initiatives of city leaders. 32 Timeline: Launch and Operational Roll-Out Austria and Switzerland create MDTF European Union joins MDTF European Union creates SDTF Trust Fund Closing Partnership Steering Committee meeting Consultations on Strategy and Business Plan Strategy and Interim Business Plan Reporting period ends Annual Report Planning Project Results Call for proposals Second call for proposals Selection Process completed Operations Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov 2013 2014 2015 2016 2017 Innovation Policy FYR Macedonia Lessons Learned Tunisia ACP Non-ACP Russia Knowledge Sierra Leone Côte d’Ivoire Vietnam Kazakhstan Croatia Ethiopia Georgia Tanzania Competitive Cities Haiti Value chain analysis Evidence and impact CIIP Annual Report 2013-2014 33 CHAPTER 3 CIIP Financial Portfolio and Resource Use – November 2012 through June 2014 CIIP’s growing portfolio of country and knowledge-centric projects is funded by approximately $35 million in donor commitments. The emphasis in FY13 and FY14 has been on establishing an implementation framework with financial controls to ensure the cost-effective use of donor resources. CIIP’s targeted resource envelope is split between country operations (75 percent) and global knowledge initiatives (25 percent). This chapter details CIIP’s funding status in terms of donor contributions and project commitments, project-level expenditures across pre-defined eligible cost categories, and current and projected rates of disbursement. Improving oyster farming techniques in Croatia (see pages 24 and 46) 35 CIIP Program Funding Figure 3.1: CIIP Trustee Level Financials CIIP funding is structured around two World Bank trust Millions funds with donor commitments totaling approximately $35 $20 million. The Multi-Donor Trust Fund (MDTF: TF071975), $18 supported by the governments of Austria and Switzerland $16 as well as the EU, was established on November 15, 2012. Non Paid Donor Contributions $14 The Single-Donor Trust Fund (SDTF: TF072037), financed through the EU European Development Fund (EDF) with $12 Investment Income the specific geographic focus on the African, Caribbean, and $10 Donor Contributions Paid-in & Not Committed Pacific states, was established on July 18, 2013. $8 As of end FY14, $22.9 million had been paid into the CIIP Pending Tranches to Existing Projects $6 trustee funds or about 65 percent of total committed funds. This comprises 80 percent of MDTF donor commitments $4 Tranched-in Project Funds (totaling $12.9 million) and 50 percent of SDTF donor com- $2 Disbursements (incl. Admin Fee) mitments (totaling $10 million). While this trustee-level fund $- structure is discrete for accounting purposes, CIIP resources MDTF SDTF are managed seamlessly across the two trust funds in order to ensure predictable, transparent and coordinated financing. The bulk of current expenditures come through the Disbursements Rates and Projections country operations window, where $12.5 million was com- As of end FY14 the MDTF had disbursed $3,659,196 while mitted and almost $4 million was disbursed. Another $8 the SDTF had disbursed $2,207,080. In the last quarter of million have been committed or earmarked through the FY14, monthly average disbursement figures increased to knowledge management window, of which projects have $274,300 for the MDTF and $309,200 for the SDTF (See disbursed almost $1.7 million, which has largely kept pace Annex 6: “CIIP Disbursement Rate by Month”). These with projections. At the outset of project approval, CIIP’s increasing monthly figures show the maturing level of Secretariat sets project-specific disbursement targets to ensure implementation. Cumulatively, the expectation has been that steady implementation and results-based financing. Alloca- the rate would fit an S-shaped curve, with low initial spend- tion reviews are held annually in conjunction with the GRM ing rates followed by a period of rapid implementation and review to confirm financing and/or to discuss the possibil- spending, before it would fall again toward the program’s ity of corrections by the re-pooling of previously allocated closure. The current trend is in line with that projection. The funds. highest disbursement rates are expected in FY15, and they Growth in project expenditures is dependent on addi- are likely to keep pace in FY16 pending additional project tional project commitments being made in the FY15 Business allocations. Planning Cycle. Figure 3.2: CIIP Commitment and Disbursement Projections Millions Projections $40 $35 Donor pay-ins Central 2% Fee minus Investment Income $30 Program Current commitments Management and $25 pre-planned earmarks Knowledge Management Central 2% fee minus investment income $20 ACP Knowledge Management Program management Knowledge management Country Operations (Rest of World) $15 ACP knowledge management Country Operations (ACP) $10 Donor Pay-Ins ACP country operations $5 Current Commitments & Pre-planned Earm Country operations (rest of the world) $- End FY13 End FY14 End FY15 End FY16 End FY17 End FY18 36 CHAPTER 4 Managing CIIP’s Partnership Governance of CIIP is led by a close collaboration of the joint MDTF and SDTF Steering Commit- tees. In February 2014 the committee met to approve the CIIP Strategy and Interim Business Plan and the CIIP Secretariat has been tasked with implementing the program strategy through the multi-track engagement framework and through its strategic support functions. This chapter provides an overview of actions related to the management of CIIP, including the approach to risk management, its partner coordination, and its communications and visibility efforts. SMEs in Haiti (See page 25 and 26.) 37 CIIP Secretariat Figure 4.3: World Bank Quality Check Steps CIIP’s rapid launch and its ongoing success depend on a robust support structure of six experienced staff supporting 12 country operations, five knowledge initiatives and the Project Preparation affirmative efforts of Track 1 and Track 2 countries. The Background Analytics Secretariat ensures coherence across the portfolio and is Quality Enhancement Review responsible for program strategy and management, financial Project Appraisal management, and risk management. The Steering Commit- tee has allocated $2.2 million (6.2 percent) to the Secretariat Implementation Support to perform these functions over the course of the five year Implementation Status Report program of which a third has been disbursed. In June 2014, Project M&E CIIP issued a Call for Proposals, which is currently under review and is expected to yield up to 15 additional proj- ects in the coming FY. Furthermore, the CIIP Secretariat ensures the cohesiveness of the program through functions Project Evaluation for knowledge and learning, monitoring and evaluation, and Implementation Completion Report strategic communications. These service functions allow Impact Evaluation real-time learning, sufficient donor visibility, and enhanced IEG Review accountability. Portfolio & Risk management which reflect the countries’ political economy and capacity The Secretariat monitors project-level progress through the constraints. CIIP manages risk at the portfolio level through Grant Reporting and Monitoring (GRM) system. Projects the Multi-Track Allocation Framework in order to direct are evaluated yearly based on milestones established in the funds to support an appropriate mix of high-risk/high-re- approved proposals, progress reporting for that year, and the ward and to projects with a higher likelihood of success. Proj- rigorous World Bank quality review processes through which ect financing tranches are released in September/October of it passes. Risk and grant objective ratings are self-reported by each year, following the GRM reporting process, in order to CIIP TTLs but are reviewed by management. To date over ensure results-based disbursement. 80 percent of CIIP projects have been rated as “Satisfac- At the project level CIIP manages risk through the rigor- tory” and/or “Highly Satisfactory” on their progress towards ous quality checks of the World Bank’s project approval pro- Achievement of Grant Objectives. As a part of this annual cess. CIIP’s Secretariat particularly makes use of the Bank’s reporting exercise, CIIP ensures a thorough review of each Quality Enhancement Review (QER), Project Appraisal, and project’s results chain along the pre-specified CIIP results Implementation Status Report (ISR) processes to enhance framework (see Annex 1). design and performance throughout the engagements. Ad- The portfolio also has varying degrees of risk, which re- ditionally, the quality enhancement measures – made possible flect the nature of competitiveness type operations. Ethiopia, by the use of funds for background analytics, Public Private Tunisia and Kazakhstan have “Substantial Risk” ratings, Dialogue, project preparation, and implementation support – provide effective risk mitigation throughout the country Figure 4.1 CIIP project objectives ratings engagement. Furthermore, CIIP’s Secretariat works closely CIIP Project Risk Ratings with project teams and consults regularly with develop- Knowledge Products ment partners at the country level to monitor each project’s Substantial Risk Country Operations progress, ensuring that resources are being used in the most Modest Risk cost-effective manner possible. Negligible or Low Risk 0 1 2 3 4 5 6 7 8 9 Partner coordination Number of projects In accordance with the Paris Declaration on Aid Effective- ness and international best practice, CIIP is committed to Figure 4.2 CIIP project risks ratings working with and aligning its efforts with other develop- CIIP Project Objectives Ratings ment partners. At the country level, CIIP projects are being Highly Satisfactory Knowledge Products prepared in cooperation with, and with the support of, a Country Operations variety of development partners, including other multilateral Satisfactory development banks, and donors. Throughout implementa- Moderately Satisfactory tion of every CIIP project, WBG task teams are engaging closely with the relevant development partners on the ground Unsatisfactory in a determined effort to improve development outcomes of 0 1 2 3 4 5 6 7 8 9 Number of projects 38 CIIP-funded operations and to increase the overall develop- CIIP Website - theciip.org ment coordination. CIIP also collaborates with the Facility for Investment Climate Advisory Services (FIAS). Systems are in place to ensure that there is complementarity across both programs. Regional portfolio reviews are undertaken periodically and parallel country engagements are managed effectively to ensure mutual leverage and avoid any duplication. In many cases, team members are providing cross-support to projects in both programs based on expertise and experience. At the sector level, FIAS industry work is tightly focused on 3 pri- mary sectors, agribusiness, manufacturing and tourism (other sector work in FCS and is executed primarily through donor and client funded technical assistance). These projects are typically smaller in scale and timeframe than those executed Managing CIIP’s Partnership by CIIP, which has a stronger emphasis on scaling up policy, institutional, and investment support through World Bank lending and harmonized donor projects. Communications and Visibility Effective communication among CIIP’s partners and its broad range of public- and private-sector stakeholders is a critical element in achieving the program’s success. Using a wide range of corporate tools and channels, and operat- ing in coordination with the WBG’s extensive external and Throughout FY14, the common visibility rules, brand- corporate relations structure, CIIP ensures the visibility of ing and communications standards developed for CIIP have both individual contributing partners and the partnership been continuously employed in local outreach and communi- as a whole. It has also fostered the creation and growth of a cations efforts in client countries. Templates for promotional, global network of practitioners and experts while promoting knowledge and outreach materials were shared with WBG operational learning. CIIP has maintained a vigorous media- operational teams and are posted on CIIP’s website for easy relations initiative by reaching out to selected journalists and access. Active participation of partner representatives was scholars at policy research organizations; by publishing high- promoted through global knowledge and country project profile magazine articles; and by frequently publishing blog events. Strategic communications across the WBG, in the posts on the WBG’s Private Sector Development blog. development community and to networks of competitiveness As part of its visibility efforts, by the end of FY14 CIIP experts have aimed to further raise CIIP’s global profile. has finalized its new set of official logos that clearly identify CIIP’s partnership website (www.theciip.org), softly the contributing partners to the MDTF and SDTF and launched in the spring of 2014, provides information about recognize the partnership. Appropriate versions of CIIP’s CIIP country operations and knowledge initiatives. In com- logo have been gradually incorporated into official print and ing years, it will become a comprehensive and interactive online products as well as CIIP’s marketing and press infor- online resource on industry-focused efforts in Private Sector mation, its knowledge products and formal publications, and Development. One of its key functions is to provide authori- its visual, online and multimedia materials. tative materials that are relevant to the smooth functioning of the Steering Committee. Contributing partners have CIIP’s Competitive Industries Notes Competitive Industries Note: Competi tive Indu Developing Practical Skills Develop stries Note: for ing Pract zations e: ustries Not ic ery: Organi Product ivity: Th al Skills for Firm e Ind Competitiv Firm Productivity: The How Flexible Deliv and Still Succeed To e What a nd The W il that Can Fa “What if we - train them (workers) and they hy In the first note on skills, we saw that An SME Entr leave?.....Wh the acquisition of practical skills was epreneur’s at if we don competitiveness and ultimately, inclusive essential to firm productivity, Dilemma, ’t and they XIBLE Competitive Industries Note: growth. This note explores the question PRACTIC Auto Cluster stay?” DS TO BE FLE g partial soluti ons of delivery. AL SKILL Interview(s) L POLICY NEE , India 201 1 continuously findin S AND FIR 3 INDUSTRIA nt often requires , 1970). This Industrial parks where firms need it: M PROD How can these skills be delivered? The level Where firms have been able to successfully of practical term developmelong- mix (Hirschman al” policy provide market-oriented and flexible skills that UCTIVITY hman showed, ly practical skills, some types of cooperation competitiven a country’s As Albert Hirsc as finding an “optim interact with rapid models have been at play to overcome ess and job workforce aches, as much problems, must A new way to attract investment market failures of incentives and holder ente creation. Prac can assert between appro tackles complex rtainty. rprises to tical skills on the job and switching conditions of unce information. Firms, trade unions, is crucial trial policy, which choices under TVET institutes and public more tech nical, job-s encompass financial litera to enhance true than in indus lt and uncertain agencies have engaged in various pecific, man cy for infor firm productiv is nowhere more requires difficu forms of collective action agement, social and mal ente rprises in ity, l markets, and to a different local and bargaining arrangements at the behaviora micro and changing globa , each appro priate mezzo level - from clusters enterprises l skills for workers in small of industrial policy instruments to cooperatives. The underlying principle (SMEs) and small med different forms approach using A UNIQUE APPROACH TO LOCATION SELECTION driving firm-based practical skills large firms . A distinctive ium there are many ying a top-down training is that beyond a certain threshold is that they feature of As importantly, come from deplo of foundational day setting are immedia the past have Location selection is probably the most critical step when designing an industrial park or zone program: it of the tely appl of the errors of skills, jobs can become a channel workplace. icable to the to build, nurture and productivity, Practical skills context. Many local political econo my. largely determines demand for the infrastructure, and hence effective implementation success. sharpen skills through interactions help them can enha day-to- y fitted to the among workers within and firm and indu move up glob nce a firm’ that were poorl outside the firm1. In other words, jobs pull skills. If so, then markets over stry competit iveness over al value chai ns and improve s two sets of questions appear important the years time 2. ILO The Scheme for Integrated Textile Parks (SITP) of the Government of India, started in 2005, has used and are explored in the have tend shows that analysis of institutions. Policy ed to grow productivity labor be grounded in ms to be remainder of this note: in unison 3 and employm All of this must so for the progra a unique strategy to handle the location selection issue. It essentially reverses the usual process, which recognize that practical . Polic ymakers incre ent details of the design run by agencies, ries skills need asingly sted itself in the programs are e, whether Minist has caused many programs to stumble in implementation, including the high-profile Indian SEZ program a.What factors influence how well levels of deve atten That poor fit manife getting those details ies must be flexibl 2008). In jobs pull practical skills - for lopment 4. tion for job creation acro n of policies, but . flexible, the agenc uolo and Palmade, (Figure 1). The program focuses government efforts on attracting and organizing the firms that will use the TABLE OF CONTENTS workers and middle managers - across TABLE OF CONT ENTS ss and implementatio (Rodrik, 2008) teams” (Crisc the range of delivery Practical skill e and learning or small “reform lity is easier said than done channels? Practical Skills development iterative chang ability to try park, and then has them to locate, dimension, and build the park itself. and Firm Produ is essential right requires es flexibility: the , howev er, flexibi fail, Factors that influence how well jobs pull practical ctivity . . . . social inclu sion. Thes for growth e, in turn, requir a bureaucracy be flexible, but skills . . . . . . .1 Global Experi .......... agencies try to e skills help with rapid ences ....... 1 Iterative chang not, and fine- Many Models of cooperation to deliver practical b.What models of cooperation have Practical Skills. with Matching Demand level throu at two level it is working or (Wilson, 1989) . or exploiting the discretion skills. . . . . . . . . . . . . . 2 been developed and Supply gh productiv s: an econ understand if rigid de facto .......... .......... of the leading ity enhancem omic an approach, While it is early days, and the scheme does not solve all the Concluding remarks . . . . . . . . . . . . . . . . among firms, the state, unions and World Bank . ent, either becoming ed. ...................4 other actors to help Portfo . . . . . . ......... advo but d it. g or being captur lio on Skills - an IEG Evalu 2 freedom” cate of critic also, as Paul tune or discar lity, and shirkin issues of industrial parks or zones, it does seem—so far—to deliver practical skills? How does Concluding ation . . . . . level, throu al pedagogy o Freire, required by flexibi this vary by the extent of remarks . . . .......... ...... 4 gh which , argued, a “practice have managed have mitigated the location selection risk: parks have been formalization of cooperation? .......... and disco young indiv of , some agencies that .......... ..5 ver how to critically parti iduals build TABLE OF CONTE NTS . . . . . . . . . . . .1 There are, though been instrumental in built where on average 50 entrepreneurs have started to ABOUT THE AUTHOR of their pres ent social cipate in the self-esteem ............. e delivery, and realities 5. The transformation Flexibility in Action. to achieve flexibl ries. One of the most operate, and private investment already represents 4 times ABOUT THE requires com pursuit of DARPA: Extreme ies and indust Priyam Saraf FACTORS THAT INFLUENCE AUTHOR plementin inclusive grow of Flexibility in the History. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2 transforming countr public investment (Figure 2). HOW child hood and g inves tmen ts in fundame th A. Priyam Saraf is a Specialist with the World WELL JOBS PULL PRACTICAL Priyam Saraf primary educ ntals like early SKILLS CIIP Annual Report 2013-2014 .. 39 Industrial Policy. ............. . . . . . . . . . .3 striking is DARP Competitiveness Global Practice. She works Bank’s Trade & gestation perio d for payo ation - whic h typically y and Risk. . . . . on skill development Priyam Saraf ffs – with prac have a long The Theory of Flexibilit Y Two factors appear to influence the is a Competitiveness Specialist with the World youth in the E FLEXIBILIT for manufacturing competitiveness. extent to which jobs are tical skill deve near term 6 PA: EXTREM Global Practi Bank’s Trade managers . Such skill lopment for able to pull skills: (a) the proportion for ce. She works & DAR of firm involvement in the manufacturing competitiven on skill develo and workers, developm ent is bene RS training and (b) the ecosystem a firm ess. pment alike. ficial for ABOUT THE AUTHO IN ACTION y than frame on the job training as an functions within. Rather Recent impa ct evaluatio Projects Agenc ns show that ced Research FIGURE 1: Implementation of India’s SEZ Program either-or phenomenon, types of prac improvements Luke Simon Jordan Specialist with the The Defense Advan tment of Defen se, is one TABLE OF CONTENTS it is the level of firm engagement in tical skills lead to rises in various Sector Development on of the U.S. Depar appears to matter. At one end of the the training process that Results from Luke Jordan is a PrivatePractice, based in New Delhi. He works It can claim spectrum in Formally approved SEZs Notified SEZs Operational SEZs (DARPA), part is training where the firm is involved intensively, an impact firm productivity. s tan. organizations. A unique approach to location selection . . . . . . . . . . . . . . . . . . . .1 End of 2011 End of 2011 End of 2011 of full time employees. On the job for instance, in the case Tanzania, evaluation Competitive Industrie and mining based growth in Afghanis e of all public ning training carries sizeable returns and conducted manufacturing in India of the most flexibl et, the global positio The tough question: “how to”. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 results holds strongly for firms connected 1 Author’s notes Vietn am and Ethiopia in four clust birth of the intern value chains. Well-designed apprenticeship - industrial to globalskills and shared facilitie interviews with 30 show that ers in a key role in the s and industrial training that have manage 580 Conditions and risks. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 stro 2 Internati s auto-compone nt been given access to confidential information on operations and knowledge products, in real time, through a password- Box 4.1 Climate Change and the CIIP Approach protected space. That space will allow partners to deliberate and comment on new CIIP projects or knowledge products. CIIP recognizes that its country operations cannot The ambition for the website is that it should support knowl- achieve their goals without tackling new issues that have edge exchange across networks of practitioners and thought become central to development - like climate change. leaders on leading-edge research, good practice or innovative To properly assess the impacts of its operations on approaches, and that it should provide results from competi- climate change, CIIP projects follow international good tiveness strategies around the world. practice safeguards policies and procedures, including CIIP’s communications and outreach efforts in FY14 those governing World Bank Group operations. The promoted operational learning through active knowledge- new WBG safeguards currently under review will help sharing among project teams, partners and country stake- reinforce a comprehensive approach to climate change holders. Emerging lessons and good-practice notes were in all World Bank funded operations and by extension in disseminated by CIIP to teams working on competitive CIIP funded operations. industries projects in a wide array of countries. Seminars, presentations, and “clinics” provided opportunities for proj- Ethiopia Example. The Ethiopia Competitiveness ect teams to share innovations and seek feedback on project and Job Creation (CJC) Project has a strong focus on design and implementation approaches (for instance, on eco- environmental and social sustainability. Many zone nomic zones, growth poles and matching-grant initiatives). initiatives have been criticized for their lack of focus In addition, embedded in most CIIP operations were PPD on environmental and social standards. To address this mechanisms and harmonized donor processes, all of which issue, the CJC Project focuses on effective management enable partnerships and open dialogue on competitiveness- of environmental and social impacts, including climate related issues. Such in-country processes were enriched by change issues to minimize adverse effects and to explore timely disclosure and publication of evaluation results on in- pilots that can be replicated in the future IZs, and the dustry level efforts. These efforts encouraged feedback loops relevant sectors. As part of the social and environment and virtuous cycles. due diligence, regular stakeholder consultations will be To be effective in its communications efforts, CIIP undertaken to ensure that relevant issues for the success strategically focused its outreach efforts on three key audi- of the project are identified and dealt with on an on- ences: CIIP’s “brain trust,” country-based policymakers and going basis. industry leaders. Members of the “brain trust” have helped keep competitiveness and jobs at the forefront of the global development agenda while energizing global communi- ties of practice. Their efforts have been complemented by awareness-raising efforts during high-profile events (like the October 2013 “Making Growth Happen” conference at the World Bank in Washington); the use of CIIP’s new web plat- form; and the leveraging of the WBG’s extensive network of country offices around the world. Given the importance of raising CIIP’s profile and establishing its identity as a thought leader on competitiveness-related issues, CIIP has also coor- dinated closely with counterparts in donor agencies. 40 Managing CIIP’s Partnership CIIP Annual Report 2013-2014 41 ANNEX 1 CIIP Results Chain Input – Tier 4 Output – Tier 3 Outcome – Tier 2 Impact – Tier 1 Basic Elements Instruments & Direct project deliverables Changes in conditions/behavior resulting Long term changes for end Solutions from outputs beneficiaries Business envi- § # of strategy/reform program Business regulation ronment designed (esp. with input from § # of days, procedures, and cost Technical Assistance PPD) to comply with business regula- § # of laws/regulations approved tion (incl. entry/exit) Value Chains and enacted or policy reforms implemented (including SEZs) Import/export PRIVATE INVESTMENT § # of days and cost to export/ § US$ value of private import investment leveraged Tax reform § $ of total private invest- § # of days and cost for tax com- ment in supported indus- pliance tries (of which domestic) Infrastructure Roads Access to markets § (financial efficiency – Including hard § $ committed and approved for § # of hours to get to market private investment lever- Finance Public infrastructure, infrastructure investment § $ cost to get to market age of public funds) land, industrial § Km of all-weather roads § (estimate new entrants) and Corridors Growth Poles utilities constructed § Km of bridges constructed GROWTH IN SUPPORT- Electricity Access ED SECTOR § $ approved and committed for § # of new connections to targeted electricity generation or grid industry § Net Number of new upgrading/expansion Public Private Dialogue firms (of which § MWh of electricity generation Reliability § # hours of electricity outages headed by women) capacity per week § % increase in total factor Labor and Skills Access to skills (reduced skills mis- productivity skills § # of strategy/ reform program match) § % share of exports designed (esp. curricula with § # of students/trainees with a job of supported sector/ input from PPD) or self-employed in supported in- industry Cities § # of teachers/specialists dustry one year after completion § % share in GDP of sec- trained/certified of education/training program tor/industry § # of people trained/certified § % share in GDP of (by skills type) linked sectors/industries Institutional § # and $ funding for cross PPD impact on reform process Strengthening institutional coordination § # of reforms enacted through Evaluation and Feed- mechanisms (PPD, PIU, inter- the PPD mechanism (evaluation SOCIAL SPILLOVERS governmental working group) wheel to measure impact on Clusters created and operational reform) back § $ approved and committed for § Number of people capacity building of spe- Public sector management and state with access to im- cific institutions (gov’t agency, capacity proved services regulator, industry body, stats § Agency effectiveness – e.g. pro- agency) - IT upgrade, people cess times, response rate etc. trained, governance etc. JOBS & BENEFICIARIES Access to § # of catalytic/innovative § $ of finance (from a wide range Catalytic Support Finance finance instruments (match- of instruments) approved and ing grants etc.) designed and $ disbursed § Gross Number of Jobs (direct - of for Firms volume committed § # of firms in focus industries ac- which women) § # of SME support programs cessing additional finance Economic Zones developed and $ committed § # of direct beneficiaries § #SMEs trained or supported (e.g. training for SMEs on of the project (of which financial literacy, management women) practices etc.)) § $ net increase in output Innovation § $ value of budget spent on § # of firms with approved patents of beneficiary enter- innovation and research and on process or product innovation prises Analytics development (R&D) § $ of financing for innovative § % increase in labor activities (VC, angel financing) productivity 42 ANNEX 2 CIIP Progress by Project Project-level narratives and updates Enabling competitive cities by supporting municipal government CIIP Annual Report 2013-2014 43 CÔTE D’IVOIRE Flagship Transformational Growth, Competitiveness, & Jobs Program ern Integrated Mining Project (incl. port and rail infrastructure), the Grant ID TF015440 San Pedro pole would utilize future investments in infrastructure to Grant Duration Aug 20, 2013-Mar 31, 2015 Grant Amount $1,206,523 promote integrated urban development, emergence of a local min- Cumulative Disbursements $493,896 ing ecosystem, tourism and agribusiness activities, and overall local Outstanding Commitments $60,440 private sector growth. It is also helping develop the framework for Design Elements Green-field zones, Growth poles, Regional Special Economic Zones (SEZs) linked to growth poles. dimension, Sector and Spatial Analyses, Potential infrastructure support Expected Leverage FY15 IDA Growth Poles Operation ($50 Implementation Progress million) CIIP has launched and implemented a range of analytical and consultative activities with government, donors, and private sectors, Strategic Context particularly on missions between December 2013 and June 2014. Key highlights include: (i) sector and spatial analyses presented at Côte d’Ivoire is emerging from over a decade of economic and the ICI2014 Investor Conference; (ii) identification of two integrat- socio-political crisis and outright post-electoral conflict in 2011. ed growth pole approaches; (iii) technical assistance on the develop- The crisis has taken a heavy toll on the once exemplary economy— ment of SEZs around growth poles. These are described below: with rising poverty and unemployment levels, declining quality of infrastructure stock, weakening of the financial sector, along with ICI2014. The High Level Investor Forum, held in Abidjan end sharp deterioration in institutional capacity and labor. Nevertheless, January (ICI2014), gathered over 3,000 stakeholders from the public the country still possesses a diversified industrial base and significant and private sectors. CIIP produced analytic work on mapping of potential in agribusiness (cocoa, cashew, and rubber), mining (gold, constraints, and opportunities in agribusiness and tourism, as well as iron, nickel) or tourism, as well as non-agricultural value chains prospects for spatial development (with a focus on PPPs in infra- such as metallurgy and chemical products. It boasts an enviable structure such as railroads). CIIP also provided lessons learned from infrastructure endowment by regional standards, and a dynamic growth poles approaches in other countries. private sector. Additionally, since the end of the political crisis, it has made significant progress in improving its investment climate Growth Poles Identification. The grant has helped finance (top 10 global reformer in Doing Business 2014) and has seen some sectoral and spatial analyses as part of the identification and design resurgence in foreign direct investment. of the Bouake and S. Pedro growth poles. Based on this early work, While short-term prospects have improved significantly, the a more detailed plan of diagnostics and technical assistance was government’s National Development Plan calls for an ambitious launched in June 2014 to help formulate growth poles building program of accelerated and sustained private sector led growth, blocks. Equally important are the extensive public-private consulta- thereby enabling Côte d’Ivoire to become an emerging economy tions that underpin the design of these enclave growth approach- by 2020. Central to the government’s vision is a focus on a number es—an example of Côte d’Ivoire’s governance approach to growth of high potential sectors (e.g. cashew, rubber, palm, textile, and pole development. manufacturing) through a growth poles approach—one that aims to exploit agglomeration economies and foster spatial development. Institutional Development. CIIP-financed efforts are helping CIIP’s Côte d’Ivoire Flagship Transformational Growth, the government develop an institutional strengthening roadmap Competitiveness, & Jobs Program aims to support a growth poles designed to improve execution capabilities around the growth poles. development strategy as a mechanism to foster transformational in- Also important are a number of organizational development activi- vestments and promote inclusive growth and job creation, through ties, for instance, of the zones development agency, key ministries a well-coordinated program of targeted reforms and public invest- involved in growth poles, and PPD mechanisms with a diverse ments to catalyze private investment in priority sectors in a spatially group of stakeholders across various agencies. Knowledge sharing delimited area. The grant is designed around the following phased around sectoral and spatial solutions, as well as lessons learned from components: (1) Identification and Diagnostics of sectoral and other countries with pilot agencies or delivery units, is an important spatial constraints to industry growth, (2) Program Design through feature of CIIP-financed institutional development activities. PPD and preparation of an action plan, and (3) Implementation Support for growth poles and economic zones. Technical Assistance on SEZs. With CIIP’s support, the Bank team has been providing technical assistance about how to set up a Achievement of Objectives dedicated zones agency. An experienced international expert was re- CIIP is furthering Côte d’Ivoire‘s efforts to promote investor cruited to follow up on the ground with the design and implementa- confidence, identify priority sectors for targeted efforts, and design tion of a stepwise approach zones development. A capacity building enclave approaches inter alia through the identification of growth workshop on SEZ reform and development was held in June 2014 poles and structuring of economic zones. In addition to help the to share international experience and lessons. Given the relevance country’s outreach to international investors, CIIP has helped iden- of SEZs to growth poles, CIIP support in this area is expected to tify two growth poles in Bouake and S. Pedro to support subnational continue through implementation. competitiveness and political stability. First, building on the city’s location on a key regional corridor (Abidjan - Ouagadougou) and CIIP work program over the next six months, endorsed by the gov- history as a manufacturing center (textiles), Bouake was identified ernment, will focus on institutional capacity building and analytical as a key pole emerging from agribusiness investments, the revival of work to accelerate the development of both growth poles. light manufacturing industries, and the development of a sub-re- gional logistics hub. Second, capitalizing on the government’s West- 44 Early Results Building Investor Confidence through Sector Prioritiza- CIIP is moving quickly to boost government’s efforts to put Côte tion. Starting with the high level investor forum early this year, d’Ivoire back on the radar screen of international investors, while reactions from investors have continued to be positive. The Ministry also helping to chart a path for structural reform. Early results on of Industry’s efforts to signal support for an agri-business transfor- the ground center on fostering institutions for collaboration and co- mation and for expansion of light manufacturing is expected to ordination, boosting investor demand through sector prioritization, produce a robust investment pipeline. A key element is the design and designing enclave growth initiatives, described below: and launch of targeted policies and public investments around the Bouake and S. Pedro growth poles. Fostering Strategic Coordination and Collaboration. A key feature of Côte d’Ivoire’s growth poles efforts has been the involve- Mobilizing Enclave or Growth Pole Investments. Even ment of multiple institutions across the public sector (Presidency, though it is still early days, design of the growth poles initiatives— Prime Minister’s Office; the Ministries of Planning, Industry and along with linked SEZs—is leveraging tangible investments. In Mines, and Tourism; as well as the SEZ development and the invest- addition to zones development efforts, the government has sought Project Results ment promotion agencies) as well as the private sector. Inclusive IDA’s assistance in designing the dual growth poles with an FY15 and collaborative design processes around the Bouake and S. Pedro operation. It is envisaged that other donors such as the EU and initiatives are part of the process building Côte d’Ivoire’s capacity to African Development Bank would support this approach. The plan, execute, and govern growth poles. These efforts, in particular, resulting financing has a high probability of leveraging considerable bode well for sectors such as agribusiness where the lack of coordi- private investments across priority sectors. nation among public and private sector actors has been the source of failures in the past. Results chain Input Output Outcome Impact Basic Elements Instruments Menu of Integrated Solutions Analytics Value chains Strategy/reform Time and cost Private Business environment program designed to comply with investments Public-Private dialogue Economic (t: 3) regulations (t: $300 Institutional Labor zones strengthening and skills Technical million) assistance Spatial development Access to upgraded Public finance strategy defined industrial land Infrastructure Access Gross number to finance of jobs Catalytic support for firms (t: 10,000, of Evaluation and Growth poles which 3,500 feedback and corridors female) Cross-institutional Reforms enacted percent growth coordination through PPD in exports Industries mechanisms mechanism (t: 2) (t: 1) Improved percent growth Agribusiness Manufacturing Extractives Tourism Capacity building effectiveness in cashew processing (t: 20 SME support programs SMEs trained or percent) supported (t: 200) Large firms supported (t: 20) CIIP Annual Report 2013-2014 45 CROATIA Smart Specialization CIIP’s engagement has significantly influenced the policy Grant ID: TF015836 dialogue with the Croatian government and the European Com- Grant Duration: October 10, 2013-October 31, 2014 Grant Amount: $ 262,500 mission on Smart Specialization through a number of consensus Cumulative Disbursements: $ 241,396.57 building activities including a broad range of public and private Outstanding Commitments: $0 stakeholders. The analytical work has contributed to an informed Design Features: Trade outcome analysis, Competitiveness decision making process for the preparation of the Smart Special- assessment, Gap analysis, RTDI assessment) ization Strategy in Croatia, with a number of major implications: Expected Leverage Absorption of EU structural funds (USD 2.5 billion), Science and Technology Project II (i)replacing the emphasis on ex-ante definition of sectors and full ($31.6 million) commitment of resources up-front with a results-based approach in which some flexibility for policy or program experimentation and ex-post allocation of resources based on results is granted; (ii) Strategic Context adopting gradualism in the expansion of programs; (iii) fully inte- Croatia’s strong economic performance over the 2003-2008 period grating monitoring and evaluation mechanisms in the design and was fueled by a growth pattern based on domestic consumption, implementation of the research and innovation strategy, allowing growing current account deficit and increasing dependence on in- for structured learning and systematic adjustment of programs and ternational finance. High and sustained rates of economic growth, policies towards the pre-defined objectives. The consensus building at a time when the size of the population was in decline, resulted in and the analytical work have significantly enhanced the govern- consistent growth in per capita income, which quickly converged to ment’s capacity to design and implement a strategy that will create a the level of the richest economies. Since the beginning of the reces- more diversified export structure, enhance productivity growth, and sion in 2008, however, the Croatian economy has been contracting promote job creation. steadily and the prolonged recession has revealed certain structural weaknesses. In order to accelerate growth in the coming decades, Implementation Croatia needs to shift towards a more productivity-based and The analytical contribution of CIIP is based on three interrelated export-led growth pattern. Deepening trade integration will require issues particularly relevant for the development of smart specializa- the country to further develop its comparative advantage in more tion strategies: trade, productivity and innovation. Those issues were skill and knowledge-intensive sectors. separately addressed in three Analytical Technical Reports, which CIIP has been supporting Croatia’s efforts to expand exports, examine the main constraints and opportunities for growth, and the enhance firm-level competitiveness, and create sustainable jobs role a smart specialization strategy can play in fostering economic through the preparation of a Smart Specialization Strategy (S3), progress: (i) Croatia’s Trade: competitiveness, performance, and which aims to focus national and regional resources on areas of potential; (ii) Stylized facts on productivity growth: evidence from competitive advantage. The S3 is an ex-ante conditionality to firm-level data in Croatia; and (iii) Export performance and eco- access European Union Structural and Investment Funds (ESIF) nomic geography in Croatia. for the period 2014-2020, for which Croatia is now eligible as a In addition, the potential for future development of five indus- new member. The funds comprise up to 3-4 percent of GDP, or tries was explicitly examined: (i) clean energy; (ii) flat oyster in the the equivalent of USD 2.5 billion. The development of the Smart Mali Ston bay; (iii) Slavonski kulen in Slavonia (traditional meat Specialization Strategy has been supported by a series of advisory product); (iv) biotechnology and pharmaceutical industry; and (v) activities and consensus building. material sciences. The particular sectors serve as illustrations of the S3 process in situations with different degrees of available market Achievement of Objectives information, where different degrees of information about eco- Smart specialization strategies, as defined in the Europe 2020 nomic specialization imply different chances of success with sector agenda, are fundamentally knowledge-driven growth strategies, targeting. The example case studies listed above include regions where targeted policies are formulated based on detailed analysis of with apparent comparative advantage, regions with latent compara- existing specializations and binding constraints through an intensive tive advantage, and regions with unclear specialization. consultative process. Extensive analytical research, supported by The report also presents a framework for the design (as well as CIIP, points to poor trade integration which discourages firm level for monitoring and evaluation) of S3 in Croatia. It suggests some productivity gains and innovation in Croatia. The implementation intermediate outcomes (goals) that should be pursued in order of S3 provides an opportunity for the country to push itself out of to enhance productivity and improve innovation (key outcomes), this low-level equilibrium by promoting the conditions necessary for which would lead to a larger and more diversified export base continued structural transformation and a renewal of the country’s (high development objectives), and, as a consequence, to GDP and productive sector. employment growth (final outcomes). In addition, an Action Plan One of the main findings of CIIP’s analytical engagement encompassing the main policy actions and strategic investments is is that Croatia has only a limited set of clear existing or emerg- also outlined. ing comparative advantages. This implies that its future areas of specialization will be revealed through a flexible strategy which Results encompasses enabling policies for entrepreneurship and market The most substantial impact of CIIP’s project has been the in-depth selection, rather than ex ante targeting. Against this backdrop two analysis informing the S3 document which will leverage USD 2.5 main priorities emerge: (i) improving productivity gains by enabling billion of EU Structural Funds towards increased competitiveness efficient entry and exit conditions and (ii) enhancing innovation and job creation. In addition CIIP contributed to the following: by promoting R&D investments by medium sized firms and/or by young companies. 46 government’s Design and Implementation Capacity. The performance and policies, particularly the composition of public analysis performed by CIIP’s team used a simplified typology relat- expenditure on R&D, the policy governance structure, and options ing availability of information on the economic specialization of a for achieving Croatia’s national target for R&D spending under region to the degree of convenience of adopting targeted policies. the Europe 2020 agenda. Regional workshops were also organized The absence of reliable information about supply and demand is in Mali Ston, Dubrovnik, and Slavenia on April 24-25, 2014, and one of the reasons why governments often avoid targeting sectors April 29, 2014, where the Oysters and Kulen case studies were dis- and products. In contrast, the approach outlined in the analysis cussed with relevant stakeholders from government and the private encourages the process of self-discovery, by continually reviewing sector. These workshops mobilized and informed public debate and the policy framework through integrated impact evaluation and built consensus around the proposed strategy. In addition, they also iterative learning though experimentation and adaptation. The contributed to an ongoing dialogue with the government, multiple technical assistance and analytical work provided by the team have stakeholders and other development partners. led to a major shift in the policy dialogue in the country and have significantly enhanced government’s capacity to design and imple- Leverage Project Results ment growth strategies. The Final Report will be used by the government to revise the S3 Strategy and submit a new version for EC’s approval by autumn Consensus building and collaborative governance. On 2014. The recommendations put forth by the team have informed January 25, 2014, a national workshop was organized to discuss to a significant extent Croatia’s Smart Specialization Strategy and the findings of the Technical Note of Croatia’s Trade competitive- as such will leverage approximately USD 2.5 billion from the EU’s ness and performance and the proposed recommendations to help Structural and Investment Funds. CIIP’s analytical work is also the country take advantage of global trends. Another national informing the active World Bank Investment loan, Science and workshop attended by a wide range of stakeholders was organized Technology Project II ($31.6 million), which aims to support Croa- on March 26, 2014, to discuss the results obtained as part of tia in the absorption of EU funds in the research and innovation the: (i) firm competitiveness diagnostics; (ii) economic geography sector by increasing the capacity of selected public sector organiza- assessment, exploring the relation between trade performance tions and stimulating the demand for those funds from the business and location within the country; and (iii) research and innovation and scientific communities. Results chain Input Output Outcome Impact Basic Elements Instruments Menu of Integrated Solutions Analytics Value chains Regulations and Time and cost Private Business environment policy reforms to comply with investments Public-Private dialogue regulations Institutional strengthening Technical Growth in assistance Clusters Public finance supported sector Innovation Social Evaluation and spillovers feedback Gross number Cross-institutional PPD impact on of jobs coordination reform process Industries mechanisms Effectiveness of Institutional institutions Clean Energy Agribusiness Biotechnology Material sciences capacity-building Funding spent on Patents for innovation and R&D innovation CIIP Annual Report 2013-2014 47 ETHIOPIA Competitiveness and Job Creation Project National PPD Forum on FDI-related issues. These milestones bode Grant ID TF015998 well for the CJC project and other donor projects, as well as for Grant Duration October 30, 2013 – Jun 30, 2015 Grant Amount $1,365,000 Ethiopia’s overall manufacturing push. Cumulative Disbursements $157,285 Outstanding Commitments $13,637 Implementation Progress Design Elements Feasibility Studies, Zones regulatory framework, Zones Corporation, Innovative CIIP’s grant has quickly delivered just-in-time advice to the gov- financing window; Industrial Infrastructure, ernment on a range of issues related to the development of its IZ SME Linkages Program, Skills centers program, and in particular, IDA’s investment in the Bole Lemi and Expected Leverage $270 million (Active IDA CJC Project + Kilinto Zones. CIIP has supported: government Contributions) • the detailed review of feasibility and design studies related to zones (including on infrastructure development, site selection, Strategic Context and investor demand), draft policies, and government manuals; Ethiopia has experienced strong and broad-based growth of around • intensive knowledge sharing on topics relevant to Ethiopia’s 10.6 percent a year on average from 2004-11, with significant in- light manufacturing strategy including the Bank team’s prepa- crease in GDP per capita. Economic diversification has come from ration of three policy notes on skills, access to finance, and a mix of government-led investments, strong global commodity investment climate; demand, and the development of new export sectors. Yet, Ethiopia • an expanded field-based presence to reach out to key decision remains highly dependent on imports, especially primary products. makers and stakeholders during the design and start-up phases The country’s 2009-14 Growth and Transformation Plan lays of the IZ program and the Bank’s CJC project (for instance, out a vision for reaching middle-income status by 2020-23 with the from the Ministry of Finance and Economic Development, the industrial sector playing a leading role. Realizing this vision requires Ministry of Investment, and the Prime Minister’s Office, the a doubling of industrial growth and an acceleration of exports—a private sector, and various research institutes). target that cannot be achieved by a growth model based primarily on government-led investments. Rather, the government’s intention The main focus of CIIP going forward will be to ensure accelerated is to attract foreign investment in light manufacturing to boost ex- implementation of the government’s program inter alia through the ports, spur job creation, and promote SME development. To imple- preparation of operating guidelines for the IZ framework (includ- ment this approach, the government plans to employ industrial ing the one-stop shop), a communications strategy, timely and zones (IZs) as the instrument of choice, and aims to adopt a sound transparent procurement of works and TA under the CJC project, legal and institutional framework, a clear industry focus, an ecosys- and continued capacity building and training of newly established tem approach, and a focus on social and economic spillovers. It has IZ-related institutions. sought to mobilize considerable domestic public, donor, and private resources, including IDA’s Competitiveness and Job Creation (CJC) Early Results Project. The approval of the CJC project constitutes an important signal Given the opportunity to support Ethiopia’s structural transfor- of CIIP’s ability to leverage large, potentially transformational mation, CIIP aims to accelerate the preparation and implementa- industrialization efforts in Africa. The IDA operation also dem- tion of the IDA project, which will in turn strengthen institutional onstrates Ethiopia’s willingness to partner with traditional and and regulatory framework for IZ development, support industrial emerging financiers to make its IZ strategy a success. IDA resources infrastructure development of two IZs; and enhance IZ linkages to for the project are reflected in the government’s federal budget. The small and medium enterprises (SMEs). CIIP’s grant is organized government also announced plans to develop three other industrial around three phased components: (1) diagnostics and advisory ser- zones in different parts of the country. It has already completed the vices to support CJC preparation and implementation, (2) capacity first phase of one of the industrial zones and plans to complete the building and implementation support, and (3) investment genera- second and final phase by August 2014. In addition, preparations tion. are underway with other development partners to develop the other sites. Achievement of Objectives As a basis for developing these specific IZs, CIIP efforts directly In response to the government’s ambitious timetable for SEZ impact important policy and institutional reforms. Described below, development, CIIP enabled fast-track preparation and approval of these include the establishment of a legal and institutional frame- IDA’s $270 million of CJC project—one of the largest and high work for IZs, launch of an ecosystem approach to IZ development, profile economic zone-related operations in the WBG portfolio. In innovative design of fiscal support, and development of rigorous addition, with CIIP support, the Bank team—jointly with DFID, M&E systems are worthy of note: USAID, and the EU—has supported early implementation efforts through knowledge and advisory activities. These include support Legal and governance framework for IZs. A proclamation on for government efforts to put in place key elements of its IZ strategy Special Economic Zones was developed and is being reviewed the such as legal framework for zones and the newly created Ethiopian Council of Ministers. It is expected that the law will be tabled and Industrial Development Zone Corporation (EIDZC), tasked with passed by Parliament in the end of October, 2014. The law provides development and management of Industrial Zones, lease of devel- for the support and regulation for five IZs across the country—two oped land and buildings, and outsourcing of IZ management. The of which are supported by IDA’s CJC project. In addition, the roll-out of the IZ strategy has involved extensive consultations with government established the Ethiopian Industrial Development Zone diverse stakeholder groups including through the IFC-sponsored Corporation (EIDZC) as part of the overall governance framework for supporting zones in the country. It also established a regulatory 48 body within the Ministry of Industry to oversee IZ development and operations with performance and selection criteria for IZ Innovative Fiscal Design. Over the course of project prepa- developers, managers, service providers, and investors. Currently, ration, the government developed and adopted an innovative, the regulatory function is handled by the Ministry of Industry. rules-based approach for developing industrial infrastructure in a While the government considers whether to make the regulatory sustainable manner. A federally managed ‘IZ financing window’ body autonomous or independent, IDA’s CJC project will continue offers access to hard IDA financing for those IZs that that meet to provide technical support to the regulatory function governing all eligibility criteria such as implementation of IZ policies and proce- zones. Technical assistance is being frontloaded to address chal- dures, completion of feasibility studies, compliance with safeguards, lenges in the one existing IZ—the Eastern Industrial Zone (EIP) in etc. The IZ window has the potential to serve as a policy lever to Dukem, established with a Chinese consortium investment. ensure the efficiency and efficacy of public and private investments in Ethiopia’s green field – and possibly, in the future – brownfield Ecosystem approach to IZ development. Based on lessons zones. learned from existing industrial zones in Africa, the government – Project Results with the help of CIIP and the IDA operation – is putting in place Development of rigorous M&E systems. To the extent pos- a number of complementary initiatives design to boost the likely sible, the Ministry of Industry’s own M&E systems and structures impact and sustainability of the IZ program, as well as its linkages are being modernized to track the progress of IZ development in to the broader domestic economy. For instance, a skills development Ethiopia. Yet, selective additions and adoptions are being made to center is being built serve the needs for the Bole Lemi and Kilinto data collection and methods, for instance, the capture of enterprise zones by jointly developing curricula and training programs with and zone level as well as overall revenue data to assess IZ opera- existing training institutions in the area of leather processing and tional performance as well as linkages. With the help of CIIP, the textiles. Similarly, a Business-to-Business Linkages Fund will be government also intends to use experimental or quasi-experimental created to strengthen the business linkages between firms within the methods to assess the impact of IZ-linked jobs to household zones and the local private sector enterprises outside the zones by incomes, the effectiveness of training on workers’ welfare and job removing the binding constraints for these domestic enterprises to performance, the impact of childcare provision on the productivity be qualified suppliers or subcontractors for bigger firms within the and welfare of female workers. zones. Through the provision of matching grants to the domestic enterprises linked to the IZs, the objective of this intervention is to enhance the local firms’ capacities, quality, productivity and market access. Results Chain Input Output Outcome Impact Basic Elements Instruments Menu of Integrated Solutions Analytics SEZ Law adopted Revenue for EIDZC Private Business Value chains from firms in IZs investment by environment IZ regulatory Public-Private function (target: $10 million) firms in IZs Institutional Labor dialogue (target: $28m), strengthening and skills Technical Economic assistance zones Master plans Serviced land in of which FDI Infrastructure Access Public finance License issued for IZ zones (target: 105ha) ($20m) to finance management Leased land in Catalytic support for firms zones (target: 32ha) Total sale value of goods and Evaluation and Teachers trained Access to skills People trained(t:7500) feedback services, of (t:50) which exports (target: $280 Staff trained in Effectiveness of million) EIDZC and Regulator institutions Industries One stop shop in EIA Number of Agroprocessing Leather goods Textile/garment and zones jobs, of which women (target: # of visitors to B2B # of local suppliers 32,000) linkages platform working with firms # of firms supported in zones (t: 25) Linkages Fund $ contract value CIIP Annual Report 2013-2014 49 FYR MACEDONIA Competitive Industries and Innovation Support Program needed to strengthen the capacity to implement these new policies Grant ID TF014914 and programs and deepen regulatory reforms. Grant Duration May 19, 2013-October 30, 2016 Grant Amount $1,602,000 Cumulative Disbursements $454,953.94 Achievement of Objectives Outstanding Commitments $120,471.33 Design Features Regulatory framework, Institution building, The CIIP grant has contributed significantly to the process of Zone governance, PPP arrangements for change for increased competitiveness of Macedonia’s economy by developing zones; , Export promotion, leveraging the reforms supported by the Programmatic Competi- Innovation financing instruments, SME tiveness Development Policy Loan (DPL) series (in high value added support services, PPD manufacturing and agribusiness), and in the cross cutting areas Expected Leverage WB DPLs ($100 million), +DPL3; Skills Development and Innovation Support of skills and innovation. The implementation of the first series of Project(WB); Western Balkans Regional reforms is already under way and the government has requested ad Trade Logistics Project (IFC); Local and third DPL. The grant has successfully strengthened several sector- Regional Competitiveness in Tourism (EU, specific reforms supported under the DPL series as well as advanced EUR 18 million); Invest Macedonia’s budget cross-cutting reform areas, which have the potential to raise medi- increased by 35 percent on the previous year (to a total of EUR 9.2 million); FDI um-term economic growth and address poverty, unemployment and (EUR 190 million in 2014); Exports (EUR 1.2 shared prosperity. The main development goals to which CIIP has billion); Jobs (9,000 in 2014) contributed include the following: (i) developing high value-added manufacturing by attracting greenfield investment and scaling up export-promotion initiatives; (ii) facilitating the restructuring and Strategic Context growth of the agriculture sector by improving agricultural land FYR Macedonia has a consistent track record with regard to administration and better targeting of incentives for agriculture macroeconomic stability and improving the business climate. producers; (iii) improving the efficiency of trade logistics services Macroeconomic and financial stability were preserved in the face of by facilitating transport of goods at border crossings and increasing significant negative shocks, and public sector debt has remained at export-readiness of the transport industry; (iv) deepening innovation manageable levels. Reforms to registration and permitting pro- capacity in the enterprise sector by developing early stage financing cesses, property registration procedures, investor protection, and tax instruments and support services for entrepreneurs and SMEs; (v) collection have further improved the business climate. In 2013, FYR identifying the binding constraints and development opportunities Macedonia was ranked the fifth most improved country among the for increasing the competitiveness of tourism and advancing the top 50 economies in the world, according to the Doing Business policy dialogue on private sector engagement and investment in report, jumping from the 92nd position in 2006 to 25th in 2013 and tourism. outstripping its peers in the region. Implementation Progress Despite these improvements, poverty and unemployment have not declined significantly, due to slow GDP growth relative to other The project implementation is on track to deliver the expected re- Western Balkan and European Union (EU) member states. Further, sults as envisioned in the approved proposal. The objectives of this the country has faced challenges in promoting shared prosper- project will be sustainable with continued support of the reforms ity. To address these challenges, Macedonia is in the process of by the government of Macedonia and by the WBG, particularly in transitioning to a higher growth economy based on advanced linkages between local supplies and foreign investors in the country, manufacturing capabilities and more competitive, export-oriented agricultural land privatization and investment in agribusiness and enterprises. Under the government’s growth agenda, exports have tourism development. Key highlights from each of the project pil- grown rapidly, and in 2012 accounted for 53.4 percent of GDP. lars include the following: Further improvement, however, depends on structural changes given that: (a) exports are still too concentrated in commodities High-value added manufacturing: The reforms supported by (metals and minerals), where value added is low and prices are vola- the grant and the DPL series have enhanced the governance of the tile; (b) medium and large firms do not invest sufficiently in quality Technological Industrial Development Zone (TIDZ) Program. Key or innovation; and (c) most exporting firms are small (fewer than 10 actions include representation of the private sector in the gover- employees) and have difficulty competing in export markets because nance of the zones and better targeting of investment resources for of inefficiencies and high costs related to customs, logistics, and the TIDZs, assessing and aligning investments with market demand trade infrastructure. Further, (d) the agribusiness sector, which em- and regional development priorities. Furthermore, new models are ploys 20 percent of the workforce in 2012, is constrained by several being developed for the TIDZ including Public-Private Partner- factors including the large share of state-owned land, which needs ship (PPP) arrangements that can attract private management to be better managed to unleash its productive and export potential. and investment, and the transfer of industrial zones to municipal governments. The engagement is also supporting measures to CIIP’s grant addresses these challenges by supporting reforms that strengthen the accountability framework for state aid, to ensure a incentivize investment and technology upgrading in major sectors predictable environment for investors and more effective monitor- where the country has a latent competitive advantage (manufactur- ing of associated fiscal costs. In export promotion, the grant has ing and agribusiness) as well as tourism, and tackle cross-cutting and supported the adoption of the Strategy for Export Promotion and enabling factors such as trade logistics, skills and innovation. These the establishment of an export promotion unit in InvestMacedonia, are being addressed through two WB Development Policy Loans. and is currently supporting the implementation of first generation The Macedonia CIIP grant provides the complementary resources exporter support programs, helping build the capacity of those exporters aiming to increase the quality of their products or reach 50 new markets. InvestMacedonia’s total budget for 2014 was increased dialogue with the government and the Delegation of the European by 35.5 percent compared to 2013 to a total of EUR 9.2 million Union about a potential investment operation with EU funding (equivalent). from the Instrument for Pre-Accession Assistance 2 (IPA2). Two workshops on destination management organizations (DMOs) were Agribusiness: The reforms supported by CIIP strengthened the held in July 2014, with representatives of the Agency for Promotion government capacity to manage state-owned agricultural land and and Support of Tourism, municipalities and local businesses. A sur- allocate financial support to agricultural producers. Specifically, the vey of local capacity to pilot and manage DMOs has been finalized, reforms facilitated restructuring of the agribusiness sector through with inputs from the workshops. measures that: (a) improve agricultural land administration, focusing on the gradual sale of state-owned land to the private sector; and Results (b) aims at improving the agricultural support administration and The successful implementation of policy reforms under the first two prevent leakage of public resources. It is estimated that the govern- DPLs has generated a number of development impacts: ment could obtain up to EUR 500 million in revenue from selling Project Results the state owned (vacant and leased) land, for a total of 210,000 • Net export of manufacturing firms located in the SEZs or hectares. These policy initiatives will reinvigorate the land market located outside but receiving tax breaks under the law from and could have a major impact on agricultural productivity, as they have gone from EUR 87 billion in 2013 to EUR 190 billion in address the sectors major structural deficiency, the excessive division 2014.Companies in these industries employed 5,000 workers of privately owned land, which constrains production, economies in 2013, which is expected to increase to 9,000 workers by the of scale, and sector competitiveness. In this context, the CIIP grant end of 2014. supported the implementation of a Survey on agricultural land • Share of medium and high-tech exports in total exports has market value which informed the policymakers in the government increased from 40.7 percent to 45 percent. about the strategic directions for the implementation of the Pro- gram for Sale of State-Owned Agricultural Land supported under the Second Competitiveness DPL (DPL2). The Land Value Survey Leverage and Partnerships is the first systematic survey of agricultural land prices to be carried The work under CIIP has significantly strengthened the capacity of out in Macedonia which provides valuable information about the the government institutions (ministries and agencies) who are part- market of agricultural land and the use of valuation methods for ners in the program and has leveraged the funding of the Competi- the sale of state owned agricultural land. tiveness DPL series, the Skills Development and Innovation Support Project, and the Western Balkans Regional Trade Logistics Project. Trade logistics: CIIP supported reforms which strengthened the Private funding is being also leveraged through the sale of state coordination between the Customs Administration and Inspection owned agricultural land, with contributions from CIIP in the devel- Agencies, increased the presence of more inspectors at border cross- opment of the government’s First Program for Sale or Agricultural ings, and introduced comprehensive improvements in the risk-based Land in State Ownership (currently being piloted). approach to customs controls and technical inspections. Better application of the risk-based approach is a critical trade facilita- Collaborative Governance tion improvement to address the costs and delays from unneces- The PPD mechanisms put in place through the grant include regu- sary controls and inspections. The decision to publish regularly the lar participation from senior advisors and Ministers of agriculture waiting times at major border crossings is helping private transport and finance, heads of departments in ministries and the office companies to improve their planning, and is helping the govern- of the Deputy Prime Minister for Economic Affairs, heads and ment to monitor the impact of recent reforms. management boards of Agencies (Directorate for Technological Industrial Development Zones, Agency for Foreign Investment and Innovation: CIIP provided critical technical assistance to strength- Export Promotion, Food and Veterinary Agency, State Sanitary en the capacity of the newly established Fund for Innovations and and Health Inspectorate, Agency for Promotion and Support of Technological Development (FITD) and develop the pilot financing Tourism, and the Fund for Innovation and Technological Develop- instruments in support of entrepreneurship, innovation commer- ment), as well as faculty, foreign investors and business chambers in cialization and in-house business innovation at the pre-commercial the country. All partners have been conduits of the reforms which and growth stages. The FITD was established through legal reforms benefit the growth and competitiveness of Macedonia’s economy supported by the Competitiveness DPLs and it is receiving initial as a whole. A round table discussion on jobs opportunities in the funding from the World Bank under the Skills Development and automotive and agribusiness sectors brought public and private Innovation Support Project. sector representatives to discuss the challenges and opportunities for investment and job creation in the automotive and agribusiness Tourism: CIIP’s grant supported the development of an ac- sectors. As a result of the round table, a concept note for a program tion plan to address the binding constraints and opportunities for on support of backward linkages with domestic companies in the increased competitiveness of the sector. Activities include: training automotive sector has been developed. Initial activities of the pro- and certification of five hotel managers and tourism consultants gram will be supported by CIIP in the next FY. according to the program of the American Hotel and Lodging Association Educational Institute, in cooperation with USAID, and CIIP Annual Report 2013-2014 51 Results Chain Input Output Outcome Impact Basic Elements Instruments Menu of Integrated Solutions Analytics Value chains Regulations and Time and cost Private Business environment policy reforms to comply with investments Public-Private dialogue Economic regulations (t: EUR 190m) Institutional Labor zones strengthening and skills Technical percent share of assistance Clusters Public finance GDP growth of Access sector to finance (t: 3 percent) Innovation Evaluation and percent growth in feedback sector (t: 2.5 percent) PPD created # of FITD Institutional instruments enacted percent share Industries capacity-building through PPD MHT exports FITD strengthened (t: 50 percent) Agribusiness Manufacturing Tourism Financial instruments Firms accessing Gross number and volume committed financing of jobs (9,000) SME support programs SMEs trained/ supported FITD accelerator Patents for programs innovation CoEs and FabLabs 52 Project Results CIIP Annual Report 2013-2014 53 GEORGIA Competitiveness and Innovation Project Achievement of Objectives Grant ID TF016020 Grant Duration 11/15/2013 to 11/01/2016 The Georgian government’s demonstrated clear commitment to the Grant Amount $525,000 new competitiveness growth agenda enabled rapid progress towards Cumulative Disbursements $159,029 the Grant’s objectives. The policy and implementation focus in Outstanding Commitments $44,038 the country has been transformed as evidenced by the accelerated Design Features Trade diagnostic, Strategy formulation, Institutional building, PPD, SME support preparation of a number of strategies and actions plan, notable Expected Leverage A series of 3 DPLs and a World Bank strengthening of implementation capacity and the development Innovation operation in the pipeline – (40 of institutional mechanisms, such as Councils, working groups, mil); USD 24 million allocation for GITA and new SME and Innovation Agencies. Following its initial trade and GEDA in the state budget sector diagnostics, CIIP is substantively informing the innovation and competitiveness architecture of the country and establishing Strategic Context public-private dialogue mechanisms that will contribute to success- ful sequencing of reforms and public investments. Georgia has undergone extensive business environment reforms over the past several years and has achieved a remarkable turn- around in its investment climate moving from 100th position in Implementation Progress the 2006 Doing Business report to 9th position in the 2013 report. Since its inception, CIIP’s project team has participated in five Georgia experienced economic growth in excess of 9 percent technical assistance missions and provided extensive policy advise, between 2005 and mid-2008. After the contraction in 2009 due to knowledge transfer and capacity building support through the conflict with Russia combined with the global economic downturn, following activities: capacity building seminars; extensive analyti- the country made a quick recovery back to 6.4 percent in 2010, cal and training PPTs; participation in three Innovation Forums 7 percent in 2011 and estimated 6 percent in 2012. This reduced (October 2013, March 2014, and April 2014) and in a high-level unemployment from nearly 19 percent in 2009 to less than 13 policy event with the government (including a brainstorming session percent in 2012. A reduction of FDI in the last quarter of 2012 and with the Prime Minister and other Ministers of Georgia February the slowing down of economic growth recorded in the first half of 18, 2014); detailed input to the creation and operationalization of 2013 combined with lower external demand pose a major challenge the two new agencies, GITA (innovation) and GEDA (SME and for sustaining Georgia’s future economic growth at the 6-7 percent export development), including draft concepts for their operations, annual GDP growth that is necessary to reduce poverty and grow charters, detailed recommendations on their proposed financial and into upper middle-income economy. non-financial products/activities, and shared relevant international An initial Trade Competitiveness Diagnostic report prepared experiences and templates; detailed contributions and revisions to by the CIIP team reveals that Georgia’s export basket shows stag- the draft Georgia Economic Development Strategy 2020 (including nancy and relatively low level of export sophistication for its level of for agriculture, innovation, education, smart specialization/industri- development. Georgia is ranked 77th in the WEF Global Competi- al policy, energy, tourism, SME development and export promotion) tiveness Index (GCI), with much lower level of business sophistica- and the Georgia draft Innovation Strategy 2020. tion, technological absorption and innovation as compared to its In terms of developing a road map for selected competitive peers in the region and ECA on average. For growth to be sustained industries, a concept paper with the outline of the Manufacturing over the medium to long run, the analysis found that Georgia needs report was prepared. The team has also been working on financing to improve competitiveness, attract foreign investment, enhance innovation and technology absorption in key sectors (such as ICT firm level productivity, improve access to finance, facilitate innova- and high value added manufacturing) and establishing financial tion and R&D investments, expand and upgrade its exports and and non-financial instruments to support entrepreneurship in those significantly advance the growth and internationalization of SMEs. sectors, including leveraging government financing. Value chain The government specifically requested the World Bank’s analysis will be carried out for an additional 3-4 industries; the list support in pursuing its competitiveness agenda, and developing of industries for analysis has been discussed and agreed on with the institutional framework for innovation and export promotion, government with focus on agro-processing, machinery (transport entrepreneurship and SME development and internationaliza- equipment and other), electronics, pharmaceuticals, and IT/ICT. tion. After extensive discussions with the stakeholders (including The results of the analyses will serve as the basis for launching government, National Bank of Georgia, private sector, international consultations and the preparation of industrial strategy/smart spe- donor and expert community, and academia), CIIP’s project was cialization policy for Georgia. The Bank team has also been making designed along the three main interventions, namely (i) strengthen- progress in upgrading knowledge and technology absorption and ing institutional capacity for reform design and implementation, modernization of export SMEs, and in strengthening the institu- and establishing quality PPD; (ii) advancing the competitiveness tional capacity of the Enterprise & Export Development Agency reform agenda through the development of strategic documents, in improving SME access to information and factor markets and action plans, analysis and knowledge transfer; (iii) facilitating imple- quality standards and certification. mentation of reforms and respective instruments aimed at innova- The CIIP team has also been working to facilitate a PPD tion growth, higher R&D investments, knowledge and technology (through the Competitiveness Council and the ICT and Innova- transfer, innovative entrepreneurship and SME internationalization, tion Council and beyond) and to ensure that businesses (particularly especially in sectors with higher value addition and export growth domestic firms) are well represented in the decision making process. potential. Proposals for the creation of Competitiveness and ICT & Innova- tion Councils were prepared and presented to the Prime Minister for review and approval. An Economic Advisory Council was es- tablished. Several task forces/working groups were also established 54 to facilitate consultations and policy formulation in selected areas Facilitating New PPDs. CIIP’s team organized six round table (pension reform, innovation policy, competition policy, investment discussions and extensive stakeholder meetings and capacity build- climate, logistics and transit, agricultural development policy). New ing events with the Georgian Business Association, SME develop- working groups/task forces are now being discussed with stakehold- ment Association, Microfinance Association, ICC, AmCham, ers. Export Development Association, Georgia Economic Development Strategy 2020 working group, other task forces, leading Georgian Early Results Universities (State Tbilisi University, Georgia Technology Uni- versity, Illiya University), Think Tanks (ISET, PMCG, Center for CIIP efforts have already directly informed important policy and Financial Stability and Competitiveness), Transparency Interna- institutional reforms. Most significantly the engagement has helped tional, private sector and financial sector representatives to discuss design the innovation and competitiveness architecture in the coun- private sector development challenges, competitiveness and innova- try and facilitated a number of new PPDs, among others: tion agenda, entrepreneurship and SME development strategy. In recognition of the importance of such dialogue, the Prime Minister Innovation and Competitiveness Architecture. CIIP’s Project Results of Georgia established a special working group comprised of key engagement was instrumental in the creation of the two agencies, government, academia and private sector stakeholders tasked with GEDA and GITA, and in the drafting of their structure, strategies, developing the Georgia Economic Reform Strategy 2020. In addi- mandate, and implementation arrangements. For the first time in tion, in early 2014 the Economic Reform Advisory Council was es- the country’s history, allocations were made in the State Budget tablished for as a permanent mechanism for public-private dialogue of Georgia for innovation and technology absorption for GITA in order to facilitate this work and ensure implementation. (USD 7 million) via various financial and non-financial products and infrastructure investment and for SME and export develop- ment for GEDA (USD 17 million). Knowledge building events and Leverage technical consultation meetings were held in February and March, The grant has capitalized on partnerships within the WBG through 2014, with participation of experts from Chile, Poland, Croatia, their collaboration with the TWICT and ICT teams. CIIP’s and Israel to transfer knowledge to GITA and GEDA on types of engagement will leverage a series of three DPLs for 2015-2017 products, distinct features, organization of selection process and the and a new investment lending operation for ICT and Innovation creation of an independent Selection Committee etc. The team has in FY2015. Reform measures identified through CIIP’s analytical also influenced the innovation and competitiveness agenda through work will be included in the World Bank’s development policy lend- substantive contributions to the Georgia Innovation Strategy and ing matrix. the Georgia 2020 Development Strategy. Results chain Input Output Outcome Impact Basic Elements Instruments Menu of Integrated Solutions Analytics Value chains Regulations and Time and cost Private Business environment policy reforms to comply with investments Public-Private dialogue regulations Institutional Labor strengthening and skills Technical Share of exports assistance Clusters Teachers trained Access to skills of supported Public finance People trained Access sector to finance Catalytic support for firms Cross-institutional PPD impact on Innovation coordination reform process New firms Evaluation and feedback mechanisms Effectiveness of Social Institutional institutions capacity-building spillovers Financial instruments Access to financing Gross number Industries and volume committed Increased firm skill of jobs (by Manufacturing Electronics Pharmaceuticals gender) Agri-processing SME support programs IT/ICT Funding spent on Patents for innovation and R&D innovation Innovation $ funding for infrastructure - m-labs, innovative activities business incubators, (VC, angel financing) etc. CIIP Annual Report 2013-2014 55 HAITI Strengthening Competitiveness Implementation Capacities signals the government’s evolving approach, was its decision to Grant ID TF016213 restructure IDA’s$20 million Business Development and Investment Grant Duration December 9, 2013 – October 30, 2015 Grant Amount $1,875,000 (BDI) Project to allow for the creation of innovative Competitive- Cumulative Disbursements $294,516 ness Facility that provides investment and capacity building support Outstanding Commitments $49,432 to emerging and existing clusters supported by enterprise agents in Design Elements Sector selection, Strategy formulation, all provinces of the country. Regional development, Competitiveness Fund, Local PPD, Competitiveness training Expected Leverage IDA Business Development and Investment Implementation Progress Project ($20 million) In the short period of its implementation, the CIIP grant has influenced the thinking and strategy of the Ministry of Commerce Context and Industry. In recognition of the limitation of IEZs, the Min- istry is now implementing a cluster approach based on continual Haiti’s legacy of deep social and economic inequities and resulting identification of new global opportunities and support for emerging intense concentration of wealth and power were exacerbated even local clusters. Over the course of a number of missions as well as further by the devastating earthquake in 2010. Haiti was both one through full-time staff support in-country, CIIP has contributed to of the poorest and one of the most unequal economies in the world. the following: Over half of its population of 10 million was estimated to live on less than US$1 per day, and 78 per cent on less than US$2 per day • Identification of ten sectors in ten different provinces through in 2001 (last available data). the engagement of local PPDs. With the help of the international community Haiti has made progress towards post-disaster recovery and reconstruction. The • Launch of CIIP’s innovative competitiveness training program, government has put private sector development at the center of its starting with the delivery of the first module in June 2014. longer term development strategy. The National Recovery and De- Based on similar methods employed in the EU, the program velopment Action Plan prioritizes reforms in the business environ- is comprised of a series of modules to be delivered within a ment and public financial management. Post-earthquake efforts to period of ten months to address the following themes and create private sector jobs have focused heavily on enclave initiatives concepts: Screening for Competitiveness Initiatives; Industry such as integrated economic zones (IEZs), industrial parks, and Analysis and Strategic Segmentation; Locations and competi- micro-parks. Aside from their investment promotion objectives, tiveness initiatives; Implementation Agencies and support in- Haitian Greenfield zones are intended to further the government’s frastructure; Implications for National Policies; and Monitoring goal of “decentralizing growth” outside of Port au Prince, and and Evaluation for Implementation and Impact. The Minister promoting regional development. of Commerce and Industry aims to leverage CIIP’s Training The Haitian experience-to-date with IEZs points to a number Program by creating a curriculum for a new Entrepreneurship of lessons and challenges that necessitate course corrections, such as Institute in Haiti. (1) the limitation of zones, such as overreliance on foreign invest- ment and less-than-anticipated job growth; (2) weak public sector • The design and launching of the Entrepreneurship Support capacity, especially in the area of investment management and Services (SAE) Program, through which Enterprise Competi- PPD; and (3) poor fit between project design and country context. tiveness Agents from the Ministry of Commerce and Industry The CIIP team has taken the opportunity to learn from these les- will work with local entrepreneurs from their province to carry sons and more thoroughly re-think Haiti’s approach to design and out competitiveness initiatives in emerging clusters and develop implementation of competitiveness strategies. strategies to exploit new opportunities. The Agents will also CIIP’s project in Haiti aims to support a more inclusive “gover- formalize the PPD process in their respective provinces. nance approach” to industrial development that draws on country capacities and local institutions across the public and private sectors, and relies on implementation mechanisms that empower, test, and Early Results reward the domestic private sector and subnational authorities. The CIIP has created an important opportunity for Haiti to develop project’s objectives will be achieved by: (i) motivating local entrepre- a new approach to private sector development. A number of neurs in emerging clusters to identify and exploit new opportunities; government decisions around the establishment of institutions and (ii) building public sector capacity to support competitiveness strate- programs provide evidence of an emerging bottom-up, regionally- gies; and (iii) expanding fiscal and financial instruments to mobilize driven approach to growth: public and private investment. Knowledge and know-how on competitive industries. In Achievement of Objectives a short time, a cadre of local enterprise agents and private sector actors are being trained in the methodologies and approaches that CIIP engagement in Haiti is helping the government develop a characterize contemporary value chain and cluster competitiveness broader menu of approaches, beyond IEZs, to promote long term strategies. While full implications of encouraging these new ap- private sector development across the country. Early progress has proaches will not be seen for some time, the deployment of the new been made through knowledge sharing around competitiveness agents across the country represents an important new development and cluster-based strategies; mobilization by the government of a which bodes well for cluster development. cadre of cluster agents around the country, and participatory sector selection by emerging entrepreneurs using local PPD mechanisms. Inclusive local PPD mechanisms across the country. With Another important achievement of CIIP’s project, which also CIIP’s help, the government has embarked on developing collabora- 56 tive institutions with the private sector, in some cases, for the first building to local clusters with a view to leveraging private invest- time. Inclusive PPDs are supporting sector prioritization and the ment and promoting firm level competitiveness. design of competitiveness strategies at the provincial level. The de- sign and implementation of the SAE Program will further enhance Leverage the capacity of provincial organizations to drive the process of CIIP has forged strong partnerships with USAID, IADB and the economic development. EU. The grant has help with the restructuring of IDA’s BDI Project, while also attracting other donors to contribute to the proof of con- Innovative cluster funding mechanisms. The proposed cept that will be substantiated in the initial years of implementation. Competitiveness Facility will provide an incentive for the local PPD efforts and eventually, for cluster development. Specifically, it will provide access to finance for enabling infrastructure and capacity Project Results Results chain Input Output Outcome Impact Basic Elements Instruments Menu of Integrated Solutions Analytics # of regulations, Time and cost Private Business environment Value chains strategies and policy to comply with investments Public-Private Labor dialogue Economic reforms regulations Institutional zones strengthening a Technical $ committed Common Value added per assistance Clusters Public finance and approved infrastructure job Infrastructure Access for infrastructure financed for clusters to finance Catalytic support investment (t: $4m) Gross number for firms of jobs Evaluation and Growth poles feedback and corridors $ financing for SAE # of reforms program enacted through Industries # of PPD mechanims PPD and $ funding Agribusiness Light Manufacturing Competitiveness Fund # of firms accessing established additional financing CIIP Annual Report 2013-2014 57 KAZAKHSTAN Competitiveness and Economic Diversification Project have identified characteristics and weaknesses of the government’s Grant ID TF015585 past and current approaches to industry-specific development and Grant Duration November 1, 2012-June 30, 2014 Grant Amount $750,000 assessed the array of current government programs that are being Cumulative Disbursements $168,466.39 used in support of economic diversification and regional economic Outstanding Commitments $0 growth. Along with this work, the CIIP grant has supported techni- Design Elements Sector selection and value chain analysis cal assistance, including an analysis of economic conditions in each to support a new generation of industry- of the fourteen regions of Kazakhstan, plus the cities of Astana and specific business environment reforms Expected Leverage $20 million component in a forthcoming Almaty; performed a just-in-time, and high-level, trade competi- $100 Million SME Competitiveness and tiveness diagnostic; and analyzed data on SMEs in Kazakhstan. Access to Finance project; approximately Given that the focus of the TA has been expanded from Astana $2.1 billion in leveraging 3 out of 7 and Almaty cities (as agreed on with MRD during the December objectives in a $5 billion partnership mission), the team is now hiring a consultant (firm) to examine agreement with the government the list of clusters that MRD has proposed for development and inform the selection of industries in which the TA will support Strategic Context pilots of the recommended approach. The TA has also helped in The government of Kazakhstan has expressed a commitment to partnerships with other development partners by creating a shared economic growth, competitiveness and diversification into non-ex- understanding of the related work of other development partners, tractive industries. It is interested in identifying sustainable sources including the OECD’s work on competitiveness and the EU’s work of medium- and long-term economic growth that would spur job on regional development, and developed an inventory of data that creation and support further regional development and shared will be available to inform the work going forward. The CIIP team prosperity. The government also aspires to increase the effectiveness also provided comments on the concept note for the Industrializa- of state support and to continue to improve the business enabling tion 2015- 2019 Concept, which informed the State Program of environment. In January, 2014, The President set out an industrial Accelerated Industrial- Innovative Development 2015- 2019 (the policy for development characterized first through the growth of government of Kazakhstan’s leading industrial policy document). manufacturing, following the example of South Korea, Singapore and others, and then through the development of a “knowledge- Implementation Progress based” economy. These industrial policy goals focus on increasing The activities in the Project Timeline have been slightly delayed. the share of non-oil products in Kazakhstan’s export basket to 70 However, this delay is due to developments at the country level, percent, and increasing small and medium enterprises’ (SMEs) including the US$5 billion Partnership Framework Agreement and contribution to GDP from the current 20 percent to 50 percent by the inclusion of a US$20 million component on Regional Competi- 2015. tive Industries in the SME Competitiveness and Access to Finance As part of the Action Plan to implement those priorities, the (CAF) project. Therefore, the delays should not be a cause for con- government is particularly interested in the development of clusters, cern, as they set the stage for better and more sustainable project and has drafted a Prospective National Clusters Development implementation. Concept 2020. In addition, the MRD is consolidating its previous Regional Development Program and Single-Industry Towns Devel- Early Results opment Program, among other instruments, into a more compre- hensive Regional Development Program. The primary goals of the CIIP’s team has worked closely with the government of Kazakh- new Regional Development Program will be urbanization and the stan, and early CIIP activities have been useful not only to prepare formation of centers of economic growth in the regions, involving for the work that will be done under the grant, but also to inform clusters. the design of the SME CAF project and discussions on the WBG- CIIP’s grant seeks to pilot an approach to support the com- GoK joint program on economic diversification and competi- petitiveness of higher added-value production and private sector tiveness. Specifically, progress on the grant implementation has activities in non-extractive industries, in and around priority areas included the following: (agglomerations, cities, towns). The TA will have a secondary focus on SME development in these industries. The project objective Innovative Approach to competitive industries in Kazakh- is being pursued through targeted interventions that focus on 2-3 stan. CIIP’s team, together with the government of Kazakhstan, industries with strong potential for increased competitiveness, and developed an approach and work plan for TA implementation that which aim to strengthen the business enabling environment and reflects the context in Kazakhstan and draws on international good address gaps in the value chains and their supporting infrastructure. practices. MRD, MINT/KIDI, private sector representatives, local As the development of a competitive industry may take a form and regional government representatives, and other government other than cluster, the pilots will apply the concept of clusters as and private sector stakeholders as appropriate (e.g. Ministry of appropriate, given the findings of the specific industries of focus. Economy and Budget Planning, Ministry of Agriculture, National Chamber of Entrepreneurs, etc.) will participate in the pilots. The proposed approach is different from previous efforts in the following Achievement of Objectives ways: (i) it takes a deeper look into specific industries, examining The CIIP grant has resulted in a series of early achievements. transactions and dynamics between firms, existence or potential to The Bank team, with support of CIIP, has helped the government develop clusters, and industry-specific aspects of business-enabling of Kazakhstan to develop a sound understanding of the policy environment; (ii) it will produce and help the government imple- priorities and factors that are driving its focus on competitive ment actionable reform plans that are owned by the government industries and cluster development. The team and the government and not the donors; (iii) it is built around a consultation process that brings together stakeholders from the private sector, different 58 parts of government and other institutions, which has been lacking fostering innovation, and (iii) addressing skills gas, building skills for in existing initiatives; (iv) it will help the government sustain the the job market. In addition CIIP directly contributed to the design consultation platform over time; and (v) through the diagnostic and the inclusion of a US$20 million component on Regional approach and implementation mechanisms used, it will allow the Competitive Industries in the SME Competitiveness and Access to government to sense market trends and feedback (the implementa- Finance (CAF) project, USD $100 Million. The grant has addition- tion mechanisms for the pilots will build capacity for this ‘market ally helped to leverage government financing as the government of sensing’ approach. Kazakhstan has agreed to finance half of the forthcoming opera- tion. The CIIP team developed recommendations on how the SME Policy Leverage and Institutional Strengthening. The CAF project component on regional competitive industries could CIIP grant helped inform approximately $2.1 billion of the total be designed in order to institutionalize the approach that will be $5 billion in the Partnership Framework Agreement between the piloted through the TA, so that the government of Kazakhstan can government and the World Bank, The Kazakhstan Program for then apply this approach across the multiple industries and clusters Sustainable Development and Inclusive Growth. CIIP’s work it wishes to develop. The project will help the government to estab- Project Results specifically informed the design and public spending priorities of 3 lish a strong institution to facilitate the development of competitive out of the 7 objectives in the Partnerships, namely: (i) increasing the sub-sectors (industries) and SME growth within them, incorporating role of the private sector in the economy, development of small and international best practices that are tailored to Kazakhstan. medium-sized businesses, and improvement of business climate; (ii) Results chain Input Output Outcome Impact Basic Elements Instruments Menu of Integrated Solutions Analytics Regulations and Time and cost Private Business environment Value chains policy reforms to comply with investments Public-Private dialogue regulations Institutional strengthening Technical assistance Clusters Gross number Access to finance Access of jobs to finance Catalytic support for firms Innovation Evaluation and feedback PPD mechanism PPD impact on established reform process Industries Institutional Effectiveness of capacity-building institutions Agriculture Machinery Food Processing Construction materials SME support SMEs supported/ programs trained CIIP Annual Report 2013-2014 59 RUSSIA Stimulating Investment and Jobs through Innovative Clusters Grant ID TF015279 Grant Duration July 8, 2013 2013-October 31, 2014 • Dialogue between clusters and regional authorities, regional Grant Amount $420,000 Cumulative Disbursements $417,890.35 centers for cluster development, and inside the clusters Outstanding Commitments $0 • Qualification and skills in the area of cluster management, Design Features Cluster selection, Cluster management, strategic planning, and work with cooperative projects Regional development, SME linkages, PPD • Management systems and procedures in the cluster manage- Expected Leverage Forthcoming SEZ lending operation ($200 ment organizations (CMOs) responsible for leading the cluster million), Two RAS initiatives • International links and visibility Strategic Context The project aimed to improve the effectiveness of cluster gov- Achievement of Objectives ernance and management in Russia and help firms create high CIIP has made a significant contribution to the policy dialogue of quality jobs through better products and services exported to global select Russian regions where the project had engagements. The markets. A cluster initiative is an organized effort to enhance the project has helped position the development of dynamic and sus- competitiveness of a cluster involving private business, public bodies tainable clusters as a key pillar of regional economic development or academic institutions within a regional and sectoral system and strategies, and provided tangible advice on how to strengthen cluster international experience suggests that cluster initiatives can play development. Public-private dialogues have been held in each of the an important role in supporting regional competitiveness, but that four regions: Novosibirsk, Tomsk, Ulyanovsk, and Troitsk involving they also carry a number of risks. Cluster policies, when properly firms, cluster leadership, regional government officials from various managed can have an economic impact and can foster innovation ministries, regional cluster development centers, research institu- in regions. However, there is evidence –at least in Europe- that the tions, and innovation support infrastructure (e.g. techno-parks and quality of most cluster initiatives is compromised by management incubators). and organizational challenges. Indeed, active cluster development The key challenges of cluster policy are related to its implemen- processes are complex and rely on efficient management systems at tation, which requires a special set of knowledge and skills, which is all levels of decision-making. particularly lacking at the regional level. The project’s main contri- In Russia, cluster initiatives hold the promise of bringing more butions were the enhancement of this set of knowledge and skills in relevant regional policy responses and support mechanisms to firms. the clusters with which the grant was engaged. CIIP strengthened Current public efforts at fostering innovation in Russia through capacity of relevant regional actors through providing them with instruments such as technology parks, incubators, venture funds and hands-on capacity building, good international practices and action the like, have not yielded many results. One reason is that these in- plans on how to move forward. struments are not always tailored to the local needs of regions. An- In addition, through support for regional cluster centers and other reason is that many of these instruments are funded through direct work with SMEs in the clusters, CIIP raised awareness and federal channels, and businesses in regions have limited opportuni- reinforced the message that there are benefits to collaboration ties to provide feedback on their relevance or the quality of their through clustering and that good cluster governance and manage- delivery. Clusters can improve the governance and management of ment can lead to positive results, and has thus catalyzed a demon- the innovation support process by giving all cluster members a voice stration effect. A very positive trend uncovered during the course of in the type of reform and support measure required, and by rally- the project was that once better exposed to the benefits of cluster- ing private resources to public resources in collaborative projects. ing, regional leaders (businesses, regional administrations, develop- The approach of the CIIP project was to identify clusters that ment agencies, R&E organizations) become more favorable inclined could most benefit from the Project’s support, and to help them toward the implementation of clustering activities in their regions. strengthen their management and governance through a number This positive attitude based on clarity and understanding can be of activities. The selection criteria were that: (1) the project support nurtured by policymakers in order to ensure Russia benefits in full to the clusters would generate reasonably quick results and have a from the potential created by clustering work. demonstration effect at the national level; (2) support would lever- age additional public or private investments to scale the impact of Implementation the project; and (3) it was reasonable to believe that cluster gover- nance and management would affect the behavior of firms in the The initial analysis conducted for the purpose of the grant’s cluster cluster. identification process highlighted that Russian clusters do not have a As a result of this process, four clusters were selected for sup- strategic vision shared by cluster members. A number of clusters are port by the project: the Novosibirsk information technology (IT) created through a top-down process, lack the necessary stakeholder cluster; the Tomsk IT and pharmaceutical cluster, the Troitsk new buy-in, and have no clear, common, and pragmatic understanding materials, laser and radiation cluster; and the Ulyanovsk aeronau- of the concept and value of developing cluster initiatives. The proj- tics cluster. A preliminary analysis of cluster policy implementation ect helped identify a number of recommendations in cluster policy in Russia showed that there are five areas where the project could design and implementation that can help mitigate existing risk provide technical assistance to the clusters: to cluster development in Russia: (i) focus cluster policy on cross- cutting technologies that are relevant to many sectors in the market; • Stakeholder understanding of the nature and organization of (ii) focus the cluster program on SMEs and put them in the driver’s clusters seat; (iii) co-fund the cluster program with multiple federal minis- tries; (iv) provide sustainable funding for cluster policy at the federal and regional level; (v) improve the quality of cluster management 60 organizations; (vi) create interest in and motivation for clustering by • 15 business projects from Russian clusters presented to foreign developing relevant cluster knowledge and skills; (vii) implement an clusters, five Russian companies and nine Russian cluster rep- efficient monitoring system agreed upon and understood by regional resentatives invited to foreign clusters, two joint projects under stakeholders. preparation In order to address a number of these identified recommenda- tions, the project used a mix of technical assistance including: (i) Leverage the identification and diagnosis of cluster initiatives to support; (ii) Funding provided by CIIP helped to develop a series of new the strengthening of cluster management and governance systems projects currently under preparation between the Bank and the through knowledge transfer, and learning-by-doing; (iii) small pilots government of Russia. Two separate RAS projects (Reimbursable to implement collaborative activities within the selected clusters; (iv) Advisory Services) are under discussion with the regions of Novosi- and the development of concrete action plans and recommenda- birsk and Troitsk. In addition, the World Bank team has been able tions for public and private stakeholders in the selected clusters. The to use PPDs with the clusters identified in this project to help set up value of the project was mainly delivered through facilitation, train- a forthcoming USD $200 Million SEZ lending operation, which Project Results ing and coaching of cluster stakeholders. The mix of activities used will include two of the clusters. For instance, the cluster in Tomsk for a particular cluster was based on the timing of the intervention focuses on the IT sector (and also includes medical and pharmaceu- (e.g. whether the cluster developed a strategy, or whether it is ready tical companies). The grant identified constraints within this cluster and willing to do so), the needs of the cluster, as well as the specific that are more sophisticated than traditional constraints in zones demands of cluster stakeholders and the regional administration. projects (e.g. commercialization, internationalization, links with foreign clusters etc.). The clusters initiatives have allowed the Bank Results and project beneficiaries the ability to identify and address these The main outcome of the grant was to improve the effectiveness of constraints early. Support has included providing direct services to cluster governance and management through: the firms to help with their business plans, finding local researchers at universities, and providing support on how to deal with issues • Expected reforms in one regional cluster center (Novosibirsk) related to intellectual property rights. The team has started building • A public private dialogue established in one cluster linkages by engaging firms within clusters. Results chain Input Output Outcome Impact Basic Elements Instruments Menu of Integrated Solutions Analytics Regulations and Time and cost Private Business environment policy reforms to comply with investments Public-Private dialogue regulations (t: $200 mil) Institutional strengthening Technical assistance Clusters Gross number Access to finance Access of jobs (t: 5000) to finance Catalytic support for firms Innovation Evaluation and feedback PPD mechanism PPD impact on established reform process Industries Institutional Effectiveness of capacity-building institutions Pharmaceuticals IT Laser and Radiation Aeronautics SME linkages Firms benefitting programs with foreign (t: 500) clusters CIIP Annual Report 2013-2014 61 SIERRA LEONE Growth Poles Program PPDs and economy-wide consultations in Freetown and upcountry Grant ID TF015439 to engage with stakeholders and review institutional arrangements Grant Duration Aug 19, 2013-Nov 30, 2014 Grant Amount $994,641 for better operation design and implementation. In addition, CIIP Cumulative Disbursements $555,600 advisory services are helping government to prioritize public invest- Outstanding Commitments $292,483 ments to pursue quick-wins, kick-start at least one growth pole, and Design features Spatial analyses, Strategy formulation, sequence future support in the context of a pipeline IDA growth Local content, Institution building, PPD, poles project. Knowledge transfer, Shared infrastructure, SME support Expected Leverage Forthcoming IDA Growth Poles Operation Implementation Progress. Following the completion of the ($15 million) Sierra Leone Growth Pole Diagnostic Report, CIIP launched and is currently wrapping up all planned Phase 1 and 2 activities. These include the governance and institutional options assessment; Strategic Context medium-long term growth poles strategy; growth poles 3-years op- Sierra Leone’s post-conflict recovery has been characterized by an erational plan; geospatial capacity needs diagnostic, port/rail com- industrial mining boom resulting in a 15.2 percent surge in GDP mercial options assessment; SMEs survey; local content compact; in 2010. While extractives significantly improve its short-term local content scorecard; suppliers development program; workforce prospects, the country’s long term goal of reaching middle income & TVET portal; fisheries cluster study; rice value chain study; mi- status will require concerted efforts to diversify the economy in part grants survey in growth poles, and report on the “Political Economy by leveraging scale and agglomeration economies. The govern- of Social Capital” in growth poles. Key highlights under each of the ment’s 2013-17 Poverty Reduction Strategy Program, Agenda for main work streams are enumerated below: Prosperity, seeks to enhance industrial competitiveness in key sectors such as agriculture, manufacturing, fisheries and tourism through Delivery Systems: A delivery system will address the current lack extractives-driven growth pole(s)/corridor(s). of effective inter-ministerial collaboration and capacity to support Sierra Leone’s growth poles approach is being developed under and facilitate this approach. The analysis on “Institutional Arrange- the leadership of the Office of the President with the support of ments for Sierra Leone Growth Poles” (March 2014) and “Sierra development partners, including the WBG. The approach involves Leone Growth Poles Delivery Systems Work Plan 2014-17” (June targeting and coordinating policy, institutional, and investment sup- 2014) are expected to inform the institutional and fiduciary arrange- port for spatial clusters around core industries. Its success depends ments for key elements of the proposed IDA growth poles project, on rigorous analytics, open consultative processes, capacity develop- and for it. ment, targeted public investments, and robust linkage efforts. Given its complexity, proactive management of operational and gover- Deals-Orientation: The deals orientation of Sierra Leone’s nance risks will be important. growth poles approach focuses on developing shared infrastructure CIIP’s growth poles program aims to help the government identify to encourage spillovers. The ongoing dialogue with government on potential growth poles that can leverage private investment in shared infrastructure development (since May 2013), a PPP Pipeline infrastructure and commercial operations and drive local economic Report financed by the PPIAF trust fund (June 2014), and a CIIP development and diversification beyond the existing extractives in- assessment of options for potential commercialization of the deep dustries. The grant is designed around the following phased compo- sea port (September 2014) are translating into time-bound project nents: (1) Growth Poles Identification and Diagnostics, (2) Program activities to be financed by IDA. Design through PPD , and (3) Implementation Support. Catalytic Interventions: While infrastructure projects are impor- Achievement of Objectives tant, associated investments and capacity-building efforts directed at The grant has made rapid progress towards identifying growth the private sector are required to catalyze economic diversification. poles and designing investments. CIIP’s innovative Sierra Leone Three activities informing project design are underway covering Growth Poles Diagnostic Report was endorsed by the Office of the the following areas: (i) Local Content Compact, (ii) Fisheries Sector President in August 2013. It identified three poles – (i) a northern Analysis, and (iii) Rice Value Chain Study. On Local Content Com- pole from Freetown to Tonkilili, (ii) a southern pole from Bonthe pact, PPD has been successful with the signing of a MoU (Novem- to Sulima, and (iii) an eastern pole from Tiwai to Kailahun – each ber 2013) and the launching of a SMEs survey (May 2014). A firm with different groupings of growth sectors such as mining and will be hired to complete the design of a SMEs Support Program linkages, agriculture, fisheries, and tourism. This analytical tool—a (August 2014). For options to diversify away from mining, two stud- “slideument”—has has a significant impact on strategy formulation ies—one on fisheries and the other one on the rice value chain—are and decision processes in Sierra Leone. As such, it is considered a at an advanced stage. good practice example of applied industry and spatial analytics to help decision-makers in other countries such as Ghana and Burkina Social Capital Development: Service delivery by local au- Faso. thorities and shared prosperity with communities are important CIIP has followed up its initial diagnostic with sustained measures of the success for the government (human development, advisory support on the design of growth poles interventions. Multi- social protection, gender, environment and local private goods). sectoral analytics have helped design a strategy, select interventions, The report, “Political Economy of Social Capital in Sierra Leone and signal commitments along four work streams–(i) delivery sys- Growth Poles,” (April 2014) has helped define the environmental tems, (ii) deals orientation, (iii) catalytic interventions, and (iv) social and risk framework—including the fiduciary, social, and environ- capital development. CIIP also provided support for the launch of mental safeguards—that will govern IDA and other donor growth poles projects. The report points to important policy issues such as 62 the lack of transparency in land lease administration or in awarding New Legal and Initiatives around Local Content. Efforts to of the land to private sector) and the matching of education and develop Sierra Leone’s embryonic legal and institutional framework skills to employment opportunities. It also identifies the need for for local content are bearing fruit. Following a number of CIIP stronger coordination across government, and greater awareness of sponsored consultations, the government, mining companies, and contextual factors such as communities’ perceptions of the extrac- the Chamber of Commerce are working to develop a Local Con- tives boom. tent Score Card. In addition, a public-private MoU on local content has been signed between the Ministry of Trade, the Ministry of An additional measure of progress is the strong demand from the Mines, and the Chamber of Commerce representing the largest government for proceeding to a third phase of the CIIP grant fo- mining companies, etc. cused on implementation support for the growth poles program. Catalytic Support for Firms. Efforts to catalyze economic diversification are underway. Notably Anchor investors are to Early Results financially contribute to SMEs support programs (TVET, Suppli- Project Results ers, etc.). Early steps have been taken to secure these investments, CIIP grant has already contributed a significant process of learning notably through technical assistance. A PPD has been successfully and institutional change around Sierra Leone’s industry level efforts. established and, and in May 2014 the team launched an SMEs An ever-broadening swathe of decision makers in Sierra Leone’s survey to support economic diversification efforts. private and public sectors have come to view growth poles as a means to sustainable growth and shared prosperity. Early results Expanded Prospects for Pipeline Deals. CIIP’s study on the rest on the adoption of legal and regulatory initiatives relevant to commercial viability of Sierra Leone’s deep sea port signals the growth poles, an increasing deals orientation, collaborative gover- government’s intention to expand its “deals horizon” on shared nance arrangements, and partnerships that leverage much-needed infrastructure. Such a significant investment in shared transport in- investments. Illustrative examples are listed below: frastructure has the potential to be a game-change for Sierra Leone and neighboring countries over the medium to long run. Collaborative Governance. Significantly, CIIP’s engagement has involved efforts to promote an inclusive public-private sector dialogue around the design and implementation of growth poles. Leverage A key feature of the in-country dialogue was to promote learn- The grant has placed a premium on partnerships both within the ing through the use of the “slideument” methodology—that is, a WBG (comprising the IDA and IFC teams) and among develop- living document with analyses and recommendations tailored to ment partners in Sierra Leone. With CIIP support, the Bank team specific industries and spatial agglomerations. Equally important are is working closely with DFID, GIZ, AfDB, and the EU during ongoing efforts to build the government’s cross-sectoral coordina- missions and more generally, on analytical and program design tion capacity to support growth poles. The CIIP grant is facilitat- activities. It is envisaged that these efforts will leverage IDA and ing south-south learning based on a number of agglomeration other donor resources to augment Sierra Leone’s public investment initiatives around the world, for instance, the Madagascar growth resources. In March 2014, the government expressed its interest in poles (Ministry of Finance), Burkina Faso Bagre pole (Independent developing a program of IDA support. The proposed IDA opera- agency), Mtwara Development Corridor (line ministry), as well as tion is currently in the design phase, and supported by a Project the international experience with delivery units in Indonesia, Aus- Preparation Facility. As these projects are developed, the Bank tralia, the UK, Malaysia, and India. team anticipates that private financing (for example, from London Mining and Addax) will be leveraged through PPPs and the Local Content Compact with large FDI and their tier-1 contractors. CIIP Annual Report 2013-2014 63 Results chain Input Output Outcome Impact Basic Elements Instruments Menu of Integrated Solutions Analytics Value chains Regulations and Time and cost Private Business environment policy reforms to comply with investments Public-Private dialogue approved (t: 3) regulations Institutional Labor strengthening and skills Technical Gross number assistance Clusters $ approved for Access to upgraded infrastructure land (t: 50 ha) of jobs Public finance Infrastructure Access investment to finance Access to deep sea Catalytic support for firms port (t: >FY18) Evaluation and Growth poles # of reform programs # of trainees feedback and corridors designed (t: 2) employed 1 year after training Cross-institutional Reforms enacted coordination through PPD Industries mechanisms mechanism (t: 3) (t: 2) Agriculture Fisheries Extractives Tourism SME support programs SMEs trained or supported (t: 260) 64 Project Results CIIP Annual Report 2013-2014 65 TANZANIA Developing Local Industries Connected to Natural Gas Discoveries specifically the construction of the LNG plant). The final output of Grant ID TF016164 Grant Duration November 30, 2013-March 31, 2017 this analysis will be a quantitative estimation of the impact that gas- Grant Amount $676,250 related investments on the identified industries and the design of Cumulative Disbursements $80,661 possible interventions to overcome the existing gaps. The team has Outstanding Commitments $180,869 received technical input and support from the gas companies and Design Elements Scoping and diagnostics, Strategy initial findings from this analysis have been shared with public and formulation, Local content policy, Institution building and knowledge private stakeholders through workshops and bilateral meetings. This transfer, PPD analysis is providing a rational basis for determining the potential Expected Leverage $20 million (Pipeline IDA Growth Poles scale of local content opportunities (estimated to be in the range of Project) 8-16 percent of the total expected gas-related investments, or $1.6 billion in leverage over several years). Strategic Context Public-Private Dialogue and roundtable discussions on In 2012 Tanzania nearly tripled the appraisal of its natural gas local content: CIIP has supported a series of roundtable discus- reserves, concentrated in the underdeveloped Mtwara and Lindi re- sions with stakeholders from the government, the private sector, gions at the border with Mozambique. The large majority of these civil society organizations, academia, and donor organizations on gas reserves are off-shore, requiring exploration below sea level. To local content policy. These discussions have centered on experience develop these reserves, international gas companies plan to invest sharing from other resource-rich countries (for instance, Trinidad between $20 and $25 billion in Tanzania over the coming decade and Tobago, Ghana, and in the end of September 2014, Malaysia) (the country’s current GDP is $28 billion), including the construc- that are implementing local content polices. This series is organized tion of a large liquefied natural gas (LNG) plant which will allow jointly with the Uongozi Institute (think tank commissioned by the Tanzania to export gas to the lucrative Asian markets. The natural government to provide technical support on local content matters) gas sector has the potential to transform Tanzania’s economy and and the Tanzania Private Sector Foundation. With CIIP’s support, lift incomes for many currently living below the poverty line. To do the Bank team has joined other donors in providing feedback on this, the government intends to take an array of proactive measures Tanzania’s draft Local Content Policy. It is envisaged that these to avoid the “resource curse” such as prudent macro-fiscal manage- PPDs will help inform policies and investments to be supported ment, institutional development, and integration of other sectors inter alia by IDA’s pipeline Development Policy Loan focused on into extractive activities. private sector development, and other investment projects. As part of this larger effort, CIIP aims to help Tanzania capi- talize on the local economic and enterprise development opportuni- Analysis of downstream opportunities: The study on the ties linked to natural gas discoveries along the Lindi-Mtwara cor- downstream linkages will be launched in Q1 FY2015. Given that ridor. To achieve this, CIIP is helping the government design and offshore natural gas is not expected to be extracted before 2022, the implement a national gas strategy, as well as the private sector gas timetable allows for ample lead time for the development of cross- value chain project in close collaboration with the main investors sector interventions. (British Gas, ExxonMobil, and StatOil). The CIIP grant is designed around three phased components: (1) scoping and diagnostics, (2) program design through PPD, and (3) ongoing implementation sup- Early Results port. With CIIP’s help, the Bank team has been an early mover in sup- porting Tanzania’s gas sector. A critical success factor will be the Achievement of Objectives ability of CIIP-supported Bank team to contribute to the design and financing of linkage programs: The grant has improved the prospects of developing the natural gas value chain in conjunction with an expansion of local economic Upstream Local Content Sourcing. The thorough analysis of development opportunities. CIIP work on upstream local content upstream local content sourcing in the gas sector funded by CIIP sourcing has helped inform a draft Local Content Policy. Similarly, helped inform the government’s draft Local Content Policy. Future the grant’s support for PPDs is boosting the government’s early ef- feasibility studies will identify a number of local industries that forts to engage a broad-cross section of stakeholders from the public can benefit the most from natural gas investment and recommend sector, local private sector, and international oil companies involved tailored interventions to overcome the existing gaps in the identi- in Tanzania. Even though it is still early, these initiatives represent fied industries, such as quality standards, scale and reliability of Tanzania’s emerging approach to managing the risks and rewards supply, which might prevent them from supplying the sector. Given of extractives-led growth. the scale of expected investments, the local content strategy could potential leverage private investment of around $1.6 billion. Implementation Progress Over the last year, the CIIP team has mobilized international Timely Public Private Dialogue. CIIP is helping Tanzania expertise and supported institutional capacity building along three navigate the political economy risks typically associated with phased work streams: (i) local content opportunity, (ii) policy dia- natural gas investments through multi-stakeholder engagements logue on local content, and (iii) downstream opportunities: and evidence based analyses. Since the inception of the analytical work the CIIP team has diligently engaged through PPDs with all Analysis of local content opportunity in the LNG Con- the relevant stakeholders, including: key ministries, the Tanzanian struction: The analysis aims to identify the local industries that Petroleum Development Corporation, the Uongozi Institute , a can benefit the most from natural gas-related investments (more group of the development partners (including the EU, DFID, and 66 Norway), the local private sector (represented by the TPSF) and the between the World Bank and the government, and will likely focus key international oil companies involved in Tanzania (such as BG, on two growth poles – one around tourism and a second around Statoil, and Exxon). the gas value chain. As CIIP-financed analysis continues to inform more immediate upstream investment policy discussions, the Bank Leverage. The CIIP grant has forged strong collaboration efforts team will launch a study on the downstream linkages in FY15. among a large number of development partners, the local private It is envisaged that additional private financing will be leveraged sector, and oil companies. A pipeline lending operation focused through PPPs. on private sector competitiveness is currently in early discussions Results chain Project Results Input Output Outcome Impact Basic Elements Instruments Menu of Integrated Solutions Analytics Value chains Regulations and Time and cost percent of Business environment policy reforms to comply with natural gas Public-Private dialogue regulations investments Institutional Labor strengthening and skills Technical locally assistance Clusters $ commited for Access to markets infrastructure captured (t:16 Public finance Access to and Infrastructure Access investment percent) to finance reliability of Catalytic support Private for firms electricity Innovation Evaluation and Growth poles investments (t: feedback and corridors Teachers trained # of students $20-30 bil, of People trained employed 1 year after training which $1.5-2 bil domestic) Cross-institutional Reforms through coordination PPD (t: 60 mechanisms percent) Share of sector Industries in GDP (t: Institutional Effectiveness of Extractives capacity-building institutions 10 percent increase Financial instruments Access to financing and volume committed SMEs trained/ Gross number SME support programs supported (t:100) of jobs (t:10 percent increase) CIIP Annual Report 2013-2014 67 TUNISIA Sector Competitiveness Diagnostics and PPD Ministries, including the Ministry of Investment and International Grant ID TF015016 Cooperation, the Ministry of Industry and the Ministry of Com- Grant Duration October 10, 2013-October 31, 2014 Grant Amount $788,000 merce and Handicraft, to conduct analytical work, and to support Cumulative Disbursements $253,742.25 a series of PPDs in ten sectors. This has included at least seven Outstanding Commitments $61,828.31 workshops hosted with counterparts as well as analytical work. Design Features Sector analyses, Strategy formulation, Sector PPDs; Competitiveness Support and Export Development Fund, Technical Early Results assistance. The CIIP grant in Tunisia has provided an opportunity to help Expected Leverage USD 100 Million, Third Export Development transform government mentality toward development of industrial Project, DPL policy strengthening institutions and fostering analytical work across strategically- selected sectors to help generate employment and Strategic Context productivity. Prior to this work Tunisia did not have a single sector- Tunisia’s economy has grown at a respectable pace in the past two specific industrial policy. decades when compared to other MENA countries. The country had a 4.8 percent average annual growth in GDP over most of Sector Selection and Analytical Work. The CIIP team, in the 2000s, placing it among the leading performers in the MENA coordination with the government of Tunisia, completed sector region. While this is one of the highest GDPs in the MENA region, selection and sequencing for a series of analytical notes and sup- it is significantly lower than in the high growth emerging economies plied technical support to the government. Through an extensive in other world regions. Tunisia’s per capita growth for the least 10 consultative process, the team selected a long list of 10-12 sectors years remained below average when compared to a large sample of on which to focus. In this initial phase, CIIP has focused on four 22 developing nations and emerging economies, including many of sectors—pharmaceuticals, IT, garments and textiles, and medical its regional and global competitors. tourism. An analytical note was drafted for each of these sectors, Youth unemployment is a major challenge, with 72 percent which focused on employment, competiveness (qualitative study us- of the unemployed under the age of 30 in 2012. Unemployment ing Porter’s diamond analysis) and exports. The team has currently rates are also much higher for women (22.5percent at end Sep- expanded the sector analysis to look at 10-12 sectors and hired tember 2013) and particularly for educated women (44 percent of experts to conduct them. CIIP has also leveraged public funds as female graduates) and in remote regions, ranging between 24 and the government has hired an external consultant to complete the 30 percent in the Governorates of the South West and South East. remaining sector analyses. The government is currently developing In absolute terms, the majority of the unemployed are low-skilled a Vision/sector development strategy—Sector analytics funded by workers. CIIP have provided the foundation for this strategy. Through technical assistance, CIIP’s project has contributed to the development of a comprehensive package of reforms to Collaborative Governance and the participation of civil promote exports and foster private investment that will help Tunisia society. PPDs supported by CIIP funds underpin all of the sec- meet the favorable medium-term economic growth potential. The tor work, and the activities have help establish a long term and project’s development objective is to identify and help strengthen sustainable PPD process in Tunisia. Public Private Dialogues in the promising clusters in Tunisia based on cross-sectoral diagnostics country are organized on two levels: (1) the high-level task force and extensive PPD. The output of this project has served as an comprised of ministry staff, the private sector and some develop- integral analytical component for the World Bank Competitiveness ment partners, which is responsible for cluster selection and major and Export Development project (CEDP).This newly developed decision making; and (2)a sectoral-level PPD addressing sector-spe- lending operation seeks to help increase and diversify exports by cific work that will soon have sub-PPDs for each of the ten sectors supported enterprises. The Project will achieve its objective through with completed analytics. The main stakeholders of the PPD are support to: (i) improving the investment climate, trade logistics and the public sector led by the Ministry of Economy, the signatories supporting innovation; and (ii) improving enterprise access to export of the National Pact (government, the trade union and the major markets and finance. private sector association UGTT, and UTICA), the private sector, in addition to a specially created Independent Council of National Ex- pertise. The PPD process is allowing participants to voice priorities Achievement of Objectives and challenges within the specific industries and regions where there PPDs supported by CIIP funds underpin all of the sector analytical may be particular measures that can increase productivity, wage work and sector studies have been completed in close collabora- growth, or jobs. In addition, the involvement of permanent civil so- tion with the government and all relevant stakeholders. The largest ciety organizations such as UGTT and UTICA is a critical element achievement during the last fiscal year was the creation and ap- of the reform process as they have served as deal brokers between proval of the Third Export Development Project, which supports the various parties of the political dialogue since the revolution. The the improvement of business climate for export competiveness and use of a committee of local experts in the PPD has provided a dilu- the diffusion of technology and innovation. The Competitiveness tion of political preferences in the process and reform and allowed Support and Export Development Fund, which provides matching the CIIP team to focus on growth and job creation. grants to beneficiary enterprises, is on track to launch in FY15. High level implementation capacity building. At the Implementation Progress country-level the government has established a committee to help The project is on track, and the intermediary targets have been engage PPDs. The government strongly endorsed the analytical achieved. The CIIP team has worked jointly with a number of key work supported by CIIP and established a high-level task force com- 68 prised of ministry staff, the private sector and some development Leverage partners. This task force is responsible for overseeing the adoption The Third Export Development Project (USD $100 Million), which and implementation of recommendations that come out of the utilized CIIP analyses in the project design, was approved on June analytical work funded by CIIP. 16, 2014. Results chain Input Output Outcome Impact Project Results Basic Elements Instruments Menu of Integrated Solutions Analytics Regulations and Time and cost Private Business environment Value chains policy reforms (t:3) to comply with investments Public-Private dialogue regulations (t: $15 mil) Institutional strengthening Technical assistance Clusters Growth of Access to finance Access exports in to finance supported Catalytic support for firms industry (t: 10 Innovation Evaluation and percent) feedback PPD mechanism PPD impact on established reform process Industries Institutional Effectiveness of Garments and Textiles capacity-building institutions Pharmaceuticals IT Medical tourism SME support SMEs supported programs; (t: 2000) Export Fund CIIP Annual Report 2013-2014 69 VIETNAM Regional Competitiveness and Job Creation Project funding aims to catalyze a programmatic WBG operation (credit Grant ID TF015384 and TA program) by supporting the necessary analytics and pro- Grant Duration September 1, 2013-December 15, 2017 Grant Amount $1,025,000 gram design. In addition, CIIP funds support building of the private Cumulative Disbursements $144,072.45 investment pipeline for anchor and supporting/supplier industries in Outstanding Commitments $37,124.68 the NSSEZ, which is an immediate action priority for the client. Design Elements: Sector analyses, Investor promotion, Regional development, Business Development Facility, providing SME Achievement of Objectives linkages services, and Accelerator program CIIP funds have been instrumental in shaping the policy dialogue and a Cluster Development Program. in line with the competitiveness agenda of the country strategy. The Expected Leverage Forthcoming Regional Competitiveness and Job Creation Project (100 Million) main interlocutors have been the Ministries of Planning and Invest- ment, Finance, and Industry as well as Peoples Party Committee at the Central and Thanh Hoa levels. It is specifically helping to shape policy directions for investment promotion including economic Strategic Context zone planning and phasing, SME finance through private financial Vietnam is an IDA country with a stable political system that institutions, facilitation the development of value chains through has made significant inroad in the transition to a market-based establishing a linkage support center, and development of economic economy. Since 1986, the country has implemented a series of poli- zones in Thanh Hoa province, which is expected to be replicated cies to liberalize and integrate the economy into the international to other parts of the country. CIIP has delivered a number of market, culminating in its accession to the World Trade Organiza- important background reports and stakeholder workshops in view tion in January 2007, which has provided additional impetus for an of achieving the project’s development objectives. CIIP engagement increased pace of liberalization of the economy. In recent years, the is significantly contributing to the government’s effective utilization Vietnamese government has been providing strong support for the of public funds. development of the private sector, and the country has undergone strong economic growth with a gross domestic product (GDP) Implementation Progress compound annual growth rate of over 7 percent between 2000 The first phase of the grant implementation is completed and the and 2010. This broad based growth has also resulted in a decline following outputs are delivered: in poverty to below 10 percent in 2010 from 29 percent in 2002 and 58 percent in 1993. Despite its strong economic performance, • the identification of high impact, high feasibility sectors in Vietnam’s GDP-per-capita remains low at US$1,596 in 2012 and, Thanh Hoa Province taking into consideration demand arising which is below the Asia Pacific developing countries’ average of from large investments in Nigh Son Special Economic Zone US$5,178. Moreover, growth has slowed down - the real GDP (NSSEZ); growth in recent years (2008-12) of 5.8 percent is lower than 7.2 • detailed sector analyses of four sectors: Cement, Petrochemi- percent during 2000-2008 - to a large extent due to rising commod- cals, Power, and Steel; ity prices and the global financial crisis. • detailed case studies of international benchmarks on petro- There are significant regional disparities in Vietnam with chemicals hubs and SME linkages programs in Singapore, lagging and poor regions, such as Thanh Hoa (TH), showing even India, Thailand and South Korea; more pronounced development needs. Continued relative pov- • assessment of existing SME linkages programs, lessons learned erty of some regions undermines Vietnam’s otherwise impressive a proposal for a Business Development Facility; development achievements. Thanh Hoa province is the 3rd largest • an assessment of current SME finance and the financing needs province by area and the 5th largest by population, and despite of MSME; the fast economic growth of the past 5 years (averaging over 10 • an initial assessment of NSSEZ Masterplan (to be fully assessed percent a year), it remains one of the poorest regions in Vietnam during appraisal of the underlying project); with US$1,065 GDP per capita. Thanh Hoa province has an op- • an Assessment of FDI trends in Vietnam and Japanese investors portunity to demonstrate enhanced private sector/SME growth / firms’ constraints analysis around the US$21 billion of planned investment in its Nghi Son • design of a PPD mechanism and creation of an expert advisory Special Economic Zone (NSSEZ), allowing not only for regional group; growth and job creation in the province, but also potentially serving • support for investor road show by Thanh Hoa delegation in as a model to replicate to the rest of the country. In addition, the Singapore; emphasis on SME development is highlighted in the government’s • initial assessment on investment promotion approaches and SME development plan that identified the need for integrated SME strategies by NSEEZ and by Industry and Tourism Investment development in the socio-economic objectives of every region and Promotion Agency (ITTPA); locality and prioritizes SMEs in competitive sectors. • forum on Investment Promotion in NSSEZ and neighboring The development objective of the proposed Vietnam Indus- areas held in Thanh Hoa for potential and current investors try Competitiveness Project (RICP) Project is to contribute to job (October 2013); workshop for investors in Singapore; and creation by attracting investments and enhancing competitiveness workshop with MPI in Vietnam (Aug 2013) and with other around the value chain of the anchor investments in the Nghi Son stakeholders (April 2014). SEZ (NSSEZ). This would be undertaken through the development • benchmark analysis of existing key infrastructure needs. of an eco-system centered on enhancing the NSSEZ, attracting investments, and strengthening anchor investments, and linkages to small and medium-enterprises through targeted interventions. CIIP 70 Early Results Business Development Facility. A planned Business De- The CIIP project in Vietnam is helping build private up- and down- velopment Facility will support SME development and linkages stream investment and business opportunities in one of Vietnam’s between the local economy and anchor investor and will be both a poorest provinces by building capacity of SMEs and Banks and platform for PPDs and training. The ultimate goal of the Facility through the development of the new NSSEZ driven by regional is to increase participation of local SMEs in regional value chains development. Some early results include: and clusters and increase capacities, competencies and growth of regional SMEs for long-term regional economic resilience, prosper- Shaping the Policy Environment: The project has helped shape ity and quality job creation. The Facility will provide: (i) business the policy environment by significantly enhancing the government’s development opportunities for SMEs; (ii) and Accelerator program understanding of investor services. Through TA financed by CIIP, to provide high-growth SMEs and local entrepreneurs to set up the government of Vietnam engaged in a dialogue with the World businesses in Thanh Hoa; and (iii) cluster development program. Bank and other development partners (notably the Swiss, Japanese The Facility is currently being established by the government with and Koreans) about the relevance of safeguards and environmental technical support and input from the CIIP team. Project Results issues when it comes to providing investor services. The same TA was used to develop a new dialogue around SMEs and to help the Leverage government better understand the role of SMEs within its industrial The grant has provided the CIIP team with an opportunity to inter- policy. In addition, the CIIP team supported the NSSEZ in invest- act with the government of Vietnam in the preparation of a USD ment generation on the ground and through investor workshops $100 Million lending operation, the Vietnam Industry Competi- held in both Singapore and with MPI in Vietnam. The team, along tiveness Project (RICP), that will go to the World Bank Board for with the government, sought to engage both private and public approval during FY15. In addition CIIP has helped the Bank better investors, and has generated a great deal of interest in the project. engage with both the government and other development partners. There is interest in having another workshop in Korea in FY15. There are six SEZs in the country and the Bank is currently work- ing in one of them, with significant potential for demonstration Collaborative Governance. The CIIP team has helped create effects. The TA and forthcoming operation has had spillover effects a PPD between government and SMEs to improve SME’s access to and helped the Bank interact with other development partners, financing in the Banking sector. including the Japanese and Koreans whose work may complement this work. Results chain Input Output Outcome Impact Basic Elements Instruments Menu of Integrated Solutions Analytics Value chains Regulations and Time and cost Private Business environment policy reforms (t: 2 to comply with investments Public-Private dialogue Economic reforms) regulations (t: $ 200 mil) Institutional Labor zones strengthening and skills Technical Number of new assistance Public finance firms (t: 1000) Access to finance Catalytic support Increase in for firms Evaluation and output of Teachers trained (t:10) Access to skills feedback beneficiary firms People trained (t:100 percent) Cross-institutional PPD impact on Gross number coordination reform process of jobs (t: Industries mechanisms (t: 2 reforms) 200,000) Cement Petrochemicals Power Steel (t: $400,000 in of which 25 funding for them) percent women Financial instruments Access to financing and volume (t: 350 mil, 500 committed SMEs) SME support Increased firm skill programs CIIP Annual Report 2013-2014 71 ANNEX 3 Multitrack Approach to Country Engagement COUNTRY-LEVEL READINESS CIIP ENGAGEMENT TRACKS 1-4 LOW TRACK 1: TARGETED SENSITIZATION Country Readiness: Track 1 aims to familiarize country leaders and sector counterparts with Knowledge Window - No sign of leadership interest or a champion the basics of industrial policy and competitiveness strategies. CIIP pro- - No formal strategy or policy on CI issues actively signs up ACP countries to Track 1, with a special focus on IDA - Little or no track-record of CI efforts countries & Fragile and Conflict Affected States. Provisions for regional - Weak policy and institutional framework (e.g., CPIA) initiatives among small states will be made. - Fragmented, unorganized private sector Bank Readiness: Examples. Training delivered centrally; global knowledge events and - Lack of awareness of CI issues conferences on competitiveness strategies, industrial policies, and - Lack of appropriate CI competencies in team industry-specific initiatives. Affirmative Efforts MODEST TRACK 2: EARLY CI DIALOGUE Country Readiness: Track 2 involves proactive efforts to initiate dialogue with country - Expressed leadership interest and identified champion counterparts on CI issues. The objective is to assess the potential of CI - Elements of formal strategy or policy efforts. - Little or no track-record of CI efforts - Modest policy and institutional framework (e.g., CPIA) Examples. High-level scoping mission to engage with key stakeholders, - Elements of an organized private sector undertake rapid sector screening, take stock of past industry level efforts, Bank Readiness: and make recommendations for ongoing dialogue and a possible path to - Early interest in CI issues Track 3 (below). - Willingness to tap Global Practice for CI competencies SUBSTANTIAL TRACK 3: SUSTAINED COMPETITIVE INDUSTRIES DIALOGUE Country Operations Window Country Readiness: Track 3 involves a substantial stakeholder engagement and knowledge - Leadership commitment, established champion(s) development. It also builds the funding platform for designing policy re- - Formal industrial policy/strategy with supporting institutions forms and scalable public and private investments. Track 3 “stress-tests” - Modest track-record of CI efforts with PPD experience institutions through pilots and M&E of existing CI efforts. - Modest-to-substantial policy and institutional framework (e.g., CPIA) - Organized pvt sectors within and across industries Examples. Launch of sector specific Public-Private Dialogues or bottom- Bank Readiness: up competitiveness initiatives that help identify reforms and investments. - Commitment of key country team stakeholders to industry-focus The outputs of these efforts could include inter alia self-standing CI - Potential for CI-related pipeline of lending and analytical work assessments, inputs to formal Bank ESW, and/or key design elements of Demand-driven Support - Commitment to tap into Global Practice for CI competencies donor-financed operations. HIGH TRACK 4: IMPLEMENTATION SUPPORT FOR INDUSTRY LEVEL EFFORTS Country Readiness: Track 4 is designed for countries with a mature (or rapidly maturing) - Deep leadership commitment, multiple champions, broadening base domestic dialogue on competitiveness and industry level issues. It ramps of support up CIIP support to scale with a full menu of AAA, and implementation - Formal industrial policy/strategy with supporting institutions support activities. Track 4 is for countries poised to leverage substantial - Strong track-record of CI efforts with well-developed PPDs at na- public and private flows to CI efforts. tional and industry levels - Substantial policy and institutional framework (e.g., CPIA) Examples. Design and implementation of policy-based and/or investment - Functioning public investment and public procurement systems, and lending operations that support various CI entry points (for instance, high potential to leverage private flows economic zones, growth poles, value chain and/or cluster develop- Bank Readiness: ment). Emphasis is on institutional strengthening, execution of public - Commitment of key country team stakeholders to industry-focus investments, leveraging of private investments, and M&E. Support for - Established CI portfolio and pipeline of lending and analytical work existing PPDs is amplified to promote learning by doing. - Substantially leveraging Global Practice for CI competencies 72 ANNEX 4 CIIP’s 2014 Call for Proposals CIIP’s 2014 Call for Proposals has yielded 27 funding pro- Value of funding proposals by region posals worth over $21 million in costed programming needs. Millions The CIIP will only be able to respond to about $12 million $- $2 $4 $6 $8 $10 $12 $14 of this demand and therefore a competitive selection process is currently underway to identify an appropriate mix of Africa Eastern Europe and high-impact operations and engagements which will support Global Knowledge the affirmative efforts of Track 1 and Track 2 countries. The Caribbean current submissions include: Pacific Latin America Only • 22 country operations and 5 knowledge proposals from South Asia all six WBG regions; Middle East and North • 17 proposals from countries eligible for SDTF Financing; East Asia Only • 15 country operations that will be supporting IDA coun- tries; Number of funding proposals by region Number of funding proposals by region Several of these applications are accompanied by letters of request from the government asking specifically for CIIP sup-  -­‐          2      4      6      8      10      12     port. An initial analysis of the proposals reflects an increased Africa   understanding of the competitive industries approach and Global  Knowledge   utilization of methodologies that support sector identifica- Eastern  Europe  and   tion to target industry-led growth. Over half of the propos- Caribbean   als include mention of three or more identified industries, Pacific   including: agriculture (17), mining (9), tourism (7), and 10 of La=n  America  Only   the proposals cover a range of other industries. Value chain South  Asia   Middle  East  and  North   development (20) remains the most common theme across East  Asia  Only   the set of proposed interventions, while cluster support (11) is emerging as a solution increasingly demanded by clients, fol- lowed by growth poles (8) and SEZs (8). Given the high-risk/ reward nature of SEZs there has been an increasing demand to understand the underlying dynamics behind the critical factors which determine success. As such two funding propos- als have separately identified the need for a deep-dive into zones and the CIIP is working to reconcile them into a single proposal that will address this analytical need. The CIIP is working with the proposal teams to understand the financing needs and to refine the proposals for submission to the CIIP Steering Committee in Q2 of FY15. CIIP Annual Report 2013-2014 73 ANNEX 5 CIIP Financial Details & Performance by Window (Figures quoted in USD$ Thousands) CIIP Country Operations Window Actual Project Information Commitments Disbursed Projected Disbursements Associ- Country TF ated Project Objectives GRM Risk Grant Paid- End End End End End End Number Number Rating Rating Amount In FY13 FY14 FY15 FY16 FY17 FY18 Single-Donor Trust Fund Modest Risk Sierra Leone TF015439 P132874 Satisfactory $995 $995 $0 $556 $439 $0 $0 $0 P151324 / Negligible or Côte d’Ivoire TF015440 Satisfactory $1,206 $900 $0 $494 $712 $0 $0 $0 P115398 Low Risk Substantial Ethiopia TF015998 P143302 Satisfactory $1,365 $250 $0 $157 $1,208 $0 $0 $0 Risk Tanzania TF016164 P143623 Satisfactory Modest Risk $676 $366 $0 $80 $211 $193 $192 $0 P147205 / Haiti TF016213 Satisfactory Modest Risk $1,875 $875 $0 $294 $1,523 $58 $0 $0 P123974 Project Develop- Negligible or TF015754 TF072037 Satisfactory $800 $200 $0 $156 $275 $185 $92 $92 ment for ACP Low Risk Multi-Donor Trust Fund Vietnam TF015384 P144825 Satisfactory Modest Risk $1,025 $1,025 $0 $144 $214 $347 $320 $0 Highly Negligible or Georgia TF016020 P146270 $525 $325 $0 $159 $180 $186 $0 $0 Satisfactory Low Risk Macedonia TF014914 P130847 Satisfactory Modest Risk $1,602 $1,602 $0 $455 $509 $445 $193 $0 P145957 / Substantial Tunisia TF015016 P132381 / Satisfactory $788 $788 $0 $254 $431 $103 $0 $0 Risk P132709 P147989 / Moderately Russia TF015279 Modest Risk $420 $420 $0 $418 $2 $0 $0 $0 P145769 Satisfactory Moderately Substantial Kazakhstan TF015585 P147704 $750 $350 $0 $168 $459 $123 $0 $0 Satisfactory Risk Croatia TF015836 P127308 Satisfactory Modest Risk $262 $262 $0 $241 $21 $0 $0 $0 MDTF Project Negligible or TF014843 TF071975 Satisfactory $200 $200 $0 $31 $69 $50 $50 $0 Development Low Risk 74 Knowledge Management and Program Management Window Actual Project Information Commitments Projected Disbursements Disbursed Associated TF Objectives Grant Paid- End End End End End End Project Project GRM Risk Rating Number Rating Amount In FY13 FY14 FY15 FY16 FY17 FY18 Number Multi-Donor Trust Fund Implementing Industrial Policy - TF014950 P146254 Satisfactory Negligible or Low Risk $472 $350 $7 $301 $65 $0 $0 $0 Lessons Learned Competitive Cities TF016040 P148372 Satisfactory Negligible or Low Risk $880 $550 $0 $306 $521 $53 $0 $0 Industry-Specific Moderately Global Value Chain TF017351 P149454 Modest Risk $750 $300 $0 $6 $682 $62 $0 $0 Satisfactory Analyses Implementing Industrial Policy - TF017259 P150790 Satisfactory Negligible or Low Risk $200 $200 $0 $3 $197 $0 $0 $0 Evidence and Impact Innovation Policy TF014858 P131764 Satisfactory Modest Risk $1,428 $886 $81 $458 $297 $296 $296 $0 Platform MDTF Training and TF014477 TF071975 Satisfactory Negligible or Low Risk $200 $200 $52 $57 $31 $30 $30 $0 Learning MDTF TF014376 TF071975 Satisfactory Negligible or Low Risk $612 $612 $0 $78 $200 $150 $100 $84 Communications MDTF Monitoring TF015664 TF071975 Satisfactory Negligible or Low Risk $610 $610 $0 $77 $230 $130 $100 $73 and Evaluation MDTF Program TF014443 TF071975 Satisfactory Negligible or Low Risk $792 $640 $209 $154 $129 $100 $100 $100 Management Single-Donor Trust Fund Strategic Communications for TF015764 TF072037 Satisfactory Negligible or Low Risk $800 $400 $0 $75 $100 $242 $242 $141 ACP Monitoring and TF015753 TF072037 Satisfactory Negligible or Low Risk $800 $400 $0 $58 $142 $200 $200 $200 Evaluation for ACP Training and Events Moderately TF015763 TF072037 Negligible or Low Risk $800 $200 $0 $0 $100 $100 $0 $0 for ACP Satisfactory Program Management TF016084 TF072037 Satisfactory Negligible or Low Risk $1,424 $1,300 $0 $335 $400 $400 $200 $89 for ACP CIIP Annual Report 2013-2014 75 ANNEX 6 CIIP Disbursement by Month $900,000 $800,000 $700,000 $600,000 $500,000 $400,000 $300,000 $200,000 $100,000 $- Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun FY13 FY14 76 CIIP Annual Report 2013-2014 77 www.theciip.org ciip@worldbank.org Financed by in partnership with