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