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Benjamin HerzbergWorld BankPSD Vice-Presidency

Public-Private DialogueEngaging Stakeholders through Competitiveness Partnerships

PPD WorkshopParis, 2006

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Going through the maze

Infrastructure (transport, energy, waste) Innovation, R&D

Regulatory improvement

Competition

Logistics & Trade facilitation

Access to finance

Training and labor information

Corruption

Innovation

Contract enforcement

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Racing to Competitiveness

Red TapePoor Productivity

Costly and unreliable Utilities

Logistics.

Competitiveness

Labor Cost

Corruption

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A variety of binding constraints

Regulatory, Economic Policy

Uncertainty, 23%

Macroeconomic Instability, 18%

Finance, 10%Corruption, 10%

Taxation, 17%

Infrastructure, 9%

Anti-competitive Practices, 5%

Skills & Education Workers, 5%

Crime, Theft & Disorder, 2%

Leading constraints identified by over 24,000 firms in 58 countries

Source: Investment Climate Surveys.

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Capacity building Reform management

Learning about good practice

A variety of investment climate reform policies

Source: WDR05.

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Reform sustainability relies on engaging stakeholders

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+

GOVERNMENT

STAKEHOLDERSBut how to structure that engagement?

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Public-private dialogue mechanisms

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Economic Council, Social Council, Gender Coalition, National Competitiveness Committee, Annual Forum, Private Sector Forum, Regional Forum, Deliberation Council, Business Forum, Competitiveness Review Group, High Level Consultative Council, Better Business Initiative, Bulldozer Committee, Investors Advisory Council, Etc.

Vietnam, Cambodia, South Africa, Mexico, Bosnia, Ghana, Nigeria, Uganda, Malaysia, Botswana, Japan, Bolivia, Indonesia, Senegal, Tanzania, Bulgaria, Turkey, Cameroon, Cook Islands, Germany, Hungary, Ireland, Kosovo, Malta, Mozambique, Thailand, Mauritius, Etc.

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Types of structure

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Bosnia

VietnamTurkey

Nigeria

Coordinating secretariat

Working group 3

Working group 2

Working group 1

Working group 4

Working group 5

Private sector advocates, associations, government representatives, donors

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Types of engagement

National forums Series of working groups Regional/local initiatives

Time-bound agreements Investors councilsGovernment-endorsed

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Diagnostics

Solution Design Implementation

Benefits of umbrella process

• Engagement• Definition • Empower stakeholders

• Consensus building• Filtering

• Ongoing support• Watchdog• Resources

M&E

• Watchdog• Feedback loop

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Regulatory payoffs

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Country Benefit Before After

Bosnia(Bulldozer)

Slashed statutory capital requirements when registering a LLC

$ 6. 500$ 1. 300Increased number of registered companies (doubled in some areas)

Vietnam(VBF)

Ease labor restrictions for expatriate employees

Decree 105 limited the number of foreign employees to 3% of the total staff, with cap at 50.

Circular 04 excluded management from limitation, and removed cap under special permissions.

Turkey(YOIIK)

Amend law on company registration process

19 steps to register2 and half month

1 step, 8 procedures to register1 day process, 9 days total

Botswana(NACEE)

Setting institutional means for economic empowerment

Public grant program with high corruption, not investment guarantee agency, poor VC access.

Citizen Entrepreneur Dev. Agency (CEDA). Direct link to Ministries of Finance + PlanningSubsidized loans, VC, JV50 applications/week

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PPD dimensions

Pubic Authorities: Engagement means sufficient capacity, political will and leadership.Business community: Needs to be somehow organized, led and feel a basic sense of security.Champion: Needs credibility, expertise and the ability to get media attention Instruments: Need logistical facilities, seed funds (may also supplement sponsor in QA)

StrongStrong

Strong

Stro

ng

BUSINESS COMMUNITY

PUBLIC AUTHORITIES

CHAMPION

INSTRUMENTS

Weak

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PPDs step-by-step

Selection of participants

Credibility and legitimacy

Secretariat and working groups

Rhythm of meetings

Institution vs. initiative

Types and form of proposals

Mapping to government structures

Implementation follow-up

Communication techniques

Branding & Logos

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Choosing the right battle

Focusing on this will bring the others

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Format does matter!

Example:

Collecting proposals

FOUR QUESTIONS

1.Issue at stake

2.Why is it a problem?

3.What is the proposed solution?

4.What are the action items?

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Transparency, legitimacy, accountability

1 Review and analyze

Dialogue and process

Enact and publish

Implement and follow-up

Verify and measure

1 2

1 2 3

1 2 3 4

1 2 3 4 5

BULLDOZER PHASE II – FIRST PLENARY SESSION

Forms distributed

by committees

Proposals Received by committees

Proposals pre-selected

by committees

Selected Proposals

sent to Bulldozer

Board

Selected proposals by

Bulldozer Board

Proposals vetted by IMF, WB,

EC, USAID, OHR

Proposals selected in First Plenary Session for inclusion into final book of 50

Proposals on hold

for further review

Northwest 500 29 27 8 7 6 6 1

Northeast 700 40 20 10 5 4 4

Banja Luka Region 600 70 40 10 4 2 2 2

Sarajevo Region 450 132 32 12 9 7 5 3

Herzegovina 200 15 10 4 3 1 1 2

Central Bosnia 1200 80 25 10 3 1 1 4

Total 3650 366 154 54 31 21 19 12

Ratio 100% 42% 15% 8.5% 6% 5%

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Stakeholder management

MOBILIZE

• Identify them• Assign and coordinate roles• Build consensus

LEVERAGE

• Communications• Education• Empowerment

Influence

Low High

Leve

l of

supp

ort

Against

For

BYPASS or STEAMROLL

• Communications

CO-OPT or NEUTRALIZE

• Information• Consultation• Diversion• Compensation• Disempowerment• Confrontation

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Communicating on reform ideas

Georgia legal and judicial reform

Bosnia Bulldozer initiative, “50 reforms in 150 days”

Nigeria PPD

Philippines procurement reform

Accountability gets specific in Bosnia (corporate governance reform)

Cambodia SME credit reform – TV shows on location (SMEs) + Experts

From the Protocols for Prosperity... To the Prosperity Garden (Bosnia)

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Issues summary

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Strategies for challenges 1/3

Be open and transparentCHALLENGES

Too much influence to a small and

unrepresentative groupCreate opportunities for

rent-seeking Reinforce the power of

existing elites Create a broad base

Strong quality control

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Strengthen associationsCHALLENGES

Gives big/FDI businesses a more powerful voice

than local SMEs

Revisit structure & participants

Reach out equally to entrepreneurs

Reinforcing vested interest

Over and under representation

Mongolia

Tanzania, 18%

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Strategies for challenges 2/3

Clear agenda, concrete proposals

CHALLENGESBecomes ineffective after a promising start. Descends

into a talking shop from which little substantive

action results. Participants become disillusioned,

wasting time and energy. Credibility of public policy

suffers.Live and

let die

Manage expectations

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Sustainability issues

One man shows

Generate bottom up supportCHALLENGES

Rests too heavily on the personal involvement of a senior government figure.Looses impetus when that

person leaves.Cannot resist shift in

political willPrepare in advance

Secure written commitment

Bolivia, Nigeria

Botswana

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Strategies for challenges 3/3

Depoliticize through outreachCHALLENGES

Too closely aligned with political factions

Deemed to die with government changeInstumentalized by

opposition Woo local politicians

Woo parliamentarians

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Include existing institutionsCHALLENGES

New mechanisms for consultation duplicate the work of existing

mechanisms, causing confusion and overburdening participants Quickly transfer

competencies

Use technical ministerial staff

Political risks

Institutional misalignments

Bosnia

Uganda NF

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The way forward

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Funding mechanisms (gov. p.s., donors)Sub-national programsIntegration to specific country contextClusters / Product marketsPost conflict