This page provides information on the various knowledge initiatives that CIIP has helped finance and deliver. The findings of several of these studies have already influenced the design of ongoing country operations or even broader development agendas in-country.
CIIP Roundtable on Competitive Industries
CIIP organized a workshop in Uganda to share ideas of what a new Industrial Policy Agenda could look like, what would be the key indicators of success, and what is the theory of change. The scope of the workshop covered the following main topics: (1) Diversification and firm level growth. This task will provide inputs to the current sector development and diversification discussion in Uganda. It will be structured into two parts. First, it will discuss the relevance of the stages of development model in Uganda’s present context, especially against a product space background. Second, it will use the most recent Enterprise Survey data available to sketch productivity (if data availability allows), innovation and its links to diversification; (2) Access to Startup Finance and Equity Finance. The presentation will focus on easing access to start-up finance for small and medium-sized enterprises building on experiences in setting up subordinated debt funds in other countries in SSA. The presentation will discuss potential strengths and weaknesses in the design of such funds and suggest a fund structure that could be adapted and tested in Uganda; (3) Current State of Agriculture Finance in Uganda and How it can be Improved. There is lack of adequate tailored funding for agriculture. The funds available are short term and do not relate to the agricultural seasons. There is no agricultural finance policy and there is lack of capacity in financial institutions to assess risks of farming and agribusiness projects. There is a need to prepare an agricultural finance policy, provide targeted training to financial institutions, agricultural entrepreneurs, identify risk and propose measures to address these risks; (4) Round Table Discussion. The discussion will focus on the suite of policy interventions that should be explored that will lead to higher levels of firm capabilities and competitiveness and look at new instruments to foster firm level growth. The discussion will also determine whether further analytical work is needed to develop an options note.
On September 22, 2017, CIIP sponsored a Symposium on New Technologies, Jobs, Growth and Development, which follows a discussion on disruptive technologies for development initiated by the World Bank Group's President Jim Kim to better position the WBG as a leader in technology innovation to achieve our twin goals. In recent years, the Trade and Competitiveness Global Practice in partnership with the Development Partners, European Commission, Austria, EU, Norway, and Switzerland through the Competitiveness, Industries and Innovation Program (CIIP) have supported the development of policy initiatives at the industry level to generate more and better paid jobs in developing economies. These policy initiatives are aimed at attracting private investment, increasing firm level productivity, and producing higher value goods. Obtaining a better understanding of the effect of new and disruptive technologies on markets would help shape better policy initiatives for developing economies in Africa, Caribbean, Asia and the Pacific. Click the following links to access speaker presentations: David Autor presentation Francois Bourguignon presentation Susan Lund presentation Ricardo Hausmann presentation William Maloney presentation Guven Sak presentation Eduardo Bitran presentation
The Innovation Paradox
The centrality of innovation to the rise of advanced economies was captured by David Landes’ (1969) classic metaphor of The Unbound Prometheus, referring to the Greek god who released the power of fire to mankind. Defined as the introduction of new products, technologies, business processes, and ideas in the market, as well as the invention of new ideas, innovation drives Schumpeter’s creative destruction process (Schumpeter  2008), underlies modern growth theory, and is the critical ingredient in historical accounts of how countries achieve prosperity. The report focuses on three central determinants of innovation performance: (1) the critical complements to innovation investment needed to realize the high potential returns; (2) the range of firm capabilities required to undertake innovation and take it to market; and (3) the required government capabilities for implementing effective innovation policies. The analysis draws on two important traditions, the neoclassical and the National Innovation Systems (NIS) literatures, highlighting the common ground between them, with the ultimate goal of contributing to more coherent and effective policy making in developing countries.
Ethiopia's Potential as a Manufacturing Destination
The “footloose” industries that have typically served as the entry point for industrialization generally involve labor-intensive segments of industrial value chains. For the African manufacturing sector to succeed, labor costs need to be competitive. Given that poor countries usually have cheap labor African countries should have some of the cheapest labor in the world. The question is — do they, and if so, is African labor cheap enough to compensate for other, less favorable, factors? This analysis suggests that industrial labor costs are found to be far higher in Africa than one might expect, given levels of Gross Domestic Product (GDP) per capita. Also, as firms become larger and more productive, their labor costs increase more in Africa than elsewhere. Even if African labor costs are high, relative to GDP/head, the extremely low income levels of most African countries (relative to external comparators) suggests the possibility that some of these countries could be attractive to industries seeking to compete on the basis of low wages. The effect would be to bypass the middle-income countries to settle only in the poorest countries.
This CIIP-financed review aims to provide lessons learned from SEZ projects, using both the World Bank’s portfolio and an independent census of SEZs globally. The review will investigate the drivers of performance of SEZs. As a result, it should provide policy makers with guidance and knowledge in the design of SEZ projects and how to formulate appropriate objectives and measurable outcome indicators. By current estimates, there are approximately 3,500 SEZs in more than 130 countries worldwide that employ more than 60 million people. Citing East Asia as a success, many developing economies request financial and technical support from the World Bank Group to implement SEZ policies. In the 1980s and 1990s, the World Bank began to fund a series of SEZ projects. Currently, the World Bank’s portfolio of investment lending operations, prepared either in direct support of an SEZ or containing a component supporting an SEZ, consists of 37 projects, with a total commitment of $2.38 billion approved between 1973 and 2015. The World Bank SEZ portfolio review provides an opportunity to look at the developmental objectives of individual projects, the extent to which they were achieved in practice, the challenges faced, and the lessons learned that could inform the scope and design of subsequent projects. Special Economic Zones: An Operational Review of Their Impacts
Matching Grants Study
Matching grants (MGs) have been implemented by the World Bank for over two decades. They remain a very popular instrument for private sector development interventions, despite often challenging implementation and insufficient evidence of impact. The objective of this study is to synthesize the current knowledge on MGs and to review the experience with this instrument, as designed and implemented by the World Bank from the early 1990s to the present. In doing so, we hope to equip teams in charge of ongoing and planned MG operations with a better understanding of the instrument and to help them choose the design and implementation arrangements that are best fitted to their objectives. We look at both the “why” and the “how” of MG programs, focusing specifically on those that use business development services (BDS) to foster private sector development and small and medium enterprises (SMEs) competitiveness.
INNOVATION POLICY PLATFORM
The Innovation Policy Platform (IPP) is a joint program between WBG and the OECD. Over the past several years, its content and functionality have increasingly been utilized by the innovation policy community. Following the launch of the IPP beta site in mid FY14 , which made available publications, statistics and web pages produced by the OECD and World Bank, the IPP project has focused on building a community of practice (CoP) and further developing technical functionality on the platform. The platform space is designed to facilitate participative knowledge exchange between policy makers, analysts, international organizations and other non-governmental stakeholders. It also supports different types of content: blog posts, discussions, a file-sharing system, collaborative editing, calendar events and links to external content. IPP has a growing user base of more than 1000 practitioners, hosts more than 35 communities and delivers weekly activities that include webinars and online learning courses. Today IPP contains over: 300 content webpages that discuss and summarize a wide variety of innovation policy related topics; 1,000 OECD chapters and working papers and 200 World Bank publications that have been tagged and linked to the IPP’s topic pages and country profiles; 60 policy briefs, case studies and videos on different aspects of innovation policy, and also contains specific country information on around 90 jurisdictions; 1,400 statistical indicators and now links topic, country and document pages to relevant statistics.
In FY15 the Cities Team completed the overview report: “Competitive Cities for Jobs and Growth: What, Who, and How”. Supplementing and informing this overview document are several companion papers that provide the foundations for the main conclusions. The report aims to understand what makes a city competitive, and how more cities can be competitive. The goal of this research has been to create a robust body of knowledge to address cities’ questions on benchmarking their performance, on analyzing what has worked and what has not, and on understanding how to organize for delivery in different contexts. Its objectives are: to understand what drives the economic outcomes of cities; and find an evidence-based approach for economic development strategies that maximize those outcomes. A “competitive city” successfully facilitates its firms and industries to grow jobs, raise productivity and increase incomes of citizens, therefore, the report argues that improving the competitiveness of cities is a pathway to eradicate poverty and increase shared prosperity. Millions of additional jobs could be created every year if more cities performed at the level of the world’s most competitive cities. The analytical work generated by the CIIP team has led to multiple country engagements where the CIIP/Bank team provided direct technical support to city councils. It has also led to a longer effort to disseminate findings, including during the EU Development Days (June 2015).
IMPLEMENTING INDUSTRIAL POLICY – EVIDENCE OF IMPACT
Building on the success of the inaugural event held at the WBG Headquarters in the fall of 2013, the CIIP team in FY15 organized a follow-up global conference titled: “New Growth Strategies: Delivering on their Promise?”. The overall theme of the event, which attracted over 700 participants, was to explore the effectiveness of industry level efforts across different countries. The keynote address at the opening of the event was delivered by Professor Dani Rodrik of the Institute for Advanced Study in Princeton. It gathered practitioners from varied backgrounds who shared their experiences. The conference also brought world-class thinkers and academics who presented their theories and research; also speaking were representatives of government and the private sector. The event provided ample opportunity for debate with a number of lively discussions between panelists and the audience. The two day conference provided opportunity for CIIP experts to disseminate the latest body of practical experiences from implementing CIIP projects and knowledge initiatives through a number of smaller workshops organized on the second day. Sessions were broadcast over a video conference link, enabling even wider audience to participate.
IMPLEMENTING INDUSTRIAL POLICY – LESSONS LEARNED
CIIP grant has helped distill and widely disseminate the latest body of knowledge on how to find and implement the right instrument that will work in the unique political economy contexts of each of our client countries. The two papers on flexible delivery and implementation, a case study on delivery units, and two high level conferences, have together curated this body of existing knowledge, as well as pushed the frontiers of new knowledge, on industrial policy implementation in several political economy contexts. In FY15, the final in a series of policy research papers, on "Doing, Learning, Being: Some Lessons Learned from Malaysia's National Transformation Program" was finalized and published in January 2015 and is being disseminated since then. It is based on three field missions to Malaysia that concluded in May 2014. The case study analyzes the context and performance of the Malaysian Prime Minister’s Performance Management and Delivery Unit (PEMANDU), created in 2009. It then draws lessons that would be applicable to delivery units, more generally, in developing country contexts. Since then, the operational research agenda of the CIIP has been expanded to include on topics such as Special Economic Zones, small and medium size enterprise support, and the political economy of new industry strategies. Strengthening the Competitive Sectors network worldwide is being given special attention.
INDUSTRY-SPECIFIC GLOBAL VALUE CHAIN ANALYSES
The CIIP has completed a series of industry-specific global value chain analyses. The first piece of work, focused on the automotive sectors in Colombia, Mexico, Serbia, Macedonia, Vietnam and Thailand, allowed the team to demonstrate that different types of capital-, energy-, and knowledge-intensive activities need to be present or nurtured in order to successfully link countries to value chains at the local, regional and global level. In doing so, the project has supported the preparation and is now supporting the implementation of a World Bank supplier development project in Macedonia, as well as an IFC Automotive Backward Linkages project in Macedonia. The project is also helping to put the GVC agenda among the private sector development priorities of the Serbian government. One component of a $100 million World Bank project on Competitiveness and Jobs in Serbia will focus on value chains. The approach that was adapted as part of the project was included in a technical assessment for the Rwandan government that aimed to support the design of a vendor supplier program for SMEs in specific sectors - mining and horticulture. The approach has also influenced the design of a $40 million lending project in Kazakhstan (SME Competitiveness Project) and a $20 million in Burundi (City Competitiveness for Job Creation) although the latter is on hold. The CIIP team, jointly with colleagues from the IFC, have also produced GVC analyses in Agribusiness (focused on Dairy) and Light Manufacturing (focused on Textiles). The ultimate goal is to enhance the relevance and quality of public and private investments in these priority industries with a view to enhancing productivity and competitiveness, responding directly to demand from client countries.
Statistical Benchmarking as a Development Tool
This note provides an introduction for practitioners to two prominent econometric benchmarking methods: Data Envelopment Analysis (DEA) and Stochastic Frontier Analysis (SFA). Both techniques rely on the calculation or estimation of an efficiency frontier, which is used to identify efficient and inefficient units or firms, respectively. These methods were illustrated by a practical example using Enterprise Survey data. The results were then reflected against total factor productivity scores, and used in subsequent regression analysis. Benchmarking requires data on comparable units or firms, respectively. The World Bank's Enterprise Survey data is used to give a practical example. In particular, the questions on productivity are generally suitable to perform benchmarking analysis. However, there are limitations with regard to comparability of units. An Enterprise Survey is a firm-level survey of a representative sample of an economy's private sector. This implies that the samples for sector specific studies are often too small. Also, there may be sector specific production functions, which are only insufficiently captured by the standard modules of the questionnaires.
Productivity, Jobs, & Growth in Africa
African countries have undergone significant macroeconomic reforms since the late 1980s. Why have these reforms not resulted in more jobs in the formal sector? Why have we not seen more growth in the private sector? The following Knowledge Products describe this situation with regard to employment and growth in the formal sector, and present some possible explanations for the path of industrialization in Africa.