Promoting Competitiveness in Practice - Economic Growth - usaid

CHAPTER 1
INTRODUCTION
Over the past five years, USAID has become an increasingly important player in the field of
promoting competitiveness. On the one hand, its competitiveness initiatives have often generated
a new vision and enthusiasm for promoting economic change in developing countries. However,
there is also considerable confusion and misunderstanding about what promoting
competitiveness is all about and what missions can or should anticipate when they embark on a
competitiveness initiative. USAID is not alone in this regard. Indeed, all of the donors we
interviewed are wrestling with similar issues: what does promoting competitiveness mean, what
kinds of results can be expected through competitiveness, and, ultimately, what is the role of the
donor in promoting competitiveness.
These are not easy questions. As Michael Porter notes in his foreword to The Cluster Initiative
Greenbook, “Hundreds of cluster initiatives have been launched involving virtually all regions of
the world, and the number is growing. These initiatives, which take a wide variety of forms, are
now an accepted part of economic development. However, we have surprisingly little systematic
knowledge of these initiatives, their structure, and their outcomes. As more and more resources
are devoted to efforts to foster cluster development, the need to understand best practices has
become more urgent.” 4
It is precisely this need to understand best practices that drives this assessment. The purpose of
the assessment is to take an objective look at the practice of promoting competitiveness,
particularly in the context of developing and transitional economies; gain a better understanding
of what has worked and what has not worked; and, on the basis of this understanding, learn how
to improve USAID’s work in promoting competitiveness. At the onset, the team established
several defining parameters for the assessment. These parameters helped to focus the team on
the issues of importance to USAID, as well as areas where relatively little analysis had been
done previously. Key defining parameters include the following:
A Focus on Cluster-Based Competitiveness Initiatives
We fully acknowledge that much of what donors and governments do in the arena of economic
growth and private sector development contributes to enhanced competitiveness and
productivity. This assessment does not look at the full range of activities that foster
competitiveness (such as, the important efforts to improve the overall business climate in
developing countries). Rather, our focus is on cluster-based competitiveness initiatives – that is,
the types of initiatives that are specifically designed to develop clusters as a vehicle for
promoting competitiveness.
4 Örjan Sölvell, Göran Lindqvist, and Christian Ketels, The Cluster Initiative Greenbook, Ivory Tower AB, August
2003, [Foreword by Professor Michael E. Porter, page 5].
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