Promoting Competitiveness in Practice - Economic Growth - usaid

seem quite large in terms of funding and scope; however, the effort and funds devoted to
cluster-based competitiveness are often quite small.
In contrast, cluster initiatives funded by USAID are generally the centerpiece of a mission’s
competitiveness initiative – and often a major component of its economic growth portfolio in
a country. This does mean that there isn’t an important policy dimension to USAID’s efforts
to promote competitiveness; there most definitely is. In countries where USAID has a
competitiveness initiative, the policy reform effort is usually cluster-driven; that is, the
clusters are determining the key policy, legal and regulatory constraints to their improved
productivity and engaging the government in a collaborative process to address these
constraints. However, in some cases, USAID also provides technical assistance to address
broader policy reform issues at the same time – either under the aegis of its competitiveness
initiative (as in Sri Lanka) or in close parallel to its competitiveness initiative (as in its
Competitiveness and Fiscal Reform Project in the Dominican Republic).
• Secondly, the World Bank competitiveness initiatives have a very different structure and
institutional locus than USAID initiatives. Because the World Bank’s counterpart is the hostcountry
government, the national government often assumes a much larger role in the actual
organization and implementation of the initiative. As a result, the competitiveness initiative
may often be housed within a government ministry (such as a ministry of economic affairs or
the like); and the role of the national competitiveness council is generally quite significant.
Indeed, when developing country governments request World Bank assistance on
competitiveness, they often ask that assistance be provided to, first, form competitiveness
councils, followed by cluster studies, and finally the development of a policy agenda.
The USAID approach is notably different. None of its competitiveness initiatives are housed
within a government ministry; rather, the projects often operate as independent project
entities and work directly with the private sector. This does not mean that engaging and
working with the government is not important in a USAID cluster initiative. To the contrary,
promoting closer interaction and better dialogue between government and the private sector
is a defining element of its cluster initiatives. However, for USAID, the starting point and
the institutional locus for the initiative is not within the government. Moreover, as will be
described in Chapter 4, the sequencing of a USAID initiative is different. Establishing a
national competitiveness council is often not the first step; in fact, USAID’s competitiveness
initiatives may or may not include a competitiveness council at all.
The assessment team was not able to determine how much funding the World Bank is devoting
to cluster-based competitiveness initiatives. 13 To the best of our knowledge, this kind of
information is not being tracked systematically (again, signaling that this is not a core thrust for
the institution). However, several of the Bank’s significant initiatives include the following:
13 A search of the World Bank’s project documents under the key word of competitiveness highlights 250 projects;
however, the vast majority of these projects do not use a cluster-based approach. Rather, the word competitiveness
in used in a variety of ways. Today, some departments within the World Bank refrain from using the term
“competitiveness” because it is has been so broadly and inconsistently applied in its projects.
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