Promoting Competitiveness in Practice - Economic Growth - usaid

The Inter-American Development Bank (IDB)
The Inter-American Development Bank has also been experimenting with and exploring the use
of cluster-based approaches to competitiveness. 15 Until recently, most of its efforts involved
providing grants in the range of $100,000 through its Multilateral Investment Fund to promote
the development of specific clusters of small and medium-sized firms. However, over the past
year, the IDB approach has rapidly changed. In June 2002, the IBD approved its first major
competitiveness initiative involving a $10 million loan in Panama. Following a similar approach,
the IDB approved a $5.4 million competitiveness initiative in Honduras in May 2003 and a $9.4
million competitiveness effort in the Dominican Republic in September 2003. While each of
these three programs has its unique characteristics, they also share a number of similarities. We
first look at these similarities and then provide a brief profile of two initiatives.
• This new wave of IDB competitiveness initiatives share a common objective: setting into
motion a participatory consensus-building process to develop policies and strategies for
strengthening competitiveness. As will be discussed in detail in subsequent chapters, USAID
initiatives share this emphasis on participatory strategic planning processes.
• Like the World Bank, the IDB’s counterpart is the host country government. As a result, the
institutional locus for its competitiveness initiatives is within government ministries, and
government will play a central role in project implementation and management. As noted
previously, this is a key difference from the USAID approach.
• All three of these competitiveness initiatives involve the establishment of a competitiveness
fund. The primary function of these funds is provide matching funds for the implementation
of national-level, as well as cluster-level, competitiveness strategies and initiatives. They
also provide the funding for technical assistance to implement these initiatives.
Panama: Program to Foster Competitiveness ...………………………..…………..$10,000,000
This program aims to launch a consensus-building process that will generate strategies and
projects focused on business competitiveness. The establishment of a “Competitiveness Team”
is at the core of the program. Like a national competitiveness council, this team will spearhead a
national strategic planning process on competitiveness issues. In addition, the project includes
four other components: diagnostic assessments of competitiveness ($510,000); the development
of competitiveness strategies and action plans at the national and cluster level ($322,000);
establishment of a “Competitiveness Fund” ($6,860,000); and monitoring and impact
15 It is important to note that the IDB also promotes competitiveness through large policy-based loan programs.
These programs do not involve cluster initiatives per se, but may involve extensive public-private dialogue on
competitiveness issues. For example, in Peru, nine public-private working groups (known as mesas de trabajo)
were established, each one focusing on a key competitiveness issue highlighted by the World Economic Forum’s
Global Competitiveness Report (such as financial systems and capital markets, foreign trade and investment,
infrastructure, human resources, education, and others). Facilitated by outside consultants, the participants
collaborated to develop a policy matrix of key reforms needed to foster improved competitiveness. In early
February 2003, the working groups presented their findings at a National Competitiveness Forum. Some of the
short-term reforms identified through the consensus-building process will be implemented through the IDB’s $300
million Competitiveness Reform Program, a policy-based lending program.
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