Promoting Competitiveness in Practice - Economic Growth - usaid

themselves to determine the parameters of what they will do and will not do … as opposed to
USAID or any other donor determining the parameters of what should be done from their
perspective.
We believe that it is the participatory strategic planning process – and the resulting local
ownership in and responsibility for implementation – that makes competitiveness initiatives
distinctly different from USAID’s other economic growth initiatives. Competitiveness initiatives
are private sector led and driven in their implementation, and this implies a fundamentally
different role for USAID and its contractors, as illustrated on the previous page.
It is also the participatory strategic planning process that distinguishes competitiveness from
industrial policy – a concern that is frequently raised by USAID and other donor economists.
There are instances in which industrial policy is pursued in the guise of competitiveness
initiatives; however, as practiced in the USAID context, competitiveness initiatives are not
consistent with industrial policy. USAID’s competitiveness initiatives involve a bottom-up
approach, where it is largely the private sector that determines the critical issues it faces in
increasing productivity and the strategies it will employ to address these issues. USAID plays a
valuable role in facilitating the strategic planning process and supporting clusters’ efforts to
become more competitive. However, as a general rule, it works with clusters that show a real
commitment to the process in terms of time and resources. Hence, promoting competitiveness in
the USAID context is not about picking, targeting and subsidizing “winners” per se; rather, it is
about building on the momentum for change in the private sector, wherever it may be. 21
* * *
These guiding principles give us one perspective on what competitiveness initiatives are all
about. A second way of looking at these initiatives is in terms of their key components, as
outlined below.
21 USAID leadership in the field is far more pragmatic regarding the concern of “picking winners.” Three of the
mission directors who have led major competitiveness initiatives noted it is not a matter of “picking winners;”
basically, you go with what little there is in the country. There are usually not a lot of choices to be made in the
countries in which USAID works.
29