Chapter 1

in conformity with internationally accepted definitions and European standards to Tunisian firms, but many more pripractices,
and (5) severance packages and unemployment vate laboratories need to be set up. The government of
insurance policies. Slovenia, also concerned that its small enterprises must
adapt to the more dynamic and competitive environment
Policies to promote innovation and quality: resulting from its integration with the EU, is trying to
"la mise d niveau" encourage this upgrading with minimal government involvement
(box 3.3).
The most important way Tunisia can innovate and improve Tunisia's more recent efforts to liberalize investment prothe
quality of its products and services is through global cedures and open more activities to the domestic and forlinkages,
mainly between private parties, rather than gov- eign private sectors should help promote a wider range of
ernments. 7 Stronger competition from trade liberalization contacts between Tunisians and foreign entrepreneurs. The
will promote higher productivity and encourage a stronger benefits of government creating a policy environment that
outward orientation. The process of achieving international promotes competition, foreign contacts, efficient infracompetitiveness
is an effect of trade liberalization and not a structural support and human resources to adopt new techprerequisite
for it. Tunisia, like other industrializing coun- nologies are well-documented. There is less understanding
tries, uses four main channels to obtain new technology: of what are the best means to help local enterprises respond
* Imports of capital goods and components that embody a to these incentives.
significant amount of technology that is often accompanied Research in several African countries on the impact of
by foreign technical assistance to set up and operate the structural adjustment measures on the performance and
equipment;
* Foreign technology licensing, where companies buy the
enhanced competitiveness of small enterprises shows
design specification and technical assistance on how to use BOX 3.3
the technology. The use of this channel is growing as tech- Upgrading the competitiveness of small and
nology gets more complicated and other methods of obtain- medium-size enterpises: The case of Slovenia
ing it (such as FDI) become more difficult; The Slovene program supports the improved competitveness of
* Foreign direct investment, which transfers capital, tech- small and medium-size enterprises (defined according to assets,
nology, management, access to global networks of information,
and access to markets; and
turnover, and number of employees) and includes two main
components: diagnostic evauations (paid for mostly by govem-
ment and a small fee from the companies) and the formation of
* Foreign education and training of students who become an equity fund to help recapitalize the enterprises (made up of
part of an overseas network that can be a valuable source of capital from EBRD, IFC, Harvard Business School Alumni
information to their home countries. Organization, two local banks, and USAJD). The most important
While government and state-owned agencies may not be feature of Slovenia's competitiveness program is the trade liberthe
best providers of technical assistance to enterprises, alization agreement with the EU, which provides the driving
t s v o h ar force , of the upgrading process, as virtually all import barriers will
goverunment can create the appropriate environment and be removed over the next five years. The role of govemment is
provide practical support to private entrepreneurs. limited to well-defined development objectives targeted at small
Examples include state-funded grants to promote the estab- enterprises, such as (I) introducing smaller firms to modern
lishment of private productivity centers (possibly in a joint financial, marketing, and management systems by helping to pay
venture with a foreign firm) and partial grants to help smal for an initial 'diagnostic' evaluation that smaller companies would
firms finance the cost of hiring interational experts, otherwise not be able to afford and (2) promoting the transfer of
technology by requiring the foreign consultants to transmit their
grams with donor governments (GTZ of Germany) is showstate
of the art analytical methods to local consulting firms. It will
be up to the firms' owners to decide if they want to go to the
ing beneficial results. Passing laws on standards and market for additional capital or loans, and for the private investmetrology
(but using private laboratories for quality certifi- ment funds and banks to decide independently whether to lend
cation) provides enterprises with a credible means to docu- to or invest in a company.
ment quality performance. Tunisia's standards and patents sotce: Sblenia, discssio,6 wih USAID onirac.
agency, INNORPI, has been very useful in applying
STRENGTHENING MARKET FORCES 37