INSTITUTIONAL MODERNIZATION IN HIGHLY COMPETITIVE ECONOMIES

Latin American and Caribbean (LAC) citizens and governments are increasingly concerned about the deficient competitive capacities of their firms and economies while facing the challenges of international markets. Likewise, the region faces a persistent inability to jointly tackle complex governance issues alongside key institutional reforms and modernization efforts already in place. Despite two decades of economic reforms, the LAC region continues to perform poorly regarding job creation which has negatively affected its social tissue even after mayor attempts to reduce poverty.
THE COMPETITIVINESS INITIATIVE:

The Competitiveness Initiative (CI) started as a pilot venture to support regional governments to increased competitiveness levels in given sectors of their economy. Moreover, from the beginning CI operations emphasized on the interdependence between institutional modernization (territorial governance) and specific sectors of market economy (key competitiveness factors).

Gaps in competitiveness, productivity and technological capabilities in LAC countries have been clearly demonstrated in the Global Competitiveness Report of the World Economic Forum and several international studies from International Development Financial Institutions.
SEGMENTS OF AN INTERVIEW ABOUT PUBLIC-PRIVATE DIALOGUE

You talk about leaders who were able to unify different sectors of society in an effort to achieve a common objective. Can you name some examples in Latin America?
There have been many cases in recent history including among our own countries where leaders have been able to unify different sectors of society, which apparently had opposite interests under a common objective. A clear example is the role played by the generation of 1989 in Chile. This generation played an important role in the transition toward democracy and rule of law, but most importantly, this generation achieved a complete modernization of the state and its institutions which today benefits with the respect of the society as a whole.

Which are the sectors and institutions that should participate and, who should take the lead?
We in a historical conjuncture in which our societies’ biggest challenge is that of involving private and public institutions, as well as associations of the productive, labor and academic sectors under the a same front. We must understand that politics should go beyond the political momentum. Thus, long term endeavors requires the consistency the daily work. That way entire citizenry can corroborate if we are actually moving forward, fully committed to our goals and presenting concrete results.

Why do you link as part of a Public-Private Dialogue to Governance and Competitiveness?
Well as you know the Forum aims to go beyond the traditional debate. So, it is here, when result-driven projects such as Competitiveness Partnership: A Public-Private Dialogue when the society as a whole leads a new initiative that actually contributes to modernization of several sectors of our economies and also affecting the lives of everybody in a given community. Particularly, I insist that the key here is not to obtain the most benefits for one specific sector, but rather gaining the interest, trust and cooperation of as many individuals and sectors as possible and create projects that will generate growth where it does not exist.

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About Governance:
Although, there are similar definitions of Governance. Nonetheless, the following definition depicts in broad terms the criteria used by the Competitiveness Initiative in addressing the challenges emerging from its project at the local level. “Governance is the sum of the many ways individuals and institutions, public and private, manage their common affairs. It is a continuing process through which conflicting or diverse interests may be accommodated and cooperative action may be taken. It includes formal instructions and regimes empowered to enforce compliance, as well as informal arrangements that people and institutions either have agreed to or perceive to be in their interest”. (Source: Commission on Global Governance)

About Competitiveness:
Competitiveness implies the aptitude of an economy to compete under market-economic conditions on an international scale. Thus, a competitive economy is driven by a myriad of multi-sector factors which normally entails: the type of macroeconomic policies; the quality of infrastructure; the effectiveness of institutions and investment on health and primary education as well as market efficiency, technology readiness, higher education (training) and business sophistication and innovation. (Source: World Economic Forum Indicators)
STRENGTHENING GOVERNANCE & RAISING COMPETITIVENESS BY BUILDING PUBLIC-PRIVATE PARTENERSHIPS

The CI’s methodological process entails the design and formulation of new pilot projects that addresses critical policy shortfalls and related institutional deficiencies. This is possible by directly engaging policymakers such as, senior government officials (including elected officials), as well as the private sector entrepreneurs, business associations and higher education supplier such as universities.

Thus, a pilot project becomes a tangible reality once harmonizes the interests of strategic stakeholders, and simultaneously triggers an open consensus process that attracts proven governance schemes and innovative productivity knowledge.

Gaps in competitiveness, productivity and technological capabilities in LAC countries have been clearly demonstrated in the Global Competitiveness Report of the World Economic Forum and several international studies from International Development Financial Institutions.

WHY A CONSENSUS IN NEEDED TO BUILD PUBLIC PRIVATE PARTNERSHIPS?

The building of a PPP help to strengthen of public sector officials ability to set a common vision while modernizing all necessary institutions and leasing the development of new competitiveness strategies in a comprehensive setting engaging key players and beneficiaries from the beginning. Hence, the conformation of a PPP ensures that new policies and development strategies are formed by a consensus that actually responds to the needs of multiple sectors.
THE NEW PUBLIC-PRIVATE-ACADEMIC-PARTNERSHIPS:

The CI has taken a step further in the configuration of Public-Private Partnerships by including in all its projects a key player, frequently absent of these type partnerships: the academic and R& D sector. This actor has no substitute in providing the vital human capital and innovative capacity essential of the knowledge economic. Consequently, the direct engagement of Universities brings to the table the chance to update their curricula to the specific demands of the productive sector.

SHORT TERM OUTCOME OF THE COMPETITIVENES INITITIVE INVOLVEMENT

• Establishment of Public-Private-Academic Partnerships (PPP).
• Reaching a transparent consensus among stakeholder to prioritize key areas/sectors of the economy towards the design and formulation of a pilot project.
• A cutting edge project entirely formulated for co-financing by the international development and donor community.
• New institutional capacity to innovate in the design of new multi-sector projects and substitute international cooperation financing by local or international private investments.

RESULTS ACHIEVED THROUGH THE ESTABLISHMENT OF THE PUBLIC-PRIVATE PARTNSERSHIPS:

Augments local actors and institutional capacity development by:

• Condition each co-owner access to the project’s benefits by assuming unique responsibilities (rights and obligations) and delivering tangible results during the entire life of the project’s formulation process.
• All partners must contribute with intellectual, technical, logistical and financial resources, particularly, project formulation cost-sharing.
• Assure project’s efficiency and effectiveness.
• Promote a shared long-term perspective with result oriented objectives.
• Increase intellectual and social capital at the community level.
• Show the benefits for institutional modernization with concrete results.
• Generate new incentives for private sector innovation.
• Increase transparency by encouraging shared accountability mechanisms.
• Encourage the creation of future PPP’s as a formal commitment among stakeholders once common goals are agreed upon.

PROJECT BENEFICIARIES

Local Government: Particularly, officials from public institutions, who initially receive enhanced Capacity Development Programs on Governance & Competitiveness. Then, the Capacity Development Program engages Business Associations such as Chambers of Commerce, preferably operating with small and medium seize enterprises. Depending of the chosen territory, capacity development programs draw local producers such as Farmers and Micro-entrepreneurs and local Universities & Academic Centers that are encouraged to review their curricula to better serve market needs.

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THE CI INITIATES THE CONSENSUS:

During the first phase the CI leads the new consensus process, providing advisory services and technical assistance towards the advancement of a pilot project proposal financing concurrently with the creation of the PPP. During second and last phase the CI works on the strengthening of the PPP by reinforcing the region’s ability to further design more projects susceptible of attracting private investments either locally or from foreign markets.

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INFORMATION AND COMMUNICATION
TECHNOLOGIES (ICTs)

 By providing citizens and businesses the necessary ICT skills and technical knowledge, project beneficiaries developed their own incentives to further use the new technologies in innovative economic activities. For that reason, each CI project posses an important component of ICT.



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HUMAN CAPITAL AND SKILLS TRAINING FOR JOB CREATION:

The objectives of curriculum reform are to match education with market demands. CI tertiary education components focus on University / Business R&D Initiatives, including workforce training.  




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ACCESS TO INTERNATIONAL MARKETS:

Once implemented these projects are the natural venue to facilitate the participation of SMEs in domestic and foreign markets; fostering the development of new entrepreneurial skills, technical competence and additional business opportunities.

The CI and International Development Institutions:

From an early stage the CI carefully chose to work in issues that were consistent with the Forum’s pledge to support leaders’ efforts to promote equitable opportunities through socio-economic innovation at the community level. Thus, priority was given to challenges faced by elected officials with an executive mandate spearheading political changes including policy and economic reforms. Furthermore, these issues were matched with the new priorities established by the international development community for the region. Therefore, CI involvement requires the political will of public officials, the engagement of leading stakeholders, and eventually the commitment of certain international development agencies. Thus far, international development agencies have been a dependable partners contributing in a consistent manner to CI’s achievements. Besides, it has been demonstrated that multi-sector projects that were preceded by a consensus required the presence of development agencies at the implementation phase given their experience handling interrelated development issues.
The CI successfully lead field mission’s with different international organizations. With the MIGA/World Bank, that concluded in a new investment promotion program complementing CI project and worked closely in several projects with the MIF/Inter-American Development Bank and Corporación Andina de Fomento. (see Project’s Pipeline for more detail information)

HOW TO SUSTAIN A PUBLIC-PRIVATE PARTERNSHIP?

Informing the Community:
CI consensus building method commits local leaders to strengthen existing civic culture by granting people access the information regarding the entire process that lead to multi-sector project. It has been demonstrated that public dissemination of knowledge as the project advances influence the management of future self-determination issues regarding socio-economic opportunities traditionally out of reach of a significant part of the community.

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Documenting the Experience:
At the technical level, one of CI’s main goals is to secure a continued development impact beyond the period of its direct involvement by assuring locals’ ability to replicate its mechanism elsewhere by documenting the entire process and how its developmental goals were accomplished.

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Access to Knowledge:
The study of international best practices (IBP) by CI’s professional team has been a key factor in developing competitiveness and productivity projects directly linked to governance issues. From its inception, the CI has been working closely with Washington DC based international development financial institutions such as the World Bank and the IDB, as well as research institutes such as Harvard University. (See International Best Practices).