IDB Experience on Sustainability of Reforms in the Region Second Competitiveness Forum Suriname Hunt Howell

Background Career at IDB in design and implementation of Policy Based Programs Preparation of draft paper on “Lasting Benefits of Competitiveness / Innovation Policy Based Loans in LAC” – Eight countries / reforms in seven thematic areas. – What happened during and after IDB PBL cycle?

Achieving sustainability of Policy Reforms A complicated and non-linear process – IDIs can be catalyst to get process started – Stakeholders initial resistance (but at least become sensitized) – Greater public awareness of deficiencies – Opinion makers convert to guarded support – Stakeholder consensus on need for reform – Approval of policy reforms & full stakeholder buy- in

Timing of Process Sustainable reforms may or may not be achieved within normal cycle of IDB loans. – Frustrating for Bank, but not necessarily bad for country. – Buy-in of key stakeholder groups is essential but cannot be neatly scheduled

National Competitiveness Councils Peru (rejuvenated after 6 years) – Initial Bank support for NCC started in 2003 – CNC relatively weak & ineffective – Reconstituted in 2009 w/ Min of Econ & Finance as chair. (Key Stakeholder) – Now actively pursuing “competitiveness agenda” Guyana (good start and going strong) – Presidential summit on competitiveness (2006) led to creation of NCC – Strong stakeholder support from beginning – Proactive agenda (2014) Influential on policy reform

NCCs that Failed Bolivia (killed after 11 years) – Bank supported interagency committee (2003) – New government undermines NCC activities. ( after 2010) - Very suspicious of Clusters – Formal abolition of tech secretariat (2014) Uruguay (hope after 7 years) – Bank support for NCC and tech. unit (2007) – NCC died but tech unit remains active – Private sector concern with lack of NCC (2014)

Secured Transaction Policy Reform Peru (8 years and counting) – Flawed law approved end of first PBL (2006) – Subsequent PBL – no solution – Corrected draft law prepared mid 2014 Colombia (8 years) – First PBL supported prep of work plan (2006) – Min Industry & Commerce endorsed diagnosis – Draft law by public-private work group (2012) – Law approved 2014 & system now operating

Transparency & Competition Policy El Salvador (10 years and going strong) – PBL called for approval of Competition Law and implementing agency (2003) – Superintendency of Competition very active (2013) Guyana (6 yrs and successful) – TA for CCAC & legislation drafting. (2006) – Proactive pursuit of consumer complaints (2014) Dominican Republic (5 yrs but unfinished) – PBL (2009) called for law, regs & implementing agency) – Deadlock on appointment of Exec Dir. (mid 2014)

Transactions Costs Reduction Bolivia (narrow focus) – Cut red tape on imports for mining exporters Colombia (broad objectives w/ benefits) – Simplification of business operation – Government procurement simplification – Single window for foreign trade Guyana (two issues but effective) – Deeds registry & Commercial Court

General Conclusions NCC potential is realized when supported. Secured Transactions Reform takes time and missteps can happen. Transparency and Competition Policy initiatives can level playing field Transactions Costs reduction initiatives good for private enterprise => staying power