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Promoting Job Creation in BSEC and CA Countries:. What Role for the Private Sector?. Karin C. Millett, Head FIAS Investment Generation-Vienna Bucharest, June 23, 2008.

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promoting job creation in bsec and ca countries

Promoting Job Creation in BSEC and CA Countries:

What Role for the Private Sector?

Karin C. Millett, Head

FIAS Investment Generation-ViennaBucharest, June 23, 2008

economic growth
‘It is absolutely crucial to recognize that all economic growth takes place at the level of the productive enterprise – otherwise it is impossible to have a clear understanding of the growth process.’ (Arnold Harberger, December 2005)

Not all productive enterprises are private, but the majority will be.

Economic Growth
private sector as the engine
Significant structural changes have taken place since the transition to market economies, though the pace of job destruction has often outpaced that of job creation. In a market economy, it is clear that the private sector is the primary creator of jobs.

However, job creation by private sector highly dependent on whether the policy environment obstructs or enables private enterprises to form, operate and exit business.

While important reforms enacted by countries represented here, evidence suggests much still to be done in many countries to create a conducive environment for private sector development.

Private Sector as the Engine
a key question is productivity
Two general approaches to increasing productivity, ‘yeast’ and ‘mushrooms’ (Arnold Harberger)

Yeast makes everything rise uniformly, e.g., knowledge, education, ICT

Mushrooms which ‘pop up’ in unpredictable places and happen in an industry at the level of the firm, which is the locus of growth, leading to real cost reduction (TFP)

A third approach is to reduce the ‘friction’ in the economic machine: working on the institutional milieu.

This offers opportunity for a public-private dialogue to improve that milieu, through identifying ‘where the shoe pinches’ for the private sector.

A key question is productivity

Towards a more competitive private sector


Labor Cost


Red Tape

Poor Productivity

Costly and unreliable Utilities




Good policies and regulations matter

Learning about good practice

Capacity building

Reform management

Source: WDR05.



Builds momentum for business environment reforms

Helps prioritize binding constraints

Ensure that reform design fits local needs and capacity

Smoothen/accelerate implementation of policy reforms

Promotes accountability, transparency, good governance

Builds trust and restore confidence in post conflict/crisis env.

Public Private Dialogue as a Tool

PPD reforms Workable reforms Reforms that work



The Key Stakeholders and Processes in PPD

Define project brief

Investment climate constraints

(Existing benchmarks and surveys)

Stakeholder investigation

(Field interviews and focus groups)

Private sector


Public authorities

Civil Society

Most significant reforms

(Field interviews and focus groups)

Stakeholder analysis

Design decision


examples of reforms resulting from ppd
Turkey— Coordination Council for Improvement of Investment Climate led to new framework of laws to facilitate FDI and dramatically simplify procedure of registering a new company.

Bosnia— Bulldozer initiative yielded many reforms, incl. slashing statutory capital requirements when registering a LLC.

Examples of reforms resulting from PPD
example of long term successful ppd
Ireland’s Social Partnership (started in early 1970s, became a real force in 1980s, as economy hit a crisis)

- Government, private sector, labor unions,

farmers, and NGOs—chaired by Prime

Minister’s Office

Identifying key competitiveness issues and addressing social equity.

- Important factor in transition from a high-

inflation, volatile economy to a low inflation,

stable and competitive economy

Expert Group on Future Skills Needs

Example of long-term successful PPD

Benefits and Outputs from PPD

Focusing on this

will bring the others


embarking on a ppd process
FIAS/WBG can provide advice and assistance, drawing on experiences of over 40 countries around the globe.

Manuals, guidelines and success stories are featured on line for those who want to learn more.

Embarking on a PPD Process

Charter of Good Practice



Tools for practitioners

Case studies

Online partnerships

PPD Workshop



Karin Millett