Tool of the World Business Council for Sustainable Development (WBCSD) tool to enable dialogue between business and governments on supplier competitiveness.
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WBCSD tool for dialogue between business and governments on supplier competitiveness
1. Enhancing national market
participation and
competitiveness
-
A framework for dialogue
between business and
governments
Overview presentation – February 2012
2. Context
• Large investments can provide an
opportunity to catalyze local economic and
social development
• Linkages with local and
national suppliers are a primary
development enabler
• Many large investors are building linkages
with local suppliers for commercial and
strategic reasons
• National supplier participation is seen as
a key policy objective by many host
governments
• Growing use of local content rules to
mandate relationships with local
suppliers
2
3. Key questions at the outset
• What are the ways in which
local firms and economies
could participate in, and benefit
from, large inward investments
in their countries?
• What are the parameters to maximize the
developmental benefits of these large
investments?
3
4. Competitiveness
• Key value chains ofparticipation of localand of
in the
enabler of the
large investments
firms
local economic development more broadly.
• What is competitiveness? The ability of a
firm to deliver orders with levels of cost,
scheduling, reliability, and quality equal to, or
better than, those of its peers, and to win
contracts in an open market.
• Investing companies and host governments
often have closely aligned interests and
shared objectives in enhancing local firm
capabilities and competitiveness.
4
5. Shared interests of enhanced local firm participation
COMPANY GOVERNMENT
•Strong relationships with
governments and local •Sustainable economic
stakeholders development & higher
living standards
•Optimize costs and
performance in supply •Maximize employment
chains SHARED opportunities
•Meeting project INTERESTS •Maximize use of national
schedules suppliers
•Meeting technical & HSE •Develop strategic
standards industries
•Access future business •Technological
opportunities development
•National suppliers competitive to international standards
•Reliable local supply chains
•Highly skilled workforce
•Improved local technological capacity
6. How best to realize those shared interests?
• Shared interests are best
realized through working to
improve the competitiveness
of local firms rather than
through mandatory
requirements (‘local content
rules’).
• Local a short term increase
lead to
content rules may
in local firm participation and employment.
• However...
6
7. Local content rules
While some isolated successes, many potential downsides,
such as:
• Increased investment costs and risks
• Uncompetitive local industries
• Reduced foreign direct investment
• Higher prices for consumers
• Reduced long-term employment
• Exacerbation of corruption
7
8. WBCSD Framework – 1
• Framework for dialogue between to
investing companies and governments
enhance local firm competitiveness.
• Based on identification of the shared
interests of companies and governments to
facilitate a constructive dialogue on
appropriate policy and corporate
responses, and, in some cases,
coordinated or collaborative actions.
• Provides a tool for engaging with government,
using evidence-based insights and proven strategies
to foster competitiveness.
8
9. WBCSD Framework – 2
• Offers a stepwise process and a to
of options for investing companies
menu
pursue this dialogue.
• Does not make specific prescriptions for
managing the relationship with government.
• Applicable for a broad range of sectors,
geographies and scales of investment.
• Target audience: country/operational
management, public affairs, supplier development
functions
9
10. Key features of the WBCSD Framework
• Analysis interests of interests and objectives – Starting point: identification of
of shared
the shared companies and governments
• Drivers of competitiveness – Simple modelplatformkey microeconomic and
of the
macroeconomic drivers of competitiveness as for a more focused
dialogue on priority areas for improvement.
• Menugovernments and other stakeholders to support realization of shared
of potential actions – Identification of appropriate actions by companies
and by
objectives.
• Metrics – Measurement model to help evaluate progressperformance of local
and to guide effective
management of actions. Also: set of metrics to assess the
firms & impacts on local economic development and the business of investing
companies.
• Case studies –capacity development.
Demonstrate the contribution of WBCSD member companies to
sustainable local
10
13. Metrics
INPUTS TO OUTPUTS IN
ENHANCED ENHANCED OUTCOMES
COMPETITIVENESS COMPETITIVENESS
COST
MICROECONOMIC
DRIVERS
SCHEDULING
LOCAL ECONOMIC
RELIABILITY DEVELOPMENT
QUALITY IMPACT ON
ASSURANCE INVESTING
COMPANIES
MACROECONOMIC CONTRACT
DRIVERS AWARD
14. Development benefits
• Sustainable economic development
• Long-term employment creation
• Higher productivity and living standards
• Technology cooperation & increased
absorptive capacity
• Positive spillovers from key
interventions
Educationinfrastructure
& training
Improved enabling environment
Business 14
15. Challenges
Employment outcomes:
• Short-term: higher, morereductions employment
no effect or
• Long term: sustainable
growth in the sector and beyond
Mismatch with investment cycle:
• Manyand services (e.g. during upfront demand for
goods
investments have large
construction)
• Insufficient time for building capacity to participate
• Potential solutions: early analysis, operational phase
procurement strategies, linking with
appropriate
15
16. Why use the Framework as basis for
dialogue?
• Maximization of investor contributions – Impact of
many investor-led programs to improve local firm capabilities
and competitiveness is often determined by the enabling
policy environment
• Collaborative action – Training and skills development
partnerships, cluster formation, etc. require a level of formal
collaboration
• Developing better policies – Effective and information
policies and programs often need insight
government
which only the private sector holds (e.g. employment and
training needs)
16
17. 3 objectives of the WBCSD Framework
• Move the discussion of national market
participation past negotiations over
restrictive requirements and towards a
search for strategies and actions that
achieve long-term benefits for both sides.
• Transform what can be an to one that is
relationship with government
adversarial
cooperative and can draw in other partners
from the public, private and nongovernmental sectors.
• Broaden the national market participation discussion to
include spillover benefits to firms that may be outside the
investing companies’ supply chains.
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18. Download this WBCSD tool at
http://www.wbcsd.org/work-program/development.aspx
Matthew Lynch
lynch@wbcsd.org
+41 22 839 31 94