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WBCSD tool for dialogue between business and governments on supplier competitiveness

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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. 1. Enhancing national marketparticipation andcompetitiveness-A framework for dialoguebetween business andgovernmentsOverview presentation – February 2012
  2. 2. Context• Large investments can provide anopportunity to catalyze local economic andsocial development• Linkages with local andnational suppliers are a primarydevelopment enabler• Many large investors are building linkageswith local suppliers for commercial andstrategic reasons• National supplier participation is seen asa key policy objective by many hostgovernments• Growing use of local content rules tomandate relationships with localsuppliers 2
  3. 3. Key questions at the outset• What are the ways in whichlocal firms and economiescould participate in, and benefitfrom, large inward investmentsin their countries?• What are the parameters to maximize thedevelopmental benefits of these largeinvestments? 3
  4. 4. Competitiveness• Key value chains ofparticipation of localand ofin the enabler of the large investments firmslocal economic development more broadly.• What is competitiveness? The ability of afirm to deliver orders with levels of cost,scheduling, reliability, and quality equal to, orbetter than, those of its peers, and to wincontracts in an open market.• Investing companies and host governmentsoften have closely aligned interests andshared objectives in enhancing local firmcapabilities and competitiveness. 4
  5. 5. Shared interests of enhanced local firm participationCOMPANY 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. 6. How best to realize those shared interests?• Shared interests are bestrealized through working toimprove the competitivenessof local firms rather thanthrough mandatoryrequirements (‘local contentrules’).• Local a short term increaselead to content rules mayin local firm participation and employment.• However... 6
  7. 7. Local content rulesWhile 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. 8. WBCSD Framework – 1• Framework for dialogue between toinvesting companies and governmentsenhance local firm competitiveness.• Based on identification of the sharedinterests of companies and governments tofacilitate a constructive dialogue onappropriate policy and corporateresponses, and, in some cases,coordinated or collaborative actions.• Provides a tool for engaging with government,using evidence-based insights and proven strategiesto foster competitiveness. 8
  9. 9. WBCSD Framework – 2• Offers a stepwise process and a toof options for investing companies menupursue this dialogue.• Does not make specific prescriptions formanaging the relationship with government.• Applicable for a broad range of sectors,geographies and scales of investment.• Target audience: country/operationalmanagement, public affairs, supplier developmentfunctions 9
  10. 10. Key features of the WBCSD Framework• Analysis interests of interests and objectives – Starting point: identification of of sharedthe shared companies and governments• Drivers of competitiveness – Simple modelplatformkey microeconomic and of themacroeconomic drivers of competitiveness as for a more focuseddialogue on priority areas for improvement.• Menugovernments and other stakeholders to support realization of shared of potential actions – Identification of appropriate actions by companiesand byobjectives.• Metrics – Measurement model to help evaluate progressperformance of local and to guide effectivemanagement of actions. Also: set of metrics to assess thefirms & impacts on local economic development and the business of investingcompanies.• Case studies –capacity development. Demonstrate the contribution of WBCSD member companies tosustainable local 10
  11. 11. Supporting improvements in local firmcompetitiveness: A virtuous circle
  12. 12. The Framework
  13. 13. Metrics INPUTS TO OUTPUTS IN ENHANCED ENHANCED OUTCOMESCOMPETITIVENESS COMPETITIVENESS COST MICROECONOMIC DRIVERS SCHEDULING LOCAL ECONOMIC RELIABILITY DEVELOPMENT QUALITY IMPACT ON ASSURANCE INVESTING COMPANIESMACROECONOMIC CONTRACT DRIVERS AWARD
  14. 14. Development benefits• Sustainable economic development• Long-term employment creation• Higher productivity and living standards• Technology cooperation & increasedabsorptive capacity• Positive spillovers from keyinterventions  Educationinfrastructure & training  Improved enabling environment  Business 14
  15. 15. ChallengesEmployment outcomes:• Short-term: higher, morereductions employment no effect or• Long term: sustainablegrowth in the sector and beyondMismatch with investment cycle:• Manyand services (e.g. during upfront demand forgoods investments have large construction)• Insufficient time for building capacity to participate• Potential solutions: early analysis, operational phaseprocurement strategies, linking with appropriate 15
  16. 16. Why use the Framework as basis fordialogue?• Maximization of investor contributions – Impact ofmany investor-led programs to improve local firm capabilitiesand competitiveness is often determined by the enablingpolicy environment• Collaborative action – Training and skills developmentpartnerships, cluster formation, etc. require a level of formalcollaboration• Developing better policies – Effective and informationpolicies and programs often need insight governmentwhich only the private sector holds (e.g. employment andtraining needs) 16
  17. 17. 3 objectives of the WBCSD Framework• Move the discussion of national marketparticipation past negotiations overrestrictive requirements and towards asearch for strategies and actions thatachieve long-term benefits for both sides.• Transform what can be an to one that isrelationship with government adversarialcooperative and can draw in other partnersfrom the public, private and nongovernmental sectors.• Broaden the national market participation discussion toinclude spillover benefits to firms that may be outside theinvesting companies’ supply chains. 17
  18. 18. Download this WBCSD tool athttp://www.wbcsd.org/work-program/development.aspx Matthew Lynch lynch@wbcsd.org +41 22 839 31 94

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