Trade Promotion Infrastructure: Industry Coordination and Sector Support
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Key Issues for Discussion in Interviews with the Private Sector and Other Institutions Industry bodies
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What is the level and nature of membership? What share of members are exporters? What are the main services they offer? What specific services for exporters? What is the nature of interaction between industry bodies and government? What are constraints to more collective action on part of industry/exporters?
Clusters
• How are the clusters organized? What is the role of private and public sector and other institutions? • How are they funded? Is it sustainable? • How effective is public-private dialogue? • What public goods are being delivered through the cluster or provided by government? • To what degree does the cluster actually contribute to greater competitiveness for individual exporters?
Subsidies and incentives to sectors and exporters
• What subsidy and incentive programs are available? • Do exporters take advantage of these? What constraints are there to higher take-up (awareness, administrative burdens, and so on)?
Tailoring the Diagnostics to Country and Sector Characteristics Summary of Specific Considerations by Country Type Country type
Relative priorities and issues for consideration • May have limited scale through which to support clusters in many industries; it is critical that sectoral support be tightly matched with comparative advantage • Industry bodies likely to be dominated by a small group (elite)
Resource rich
• May be strong industry bodies from natural resources sectors (potentially dominated by FDI) with effective lobbying • Role of subsidies and incentives may be important to probe; how effective is the incentive structure in facilitating investment in sectors in which the country has comparative advantage?
Low income, labor abundant
• Building capacity of industry bodies and clusters should be a priority
Middle income
• May have well-established, strong industry bodies • Emphasis on cluster support to facilitate innovation and upgrading
Industry representation, cluster, and sector support will vary tremendously across sector and country. In this respect, there are no specific considerations inherent to the sector.
Background Reading: Relationship Between Industry Coordination and Sector Support and Trade Competitiveness Governments provide a range of support targeted to individual sectors, which may be specifically targeted to promote export competitiveness or may do so implicitly. In the past, such support normally came under the banner of “industrial policy” and targeted specific sectors according to their traditional importance to the economy or their potential to act as a catalyst for diversification and upgrading. Although such targeted sector policy remains popular in many countries, more recently, government intervention has focused on a comprehensive cluster approach. A cluster is an agglomeration of companies, suppliers, service providers,
and associated institutions operating in the same broad field, and usually is located within a relatively narrow geographic area (World Bank 2009b). Cluster support differs fundamentally from traditional industrial-policy-inspired sectoral approaches principally in their focus on related and supporting institutions, their preoccupation with competitiveness, and their openness to imports and foreign investment. Clusters contribute to competitiveness by offering a rich environment for realizing externalities, including access to specialized labor, specialized suppliers, and knowledge spillovers. This allows individual firms to realize the benefits of scale economies, contributing to greater productivity and innovation (for example, the ICT clusters in Silicon Valley in the United States and Bangalore in India). As clusters rely on external scale economies, however, they face a challenge of collective action. Thus, the government often has an important role to play in facilitating clusters, particularly in cases in which the cluster remains latent and in
Module 2
Small (population) and remote/landlocked