oecd-report on the implementation of the euro-mediterranean charter for enterprises-2008

8/14/2019 OECD-Report on the Implementation of the Euro-Mediterranean Charter for Enterprises-2008

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Report on theimplementation of theEuro-Mediterranean

Charter for Enterprise2008 enterprisepolicy assessment

EuropeanCommission


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Report on the implementation

o the EuroMediterranean Charteror Enterprise

2008 enterprise policy assessment

Written by:

European Commission (Directorate-General or Enterprise and Industry)

Organisation or Economic Cooperation and Development (Private Sector Development Division)

European Training Foundation

In consultation with:

European Investment Bank

Undertaken with the nancial support o the European Commission (EuropeAid Co-operation Oce

and Directorate-General or Enterprise and Industry), the European Training Foundation, the European

Investment Bank and the OECD Private Sector Development Division.


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More inormation on the European Union is available on the Internet (http://europa.eu).

Cataloguing data can be ound at the end o this publication.

Luxembourg: Oce or Ocial Publications o the European Communities, 2008

ISBN 978-92-79-05212-5

DOI 10.2769/60562

European Communities/OECD, 2008

Reproduction is authorised provided the source is acknowledged.

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The inormation and views set out in this report are those o the author(s) and do not necessarily reect the ocial opinion o the European Com-

munities. Neither the European Communities institutions and bodies nor any person acting on their behal may be held responsible or the use

which may be made o the inormation contained therein.

This work is published on the responsibility o the Secretary-General o the OECD. The opinions expressed and arguments employed herein do not

necessarily reect the ocial views o the organisation or o the governments o its member countries.


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Page 3

European Commission, DirectorateGeneralor Enterprise and Industry

The Enterprise and Industry DG supports European businesses eforts

to be competitive in the global economy and generate sustainable

growth and jobs or the benet o all European Union (EU) citizens. It

encourages innovation and entrepreneurship across the EU, with a o-

cus on small and medium-sized enterprises (SMEs). The Enterprise and

Industry DG designs and monitors EU legislation to create the right con-

ditions or European businesses to thrive.

Organisation or Economic Cooperation andDevelopment, Private Sector DevelopmentDivision

The OECD Private Sector Development Division brings together under

one umbrella horizontal regional programmes aimed at enhancing sus-

tainable growth and employment through better policy to improve the

business climate.

The division assists regions in developing and implementing efec-

tive policy reorms to enhance investment, competitiveness and pri-

vate sector development in several regions. Its programmes include

the Investment Compact or South East Europe, the Middle East and

North Arica Investment Programme, and the Eurasia Competitiveness

Programme.

The division was created to respond to the growing demand or private

sector development policy advice in non-OECD economies, which in-

creasingly requires a horizontal, cross-issue approach.

European Training Foundation

Based in Turin (Italy), the European Training Foundation (ETF) is the EUs

specialist agency supporting education, training and wider human cap-

ital development across 30 partner countries. These include prospective

EU members, the southern and eastern Mediterranean region, eastern

Europe and central Asia. Central to ETFs work in its partner regions is

the promotion o quality human resources to enhance economic com-

petitiveness and social inclusion.

European Investment Bank

The European Investment Bank (EIB) was created by the Treaty o Rome

in 1958 as the long-term lending bank o the European Union. Its mis-

sion is to urther the objectives o the European Union; within this

ramework, the EIB continuously adapts its activity to developments in

EU policies.

In the Mediterranean region, the EIB operates through its Facility or

Euro-Mediterranean Investment and Partnership (FEMIP). Its two main

priorities are support or the private sector and the creation o an in-

vestment-riendly environment by means o ecient inrastructure and

appropriate nancial systems.

European Commission, EuropeAidCooperation Oce

The EuropeAid Co-operation Oce manages EU external aid pro-

grammes and ensures that development assistance is delivered world-

wide. EuropeAids main mission is to implement the Commissions ex-

ternal aid instruments, both those unded by the Unions budget and

the European Development Fund. To ensure coherence, complementa-

rity and coordination in implementing external assistance programmes

worldwide, EuropeAid works in close collaboration with its various part-

ners. The overall aim is to make external aid more efective.

Organisationproles


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The European Commission is keen to strengthen relations with our Mediterranean partners. We wish to ully exploit the potential o the European

neighbourhood policy. This could ultimately lead to the creation o a large single market, which would create a lasting win-win situation or all

partners involved.

Some important steps have already been taken to enhance business opportunities and prot rom exchange and mutual learning. The Euro-

Mediterranean Charter or Enterprise is clearly a good example in this respect and I am very pleased that nine Mediterranean partners have sub-

scribed to it.

Adopted by industry ministers in 2004, the Charter is based on the model o the European Charter or Small Enterprises. An improved business

environment and the promotion o entrepreneurship and small and medium-sized enterprises are not only challenges or the EU but also or our

partners in the neighbourhood. It was appropriate then to share our recipes or prosperity and job creation and it is time now to look into the

results achieved so ar.

For eight months, hundreds o organisations and people in our partner countries rom the Commission and rom its partner organisations have

worked together to assess the progress achieved under the Charter. As a result o this remarkable cooperation the present report shows that EU

enterprise policies have been a valuable source o inspiration or our Mediterranean neighbours. It proves that our Mediterranean partners aredeveloping a strong entrepreneurial culture, which is a valuable asset or them and a precondition or successul growth and job creation. The

report also underlines the importance o urther close cooperation in this area. Thereore I would like to use the occasion o the presentation o this

report to invite our partners to prot rom the Commissions recently tabled proposals on how to best promote SMEs and entrepreneurship (the

Small Business Act or Europe).

Peace, stability and prosperity are objectives which the EU and its Mediterranean partners share. Vibrant enterprises, led by down-to-earth but

ambitious entrepreneurs, are, in my view, a vital element in achieving these common goals.

Gnter Verheugen

Forewordby European CommissionVicePresident Gnter Verheugen


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This report on the implementation o the Euro-Mediterranean Charter or Enterprise (MED Charter) provides a comprehensive picture o the devel-

opment o policies that support and promote entrepreneurship and enterprise development conducted by the governments o the Mediterranean

partner (MED) countries: Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the Palestinian Authority, Syria and Tunisia.

It presents the results o an eight-month-long policy review and monitoring process, conducted as a pilot project, led and coordinated by the Euro-

pean Commission, the Organisation or Economic Cooperation and Development, the European Training Foundation and the European Investment

Bank, and conducted in partnership with the MED Charter stakeholders. The pilot project involved extensive consultations with a large number o

policymakers, representatives o governmental agencies and institutions, representatives o private sector organisations, members o the banking

and nancial community, economists, enterprise policy experts and bilateral and multilateral development organisations. In act, one o the key

achievements o the pilot project has been the enhancement o dialogue between governmental institutions and private sector organisations.

Another is the exchange o inormation and experiences at the country and MED regional level.

Today, private enterprises are the main engine o growth in the MED countries, progressively replacing government-sponsored investment pro-

grammes and state-owned companies. Over the last three years, the MED region has experienced strong economic growth and has embarked on

programmes o structural economic reorm aimed at improving the business environment and acilitating enterprise development.

However, the MED region still aces a number o challenges. The most pressing challenges are: generating a sucient number o jobs to absorb

the ast-growing number o young and increasingly better educated entrants into the labour market; promoting entrepreneurship, in particular

among women and youth; and reducing overall unemployment. At the same time, MED enterprises need to innovate and grow to withstand the

increasing level o competition arising rom the process o economic integration at global, Euro-Mediterranean and regional levels.

Addressing these challenges will require action on several ronts, through well-structured and targeted policy initiatives. This report provides a

contribution to policy development and cooperation with the nal aim o supporting enterprise development in the MED region and addressing

the challenges listed above.

The pilot project signals an important step orward in enhancing Euro-Mediterranean industrial cooperation within the ramework o the Barcelona

process: Union or the Mediterranean and it has urther developed the intra-regional policy dialogue ostered by the MENA-OECD Investment

Programme. We look orward to a urther deepening o this ruitul cooperation.

Rainer Geiger John Farnell

Deputy Director Director

Directorate or Financial and Enterprise Aairs Coordination, Planning and International Aairs

Organisation or Economic Cooperation and Directorate-General or Enterprise and Industry

Development European Commission

Introduction


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Acknowledgements

This report presents the ndings o a pilot project that was undertaken

by the nine Mediterranean partner countries o the EU (the MED coun-

tries), the European Commissions Directorate-General or Enterprise

and Industry, the Organisation or Economic Cooperation and Devel-

opments Private Sector Development Division (OECD PSD), and the

European Training Foundation (ETF), in consultation with the European

Investment Bank (EIB).

The work was led by Marie Corman (Enterprise and Industry DG), Anto-

nio Fanelli (OECD PSD) and Anthony Gribben (ETF), in cooperation with

Sabina Pogorelec (EIB), Eka Heder (ETF), Abdelaziz Jouani (ETF), Jakob

Fexer (OECD PSD) and Sara Sultan (OECD PSD).

In the MED countries, the ollowing national Charter coordinators (see

Annex III) coordinated their countrys participation in all stages o the

pilot project: Mohamed Kirat (Algeria), Hany Barakat (Egypt), Zvia Dori(Israel), Muna Tarawneh (Jordan), Rola Bacharouch (Lebanon), Latia

Echihabi (Morocco), Jaar Hdaib (Palestinian Authority), Reem Hilali

(Syria) and Raja Mni (Tunisia). In particular, the Charter coordinators,

with their teams, led the countrys sel-assessment and coordinated the

contributions o diferent government institutions and national stake-

holders.

The independent assessments were conducted with the support o a

team o consultants led by: Abdelghani Bendriouch (Contrle de Ges-

tion, Etudes, Formation et Organisation pour les Socits (COGEFOS))

or Algeria, Morocco and Tunisia with inputs rom Amira Amirouche (Al-

geria), Mohamed Bahloul (Algeria), Karim Benkalah (Tunisia) and SalahHatem (Tunisia); Nihal El-Megharbel (The Egyptian Centre or Economic

Studies) or Egypt with inputs rom Reem Abdel Haliem; Miri Lerner

(The School o Management and Economics, The Academic College

o Tel-Aviv Jafa) or Israel with inputs rom Eli Gimmon (Tel-Hai Aca-

demic College, Department o Economics and Management); and Yusu

Mansur (Envision Consulting Group) or Lebanon, Jordan, the Palestin-

ian Authority and Syria with inputs rom Hisham Awartani (Palestinian

Authority), Roger Melki (Lebanon) and Nabil Sukkar (Syria).

The principal authors o the report are: Antonio Fanelli, Jakob Fexer and

Sara Sultan rom the OECD PSD; Marie Corman rom the Enterprise and

Industry DG; and Anthony Gribben with inputs rom Eka Heder and

Abdelaziz Jouani rom the ETF. In addition, the sections on Access to

nance were written by Sabina Pogorelec rom the Development Eco-

nomics Advisory Service o the EIB; the sections on Agreement on con-

ormity and acceptance o industrial products by Evelyne Hania rom

the Enterprise and Industry DG; the sections on Investment-riendly

taxation by Steven Clark and Ana Cebreiro rom the OECD Centre or

Tax Policy and Administration; and the sections on Innovative rms by

Alistair Nolan rom the OECD PSD. Research assistance was provided

by Said Kechida rom the OECD PSD. Further inputs were provided by

Rainer Geiger and Anthony OSullivan rom the OECD.

The authors o the report would like to thank the ollowing individu-

als and organisations or their support in completing the pilot project:

Robert Ley (OECD Directorate or Financial and Enterprise Afairs), the

Middle East and North Arica (MENA)-OECD Investment Programme

(Alexander Bhmer, Frances Mooney, Alissa Koldertstova and Joshua

Yeremiyew), the OECD Centre or Entrepreneurship (Sergio Arzeni and

Marie-Florence Estim), Thomas Dannequin (OECD PSD), the Commis-

sion delegations in the MED countries and participating directorates-

general, John Farnell, Philippe Jean and Jan Eric Frydman (Enterpriseand Industry DG), Carla Montesi (EuropeAid), Ali Berrada Gouzi (Mo-

rocco, Agence Nationale pour la Promotion de la Petite et Moyenne

Entreprise (ANPME)), Nadia Okar (Syria, Ministry o Industry), Steano

Giovanelli (United Nations Industrial Development Organisation), Lena

Tsipouri (Medibtikar) and Lois Stevenson (International Development

Research Centre).

The nal report was prepared or publication by Jakob Fexer and Sara

Sultan, with support rom Antonio Fanelli and Marie Corman.

For any urther inormation on this pilot project, please contact:

Marie Corman ([email protected])

or Antonio Fanelli ([email protected])


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Organisation proles 3

Foreword by European Commission Vice-President Gnter Verheugen 5

Introduction 6

Acknowledgements 7

Scope o the report, methodology and key ndings 15

PART I 19Introduction 21

The Charter process in the Euro-Mediterranean region 22

The Euro-Mediterranean Charter Implementation assessment grid and the assessment methodology 23

Key economic data or the MED region 26

PART II 29Dimension 1: Simple procedures or enterprises 31

1.1. Introduction 31

1.2. Assessment ramework 311.3. Analysis 32

1.4. Synthesis 37

Dimension 2: Education and training or entrepreneurship 39


2.2. Assessment ramework 39

2.3. Analysis 41

2.4. Synthesis 42

Dimension 3: Improved skills 44



3.3. Analysis 45

3.4. Synthesis 47Dimension 4: Easier access to nance and investment-riendly taxation 48


Access to fnance 48


4.3. Analysis 49

4.4. Synthesis 52

Investment-riendly taxation 52



4.7. Analysis 54

4.8. Synthesis 54

Dimension 5: Better market access 55



5.3. Analysis 56

5.4. Synthesis 59

Contents


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Dimension 6: Innovative rms 61



6.3. Analysis 62

6.4. Synthesis 64

Dimension 7: Strong business associations 66



7.3. Analysis 67

7.4. Synthesis 70

Dimension 8: Quality business support schemes and services 72



8.3. Analysis 73

8.4. Synthesis 76

Dimension 9: Strengthening Euro-Mediterranean networks and partnerships 77



9.3. Analysis 77

9.4. Synthesis 79

Dimension 10: Clear and targeted inormation or enterprises 80



10.3. Analysis 80

10.4. Synthesis 82

PART III 83

Introduction 85ALGERIA 86

1. Country overview 86

2. Enterprise policy and publicprivate consultation ramework 86

3. Operational environment 87

4. Services or enterprises 88

5. Human capital 88

6. The way orward 89

EGYPT 91


2. Enterprise policy and publicprivate consultation 92



5. Human capital 95


ISRAEL 97





5. Human capital 101


JORDAN 103








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LEBANON 107







MOROCCO 112


2. Enterprise policy and publicprivate consultations 112





PALESTINIAN AUTHORITY 117







SYRIA 122







TUNISIA







Annees 131


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FiguresFigure 1: Breakdown o the assessment grid structure 24

Figure 2: Assessment ramework Dimension 1 32

Figure 3: Dimension 1 overall scores 38





Figure 8: Assessment ramework Subdimension 4.1 48

Figure 9: Dimension 4a overall scores 52

Figure 10: Assessment ramework: Subdimension 4.2 53





Figure 15: Assessment ramework Dimension 7 66Figure 16: Dimension 7 overall scores 71







Figure 23: Algeria: Overall scores per Charter dimension 90

Figure 24: Egypt: Overall scores per Charter dimension 96

Figure 25: Israel: Overall scores per Charter dimension 102

Figure 26: Jordan: Overall scores per Charter dimension 106

Figure 27: Lebanon: Overall scores per Charter dimension 111

Figure 28: Morocco: Overall scores per Charter dimension 116

Figure 29: Palestinian Authority: Overall scores per Charter dimension 121

Figure 30: Syria: Overall scores per Charter dimension 125

Figure 31: Tunisia: Overall scores per Charter dimension 130

BoesBox 1: Steps in the Charter assessment process 23

Box 2: Egypts good practice 34

Box 3: Company surveys 37

Box 4: Entrepreneurship education and training: policy ramework 41

Box 5: Improved skills: start-up support 46

Box 6: Jordan Loan Guarantee Corporation 50Box 7: Israels approach to unding start-ups 63

Box 8: Publicprivate consultation 69

Box 9: Good practice in business support services 74

Box 10: EU supports MED networking 78

Box 11: ANIMA 79

Box 12: Fashion to the uture 79

Box 13: Online interaction between enterprises and administration in Lebanon 81


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Tables Table 1: Population, GDP and unemployment 26

Table 2: Foreign direct investment (FDI) 26

Table 3: Gross value added at basic prices, 2006 (% share o gross value added) 27

Table 4: Trade balance and exports by main commodity group 27

Table 5: Scores in Subdimension 1.1: Institutional ramework or enterprise policy 33

Table 6: Scores in Subdimension 1.2: Better legislation and administrative simplication 35

Table 7: Scores in Subdimension 1.3: Cheaper and aster start-up and closing 36

Table 8: Scores in Dimension 2.1: Education and training or entrepreneurship 41

Table 9: Scores in Dimension 3: Improved skills 45

Table 10: Scores in Subdimension 4.1a: Credit environment 50

Table 11: Scores in Subdimension 4.1b: Financial acilities or enterprises 51

Table 12: Scores in Subdimension 4.2: Investment-riendly taxation 54

Table 13: Scores in Subdimension 5.1: Implementing a proactive trade policy 56

Table 14: Intra-regional ree trade agreements 57

Table 15: Scores in Subdimension 5.2: Simplication o procedures or international trade 57 Table 16: Scores in Subdimension 5.3: Agreement on conormity assessment and acceptance o industrial products 59

Table 17: Scores in Dimension 6: Innovative rms 62

Table 18: Scores in Subdimension 7.1: Publicprivate consultations 68

Table 19: Scores in Subdimension 7.2: Enterprise networks and business associations 70

Table 20: Scores in Dimension 8: Quality business support schemes and services 75

Table 21: Scores in Dimension 9: Strengthening Euro-Mediterranean networks and partnerships 78

Table 22: Scores in Dimension 10: Clear and targeted inormation 81

Table 23: Institutional set-up in Egypt 92

Table 24: Innovation programmes in Israel 100

Table 25: Administrative simplication programmes in Lebanon 108


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S c o p e a n d p u r p o S e o t h e r e p o r t

This report is based on a pilot project assessing the status o implemen-

tation o the Euro-Mediterranean Charter or Enterprise (the Charter) (1)

in Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the Palestinian Au-

thority, Syria and Tunisia (hereinater, the MED countries). It provides a

comprehensive overview o enterprise policy in the MED countries.

The Charter was adopted by industry ministers in 2004. Since then it

has been a key document guiding MED governments policy towards

the private enterprise sector. At the same time it is also a platorm or

Euro-Mediterranean (Euro-Med) cooperation, as the Charter has been

generated within the process o Euro-Mediterranean industrial coop-

eration conducted within the ramework o the Barcelona process(2). The

Charter is structured in 10 policy dimensions and incorporates several

eatures o the European Charter or Small Enterprises.

The report is a joint publication o the European Commission, the Organi-

sation or Economic Cooperation and Development (OECD) and the Eu-

ropean Training Foundation (ETF), in consultation with the European In-

vestment Bank (EIB) (hereinater, the partner organisations). The report

summarises the results o an eight-month assessment process started in

September 2007 and completed in mid-April 2008. The report ocuses on

the evaluation o policies towards the enterprise sector elaborated and

implemented by central government institutions. Whilst MED countries

have been ully involved in all the stages o the exercise, the contents o

the report reect the nal decisions made by the partner organisations.

M e t h o d o l o g y

The assessment was instigated by the MED countries, when they re-

quested assistance rom the Commission in order to improve the Char-

ter monitoring. The Commission responded to this request by launch-

ing a pilot project that was conducted with the direct participation o

MED countries in both the elaboration o the policy indicators used or

the assessment as well as in the assessment phase.

The methodology applied was originally developed by the OECD un-

der the Investment Compact Programme or South East Europe. (This

methodology was also used or the assessment o the implementation

o the European Charter or Small Enterprises in the western Balkans

in 200607.) Building on this experience, MED countries and partner

organisations elaborated analytic indicators or each o the 10 dimen-

sions o the Charter, capturing key policy eatures. In total, 77 policy

indicators were used, orming the MED assessment grid. Five levels o

policy development were dened or each policy indicator, outlining a

policy development path that ranges rom level 1 (no structured policy

intervention in place) to level 5 (policy incorporates key elements o in-

ternationally recognised good practice). According to the level o com-

plexity, dimensions were divided in subdimensions. Assessment results

are aggregated at dimension and subdimension level. Indicators are

weighted according to their relative importance (see Annex I).

The nal assessment and the assignment o scores or each policy in-

dicator are based on the synthesis o two distinct, albeit parallel, as-sessment processes that are based on the common MED assessment

grid (see Annex I). Each country conducted a sel-assessment led by a

national Charter coordinator, using inputs rom relevant government

institutions and key stakeholders. The partner organisations completed

a parallel and independent assessment, based on inputs collected by

a team o local experts and supported by interviews with experts and

private sector representatives. This independent assessment also com-

bined data and inormation rom international organisations, bilateral

donors and other published sources.

For the purpose o this report, enterprise policy is dened as a set o pol-

icies and measures aimed at improving the business environment andoperational conditions or enterprises. The 10 Charter dimensions cover

the typical sequences in the lie cycle o an enterprise, including estab-

lishment, expansion, maturity and closure, as well as a wide spectrum o

issues relevant or enterprise development, ranging rom administrative

simplication to the tax regime to human capital development.

Enterprise policy is consistent with a horizontal approach to policymak-

ing, seeking to improve conditions or the largest possible number o

enterprises. It is thereore substantially diferent rom vertical policies

(particularly traditional industrial policies), which tend to target inter-

ventions on a limited number o priority sectors or sometimes even

enterprises, selected as national champions. Enterprise policy relies

Scope o the report,

methodology andkey ndings

(1) http://ec.europa.eu/enterprise/enterprise_policy/ind_coop_programmes/med/doc/1949_en.pd

(2) Among the principal aims o the Barcelona process, launched in November 1995, are the enhancement o economic and nancial cooperation and the creation o a Euro-Mediterranean area o shared prosperity through sustainable and balanced socioeconomic development.


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tries (Egypt, Jordan, Morocco, Tunisia, Lebanon) have developed one-

stop-shops, although there are variations in terms o conguration and

scope. Syria, Algeria and the Palestinian Authority still have problematic

company registration procedures. Israel also needs to urther improve its

perormance on company registration and develop a one-stop system.

Dimension 2:Education and training or entrepreneurship

While education and training are increasingly recognised as key contrib-

utors to competitiveness in all MED countries, learning systems generally

lack the policy thrust required to ensure strategic inputs into an entre-

preneurial economy. The objective o Dimension 2 is to encourage those

countries participating in the Charter to develop and promote entrepre-

neurial leaning, in a lielong learning perspective, as a central pillar in the

wider efort to promote competitive economies. Entrepreneurial learn-

ing reers to all orms o education and training (both ormal and non-or-

mal), including work-based learning, which contribute to entrepreneurial

spirit and activity, business creation and employability development.

Two lines o development should be considered or Dimension 2.

Developapolicypartnershipwithstrategybuildinginvolvingedu-

cation, employment and industry ministries, as well as employers,

workers and other non-government interest groups. This would en-

courage the education system to promote entrepreneurial attitudes

(such as creativity, autonomy and risk-taking) and entrepreneurial-

specic skills (such as book-keeping and business planning). Tunisia

is a rontrunner in this area and may ofer good practice to be shared

with other MED countries.

Raiseawarenessthattheentrepreneurialmind-setshouldbedevel-oped as a key competence particularly in all compulsory education

levels. The understanding o the concept and potential o entrepre-

neurship as a key competence (as well as its implications or the

overall system in terms o curriculum development, teacher training

and school management) is required or all countries in the region.

Dimension 3:Improved skills

Workorce competencies should be regularly improved and the training

market continuously developed to ensure that the manpower require-ments o companies are met. Improved competencies can not only pro-

mote the establishment o new businesses and ensure their survival but

can additionally promote the growth o businesses, reinorcing com-

petitiveness and access to international markets. There is a lack o data

on enterprise training, including start-ups and expanding business. In

order or the participating countries to move orward on Dimension 3,

systemic data developments should be considered. A regular and com-

prehensive survey o the enterprise community to track training needs

and training take-up, as well as to determine current and uture skill

needs, could improve policymaking and the targeting o resources.

Another area o development is training or enterprise growth. Given

well-developed practice on training or expanding enterprises (particu-

larly in Egypt, Israel, Jordan, Morocco and Tunisia), a knowledge-sharing

ramework would give all countries access to inormation on policy

tools and nancing arrangements. The ramework would enable a more

developed impact assessment or the region, by bringing together the

network o national bodies involved in the training efort, co-working

through peer learning on areas o common development interest.

Dimension 4:Easier access to nance and investment

riendly taation

The access to nance component o Dimension 4 is made up o two

subdimensions: credit environment and nancial acilities or en-

terprises. Across the MED region, there has been more progress in

developing nancial acilities or enterprises than in improving the

credit environment. Asset-backed bank lending is the main source o

external nancing or enterprises. However, collateral requirements

are generally very high. Access to (and reliability o ) inormation rom

cadastres is limited in many countries. With the exception o Israel and

Tunisia, credit inormation services are not yet ully developed. But

most o the MED countries have established credit guarantee schemes,

some o which operate in partnership with commercial banks (Jordan,

Morocco, Tunisia and Egypt). Micronance acilities are also well de-

veloped in a number o MED countries, such as Morocco, Egypt, Israel

and Lebanon. Access to capital markets or SMEs is still problematic

and the availability o risk capital is very limited. However, Egypt, Mo-

rocco and Tunisia have made gains in this area, while Israel has a com-

petitive venture capital industry. Syria, the Palestinian Authority and

Algeria need to ocus on improving access to nance, while Tunisia

should increase its eforts in improving its credit environment.

The tax policy assessment has been hampered by a lack o inormation.

Thereore, it has not been possible to assign country scores. As a gen-

eral remark, governments in the region have not yet applied systematic

methods o evaluating the tax regime and the tax compliance require-ments imposed on small and medium-sized companies.

Dimension 5:Better market access

Dimension 5 includes three policy subdimensions: a proactive trade pol-

icy, simplication o procedures or international trade, and agreements

on conormity assessment and acceptance o industrial products (ACAAs).

Few countries in the MED region (Israel and Egypt) have a national export

strategy. However, most have established government export agencies

and export promotion programmes. The level o regional trade integration measured by the number o intra-MED ree trade agreements (FTAs) in

place has recently improved. But implementation o the main regional

FTAs is at an early stage. Egypt, Jordan, Morocco and Tunisia are more ad-

vanced in terms o regional trade integration, while Algeria is the least in-

tegrated. International trade procedures are becoming simpler across all

the MED countries (moving ast in Egypt, Israel and Tunisia and lagging

in Algeria). In preparation or the ACAAs, signicant eforts are needed in

legislative alignment and strengthening o the institutional ramework.

Dimension 6:Innovative rms

The assessment ramework on enterprise innovation includes our in-

dicators: development o a strategy on enterprise innovation and re-

search and development (R & D); government action to link rms to


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Page 18

technology and research centres, and promote inter-rm cooperation;

support or innovative rms; and support or business incubation.

In all MED countries, policymakers recognise innovation as a source o

long-term prosperity, and most countries have taken steps to establish

components o an innovation system. These eforts have tended to con-

centrate on creating linkages between business and university, develop-

ing business incubators, upgrading human capital and implementinga range o enterprise-level technology upgrading (mise niveau) pro-

grammes, some o which have a sector-specic ocus. Most MED coun-

tries possess innovation and technology centres (Egypt and Morocco

stand out in terms o institutional strength in this area) although across

the region the number, sophistication and track record o these institu-

tions vary considerably. However, with the exception o Israel, MED coun-

tries have yet to take a signicant position on the global stage as sources

o technological innovation. While all MED countries have launched ini-

tiatives on research and innovation, the volume o investment in R & D is

limited or the region as a whole; and in some cases the development o a

comprehensive innovation strategy is still incipient (including the Pales-

tinian Authority, Lebanon and Syria).

Dimension 7:Strong business associations

Dimension 7 is made up o two subdimensions: publicprivate con-

sultations, and networks and business associations. All MED countries

have introduced practices o publicprivate consultations. However,

practices vary considerably in terms o institutional ramework, re-

quency and degree o transparency. Israel, Palestinian Authority, Egypt,

Morocco and Tunisia have adopted relatively well-developed consulta-

tion mechanisms. Publicprivate consultation practices in Algeria and

Syria are largely ormal, but the consultation mechanisms are evolving.Private sector organisations in the MED countries are gaining strength

in terms o advocacy and ability to provide services to their members.

The largest private sector organisations are the chambers o commerce

and industry and manuacturers/employers organisations. However,

the more established the institution, the higher the risk that it repre-

sents the insiders well-connected, dominant companies. Private sec-

tor organisations are strong in Israel, Egypt, the Palestinian Authority,

Morocco and Tunisia; they are relatively well organised in Lebanon and

Jordan, but have still limited advocacy unctions in Algeria and Syria.

There are signs o networks o entrepreneurs operating in new and

high-value sectors, o women entrepreneurs and young entrepreneurs

in several MED countries.

Dimension 8:Quality business support schemes and services

The assessment ramework or Dimension 8 o the Charter includes our

indicators designed to capture the various business support schemes

available throughout the MED countries. It underlines the need or ac-

cess to support or new entrepreneurs and start-ups (typically amily-

run, micro- and small enterprises in the MED region), and the provision

o services to established rms with growth potential. All MED countries

have programmes to help small rms overcome problems associated

with market ailures in the provision o services, and thus target spe-

cic populations, such as the Moroccan Moukawalati programme sup-

porting youth entrepreneurship, the Palestinian Authority programme

targeting women entrepreneurs and Israels 28 small business develop-

ment centres, which operate with local minority communities. Business

establishment support centres (usually industrial parks or zones) aim to

upgrade enterprises with growth potential, such as the upgrading pro-

grammes omise niveau in Tunisia, Morocco and Algeria, and indus-

trial zones in Jordan, Israel, Egypt and Syria. There has been substantial

technical and nancial assistance in all MED countries to develop a ull

range o services or start-ups and established companies (or example,

in Lebanon the Industrial Modernisation Centre helps acilitate accessto nance). However, there is still an inormation gap as programmes

are not widely advertised. Furthermore, there is a paucity o monitor-

ing and evaluation tools to evaluate the efectiveness o programmes

which are consuming sizeable resources.

Dimension 9:Strengthening EuroMediterranean networksand partnerships

The assessment ramework comprises three indicators. These look at

networks and partnerships in place between businesses and between

business service providers, and assess whether they are embedded in

a broader strategy or enterprise development. They also assess their

sustainability, their upscaling prospects, the range o sectors covered

and the extent o Euro-Med connections.

The assessment shows that some experience has been accumulated

at Euro-Mediterranean level in networking and partnerships between

businesses and between business service providers, oten with donor

support. Yet it reveals that there is much scope or using networks and

partnerships in more strategic, sustainable and ambitious ways, or bet-

ter exploiting pilot projects and previous results, and or learning rom

successul experience across the Euro-Mediterranean area.

Dimension 10:Clear and targeted inormation or enterprises

The assessment o Dimension 10 is made up o two indicators: tradition-

al channels o inormation (such as government gazettes) and online

inormation. There is a signicant need across the region to improve

the quality o inormation or enterprises and to make it more acces-

sible by bundling sources o inormation, especially online. Inormation

lacks detail, reliability, updates, accessibility and usability. Egypt, Israel,

Morocco and Tunisia have made the most substantial eforts to tackle

these problems, namely through interactive websites, governmentagencies and in some cases even Internet portals or networks o inor-

mation centres.


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PART I


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Page 21

(3) http://ec.europa.eu/enterprise/enterprise_policy/ind_coop_programmes/med/doc/1949_en.pd

(4) These dimensions are reerred to as lines or action in the Charter. Please reer to the section below entitled The Euro-Mediterranean Charter implementation assessmentgrid and the assessment methodology or a list o the 10 Charter dimensions.

(5) In the tables, the ollowing abbreviations are used or the MED countries: AG, EG, IS, JO, LE, MO, PA, SY, TU; and or the regional average: MED.

The objective o this report is to assess progress in implementing the Euro-Mediterranean Charter or Enterprise (hereinater the Charter) (3) in the

EU Mediterranean partner countries and territories (hereinater MED countries).

The Charter is seen by the MED countries as a key instrument to guide reorms in enterprise policy. It provides guidelines on 10 policy dimen-

sions (4) relevant or the development o the private enterprise sector. Its structure and contents are modelled on the European Charter or Small

Enterprises, a European Union (EU) document dening policy guidelines in the area o enterprise and small and medium-sized enterprise (SME)

development, adopted in the ramework o the Lisbon agenda to improve cooperation on enterprise policy issues within the EU and between EU

Member States.

The report covers the MED countries that have endorsed the Charter: Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the Palestinian Authority,

Syria and Tunisia (5). It contains an analysis o the level o implementation or each o the Charters 10 dimensions at regional level, and an evaluation

o the perormance o each country and territory in implementing the Charters policy guidelines, based on a common set o indicators.

The report ocuses on the evaluation o policies or the enterprise sector elaborated and implemented by central government institutions. It does

not review policy measures taken by local administration and non-government institutions to support private enterprise development, although

those institutions play an important part in policy elaboration and delivery, particularly towards the small enterprise sector.

The report is structured in three parts:

PartIcontainstheintroduction,backgroundandmethodology,aswellasanoverviewofthekeyeconomicandsocialdatafortheMediter-

ranean partner countries.

Part II contains an assessment o the degree o implementation o each o the 10 Charter dimensions, with an analysis o trends and key issues,

and comparisons o the diferent countries and territories.

PartIIIpresentsprolesofalltheMEDcountries,highlightingstrengthsandareasforimprovementinpolicydesignandimplementation.

Introduction


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Page 22

One o the aims o the Barcelona process, launched in November 1995

and reinorced in 2004 by the European neighbourhood policy, is to

build a Euro-Mediterranean region o shared prosperity through an

economic and nancial partnership and the gradual establishment o a

ree trade area. The Euro-Mediterranean ree trade area, to be complet-

ed by 2010, will cover the EU, Turkey and the EUs nine Mediterranean

partners: Algeria, Egypt, Israel, Jordan, Lebanon, Morocco, the Palestin-

ian Authority, Syria and Tunisia.

To meet the goals o the Barcelona process, the MED countries en-

gaged in industrial cooperation with the EU. Industry ministers

adopted the Euro-Mediterranean Charter or Enterprise at the Euro-

Mediterranean Ministerial Conerence on Industry held in Caserta, Ita-

ly, in October 2004. By endorsing the Charter, Mediterranean partners

committed to use it as a tool to implement microeconomic reorms

and to boost the competitiveness o their enterprises, with the aim toattract higher levels o domestic and oreign direct investment.

Following the adoption o the Charter, all MED countries established in-

stitutional structures to implement the Charter, led by a national Char-

ter coordinator (senior governmental representative rom the Ministry

o Industry, national SME agency or equivalent).

In 2006, the European Commission issued a regional progress report on

the implementation o the Euro-Mediterranean Charter or Enterprise

on the basis o national reports produced by Mediterranean partner

countries. The report described recent developments and examples

o good practice. It compared strengths and weaknesses in the Euro-Mediterranean region (hereinater MED region), and ormulated rec-

ommendations on next steps.

At the Sixth Euro-Mediterranean Ministerial Conerence on Industry in

Rhodes, Greece, in September 2006, Industry ministers decided to pro-

ceed with the Charter implementation. The national Charter coordina-

tors sought the European Commissions help to improve the planning,

monitoring and evaluation o the Charter implementation. They called

or a more systematic and analytical tool to track policy developments

and identiy gaps in policy elaboration and implementation at the na-

tional and regional levels. When the MED national Charter coordinators

met in Berlin on 6 June 2007, they agreed to launch a pilot project or

an in-depth evaluation o government policies or the 10 dimensions o

the Charter in the MED region.

In response to the MED countries request or assistance, the European

Commission came orth with a process and a methodology already test-

ed or the assessment o the implementation o the European Charter

or Small Enterprises in the western Balkans (6) in 200607. The Com-

mission invited the Organisation or Economic Cooperation and Devel-

opment (OECD), the European Training Foundation (ETF) and the Euro-

pean Investment Bank (EIB) (hereinater the partner organisations) to

participate in an assessment o the implementation o the Charter in

the MED region, building on the western Balkan experience.

In September 2007, experts rom MED countries, in cooperation with

the partner organisations, developed a Charter implementation as-

sessment grid to measure progress on the 10 dimensions o the Euro-Mediterranean Charter or Enterprise and composed o a common set

o policy indicators. In October 2007, the assessment grid was adopted

by the Working Party on Euro-Mediterranean Industrial Cooperation

and the assessment was launched.

(6) The SME policy index is an assessment tool developed by the OECD InvestmentCompact or South East Europe, in cooperation with the Commission and withcontributions rom the ETF and the European Bank or Reconstruction andDevelopment.

The Charter process in

the EuroMediterraneanregion


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Page 23

The EuroMediterranean Charterimplementation assessment grid and theassessment methodology

The assessment grid is designed to provide the MED governments with

a tool to monitor the implementation o their policy towards the en-

terprise sector, based on the policy guidelines presented in the Char-

ter. The grid allows governments to assess the level o implementationwithin each dimension covered by the Charter and across the spectrum

o the 10 Charter dimensions. The grid makes it possible to identiy

strong and weak points in policy elaboration and implementation, as

well as inconsistencies within and across policy dimensions. Govern-

ments can use the results or policy planning, allocating resources and

structuring the policy dialogue with stakeholders and donors.

At the MED regional level, the Charter assessment could help to iden-

tiy common priorities, exchange experience, learn rom each others

activity and introduce elements o peer pressure. However, it must be

made clear that the purpose o this pilot project at the MED regional

level is not to rank countries by level o perormance. The MED region

covers countries with very diferent economic structures, institutional

congurations, endowment o natural resources and economic policy

approaches. A number o MED countries embarked some years ago on

a reorm process to improve the business environment, and developed

tools, schemes and institutions to support this process. Others have

launched this process much more recently, hampered by major politi-

cal and budgetary constraints, armed conict and political instability,

or the legacy o a centralised and planned economy. It is thereore not

prudent to compare perormances across countries without taking into

account those considerations.

Box 1: Steps in the Charter assessment process

1. Denition o the Charter implementation assessment grid in cooperation with experts rom MED countries, the national Charter coordinators and the

apartner organisations. Workshops on indicators or Dimensions 2 and 3 were held in Turin, Italy, on 1011 September 2007 (organised by the ETF),

while workshops on all other dimensions took place in Brussels on 1314 September 2007 (organised by the Commission).

2. Validation o the assessment grid in MED countries.

3. Endorsement o the assessment grid at the meeting o the Working Party on Euro-Mediterranean Industrial Cooperation in Brussels and launch o the

sel- and the external assessments (22 October 2007).

4. A team o independent consultants (brought together by the OECD) organised research visits, and conducted data collection and interviews in the

MED countries. The OECD and ETF conducted research missions in the MED countries (December 2007 through February 2008).

5. Technical meetings o partner organisations (Commission, OECD, ETF, EIB) to monitor progress, devise weighting system and structure o the report.

Consultation meetings with the World Bank and UNIDO (Brussels, 14 January, 14 February and 16 March 2008).

6. Regional meeting involving national Charter coordinators to review the assessment process, to present the weighting system and to determine the

structure o the report (Brussels, 15 February 2008).

7. Meetings in each o the nine MED country capitals, chaired by the national Charter coordinators and the Commission, to compare the results o the

sel- and the external assessments and reconcile views with the participation o the members o the government sel-assessment team, representa-

tives o private sector organisations, other stakeholders and partner organisations (February through March 2008).

8. Partner organisations conducted second-level measurement (desk research) to urther review discrepancies between the sel- and the external as-

sessments, incorporating data and inormation rom other sources (April through May 2008).

9. Regional meeting to present and discuss the preliminary results o the regional assessment to national Charter coordinators and nal decisions on

the weighting o the indicators and the structure o the report (Brussels, 16 April 2008).

10. Finalisation and publication o the Charter report (June through October 2008).

11. Ocial presentation o the Charter report at the Seventh Euro-Med Ministerial Conerence on Industry (Nice, France, 56 November 2008).


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t h e a S S e S S M e n t g r i d

The assessment grid blended the structure o the Euro-Mediterranean

Charter or Enterprise with an assessment approach developed by the

OECD or evaluating the European Charter or Small Enterprises in the

western Balkans. The ramework has been ne-tuned to reect the

conditions o policymaking in the MED countries (7).

The assessment grid is structured along the 10 dimensions o the Euro-

Mediterranean Charter or Enterprise.

Within the assessment grid, most policy dimensions are urther di-

vided into subdimensions that capture the critical themes o policy

development. Each subdimension consists o a set o indicators, rep-

resenting key and detailed policy eatures. For instance, Dimension 5

(better market access) includes three subdimensions: implementing

a proactive trade policy, simplication o procedures or international

trade, and agreements on conormity assessment and acceptance o

industrial products (ACAAs). The subdimension ACAAs, or example, isthen urther broken down into six detailed policy indicators.

For each indicator, ve levels o policy development have been dened,

outlining policy development paths that range rom level 1 to level 5.

At level 1, there is no structured policy intervention, only limited ad hoc

measures; at level 2, pilot projects have been developed, but there is

not yet a consistent policy approach; at level 3, there are the basic ele-

ments or adopting a consistent policy approach (legislative ramework

completed, relevant institutions established), but policy implementation

has not yet started; levels 4 and 5 correspond to an increasing degree o

implementation/enorcement. In particular, at level 5, policy practices are

largely in line with internationally recognised standards and good prac-

tices. To attain level 5, a country should show strong evidence that policies

are widely implemented, monitored and independently evaluated. Where

countries are clearly in transition between two levels, or where the actual

situation combines elements o two levels, a hal point is attributed.

the charter aSSeSSMent proceSS

The nal assessment and the assignment o scores or each policy in-dicator have resulted rom the synthesis o two distinct but parallel

assessment processes, based on the common assessment grid.

Each country conducted a sel-assessment, using inputs rom the rel-

evant government institutions and key stakeholders or each policy

area. This process was led by the national Charter coordinator. The

partner organisations completed in parallel an independent assess-

ment, using inputs collected by a team o local experts (and support-

ed by interviews with public and private sector representatives) and

combining data and inormation rom international organisations,

bilateral donors and other published sources. In particular, UNIDOand the Commission delegations in the MED countries provided

valuable inputs and logistic support in completing the independent

assessment. Other valuable inputs were provided by the OECD Mid-

dle East and North Arica Investment Programme. The OECD, in close

consultation with the Commission, coordinated the independent as-

sessment and elaborated the nal synthesis between the two assess-

ments. The ETF directly conducted assessments or Dimensions 2 and

3 (education and training or entrepreneurship, and improved skills),

while the EIB participated in the assessment o the Access to nance

component o Dimension 4. Finally, the Commission (Enterprise and

Industry DG) ormulated the external assessment or the ACAAs sub-

dimension and or Dimension 9 on Euro-Mediterranean networks and

partnerships.

(7) The assessment grid is presented in Annex I.

The policy dimensions o the

Euro-Med Charter or Enterprise

1. Simple procedures or

enterprises

2. Education and training or

entrepreneurship

3. Improved skills

4. Access to nance and

investment-riendly

taxation

5. Better market access

6. Innovative rms

7. Strong business

associations

8. Quality business support

schemes and services

9. Strengthening

Euro-Mediterranean

networks and

partnerships

10. Clear and targeted

inormation

Dimensions Subdimensions

5 Better market access

5.1 Proactive trade policy

5.2 Simplication o procedures

Subdimensions Indicators

5.2 Simplication o Procedures

5.2.1Level o computerisation o procedures

or oreign trade

Indicators Level o reorm

1 2 3 4 5

Level o computerisation o

procedures or oreign trade

Quality o access to regulatory

and procedural inormation

relating to oreign trade

Virtual one-stop-shop

to deal with the ormalities

o oreign trade

Figure 1: Breakdown o the assessment grid structure


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W e i g h t i n g o t h e i n d i c a t o r S

To improve the presentation o results o the assessment exercise,

scores have been aggregated at the level o subdimension and dimen-

sion. In order to do so, a weight has been assigned to each indicator,

according to its perceived importance in relation to enterprise policy

development. The same process has been repeated or the subdimen-

sions. The weights have been assigned through a process o consulta-tion between the our partner organisations and the national Charter

coordinators. The weighting system ranges rom 3 (most important) to

1 (least important). The nal score assigned to each policy dimension

is thereore calculated as a weighted average o subdimensions and

indicators (8).

l e S S o n S l e a r n e d r o M t h e p i l o t p r o j e c t

A strong point o the process is that it is based on a participative ap-

proach, where the methodology and each step in its application have

been elaborated and completed with the direct participation o the

Charter coordinators and endorsed by the main policy stakeholders in

the MED countries. Due to this close consultation it has been possible

to reach a consensual synthesis o the results o the two parallel assess-

ment exercises that reects the views o the partner organisations as

well as the national Charter stakeholders in all the nine participating

MED countries.

However, the partner organisations are well aware that the pilot project

has yielded a number o lessons.

Thetransformationofqualitativeindicatorsintoquantitativescores

involves a signicant degree o approximation and discretion, as

policies do not always evolve in sequence and the indicator descrip-tions are necessarily general and incomplete, in order to t very di-

erent country situations.

Whilethecollectionofdataandinformationonthelegalandinsti-

tutional ramework or each policy dimension does not generally

present signicant measurement problems, the evaluation o the

status o policy implementation or a number o indicators, particu-

larly in relation to levels 4 and 5, is very dicult in the absence o

independent evaluation exercises, statistical data and/or company

surveys. The impact o government policies is even more dicult to

evaluate: it has been impossible to conduct such surveys and ex-

tensive data collection on policy implementation within the scopeo this pilot project. However, partner organisations and Charter

coordinators plan to address this issue or a selected number o pri-

ority dimensions. Initial steps have been taken to cooperate with

UNIDO and other organisations to complement the Charter assess-

ment with the collection o data and inormation at the company

level.

Thereisa shortageofcomparablestatisticaldataonthestructure

and the sectoral specialisation o the enterprise population. In ad-

dition, the available data do not reect the ull picture o enterprise

development, and particularly SME and micro-, small and medium-

sized enterprise (MSME) development in the region, as in many MED

countries a considerable number o enterprises operate in the inor-

mal sector o the economy.

Finally, although the 10 dimensionsoftheChartercovera good

spectrum o the policy areas that afect enterprise development,

a number o other highly important policy areas, such as labour

market, anti-corruption, competition and trade, are not included.

The Charter assessment is a pilotexercise that needs to be comple-

mented by other policy assessments in order to orm a ully compre-

hensive view o the status o private sector development in the MED

countries.

(8) The assigned weights are reported in Annex I.

Page 25


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Page 26

FDI fows in mil. EUR FDI stocks per capita in EUR

1990 2000 2003 2004 2005 2006 2006

AL 181.5 408 567.7 695.8 1 155.3 193.9

EG 543.2 152.5 1 388.4 3 460.3 6 464.4 351.4

IS 1 022.7 2 507.7 1 313 3084 9 205.1 4303.5

JO 99.7 280.6 419 986.1 2 008.9 1879.2

LE 289 1 916.2 1 282.8 1 770.7 1 798.4 3182

MO 373.3 1 563.4 688.7 1 896.2 1 865.3 632.9

PA 99.76 11.6 31.5 30.2 24.4 188.2

SY 81.7 115.8 177.01 321.8 386.2 316.2

TU 291 375.9 411.3 503.3 2 131.8 1361

Source: Unctad, World Investment Report 2007.

Key economic data or the

MED region

t a b l e 2 : o r e i g n d i r e c t i n v e S t M e n t ( d i )

Population*

in mil.

GDP in bil. EUR

2006

GDP per capita

in EUR

% GDP growth

(200206)

% GDP growth***

2007

Unemployment

rate 2006

AL 33.7 92.7 2 770 4.78 4.6 12.3

EG 71 74.9 1 068* 4.4 7.2 11.2*

IS 7.1 111.9 15 868 3.48 5.1 8.4

JO 5.6 11.3 1 873* 6.32 5.7 14

LE 3.7 17.2 3 591 3.12 0.3 7.9**

MO 30.3 52.09 1 708 4.82 2.1 9.7

PA 3.8 3.4 1 024** 0.7 na 23.6

SY 18 26.1 1 382 3.5 3.3 8.1

TU 10.3 24.6 2 459 7.44 6.3 14.2

Sources: Eurostat 2008, International Monetary Fund 2007.

(*) 2005 data.

(**) 2004 data.

(***) CIA World Factbook, est. 2007.

t a b l e 1 : p o p u l a t i o n , g d p a n d u n e M p l o y M e n t


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Page 27

Value added (% o GDP) by sector

Agriculture

(NACE Sections A+B)

Industry

(NACE Sections C to E)

Construction

(NACE Section F)

Services

(NACE Sections G to P)

AL 8 53.8 8.4 29.8

EG* 14.9 32.3 4 48.8

IS 1.9 17.2 4.9 76

JO** 2.5 20.8 4 72.7

LE** 5.2 11.9 7.4 75.4

MO 15.7 21.6 6.2 56.5

PA 8 12.8 2.5 76.7

SY 20.1 27.1 2.6 50.1

TU* 12.2 26.5 6.2 55.2

Source: Eurostat, 2008.

(*) 2005 data.

(**) 2004 data.

Current account

balance in

bil. EUR, 2006

Trade per capita EUR,

2004 2006

Eports by main commodity group

Agricultural

products

Fuels and mining

productsManuactured goods

AL 6.3 1392 0.2 98.8 1

EG 1.7 557 15.4 54 30.4

IS 5.1 10 670 3.3 1.4 95.2

JO -1.2 2 133 13.6 11.2 69.5

LE -0.9 4 787 11 28.2 40.9

MO 1.2 867 20.7 12.9 64.9

PA na na na na na

SY -1.4 na 11.5* 55.9* 6*

TU -0.4 1 885 12.7 15.9 71.3

Sources: World Trade Organisation, International Monetary Fund and World Bank.

(*) 2004 data.

t a b l e 3 : g r o S S v a l u e a d d e d a t b a S i c p r i c e S , 2 0 0 6 ( % S h a r e o g r o S S v a l u e a d d e d )

t a b l e 4 : t r a d e b a l a n c e a n d e x p o r t S b y M a i n c o M M o d i t y g r o u p


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PART II


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1.1. Introduction

Complex procedures and heavy regulatory compliance requirements

stifen enterprise growth by diverting resources rom the creation o

value-added activities to non-productive ones. The burden o complex

procedures is disproportionally higher on small companies than on

large ones, as administrative and managerial resources are scarcer and

costs cannot be spread over a large turnover.

Over the last ew years policymakers, as well as economists and man-

agement experts, have turned their attention to how to rationalise and

improve the eciency and quality o the regulatory ramework. This

trend is not limited to OECD and EU countries. Governments in emerg-

ing economies have also understood the importance o regulatory re-

orm, thanks to a new stream o analytical research and benchmarking

exercises.

The MED economies have been well known in the past or the complex-

ity o the regulatory environment and or the high barriers imposed on

new market entrants. The themes o enterprise policy and regulatory

reorm are relatively new to the MED region, but over the last ew years

there has been noticeable progress as presented here below.

However, regulatory reorm cannot be looked at in isolation. To better

understand the direction o reorms in the MED region, this assessment

must begin by looking at broad policies or the development o a com-

prehensive enterprise policy ramework.

1.2. Assessment ramework

The assessment ramework or Dimension 1 o the MED Charter in-

cludes three subdimensions. Each is related to a critical block within

the domain o enterprise policy, moving rom a broad policy perspec-

tive to the area o legal and regulatory reorm and simplication, and

nally ocusing on specic instances o reorm, such as company reg-

istration.

The rst subdimension covers the main eatures o the countrys en-

terprise policy ramework. It provides a picture o the institutions that

guide government policy towards the enterprise sector, examining

their roles in policy elaboration, implementation and monitoring, while

reviewing policy coordination mechanisms and looking at the setting

established in strategic documents.

The second subdimension looks more specically at government ac-

tion in the broad area o regulatory reorm and regulatory simplica-

tion. The analytical indicators review the role o the institutions leading

the regulatory reorm process and the strategic approach adopted by

the MED countries. A set o three indicators captures the main policy

options available to government, progressing rom a simple review

and rationalisation o existing laws and regulations to a more radical

approach aimed at substantially reducing the number o existing laws

and regulations. The last indicator looks at whether new legislation is

subject to regulatory impact analyses.

Dimension 1:

Simple proceduresor enterprises

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Page 32

The third subdimension deals specically with measuring perormance

in the process o company registration, de-registration and business

closure. This area has been extensively reviewed, ollowing the work

conducted by the World Bank with its annual Doing Business report. The

subdimension combines a range o indicators constructed specically

or this exercise and a number o indicators taken rom Doing Business(9).

The purpose is to cover in detail the three main components o the busi-

ness establishment process, rom incorporation-registration to notica-tion and compliance.

1.3. Analysis

e n t e r p r i S e p o l i c y r a M e W o r K

Enterprise policy encompasses a wide spectrum o policy dimensions

and covers all the sequences in the company lie cycle: rom establish-

ment to expansion, maturity and company closure. The population o

companies in most countries is extremely diferentiated in terms o

business size, sector specialisation, location, legal orm and ownership

structure, etc. In order to be efective, enterprise policy has to be both

comprehensive (operating simultaneously on a number o dimensions

and reaching the widest number o enterprises) and targeted (in order

to address specic issues). In other words, an efective policy should bebroad enough to have an impact on macroeconomic targets (such as

value-added and employment generation), but specic enough to inu-

ence company behaviour. It is up to the government and stakeholders

to nd the right mix between broad policy measures (such as changes

in the standard corporate tax rate or the elimination o general licens-

ing requirements) that aim to improve the operational environment or

the largest number o companies, and targeted measures addressing

specic market ailures (such as the introduction o credit guarantee

schemes or some categories o SME, schemes supporting innovation

and entrepreneurship training programmes).

Thereore, clear assignment o mandates, missions and tasks to gov-

ernment institutions as well as an advanced level o interministerial

coordination are essential or good standards in policy elaboration and

implementation, and the right policy mix. A strategic document that

denes medium-term targets or private sector development and theenterprise policy strategy needed to reach those targets will help en-

sure consistency in government policy, secure consensus around gov-

ernment action and send clear signals to private enterprises on the di-

rection o policy. The enterprise policy strategy should be elaborated in

close consultation with representatives o the key stakeholder groups.

It should be endorsed by the government and be consistent with and

complement other strategic government papers, such as industrial or

innovation policy strategies. Well-developed publicprivate sector con-

sultation mechanisms are vital or the quality o the overall enterprise

policy. The analysis o the institutional policy ramework is thereore

closely connected with that conducted in Dimension 7 o the Charter.

The institutional policy ramework in the MED countries is highly difer-

entiated, due to diferent government and constitutional structures, and

policy practices. For some o the MED countries, such as Algeria and Syr-

ia, the concept o enterprise policy is relatively new, as these countries

had traditionally placed an emphasis on vertical, sector-based policies.

For a number o years other countries, such as Jordan, Israel, Morocco

and Tunisia, have developed horizontal policies in parallel with more tra-

ditional sector-based policies, while the Palestinian Authority and Leba-

non have never placed an emphasis on traditional sector-based policies.

Egypt, traditionally a bastion o vertical policy, started to change course

in 2004 and adopted a comprehensive horizontal policy approach.

The scores on the institutional ramework subdimension broadly reect

these dividing lines. In countries where the transition to a horizontal

Simple procedures for

enterprises

Institutional

framework

Better legislation

and administrative

simplication

Cheaper and faster

start-up

Figure 2: Assessment ramework Dimension 1

(9) See: http://www.doi.gov/oia/procurement/reports/2008%20World%20Bank%20EoDB%20Rankings.pd


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enterprise policy has just started or is not yet completed, the delegation

o responsibility and the assignment o tasks and mandates are not yet

well dened. This creates scope or overlapping o competences and

potential policy inconsistencies.

By taking this approach, the MED countries could be divided into two

groups.

Therstgroupismadeupofcountrieswitharelativelywell-devel-

oped institutional policy ramework, in terms o delegation o re-

sponsibilities, policy coordination, enterprise development strategy

and task assignment. This group includes Israel, Egypt, Morocco, Tu-

nisia and Jordan.

The second group ismade upof countries with aninstitutional

policy ramework still in the initial phase o evolution, with open is-

sues about policy coordination and assignment o tasks. This group

includes Algeria, the Palestinian Authority, Lebanon and Syria.

In both groups the weakest point is interministerial policy coordination.

In Egypt, policy towards the private sector is driven by two key min-

istries, the Ministry o Trade and Industry and the Ministry o Invest-

ment, as well as a special purpose institution, the Social Fund or De-

velopment, which is in charge o developing and implementing policy

towards micro- and small enterprises. Each institution supervises the

activity o a number o executive agencies. In particular, the Ministry

o Trade and Industry is responsible or sectoral policies, but also or a

number o horizontal policies, such as innovation and Euro-Med coop-

eration, and plays a major role in steering the national competitiveness

programme. There are no institutionalised mechanisms o policy coor-

dination (besides high-level coordination conducted by the Cabinet o

the Prime Minister), but there is in practice a signicant level o cooper-ation. Across-the-board participation at the level o executive agencies

ensures programme coordination. A similar situation prevails in Jordan

where the Ministry o Industry and Trade is preparing an industrial pol-

icy that includes provisions or all o the specialised executive agencies.

Egypt is the only country in the region which has elaborated something

close to a comprehensive enterprise policy strategy (the 2005 industrial

development strategy) with signicant private sector inputs. Though

its name emphasises its industrial orientation, the strategy covers a

number o policy areas specic to enterprises, such as competitiveness,

innovation, human capital development and regulatory reorm.

In Morocco, the Ministry o Commerce and Industry is responsible or

SME policy as well as the implementation o the new sectoral develop-

ment plan. Policy coordination is ensured at high level by the Ministry

o Economic and General Afairs, and by a number o interministerialcommittees and commissions. Tunisia has a similar governance struc-

ture, with a high-level National Commission or Investment chaired by

the Head o State, in charge o setting policy guidelines and monitoring

the achievement o policy targets.

Israel has traditionally adopted a pragmatic approach to enterprise

policy, ocusing on specic programmes, seeing government interven-

tion as temporary and directed to addressing specic market ailures.

Consequently, Israel never developed a multi-year comprehensive pol-

icy strategy. However, the Ministry o Industry, Trade and Labour uses

yearly work plans to set policy targets and agendas or the implementa-

tion o enterprise policy measures.

In Algeria, a country belonging to the second group, policy competen-

cies or private sector development are split between the Ministry o

Industry and Investment (responsible or the implementation o the

national industrial policy and investment promotion) and the Ministry

o SMEs and Handicrats. Policy coordination is conducted at a high

level but there is large scope or improvements.

The scores or Lebanon and the Palestinian Authority largely reect the

stalemate in government activity caused by armed conict and political

instability.

With regard to enterprise policy strategy, Morocco and Tunisia havegone ar in setting policy guidelines, but these are reected in a number

o government-endorsed documents and not in a single strategy paper.

Algeria, Syria and Tunisia operate all on the basis o ve-year economic

plans that include elements o a private sector reorm agenda. However,

the accent, in the case o Algeria and Syria, is very much on achieving

quantitative targets and outlining investment plans, while in Tunisia

quantitative targets are complemented by qualitative objectives.

Indicator W (10) AL EG IS LE JO MO PA SY TU MED

1.1.1. Delegation o

responsibility or

enterprise policy

2 1.5 4.0 4.5 2.0 3.5 3.0 2.0 2.0 3.5

1.1.2. Coordination

with other ministries,

stakeholders and civil

society

3 3.0 3.5 4.5 2.0 3.0 4.0 2.5 2.0 3.0

1.1.3. Enterprise

development strategies3 2.0 4.0 3.5 2.5 2.5 3.0 1.5 3.0 3.5

1.1.4. Clear task

assignment2 2.5 4.0 4.5 2.0 4.0 4.0 1.5 3.0 4.0

Overall weighted

average or

1.1. Institutional

ramework

or enterprises

2.3 3.9 4.2 2.2 3.2 3.5 1.9 2.5 3.5 2.3

Table 5: Scores in Subdimension 1.1: Institutional ramework or enterprise policy

(10) In all the tables, W stands or the weight assigned to the respective indicator or subdimension. The weight is used to calculate the weighted average or each countrysrespective subdimension score. Reer to Annex I or a comprehensive list o weights.


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b e t t e r l e g i S l a t i o n a n d a d M i n i S t r a t i v e

S i M p l i i c a t i o n

There is no single model or improving legislation and administrative

procedures applicable to enterprises within a country. This requires ac-

tion on several ronts (legislative, institutional and organisational) over a

number o years and afects a considerable number o economic sectors.

Legislative and administrative simplication is the outcome o regulatoryreorm. Policy coordination plays a considerable role, as does political

commitment. As stated in the Charter, an efective way to work towards a

high-quality business regulation environment is to structure government

intervention based on a medium-term strategy, reinorced by a solid in-

stitutional ramework and supplemented by regulatory assessment tools.

Although still very much in its inancy, regulatory and administrative

reorm is gaining momentum on the regional enterprise policy map,

most evident in the recent eforts made to smooth company registra-

tion procedures throughout the region (11).

Israels eforts to simpliy enterprise legislation and administrative pro-

cedures revolve around several targeted strategies led primarily by the

Ministry o Finance in cooperation with the Ministry o Industry, Trade

and Labour and the Ministry o Interior. For example, in August 2005

the government established an interministerial committee to which

private sector representatives were invited. The aim was to come up

with a strategy or the simplication o business licensing.

Tunisia has also made good progress within this subdimension. A

number o laws and provisions have been passed and several special

units have been put in place to simpliy administrative procedures,

overlooked by a high-level coordination body at prime ministerial level.

To date, in 80 % o the cases, administrative authorisations have been

replaced by general requirements.

While Morocco has no enterprise sector simplication strategy, since

1999 it has examined 750 procedures and simplied 200 which afect

enterprises.

Lebanon and Jordan have a solid institutional ramework in place or

legislative and administrative simplication, but it is not explicitly

targeted to enterprise policy. In Jordan, this gap could be lled through

the enterprise strategy that is currently under way.

In Lebanon, the Ministry o Economy and Trade, the Oce o the Min-

istry o the State o Administrative Reorm and the Ministry o Finance

have cooperated to simultaneously work on the review and simplica-

tion o current legislation. Redundant pieces o legislation and regula-

tion have been identied, yet limited eforts have been made, with the

exception o company registration.

In Syria, the Ministry o Local Administration is drating a new law on

the streamlining o procedures in local administrations. Furthermore,

the Ministry o Industrys current ve-year plan contains a chapter on

revising business regulations, and the Commission is embarking on a

project with the same ocus. The business environment is still heavily

regulated, but these projects could bring some tangible benets.

Algeria and the Palestinian Authority do not have an institutional rame-

work or a strategy to simpliy legislation and administrative procedures

or enterprises. Only ad hoc activity has taken place in this eld: Algeria

has a ocus on company registration, while the Palestinian Authority has

several donor-unded programmes.

c o S t - b e n e i t a n a l y S i S o n e W e n t e r p r i S e

l e g i S l a t i o n

Systematic and consistent cost-benet analysis should be applied when

enterprise-related legal instruments are drated, in order to optimise

the eciency and efectiveness o the instrument and ensure that it will

achieve the intended objectives at minimum cost and with the ewest

unintended negative consequences. This type o analysis greatly im-

proves enterprise-related policy instruments and avoids unnecessary

legislation and regulations.

Yet despite these benets, systematic

oecd-report on the implementation of the euro-mediterranean charter for enterprises-2008

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