wbcsd tool for dialogue between business and governments on supplier competitiveness
DESCRIPTION
Tool of the World Business Council for Sustainable Development (WBCSD) tool to enable dialogue between business and governments on supplier competitiveness.TRANSCRIPT
Enhancing national market participation and competitiveness-A framework for dialogue between business and governments
Overview presentation – February 2012
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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
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• 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?
Key questions at the outset
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Competitiveness
• Key enabler of the participation of local firms
in the value chains of large investments and of
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.
SHARED INTERESTS
•Strong relationships with governments and local stakeholders
•Optimize costs and performance in supply chains
•Meeting project schedules
•Meeting technical & HSE standards
•Access future business opportunities
•Sustainable economic development & higher living standards
•Maximize employment opportunities
•Maximize use of national suppliers
•Develop strategic industries
•Technological development
•National suppliers competitive to international standards•Reliable local supply chains•Highly skilled workforce•Improved local technological capacity
COMPANY GOVERNMENT
Shared interests of enhanced local firm participation
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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 content rules may
lead to a short term increase
in local firm participation and employment.
• However...
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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
Local content rules
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WBCSD Framework – 1
• Framework for dialogue between
investing companies and governments to
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.
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WBCSD Framework – 2
• Offers a stepwise process and a menu
of options for investing companies to
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
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Key features of the WBCSD Framework
• Analysis of shared interests and objectives – Starting point: identification of the shared
interests of companies and governments
• Drivers of competitiveness – Simple model of the key microeconomic and
macroeconomic drivers of competitiveness as platform for a more focused dialogue on priority
areas for improvement.
• Menu of potential actions – Identification of appropriate actions by companies and by
governments and other stakeholders to support realization of shared objectives.
• Metrics – Measurement model to help evaluate progress and to guide effective
management of actions. Also: set of metrics to assess the performance of local firms &
impacts on local economic development and the business of investing companies.
• Case studies – Demonstrate the contribution of WBCSD member companies to
sustainable local capacity development.
Supporting improvements in local firm competitiveness: A virtuous circle
The Framework
Metrics
MICROECONOMICDRIVERS
MACROECONOMICDRIVERS
COST
SCHEDULING
RELIABILITY
QUALITY ASSURANCE
CONTRACT AWARD
LOCAL ECONOMIC DEVELOPMENT
IMPACT ON INVESTING
COMPANIES
INPUTS TO ENHANCED
COMPETITIVENESS
OUTPUTS IN ENHANCED
COMPETITIVENESSOUTCOMES
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Development benefits
• Sustainable economic development
• Long-term employment creation
• Higher productivity and living standards
• Technology cooperation & increased
absorptive capacity
• Positive spillovers from key
interventions
Education & training
Improved infrastructure
Business enabling environment
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Challenges
Employment outcomes:
• Short-term: no effect or reductions
• Long term: higher, more sustainable employment growth in
the sector and beyond
Mismatch with investment cycle:
• Many investments have large upfront demand for goods and
services (e.g. during construction)
• Insufficient time for building capacity to participate
• Potential solutions: early analysis, appropriate procurement
strategies, linking with operational phase
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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 government policies and
programs often need insight and information which only the private
sector holds (e.g. employment and training needs)
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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 adversarial
relationship with government to one that is
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.
Matthew [email protected] +41 22 839 31 94
Download this WBCSD tool at http://www.wbcsd.org/work-program/development.aspx