The OECD Investment Compact for South East Europe

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The OECD Investment Compact for South East Europe

• Supporting Investment Climate Reform for Growth
  and Employment

2
Overview

• Objective, Organisation and Strategic Framework
• Activities and Achievements
• Future strategy

3

• 1. Objective, Organisation and Strategic Framework

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Objectives

• The OECD Investment Compact was launched in 2000
  under Stability Pact Working Table II on Economic
  Reconstruction, Development and Cooperation.
• It aims to increase regional stability via
  increased investment
• It also fosters regional ownership of investment
  policy and reform, supports the EU integration
  process and encourages the development of a
  regional investment strategy

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Structure
Regional Co-operation Council
OECD Directorate for Financial and Enterprise
Affairs
Co-chairs OECD Country SEE Country OECD
OECD donor countries
Investment Compact for South East Europe
Regional Working Groups Anti-Corruption Human
Capital Investment Promotion Regulatory Reform
SEE country economic teams
SEE Investment Committee
International organisations
Private sector
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Strategic Framework
Focus of Investment Compact Program
A. Enterprise and SME Development
B. Policy and Promotion Specific to FDI
Investment Reform Index (IRI) SME Policy Index
1. Monitoring and Evaluation
Sector Specific Sources of Competitiveness
Thematic Working Groups Sector Specific Regional
Investment Promotion
Enterprise Forum
2. Implemen-tation Support
4 Areas
Structured Public/Private Debate
SME Policy Index
Regional Foreign Investors Council, White Book
and Investor Forum
3. Private Sector Support
Annual Ministerial for SEE Region
4. Political Support
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• 3. Activities and Achievements

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Summary of Achievements

• Overall achievements in the last seven years
• Enhanced the investment environment by
• Accelerating reforms through identification of
  priorities and guidance on how to implement them
• Moving countries closer to OECD standards through
  adherence as observers to OECD Committees
• Improving brand image with sector specific
  investment promotion events and engagement with
  OECD
• Increased capacity of policy makers through the
  transfer of OECD methodologies, tools and
  instruments taking into account the specific
  circumstances of the region.
• Promoted a culture of continuous improvement with
  the systematic monitoring and evaluation of
  reforms based the Investment Reform Index and the
  SME Policy Index
• Helped establish a sustainable process for reform
  of the business climate at the regional level
  through a self-reinforcing mechanism of
  measurement and actions to improve measurements
• Encouraged regional ownership of the reform
  process with the launch of the South East Europe
  Investment Committee and regional thematic
  Working Groups to improve policy dialogue and
  implementation of investment reforms.

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Achievements
Monitoring and Evaluations

• Main achievements
• Created awareness of the impeding effects of
  policies across many different dimensions on the
  inflow of FDI and the development of SMEs
• Helped accelerate specific reforms through
  identification of priorities and guidance on how
  to implement them
• Identified and disseminated regional good
  practices in SEE
• Identified improvements in FDI statistics needed
  to comply with international standards

• Main activities
• Investment Reform Index 2006 benchmark of
  progress made on policy reform across SEE regions
  with direction on how to make improvements
• SME Policy Index a comparative assessment of
  progress made by Western Balkan countries on
  implementing the European Charter for SMEs
• How South East European Countries Statistics
  Measure Foreign Direct Investment

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Achievements
Implementation Support

• Main achievements
• Built capacities for effective policy advocacy of
  IPAs and business associations.
• Provided policy guidance on how to increase the
  competitiveness of four sectors with growth
  potential in SEE (Information Technology,
  Business Process Outsourcing, automobile
  components and textile)
• Developed guidelines adapted to the region on how
  to conduct more effective investment promotion,
  assess skills gaps, design and implement SME
  linkage programmes, work more effectively with
  parliaments and fight corruption in public
  procurement
• Identified and encouraged good practices for
  investment promotion in the SEE region

• Main activities
• Advised on improving the collection and
  dissemination of FDI statistics through capacity
  building workshops
• Conducted sector specific analyses and regional
  investment promotion events co-ordinated with the
  World Bank, ICE and the investment promotion
  agencies of the region
• Developed regional guidelines through SEE IC
  Working Groups

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Achievements
Private Sector Support

• Contribute to measuring progress on the
  monitoring and evaluation activities of the OECD
  Investment Compact (e.g. Investment Reform Index
  and the SME Policy Index)
• Give opinions on policy reform issues through
  dialogue with governments
• Share best practices with SEE countries.

• Main achievements
• Increased the effectiveness of policy advocacy of
  the private sector by channelling their inputs
  through Investment Compact monitoring tools
• Helped develop new private sector organisations
  and networks (FIC in Serbia, regional FIC
  network)
• Encouraged dialogue between the public and
  private spheres on policy reforms (eg public
  private debates over results of IRI 2006)

• Main activities
• Brought together members from the public and
  private sector at the bi-annual Investment
  Committee for South East Europe
• Encouraged the development of Foreign Investor
  Councils and contributed to the regional Foreign
  Investors Council
• Investor of the year awards to reward
  top-performing domestic and international
  investors in SEE

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Achievements
Political Support

• Encourage consensus on OECD Investment Compact
  activities
• Discuss policy recommendations and findings from
  Investment Compact evaluations
• Promote regional co-operation in the
  implementation of reforms
• Garner political commitment from relevant
  policy-makers to implement reforms.

• Main achievements
• Regional Framework for Investment adopted by
  countries of the region
• Country political will to implement policy reform
  priorities identified through the IRI and SME
  Index

• Main activities
• Launched the South East Europe Investment
  Committee which bring together key policy-makers
  in the region to discuss the work plan of the
  Investment Compact
• Nominated countries from the region as leads of
  the working groups
• Conducted annual Ministerial meetings to
  establish regional guidelines and consensus on
  actions for reform

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• 4. Future strategy

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Future strategy

• Principles
• Working Groups
• National support

• Focus resources on low and middle income
  countries of the region.
• Enhanced focus on country-specific support in
  reform prioritisation and implementation.
• Focus on
• adapting and disseminating OECD guidelines to SEE
  context in 1-2 specific policy areas,
• evaluating SEE countries against the adapted
  guidelines and developing country-specific policy
  recommendations.
• New working group on tax policy and
  administration
• Results synthesised in flagship publication on
  Private Sector Development in the SEE region.
• Business Climate Development Strategy
• Expand the National Investment Reform Agenda to a
  broader policy scope.
• Incorporate existing evaluations and strategies,
• Provide a roadmap for implementation
• Leverage as a tool to communicate around
  difficult reforms.

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IRI 2009

• Results
• An overview of each SEE countrys performance on
  business climate policy reform, allowing
  benchmarking relative to peers
• Jointly defined policy priorities to further
  improve the business climate
• Recommendations on how to make improvements
  within each policy dimension and concrete
  examples of OECD best practices
• Follow up support in implementation of reforms
  from both the OECD an other international
  organisations.

• Policy Scope
• Investment policy
• Investment promotion
• Tax policy and administration
• Trade policy
• Anti-corruption
• Human Capital development
• Infrastructure
• SME policy
• Regulatory reform and parliaments

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IRI 2009

• Collaboration with the RCC
• CEFTA 2006 the Investment Compact will assist in
  monitoring the three investment-related clauses
  of the CEFTA 2006 and incorporate them within the
  findings of the IRI 2009. Monitoring and
  evaluation of CEFTA 2006 may be expanded to
  include contributions by the CEFTA structures to
  the IRIs Trade Policy and Administration
  dimension.
• Regional Co-operation Council The RCC priority
  areas of Infrastructure, Human Capital
  Development and Justice and Home Affairs could
  benefit from the IRI evaluation and priority
  setting process within those dimensions. Strong
  involvement of the RCC would also enhance both
  the quality of IRI outputs and its impact on
  policy reform in SEE.
• Regional Development Centre Possibility of RDC
  playing a leading role in co-ordinating private
  sector input into the IRI, working closely with
  the Business Advisory Council, the Foreign
  Investor Council and the local chambers of
  commerce.

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SME 2009

• Methodology
• Common update evaluation grid, based on 10
  dimensions, number of sub-dimensions and 5 policy
  development levels.
• Need to maintain the same evaluation criteria in
  order to ensure comparability with the 2006
  scores and be able to track progress
• Synergies with the MED Enterprise Policy
  Assessment

• Assessment Process
• Self assessment conducted by government under the
  supervision of the National Charter Coordinator
• External assessment conducted with the support of
  independent consultants under the supervision of
  the OECD, the EC, the EBRD and the ETF.

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Research Network

• Objective
• Increase collaboration in economic research
  between major national economic research units
  (ERUs) in SEE with a view to improve the
  evaluation and design of government policy.

• Expected Benefits
• Contribution to the overall value and quality of
  the research output in SEE
• Synergies stemming from the joint research data
  collection and evaluation, expertise and skill
  exchange as well as more efficient communication
  and promotion of the research findings
• Opening up new funding sources to the network
  members

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Regional Competitiveness Initiative

• Match supply and demand
• Align ministries
• Develop tools to analyse skills gaps and
• shortages
• Review the labour market regime
• Develop a mechanism for dialogue with
• civil society

Suggested Approach
Sustained Competitiveness

• Remove sector specific policy barriers on a
  continuous basis
• Set-up regional sector specific
• working groups
• Develop sector
• specific monitoring tools

• Channel innovation efforts
• Assess the success levels of current cluster
  initiatives
• Develop an organisational structure and
  governance model at the national level
• Map out the objectives and scope of competitive
  clusters to channel innovation efforts

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• 5. Calendar

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Calendar 2008-2009
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• Anthony OSullivan
• Head of DivisionPrivate Sector Development
  DivisionOrganisation for Economic Co-operation
  and Development (OECD)
• Anthony.OSullivan_at_oecd.org

• Erin Hengel
• Policy AnalystInvestment CompactPrivate Sector
  Development DivisionOECD
• Erin.Hengel_at_oecd.org

Contacts
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Strategic Framework
OECD and Regional Good Practices and Guidelines

• Country-specific level

• Regional level

Conduct Peer Review and Peer Learning
Assist inPlanning and Prioritising Reform
Support in Implementation of Reform

• Peer review and peer learning between SEE
  countries on targeted policy areas,
  includinginvestment policy, investment
  promotion, tax policy, financial market policies,
  Corporate Governance.
• Discuss OECD tools and guide-lines with OECD
  experts and adapt them to SEE context.

• Each country develops with support of the OECD
  Secretariat a specific National Investment Reform
  Agenda which identifies reform priorities and how
  they will be implemented.

• The OECD secretariat provides targeted assistance
  in improving legislation as well as the
  regulatory and institutional environment on
  demand.
• E.g. Creation, adoption and implementation of
  the FDI strategy in Moldova

Better government policies and capacities to
raise competitiveness and to attract more
investment for growth and employment