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WBCSD Launches New Tool on National Market Participation and Competitiveness

Summary

The World Business Council for Sustainable Development (WBCSD) has developed the National Market Participation Framework, a new tool to help open up dialogue between business and government on supplier competitiveness. Competitiveness is key to enabling local firms’ participation in the value chains of large inward investments and to local economic development.

Investing companies and host governments often have shared interests in enhancing local firms’ capabilities and competitiveness. The tool presents the case that these shared interests are best realized through working to improve the competitiveness of local firms rather than through mandatory requirements (‘local content rules’). While such mandatory requirements can boost local firm participation in the short term, substantial evidence suggests these measures can be counterproductive and often impose significant costs on consumers and investing firms, increase project risk, reduce competition and innovation, and discourage investment.

The tool can be used across a broad range of sectors, geographies and scales of investment. It will be particularly useful in circumstances where investing companies have opportunities to engage with governments, government agencies or other key stakeholders on the parameters to maximize the developmental benefits of large investments.

The tool also:

  • makes the case that investing companies and host governments often have shared interests in enhancing local firms’ capabilities and competitiveness;
  • presents the case that these shared interests are best realized through working to improve the competitiveness of local firms rather than through mandatory requirements (‘local content rules’). While such mandatory requirements can boost local firm participation in the short term, substantial evidence suggests these measures can be counterproductive and often impose significant costs on consumers and investing firms, increase project risk, reduce competition and innovation, and discourage investment;
  • was developed by seven WBCSD member companies to help foreign investors engage in constructive dialogues with national governments on how to most effectively stimulate economic growth;
  • offers a stepwise process for investing companies to pursue a dialogue or engagement process, but it is not prescriptive on managing the relationship with government;
  • can be used across a broad range of sectors, geographies and scales of investment. It will be particularly useful in circumstances where investing companies have opportunities to engage with governments, government agencies or other key stakeholders on the parameters to maximize the developmental benefits of large investments;
  • features case studies to provide evidence of the success this approach can bring; and
  • is accessible to non-experts; the depth of technical detail is appropriate for corporate decision-makers, ranging from procurement managers to executives overseeing country-level or regional-level strategies.

With this document the WBCSD hopes to advance three objectives:

  • To 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.
  • To 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.
  • To broaden the national market participation discussion to include spillover benefits to firms that may be outside the investing companies’ supply chains.

For more information, please contact Filipo Veglio, Director, Development Focus Area World Business Council for Sustainable Development (WBCSD). or click here.