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Small States Forum 2014: The Private Sector as an Engine of Growth and Service Delivery
October 11, 2014World Bank, Washington D.C.

The Private Sector as an Engine of Growth and Service Delivery


Today, many small states have resumed economic growth since the recent global crisis. Their economic growth is however weaker compared to that of larger peers, reflecting not only the more limited policy tools and resources but also the challenge of diversifying economic structures  and re-orienting economic activities in new markets and sectors.

Because of their size, economic recovery in small states has been more dependent on the health of traditional markets and influenced by the strength of external demand in specific sectors. Their remoteness and isolation make it difficult and costly to fully exploit new opportunities — a situation that increases the cost of intermediated inputs and imports and prevents efficiency and innovation. When one dominant activity declines, it has an impact throughout the economy, exposing the population to income volatility which can create additional hardships, as the poorest are less able to weather shocks to their incomes. Government revenues are also affected as they depend on few sources of income.

Despite these common challenges, a number of global trends offer new opportunities for small states—the emergence of global value chains, advancements in hard and soft connectivity, the emergence of new production technologies, and the potential of tapping financial, social, and human capacities of successful diasporas.

To exploit these opportunities, a number of countries are embarking on competitiveness strategies that complement country-wide reforms with industry specific efforts, for example, in fisheries, tourism, agribusiness, extractives and other sectors. The focus on competitiveness is new territory for many small states.  Success will require a heavy emphasis on learning-by-doing and tailoring policies to the characteristics and capacities of small states. 

The goal of this year’s discussion is to share experiences and distill lessons on industry specific markets and linkages between industrial clusters (for example, infrastructure, policy and institutional support for linkages between tourism and agribusiness value chains) to exploit agglomeration economies and economies of scale and scope, enhance firm-level productivity and sectorial trade competitiveness. Discussion will also touch upon policy options available to small states, ranging from Special Economic Zones, to growth poles and cluster development, as well as regionalization efforts as a basis for identifying an array of market segments that offer opportunities for value addition.

The private sector not only plays a critical role for economic growth and jobs creation but also it is a key partner for small states to increase access to services such as water, waste, energy, transport, telecommunications, education and health. In this context, this year’s discussion will focus on the role that Public-Private Partnerships (PPPs) can play in increasing efficiency and sustainability of public services, and their role in expanding access to and choice of services, particularly for households that tend to be poorly served by traditional delivery methods. Discussion will also touch upon the design, the regulatory framework, and government capacity necessary to realize these benefits in a small states context.

Agenda

World Bank Group Headquarters, Conference Hall J-B1-080

8:30-9:00  Breakfast Reception
9:15-9.30  Welcome

Hon. Pierre F. Laporte, Minister of Finance, Trade & Investment,  Republic of Seychelles
Dr. Jim Yong Kim, President, The World Bank Group

9:30-10:00  The SIDS Conference and Climate Change Summit

Rachel Kyte, Vice President and Special Envoy for Climate Change, The World Bank Group
Hon. Tuilaepa Aiono Sailele Malielegaoi, Prime Minister and Minister of Finance, Samoa

10:15-11:00  Competitiveness and the Private Sector

Anabel Gonzalez, Senior Director of Trade and Competitiveness, The World Bank Group
Discussants:
Hon. Kenny D. Anthony, Prime Minister, Governor and Min. of Finance, Economic Affairs,
Planning, Information and Social Security, St. Lucia
Hon. Cristina Isabel Lopes da Silva Monteiro Duarte, Minister of Finance and Planning, Cape Verde

11:15-12:00  Public-Private Partnerships

Laurence W. Carter, Senior Director of Private Public Partnerships, The World Bank Group
Discussants:
Hon. Peter Phillips, Minister of Finance Planning and the Public Service, Jamaica
Hon. Emilia Maria Valeria Pires, Minister of Finance, Timor-Leste

12:15-12:30  Conclusion
Hon. Pierre F. Laporte, Minister of Finance, Trade & Investment, Republic of Seychelles
R. Kyle Peters, Vice President, Operations Policy and Country Services, The World Bank Group

12:30-1:15  Lunch Buffet

1:30 -2:45  Technical Workshop: Climate Financing in Small Island

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Technical Workshop: Climate Financing in Small Island States

Objective: Building on the results of the high-level discussion on climate finance held during the 2012 Small States Forum, the Technical Workshop will present a roadmap of the principal sources of climate resilience finance available within the WBG, and provide practical ‘how-to’ guidance regarding questions of eligibility and accessibility for small island states partners to help prepare strategically to tap into such financing instruments.

1:30-1:40  Introduction by James Close, Director for Climate Policy and Finance, The World Bank

1:40-1:50  The Experience of Belize presented by Sharman Yvonne Hyde, CEO Ministry of Finance and Economic Development representing Belize and by Pierre Nadji, Senior Country Officer Latin America and Caribbean

1:50-2:00  The Experience of Samoa presented by Mr. Lulai Lavea, CEO Ministry of Finance representing Samoa and by the Country Director for Pacific Islands, Timor-Leste and Papua New Guinea by Franz R. Drees-Gross

2:00–2:10 The Green Climate Fund by Ousseynou Nakoulima, Director at the Secretariat of the Green Climate Fund

2:10–3:00 Discussion, moderator James Close

Chairman’s Summing-Up - Small States Forum 2014

We, the representatives of small states, met at the Small States Forum on October 11, 2014. We considered the prospects for the global economy and its impact on the development prospects for small states. We noted that while many small states have resumed economic growth since the recent global crisis, small states economic performance is weaker compared to that of their larger peers. We acknowledged that this is a reflection of not only the more limited availability of policy tools and resources but also the challenge that small states face in diversifying economic structures and re-orienting economic activities in new markets and sectors.

We emphasized the need for extraordinary efforts individually and collectively to ensure that development gains in our countries are sustained. We recognized the role of the private sector for breaking the vicious cycle of low growth and high debt in many small states. In this context, progress on reforms in macro fiscal management, governance, business environment, and investment climate are essential, but removing key bottlenecks and enhancing competitiveness in specific sectors are equally important.

We also acknowledged the role of private sector to increase the efficiency and sustainability of service delivery while expanding access and choice, including in the areas of water, waste, energy, transport, telecommunications, education, and health. In this context, we benefitted from an extensive discussion of the critical aspects of the regulatory framework for Public-Private Partnerships (PPPs) and government implementing capacities necessary to realize the benefits of PPPs in our small economies.

We also noted that investment in infrastructure and human capital remains a key driver to promote private sector led growth. But, we recognized that growing fiscal pressures and international conditions could present challenges to mobilizing resources. In this context, we benefited from an extensive exchange of views on the Third International Conference on Small Islands Developing States (SIDS) that was held the first week of September in Samoa.

We expressed concern that a large number of bilateral and multilateral financing sources continue to rely on income measures to determine eligibility to concessional resources, without taking vulnerability into account. The World Bank is a major exception to this tendency, with IDA funds made available to SIDS under the small islands exception. We called for a coordinated effort by development partners to follow the World Bank’s example and review the rules governing access to concessional finance, including ensuring that there are no impediments to the Green Climate Fund finance reaching small island states.

We underscored the effect of natural disasters in exacerbating fiscal and macroeconomic challenges and the importance of augmented donor support to help our countries build resilience and address inherent vulnerabilities, which will continue to have important and long-lasting impacts on our development prospects. We called for scaled-up global assistance to build resilience, including by supporting the World Bank’s Small Island States Resilience Initiative, which aims at implementing priority investments and strengthening country’s technical, fiscal and fiduciary capacity to manage climate and disaster risks.

We shared some examples of success in small states and underscored the need to continue to learn from each other and to tap global expertise in specialized areas. In this regard, we thanked World Bank Group’s President Dr. Jim Yong Kim for the World Bank’s continued commitment to and support of the Small State Forum.

Pierre F. Laporte
Minister of Finance, Trade & Investment, Republic of Seychelles





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