Transcript Special and differential treatment in Cariforum

IPPG Cluster on
State-Business Relations
Introduction
Dr Dirk Willem te Velde
15-18 December 2009
CUTS-IPPG meeting Jaipur
Introduction

IPPG combines various disciplines including
economics and political science.

State-Business Relations emerged early on as an
IPPG issue relevant to various disciplines.

Exploratory studies, research in India and African
countries, policy engagement
SBRs and institutions
The study of state-business relations (SBRs) lies at
the heart of IPPG. SBRs reflect economic and
political institutions.




Economic: SBRs embody formal and informal rules and
regulations that are designed to perform economic functions.
Political: SBRs reflect the way in which power amongst
different agents, elites and coalitions of interest are shared.
Respect disciplines, test the boundaries and crossfertilise (e.g. political science essential for
understanding nature of SBRs, economics tells us to
understand why it matters for development)
Theoretical
underpinnings of SBRs




Markets fail to allocate resources efficiently in theory
and practice (market failures)
But governments may fail to overcome market failures
(governance failures).
Appropriate institutions and co-ordination mechanisms
(SBRs) can help to address market failures without
leading to failed interventions (also refer to 
Williamson, Ostrom)
Functional approach (better investment climate, better
allocation of scarce resources, reducing risk providing
information)
Objectives of SBR cluster

understand the nature of formal and
informal interactions between the state and
business;

understand the effects of different types of
SBRs on (patterns of) economic growth;

understand conditioning factors affecting
this relationship.
Policy relevance

Inform technocratic economists (and those they influence) using
evidence that institutions matter – non-trivial, incl. language (not
only which policy matter, but also how such policies are made).

Inform political scientists that power can be channelled for growth
enhancing effects

How can developing countries build institutions that sustain (PP)
growth. How can they be incentivised to support state-business
relations that matter.

How can donors help: e.g. can they support state-business
relations, and if so how?
Hypotheses

It is possible to identify (PP) growth enhancing
characteristics and functions of SBRs (at country
level and perhaps beyond).

It is possible to identify what drives effective SBR.

It is possible to inform policy makers about
effective SBRs.
Research on SBRs and growth
State-Business Relations
Forms
(measuring)
What creates and
sustains forms of SBRs
(political analysis)
Economic Functions
(theory)
Effects on growth
(economic analysis)
Research on SBRs and growth:
Obtaining evidence
State-Business Relations
Forms
(measuring)
What creates and
sustains forms of SBRs
(political analysis)
Economic Functions
(theory)
Effects on growth
(economic analysis)
Context specific analysis of
forms / functions of SBRs
State-Business Relations
Forms
(measuring)
What creates and
sustains forms of SBRs
(political analysis)
Economic Functions
(co-ordinating; prioritising
allocative, risk reducing)
Effects on growth
(economic analysis)
Research questions in
country context





Examine determinants of SBRs
Describe formal and informal institutional and
organizational forms in both public and private
sectors and the relations between them
Discuss economic functions of SBRs in the
specific country context
Discuss specific instances of effective SBRs, or
ineffective SBRs
Provide policy relevant conclusions
SBR case studies (Africa)
Synthesising SBR Research
Ghana
Drivers
Describe/
measure
Historical institutionalist
inductive theories
Existing
data sets
Mauritius
Analytical and historical
account
South
Africa
Tracing history of statebusiness organisation,
explore nature of subnational SBR
Zambia
Survey
Economic
functions
Effects on growth
performance
Micro econometrics
Effect SBR on
budget policy
proposals
Effect SBR on
trade and
industrila policy
Effect SBR on
allocation of pro
poor public
spending
Micro econometrics /
firm performance /
macro economics
Emerging issues

SBRs matter. Mauritius (Rojid et. al .): Joint Economic Council is influential private
sector actor in SBRs in Mauritius; Measured SBR leads to higher growth (19702005). How? E.g. suggested budget proposals for better industrial policies are
frequently taken over by government budgets.

SBR cannot simply be put in place. South Africa (Natrass, Seekings): Nedlac did
not provide a real consensus seeking forum, due to weaknesses in state, although
some success in industrial policy.

SBRs do perform useful functions at macro level. Zambia (Bwalyas, et al.):
analysis of new, transparent mechanism to channel budget proposals suggest that
business organisations / actors have influenced budget outcomes (esp using civil
servants), more than other stakeholders.

And at micro level. Across Africa (Qureshi and Te Velde): business membership
leads to better firm performance by reducing policy uncertainty and lobbying, but
individual lobbying remains important!

There is more going on than measured SBRs. Ghana (Ackah et al.): more
developed social networks (politicians, civil servants) of firms (#256) lead to better
firm performance
Who do we want
to tell what?

Academics – new way of looking at (PP) growth (empirical
examinations rooted in theory)

Government policy makers – engaging business is useful for
development

Business policy makers – engaging in a well informed
democratic conversation with government helps

Funders / donors – it takes a long time
Why does it matter ?
Some practical examples
GFC hit countries differently (exposure), but ultimately the
vulnerability also depends on resilience which is conditioned by
effective SBRs


Uganda vs Tanzania: Tanzania instituted a task force to gather
information and acted; Uganda was / is slow to progress

Mauritius vs St Lucia: Mauritius set up a task force to address crisis and
acted early on (institutionalised); St Lucia did not and faced protests.

Zambia’s and Kenya’s task force have yet to report or share info; mining
disputes and kneejerk policy reactions ….
People to influence
Examples (1)

(From l to r) WB practice, academics and practical economists
People to influence
Examples (2)

Economic Councils + Central Banks + Business associations
THANK YOU