BRIEF February 13, 2020

Improving Business Environment for Prosperity (IBEP)

Overview

The four-year Improving Business Environment for Prosperity (IBEP) program is implemented by the World Bank Group (WBG) with support from the UK’s Foreign and Commonwealth Office Prosperity Fund. The program aims to strengthen the design and implementation of business environment reforms in middle income countries with the objectives of boosting business competition and catalyzing shared prosperity. It is built around a Global Influence Window and country-level engagements in nine countries: Brazil, Indonesia, Malaysia, Nigeria, Pakistan, Philippines, South Africa, Turkey and Vietnam. See the Program’s Theory of Change.

Development Challenge

Middle Income Countries (MICs) are home to a substantial part of the world’s population (representing about five of the world’s seven billion people) as well as global poverty (accounting for 73% of the world’s poor). They are also considered major engines of global growth, generating about one third of global GDP, though they often face common challenges, including:

Stagnating productivity growth
Worsening inequality and poverty rates
Weak governance structures
Growing instability
More frequent and severe crises (i.e. refugee crisis, commodity prices shocks)

These issues make it difficult for policymakers to promote sustainable growth, firm integration into the world economy, or a more even distribution of wealth. In addition, the emergence of global value chains (GVCs) has changed the global economic landscape. GVCs have transformed the production of goods, increased the relevance of private investment, and set global standards for economic activity. Given their importance, a favorable business environment is essential to create the opportunities and incentives for firms to invest productively, generate jobs, and grow. Transparent and simple regulations, low costs of doing business and open markets give the private sector confidence to start a business, increase market shares and expand into new markets.

By working with governments to improve their business environment, boost competition and attract and retain investments, IBEP seeks to support countries generate more employment opportunities and increase their shared prosperity.

Program Description

Country Engagements

The IBEP program targets key development constraints faced by MICs. Specific activities are designed in alignment with the countries’ national development plans and strategies, and with the WBG’s Systematic Country Diagnostics and Country Partnership Frameworks. Country programs are designed around the following three thematic pillars:

Strengthening business regulations and practices. Government regulations play a decisive role in creating a predictable and conducive framework for businesses to form, operate, and grow. The objective of this pillar is to improve regulations, reduce administrative costs, foster open and competitive markets, and lower uncertainty for businesses and investors.
Enhancing business competitiveness. Local firms enhance their competitiveness when they integrate into value chains, increase service and product quality standards, participate in public tenders, or leverage technology. This pillar aims at improving local firms’ linkages to international markets and investors, and at increasing their ability to meet service and product quality standards.
Catalyzing shared prosperity. Shared prosperity captures two elements: economic growth and equity. From the perspective of businesses and investors, lagging regions in most large MICs account for large markets and hold promise as potential engines of growth. However, these regions face significant gaps in terms of human capacity, legal, regulatory and institutional frameworks for investment, and the reach and efficacy of government services, all impeding business activities, ultimately holding up productivity and job creation. The objective of this pillar is to advance shared prosperity by improving business environment at subnational level.

Global Influence Window

In addition to country engagements, IBEP capitalizes on the WBG’s global reach and cross-country knowledge to inform the design and implementation of the IBEP country programs. It also showcases the experience of the program countries for the benefit of other developing countries and fosters peer-to-peer learning opportunities. The Global Influence Window thus develops and leverages a range of analytical and global engagement initiatives across its five pillars focused on (i) analytics, (ii) reform toolkits, (iii) adaptive policy design, (iii) the bi-annual Global Investment Competitiveness Report, and (iv) peer-to-peer learning events bringing together policymakers with business and academia leaders to enhance partnerships, exchange ideas, and develop solutions. Please find a list of the IBEP-supported publications developed by the Global Influence Window below.

Gender and Inclusion

The program also features the cross-cutting theme of gender and inclusion (G&I) across its activities. Building on the momentum of the peer-to-peer learning event held in Johannesburg, South Africa in March 2019, the program has made a concerted effort of formulating a G&I approach and setting targets in each of the nine country engagements.

Pilot Supplier Development Program in Vietnam

Country Projects Overview

This section provides a short overview of the nine IBEP country projects currently in implementation.

In Brazil, the program aims to reduce specific regulatory barriers and other microeconomic distortions to leverage investment, increase competition and enhance productivity growth. This expected objective will be accomplished by strengthening national- and subnational-level business regulations, practices and policies to encourage competition and private investment; enhancing the investment framework and protection of investors; and improving the incentives frameworks and policies for productivity growth and competitiveness.
In Indonesia, the program seeks to increase domestic and foreign investments through economy-wide and sector-specific (logistics and ports) reforms. Economy-wide reforms will focus on improving regulatory governance, opening markets, and boosting competition. Sector-specific reforms will focus on removing regulatory and tariff barriers to investment entry as well as FDI restrictions. The reforms are expected to create open and predictable markets and strengthen the business regulatory environment, thereby improving investment attractiveness.
In Malaysia, the program seeks to provide advisory and analytical support to reforms in selected areas of investment, competition and business environment policy such as tax incentives, investment promotion, SME policy, subnational growth, and investment climate policy dialogue. These reforms seek to remove barriers and distortions to sustain private sector-led growth.
In Nigeria, the program aims to support the government’s efforts to improve the investment climate and enhance business competitiveness to foster economic diversification. The program supports reforms throughout the investment life cycle, assessing and modifying entry requirements, increasing attraction and aftercare services, and establishing linkages with domestic firms.
In Pakistan the program seeks to strengthen the country’s ability to attract investment through facilitation and retention arrangements, removing barriers to entry and establishment, addressing weaknesses in the investment promotion capacity, improving the business environment in key priority sectors and enhancing the federal and provincial coordination on investor services. The program also aims to strengthen the linkages between foreign investment and the domestic economy, including for women-owned businesses.
In the Philippines, the program is supporting the economic development agenda of the government by strengthening business regulations and practices through regulatory reform and pro-competition policy; and enhancing business competitiveness, particularly by improving the ability of local firms to integrate into global value chains and by increasing service and product quality standards.
In South Africa, the program seeks to address key investment climate and structural challenges faced by the country such as poor regulation, anti-competitive practices and negative investor perceptions. The program aims at addressing investment and growth challenges by focusing on a range of reforms with special attention to SMEs.
In Turkey, the recent increase in macroeconomic turbulence is putting the focus on attracting, retaining, and growing private investment. The program targets the improvement of the investment climate and the integration of domestic firms into global value chains with the aim of increased firm growth and job creation, as well as increased productivity and domestic value addition by foreign and domestic firms.
In Vietnam, the program is implementing a pilot Supplier Development Program (SDP) to expand the integration of local SMEs into global value chains and to increase overall domestic value addition through the facilitation of linkages between foreign firms and local businesses. By enhancing the ability of domestic supplier to participate in international markets, the program aims at supporting firms’ abilities to create new and sustainable jobs as well as at enhancing their competitiveness in export markets.

Results to Date

This section provides additional information on the results achieved under the Global Influence Window and the Country Engagements up to September 2019.

The Global Influence Window has continued to produce operationally relevant diagnostics and reform tools. The headline results delivered with the support of IBEP since program inception include:

167 analytical and policy outputs, including working papers, country reports, methodology notes, blogs, databases, etc;
79 projects or activities of the World Bank Group leveraging IBEP outputs;
68 countries benefiting from IBEP outputs;
9,917 downloads of externally published outputs, including working papers, country reports, blogs, etc.
46 learning events;
1,758 event participants;
51% female event participants; and
92% satisfaction of event participants with event content, organization and learning.

Country engagement programs have also demonstrated overall strong progress on policy engagement and are beginning to formalize strategies and recommendations toward tangible policy reforms:

Over 80 government counterpart agencies have been engaged in substantive policy dialogue across the portfolio of nine country projects;
To present and discuss the results of diagnostics, build consensus with counterpart agencies, and chart out pathways toward reforms, approximately 75 workshops, seminars, training events and conferences were held and attended by nearly 4,300 private and public sector stakeholders;
Building upon the diagnostic work and consultative workshops with policymakers, the program delivered about 40 recommendations on institutional, legal, and regulatory changes; and
Demonstrating progress towards reform targets, the program has already attained eight reforms.

Events

POSTPONED! Upcoming peer-to-peer learning event: March 23-26, 2020, Vienna, Austria. This event will launch the Global Investment Competitiveness Report 2019/2020 and the dissemination of its main findings. It will also present an opportunity for continued peer-to-peer learning among policymakers around the areas of business environment, investment policy and promotion, and markets and competition policy in connection to the IBEP program.

Peer-to-peer learning event: March 12-14, 2019, Johannesburg, South Africa. This event is an integral part to IBPE’s Global Influence Window and aims at fostering peer-to-peer learning among policymakers by sharing reform experiences in the core thematic areas of the IBEP program, including: business environment, investment policy and promotion, and markets and competition policy, as well as cross-cutting experience on gender and inclusion.

IBEP-Supported Publications

IBEP Blogs