PRODUCTION TRANSFORMATION POLICY REVIEWS (PTPRs) A POLICY ASSESSMENT AND GUIDANCE TOOL TO IMPROVE THE EFFECTIVENESS OF PRODUCTION TRANSFORMATION STRATEGIES Please cite this paper as: Primi, Annalisa. (2016), "Production Transformation Policy Reviews (PTPRs): A Policy Assessment and Guidance Tool to Improve the Effectiveness of Production Transformation Strategies." DEV/GB(2016)2, OECD Development Centre, Paris, France 1 PRODUCTION TRANSFORMATION POLICY REVIEWS (PTPRS): A POLICY ASSESSMENT AND GUIDANCE TOOL TO IMPROVE THE EFFECTIVENESS OF PRODUCTION TRANSFORMATION STRATEGIES January 2016 This document is the reference framework for the Production Transformation Policy Reviews (PTPRs), elaborated in the framework of the OECD Initiative for Policy Dialogue on GVCs, Production Transformation and Development. The present version of the document has been endorsed by participating countries of the Initiative at the 4th Plenary Meeting on May 2015. The document clarifies the rationale for the PTPRs as a new policy assessment and guidance tool; presents the conceptual framework for the PTPRs and provides information about the review process. Annalisa Primi, Head OECD Initiative for GVCs, Production Transformation and Development [email protected] 2 TABLE OF CONTENTS PRODUCTION TRANSFORMATION POLICY REVIEWS (PTPRS): ....................................................... 2 A POLICY ASSESSMENT AND GUIDANCE TOOL TO IMPROVE THE EFFECTIVENESS OF PRODUCTION TRANSFORMATION STRATEGIES ................................................................................. 2 BACKGROUND ............................................................................................................................................. 4 THE NEED FOR A NEW POLICY ASSESSMENT AND GUIDANCE TOOL .......................................... 6 THE PROPOSAL: PRODUCTION TRANSFORMATION POLICY REVIEWS (PTPRS) ......................... 7 General objectives ........................................................................................................................................ 7 Specific objectives ....................................................................................................................................... 8 VARIETY OF EXISTING STUDIES ON WHICH PTPRS CAN BUILD ON ............................................. 8 THE VALUE PROPOSITION OF THE PTPRS .......................................................................................... 11 THE CONCEPTUAL FRAMEWORK ......................................................................................................... 12 Main assumptions ...................................................................................................................................... 12 The increasingly complex and uncertain scenario calls for bold actions and better metrics ..................... 13 A common challenge for developing countries is to identify ways to make GVCs work for SMEs ..... 17 The 5 pillars of successful transformation and upgrading strategies in contemporary economies ............ 19 THE PTPRS IN PRACTICE ......................................................................................................................... 22 The structure .............................................................................................................................................. 22 Methodology .............................................................................................................................................. 23 Co-operation with the International Organisations members of the Advisory Board ................................ 24 Outcomes ................................................................................................................................................... 24 REFERENCES .............................................................................................................................................. 25 Tables Table 1. Structure of the PTPRs .......................................................................................................... 22 Figures Figure 1. The PTPRs interpretative framework .................................................................................... 20 Figure 2. Definitions of the 5 pillars of the PTPRs ............................................................................... 20 3 BACKGROUND 1. The OECD Initiative for Policy Dialogue on Global Value Chains, Production Transformation and Development (http://www.oecd.org/dev/global-value-chains.htm), has been launched as part of the OECD Strategy on Development, and which as of April 2015, counts with the participation of 19 countries and an Advisory Board of Experts from 9 International Organisations (ECA, ECLAC, ESCAP, ESCWA, ILO, UNCTAD, UNIDO, WB, WTO). 2. As agreed by participating countries, the Initiative was requested to carry out country studies on production transformation and upgrading trajectories (Ref: Concept Note). As part of this stream of work, in 2014 a Working Group (WG) on Country Studies led by Costa Rica, Uruguay and Turkey, has been set up to identify a methodology for carrying out the studies. The WG has organised a Meeting with the contribution of the Ministry of Development of Turkey and TEPAV in Istanbul, Turkey, on October 2nd, benefiting from participation of UNIDO and UNCTAD from the Advisory Board and a small group of experts. (The programme, notes for discussion and LoP of the WG meeting are available on the restricted web-platform of the Initiative). The WG has discussed and improved a draft proposal shared by the Secretariat and has prepared a “proposal for “Production Transformation Policy Reviews (PTPRs): a new Policy Assessment and Guidance Tool to Improve the Effectiveness of Production Transformation Strategies”, which has been shared for discussion at the 3rd Plenary Meeting of the Initiative held in Kuala Lumpur, Malaysia on October 2015. 3. Participating countries at the 3rd Plenary Meeting have highlighted that country analyses are essential for making the policy dialogue an effective peer learning experience. According to participants, in-depth country studies are useful tools for learning from the experiences of others and sharing knowledge. Countries highlighted the importance of carrying out in-depth country analysis of experiences of diversification, production transformation and upgrading with the participation of peers. It allows identifying how countries can benefit from the participation in global value chains and create resilient linkages, benefiting from the variety of the experiences of the countries engaged in the network. Participants agreed on the fact that these studies should aim at: Providing a guiding framework for policy makers to identify options and actionable policy responses to promote structural transformation and upgrading in value chains, based on comparative assessment of countries’ assets, potential and priorities. Increasing the collective knowledge about the variety of development trajectories and patterns and on development narratives, based on the in-depth review of countries’ experiences. 4. Participating countries endorsed the proposal for Production Transformation Country Reviews (PTPRs). Participating countries highlighted that the PTPRs add value by proposing an original framework for diagnosis and policy guidance and by constituting a valuable process of policy analyses. Participants welcomed the timely focus on production transformation and industrial development, as these issues are coming back in the development agenda. The PTPRs mid-long term approach has been particularly welcomed. Participating countries highlighted the importance of collectively developing case 4 studies of successes and failures in diversification and upgrading in value chains with a view to identify key factors for supporting the creation of capabilities for entering into new sectors and activities. Participants welcomed the three-chapter structure of the PTPRs, with a first chapter providing a snapshot on country (and/or region within the country) positioning with global and regional benchmarking, benefiting from the OECD-WTO TiVA database for global trends, and for country positioning, when available; a second chapter focusing on an institutional assessment of strategy and implementation capabilities, with a focus on identifying policy complementarities; and a third chapter focusing on a specific topic and/or value chain as indicated by the reviewed country. The PTPRs are OECD reviews that are carried out as a joint exercise with UNIDO and UNCTAD, upon availability of funding. They will count with the participation of UN-Regional Commissions when a country of the region is reviewed and with the support of the Experts of the Advisory Board of International Organisations. UN-ECA and UN- ESCAP stressed the importance of this assessment and guidance tool for supporting processes of policy planning and implementation in LDCs and welcomed opportunities of collaboration in their respective countries of interest (Cfr. Summary Record of the 3rd Plenary Meeting of the Initiative, October, 2014- Kuala Lumpur- Malaysia). 5 THE NEED FOR A NEW POLICY ASSESSMENT AND GUIDANCE TOOL 5. The Production Transformation Policy Reviews (PTPRs) are a new policy assessment and guidance tool elaborated in response to countries’ demand in the framework of the implementation of the Programme of Work of the OECD Policy Dialogue Initiative on Global Value Chains, Production Transformation