Economic & Private Sector DevelopmentCreating an enabling environment for development
When applying sustainability criteria, economic development can have a positive impact well beyond the economic growth per se: it can foster productive and decent work environments that offer individuals prospects at the personal level and within society, it can improve health and well-being, allow for better education, and thereby break the vicious circle of poverty.
We advise governments in their efforts to provide an efficient framework for private sector development and stable financial systems. We support public financial management and collection of tax revenues enabling the state to improve its services.
The environmental impacts and pressure on ecosystems and climate change can be lessened if growth is guided effectively. We consider economic development in an holistic context, accounting for natural resources and negative externalities of production and consumption. This is of particular importance to developing countries as the poor population tends to be most vulnerable to environmental degradation and climate change.
areas of expertise
The private sector is the engine of economic development and the source of income generation and public revenues. It is, therefore, one of the most important levers in achieving sustainable development and improving living standards.
Globalisation and the liberalisation of world trade force developing countries to improve their competitiveness to achieve economic growth. Low wages and natural resources alone are no longer sufficient to help people out of poverty, in fact, they can become dangerous traps of underdevelopment. The division of labour is taking place on a global scale with ever-increasing levels of sophistication, breaking up value chains for a product onto several continents.
The key lies in a strong enabling framework for the private sector to develop competitive advantages and perform specialized production and service functions.
Luvent Consulting is specialised in supporting the public sector to address the numerous levers at its disposal to promote private sector development. In parallel, Luvent Consulting directly supports the private sector through consulting services to promote internationalisation and business development.
The administrative enabling frameworks provided by governments to support private sector development are in many developing countries in need of reform and improvement. Administrative procedures are excessively time-consuming, inefficient and oftentimes arbitrary, there is often a lack of competition, access to resources is inequitable and the information is highly asymmetric and too difficult to obtain for many. All of these factors hamper growth and development unnecessarily.
The precondition for inclusive economic growth and for increasing public income in these countries is the further development of a business enabling environment. Much of the economic growth depends on the efficiency and reliability of economic policymaking and its implementation. State actors must be able to draft pro-growth economic policy with minimal undesired externalities and they must be able to translate the policy into practice.
Luvent Consulting advises and supports governments, adaptation and implementation of policies that will encourage sustainable economic growth and economic stability. We do not apply a one-size-fits-all approach, in contrast, we must and we do adapt to the individual economic and cultural context of the beneficiary country or region to offer unique and tailored solutions for the specific context of our client while profiting from our international best practice projects and our state-of-the-art research department.
Luvent Consulting is supporting governments to develop and implement economic policies through the following activities:
- Assist in establishing economic-policy analysis. Conduct enterprise surveys with varying complexity and scale depending on the needs.
- Assist in the development of stakeholder consultation mechanisms, notably also through e-government platforms or mobile phone solutions.
- Assist the establishment and improvement of public and private institutions required to promote social and ecological aspects of economic policies. Development of processes: notably Regulatory Impact Assessment mechanisms.
- Assist in the drafting and consultation process of appropriate economic policies and reforms.
- Assist with consulting and capacity development services in developing and putting national poverty reduction strategies into practice.
- We support the implementation of decentralisation and regional economic policies, administrative structures, economic clusters and regional value chains.
- Particular focus lies on SME policy development as in most countries, 99% of the enterprises are SMEs, most of the poor and vulnerable people work in SMEs, and the need for efficient administrative and support structures are the highest among SME.
Exports are identified as one potential driver for accelerated growth and economic development of a country. The Asian “miracle” of economic growth by South Korea, Taipei, Thailand, Singapore and Malaysia is often quoted as a key example on how developing countries can mature towards transition and in some cases developed economies. While export promotion certainly was not the only decisive factor, a number of arguments suggest the positive effects of targeted export promotion policies to support economic growth:
- Allowing to capitalise on economies of scale to compensate for immature and/or small domestic markets
- Export will expose domestic firms to international competition, technology and marketing will improve domestic productivity as a necessity to compete on a global scale.
- Corporations with international companies result in spillover effects to the domestic industry improving technology level, knowledge and skills.
- Exports allow access to imports that can be purchased with the foreign exchange they generate.
- Growth of manufacturing output is more valuable at the margin than the same growth of agriculture or services, due to externalities and dynamic increasing returns to scale, the shift in the composition of exports by targeting strategic sectors will further benefit the overall economy.
To support governments in their aim to promote export and trade, we are offering a broad spectrum of services, holistically addressing the existing barriers. Depending on our mandate we address areas such as TVET education, Quality Infrastructure, Domestic Financial Markets, Foreign Direct Investments and of course policy and regulatory incentives. We conduct market analysis, and studies to identify priority sectors, establish clusters and support value chains, we connect stakeholders internationally and identify markets and clients for produces. We also support policymakers in international trade negotiations and develop capacities, equipping policymakers in developing countries with cross-sectoral strategies and tools to implement effective trade policies at home and negotiate trade deals internationally.
For many developing countries tourism constitutes a major source of income, foreign currency influx and employment opportunities, notably in rural areas. It drives infrastructure development, increases awareness about natural and cultural heritage and the need for preservation as well as creating incentives for education.
Experts predict that over the next decade nearly 50 million jobs will be created in the tourism sector in Asia and Africa. But the increasing number of international tourist benefit not only the tourism sector such as accommodation, catering, guides and activities, but also the agriculture, farming, crafts and trades and transport sector. There are significant spillovers for the entire regions.
Many countries that have experienced a surge in tourism flux have however experienced the notable risks that tourism entails. The income flux is sensitive to external factors, such as trends, safety concerns following terrorism, political unrest, they depend on the economy in the origin countries. Awareness of the volatility and protection against temporary sharp falls in demand need to be created.
A further risk is the overuse and destruction of natural and cultural structures and heritage. The risk associated with excessive use and degradation of the natural resources as well as the risk of discrimination, exploitation and expulsion of the local population must be taken very seriously as it goes against sustainable development and it destroys the very reasons for the touristic interest in the region.
Luvent Consulting services for sustainable tourism
To assure the long-term viability of a tourist destination and to assure the sustainable economic development of the local population, we are guided by the principle of sustainable and responsible tourism. We are capitalizing on the various opportunities tourism may offer for a region but we take equal responsibility in minimizing negative effects of tourism over the long term. It may be relatively easy to exploit an attractive region in the short term, rapidly increase tourism flux and thereby short or medium-term economic growth, but without precautions and a solid long-term strategy this will result in unsustainable exploitation with an equally sharp collapse of the tourism arrivals after the natural and cultural resources are exploited and unattractive for tourist.
We, therefore, include all stakeholders to engage in a dialogue and cooperate closely. We use our experience from other regions to identify potential risks of exploitation and discrimination and develop mechanisms to prevent such trends from developing. We are equipped to mediate and find compromises in situations of conflicting interests. We are placing a particular focus on creating opportunities for women to become active in the tourism sector. We are applying and following closely the guidelines established by the UNWTO in the Global Code of Ethics for Tourism and the EU Commissions Travelife initiative.
With our experience and network in the German and European travel sector, we promote sustainable tourism destinations amongst tourist organisers in Europe and thereby offer opportunities for increases in tourism volumes.
Start-ups are important drivers for employment and economic growth in many economies of the developed world. A study by the Kauffman Foundation suggests that employment and growth would be negative over the period 1980-2015 without employment created by “new” firms. More important than their impact on the present day economy is the pivotal role start-ups and innovative entrepreneurship play in maintaining and improving an economies’ competitive position for the future. Governments in the developing world have identified the potential of their innovative entrepreneurs and are seeking increasingly to support the founding of companies and the development of innovative enterprises.
We are supporting these efforts with our state of the art expertise, based in the heard of Berlins Startup scene and expertise in establishing and developing sustainable innovation and incubation centres in different economic contexts in Asia, Eastern Europe, the EU or Africa. We offer services at all levels:
- Training individual start ups at a company level
- Developing capacity and organizational know how
- Initiation and training of managers for the management of incubators
- Support to governments in drafting policies and legislation to enable startup and entrepreneurship at federal and regional level.
Our service and maintenance support stays also after project termination available.
Quality infrastructure (QI) is an often neglected yet pivotal factor for economic development and trade in development cooperation. QI comprises standardisation, accreditation, conformity assessment such as certification and testing services, and metrology. So called non-technical-barriers (NTB) to trade are a major impediment to trading from developing countries to Europe or the USA for example. QI addresses product quality, product traceability, environmental and health protection, product compatibility, and supports consumer and supplier confidence in products.
Reduction of transport costs, increasing economic integration, globalisation of marketing and communication increase the awareness of available products but also of quality issues on the part of consumers, trade participants and legislators. As a result, governments are defining in ever more details the technical and quality requirements of products allowed to be sold, and consumers are becoming increasingly selective of products that are potentially of poor quality or have an excessive negative footprint during its production. Product quality and production standards are therefore becoming key competitive factors. Most developing countries, however, lack the adequate Quality Infrastructure such as certified laboratories or certification agencies to certify their exports in order to meet EU or US requirements for imports. Establishing and setting up internationally accepted Quality Infrastructure requires time and international expertise.
Luvent Expertise in Quality Infrastructure:
- We are experienced in setting up and improving quality infrastructure systems in developing countries, mostly in partnership with leading European standardization, metrology and technical institutions for quality infrastructure.
- We develop a clear strategy to assure convergence to European QI standards and WTO requirements.
- We support governments in increasing consumer awareness about product quality and production processes.
- We support governments in the formulation of an adequate competition policy and improvements in market surveillance systems. This requires a constructive dialogue with the private sector and functioning networks for information exchange.
Benefits of a functioning QI:
- Create the precondition for participation in international trade
- Dismantling technical barriers to trade in the framework of the global harmonisation of standards and processes and norms, thereby enabling access to the European Single Market etc.
- Creating means for effective market transparency on the supply and demand side, reducing transaction costs, information parity, and service compatibility,
- Improve health and safety of products thereby protecting consumers and employees.
- Creating a precondition and the necessary means to measure and quantify resource efficiency, environmental degradation of products.
The European integration process is often cited as the most successful regional integration process, stopping centuries of wars on the European continent, improving economic development, cultural exchange and political cooperation, making the European Union the largest economic power in the world and a role model for freedom, peace and prosperity around the world. The potential benefits for participants are high not only within the region but also as a mean to increase its negotiating power when speaking with one voice in international trade negotiations.
While the EU itself has experienced a crisis with the required bailout of the southern Member States and the secession vote of the UK from the EU, regional economic unions are proliferating around the world creating a maze of overlapping free trade agreements and commitments nearly impossible to follow. In Asia alone, there are over 200 different Free Trade Agreements signed, some of which are not even in effect. This problem was famously described by Jagdish Bhagwati as being akin to a spaghetti bowl. Since then efforts have focused on creating mega-regionals such as TTIP, TPP and RCEP to comprise most of the world trade as few trade agreements as possible. These agreements are mostly conducted on the top political level. With Luvent Consulting we are supporting the Public-Private Dialogue to assure a constructive exchange and inclusion of all stakeholders, consumers, industry, and social and environmental concerns are being accounted for during the negotiation processes.
The second trend for regional cooperation focuses on regional organisations with a clear purpose and mission, for example, to reduce technical barriers to trade such as custom procedures or standards along a given trade corridor such as the Northern Corridor connecting countries to the port of Mombasa. Luvent Consulting is supporting Secretariats and regional organisations to effectively fulfil their mission and improve the development of its member states. We develop capacities and organizational competencies of regional organisations, we develop and review strategies, we conduct studies, we facilitate and mediate communication amongst its member states and institute sustainably financed stakeholder consultation forums for effective public-private dialogue.
Globalisation has profoundly changed the way products are produced and services are provided. Individual parts of a product may be sourced and produced by different companies on different continents before final assembly in one place and being purchased and used in yet another location. Even services are now provided on different continents from where they are consumed, such as the provision of IT-Helpdesks via telephone or the internet, or teams working together via online communication on creating a service from across different countries. In other words, the value chain for creating products and services is being broken down and companies, regions and countries are increasingly competing for the provision of parts of the value chains.
On the other hand, economies of scales are increasingly used to maximize efficiencies and reducing costs of production. As a result, clusters are often formed in a particular geographical location. The classic example is still Silicon Valley in the US where the availability of highly skilled and creative IT experts is attracting successful IT companies which in turn attacks skilled workers. Similarly, the production of certain hardware IT products, for example, are being clustered in certain regions in China or other Asian countries as their expertise and infrastructure together with the availability of cost-effective labour provides ideal circumstances for manufacturing IT products for the entire world in very few locations.
- Advice on business enabling environment
- Capacity Development & Training
- Support policy and regulatory reform
- Integrative approach to economic development including education promotion, environmental protection, social equity
- Provision of business development services
- Market access strategies
- Identification, development and access to international value chains
- Conduct investment analysis