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Bureau for Policy and Program CoordinationOctober 2004

PN-ACT-167

An Evaluation of Trade Capacity Building Programs

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The analysis in this paper is based on the following documents:

USAID Support for WTO/FTA Accession andImplementation (PN-ACT-168)

USAID Behind-the-Border Trade Capacity Building (PN-ACT-169)

Regional Trade Agreements: A Tool for Development?(PN-ACT-170)

Other relevant documents include

Building Trade Capacity in the Developing World (PD-ABX-241)

U.S. Contributions to Trade Capacity Building: ImprovingLives through Aid and Trade (PD-ABY-500)

RELATED PUBLICATIONS

James W. FoxThe Louis Berger Group, Inc.

Joseph M. LiebersonUSAID Office of Development Evaluation and Information (DEI)Bureau for Policy and Program Coordination

Diane RayAcademy for Educational Development

Joyjit Deb Roy

The Louis Berger Group, Inc.

October 2004

An Evaluation of Trade Capacity Building Programs

Overview

Contents

List of Tables 3

Abbreviations and Acronyms 4

An Overview of U.S. Assistance for Trade Capacity 7

Activities Studied 11

Findings from the Research 12

Appendix: Summaries of Country/Regional Programs, 1997–2001 14Armenia 14Bulgaria 15The Caribbean Region 17The Central American Region 18Croatia 19The Dominican Republic 20Ecuador 21Egypt 22Eritrea 23Honduras 24Indonesia 25Jordan 25Kazakhstan 27The LAC Region 28Mali 29Morocco 31Mozambique 32The Philippines 33Regional Center for Southern Africa 34Romania 35Russia 37Sri Lanka 38West African Regional Program 39

2 PPC Evaluation Working Paper No. 12

List of Tables

Table 1: U.S. Government Trade Capacity Building by Agency 7

Table 2: U.S. Government Assistance for Trade Capacity Building, FY 1999–2001, Ranked by USAID Funding 8–9

Table 3: USAID-Funded Trade Capacity Building, FY 1999–2001, by Region 11

An Evaluation of USAID Trade Capacity Building Programs 3

Abbreviations and AcronymsACDI/VOCA Agricultural Cooperative Development International/Volunteers in

Overseas Cooperative Assistance

AGOA African Growth and Opportunity Act

AIM accessing international markets

ANE Asia and the Near East (USAID bureau)

APHIS Animal and Plant Health Inspection Service

ASEZ Aqaba Special Economic Zone

ATRIP Africa Trade and Investment Program

BIDE Boston Institute for Development Economies

BOP balance of payments

BSI business support institutions

BSO business support organizations

CAAEF Central Asian-American Enterprise Fund

CARICOM Caribbean Community and Common Market

CEPRA Center for Economic Policy Research and Analysis

CIS Commonwealth of Independent States

CTA Confederation of Mozambique Business Associates

DEI Office of Development Evaluation and Information (USAID)

DOE Department of Energy (U.S.)

ECOWAS Economic Community of West African States

ENI Europe and the New Independent States (USAID)

EPA Environmental Protection Agency (U.S.)

EPZ Export Processing Zones

ESF Economic Support Funds

Ex-Im Bank Export-Import Bank of the United States

EU European Union


EU/TACIS EU Technical Assistance for the Commonwealth of Independent States

FDA Food and Drug Administration (U.S.)

FLAG Firm Level Assistance Group

FTA free trade agreement

FTAA Free Trade Area of the Americas

FTC Federal Trade Commission (U.S.)

GSP Generalized System of Preferences

HHS Department of Health and Human Services (U.S.)

HIID Harvard Institute for International Development

IBRD International Bank for Reconstruction and Development

IMF International Monetary Fund

IPC implementing policy change

IPR intellectual property rights

IR intermediate results

IRIS Center for Institutional Reform and the Informal Sector (University of Maryland)

ISO intermediate support organizations

LAC Latin America and the Caribbean

MAP Morocco Agribusiness Promotion

MOU memorandum of understanding

MSME micro, small, and medium enterprise

NGO nongovernmental organization

NIS New Independent States

NTAE non-traditional agricultural export

OECS Organization of Eastern Caribbean States

OPIC Overseas Private Investment Corporation

OTI Office of Transition Initiatives (USAID)


PEG Partnerships for Economic Growth

PFF Partnership for Freedom Program

QIZ Qualified Industrial Zone

RAEF Romanian American Enterprise Fund

RCSA Regional Center for Southern Africa

REIP Rural Enterprise Investment Partnership

REU Rural Enterprise Unit

RNM Regional Negotiating Machinery

SADC Southern African Development Community

SEED Support for East European Democracy (U.S. Department of State)

SEETI Southeast European Trade Initiative

SEG sustainable economic growth

SIECA Secretariat for Central American Economic Integration

SME small and medium enterprise

SO Strategic Objective (USAID)

SOE state-owned enterprises

SpO Special Objective (USAID)

SPS sanitary and phytosanitary

TCB trade capacity building

TTC trade technical unit

USDA U.S. Department of Agriculture

USTDA U.S. Trade and Development Agency

WAPP West African Power Pool

WARP West African Regional Program

WTO World Trade Organization


1 The database is available online at http://qesdb.cdie.org/tcb/index.html.

Introduction

This paper reports on the first phase of astudy by USAID’s Office of DevelopmentEvaluation and Information (DEI) of U.S.

assistance for trade capacity building (TCB).

The first section provides an overview of recentU.S. assistance for TCB, discussing the major typesof assistance and recipients. The next section identi-fies kinds of TCB activities being studied, with therationale for their selection. The last sectiondescribes the work undertaken under the first phaseof the study, and provides conclusions and findingsfrom the work.

An Overview of U.S.Assistance for TradeCapacity DevelopmentUSAID developed a database of U.S. governmentassistance for trade capacity building. The databaseprovides extensive information by type of activity,recipient country, and U.S. Government agency.1 Itseparates funding from implementation of activitiesfunded by another U.S. Government agency. Thedatabase provides financial information for FY1999–2002. The information in the database hasincreased in detail over time, and considerably morespecificity is available for FY 2002 than for earlieryears.

For the purpose of this study, the statistics wereaggregated to obtain totals for the three-year period,FY 1999–2001. The activities during this periodshould be sufficiently mature to allow some judg-ments to be made.

Table 1 summarizes all U.S. Government TCBassistance reported by agencies to the USAID data-base. USAID is the primary source of such assis-tance, providing nearly $1.1 billion of the total ofabout $1.5 billion over the three-year period.USAID provided 72 percent of the total, followedby the Department of Labor, with 13 percent. The

Overseas Private Investment Corporation (OPIC),the Export-Import Bank of the United States (Ex-Im Bank), the U.S. Department of Agriculture(USDA), the Department of State, the U.S. Tradeand Development Agency (USTDA), theDepartment of Energy (DOE), and the U.S. PeaceCorps, in descending order, each provided morethan $10 million over the period.

These statistics are based on a broad definition ofTCB. A broad definition is appropriate because acountry’s capacity to trade depends on the overalloperation of the economy. The quality of the trans-portation and communications infrastructure, thecapability of the financial system, and the qualityof a country’s technical institutions to support pro-ductivity increases in the business sector are allexamples of factors that are critical to a country’scapacity to participate in the world trading system.

Agency As Funder As Implementer

Only

USAID 1,069.8 0.0

Labor 194.4 0.2

OPIC 58.5 0.0

Ex-Im Bank 34.1 0.0

USDA 27.7 33.5

State 26.5 0.0

USTDA 22.4 0.0

DOE 18.5 0.0

Peace Corps 15.1 0.0

Treasury 9.2 4.1

Commerce 1.1 11.4

EPA 0.3 0.8

FTC 0.0 1.6

Justice 0.0 0.8

HHS 0.0 0.0

Interior 0.0 0.0

Total 1,477.6 52.4

Table 1: U.S. Government Trade Capacity Building by Agency


Source: USAID TCB Database


Rank Country/Region USAID Other Agencies USG Total1 Eygpt 123,065 1,876 124,9412 Armenia 59,775 2,912 62,6873 Jordan 57,775 110 57,8624 Sub-Saharan Africa (ns)* 53,709 24,108 77,8175 Phillipines 50,772 975 51,7476 Georgia 44,908 605 45,5137 West Bank/Gaza 42,238 – 42,2388 Kazakhastan 41,128 846 41,9749 Ghana 40,465 3,564 44,029

10 Haiti 28,444 – 28,44411 Asia (ns) 27,908 7,266 35,17412 Kygyzstan 27,499 – 27,49913 Ukraine 25,685 628 26,31314 Russia 24,921 21,355 46,27615 Croatia 23,815 31,901 55,71616 Southern Asia (ns) 22,300 20 22,32017 Romania 21,071 1,210 22,28118 India 19,088 20,556 39,64419 Indonesia 18,356 153 18,50920 Mozambique 16,669 250 16,91921 Peru 13,700 1,085 14,78522 Mali 13,101 430 13,53123 Honduras 12,501 1,234 13,73524 Global (ns) 12,358 155,273 167,63125 Nigeria 12,350 1,893 14,24326 Vietnam 11,664 2,019 13,68327 Bangladesh 11,393 6,377 17,77028 Azerbaijan 11,136 25 11,16129 Zambia 10,975 1,659 12,63430 Central & Eastern Europe (ns) 10,936 6,304 17,24031 El Salvador 10,778 4,697 15,47532 Morocco 9,750 200 9,95033 Western Africa (ns) 9,730 – 9,73034 Latin America & Caribbean (ns) 8,674 6,717 15,39135 COMESA Secretariat 7,217 – 7,21736 Tanzania 7,122 3,000 10,12237 Caribbean (ns) 6,904 5 6,90938 Brazil 6,867 13,996 20,86339 Sri Lanka 6,784 – 6,78440 Thailand 6,238 782 7,02041 Mongolia 6,124 570 6,69442 Uzbekistan 5,725 1,071 6,79643 Poland 5,600 851 6,45144 Uganda 5,145 2,154 7,29945 Dominican Republic 4,159 2,591 6,750

Table 2: U.S. Government Assistance for Trade Capacity Building, FY 1999–2001(Ranked by USAID Funding)

($US Thousands)

9

46 Senegal 4,120 245 4,36547 Jamaica 4,000 1,384 5,38448 Tunisia 3,899 – 3,89949 Macedonia 3,786 239 4,02550 Bulgaria 3,728 3,082 6,80551 Malawi 3,462 388 3,85052 Guyana 3,355 – 3,35553 Namibia 3,208 – 3,2084 Madagascar 3,106 – 3,106

55 Algeria 2,950 2,201 5,15156 Bolivia 2,843 328 3,17057 South Africa 2,814 604 3,41858 Mexico 2,444 982 3,42659 South America (ns) 2,306 9,526 11,83260 Serbia 2,300 – 2,30061 Lebanon 2,295 620 2,91562 Tajikistan 2,292 – 2,29263 Turkmenistan 2,251 807 3,05864 Malaysia 2,113 102 2,21565 Former Soviet Republics (ns) 1,723 3,573 5,92666 Kenya 1,711 0 1,71167 Windward Islands 1,662 0 1,66268 Central America (ns) 1,507 1,123 2,63069 Ecuador 1,326 – 1,32670 Albania 1,129 463 1,59271 Zimbabwe 1,045 104 1,14972 Benin 975 – 97573 Guatemala 882 3,614 4,49674 Togo 875 – 87575 Andean Pact Secretariat 700 – 70076 Angola 651 1,190 1,84177 Colombia 386 6,402 6,78878 Hungary 386 450 83679 Montenegro 386 – 38680 Ethiopia 201 80 28181 Botswana 100 – 10082 Moldova 100 – 10083 Paraquay 78 – 7884 Nicaragua 75 2,916 2,99185 Cambodia 56 1,000 1,05686 Côte d’Ivoire 50 – 5087 Nepal 45 4,953 4,99889 Non-USAID Countries** – 24,980 24,980

Total 1,069,813 402,535 1,472,348

Source: USAID TCB * NS = Country not specified. These are regional programs that cannot be allocated to a specific country.** These include Turkey, China, Yemen, Argentina, Costa Rica, Cameroon, Venezuela, Mauritius, Bosnia & Hertzegovina, Czech Republic, St. Kitts & Nevis, Uruguay, Panama, and regional funding for Central America & Caribbean (ns) and Middle East (ns).

An Evaluation of USAID Trade Capacity Building Programs

Table 2: U.S. Government Assistance for Trade Capacity Building, FY 1999–2001(Ranked by USAID Funding) (cont.)

($US Thousands)


In earlier days, trade was based more on resourceendowments—e.g., deposits of minerals or petro-leum, or climatic advantages for particular crops. Inrecent years, however, the importance of productsbased on natural resource endowments has paled incomparison to goods and services that, in principle,can be produced anywhere in the world. Thecapacity to produce most manufactures dependsmore on the skills of a country’s workers and thequality of its institutions rather than any naturalendowment. Indeed, most of the oil producers—the one commodity whose producers are stillenvied by oil importers—have fared less well overthe last quarter-century than most of the rest of thedeveloping world. Oil-producing countries havesuffered from “Dutch disease,” a malady that affectscountries when a resource-based export pushes theexchange rate to levels that eliminate the country’scompetitiveness in other products.

The more recent case of Japan provides furtherinsights. For four decades, Japan pursued anexport-led growth model. Its export-oriented indus-tries, such as automobiles, electronic products andshipbuilding, were examples to the rest of the worldon how to achieve productivity. But the nontradedpart of the economy did not share in this produc-tivity gain. Agriculture was highly protected, lead-ing to domestic prices for some products, such asrice, that were many times the world level. Serviceswere also protected from competition, so bankingand wholesale and retail trade did not share in thecompetition-induced productivity growth of theexport sectors. Eventually, Japan’s capacity to growwas stymied by the lack of productivity outside theexport sector. And exports began to be draggeddown by the high costs caused by low productivityin the rest of the Japanese economy. In sum, it isno longer possible to separate the trade sector fromthe rest of the economy, at least as a country’s econ-omy becomes advanced and fully articulated.

Table 2 summarizes U.S. government assistance atthe country level, broken down between USAIDand other agencies. USAID provided TCB assis-tance to 88 countries and regions, and other agen-cies assisted another 17 countries. Altogether, theUnited States provided more than $1 million toeach of more than 80 countries. Clearly, the U.S.

Government is a world leader in assisting countriesto participate in the world economy.

The country allocation of USAID TCB assistancemerits some note. Many of the largest allocationsgo to countries where trade issues are probably lessimportant than other development or policy con-cerns, or where the government has not provided afavorable policy environment for trade. Indeed, 10of the 15 largest recipients of TCB assistance werecountries that could be classified in this way.

While U.S. assistance for TCB has been spread verybroadly among countries, it has also been spreadwidely among activities. Table 3 summarizesUSAID TCB assistance by type of activity and byregion. Overall, trade facilitation is the largest useof USAID resources for TCB during 1999–2001.The emphasis in each region differs, however.

■ For the Bureau for Europe and Eurasia (E&E),financial sector development is the leading useof USAID TCB resources.

■ WTO-related work is the largest use in the Asiaand Near East region.

■ Trade facilitation is most important in Africaand Latin America and the Caribbean.

■ Environment and standards is the largest usefor worldwide resources.

Activities StudiedThough trade is affected by everything else in theeconomy, study of particularly important aspects isnecessary if the task of evaluation is to be made man-ageable. For the purpose of this study, the TCB activ-ities to be included are only those that relate directlyand principally to exporters, and to the governmentagency primarily responsible for trade issues—usuallya ministry of trade or of external commerce.

Thus, this study includes

■ assistance to ministries of trade

■ assistance to government agencies or the privatesector to comply with WTO rules

■ assistance to exporters, either at the firm levelor through associations of exporters

■ other activities intended to increase exports asthe principal effect

In terms of the categories in Table 3, all or most ofthe WTO-related activities would fit within thearea studied. Three other categories—trade facilita-tion, trade-related agriculture, and trade in serv-

ices—include many activities that fit within thelimits of the study.

Findings from theResearchThis section summarizes the results of a review ofUSAID TCB data. This review draws upon theinformation available from R4s for the period FY


Sector Africa Asia & Europe & Latin AmericaNear East Eurasia & Caribbean Worldwide Total

Competition Policy & 3,617 40,349 32,481 2,944 0 79,392Foreign Investment (2) (9) (10) (3) (0) (7)

Environmental Trade & Standards 1,03 53,196 11,779 8,396 4,560 78,963(1) (13) (4) (7) (37) (7)

Financial Sector Dev. & 11,534 38,548 119,863 3,854 376 174,176Good Governance (6) (9) (37) (3) (3) (16)

Gov/Transparency & 9,700 58,853 22,858 819 0 92,231Inter-Agency Coord. (5) (14) (7) (1) (0) (9)

Human Resources & 7,144 31,125 9,028 13,193 2,341 62,832Labor Standards (4) (7) (3) (12) (19) (6)

Physical Infrastructure 21,395 26,456 12,366 8,868 6 69,091Development (11) (6) (4) (8) (0) (6)

Services Trade Development 18,480 12,154 6,042 3,614 599 40,888 (9) (3) (2) (3) (5) (4)

Trade Facilitation 57,028 65,586 78,329 36,136 1,466 238,546(29) (15) (24) (32) (12) (22)

Trade-Related Agriculture 42,371 16,448 13,862 26,722 1,665 101,068(21) (4) (4) (24) (13) (9)

WTO 26,249 67,147 13,217 7,460 1,344 115,417 (13) (16) (3) (7) (11) (11)

Other TCB 251 14,928 449 1,582 0 17,210 (0) (4) (0) (1) (0) (2)

Total 198,801 424,791 320,275 113,588 12,358 1,069,813(100) (1000 (100) (100) (100) (100)

Table 3: USAID-Funded Trade Capacity Building, FY 1999-2001 By Region$ thousand

(percentage)


1999–2003.* (The documents were prepared annu-ally between 1997 and 2001.) The documents werereviewed for all missions for which “narrowlydefined” TCB appeared to be an important featureof the mission program from preliminary review ofUSAID Strategic Objectives (SOs). This reviewproduced a list of 23 mission or regional programs.They accounted for more than half of all USAIDfunding for TCB during FYs 1999–2001. For eachof these programs, a one- or two-page narrative wasprepared, including

■ a summary of the rationale for the USAIDfocus in this area

■ a description of the approach used by the mission

■ a description of the indicators used to measureperformance of the specific activities undertaken

■ a description of how the TCB work evolvedover the five-year period being reviewed

These descriptions are in the appendix. They pro-vided a database for subsequent work, includinginterviews by email and telephone with USAIDproject managers in field missions responsible forthe implementation of these activities. Those inter-views characterized the USAID interventions inmore specific terms to determine the major chal-lenges that project managers faced in designing andimplementing their specific activities, along withtheir perspectives on the desirability of replicatingsuch activities in other countries.

The main findings that emerge from the review ofthe 23 TCB programs are as follows.

1. Integration of TCB with other activities. Inmost missions considered, TCB activity is inte-grated very closely with other activities, makingit difficult to treat it as separate from otheractivities. The SO containing the TCB worktypically contains other activities of very little

relation to trade. SOs have become conven-iences that amalgamate a wide variety of activi-ties. In such cases, it is not possible to separatea TCB activity from other quite different workby USAID missions.

2. Flexibility. USAID TCB activity has been man-aged very flexibly. In most missions, the specificactivities being pursued vary significantly fromyear to year. These frequent changes complicatethe problem of assessment of mission success inTCB. The earlier system of relatively rigiddesigns simplified evaluation, for it was rela-tively straightforward to compare outcomeswith initial goals.

3. Incoherence. Even where trade is important tomission work, the annual R4s do not appear tolay out a coherent multiyear goal, supported bya consistent approach, which would make themission work susceptible to evaluation usingthe usual tools.

4. TCB R4 SOs often do not identify specificinputs, and they rarely mention outputs. Ifthere are no multiyear goals, vaguely statedinputs, and no clearly stated outputs, it is difficult to make judgments about programimpact, efficiency, and effectiveness.Therefore, it is surprising when almost allTCB SOs meet or exceed expectations. Over afive-year timespan, success is not always self-evident. When targets and measures of successchange every few years, programs can perhapsbe “successful,” but such success cannot beconfirmed through evaluation.

5. A moving target. The discussions with USAIDstaff during this review make clear that USAIDhas been upgrading its capabilities in the TCB area. This was particularly the case duringFYs 2000–02, when a number of trainingcourses were provided for both Washington andoverseas staff. More recently, USAID

* R4s are a USAID mission annual report on past performance andbudget requests for future years.


Washington increased the number of profes-sionals working on TCB issues, bringing inpeople with trade experience from elsewhere inthe U.S. Government. In reviewing activitiesthat were largely implemented before this stafftraining began, it is important to keep this inmind. There is little value in identifying aproblem that is already being addressed.


Appendix: Summaries ofCountry/RegionalPrograms, 1997–2001

Armenia

RationaleThe TCB rationale for USAID’s involvement inArmenia was to push for a private sector-led exportstrategy that would utilize a trade trade-friendlyregime’s help to gain WTO accession. This wouldhelp open markets for increased trade.

Approach and ModalityIn the early years, USAID worked closely undermultiple Strategic Objectives (SOs) to create thelegal and regulatory enabling environment requiredfor accession to WTO. The initial accession targetof 1998 was pushed back after USAID realized thata ceasefire did not result in increased trade becausethe land borders were still largely blocked. Thisincreased the cost of inputs, making Armenia ahigh-cost producer. In FY 1999, considerableprogress was made towards accession, and Armeniareached the fourth round of working negotiationsin Geneva. Accession had been anticipated in thesummer of 1998, but a new pro-Russian govern-ment reconsidered the merits of WTO accession.However, by this time, USAID’s assistance programthrough the Center for Economic Policy Researchand Analysis (CEPRA) project had come to an endand effective WTO accession work was handedover to the European Union’s technical assistanceprogram for the Commonwealth of IndependentStates (EU/TACIS).1

Performance MeasurementThe performance indicator in the FY 1999 R4 wasvery trade-specific, making WTO membership anindicator under “Increased Access to ExportMarkets and Development of Domestic Markets.”The following year, the same indicator was

maintained under the “Accelerated Developmentand Growth of Private Enterprise” SO. The FY2001 R4 indicator was changed to “access tobroader markets” and tracked the volume ofexports. Trade-related indicators were dropped inthe following fiscal year.

Evolution of the SO FY 1999. The FY 1999 R4 (June 1997) reportsArmenia’s merchandise exports at $290 million andtrade deficit at $861 million in 1996. Armenia’s topexport markets in 1996 were Russia (27 percent),Iran (13 percent), Belgium (13 percent), andTurkmenistan (5 percent), indicating that penetrat-ing Western markets had barely begun. USAID’sagenda has been to convince the private sector thata liberal trade regime and WTO membership willallow them to import needed inputs, add value,and export the products. Though conceptuallysound, this strategy has not succeeded because ofthe lack of regional peace, cooperation, and integra-tion. Armenia’s land transportation corridors werelargely blocked (Azerbaijan and Turkey). This raisedthe cost of inputs and made Armenia a high-costproducer. Thus a ceasefire was not enough to causean export-led, private sector growth strategy to suc-ceed. USAID has programs in all areas of enablingenvironment to assist Armenia in gaining entryinto WTO. WTO requirements for accession werenot yet satisfied. WTO was not comfortable withthe breadth and depth of Armenia’s reform of thelegal and regulatory environment for trade. WTOwill require four or five “working parties” forArmenia to complete the process of accession.USAID’s original estimate was three “working par-ties,” so the accession target was pushed back from1998 to 1999 or 2000. USAID continued to pro-vide an improved framework for the protection ofintellectual property rights and tariff rates andstructures. USAID programs also focused on civil,criminal, and administrative codes for compliancewith European and WTO conventions.

FY 2000. The FY 2000 R4 (May 1998) reports aworsening trade deficit in 1997. USAID continuesto provide WTO assistance under its SO “IncreasedSoundness of Fiscal Policies and Management1 Armenia finally joined the WTO in December 2002.


Practices.” USAID work has included programs fortax policy and customs advisory, including customscode, customs valuation, and country of origin.Under its SO “Accelerated Development and Growthof Private Enterprise,” USAID has continued to workon the enabling environment program for WTOaccession administered by the Center for InstitutionalReform and the Informal Sector (IRIS) at theUniversity of Maryland. Armenia completed itsFourth Working Group session on WTO accession inGeneva and the new R4 talks about accession as earlyas 1998. EU/TACIS also had a program to supportArmenia’s entry into the Council of Europe andWTO.

FY 2001. This R4 (March 1999) reports thatUSAID expectations for the country’s entry into theWTO were not realized in 1998 as the new govern-ment reconsidered the merits of membership. Therehas been renewed invigoration of Armenia’s interestin WTO, and accession was now expected in 1999,before the completion of the Uruguay Round. WTOmembership was expected to increase access to exportmarkets and boost foreign investor interest. USAID’stechnical assistance was effectively handed off toEU/TACIS with the end of the IRIS contract.

FY 2002. The R4 document released in March2000 does not mention any USAID work towardsWTO accession except for translating some docu-ments about WTO accession for the ministry.Political changes—including the October 1999 assas-sinations of the prime minister and parliamentaryspeaker—resulted in a slowing down of the economicreform process.

Bulgaria

RationaleThe TCB rationale for the SO was to assist theGovernment of Bulgaria to privatize former SOEsand spur private sector development through bothfirm-level assistance as well as assistance to businesssupport organizations (BSOs) to act as intermedi-aries. Assistance was also provided through policy,legal, and regulatory interventions. Accession to EUmembership was seen as a key factor in bringingabout economic and political success.

Approach and ModalityIn the early years of the SO, firm-level assistance wasthe preferred method of building trade capacity inBulgaria. Assistance was also provided to BSOs toact as intermediary support organizations. As a resultof a disastrous economic situation in 1996–97, assis-tance was targeted more on bank restructuring,financial market development, and other policy andregulatory aspects. After macroeconomic stabiliza-tion and the possibility of EU membership, USAIDassistance was focused on getting Bulgaria ready foradherence to the economic rules of the EU so thatthe country could sustain the competitive pressuresonce it entered the European Union. Graduation ofUSAID assistance was delayed from 2002 to at least2004–05, as it became evident that Bulgaria was inno position to gain admittance to EU because of itsslow reform pace.

Performance MeasurementThe performance indicators in the FY 1997 R4 weretargeted towards tracking firm-level improved busi-ness practices and transactions. The indicator waschanged in FY 1998 to show the percentage share ofGDP supplied by private enterprise as well as lawsand policies drafted to foster private sector growth.Other indicators were added: the strength of BSOsand improved performance of their members. Thenew SO introduced in FY 1998 to develop a privatefinancial market had its own indicators: the share ofprivate banks versus total bank assets and nonper-forming loans as a share of total bank loans. The SOhad additional indicators for securities market devel-opment and private pension systems. The following


year most of the indicators remained the same,with some minor changes about the increase ofexports in targeted firms. An additional indicatorwas established to track the number of licenseddealers in the securities market. The private pensionsystem indicator was dropped. The same indicatorswere carried on in the final year of assessment.Though they provided a reasonable idea of thecompetitiveness of private enterprises, they werenot directly related to trade capacity building.

Evolution of the SOFY 1997. The FY 1997 R4 (March 1997, for theperiod October 1, 1997–September 30, 1999)reports that, in response to a worsening economiccrisis in Bulgaria, USAID allocated additionalresources to SO 1.3: “Increased Growth of PrivateFirms in a Competitive Environment” to position itfor economic structural reform. Along with target-ing Firm-Level Assistance Group (FLAG) efforts oneconomic areas of potential strength such as export-oriented firms (agribusiness, dairy processing, andlight manufacturing, among others), new initiativeswere targeted in the macroeconomic areas of bankrestructuring and enterprise reform. To further sup-port economic reform, USAID Bulgaria partici-pated in the Ron Brown Fellowship Program tosend young leaders involved in economic policymaking to the United States for a one year of uni-versity training. The SO included two intermediateresults (IRs) for direct enterprise assistance, associa-tion strengthening, and legal and policy reform.The privatization SO was folded into this SO.

FY 1998. The FY 1998 R4 (May 1998) reportsthat Bulgaria instituted stringent economic recoverymeasures and USAID continued to refine its ownSO—from a predominantly “retail” assistance deliv-ered at the firm level to one seeking to inducegreater private-sector change through policy, legal,and regulatory initiatives. A new country strategywas adopted for USAID Bulgaria. Accession to EUmembership became a major objective. Creation ofa functioning and open market economy able tosustain the competitive pressure within the EU andthe ability to uphold the obligations of membershipbecame a priority. A new SO1.4, “A MoreCompetitive and Market-Responsive PrivateFinancial Sector,” was introduced with a view to

strengthening financial markets. The SO was linkedmore clearly to phase out in year FY 2002. Thoughoverall funding for FLAG was reduced, withresources dedicated to only those members workingat institutional, legal, and regulatory issues, FLAGcontinued to play a major role in the developmentof Bulgaria’s private sector and in fostering a com-petitive market environment. Sustainable economicdevelopment of private enterprises in a competitiveenvironment was targeted through the creation ofan enabling legal environment, and in associationbuilding and enterprise growth.

FY 2000–01. This R4 (April 1999) reports thatinitial plans to graduate Bulgaria from USAIDassistance in 2002 will not be met—at least untilabout 2004 or 2005—partly as a result of the esca-lating conflict in Kosovo and Serbia, which damp-ened economic recovery prospects. This wasexpected to affect the achievement of EU economicaccession criteria. It was also felt that that buildingof sustainable intermediate support organizations(ISOs) was going to take more time than originallyanticipated. The R4 claims that the relevant SO “iscreating a vibrant private sector, supported by afunctioning policy and regulatory framework.” TheSO aims to develop strong and sustainable ISOs—such as business, trade, and professional associa-tions—that support the growth of member firmsand provide business services which ultimatelybecome self-sustaining through membership dues.The SO also tries to improve legal and policyframework as the basis for sustained economicgrowth and competitiveness. It meets short-termpriorities of job creation and economic growth byfocusing on increasing the competitiveness ofmicro, small, and medium enterprises. In FY2000–01, a microfinance program was also testedwith limited budgets. Work under the new SO forbank restructuring, capital market development,and public-private pension reform system contin-ued. The R4 notes that $3.4 million will be allo-cated to FLAG activities in FY 2000 and $1.9 mil-lion in FY 2001. Additional resources were allo-cated to SO1.4.

FY 2002. The R4 document released in May 2000reports that accession to the EU is not anticipatedfor another decade or so because of the status of

democratic and economic adherence progress.Bulgaria suffered a disruption of trade and commer-cial routes because of events in Kosovo. USAIDBulgaria wants to continue to promote Stability Pactand EU Accession goals, and will graduate Bulgariafrom U.S. assistance when keystone criteria are satis-fied. Citing strong performance by BSOs, USAIDhas decided to shift its strategy from targeting themfor assistance to using them as sustainable partners inpromoting small and medium enterprise (SME)development, notably in the areas of competitivenessand external trade. Agreements were previouslysigned with banks under a loan guarantee programproviding capital to SMEs. USAID continued itsactivity under bank restructuring, capital marketsassistance, and pension reforms. Though most bankprivatization would have occurred by late 2000, thisactivity would be continued to encompass other pri-vatization initiatives. The intermediate results wereslightly rearranged to meet these objectives.

Another R4 document, released in February 2001,states that administrative barriers to business con-tinue to burden the development of SMEs. Foreigndirect investment exceeded $700 million in 2000.Considerable progress was made toward creating acompetitive and market-responsive private financialsector, but Bulgaria was still far from having abroad and liquid capital market, despite a notice-able increase in trading volume. The private sectorshare of GDP had grown to about 70 percent in2000. USAID will continue to advance regionalinitiatives, such as the Southeast European TradeInitiative (SEETI), which directly contributes tomarket development and trade with WesternEurope. USAID is mobilizing loan and equityfinance to SMEs with the creation of a new $7 mil-lion Trans-Balkan Bulgaria Fund in late 2000.USAID’s program continues to contribute to thedevelopment of laws, policies, and institutions thatenable private sector growth. The mission waspoised to conduct several assessments and evalua-tions about the current firm-level assistance model,the role and value of micro and SME finance inSoutheastern Europe, needs in the agricultural sec-tor, and, possibly, a commercial law assessment.

The Caribbean Region

RationaleMeans are needed to increase exports becausegrowth in exports is vital to broad-based economicgrowth in the small economies of the Caribbean.

Approach and ModalityFor SO 538-004-01, “Increased Employment andDiversification in Select Non-TraditionalActivities,” barriers to increased production are tobe addressed, both for goods and services. Cost-reducing activities such as telecommunicationsreform and reduction in government red tape are tobe undertaken, and technical assistance and train-ing to raise productivity will be provided. Thesecountries are constrained by the limited resourcesfor policy and regulatory changes needed to imple-ment Free Trade Area of the Americas (FTAA) andWTO commitments, so technical and policy assis-tance to governments is needed. Harmonization ofcommercial laws in the region and trade liberaliza-tion will also be supported.

Performance MeasurementOne performance indicator was developed for theFY 2003 R4: total employment for all goods andservices in the economies of the Organization ofEastern Caribbean States (OECS) where USAIDworks. This is an overly broad measure, not welllinked to the SO, which focuses on select nontradi-tional activities.

Evolution of the SOFY 2002 R4. The SO was first developed for theFY 2002 R4, incorporating some programs previ-ously managed from USAID Washington. A gen-eral program design has been developed, and aworkplan for the initial year of the program isbeing developed. The secretariats of the CaribbeanCommunity and Common Market (CARICOM)and the OECS are to be the principal implement-ing organizations, but various NGOs and privatesector associations will also be used.


FY 2003 R4. Subgrants and cooperative agree-ments on major elements of the program are to besigned soon, but several initiatives have alreadybegun. Computers and software have been pro-vided to all CARICOM members in support of theRegional Negotiating Machinery (RNM), and mostare connected to the RNM website. USAID hasbegun providing technical assistance on competi-tiveness to business groups.

The Central American Region

RationaleThe basic rationale is greater prosperity throughmore open markets and more sustainable use of theregion’s resource base.

Approach and ModalityThe program seeks to promote Central Americanparticipation in the FTAA by alleviating the short-age of technical expertise in the region’s govern-ments and institutions. Technical assistance is to beprovided through the Secretariat for CentralAmerican Economic Integration (SIECA) to sup-port improvements in policies that facilitate theFTAA, such as trade liberalization, protection ofintellectual property rights, and protection ofworker’s rights. Technical assistance is being pro-vided by various U.S. Government agencies,including the Customs Service, Department ofLabor, and the Patent and Trademark Office, aswell as by private consultants.

Performance MeasurementThe initial measurements used were CentralAmerican trade as a share of GDP and the compos-ite score on a set of “readiness indicators” for par-ticipation in a free trade agreement (FTA). Bothmeasures are relevant to the goal of the SO, andwere tracked consistently for the five-year periodreviewed. Nevertheless, they are such high-levelindicators that the USAID activities probably hadonly a marginal influence on their movement.

Evolution of the SOFY 1999 R4. The SO is formulated as “increasedIncreased Central American participationParticipation in global Global Markets.” USAIDsigned agreement with SIECA to support regionalparticipation in FTAA working groups and developa medium term plan for achievement of FTAArequirements.

FY 2000 R4. All countries made progress inimplementing WTO commitments, and withUSAID support, reduced tariffs on external trade.Regional cooperation on labor was also promoted,with baseline data collection on workers’ rightsconditions in each country and analyses of mecha-nisms to facilitate free labor movement in theregion.

FY 2001 R4. Central American countries kept onschedule for their reductions in external tariffs.Their participation in FTAA work increased, withthe region’s governments chairing three of 11 work-ing groups. Regional sanitary and phytosanitary(SPS) regulations consistent with WTO standardswere negotiated. Progress continued on labor issues,and all countries in the region have now beenremoved from the Generalized System ofPreferences (GSP) worker rights “watch list.”

FY 2002 R4. Progress continued to be made onWTO commitments on customs valuation andintellectual property. Work on various issues ofregional integration, including trade in services,investment, and dispute resolution, continued. AnFTA has been negotiated with Chile.

FY 2003 R4. Progress continued on training anddissemination of information on trade issues. Twocountries in the region established a customs union.Intellectual property rights (IPR) legislation wasratified in two countries. Progress continued to bemade on trade negotiation readiness, and an FTAwas signed with Mexico by three countries.


Croatia

RationaleThe initial rationale for the SO was to work as littleas possible with the government, which was seen asrigid and detrimental to economic progress. Afterthe new government was voted in, the FY 2002 R4outlined programs focused on private sector capac-ity building. Small activities were carried on foremployment creation and poverty reduction forwar-affected areas and populations.

Approach and ModalityThe initial modality was implementing and enforc-ing an effective, transparent legal and regulatoryframework for economic development, but this wasabandoned due to an unyielding approach on thepart of the Government of Croatia. Targeted sup-port was given to SMEs in selected regions to sup-port people affected by the war. After the new gov-ernment was sworn in, a more comprehensive eco-nomic growth program was designed in the finalyear of review.

Performance MeasurementThe FY 1998 R4 indicates that the initial indicatorsfor showing a more competitive, market-responsiveprivate financial sector included establishment ofviable, transparent financial institutions and expan-sion of capital markets. There were no specific indi-cators for enterprise growth or trade capacity activi-ties other than some work on SME developmentunder the reintegration SO. In FY 2001, an indica-tor was established to assess the growth of micro,small, and medium enterprises (MSMEs) and showtheir ability to provide jobs and incomes to supportreturning and remaining populations. In FY 2002,the new indicators for the newly approved SO1.3included: (1) “Competitive, TransparentPrivatization of State State-Owned Enterprises;” (2)“Strengthened Capacity of SMEs to Operate andCompete;” and (3) “Improved Investment Climate.”

Evolution of the SO FY 1998. The FY 1998 (June 1997) R4 reportsthat though the Croatian economy is recoveringwell since the end of the war, the government hasserious reservations about implementing andenforcing an effective, transparent legal and regula-tory framework to ensure more broad-based partici-pation of society in economic restructuring. Thereis a slow rate of increase of private investment, pri-marily due to an underdeveloped financial sector.Initial privatization resulted in a small group of oli-garchs with ties to the ruling party and a concen-tration of most of the economic wealth. After ini-tial rejection, Croatia was accepted to the Councilof Europe in November 1996. Croatia wants EUand NATO membership but needs to meet somebasic political and economic guidelines before itcan join. SO2 in Croatia aims to establish “A MoreCompetitive, Market-Responsive Private FinancialSector.” It aims to develop an effective legal, regula-tory, and administrative framework to support thedevelopment of transparent, reliable, and participa-tory financial markets. Under its SO for reintegrat-ing population affected by the Erdut Agreement,USAID Croatia is carrying out some small privateenterprise development in the greater Slavoniaregion to create employment opportunities andeconomic growth. The SME portfolio comprisesfive specific activities: a business registration proj-ect; , a private sector development project; amicroloan program; an equity finance project; anda business training program.

FY 2000. The March 1998 R4 reports thatthough Croatia has strong economic indicators, itis not ripe for “graduation” because of the war inYugoslavia and the lack of “democratization” com-mitment of the ruling party. This is also hamper-ing Croatia’s attempt to join the EU. Under thereintegration SO, USAID is carrying on its SMEportfolio with the intention of providing smallbusinesses in war-affected areas with access to thecredit, capital, technical assistance, and training toenable them to develop and expand. Due to areduction of $5 million in the FY 1998 budgetand no increase in FY 1999 budget, USAID may


be forced to prematurely terminate all economicrevitalization activities for war-affected popula-tions.

FY 2001. The April 1999 R4 reports that USAIDcontinued its support to SMEs under the reintegra-tion of war-affected population SO. The closeoutrequest for this SO has extended by a year, toDecember 2000. USAID has requested a $3.5 mil-lion funding to carry on the SME activities andsupport the provision of jobs and incomes forreturning and remaining populations.

FY 2002. USAID Croatia’s assistance in the eco-nomic sector originally fell under SO1.4. Assistanceunder this SO was suspended in 1998 due to theunwillingness of the Croatian government to movetoward economic reform and fulfill its commitmentto the Dayton Accords. The coalition governmentelected in early 2000 has made substantial progressin reversing the nationalist and authoritarianpolices of the previous Tudjman government.Croatia joined WTO and the NATO Partnershipfor Peace in 2000. Soon after the elections, the EUformed a European Union Task Force for integra-tion of Croatia into Europe. A Stabilization andAssociation Agreement with the EU is expected tobe signed in 2001. An economic advisor was pro-vided to the deputy prime minister. The economicreform activities in Croatia during FY 2002–03 willaccelerate as new or following initiatives addressingprivatization, SME development, internationalcompetitiveness, energy restructuring, bankingsupervision, and commercial law reform arelaunched. A new Strategic Plan for FY 2001–05programs SEED funds to achieve its SOs. USAID’sassistance program expanded significantly in 2000.Earlier programs aimed only at improving politicalprocesses, strengthening civil society, and reinte-grating war-affected populations, but a new portfo-lio now includes significant economic reform andsocial transition activities. Under an overarchingtheme of competitiveness, the new SO1.3 will sup-port macroeconomic and structural reforms toimprove the enabling environment for private sec-tor growth. At the same time, the work in SO1.3will pursue interventions to help businesses acquirethe skills, tools, and services needed for them to

succeed in increasingly competitive local, regional,and global markets.

The Dominican Republic

RationaleTCB was only one among various activities carriedout under the rationales of economic growth andgood governance benefiting the poor.Consequently, no explicit rationale for working inthis area is evident in the R4s.

Approach and ModalityThe principal approach used in the DominicanRepublic was support for policy advice to theGovernment of the Dominican Republic. The spe-cific location of this activity in the mission’s strategicframework varied year by year. This suggests that themission saw this activity as important, so it was shuf-fled about into the most convenient box for justifica-tion to consultants. These included the MonitorCompany and Chemonics for competitiveness, andHarvard Institute for International Development(HIID) and the Boston Institute for DevelopmentEconomies (BIDE) for studies.

Performance MeasurementThere were no performance measures directlyrelating to TCB. One performance measure relat-ing to government policy decisionmaking contin-ued throughout the period considered. Its specificformulation varied over time, with later formula-tions becoming more specific. The FY 2003 for-mulation is “economic policy reforms developedwith USAID assistance and approved by theGODR [Government of the DominicanRepublic], which means that the law, decree, regu-lation, or plan has been authorized at the appro-priate level and is ready for implementation.”Even in this specific form, the measure is open towide variation in interpretation. Any governmentenacts thousands of measures annually, some sig-nificant number of which will have been influ-enced by USAID.


Evolution of the SOFY 2000 R4. As part of the consolidation of themission portfolio, the mission’s economic growthSO, “Institutions Which Contribute to IncreasedEconomic Opportunities for Poor DominicansStrengthened,” was eliminated. A Special Objective(SpO) for “Policies Adopted That Promote GoodGovernance” was established to carry on an activ-ity that provide policy advice to the Governmentof the Dominican Republic, including develop-ment of a national competitiveness strategy.

FY 2001 R4. USAID continues policy adviceunder the SpO in a wide range of policy areas,including some relating to trade—competitiveness,an investor’s roadmap, tariff reduction, trade negotiations, and the FTAA

FY 2002 R4. The TCB activity was includedalong with energy and environment in a new gov-ernance SO “Policies Adopted That PromoteGood Governance” that also encompasses educa-tion. The trade-promoting activities included acompetitiveness program, technical assistance(TA) for IPR and customs reform—but also activ-ities relating to SOE reform and environment.

FY 2003 R4. The SO was renamed as “PoliciesAdopted that Promote Good Governance forSustainable Economic Growth.” Under the nationalcompetitiveness strategy, clusters have been imple-mented for the Santiago region with promisingprogress for horticulture, tourism, and SMEs. Policyanalysis supported by USAID helped in the develop-ment of legislation that reduced import tariffs.

Ecuador

RationaleSO 518-011 is “Improved Social and EconomicConditions of Inhabitants along the Peru-EcuadorBorder Thereby Promoting Border Integration.”The activity, begun in 1999, is intended to supportpeace negotiations between Peru and Ecuador bypromoting economic and social development of the

area where the two countries share a border. Theregion is one of the poorest parts of Ecuador, withmore than 70 percent of the population living inpoverty and only 22 percent of homes with run-ning water. Unemployment and underemploymentare also very high.

Approach and ModalityThe initial phase of the program emphasized socialservices—health, water, and sanitation—imple-mented by CARE for people living in the borderareas. Other aspects of the program, includingincome generation and environmental concerns, arein the process of design.

Performance MeasurementThe performance measures included all addressedsocial indicators such as access to water and sanita-tion. No trade or economic factors measures haveyet been developed.

Evolution of the SOFY 2002 R4. The SpO was established as a resultof an October 1998 peace agreement betweenEcuador and Peru, which ending ended more thana century of occasional conflict. USAID committedresources to support the Ecuadorian effort toimprove conditions in the border area. An initial$1.5 million was committed to CARE to carry outsocial infrastructure activities, and design workbegan on economic aspects of the program.

FY 2003 R4. The second phase of the programbegan with the signing of a cooperative agreementwith CARE for $19 million. This includes fundingfor water and sanitary infrastructure, microfinance,and training and technical assistance to municipali-ties. Changes in legislation to facilitate binationalcommerce are to be sought, and binational tradefairs are to be promoted.


Egypt

RationaleThe strategic goal is to increase Egypt’s economicgrowth rate—from 2.9 percent in 1994 to 6 percentin 2001—by increasing trade and investment andimproving economic efficiency. There is one cleartrade SO and two SpOs that are weakly related totrade: SO1 “Will Accelerate Private Sector-Led,Export-Oriented Economic Growth;” SpO-A, “WillIncrease the Use of Egyptian Universities in Quality,Demand-Driven Applied Research;” and SpO-D,“Demonstrates Approaches to Sustainable Tourism.”During 1999 USAID developed a new strategy for2000–09 designed to change the U.S.-Egypt rela-tionship to one grounded on trade and investment.A new program goal is: “A Globally CompetitiveEconomy Benefiting Egyptians Equitably.”

Approach and ModalityIn addition to advice from USAID direct-hireeconomists, a long list of projects is designed toimprove macroeconomic policies, trade policies,increase selected exports, speed the pace of privati-zation, improve WTO compliance, decrease directtaxes, improve competitiveness, and encouragesmall and microenterprises.

Performance measurementThough every year nearly all SO targets are met orexceeded, policy and structural economic problemsthreaten growth.

Evolution of the SOFY 1999. For SO1 the targets are increased GDPgrowth rates; a greater share of GDP produced bythe private sector; an increase in non-petroleumexports; an increase in real GDP per worker; andincreased privatization. All targets are met orexceeded. SpO-D demonstrates and promotes sus-tainable approaches to tourism. Though tourismgenerates foreign exchange, USAID’s emphasis ison environmental sustainability and cultural suit-ability. The linkage of universities to trade is notexplained in a convincing manner.

FY 2000. The level of trade protection remains

extremely high. The banking sector has a low levelof restrictions. As in the last year, all indicatorswere good though non-petroleum exports weredown. Lagging export growth is due to macro andmicro policy and institutional problems, whichUSAID is addressing. Sector policy reforms hadpositive accomplishments, with 56 percent ofreforms accomplished so far. Tourism was high,although the massacre of tourists in Luxor in 1997cast a pall over future tourism and GDP growth.

FY 2001. SO1 continues the extensive list ofmacro and micro indicators, with nearly all meet-ing or exceeding expectations. GDP grew 5 per-cent: the private sector share of GDP rose to 70percent; private sector jobs increased by 400,000;nontraditional exports increased by $500 million;and non-petroleum exports increased from $1.1billion to $1.7 billion. The SO notes that fastereconomic policy reform and progress on privatiza-tion will be needed if Egypt is to compete moreeffectively in the global economy.

FY 2002. The new goals and SOs have been inplace less than a year so results are not yet available.Under the old goal, Egypt’s policy reform perform-ance is impressive, with progress on privatizationand deregulation and “commendable progress onGDP growth and private sector productivity.”Exports in USAID-supported areas increased 30percent. Egypt still has a high level of poverty andunemployment. An overvalued Egyptian currencyis one of several reasons for stagnant export growthand a deteriorating investment climate.

FY 2003. The two new SOs have been in placefor over a year: SO16, “Environment for Trade andInvestment Strengthened” and SO17, “Skills forCompetitiveness Developed.” But performance isnot that great. Under SO16, non-petroleumexports as a percentage of GDP are down from 22to 20 percent. GDP growth dropped from 6 to 4percent. For the good news, exports in selectedsectors are up, new stock market shares issued areup 20 percent, and 35,000 jobs have been createdby microenterprise loans. Under SO17 (skills fordevelopment), 1,000 people are trained in softwareapplications. SpO–12 on tourism is finally foldedinto environment, SO19.


Eritrea

RationaleThe broad goal of SO 661-002, “Increased Incomeof Enterprises, Primarily Rural, with Emphasis onExports,” is to promote investment in Eritrea.USAID Eritrea’s Investment Objective Number 2began as a five-year project in late 1997. It is alsoreferred to as the Rural Enterprise InvestmentPartnership (REIP), a bilateral agreement with theGovernment of Eritrea. By providing technicalassistance and credit services to rural enterprises toincrease their efficiency, competitiveness, andprofit, Investment Objective 2 aims to increaseEritrea’s capacity to generate income and foreignexchange to purchase food, capital equipment, andconsumer goods. Achieving this objective dependson two principal immediate results: the value ofdomestic goods and services sold by assisted enter-prises must increase; and the value of exports fromassisted enterprises must grow.

Approach and ModalityThe two main components of the REIP are theRural Enterprise Unit (REU) and the EnterpriseInvestment Fund (EIF). The REU provides techni-cal assistance to enterprises and the EIF, managedby the Commercial Bank of Eritrea, makes landavailable to enterprises to meet capital requirementsand increase investment in the rural areas.Originally technical support and credit assistancewas to be carried out by Agricultural CooperativeDevelopment International/Volunteers in OverseasCooperative Assistance (ACDI/VOCA) in an inte-grated manner between the REU and the EIF, butthat changed when the Government of Eritreaannounced that it would assume responsibility forthe REU. However, due to conflict, ACDI/VOCAwas brought in to provide an alternate disburse-ment mechanism for loans in FY 2000.

Performance MeasurementThe FY 1999 R4 does not include performancedata tables because the mission was operating with-out an approved strategy. Performance monitoringoccurred at the activity level instead of the objectivelevel. In FY 2000, trade capacity building activities

fall under IR2.3, “Value of exports from assistedenterprises increased.” There is one indictor for thisSO: “Increase in export sales by enterprises receiv-ing loans and technical assistance.” In FY 2001, theIR remains, but the indicator changes to “Numberof enterprises receiving loans and/or technical assis-tance.” The FY 2002 R4 again keeps the IR, butchanges the indicator to “Value of export sales ofenterprises receiving loans and/or technical assis-tance.” The FY 2003 R4 has the same IR and indi-cator as FY 2002.

Evolution of the SOFY 1999 R4. USAID supported the first market-ing trip by Eritrean growers to Saudi Arabia andthe first investment mission to the United States byEritrean businessmen. These are the only tradecapacity building activities mentioned in the R4.

FY 2000 R4. Trade capacity building activitiesfall under IR3, “Value of exports from assistedenterprises increased.” Efforts consist of identifyingappropriate export crops that Eritrea can produce,process, and export to increase foreign exchangeearnings and diversify its export base. The firstEritrean investment mission to the United Stateswas sent in the fall of 1997 under a programfinanced by USAID to determine the initial level ofinterest among industrial processors of vernonia oil-based products. USAID is exploring options to fur-ther research, produce, and process vernonia oil forthe U.S. market. The activity was scheduled tobegin during FY 1998. Other exploratory efforts todevelop export markets have included a horticul-tural trade mission to Saudi Arabia. (Eritrea, in the1960s, exported a significant supply of bananas toSaudi Arabia.) Efforts will be made in FY 1998 andonwards to regain the export markets lost duringthe protracted struggle for liberation. The focus ison improving the quality and volume of bananasand other fruits produced in Eritrea and makingthem marketable in Saudi Arabia and otherregional markets.

FY 2001 R4. Overall, the SO did not meetexpectations, but there was progress in export sales.Two trade missions to regional markets resulted infirm export contracts of $60,000. This opened newmarkets and suggests that Eritrean leather and


leather goods can compete favorably for foreignexchange.

FY 2002 R4. The SO did not meet expectationsdue to the conflict with Ethiopia. The develop-ment assistance program was virtually suspendedfollowing two ordered departures, the evacuationof all mission staff except the director, and therestrictions imposed on the disbursement of dollar resources.

FY 2003 R4. The SO did not meet expectationsas a result of the economic effects of the conflict,which disrupted traditional trade patterns withEthiopia. USAID sent a delegation of 19 Eritreanbusinessmen to a leather convention in Casablanca,Morocco, in September 2000. Several deals totalingabout $675,000 were successfully negotiated andhave expanded the value of leather exports to mar-kets in Africa and Europe. This is the second eventin as many years that has increased the leatherindustry’s exposure to nontraditional markets andhas produceds tangible, if limited, evidence ofEritrea’s competitiveness and ability to generate for-eign exchange. Other activities were constrained bythe security situation.

Honduras

RationaleThe initial rationale of SO 522-00, “EconomicReactivation Meeting the Needs of the Poor,” wasto achieve broad-based economic growth and jobcreation by reducing barriers to Honduran partici-pation in the world economy. After HurricaneMitch, restoration of the economy and infrastruc-ture became more central.

Approach and ModalityAside from an old project for non-traditional agri-cultural exports (NTAE), TCB has not been a sepa-rate area for USAID work. Support for improvedpolicy through studies and dialogue on numerousissues relating to trade—Export Processing Zoneszones (EPZs), elimination of controls on pricingand trade in agricultural products, investment pol-

icy—as well as on various other macro and sectorpolicies less directly related to trade. During theearly years, behind-the-border activities, particularlyin agriculture, focused on strengthening the capac-ity to export by sector-level technology transfer andmarketing assistance

Performance MeasurementPerformance indicators included very aggregatemeasures—total employment (first four years), totalinvestment (last four years)—and several measuresof microfinance and education performance. Thefirst four years included an export performancemeasure, but the specific measure tracked was each year.

Evolution of the SOFY 1999 R4. Under SO1, “Enhanced EconomicParticipation and Increased Incomes of the Poor,”small farmers are gaining access to export marketsbecause of technology and management assistanceprovided by USAID. At the policy level, USAIDsupported a unit that recommended liberalizedtrade in agricultural products, expansion of exportprocessing zones, and increased private investmentin mining and bananas.

FY 2000 R4. The SO changed slightly to“Enhanced and Equitable Access to ProductiveResources and Markets.” There was continued support for policy improvements by the govern-ment, although this was slowed by elections. Therewas support for FTAA. Honduras saw continuedsuccess in NTAEs through technology transfer.

FY 2001 R4. The SO changed slightly, with“expanded” replacing “enhanced.” Progress onNTAEs had been impressive until HurricaneMitch, which caused major losses. Policy improve-ments continued, except for some temporaryrestrictions following Mitch.

FY 2002 R4. SO changed to “EconomicReactivation Meeting the Needs of the Poor.”

FY 2003 R4. Program emphasis is improving the overall policy environment for growth and promotion of micro and small business. The TCB


emphasis is not evident from the document.Activities shifted toward construction of secondaryroads and other infrastructure related to Mitch-related reconstruction, microfinance, land titles,and forestry.

Indonesia

RationaleBy 1997, Indonesia was on an extremely successfuleconomic roll. By 2020 it might be the fourthlargest economy in the world. USAID will helpIndonesia make its economic breakthrough andthen phase out U.S. assistance in FY 2001. Themacroeconomic situation is excellent, thoughIndonesia needs to further liberalize its interna-tional trade, improve domestic competition, andimprove economic efficiency. USAID will work toimprove microlevel policies through financial, legal,and regulatory reform. The USAID strategy wasput in place before the 1997 Asian financial crisis.By 2001 USAID noted that several microlevelreforms had been successful but macroeconomicconditions were grave as the country was strugglingto recover from the Asian financial crisis.

Approach and ModalityFor SO 497-011, “Recovery of the Economic andFinancial System,” USAID economists and contrac-tors will work on fiscal and monetary policy;improved capital markets; trade policy, regulations,and legislation; along with measures to improvecompetitiveness.

Performance MeasuresImport tariffs and export restrictions were reducedfaster than anticipated. More than 90 percent ofUSAID funding-advisor recommendations wereacted upon. The USAID Partnerships forEconomic Growth (PEG) project got off to a slowstart, but economic laws and regulations wereimproved. This should help domestic competition,along with increased lending to SMEs. But macroconditions (fine five years ago) were not depressed:the rupiah remained weak; the stock market wasdepressed; inflation was high; and economic

growth, investment, and exports were all below pre-crisis levels.

Evolution of the SOFY 1999. Since macroeconomic conditions aresuperb, all attention is concentrated on microeco-nomic legal, regulatory, financial, and proceduralfactors affecting international trade and domesticcompetition.

FY 2000. All performance targets were met orexceeded. The economy continues to open up andtrade increased. This was achieved against thedour macroeconomic background of the Asianfinancial crisis.

FY 2001. The financial crisis lays bare the struc-tural flaws of the economy, and there is unprece-dented public sector support for economic reform.A new anti-monopoly law and steps to promotecorporate restructuring move forward. All IMF tar-gets on internal trade liberalization are met.

FY 2002. The economy has finally stopped con-tracting and is starting to recover. Much workremains in bank and corporate restructuring andgovernance systems. Exports failed to benefit fromthe depreciated rupiah and credit is tight. New lawson anticorruption, secured transactions, and con-sumer protection are passed.

FY 2003. A modest economic recovery occurs.The legal and regulatory environment hasimproved and critical legislation on competitionand corporate governance is passed. Indonesia has astaggering array of challenges to overcome as theeconomic crisis continues.

Jordan

RationaleThe initial rationale for the SO was to change gov-ernment policy to open the economy, becausegreater participation in the world economy wasseen as critical to long-run growth, employmentcreation, and poverty reduction in Jordan.


Approach and ModalityThe initial modality was primarily policy dialogue,supported by large, policy-based, grants, to be dis-bursed as progress was made on agreed goals.Grants for technical assistance in important areas—WTO accession and investment promotion—werealso provided, apparently through institutional con-tractors. As described below, the mission approachchanged significantly when Jordanian governmentpolicy changed. After this, support for quick WTOaccession was provided, along with project fundingfor an industrial park—a Qualified Industrial Zone(QIZ)—from which production would be exportedto the United States. A Jordanian-U.S. free tradeagreement was negotiated.

Performance MeasurementThe FY 1998 R4 did not include performancemonitoring indicators,; but rather, it discussedgeneral issues relating to the stability and rele-vance of measures used to track performanceunder the SO. In FY 1999, five indicators relatingto TCB were established: for registration of newcompanies, amount of foreign investment, num-ber of jobs created by foreign investment, customsefficiency, and public knowledge of policyreforms. A year later, the first two remained, butthe final three were dropped. A new third indica-tor, for progress on privatization of SOEs, wasadded. The same three indicators were reported inthe FY 2000 and 2001 R4s. The three indicatorsappeared to provide a reasonable tracking of theoverall performance of the government policyregime, though none were very closely related tothe trade sector. None were directly related to thethree broad areas of concern of the SO—eco-nomic growth, employment creation, and povertyreduction.

Evolution of the SOFY 1998. The FY 1998 (April 1997) R4 proposeda new SO: “Increase Economic Opportunities forJordanians.” The discussion highlighted job cre-ation as the central concern, to be addressedthrough credit for micro and small enterprise,through policy implementation, including “cus-toms, tax laws, business regulation and licensingprocedures, and intellectual property rights,” and

through addressing gender concerns in employ-ment. The SO included IRs for financial servicedelivery and trade policy reform.

FY 1999. This R4 reports that the SO wasapproved in April 1997. Establishment of MiddleEast Peace and Stability Fund in June 1997 allowedthe USAID mission to add $50 million to policy-based balance of payments (BOP) assistance. A newIR, “Improved environment for sustained policyreform,” based on conditioned BOP support of$200 million over next four years, was approved inFebruary 1998. The mission has a wide-rangingpolicy agenda with the Jordanian government,including “the Prime Minister’s Privatization Unit,the Ministries of Planning, Finance (including theCustoms Dept.), Trade and Industry, and theInvestment Promotion Corporation.” The missiongave a $15 million grant to World Bank for TA forpolicy implementation.

FY 2000. This R4 includes the first mention ofprogress over the past year toward WTO accessionin 2000, and mentions the Government of Jordan’scommitment on IRP framework and enforcement.It mentions the launch of USAID-funded TA(technical assistance) fund with World Bank sup-porting privatization, insurance reform, capitalmarkets, but notes the failure to go ahead withtelecom privatization. It indicates plans to promotebusiness competitiveness in the Ministry ofPlanning. Early in the year, a $50 million disburse-ment is linked to specific actions on IPR, WTO,banking supervision, and privatization. TheUSAID Bureau for Asia and the Near East (ANE)program approved a “comprehensive” revision ofthe SO performance monitoring plan in January1999, and the SO end date was extended from2002 to 2004.

FY 2001. This R4 reports that Jordan acceded provisionally to WTO in December 1999.Prospects had seemed bleak as late as June 1999,but strong support came from the new King ofJordan, who also promotes private sector andinformation technology. The passage of 13 WTO-related laws is expected in 2000. USAID BOPsupport doubled to $100 million, probably on aone-time basis. The USAID Implementing Policy


Change (IPC) program promoted rapid expansionof QIZ, not mentioned in the previous R4.Telecom was privatized. The Jordan-U.S. BusinessPartnership provided extensive firm-level assistanceto small and medium-sized firms.

FY 2002. USAID provided two years of TA forWTO accession. This included IPR legislation lead-ing up to full WTO accession in April 2000, initial-ing of U.S.-Jordan FTA in October 2000, andpreparation for the February 2001 opening of theAqaba Special Economic Zone (ASEZ), with $20million from USAID. USAID pushed legal changes,stock market development, and privatization.

Kazakhstan

RationaleThe rationale of USAID Central Asian Republics(CAR) was the development of a market market-based, vibrant private sector that would quicklystrengthen itself under a strong legal and regula-tory environment to enable Kazakhstan to gainWTO accession.

Approach and ModalityIn the early years of the SO, USAID assistancefocused on the development of a policy and regula-tory environment for commercial law reform toready Kazakhstan for admittance into WTO.USAID attempted to create a policy environmentto ensure private sector competition, adequate judi-cial reform to enforce these policies, and the devel-opment of human resources to function in the mar-ket economy. The same focus was maintained in ayear of strong macroeconomic reform in prepara-tion for WTO accession. The FY 2001 R4 startedreporting that WTO accession would be delayedbecause macroeconomic reform alone could notspur private sector development, which was affectedby the 1998 Russian economic crisis and the moveof the capital from Almaty to Astana. As it becamemore evident that WTO accession would takelonger than initially anticipated, the mission’sstrategic objectives were redirected to providingfirm-level assistance and fostering SME growth.

Performance MeasurementThe performance indicators in the FY 1997 R4were targeted towards tracking private-sector partic-ipation in the share of GDP, capital investments,laws and policies consistent with international prac-tices passed, and market transition news in broad-casting. The same indicators were maintained inthe following three years. A new set of indicators tomatch the new SO of SME growth were put for-ward in FY 2003. These included a variety ofindexes for business environment, a business educa-tion environment (outlining the steps necessary tocreate increased access to business information,knowledge, and skills), and a financial marketsindex (outlining the steps necessary to create moreresponsive financial institutions, instruments, andmarkets). The final indicator outlined the percent-age of legal and regulatory benchmarks achieved.

Evolution of the SO FY 1998. The trade capacity buildingTCB-relatedSOs in Kazakhstan are aimed at building up thecountry’s private sector capacities to ready it foradmittance into the WTO. The relevant SOs in theFY 1998 R4 (April 1997) deal with privatization ofSOEs, development of private enterprise—most rel-evant—and the development of a private financialmarket. SO1.3, “Accelerated Development andGrowth of Private Enterprises,” works in the areasof legal and regulatory reform, WTO accession,commercial law training of legal and administrativepersonnel, and promotion of human resources ableto function in a market economy. The SO includesIRs for policy environment to ensure competition,adequate judicial reform to enforce these policies,and the development of human resources. TheGovernment of Kazakhstan has adopted a compre-hensive set of international accounting standards inearly FY 1997. The target for WTO accession waswithin a year.

FY 2000. This R4 (February 1998) reports thatthe SO for the development of private enterprisecontinued to work with the same focus as the yearbefore. It mentions Kazakhstan’s extremely rapidprogress in satisfying requirements for WTO mem-bership during the past two years. Pro-businessbankruptcy, procurement, and foreign investment


laws have all been adopted. The R4 reports thatKazakhstan has reached the stage of intensive nego-tiations with the Geneva Working Group members.Accession in 1998 is possible if the government canaccelerate progress in a number of key areas,including intellectual property rights, antidumping,and countervailing duty legislation, and, most par-ticularly, a number of key services. The CentralAsian-American Enterprise Fund (CAAEF) contin-ued its investment and lending activities in supportof private enterprise development. Training oncommercial law issues, bankruptcy and liquidationprocedures, customs procedures, and the latest cus-toms legislation and regulations will continue.Although substantial success was achieved withUSAID assistance in privatizing small and mediumsized companies, many large scale enterprisesremain under state control. In the financial sector,the R4 mentions a slowly developing stock market,more mature banking, and the development of aprivatized pension reform system.

FY 2001. The March 1999 R4 document men-tions progress toward WTO accession slowed inpast year because of the move of the capital fromAlmaty to Astana and the input due to renewedvigorous political ties with Russia and theCommonwealth of Independent States (CIS).USAID will continue assistance for sound taxadministration, intergovernmental finance reform,and budget reform at national and local levels. InFY 2000, USAID will begin phasing out reforms inthe areas of capital markets, pension reform, andbank supervision. USAID is considering supportfor land privatization and the nascent insuranceindustry. CAAEF returned largely negative resultsin1998. As a result, the strategic focus of the fundwas changed to concentrate on SME lending.Commercial law drafting and training work will beshifted to the Ministry of Justice and will be hence-forth managed by the International Bank forReconstruction and Development (IBRD).

FY 2002. The R4 (April 2000) reports the devel-opment of a new strategic assistance plan forKazakhstan for 2001–05. USAID will increasework at the local or micro level to begin to bring tolocal institutions and citizens the benefits of macro-

level policy and legal and regulatory reforms. Anexample of this approach is the Atyrau RegionalInitiative, a public-private partnership designed toincrease investment in a region of Kazakhstan thathas significant human needs, despite its gas and oilreserves. Economic assistance will focus on improvingthe business environment, business-related education,tax and budgetary reform, and financial mechanismssuch as insurance, mortgages, and microcredit. TheR4 reports that private enterprise growth has stag-nated and slowly recovering from the Russian eco-nomic crisis of 1998. The primary impediments togrowth, however, continue to be overregulation of theeconomy and rent-seeking behavior by governmentofficials. USAID assistance continues to worktowards WTO accession. Fifteen WTO laws wereenacted and five major documentary submissionswere drafted for the Government of Kazakhstan’sWTO accession in the previous year. Under the newstrategy, USAID will begin to provide more assistancedirected at businesses, particularly SMEs. The newstrategy will also eliminate indicators that are nowobsolete and introduce new ones.

FY 2003. The R4 (February 2001) reports that itis a transition document between an old and a newstrategy. The new strategy shows a clear shifttowards fostering SME growth. The SO is changedto “An Improved Environment for the Growth ofSmall and Medium Enterprises.” Three new inter-mediate results are outlined that focus on theopportunity to acquire business information,knowledge, and skills; more responsive financialinstitutions, instruments, and markets; andincreased implementation of laws and regulations.USAID’s focus changes to new job creation, eco-nomic growth, greater participation, and improvedquality of life for the citizens of Kazakhstan.

The LAC Region

Rationale The smaller countries and subregions in LAC areconstrained in their capacity to participate fully inthe FTAA. USAID support can help bridge the gapand bring them into the integration process in a waythat meets equity and environmental considerations.


Approach and Modality The main vehicles in the approach are support forthe FTAA process in the subregions, includingincreased participation in regional trade: greateravailability of credit and other financial services;increased access by the poor to secure and mar-ketable land titles; and environmentally sustain-able development.

Performance Measurement A number of performance measurement indicatorswere established, most involving counting the num-ber of countries or subregions that are participatingor making progress in relevant areas. The measuresare thus subjective, and influenced by whether theproject is providing inputs in particular regions.Meaningful measurement is inherently difficult in acase where several types of activities are beingundertaken in a variety of countries or regions. Themeasures used, though crude, are probably as muchas can reasonably be expected.

Evolution of the SOFY 1999 R4. The SO is defined as “ProgressToward Resolving Key Market Issues ImpedingEnvironmentally Sound and Equitable Free Tradein the Hemisphere.” The results framework wasapproved in August 1996. Progress during the firstsix months was limited by lack of timely release offunding for program.

FY 2000 R4. So far, the program has emphasizedCARICOM, signing a memorandum of under-standing (MOU) with the secretariat, and promot-ing a Caribbean food safety initiative and credit forsmall enterprises in the OECS countries. The pro-gram is also supporting strengthening of labor min-istries in the region, and funded a comprehensiveanalysis of trade and environment issues by theWorld Resources Institute for an upcoming tradeand environment conference.

FY 2001 R4. Technical support to the CARI-COM countries to increase trade is a main empha-sis. Helping countries meet SPS requirements forexporting to the U.S. was a major area of support,with the help of USDA. The Customs Service pro-vided help on customs reform and valuation. The

“virtual secretariat” of CARICOM was also sup-ported as a means to improve communication andinformation exchange among the member coun-tries. Microfinance is being promoted throughACCION.

FY 2002 R4. The Caribbean effort on SPS andfood safety has been very successful. Conferenceson property registration and microfinance havebeen held with support from the program. It hasalso supported assistance on competition policy toArgentina and Brazil, provided by the Departmentof Justice and the FTC. This SO is being termi-nated, with some responsibilities transferred toregional missions (especially for the Caribbeanregional activities), and several new SOs and anSpO are to be established.

FY 2003 R4. A new SpO, “continued participa-tion of LAC subregional trading blocs in the FTAAprocess,” has been established to replace the previ-ous trade SO. It is intended to help smallereconomies to meet WTO obligations, facilitatebusiness development, and foster civil society par-ticipation in the FTAA process.

Mali

RationaleThe Sustainable Economic Growth (SEG) SO forthe period FY 1996–2002 is, “Increased Value-Added of Specific Economic Subsectors toNational Income.” The targeted subsectors arecereals, livestock, alternative commodities, andfinancial services, including microfinance. SEGhad targeted an aggregate 5 percent annual growthrate in the cereals, livestock, and alternative com-modity sectors for the strategic period, consistentwith the mission strategic goal of not less than 5percent gross domestic product annual growthoverall.

Approach and ModalityThe SEG IRs integrate production, processing, andtrade activities in the cereals, livestock, and alterna-tive commodity sectors through a crosscuttingapproach. It promotes agribusiness growth while


ensuring rational natural resources managementand women’s participation in the country’s eco-nomic growth.

Performance MeasurementThe mission started a new five-year strategy in theFY 1999 R4. Intermediate results and indicatorswere not in place until the FY 2000 R4. Tradecapacity building activities were placed in the SEGobjective. In the FY 2000 R4, IR3 “Increased tradein cereals, livestock, and alternative commodities,”was developed, but no indicators were in place. Inthe FY 2001 R4, the IR remains, and an indictor,“Total volume of alternative commodities sold indomestic and export markets,” is added. This IRand indicator remain for the FY 2001, 2002, and2003 R4s.

Evolution of the SOFY 1999 R4. The SEG SO was believed to be ontrack, though indicator data are not availablebecause the mission was beginning a new five-yearstrategy. The SEG SO includes activities toincrease the value-added in alternative crops andlivestock products for export and increase exportsof livestock. Under the Cereals Results Package,the value-added of cereals did increase. Officialcereal exports were 45,000 metric tons, valued at$12.6 million; no baseline is provided. In theLivestock Results Package, impacts include expan-sion of sales of dried meat into new markets,including Switzerland; interest expressed byregional traders in access to markets in the westand southern regions of Mali; a reduction inpaperwork required for exports; and a reduction inpayments per truckload of animals from Segou toAbidjan. Under the New Opportunities ResultsPackage, USAID helped arrange private air char-ters for fruit and vegetable exports to Europe,undermining the Air Afrique monopoly. Greenbean processing and export operations wereimproved and high value products were exportedby private firms in retail packs. The missionencouraged the testing of commercial productionand export of hibiscus flowers.

FY 2000 R4. Highlights of the TCB activitiesinclude an increase in exports of Central Veterinary

Laboratory vaccines; establishment of two newregional markets for livestock sales; elimination ofexport taxes on hides and skins; privatization ofground handling facilities to increase competitionand decrease costs of air freight for agricultureproducts; and increased production of niche cropsfor export markets, including green beans, man-goes, and hibiscus flowers. In particular, improvedhibiscus varieties were cultivated for and exportedto Celestial Seasonings of Colorado.

FY 2001 R4. Under the trade IR, the total vol-ume of alternative commodities (green beans, man-goes, tomatoes, onions, and natural products) mar-keted and exported increased by 17.4 percent, sur-passing the indictor target. The growth is a result ofthe promotion of partnerships between private-sec-tor agribusiness and farmer production groups. Amodel pioneered by USAID Mali’s SEG for inte-grating larger agribusiness enterprises into the pro-gram to assist in quality control, improved packag-ing of products, and establishing export linkages isnow being adopted in other areas of the country.

FY 2002 R4. The USAID-supported marketinformation system expanded its product and mar-ket coverage to include national, regional, andworld markets. A new organizational structure ofmarket information provided producers and traderswith real-time information. USAID sponsored thesecond Market Outlook Conference, during whicha network of regional traders was created for foster-ing regional integration and the removal of tradebarriers. Also, the SEG-supported Agro-EnterpriseCenter successfully organized a first-ever export of35 tons of Malian mangoes, by sea, to markets inthe United Kingdom and Germany.

FY 2003 R4. Livestock exports increased.Support was provided for improving marketingefficiencies through improved market infrastruc-ture, increasing management capacity among live-stock cooperatives, and developing stronger busi-ness relationships between Malian exporters andimporters in neighboring countries. As within thecereal sector, USAID support assisted in better dis-semination of livestock market information and thecreation of regional trader networks. USAID sup-


port also contributed to improved efficiencies inlivestock vaccine production and marketing.

Morocco

RationaleThe rationale of SO 608-005, “IncreasedOpportunities for Domestic and Regional Tradeand Investment,” is to reduce or eliminate impedi-ments to private sector investment and strengthenthe capacity of intermediary institutions to deliverservices to small and microenterprises.

Approach and ModalityUSAID Morocco has a two-pronged approach toTCB. One is improving policies to support tradeand the other is to improve the competitiveness offirms. In the area of policy, USAID Morocco sup-ported an agricultural intellectual property rightslaw, reforms in custom inspection procedures, anduniform food safety standards and regulations.Improving the competitiveness of firms contributedto an increase in exports, expansion into nontradi-tional markets and nontraditional products, and theadoption of new technologies by Moroccan firms.

Performance MeasurementThe FY 1999 R4 does not include performanceindicators. In the FY 2000 R4, under IR3.1, thereis one indicator, 3.1.1, “Progress towards adoptionof 15 key reforms.” IR3.4 has two indicators: 3.4.1“Export sales attributable to USAID assistance” and3.4.2, “Exports to non-traditional markets attribut-able to USAID assistance.” The FY 2001 R4 indi-cators stay the same, with the removal of indicator3.4.2. In FY 2002, indicator 3.1.1 remains and3.4.1 is dropped. In addition, a new IR and indica-tor are being developed: IR5.2, “Strengthened insti-tutional capacity to foster private sector,” with theindicator “Progress toward strengthening institu-tional targeted institutions.” Finally, in the FY2003 R4, SO3 changes to SO5, “IncreasedOpportunities for Domestic and ForeignInvestment.” There are no TCB-specific IRs orindicators under this SO, although much workaround building the private sector.

Evolution of the SOFY 1999 R4. TCB activities fall under SO3,“Expanded Base of Stakeholders in the Economy,Targeting People of Below-Median Income.” Twoof the four IRs for this SO contain TCB-relatedactivities. The first is IR3.1, “Improved policy andregulatory environment.” Under this IR, an agricul-tural intellectual property rights bill was passed,customs inspection procedure reforms generated areduction in road transport costs for food exporters,and uniform food safety standards and regulations,based on U.S. Food and Drug Administration(FDA) models, were nearing adoption byMorocco’s Ministry of Agriculture. For IR3.4,“Improved competitiveness of USAID-assistedfirms which generate employment for below-median income people,” the Morocco AgribusinessPromotion (MAP) and the Accessing InternationalMarkets (AIM) are the primary activities focusedon improving the competitiveness of firms thatemploy below-median income people. AIM closedon July of 1996. Under IR3.4, exports of horticul-tural and other products increased. A majority ofthese export sales went to nontraditional marketsand some were in new or nontraditional products.New horticultural products were introduced thatbenefit Moroccan exporters. Moroccan firms alsoadopted new production, processing, packaging,transport, and management technologies.

FY 2000 R4. TCB activities continue under SO3and IR3.1 and 3.4. Accomplishments under IR3.1include USDA concurrence with phytosanitaryprocedures for tomato exports to the United Statesand the completion of the Truck Export SurchargeCut. Progress was made on the implementation ofthe Agricultural Intellectual Property Rights law,the Uniform Food Safety Standards andRegulations, and Crop Contracts and Arbitration.Under IR3.4, progress continued in export sales,export sales in new markets, market diversificationproducts, introduction of new horticultural prod-ucts, adoption of new U.S. technologies, andreduction of road transport costs for food exporters.

FY 2001 R4. TCB activities continue underSO3 and IR3.1 and 3.4. A big accomplishmentunder IR3.1 was the advent of tomato exports to


the U.S., following five years of effort and Animaland Plant Health Inspection Service (APHIS)approval. Implementation of the AgriculturalIntellectual Property Rights law continued. UnderIR3.4, progress continued on horticulturalexports, diversified agricultural exports, introduc-tion of new horticultural products, and adoptionof new U.S. technologies.

FY 2002 R4. TCB activities continue underSO3 and IR3.1, but IR3.4 has been dropped.Future assistance will be delivered under SO5,“Increased Opportunities for Domestic andRegional Trade and Investment,” that will concen-trate on making the trade and investment envi-ronment more attractive. Under IR3.1, a competi-tion law was passed and phase 1 of the Investor’sRoadmap was completed.

FY 2003 R4. The new SO5, “IncreasedOpportunities for Domestic and ForeignInvestment,” is based upon two IRs: IR5.1,“Improved legal, administrative, regulatory, andpolicy environment for private sector develop-ment,” and IR5.2, “Strengthened capacity ofselected institutions to foster private enterprise.”Approval of the SO did not occur until March2000. The mission used supplemental resources torevise the newly enacted competition law and con-duct a watershed study on the potential for tradedistortions arising from the Moroccan–EU freetrade agreement. Economic support funds (ESF)were used in the reengineering phase of theInvestor’s Roadmap exercise.

Mozambique

Rationale The initial rationale for SO 656-00, “ImprovedEnabling Environment for Private Sector-LedGrowth and Development,” was to improve theenvironment for economic growth and develop-ment by expanding existing government effortstoward an open market economy.

Approach and Modality The approach focuses on two results: (1) increasingthe role of the private sector in the development of

economic policy, legislation, and regulations; and(2) improving policies and facilities to encouragetrade and investment. Under the second focus,USAID activities promote tax system reforms,reduction of red tape, telecommunications policyreform, trade openness, the establishment of a dis-pute resolution center, and privatization of threemain rail lines that serve much of the eastern areaof southern Africa. USAID provides a combinationof technical assistance resources to the private andpublic sectors and budget support to compensatefor temporary revenue shortfall resulting from insti-tutional, tax, and tariff reforms.

Performance MeasurementA trade capacity building indicator does not appear until the FY 2003 R4. It is under IR4.1.1,“Effective and informed private sector voice in pol-icy formulation.” This IR’s only indicator, “Analysesof proposed policies or legislation performed orcontracted by Confederation of MozambicanBusiness Associations (CTA) annually,” includesanalyses of Southern Africa DevelopmentCommunity (SADC) trade protocol.

Evolution of the SOFY 2000 R4. The SO is introduced as a proposedSpO, “Improved Enabling Environment forEconomic Growth and Development.” It was created to unite improvements to the overall socioe-conomic enabling environment, track progress inthe overall environment for growth and stability(such as public sector reform and the developmentof a new commercial code and fiscal legislation),and serve as the central point for tracking the mis-sion’s macroeconomic policy. Significant assistanceis to be received under the Africa Trade andInvestment program (ATRIP). Under ATRIP, themission would help the government expand itsefforts towards an open market economy, whichinclude trade and investment treaties and protocolsand tariff reduction.

FY 2001 R4. The SO appears as a SpO:“Improved Enabling Environment for PrivateSector-Led Growth and Development.” USAIDwill focus on two results for this SpO: (1) increas-ing the role of the private sector in the develop-ment of economic policy, legislation, and regula-


tions; and (2) improving policies and facilities toencourage trade and investment. Under the secondresult, USAID supports more openness to trade-both regional (under the SADC trade protocol) andglobal (under the WTO); the introduction of avalue-added tax; the reduction of red tape; and thecompletion of the privatization of the three mainrail lines, which serve much of the eastern are ofSouthern Africa. USAID will provide a combina-tion of TA resources to the private and public sec-tors and nonproject assistance to compensate fortemporary revenue shortfall from tariff and taxreforms. USAID worked on developing a consensuswithin the Mozambican private sector that regionalfree trade deserved its support, and then provideddirect support for the government’s negotiatingteam for the SADC Trade Protocol.

FY 2002 R4. The objective keeps its name, butchanges from a SpO to SO4 (656-004). The goalsand activities under the second goal of trade andinvestment remain the same. The program built on1998 assistance to the private sector by providingthe Government of Mozambique with the resourcesto establish a Trade Technical Unit (TTC) to nego-tiate SADC trade protocols. The TTC is staffed byhigh-level Mozambican officials, backed by short-term assistance from a U.S. trade specialist. TheMozambican delegation is now a strong negotiatingteam, and debate on trade issues is now open, pub-lic, and newsworthy.

FY 2003 R4. The SO title and goals remain thesame and activities are expanded to includetelecommunications policy reform and the estab-lishment of an alternate dispute resolution center.This year, CTA conducted policy analysis of tradeissues, particularly the SADC Free Trade Area andAfrica Growth and Opportunities Act. The CTAcan take much of the credit for Mozambique’s fullcommitment to the regional Free Trade Area (FTA)envisaged by the SADC protocol, a major policytransformation achieved in a very short period.USAID support for trade reform, including theAfrican Growth and Opportunity Act (AGOA) and WTO principles will continue. Mozambicanbusinesses have increasing access to global andregional information and markets throughincreased internet services.

The Philippines

RationaleUSAID activities were designed to transformMindanao from an impoverished supplier of pri-mary products to one of the most productiveregions in the Philippines, with a standard of livingequal to the national average. Increased investmentand higher value exports would dramaticallyincrease employment and welfare. Internationaltrade was a minor part of the program. The pro-gram was put in place after a peace agreement wassigned in Mindanao. The SO 492-001, “TheEconomic Transformation of Mindanao” would bethe economic glue to make the peace agreementstick. By 2001, the fighting started up once more,investment and economic activity ground to a halt,and the SO was closed down.

Approach and ModalityThe project design concentrated on facilitatinginvestment in new enterprises that would generatenew jobs. Assistance to farmers and fishermenwould help them gain access to more lucrative mar-kets that would dramatically increase their income.The project built a new airport that would greatlyincrease passenger and air cargo traffic. Increasedgovernment infrastructure investment andimproved telecommunications were designed togreatly encourage business investment.

Performance MeasurementThe original targets were creation of 250,000 newjobs; $6 million in higher valued products shippedfrom Mindanao; a $1.4 billion increase for directexports; and investments in new enterprises to cre-ate 25,000 new jobs and a 160 percent increase inthe incomes of 9,300 farmers and fishermen.

Evolution of the SOFY 1999. With a new peace agreement, peace isnow possible in Mindanao. USAID will work tosupport economic growth to make the agreementsucceed. USAID will expand activities in the newlycreated Zone of Peace and Development. It willmake Mindanao a safe place to do business.


FY 2000. The 1997 Asian financial crisis hasmade it harder to create new jobs. Employment issharply down. Mineral exports are below target,though higher value products shipped to domesticand international markets are above target. Theproject is working with USAID’s Office ofTransition Initiatives (OTI) to help former combat-ants become productive farmers. Success withmicroenterprises and rural banks is encouraging.

FY 2001. An expanded effort has been launchedto better link low-income groups to markets. Workon the policy environment and business supportorganizations is going forward. Efforts will nowshift to assisting Muslim excombatants to becomeproductive farmers.

FY 2002. The Government of the Philippinespledges to increase the share of national infrastruc-ture investment that goes to Mindanao. Themicroenterprise program triples in size. New privateinvestment falls significantly below target.

FY 2003. The security situation and the politicalatmosphere have dramatically deteriorated.Outbreaks of violence in Mindanao have broughtinvestment to a halt. Crucial national economicreforms are lagging. Trade protection has not beenreduced. Due to the bad political and economic cli-mate, the Mindanao SO1 will be combined withSO2, which supports a more competitive economicenvironment. Peacebuilding activities in the oldSO1 will become part of a SpO. Work will con-tinue on helping the Philippines on several tradeissues, including meeting WTO commitments,with special emphasis on customs valuation. TheSO2 will also include efforts to reduce corruption,improved governance and encourage open andcompetitive markets.

Regional Center forSouthern Africa (RCSA)

Rationale SO2, “A More Integrated Regional Market,” wasformally adopted in May 1997. According to theRCSA FY 2000 R4, “SO2 was developed in the

belief that Southern Africa’s economic performancewill improve if the region can begin to operate as asingle market in which goods, services, capital andlabor move easily across national borders. RCSAexpects a more integrated regional market to lead toincreased trade and investment. Increased trade andinvestment will, in turn, lead to business expansion,employment and income growth and greater foodsecurity.” As the SADC countries pass trade proto-cols, the rationale of the SO is adjusted to also pur-sue increased trade and investment opportunitiesfor the region under the WTO and AGOA.

Approach and ModalityThe RCSA mainly provides technical assistance tohelp SADC countries form trade agreements andreduce transport costs for trade. Training is alsoprovided to increase the capacity of the private sec-tor to advocate for the expansion of regional trade.

Performance MeasurementThe SO started in the FY 2000 R4. The followingIRs and indicators are in FY 2000-03 R4s.“Increased value of intra-SADC trade” is an SO-level indicator, while “Reduced barriers tobroadened participation in the regional market” isIR2.1, with the indicator “Decreased proportionof intra-SADC imports subject to tariffs in excessof 10 percent.” “More efficient provision of infra-structure” is IR2.2, with indicators “Reducedtransport costs of imports;” “Number of licensedtelecommunications service providers;” “Costs oftransporting imports—Beira to Ndola” (added inFY 2003 R4); “Costs of transporting imports—Durban to Ndola” (added in FY 2003 R4); and“Extent of telecommunications service provision”(added in FY 2003 R4). IR2.3 is “Advocacy forsustained regional integration strengthened,” butperformance data tables are not provided.

Evolution of the SOFY 2000 R4. SO2, “A More Integrated RegionalMarket,” is formally adopted in May 1997. To meas-ure economic integration, RCSA will monitor thevalue of trade within the region and with the rest ofthe world. RCSA will also monitor four commodi-ties (Panado, Surf, Colgate toothpaste, and Toyotaoil filters) to serve as a proxy of overall wholesale


price convergence. The SO2 has not been in placelong enough to show progress at the SO level, but itdoes mention that the SO is building on past workto reduce trade barriers, increase the efficiency ofinfrastructure, and strengthen networks to addresspolicy formulation and integration.

FY 2001 R4. Performance of the SO exceededexpectations. Evidence of a more integrated marketis seen in the increase in intra-SADC trade, reduc-tion in tariff and nontariff barriers, formulation ofregional networks, development of SADC proto-cols, and the changed nature of the debate withinSADC. Under IR1, “Reduced barriers to broad-ened participation in the regional market,” progresswas made in the development of a Finance andInvestment Protocol that will complement theexisting Trade Protocol. The new protocol will pro-vide a framework for harmonizing central bankpolicies and regulations and for audit and account-ing standards throughout the region. Under IR2,“More efficient provision of infrastructure,” RCSAactivities focused on efficiency concerns rather thanbuilding roads or rails. The average transportationcost did decrease, and member states are in theprocess of adopting simplified and harmonized cus-toms clearance procedures. Under IR3, “Increaseadvocacy for sustained regional integration.” thediscussion has changed to when, not if, regionalintegration should occur, in what sectors, andunder what institutional arrangements.

FY 2002 R4. Activities continue in the three areasof reducing trade barriers, increasing efficiency intransportation and communications, and buildingthe capacity of associations to advocate for policyreforms. With technical assistance provided by theRCSA, SADC member states ratified the TradeProtocol in 1999, which established the legal andpolicy framework for the creation of the SADCFTA. Implementation of policies following 1998 rat-ification of the Transport and CommunicationProtocol, with RCSA’s technical assistance, are con-tributing to a reduction in transport costs. There hasalso been an increase in dialogue on regional integra-tion issues between national governments and theprivate sector, as a result of assistance provided bythe RCSA to public and private sector groups.

FY 2003 R4. TCB activities continue under thethree IRs. Following the SADC Trade Protocol rati-fication in January 2000, the SADC FTA waslaunched in September. RCSA provided support tothe member states for the FTA and helped buildprivate sector support through private sector aware-ness efforts. Eleven SADC countries were declaredeligible for expanded trade benefits under AGOA,and four successfully completed the certificationprocess. RCSA was also involved in the establish-ment of institutions and systems that will make upSADC’s electricity trade market, and supported fur-ther implementation of transport sector andtelecommunications policy reforms.

Romania

Rationale The rationale for the SO was to capitalize on thepresence of a reform-minded government to insti-tute the necessary policy and legal changes to spurthe development of private enterprise in Romania,which would encourage economic development,create employment, and reduce poverty.

Approach and Modality After the new government came to power in 1996,USAID decided to shift its activities from a localfocus to policy reform that would provide an envi-ronment for private sector growth. It was decidedto narrow the focus of the SO to include agribusi-ness-related enterprises. Over the next couple ofyears, the focus was maintained, though economicreform slowed and macroeconomic indicators didnot perform well. The Romanian economy suffereddue to the Kosovo conflict, but the government’ssupport for NATO was rewarded with EU acces-sion talks. USAID strategy shifted to working withintermediary organizations and MSMEs.

Performance Measurement The FY 1998 R4 indicators were not very effectivein data collection, concentrating on aspects such asphysical infrastructure, more competitive marketplaces, increased capital investments, and improvedmanagement practices. These indicators were refinedover time to facilitate more effective data gathering,


with new indicators on strengthened BSOs andmore refined indicators showing increased capitalinvestments and improved management practices.The indicator for improved management practiceswas dropped in FY 2001. The following year, theintermediate results were adjusted for the same indi-cators for more accurate reporting.

Evolution of the SO FY 1998. The FY 1998 R4 (May 1997) is verybullish about the new reform-minded administra-tion voted into power in Romania. It reports a shiftin strategic plan from pilot and local activities to amore policy-focused intervention. It also mentionsthat by the end of FY98, the focus of SO1.3 will benarrowed to privatization, agriculture, and thedevelopment of agribusiness. The R4 reports thatkey laws in bankruptcy, intellectual property rights,competition, and commercial law have been passed.It mentions that USAID is working to reduce thelicensing time required for new entrants to privateenterprise. A number of clients were financed bythe Romanian American Enterprise Fund. Humanresources were improved with the creation ofCenters of Business Excellence in key universities.Progress will depend on creating an open and com-petitive marketplace, increased capital investmentin private enterprises, and improved managementpractices adopted by enterprises.

FY 2000. This R4 (May 1998) reports that theprivate sector increased its share of contribution toGDP, from 52 percent in 1996 to 58 percent in1997. Improved legislation was passed to promotefluid land market; lower income and profit taxa-tion; increased open competition; increased foreigndirect investment; and leasing. In addition, as ofDecember 1997, the Romanian AmericanEnterprise Fund had provided loans to 15 largecompanies, 23 small companies (total $1.5 mil-lion), and 223 microenterprises (total $1 million).The confusing and inadequate legal frameworkacross all sectors continues to impede economicgrowth, while the judiciary is in need of major,comprehensive reform. Thus far, donors have pro-vided little assistance to the judicial sector. The R4mentions that the U.S. Government can take thelead in establishing such reform. USAID assistanceunder SO1.3 will target three areas: an improved

policy, legal, and regulatory framework in placethat supports private enterprise development(including SMEs); increased capital investment inprivate enterprises; and improved managementpractices adopted by businesses. The policy regula-tory work will be done in partnership with theWorld Bank, which is preparing a $175 millionSME development project. The focus of agribusi-ness development will continue.

FY 2001. The FY 2001 R4 (March 1999) statesthat progress toward economic reform has beenextremely slow in the past year. The mission hasmade several adjustments to its SOs and indicatorsto effectively capture the results of its assistance.Current tax and investment policies provide disin-centives for foreign and domestic investors. USAIDrealizes that, in the longer term, the overall invest-ment climate must improve and associations mustplay a greater role in facilitating private sectorgrowth. SO1.3 will shift the bulk of the reform andadvocacy interventions to business associations andsupport organizations. It will continue to push forremoval of subsidies, reduction in import tariffs,and other trade-friendly measures. The mission willalso start working with MSMEs and link sustain-able business and agricultural associations withadvocacy. To bolster human talent, USAID will alsowork to encourage the returned of skilledRomanian students and promote opportunities forAmerican volunteerism. The mission also showedconcern about efforts to promote subsidized crediton the part of EU.

FY 2002. The March 2000 R4 document statesthat Romania’s support of NATO was recognizedby EU, which invited Romania to participate inaccession talks. It also refers to a growing informaleconomy (estimated at about 50 percent of the for-mal GDP) that accommodates the large numbersof those unemployed as a result of privatization andjob losses. Romania’s economy was badly jolted bythe Kosovo conflict and the Serbia embargo, whichsevered markets and destroyed shipping on theDanube. The mission’s program has encouragedincreased domestic and foreign investment in largerscale enterprises. The Romanian AmericanEnterprise Fund (RAEF) has issued $35 million inloans and venture capital to 17 large companies,


leveraging total financing of $81 million for theseprojects. The U.S. investment promotion program,the Capital Trade and Development Group, hasstimulated $33 million in investment. It has alsospurred about $44 million in U.S. imports forequipment goods. A “red-tape analysis” was com-pleted, which identifies barriers to private develop-ment and foreign investment to foster critical regu-latory and policy changes. It is expected that theagribusiness sector will spur exports and efficiencyby increasing the production of valuable fruits andvegetables and using agricultural waste for con-struction materials.

Russia

RationaleUSAID policy in Russia is to work with SMEsnewly created as a result of privatization or newbusiness ventures, assisting a number of BusinessSupport Institutions (BSIs) that would providebusiness development services.

Approach and ModalityIn conjunction with BSI assistance to provide sup-port to SMEs, USAID also worked on the policyand regulatory environment to ensure that SME-friendly laws were enacted. New microfinance pro-grams to provide lending to SMEs were also devel-oped. As a result of privatization, many ordinaryRussians found themselves holding vouchers forpart-ownership of their former workplaces. Therewas an explosion of SMEs where individual firm-level assistance was not possible. Thus, USAIDconcentrated its efforts on working with intermedi-ary service providers who could ultimately be madeself-sustaining, either through membership dues oruser fees.

Performance MeasurementThe indicators included in FY 1998 R4 to showthe development of the private sector were policies,laws, and regulations; land and real estate marketmechanisms; models of private ownership; and anetwork of sustainable BSIs. These indicators werereported on in the following year. FY 2001 sawreporting done on a new set of indicators: whether

small and medium sized businesses flourish overtime; whether successful models of private owner-ship and modern management are widely repli-cated; and whether modern management practicesadopted by private sector firms translate intoincreased external financing. The following year,these indicators are slightly revised again to show the increase of SMEs over time, identify successful models of private ownership and modern management and whether they are beingadopted by firms.

Evolution of the SOFY 1998–99. The FY 1998-99 R4 reports thatthe SO for private sector development played astrong role in the Agency’s goal of Broad-BasedEconomic Growth. It is a high priority for theUSAID Bureau for Europe and the NewIndependent States (ENI). Although Russia’s overallenvironment for accelerated private sector develop-ment could be improved, USAID Russia activitieshave been supporting commercial law develop-ment, the formation of a functioning land and realestate market, restructuring of privatized firms, andthe development of Business Support networks.USAID provides firm-level assistance to newly pri-vatized and new business ventures, as well as sup-port to Business Support Institutions that providetraining, advisory services, and business contacts toa client base of entrepreneurs and business associa-tions. USAID has started several regional initiativesto spur economic growth. Tax burdens, lack ofmarket information and experience, managers’resistance to new standards of corporate gover-nance, gaps in the legal and regulatory framework,inadequate law enforcement, and uncertain owner-ship rights to assets are all listed as impediments tobusiness growth. The R4 reports that under theClinton Administration proposed a “Partnershipfor Freedom in the NIS [New Independent States]”There is a chance of substantially increased fund-ing, compared to previous levels.

FY 2000. The FY 2000 R4 (April 1998) outlinesreal estate reform, housing sector reform, businessdevelopment support and management training,business consultant expertise programs, universitylinkages, creation of centers of business develop-


ment, and business network strengthening as prior-ity areas for the accelerated private enterprisegrowth SO. USAID assistance will continue tofocus on BSI assistance and the ability to makethem self-sustaining. The resource requirement forthe entire SO for FY 2000 was about $15 million,compared to $16 million in FY 1999 and $19.5million in FY 1998.

FY 2001. R4 (April 1999) reports that there hasbeen a dramatic increase in the number of SMEsacross Russia. USAID Russia continues to supportbusiness training for individual entrepreneurs inmarketing and western management practices;onsite client-focused business consulting services;formation of effective and sustainable business asso-ciations, trade organizations and business supportcenters; access to credit from nonbank sources; andland and real estate privatization to help makeadditional collateral available through monetizationof assets. Indicators showing private sector growthincluded the number of SMEs registered in Russia,number of additional jobs created, and the abilityof USAID-assisted firms to access external financ-ing. In spite of the August 1998 economic crisis,USAID has continued to pursue its initial SO tar-gets because the fundamental problems with thedevelopment of the private sector remain-access tocredit, lack of trained human capital, and unfavor-able policy environment. The FY 2001 budgetrequest is for about $16 million, with slightly moreresources aimed at microenterprises than in the previous years.

FY 2002. The April 2000 FY 2002 R4 reportsthat private sector growth is targeted primarilythrough assistance to BSIs. This includes training,counseling, internet use, and appropriate referralsto help entrepreneurs obtain business opportunitiesand financing, along with greater access to financefor Russian entrepreneurs from nonbank financialinstitutions, often through microfinance institu-tions. USAID also works to improve the policy andregulatory environment for small businesses.

Sri Lanka

RationaleIn FY 1999, the strategy included SO1, “IncreasedPrivate Sector Employment and Income,” whichaddressed “major constraints to entry and opportu-nity in the private sector.” Activities were designedto expand private enterprises and improve theenabling environment. The SO has few trade devel-opment interventions in FY 1999 and 2000. SO1is changed in FY 2001 to add trade. It is nowdesigned to create “an improved framework fortrade and investment.” By FY 2002 the rationale isamended to “Improving the framework for tradeand investment, which contributes to the USAIDobjective of expanded and strengthened privatemarkets, which is the main contributor to broad-based economic growth.” In FY 2003, the SO1remains, but a new specific trade SO is added. The new SO4, “Improved Competitiveness,” hasthe goal of “increased competitiveness in the global marketplace.”

Approach and ModalityFive activities are implemented by USAID contrac-tors: IESC, OSU/DAI, J.E. Austin, DeloitteTouche, and ISTI. Mission staff work with the gov-ernment to encourage adoption of policy and insti-tutional reforms. Nathan and MSI are added in FY2003, as trade becomes an emphasis.

Performance Measurement As is usual in R4s, all targets are achieved or sur-passed, or they are dropped or changed.

Evolution of the SOFY 1999. The USAID TIPS, AgEnt, MED, andSCOR projects provided 14 percent of Sri Lanka’semployment creation in 1996 (12,212 jobs).Stock exchange development and IPOs providedcapital that generated 3,000 jobs. The number ofshareholders increases by 10,000. Governmentprivatization was $77 million. There is increasedprivate sector investment, more food is distribu-tion by the private sector, and use of improvedagricultural technologies is up. There are no indi-cators of trade impact.


FY 2000. The SO continued its focus on job cre-ation, technology, investment, and support of thestock exchange. SME promotion is added as a spe-cific concern. Trade trips and trade shows are usedto promote exports. Exports related to USAIDactivities were $119 million. As in the last year,everything is working well.

FY 2001. The redesigned SO that includes tradesupports nine new policy and regulatory reformsneeded to improve domestic and export competi-tiveness. It will work with 30 private sector associa-tions. Policy and institutional reforms include sec-ondary trading in government bonds; code of con-duct for primary dealers; improved banking super-vision and regulation; reduced tariffs on packagingmaterial; intellectual property rights; infrastructurepolicies and; agricultural technology.

FY 2002. Eight of the nine policy reforms aresuccessfully launched. Imports of new agriculturaltechnology increased from $.9 to $1.7 million.Sales in targeted sectors rose $30 million andimports of genetic material increased from $1.75million to $4.8 million. Support for competitive-ness clusters and improved corporate governanceare now included in the SO.

FY 2003. The nine SO1 policy reforms haveincreased to 20. Many trade development reformshave been shifted to a new trade SO4 that hasestablished five clusters and a private and publicsector dialogue.

West Africa RegionalProgram (WARP)

RationaleThe FY 2003 R4 is the first R4 for the West AfricaRegional Program. It is a new program based inMali. The goal of the WARP is a politically stableand economically prosperous West Africa. No specific rationale is given for SO4, “RegionalEconomic Integration Strengthened in WestAfrica,” but the ultimate beneficiaries of its invest-ments in increasing interregional trade and harmo-

nized trade laws and energy regulations are allinhabitants of the West Africa region.

Approach and ModalityActivities currently described in the SO are technicalassistance and training. Seminars and business link-ages programs are planned to develop the capacity tosupport the expansion of trade. Regional trainingactivities are planned for improving and expandingbanking services, and technical assistance is providedfor the regional energy initiatives.

Performance MeasurementSO4 has two SO indicators: “Percent of total tradethat is intra-regional increased from 10 percent to25 percent by 2008,” and “Harmonized regulationsfor the international trade of gas and electricityadopted in at least seven ECOWAS [EconomicCommunity of West African States] countries.”SO4 also has four intermediate results. IR1 is“Intra-regional barriers to trade reduced;” IR2,“Improved dialogue and coordination on tradepolicies among West African countries;” IR3,“Improved harmonization of regional monetaryand fiscal policies by West African countries;” andIR4, “Improved regional institutional capacity toprovide sustainable and competitively priced supplyof energy.” Additionally, IR4 has two indicators.Indicator 4.2, “International electricity intercon-nection capacity in the ECOWAS region increasedto connect all countries in Zone A by 2005 with aninvestment of at least 100 MW connecting to ZoneB by 2008,” and Indicator 4.3, “Transnational elec-tric energy sales within ECOWAS grow each yearfollowing the establishment of regional electricalentity, and transnational sales (in MWh [megawatthours]) during 2008 are at least triple transnationalsales in 1999.”

Evolution of the SOFY 2003 R4. The SO was approved for theperiod FY 2001–08. The targeted subsectors aretrade and investment, banking and finance, andenergy. In the area of trade and investment, the SOwill work to reduce barriers to trade and buildtrade and investment linkages between West Africaand the United States. In banking and finance,


training will occur to improve banking services andincrease the capacity of banks to facilitate interna-tional trade and expand domestic lending activities.Interventions in the energy sector involve supportfor the establishment of the West African PowerPool (WAPP), a project involving the national elec-trical utilities and energy ministries of 14 of theECOWAS countries.


This Evaluation Working Paper can be ordered from USAID’sDevelopment Experience Clearinghouse (DEC). To downloador order publications, go to www.dec.org and enter the document identification number in the search box. The DECmay also be contacted at 8403 Colesville Rd, Ste 210, SilverSpring, MD 20910; tel 301-562-0641; fax 301-588-7787;email [email protected].

Editorial, design, and production assistance was provided byIBI-International Business Initiatives, Arlington, VA, undercontract no. HFM-C-00-01-00143-00. For more information,contact IBI’s Publications and Graphics Support Project at703-525-2277 or [email protected].

For more information, contactU.S. Agency for International Development

Washington, D.C. 20523-1000

Telephone: 202-712-4810

Internet: www.usaid.gov

PN-ACT-167

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