Inclusive development: going beyond dialogue!

An integral view on development

Ir. Steven Coutinho MBA, (former UNDP)

October 22, 2013

Before we start, let’s check the temperature:
Observations from Roteract seminar last Saturday…

We should stop feeling

victimized
We are good at finger
pointing at each other

“Externally motivated people in general act - External forces beyond one’s control…
as if they are the victims of external forces - Is there a clear role definition for all?
beyond their control (Rokeach, 1970)”

Dare to dream

25 years ago we also talked

- Power Distance? (Hofstede, 1980) on privatization
- Can choices be made?
- Uncertainty Avoidance? (Hofstede, 1980)
- Role definition: who takes action?

It's like déjà vu all over again

- Framework of how to move forward? Looking for leadership

Who drives it?
- Lack of accountable process owners /
agencies that bring agenda forward
Source: Rotaract Curaçao Club 19 October 2013
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And this one is especially interesting…
as it indicates how complicated dialogue can be

“The key to understanding the private sector is to realize that it is not a club to which one can
belong by paying a membership fee and then following its rules. The private sector is a very
heterogeneous bunch.”

“Understand that the private sector is a big tent of often heavily diverse interests, “

Source: Speech by Ron Gomes Casseres, Rotaract Curaçao Club 19 October 2013
2
These observations can be grouped along two clusters:
1. Mindset or ‘Mental Models’ and
2. Strategy

Mental Models ❑ The invisible parts of change

Framework for Action ❑ Shared framework of development

(Strategy & Implementation) and the roles each one plays

Address one without the other and there will be no progress…

and all stakeholders will remain in dialogue mode

3
1
Mental Models

Mental Models - understanding the invisible parts of change

Framework for Action

❑ What are some of the basic beliefs that influence frames of reference (beliefs, inferences, goals)?

❑ Who is out there? - What are the groups that we can describe according to their frames of reference?

❑ Where can we start in attempting to bring those groups to a shared vision?

Every nation has leaders which fall into 5 groups:

Innovation Open Traders

Looking for a
referee

Source of
Frustrated
Advantage Partners
Influenced by
Culture
(parenting, Somewhat
Go-It-Alones
Satisfied
education, etc) Natural
Resources Private
Public Primary
Sector Actor Sector

Indicator Intensity
Governance Indicator
Diversification Development Diversification
[Link] Econ. Development

Power Distant Power Distant

85

Uncertainty Avoidant Uncertainty Avoidant

92

Collectivist Collectivist
47

Feminine 3Feminine
7

0 50 1 00
Source: Cu ltFairbanks,
Plowing the Sea. u r a l Dim en sion
Lindsay
4
Mea su r em en t
Geert Hofstede, 1990
IMF Publications
Conclusion 1

Only once we understand each other’s frame of reference,

our view of the world and our roles in it, can we continue

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2 Mental Models

Framework for action: 5 building blocks of successful countries

Step-by-step approach brings discussion forward
Framework for Action

❑ Ownership: - a high-ranking political principal

- clear authority to make decisions,
Clear Ownership
❑ Targets: - clear benchmarks for success (failure)
- use of automatic exit provisions when
initiatives do not meet targets, Targets

❑ Overarching Strategy: - clear choice selected export sectors

and their development through FDI
- each sector supported by focused
policies.
Overarching Strategy
All
Prioritisation

Sectors

Export and Public Policy

Enabling
Focus Domestic and Enabling
Sectors Sectors
Sectors Institutions
Business
Cases

❑ Implementation: - reliance on agencies with demonstrated Implementation

competence, a degree of autonomy
from daily politics
- clear support from political principal
Monitoring and Dialogue
❑ Deliberation: - use of deliberation bodies that engage
the private sector .

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Conclusion 2

Only if all 5 conditions are met, can we make progress.

Government ownership herein is key. There is no “leading from behind”

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1
Integrating: focus on both private and public sector (framework), but
also on individual, family and community (mindset)
2
Wealth

Performance Analysis
Income taxed to GDP / Capita Equal
deliver healthcare, (Added Value / Capita) Distribution
education, etc

Salaries

AddedValue
Added Value Employees
Employees
(Sector A)
(Sector A) (Sector A)
(Sector A)

Strategy: Strategy: Culture Skillset

Strategy

Low Cost Differentiated (Relevance)

Sector-by-Sector Dimension
Policies A

Governance &
Dialogue
Implementation

Public Private Individual

Investment Investment Value A
s s

Public Private Attraction Parenting Education Work

Partnerships FDI

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Conclusion 3

No matter which framework we choose, it needs to be all inclusive.

Transforming an economy cannot happen without transforming people’s minds.

“Sometimes people hold a core belief that is very strong. When they are presented with evidence that
works against that belief, the new evidence cannot be accepted. It would create a feeling that is
extremely uncomfortable, called cognitive dissonance. And because it is so important to protect the
core belief, they will rationalize, ignore and even deny anything that doesn't fit in with the core belief.”

― Frantz Fanon, Black Skin, White Masks

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The National Development Plan:
What can we learn from others?
Working sessions – Part 1

Ir. Steven Coutinho MBA, (former UNDP)

October 22, 2013

Suriname’s Multi Annual Planning Process 2006 – 2012: a complicated
political journey with many stakeholders leading to a paper tiger

Resource Team:
Strategic Context
Timelines

Compilation by
Planning Office

Aug 2005 Dec 2005 March 2006 July 2006

Election results Process Deadline Deadline

start Ministers Parliament

Process

➢ All 17 Ministers were asked to hand in their ‘vision’ by March 2006 (i.e. 4 months)

➢ Planning Office was meant to compile them, add underlying data and hand in to Parliament (as with previous processes)

➢ Seeing the pitfalls, Minister Planning and Development in Dec 2005 forms a Resource Team to supplement his Planning
Office

➢ Head of Planning Office had strong political affiliations → no collaboration between Minister Planning and Development →
parallel trajectories

➢ Political water-down of document at end of process to ‘appease’ all factions and limit accountability

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The resulting Multi Annual Development Plan did not contain the
5 necessary building blocks

Building Block Characteristic Drivers

Ownership No coherency between plans No overall coordinator of Ministers before they

devise policy (complicated by coalition politics)

Targets No clear targets, nor benchmarks, so no No clear starting point of how to measure wealth
progress measurement and social progress

Strategy No overarching strategy how to get there No time to create a shared vision between
coalition parties, nor between the Public and
Private Sector
Prioritisation Unrealistic budget estimates No prioritisation of projects. Policy became a
‘wish list’ of all projects

Implementation No phased timeline of how plans were to be No overall coordinator from an agency level.
implemented Each coalition party claimed their own ‘territory’

Monitoring / No clear role for either the Public Sector nor Unclear concept of development.
Deliberation the Private Sector Distrust between parties.
Unclear mental mapping of both ‘parties’

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Some well known examples analyzed along the 5 blocks
Building Block Singapore South Korea Ireland
Ownership Strong system leaders Prime Minister Prime Minister Prime Minister
Targets Clear Benchmarks High High High
Strategic Choice Level of state High High High
intervention
Market focus Export Export Export
Funding Source FDI Foreign Loans FDI
- Focus Period 1 Ship repair, oil, refining Steel, shipbuilding, Clothing and textile
Sectors petro-chemicals. chemicals
Period 2 Medium- and high-tech Manufacturing, Manufacturing
industry and chemicals, electronics
services.
Period 3 Financial and business Finance, insurance, Electronics, computers
services real estate and and software
business services
- Enabling Sectors Infrastructure Special Economic Zone Transportation industrial ICT and transportation
and office infra networks
Human Capital Proactive restructuring Proactive restructuring Proactive restructuring
of education system of education system of education system
Financial Services High High High
Implementation Prioritization and quick High High High
wins
Delivery Agency Economic Development Economic Planning Fragmented
Board Board
Private Sector High High High
Involvement
Monitoring & PPD platforms EDB FKI NESC
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Deliberation
Implementation along with Ownership: there are enough consultant
reports with targets and strategies, action is key.

Country Institution Mandate Source of Authority Human Capital

Ireland Industrial a) Identify emerging sectors in global Autonomous semi-state

Development economy and attract major companies to those agency founded in
Agency sectors strategically relevant to Ireland. legislation
b) Funding through inward investment promotion
1949 - agency.
c) Build links between businesses and 3rd level
education, academic and research centers to ensure
necessary skills and research and development
capabilities are in place.
d) Actively engages in development of infrastructure
and business support services, telecoms, education,
regulatory issues

South Korea Economic Park Chung Hee wanted to transform South Korea Headed by the deputy Bureaucrats known
Planning from a backward agricultural nation into a modern prime minister and for high intellectual
Bureau industrial nation. In 1960s, the board formulated all endowed with capability and
of South Korea's economic plans, allocated resources institutional autonomy educational
1961 - and directed the flow of credit thus increasing its background in
coordination. business and
economics.
Singapore Economic a) to formulate and implement economic and Statutory Board. Set up Selection of some of
(Kumar, Development industrial development strategies; by an act of Parliament the best candidates
2010) Board b) to develop Singapore into a global city with total and empowered to act to go overseas to
business capabilities by attracting foreign on secondary study the
EDB investments, developing local enterprises as well as legislation, without humanities,
implementing strategic overseas projects with reference to parent sciences,
1961 - current significant linkages to Singapore. ministry. engineering, or the
Ten line divisions aligned along clusters which Sufficient funding with professions.
Singapore has designated for its growth strategy. annual Budget: US$
223 million (2007)

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Dialogue: competition in a globalized world comes down to competition among
different systems of government–private sector collaboration and relationships

Every sector requires a different approach by the Government

Government
Primary Sector Investment Trade
Policies Choice Policy Policy
(Primary)
Macroeconomic Policy

Infrastructure

Government
Supportive Institutional Framework
Policies
Law

Education

Financial System

Business Business Product Market

Strategies Development Development Development

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Putting it all in perspective

CURACAO

16
Ownership, presence and accountability: no-one can lead from behind

Prime Minister

Curacao Development Board

Parliament
(across political cycles)

Authority enacted by law, staffed

and funded professionally

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 Target scenarios can be modeled: “Catch-Up” & “Take-Off”. Need to also
incorporate demographic ambitions and equal distribution

Wealth

GDP Distribution

GDP / Capita

ThreeTarget
Three scenarios
GDP can be modelled
scenarios can be modeled GINI has been stable over last years
3. Take Off
5% Regional GDP Growth 1 Maximal inequality
4%

3% ❑Debt Maturity 2. Catch Up

S. Africa: 63
❑Foreign tax rules expires
2% ❑Refinery lease expires 1. Fall Behind 0.5
1%
Curacao: 39

0% Denmark: 24
2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019
-1% Perfect equality
0
-2%
2005 2006 2007 2008 2009 2010 2011 2012 2013
-3%

-4% Today

18 Source: Data from Ministry Economic Affairs

Sources: IMF, CBS, and Central Bank
Overarching Strategy: starting point should be productivity

40,000 Financial Services

Government

35,000 Education
(Private)
Average Annual Wage (USD)

30,000
Transport Utilities
25,000
Health Real Estate, Renting
20,000 Services and Business Services
Trade Services
Manufacturing
15,000

10,000
Community
Hotel & Services Bubble size
5,000 Restaurants = 5000 employees
Agriculture
-
0 50 100 150
Labor Productivity (USD * 1000's / Employees)

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Prioritisation: sectors with highest productivity are under pressure.

Curacao Sector Productivity Breakdown

0.30
Utilities
2019:
Foreign tax rules expires
Financial
0.25 Services

0.20 2019:
Productivity

Refinery lease expires

0.15 2019: Real estate,

Manufacturing
Debt Maturity commences renting and
business activities
Transport
0.10
Agriculture Community Government
Services Admin Wholesale / Retail

0.05 Health
Education Hotels & 2019:
Restaurants
Construction LGO

0.00
0% 2% 4% 6% 8% 10% 12% 14% 16% 18% 20%

Contribution to GDP
Bubble Size
5000 employees

20 Source: Author’s analysis of CBS Curacao Author: Steven Coutinho

Implementation

21
Deliberation

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 Appendix: employment being generated in less productive sectors
Diagnostic
Gross Value Add per Sector Employment Labour Productivity
Annual Growth ’08 – ’11: 2.6% Annual Growth ’08 – ’11: 3.2% Average: 0.08

1. Financial intermediation 19.1% 4,713 0.20

2. Real estate, and 15.7% 7,100 0.11

business activities
3. Trade 12.4% 10,841 0.06

4. Transport, Storage and 9.4% 4,431 0.11

Communication
5. Manufacturing 8.9% 3,947 0.11

6. Public Administration 7.7% 5,349 0.07

7. Construction 5.8% 4,755 0.06

8. Health and Social Work 5.5% 5,916 0.05

9. Other Community Work 4.8% 3,489 0.07

10. Hotel and Restaurants 0.04

3.8% 4,817

11. Utilities 749 0.26

3.8%

12. Education Private 3,067 0.04

2.3%

13. Agriculture, Fishing 485 0.07

0.6%
and Mining

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