Maria Vagliasindi

Institutional reform for investment and growth in South Eastern Europe

This study analyses the institutional impediments to investment and growth in SEE and suggests ‘second generation’ policy reforms to ease these constraints. Chapter one reviews the recent trends in the economies of the eight countries that comprise the region (SEE8) and their prospects for international and intra-regional integration. It conveys the message that a favorable institutional framework for domestic and foreign investment is essential to achieve sustainable growth in SEE. The chapter presents the scope, methodology, and the approach the study undertakes for assessing the role of key market institutions in SEE business development. The analysis utilizes not only traditional, official data from the eight countries to assess the characteristics, trends and relationships between these institutions, but also employs data from a set of 40 original enterprise-level business case studies carried out in each of the eight countries and the two rounds of the Business Environment and Enterprise Performance Survey (BEEPS) conducted in 1999 and 2002. The study focuses on four institutions that relate fundamentally to the efficient operation of market incentives in an economy: (i) inter-enterprise competition and economic barriers to entry/exit, (ii) access to (regulated) utilities and infrastructure services, (iii) corporate governance, financial transparency and access to finance, and (iv) commercial dispute resolution. The methodological tools employed in the analysis investigate these institutions systematically across the eight SEE countries to allow for cross-country and cross-sectoral comparisons, and to develop a regional as well as a country-specific perspective on corresponding policy challenges. Chapter two presents an overview assessment of each of the four core issues of this study. It reviews in the aggregate the business environment in the eight countries, based on BEEPS (1 and 2) and the EBRD transition indicators. The remaining sections of this overview present a summary of the main findings of each of the four core chapters of the study: competition, regulated infrastructure utilities, corporate governance and finance, and commercial dispute resolution.

Revisiting public-private partnerships in the power sector

As the world demand for energy continues to grow, a big question is where will all the energy come from and what will the price tag be. With such enormous sums needed, public-private partnerships (PPPs) could play a big role. But the financial crisis has raised worries about funding, and much is still not known about how best to attract PPPs. This report reviews the evidence to date with sectoral reforms and considers different approaches in varying circumstances to help outline the potential role of the private and public sector in: 1) strengthening the corporate governance of private and public utilities; 2) helping governments to establish legal, regulatory, contractual, and fiscal frameworks; and 3) improved market governance to attract private investment. Chapter one reviews the impact of the recent financial crisis on PPP investment compared with what happened in earlier financial crises. It also looks out the latest projections for additional power sector investment needed because of climate change and the possible sources of financing. Chapter two examines how PPP investment in the power sector has fared. It also gives the results of an econometric study that explores which types of incentives and variables matter most to PPPs when they are weighing entering the power sector, especially in renewables, and what influences the ongoing level of investment. The idea is to provide a powerful benchmarking tool at the sector and country levels against which governments and policy makers can evaluate progress on this issue. Chapter three examines four case studies-in China, Brazil, Peru, and Mexico-to identify, disseminate, and promote best practices on alternative ways to attract PPPs.