Strengthening institutional capacity for economic policy-making

Improving institutional capacity for economic management
Traditional policy-making agencies of governments of developing countries (ministries and departments of industry and trade) are often ill-equipped in terms of management, analytical and research capacities to make well-informed policy choices and to manage efficiently government programmes of incentives. In many cases, such governments have not fully perceived the close relationship of trade, investment, and technology (including manpower skills development and technology acquisition), which necessitates an appropriate institutional arrangement within the government machinery. Such relationship calls for new systems of government coordination as well as for new mechanisms in the governmental apparatus, all aimed at strengthening the role of the private sector in the economy. Instead of the earlier regulatory and control mentality, a cooperative and enabling environment is required from government agencies. Most developing countries have yet to develop representative, private sector institutions such as trade and industry associations and chambers of commerce. Where these institutions exist, they have in the past been primarily concerned with lobbying governments in an environment of government regulations. What is now required is for these organizations to develop technical capabilities to service their membership. This demands new skills, and new resources in particular with regard to access to market information databases. These organizations could also be partners in technical cooperation. Lastly, most developing countries have not utilized the technical skills of universities and research institutions in the process of policy development, formulation, and monitoring. Linkages need, therefore, to be established between governments, business, trades un ions and the academic/research community to develop a consensus on effective national strategies for building internationally competitive export supply capacities.
Technical cooperation in institution building is essential. In developing their export supply capabilities, many developing countries need technical know-how to strengthen and reorient their institutional system, and to improve their policy-making capacities. The public assistance programmes mentioned earlier should be subject to regular review to ascertain that they continue to generate net benefit. In this context, transparent mechanisms could be established to monitor the costs and benefits of such programmes. Similarly, institutional arrangements need to be made for technology acquisition and adaptation. Last but not least there is need for institutional capacity to promote and facilitate the inflow of FDI.
Type Classification:
E: Emanations of other strategies
Related UN Sustainable Development Goals:
GOAL 8: Decent Work and Economic GrowthGOAL 16: Peace and Justice Strong InstitutionsGOAL 17: Partnerships to achieve the Goal