Participants at the EPAC G4G anniversary event in September 2016.
Photo courtesy of the G4G facebook page.
The 2008 Rose Revolution, which marked Georgia’s turn down a more democratic, market-based and Western-oriented path, kicked off a process of robust reforms and aggressive moves headed by then-President Mikheil Saakashvili to tackle the endemic corruption that had long hampered the country’s economic development. The turn was affirmed in 2014 when Georgia signed the Deep and Comprehensive Free Trade Agreement (DCFTA) and Association Agreement with the European Union (EU), signaling a commitment to enact further reforms and open its markets to Europe – a step that Georgians envision as eventually leading to EU membership.
However, despite the strong anti-corruption measures enacted after 2008, concerns about the rule of law and quality of governance also arose during that period. While there was not necessarily a threat of reforms being derailed, there were legitimate questions as to how representative the process was under the then-ruling government. Those trends led (in part) to the defeat of Saakashvili’s party in parliamentary elections in 2012, followed by the defeat of the presidential candidate from his party the following year. The business community had generally been in favor of many of the changes enacted under Saakashvili—though small and medium-sized enterprises (SMEs) did not always have a seat at the table.. With the change in government came some concerns that the economic reform trajectory could be reversed.
Over the past several months, CIPE intern Ann Sander Nielsen conducted in-depth research and analysis of one of the most troubling features of the break-up of the Soviet Union: the secessionist wars of the early 1990s, which ended without clear military or political resolution, leaving behind so-called “frozen conflicts” and leading to the emergence of new, unrecognized, separatist states.
These issues are topical today, with the unrecognized Russian annexation of Crimea, the annexation of South Ossetia, and the ongoing separatist conflict in Ukraine’s Donbas region, among other developments, demonstrating that the post-Soviet space is still struggling to chart its political direction and settle on its borders.
The recent signing by Georgia, Ukraine and Moldova of Deep and Comprehensive Free Trade Agreements with the European Union, viewed by some as the first step on a long road toward eventual European integration, may create additional pressure to resolve the status of the breakaway regions in these countries.
I worked with Nielsen to publish her research in this month’s Economic Reform Feature Service article, which looks at the political and economic factors that shape the de facto states of Eurasia’s frozen conflict zones.
Nielsen has also used her research to prepare a series of case studies, which CIPE will be releasing on this blog over the coming weeks, analyzing specific conditions in a number of the separatist regions in more detail. The first of those will look at Moldova’s breakaway Transnistria region.
Read the article here.
Marc Schleifer is the Regional Director for Eurasia & South Asia at CIPE.
Minister of Economic Development Pavlo Sheremeta (left) with CIPE Deputy Director Andrew Wilson (center) and László Kállay, SME expert and Professor at Corvinus University of Budapest (right).
In the weeks following the so-called “EuroMaidan” protests in Kyiv that led to the installation of an interim government and the scheduling of early presidential elections, attention in Ukraine began to turn to the need for urgent measures to jump-start the economy, as well as for a comprehensive set of policy reforms in the medium- to longer-term to get the country on track.
With stagnant growth, large fiscal deficits, and the likelihood that international assistance from the IMF will be predicated on a set of austerity measures, many analysts believe that the only way to stimulate Ukraine’s economy is to support the growth of the small and medium-sized enterprise (SME) sector, which represents just a small fraction of the country’s economy in comparison to the countries of Europe which Ukraine aspires to join.
To help articulate just what changes are needed, and to ensure that that the SME sector has a voice in the policy reform discussion, a group of Ukrainian business associations representing SMEs and leading think tanks organized a national forum to discuss a coordinated strategy for reform on April 8-9 with support from CIPE.
Participants at a recent capacity building workshop for women’s chambers in South Asia.
At CIPE, we take a systemic and institutional approach to supporting entrepreneurship. Systemic in that unlike other organizations, rather than providing training or microloans to individual entrepreneurs, we seek to understand the policy barriers that often make it difficult to register firms, access credit, or conduct business. Institutional in that we support the efforts of civil society organizations – chambers of commerce and business associations – that seek to engage and advocate with policymakers to eliminate those barriers.
In the case of promoting women entrepreneurs, CIPE has focused in a wide range of countries on building the capacity and strengthening the governance of women’s chambers and association, thus making them more effective participants in that advocacy process.
Recently, a group of CIPE staffers took part in an informal email discussion that illuminates certain aspects of our approach to working with these organizations, which we wanted to share with readers of this blog. The conversation began when Julie Mancuso, Program Officer for Africa, wrote to several of her colleagues: “I am curious as to best models for women’s chambers and whether separate is usually better. Should women be engaged ideally through a strong local chamber, rather than starting their own, organized primarily around gender? Is this an area of debate or is there an agreed-upon model one way or the other?” Her specific question concerned her work with a coalition of women’s business associations that are weighing the relative merits of creating their own chamber or operating under the umbrella of the national chamber.
Informal businesses in rural areas are a key part of the economy in many countries, like India. (Photo: Wikimedia Commons)
The informal sector — the unlicensed, unregistered small businesses that make up the bulk of economic life in many countries — is not all bad.
A recent article in the Economist analyzed the issue of informality in the Indian economy and drew out a range of excellent points regarding the size of the country’s informal economy and the energy and dynamism that undocumented economic activity has brought to rural India, as well as the difficulties that informality can bring. These include costs to the entrepreneurs themselves, in terms of accessing credit and problems achieving scale, among others, as well as costs to the overall economy in terms of lost tax revenue and the circulation of money outside of the financial system. Indeed, there has been no shortage of research on the challenges posed by informality around the world.
What this article gets wrong however, is its conclusion, regarding what India can do to promote the formalization of the informal sector. The author writes “The best way to speed up the process is to extend the reach of the financial system. In return for coming into the formal economy and paying taxes, firms would get access to capital.” This analysis misses an important point about informality.
Yesterday I wrote about how CIPE is helping women business leaders to break down barriers in South Asia – both barriers between countries and barriers that are keeping women out of the economic mainstream. CIPE’s third networking and training session for the heads of women’s chambers of commerce and business associations, held on September 18-20 in Lahore, Pakistan, was a resounding success, including a dinner at the Lahore Chamber of Commerce that drew the Governor of Punjab as a featured speaker.
But we also wanted to take some time to focus on the training program itself, and the results of the hard work that these women are putting in to building their organizations. There is no shortage of programs in South Asia to build links among women entrepreneurs – to encourage trade and business ties – but CIPE is focused on strengthening the capacity of the chambers and associations, both so they can better represent their members in the policy process, and help their members grow their own businesses.
The biggest changes can start with small steps – particularly in the effort to change cultural barriers and to ease decades-old national tensions. Often it is the private sector, seeking to open new markets, explore possibilities, and expand trade and commerce, that is at the forefront of such changes.
Last week in Lahore, Pakistan, CIPE organized the third in its series of training and networking sessions for a group of women’s business leaders from across South Asia, helping bring about a range of positive steps – both for national understanding and opportunity for traditionally marginalized women.
This network, which CIPE has been developing with the support of the National Endowment for Democracy, includes participants from major and emerging chambers of commerce and business associations from Pakistan, India, Bangladesh, Nepal, Sri Lanka and Bhutan.
The idea to bring together representatives from these countries – particularly given the tensions between India and Pakistan, and the history between Bangladesh and Pakistan, was not guaranteed to succeed. But after two meetings, one last winter in Dhaka and then again in the spring in Kathmandu, it was becoming clear that these women business leaders were growing closer, learning from one another, sharing ideas and information, and finding ways to strengthen their organizations.