 A key part of the Learning to Compete project is the country case studies, is the fact that we're bringing together research from a variety of different countries across Africa and also in Southeast Asia. And what wider brings is the fact that we can bring in local country teams, we're working with local partners who bring with them experience, who bring with them policy relevance and context that is much needed in this type of research. Me personally I've been working with the country teams in Nigeria and Uganda and also I've been spending time in Southeast Asia in Vietnam and Cambodia. Vietnam's success over the last couple of decades has been pretty remarkable. I think a lot of it is rooted in the market orientation that they adopted in the late 1980s and as well as being market oriented they became very export focused. So a lot of policy over the last decade has been looking at becoming more export oriented, better trade policy, more deregulation of state ownership, investment policy and making investment and trade more easy essentially. So the growth that they've experienced has been fueled to a large extent by increases in exports but also by industrialization. So growth and industrial output over the last decade has been in the double digits and I think this is part of that remarkable success story. This has in part been fueled by foreign investment, so more relaxed investment laws has helped in this regard but it's also been private sector development. So you've really seen a massive growth in entrepreneurship, you've seen massive growth in private sector enterprises which are very dynamic, which adapt, are very adaptable, which are starting to export and I think that's really an important part of that story. Well to an extent it's down to entrepreneurial culture. There's also still state involvement, while there has been deregulation, state investment has been much better targeted, much better focused on sectors that have growth potential. So a lot of the policies within Vietnam have been sector specific and there's been sector specific policies and financial incentives directed towards areas where they feel they've got a comparative advantage. Some other examples include electronics and more recently kind of evolving sectors such as software development and these kinds of things. So you're seeing this transition from focusing on a focus on traditional sectors towards a focus on more higher value added sectors, emerging sectors and growing sectors. And a lot of the sector specific policies have focused on research and development, promoting research and development, promoting capabilities. I think that we can't assume that they can replicate Vietnam's success or follow the exact same path. The context as I've said, they're just very, very different. I think that what they can do is learn from the types of approach that they've taken. Look to things like what are their comparative advantage? What are the sectors that could potentially grow in the future? And by focusing on areas where you have a comparative advantage I think that you can learn a lot from that. It's also about I guess in early stages of development some amount of protection of your sectors is required, of your firms is required in order to help them and help launch them onto the world stage and launch them into export markets. I don't think you can underestimate the value in having a good infrastructure system. You can't underestimate the value in having consistent energy supply for example. These are major constraints that are facing African, many African countries. Towards private sector development. I think that it's about looking at how Vietnam went from a stage where there was very little private sector development to all of a sudden creating opportunities, creating a platform where small enterprises can start where small enterprises can grow. I think that's really where African economies can learn lessons. When we look at agglomeration what we're talking about is the tendency for firms to locate near each other and when we talk about agglomeration economies we're talking about the fact that this can be a source of productivity growth for firms. So a lot of industrial policy over the last number of decades have established industrial parks, tried to establish export processing zones to bring firms together so that they can potentially benefit from these types of agglomeration economies. They take the form of things like having access to a pooled set of labour, a pooled skilled labour for example, reducing transport costs and also maybe interactions with firms in the same sectors that could potentially lead to technology transfers or technology spillovers. So when we talk about agglomeration we're talking about this as a potential source for productivity gains really. I think you'll always get clustering where there are natural advantages to being located somewhere. So you'll get clustering of firms in cities, you'll get clustering of firms in ports near large infrastructure projects. You see the same in Cambodia, see it to a certain extent in Nigeria. So you will see that kind of clustering. That's more like kind of an urbanization or maybe localization rather than agglomeration per se. When we talk about agglomeration what we're trying to see and what we're trying to identify is whether when firms locate near each other they start to interact more and if they interact more then are they benefiting from the knowledge that each of the different firms have. You might expect things like technological complementarities to emerge whereby it makes sense if these firms are all interacting one firm comes along and wants to introduce say e-business practices or e-banking then all of the firms will perhaps adapt because they are interacting with each other. I think in developing country contexts in Africa in particular these types of interactions might be very important where you have infrastructural deficits or where private sector firms are generally quite small and they tend to have to locate near their customers and have to locate near their inputs. So agglomeration might be even more important in these contexts than it is in developed country contexts. So that's the kind of thing that we're looking at when we talk about agglomeration. And there's kind of two things that happen when firms cluster together. They can become much more competitive so they have to compete with each other so there may actually be disadvantages to some very small firms from locating near their close competitors because of these competitive effects. But overall for productivity that's a good thing to weed out the inefficient firms and there will be reallocations towards the more efficient firms. And then the more efficient firms that are closely located to each other may then start to interact, learn from each other and together improve their production processes and business practices. It's difficult to know what the policy implications here are. I think that the evidence for industrial parks for export processing zones there's no really strong evidence to suggest that firms these parks and zones do experience these types of productivity spillovers. It seems that the evidence that we have suggests that it's more the naturally forming clusters of activity where these types of agglomeration economies are observed. So it's where firms, the profit maximizes themselves are deciding where to locate, they're the ones who are interacting and then they experience these productivity spillovers. So there's evidence for example in Cambodia that these export processing zones they're not very well developed yet but the ones that are developed become very insular and they basically still import all of their inputs and then they immediately export their outputs and there's very little interaction that happens between them. So the way you establish these types of industrial parks and the way you establish these types of export processing zones I think will matter. I mean it might make sense for a government to set up a special economic zone where infrastructure is a lot better where there's no problems with power shortages and so on and firms to come rather than specifically setting it up just say for export firms or just say for foreign firms. Absolutely and I mean I think it's a step by step process in many African countries and this is kind of what the starting point should be in terms of reducing that infrastructural deficit. I've learned that bringing all of the evidence together there appears to be a premium associated with exporting and it appears that firms do learn by exporting but I think it again depends on the context. There's a couple of different processes at work so the evidence is very strong that the more productive firms select into exporting. So in order for a firm to be able to export in the first place they have to reach some kind of level of innovation some level of technology or some level of productivity where they can then access the export markets. Once they enter the export markets not all firms learn but some firms do learn and so there is a premium to be gained from that there is some kind of productivity gain. It seems that where you export matters so exporting to developed countries exporting to the EU, exporting to the US the productivity gains are larger and also what you export matters so if you're exporting more high tech types of produce or high tech types of output then it'll also matter. But another phenomenon that we're observing in Mozambique for example is that there are many firms that the business literature would say are born global so it's not that they're domestic firms that then start to export they're firms that establish in order to export so this is kind of a different way of looking at it in a different perspective and these firms do have a premium an export premium associated with their export behavior so I would say that on a whole there are productivity gains from exporting I think that the mechanisms that we're getting more familiar with and we're becoming more familiar with but there's still a lot of work to be done to understand precisely when and how this learning actually happens from a policy perspective I think that there's kind of two margins which policy makers should think about the first is how can they encourage access to or allow access to domestic firms access export markets and this is about reducing trade costs and in many cases it's simply about providing information about firms with knowledge about how to sell their produce and putting them in touch and linking them in with the export markets because that appears to be one of the big constraints that we see and once that margin is covered of course these firms have to be efficient you have to reduce the constraints that affect their everyday business such as the infrastructure deficit such as perhaps accessing credit in order to be able to invest or innovate or invest in new projects which is really really crucial and then once they're at that margin and they actually accessing the export markets and it's about making sure that that's facilitated and that again constraints are removed I think FDI is a very important part of the development process and evidence in Vietnam suggests that FDI has been part of the story in many of the other countries that are involved in the learning to compete project we find that there is FDI but there are very few linkages with the local economy so FDI firms are investing and this creates jobs this is good for the economy in that respect but they are for the most part importing their inputs and then directly exporting their output so there's no real linkages with the domestic economy so I think for FDI to be a real engine for growth for developing countries we really need to establish linkages with domestic producers from a policy perspective what this means I mean the reasons why in many cases I believe FDI firms are not linked in is because there's insecurity of supply of inputs they have to be sure that they're going to get the inputs that they want they have to be of a suitable quality they have to meet environmental standards and increasingly there's pressure that they have to be follow some ethical business practices of corporate social responsibility would have to be built into this so there are gaps there and it could be just a knowledge gap or it could be some other gaps where there needs to be some investment in the domestic sector to start to take these boxes but I would envisage that an FDI investment project should I believe from a policy perspective include some kind of mechanism whereby the FDI firm would get their inputs locally and I think that's where there are real gains to be made entrepreneurship is a very important part of the story and certainly has been a very important part of the success story of Vietnam I don't believe that entrepreneurship is something that can be told I think that the recent evidence from various business training programs in Africa suggest that there are no real returns you can't teach this entrepreneurship these are entrepreneurs to begin with in many cases I think that what it comes back down to is having policy directed towards removing the constraints to entrepreneurs actually investing removing the constraints to small businesses from being established and small businesses from graduating from being small to being medium sized enterprises because that's where the action starts to happen that's really where they start to get into the export markets and so on so removing these constraints are what we've mentioned already making sure there's access to credit and improving infrastructure just making the environment easier for entrepreneurs to actually invest in enterprise my belief is that it's to remove the obstacles I think that if the obstacles are removed and the constraints are addressed it means identifying the constraints to begin with but once they're identified and they're addressed I think that entrepreneurs are profiteers they want to maximize profits to some extent maybe there are sector specific policies where certain sectors you can try and encourage for example you could think about the agricultural sector and agro processing there may be some kind of mismatch of skills there that the government extension programs could address to promote entrepreneurship to encourage agriculture producers to start moving up along the value chain so there may be certain sectors where there can be extension services that could have an impact but on the whole I think that it's about removing the constraints removing the bottlenecks and I think after that as was the case in Vietnam we should see entrepreneurship flourish