the role of ecas in promoting national export role of ecas in promoting national export.pdfthe key:...

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The role of ECAs in promoting national exportMeasuring impact in a Strategic Econsystem

Draft10 December 2013 AMAN UNION - Fourth Annual Meeting

Doha, State of Qatar

Philipp LemmerzManager, Head of Public Policy, PwC

1 The role of ECAs – promotion of national export and beyond 1

2 The Strategic Econsystem 5

PageSection Overview

Agenda

PwC10 December 2013

The role of ECAs – promotion of national export and beyond

Section 1

The role of ECAs in promoting national export • Measuring impact in a Strategic Econsystem

1

PwC10 December 2013

Draft

Internal drivers: national economic strategies impose increasing requirement on ECAs requiring flexible capabilities

2


Section 1 – The role of ECAs – promotion of national export and beyond

From pure risk mitigation…

…to multi-dimensional goals

Time

• Export growth• Employment• Export growth

• SME focus• Employment• Export growth

• FDI• Diversification • SME focus• Employment• Export growth

• Innovation • Entrepreneurship• FDI• Diversification • SME focus• Employment • Export growth

PwC10 December 2013

Draft

External drivers: The environment for ECAs operation becomes increasingly complex and diverse on numerous layers

3



ECA

Public interest

Level playing

field

Inter-national

(counter-)effects

Social and ecological standards

Increasing competitive-

ness

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Draft

Economic context: ECAs operate as part of the national overall economic agenda as important strategy enablers

4



Domestic factors

• GDP generated by few sectors only

• Shift towards knowledge based economy ensures future prosperity

• Limited size of domestic market requires exploration of international markets

Regional and global factors

• Fiercer competition in foreign markets

• Global financial sector imbalances requires national answers

• Fast occurring crisis and chances need flexible solutions for quick reaction

• Suitable Economic Diversification• Sound Economic Management• Responsible Exploitation of Oil and Gas

“Company size focus”

“Sector focus”

“National content approach”

“National interest approach”

Strategic focus

matrix

ECAs focus on the fact that the export is conducted by a company

from their home market

ECAs limit their insurance or financing to goods and services

produced in their home country

ECAs focus on diversification and promotion of specific industries in

order to decrease the dependence on their

major products

ECAs provide specific support for exporters representing key sectors

PwC10 December 2013

The Strategic EconsystemSection 2


5

PwC10 December 2013

Draft

The key: it aligns a strategic management approach with the public policy model to a powerful unit applicable on every level of Econsystems…

6


Section 2 – The Strategic Econsystem

The Strategic

Econsystem

Strategic Management Model Public Policy Model

Combination into a clear ‘strategic fit’

• Lack of promotion coherence• Gaps in public promotion tools• Challenge due to federal structure

• Socio-economic targets

• Understand key drivers• Analyse the interdependent

components of the economy• Transparent strategic

framework for policy setting

Critical Success Factors (internal capabilities)

• Competition in global markets• Access to finance• Access to overseas markets • Positioning country at global scale

Key Success Factors (external determinants)

Definition of the policy agenda

1234

Approach to policy setting

Dimensions of policy setting

Agenda setting

Policy formulation & adoption

Implementation

Evaluation

Institutions

ProgrammesTime

Policy

PwC10 December 2013

Draft

…and puts the pieces together to form a strategic, interconnected, coherent approach to economic promotion

7



… Export

FDI

Start-ups

Inno-vation

FinanceDevelopment Banks

Export Credit Agencies

Incubator Centres

Investment Parks

Foreign Aid Agencies

Chambers

Investment Authorities

etc.

Institutions

Programmes

Time

PwC10 December 2013

Draft

For economic promotion, the Strategic Econsystem is like an accelerator for target achievement and serves as a vision enabler

8



The Strategic

Econsystem

• Prioritisation for the implementation of public promotion programmes

• Definition in a content and time-wise manner

Roadmap for programme

implementation

Quick adoption to trends and risks

Generate a competitive edge over

peers

The Strategic Econsystem can tell what to do (policy agenda)

• Quick adoption of fast changing success factors in national policy agendas

• Competitive edge to obtain advantage over peers through more efficient and effective policy adoption

The Promotion Calculator can tell how to operationalize the policy and measures the impact

PwC10 December 2013

Draft

The Promotion Calculator is a multidimensional tool allowing ex ante and ex post applicability

9



Present value of promotion measures the initial flow of funds

Money transfer

1The investment leverage measures additional investment triggered through promotion

Investment leverage

2The target achievement rate levels out side effects of promotion like deadweight effects

Target achievement

3Finally the promotion impact is normalized by necessary cost and network effects

Administrative cost and portfolio effects

4

x


Money transfer


Investment leverage

2The target achievement rate levels out side effects of promotion like deadweight effects

Target achievement

3Finally the promotion impact is normalized by necessary cost and network effects

Administrative cost and portfolio effects

4

x

Inno-vation

Entre-preneur-

ship

FDI Finance

Promotionframework

…

Export

Ex-ante strategy implementation Ex-post framework refinement

• Based on a well-focused economic promotion strategy the Promotion Calculator gives answers on how to shape promotion programmes

• It enables economic promotion to be optimal shaped in terms of strategy achievement and efficiency

• It steers the resources into those scheme setups that provide the highest return on promotion

• The Promotion Calculator gives feedback on the performance of promotion schemes and frameworks

• It can be used for risk management as well as steering implicator to be reactive on opportunities and risks

• The continuous ex-ante monitoring ensures constant alignment of the schemes to the strategic objectives and highly efficient programme delivery

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Draft

Accountability, sustainability and cost-benefit-aspects require best achievable “Return on Promotion”

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• The RoP makes results of promotion visible, comprehensible, measurable and comparable

• RoP is a normalisedand dimensionlessvalue thus allowing comparison between the variety of thinkable economic promotion schemes

• The Promotion calculator is the connector between promotion strategy and implementation

The four key elements of the Promotion Calculator

The approach includes administrative costs as additional input

Inputs incl. admin. cost 1


Money transfer


Investment leverage

3The target achievement rate levels outside effects of promotion like deadweight effects

Target achievement

4x

Return on Promotion (RoP)

RoP

PwC10 December 2013

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In simplified terms a multiplication of the input data with combines efficiency and promotion performance in an optimal manner

11



Promotion efficiency

Promotion performance

X X

Monetary transfer

Triggered financing volume

Investment leverage

Target achievement ratio

Present value of promotion

Target achievement

PwC10 December 2013

Draft

99 380 (8 546)90 834 (11 327)

79 507 (2 323) 77 184

-

20,000

40,000

60,000

80,000

100,000

120,000

Base case Exports Imports Direct impact Imports Direct + indirect impact

Imports Direct + indirect + induced impact

VKG shale oil production value chain impact on foreign trade balance, € in thousands

A quantitative approach to economic promotion highlights fields of impact

12



Source: CONFIDENTIAL, PwC analysis

Total annual impact to foreign trade balance

+ 77.2 mn.

In total, the amendments have a significant positive impact on both the total exports and the foreign trade balance.

Effect of proposed amendments on foreign trade balance, EUR in thousands

e.g. imports by the suppliers along the

value chain

Effects from additional

consumption through employment gains

Imports directly relating to the gain in

value creation for exports

Direct additional exports resulting from

proposed amendments in

promotion schemes

Gain in direct additional exports in % of total exports 0.9%

PwC10 December 2013

Draft

Analysis reveals considerable impacts of ECAs on job creation, SME development and value chain effects

13



ECA effects

ECA’srole

Germany • From 2000 – 2009 up to 141.000 jobs affected by Hermes cover / 2010: Increase to 240.000• 50% of jobs created in SMEs• 1.44 jobs are created indirectly at supplier firms /90.000 jobs were created outside GermanyCanada• Increase of affected jobs from 572.523 in 2008 to 642.465 in 2009• Number of served SMEs rose from 6.204 in 2007 to 6.886 in 2009• Supported volume in emerging markets rose by almost 50% from 2007 to 2010

• Job creation and preservation• SME promotion and stabilizing effect in economic crisis • High importance of an ECA for access of corporates to important and growing international

markets• Effects along the value chain leveraging positive effects beyond the cover holder• Cover for exports allows companies to retain know-how even during crisis and grow on a solid

knowledge-driven basis

Source: ifo study, EDC, PwC analysis

PwC10 December 2013

Draft

The Strategic Econsystem approach combines the best of two worlds to unfold its potential in economic promotion

14



…is a structured approach to operationalize economic strategies

…helps to define suitable economic promotion approach

…defines the right promotion schemes to be implemented

…helps to leverage on money spent for economic promotion

…saves funds through efficient resources allocation

…locates room for improvement of economic promotion

Strategic Econsystem

Promotion Calculation

Powerful economic

promotion

Combined application of the frameworks helps to set up a

system of effective economic promotion

tools

Modern concepts for economic promotion.

Vorsitzender des Aufsichtsrats: WP StB Dr. Norbert VogelpothVorstand: WP StB Prof. Dr. Norbert Winkeljohann, WP StB Dr. Peter Bartels, WP StB CPA Markus Burghardt, StB Prof. Dr. Dieter Endres, WP StB Petra Justenhoven, WP StB Prof. Dr. Georg Kämpfer, WP StB Harald Kayser, WP RA StB Dr. Jan Konerding, StB Marius Möller, WP StB Martin ScholichSitz der Gesellschaft: Frankfurt am Main, Amtsgericht Frankfurt am Main HRB 44845 PricewaterhouseCoopers Aktiengesellschaft Wirtschaftsprüfungsgesellschaft ist Mitglied von PricewaterhouseCoopers International, einer Company limited by guarantee registriert in England und Wales

Philipp LemmerzManagerT: +49 (40) 6378 2207M: +49 (17) 1768 [email protected]

the role of ecas in promoting national export role of ecas in promoting national export.pdfthe key:...

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