Background

In 2009, USAID, through its Promoting Economic Opportunities Program developed the Municipal Competitiveness Index Project, 2009 MCI. This project measured for the first time in the country the business-enabling environment at the municipal level for the 100 most populated municipalities of the country, which represent 81% of the Salvadoran population.

The 2009 MCI measured the conditions that the investors and entrepreneurs consider when deciding where to invest and set up their businesses or expand the existing ones, with which they create jobs and income that bring benefit to the municipality as a whole. The MCI measurement variables were: Transparency, Municipal Services, Proactivity, Informal Payments, Public Safety, Time to Compliance, Rates and Taxes, Entry Costs, and Municipal Regulations.

The 2009 MCI results showed that all municipalities, even those with good scores, had a big potential for increasing their competitiveness and capacity to attract investment, as well as expanding business opportunities, and increasing the number of jobs and their income.  These findings encouraged USAID to launch its new USAID Municipal Competitiveness Project.

USAID Municipal Competitiveness Project

From the Municipal Competitiveness Index through the 2009 MCI... towards "building business and job opportunities"

Objective

The USAID Municipal Competitiveness Project (MCP) seeks to strengthen municipal competitiveness by developing a favorable business climate in order to increase private investment, business and job opportunities for both men and women aimed at local economic development.  The Project assists 50 municipalities under the oversight of RTI and the support of key partners and other recognized resource organizations.

The Project aims to help municipalities become more competitive by strengthening their administrative and service delivery capacity, cultivating mayors´s dynamism in promoting economic activity, and fostering alliances among municipalities and between municipalities and the private sector.

According to this vision, the Project promotes private sector participation in the municipal efforts through participatory processes involving dialogue, diagnosis and identification of actions geared to local economic development. The Implementing Partners of the USAID Project articulate the prioritized actions in Municipal Competitiveness Plans to be executed by the municipalities with the support of the private sector.

The Project will support the Municipal Competitiveness Plan execution process through the development of Technical Assistant Programs. In parallel, the Project will strengthen productive sector activities through the delivery of training and technical assistance for developing entrepreneurial and labor force capabilities, a business plan challenge, entrepreneurial associations, women business networks, investment promotion events, job and internship opportunities fairs, among others.

The commitment to execute the Plan will be sealed in a Transparency and Competitiveness Pacts to be signed by both actors and its execution will be monitored and supported by a Competitiveness Improvement Teams consisting of representatives of both actors.  The USAID Project will support the development of Municipal and Micro Regional Competitiveness Plans through technical assistance programs in the fields of leadership, local economic development and other specialized topics.

The USAID Municipal Competitiveness Project becomes the first project in the region aimed to local economic development and growth with the joint effort of the municipality and the private sector guided by the Municipal Competitiveness Index and its components.

USAID Project Components

1. Improvement of municipal effectiveness and efficiency for promoting economic development. It seeks to stimulate a continuous improvement in the municipal management aimed to achieving economic development. It includes the implementation of the Municipal Streamlining Procedures Program which diagnoses and simplifies the identified and prioritized business procedures in done by each municipality. The municipal staff receives training in the methodology and processes to continue the simplification process beyond the Project life. Furthermore, the Business-Friendly Certification Program recognizes and awards the progress and innovations made by each municipality.
2. Municipal Competitiveness Index Measurement 2011 and 2013. It measures the progress or constraints related to key variables to investors with the purpose of promoting a business-friendly environment and encouraging a healthy competition among municipalities.
3. Building organizational and linking capabilities among municipalities, and between the municipalities and the private sector, at the local and micro regional level. It promotes dialogue and integration of public and private efforts aimed to local economic development. It includes the organization of business associations and strengthening of business women's associations that implement Local Economic Development initiatives. This component includes also Product and Investment Promotion Fairs, Job Fairs, an Entrepreneur Business Plan Challenge, dialogue events on best practices, identification of Mentor Mayors who will give training and become consultation and dialogue resources for the municipalities in their region as well as in other municipalities. Moreover, this component contemplates the creation of a virtual platform called "Municipal Competitiveness Learning Network" that will share the best practices developed by the municipalities, studies, success stories, and other information resources useful for the municipalities and the private sector participating in the efforts of this Project.

All USAID Project interventions include elements of the Gender Policy of the Project, created to guarantee equal opportunities for all the men and women of the municipalities.

Implementing Partners

The USAID Project executed by RTI International is supported by the following organizations which implement several interventions in the territories:

• The National Foundation for Development (Fundación Nacional para el Desarrollo - FUNDE), attending 30 municipalities in the eastern and central regions;
• The Advisory and Training System for Local Development (Sistema de Asesoría y Capacitación para el Desarrollo Local - SACDEL), attending 20 municipalities in the western and central regions;
• The Foundation for Sustainable Development (Fundación para el Desarrollo Sostenible - FUNDES) works in the implementation of the Streamlining Procedures Program and the Municipal Business-Friendly Certification Program;
• The Superior School of Economy and Business (Escuela Superior de Economía y Negocios - ESEN), carries out 2011 and 2013 MCI measurement rounds;
• Other organizations will carry out other actions aimed to achieving the USAID Project objectives.

The RTI International Technical Team will be workgin in constant interaction with private business organizations and financial institutions to promote local investments and business opportunities in the municipalities attended by the USAID Project.

Municipalities by region, department and implementing partners

The USAID Municipal Competitiveness Project is attending 50 municipalities that requested to participate in the Project, which were selected under the accomplishment of requirements and Project criteria previously disseminated among Salvadorean municipalities. As part of such request for participating in the Project, the respective Municipal Councils issued an Agreement to reflect their commitment to municipal competitiveness improvement. In addition, the municipalities signed a Memorandum of Understanding with RTI International, in representation of USAID, establishing the responsibilities of both parties.

42 of the 50 selected municipalities by the project participated in the 2009 MCI. The remaining 8 municipalities (*) participated for the first time in the 2011 MCI and will also be included in the 2013 MCI. These municipalities are included in the following Table: