Fill in the blanks…
“Today, mandatory certification and
standardization are among the major
barriers to innovation and development in
Ukraine. They make introducing a new
product next to impossible […]”
- President Yushchenko*
*Kyiv, Ukraine, July 10, 2008, third Presidential Forum “State and Business Are Partners (source: http://www.ifc.org)
1
ECA’s Quality
Competitiveness
Jean-Louis Racine
The World Bank
Knowledge Economy Forum VIII, Fontainebleau
May 1, 2009
Outline
• ECA countries compete mostly on price.
• The national quality infrastructure: invisible but
essential for innovation and trade.
• ECA’s quality infrastructure is not conducive to
enhancing quality competitiveness.
• Reforms challenges.
3
How ECA Competes On Quality
4
What is Quality?
Customer
expectations
Quality
Regulations
and laws
Standards
5
CIS countries are
lagging behind
Relative unit values of exports to the EU
Improvements
in quality
competition
Bubble size
indicates intraindustry trade
Better
quality
CIS +
Georgia
Improvements
in price
competition
Note: excludes
textiles, apparel and
leather sectors
6
Most industries in ECA
compete on price
Number of industry sectors competing on price and quality
Compete on
quality in more
sectors
Compete on
price in more
sectors
7
Many ECA countries export in
sectors with limited prospect for
quality upgrading
Share of exports to the EU in quality-dominated sector
Export in qualitycompetitive
• Machine-tools
industries
• Pharmaceuticals
• Made-up textile articles
EU + Turkey
Export in pricecompetitive
industries
• Articles of concrete
• Basic iron & steel
• Primary batteries
CIS +
Georgia
8
In the CIS economic restructuring
has led to mixed opportunities for
quality upgrading
Share of exports to the EU
9
Upgrading strategies
for ECA
• CIS + Georgia: diversify into sectors with
quality upgrading potential.
• EU, Turkey and Balkans: focus on
diffusing existing quality practices to more
enterprises.
10
Overview of
the National Quality Infrastructure
11
What is the national
quality infrastructure?
Standards
Accreditation
Metrology
Conformity
Assessment
12
Accreditation &
conformity assessment
National accreditation
body
accreditation
Certification bodies, inspection bodies, calibration
laboratories, testing laboratories
conformity assessment
Firms and other organizations
13
Metrology
National metrology institute
Calibration laboratories
Manufacturers, research institutes, universities
National and international consumers, public health and safety, natural environment
14
International Integration
Mutual Recognition Agreements (MRAs) in
accreditation and metrology ensure that
trade partners recognize each other’s
conformity assessment systems
15
ECA’s Quality Infrastructure
16
Key Issues in ECA
In ECA, the national quality infrastructure is often
• Based on technical regulations (i.e. mandatory standards)
• Highly centralized and dominated by government institutions
• Often not harmonized with and not recognized by that of trade
partners
17
There is a strong effort to harmonize
standards in countries bordering the EU,
but not in CIS countries
35
(thousands)
30
25
20
15
10
5
Cr
oa
tia
a
He
rz
eg
ov
in
ed
on
ia
an
d
Bo
sn
ia
FY
R
M
ac
Al
ba
ni
a
Se
rb
Ky
ia
rg
yz
Re
pu
bl
ic
e
Ka
za
kh
sta
n
Uk
ra
in
ria
Bu
lga
Tu
rk
ey
Ro
m
an
ia
0
UK
number of standards
Composition of the national standards
international standards
EU standards
GOST standards
purely domestic standards
18
There are two major
gaps with accreditation
• Accreditation rates are very low in some countries…
share of accredited laboratories
Share of testing laboratories which are accredited
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Georgia
Serbia
Armenia
Kyrgyz Ukraine
Republic
Albania
19
There are two major
gaps with accreditation
• …and…
30
25
20
15
10
5
kr
ai
ne
H
un
ga
ry
C
ro
at
ia
Se
Ka
rb
i
z
FY
ak a
R
hs
M
ta
n
K y ac
ed
rg
on
yz
ia
R
ep
ub
Bo
Ar l i c
m
sn
en
ia
i
an
Al a
d
ba
H
n
er
ze ia
go
vin
a
G
eo
rg
ia
ai
n
U
Sp
d
la
n
Po
rk
e
y
0
Tu
Number of accreditations granted
Number of accredited ISO 9001 certification bodies
Number
of accredited ISO 9001 certification bodies
35
20
There are two major
gaps with accreditation
• …and many accreditations are not internationally
recognized
35
30
25
20
15
10
5
kr
ai
ne
H
un
ga
C ry
ro
at
ia
Se
Ka
rb
FY za ia
kh
R
st
M
a
a
Ky
ce n
rg
yz don
ia
R
ep
ub
Bo
Ar lic
m
sn
en
ia
ia
an
A
d
H lban
er
ze ia
go
vin
a
G
eo
rg
ia
U
d
ai
n
Sp
la
n
Po
rk
e
y
0
Tu
Number of accreditations granted
Number of accredited ISO 9001 certification bodies covered by an MRA
21
7
0
Czech Republic
Estonia
Germany
Poland
Spain
Turkey
United Kingdom
Latvia
Lithuania
Slovenia
Ireland
Slovak Republic
Brazil
China
India
Malaysia
Bulgaria
Romania
Albania
Armenia
Azerbaijan
Belarus
Bosnia and Herzegovina
Croatia
FYR Macedonia
Georgia
Hungary
Kazakhastan
Kyrgyz Republic
Moldova
Montenegro
Russian Federation
Serbia
Tajikistan
Turkmenistan
Ukraine
Uzbekistan
Most ECA accreditation systems
are internationally isolated
Number of accreditation MRA fields
6
5
4
3
2
1
22
G
er
m
ze
ch Ru any
Re ss
pu i a
Po blic
la
n
Sl
S
ov
pa d
ak T i n
R urk
e p ey
S l ub
o li
R ven c
om ia
B u an
lg ia
a
Se ria
Be rbi
l a
U aru
kr s
C aine
r
M oa
Ka ol tia
za dov
kh a
s
H
M un tan
ac g
ed ary
o
U Ge nia
z
Tu be or
rk ki gia
m sta
en n
T
Bo K M aj ista *
sn yr on ikis n*
i a gy t e t a
& z ne n*
H R e gr
er p o*
ze ub
A z go l i c
er vin *
b a
Ar aija *
m n*
A l eni
ba a*
ni
a*
C
total number of CMCs
Metrology systems in ECA
are not widely recognized
Number of registered calibration and measurement capabilities
1600
1400
1200
1000
800
Not part of the
CIPM MRA
600
400
200
0
23
Some metrology institutes are
not contributing to economic
development
Number of calibrations conducted by the national metrology institute
900
Total number of calibrations
800
700
25000
Total number of calibrations
per $1 bln industry value
added
20000
600
500
400
15000
300
10000
200
5000
100
kr
ai
ne
M
ac
ed
on
ia
Al
ba
ni
a
Ar
m
en
Ka
ia
za
kh
st
an
U
FY
R
rb
ia
Se
lg
a
ria
y
Bu
rk
e
Tu
ro
a
tia
y
C
m
an
G
er
la
n
Po
un
g
d
0
ar
y
0
H
Number of calibrations
30000
Number of calibrations by IVA
35000
24
Incentives for Reform
• EU accession
• WTO Technical Barriers to Trade agreement
• Export competitiveness
• Business environment
25
Key Challenges
• Adopting international standards takes time, money
and skills
• An abrupt transition to an international voluntary
system will results in temporary gaps in the national
quality infrastructure
• Incentives are reduced if regional trade partners are
not using international standards either
• Political economy challenge of transition to a voluntary
decentralized model
– Weakened institutions
– Removal of technical barriers to trade
26