Many low-income countries face the challenge of how to increase productivity, value added, and exports. That statement certainly applies to Tunisia. To transform the economy from a low-wage, low value-added, economy to a knowledge-based and skill-intensive one, Tunisia needs to pursue a two-pronged strategy of repositioning in traditional sectors and diversification into new sectors and products. First, it needs to move up the value chain in traditional export sectors by deepening integration, increasing product sophistication and supporting initiatives that enhance logistics and investment in innovation. Second, it needs to promote investment in newer, knowledge-intensive products and services. Overall, a gain in efficiency is demanded for Tunisia to grow at a higher pace.
With these goals in mind, the Government of Tunisia, with support from the World Bank Group, is implementing the Export Development Project III, a $50 million investment project to promote and diversify exports. This project includes a $22 million component, named TASDIR+, for direct support to exporting enterprises, which already carried out two rounds of funding. The research team has therefore proposed, and the Government of Tunisia has agreed, to modify the third TASDIR+ round and to conduct a RCT. Rather than offering matching grants and technical assistance based on a judgment about which enterprises prospectively seem likely to succeed (the existing model), the new round will offer an export rebate, based on observed export success. Success will be based on firms’ export performance in terms of increased export volume in the same market or accessing a new market. The research team plans to vary the set of destination markets eligible for the rebate, to examine how the effect of the rebate varies by destination market characteristics (including income level).
This project tackles the questions that lie at the heart of Tunisian development strategy of how to promote economic development through high value-added exports. It is important to understand the factors that influence a country’s transition from the production of low-quality to high-quality products since the production of high-quality goods is often viewed as a pre-condition for export success and, ultimately, for economic development. The findings from this impact evaluation are also expected to influence the government’s design of it export promotion efforts. Since TASDIR+ plans to run until 2021, the findings will allow the government to make adjustments to make the scheme more effective in subsequent years.
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