Final report : a program evaluation of AID"s investments in voluntary assistance to private enterprise development in Central and Eastern Europe

The assistance is being provided under six projects (180-0002, 0014, 0023, 0024, 0027, 0032) via nine grantees (Volunteers in Overseas Cooperative Assistance, Agricultural Cooperative Development International, MBA Enterprise Corps, International Executive Service Corps, Peace Corps, National Cooperative Business Association, Land O"Lakes, Financial Services Volunteer Corps, and Citizens Democracy Corps). Over the past three fiscal years, A.I.D. has invested about 4% of its regional budget in voluntary agency assistance for private enterprise development. This type of assistance has given meaning to the concepts of pro bono and local contributions. Further, it has provided a visible American presence that allows the testing of local development initiatives which can contribute to future policy and program formulation in transitional societies. Government and private sector entities have been highly receptive to voluntary agency assistance to private enterprise development, although at first there was skepticism as to why talented Americans were willing to provide voluntary services. Assistance has been particularly appropriate for the transition period, during which strategies and priorities have been unclear. Assistance has been successful because of a high degree of A.I.D. flexibility and the abilities of voluntary agencies to rapidly mobilize American expertise and know-how. Voluntary agencies have created a series of in-country experiments that use knowledge about local environments and test different TA and training modes. Voluntary agencies share common development goals but have distinct identities and perform specific roles and functions which can be effectively tapped and integrated into A.I.D. programs at the country level. High performance by voluntary agencies results from quality in-country planning, management, assessment, and follow-up. The performance is enhanced by instilling local "ownership" and by leveraging other U.S. foreign assistance resources. Voluntary agency assistance could be improved by paying more attention to developing the capabilities of local institutions to provide effective business services. Long-term private enterprise development depends on the continued development of "success models" that are being provided by the voluntary agencies, the results of which should be fed more systematically into ongoing policy and program development processes. A.I.D. needs to develop a program strategy that is directed toward the circumstances and requirements of individual countries in Central and Eastern Europe and that draws upon the lessons of the first years of voluntary agency assistance. In sum, A.I.D."s investment in voluntary assistance to private enterprise development is a cost-effective means to address the requirements of transitional societies in Central and Eastern Europe. Returns from these investments could be increased through a process that helps to tailor agency inputs to the comparative advantages of countries (and sub-regions of countries) in the marketplace. The prospects for sustainability of these initiatives will increase as indigenous private sector groups are strengthened and can lobby for fiscal policy and legal system reforms that are necessary to create favorable business environments. This focus is lacking and should be a priority for future A.I.D. decision making, perhaps through the mobilization of resources from well-matched U.S. trade and investment entities. Finally, long-term private sector development depends on institution building, primarily through improved business schools and services and increased government planning and decision making capabilities, particularly at the municipal level. A.I.D. is funding such complementary investments, which despite their weak integration, may be strengthened through the devolution of resource control to the field or country level. (Author abstract)