Mid-term evaluation of the International Executive Service Corps (IESC) trade and investment services program : final report

Mid-term evaluation covers the period 9/89-5/92. TIS has been a worthwhile experiment and has developed cost-effective approaches to delivering trade and investment services. The key accomplishment is perhaps IESC's new Multiple Business Services program, whereby its network of VEs is utilized to provide many additional services needed by the private sector in USAID client countries. To date, a total of $11.2 million has been expended on TIS efforts in 10 countries, including those in Eastern and Central Europe. In two countries (Morocco and Sri Lanka), USAID funding covers almost 100% of TIS' operating costs, indicating that TIS "seed" projects have begun to take root and germinate. However, better monitoring and reporting by IESC would enable USAID to assess the impacts of individual country experiments with greater precision. The programs in operation the longest have all generated results. According to IESC reports, Morocco, Guatemala, and Dominican Republic have generated nearly $20 million in exports, over 4,000 jobs, and more than 80 transactions (cooperative agreements, licensing arrangements, etc.). However, the IESC reports assume that these effects were due solely to the TIS program; such a high level of attribution is possible only in Morocco, where TIS is separated from the traditional VE program. Adjusted figures would reduce TIS' overall impact to $12.2 million in exports and about 790 new jobs. Even with these modest figures, however, the cost-effectiveness of the three programs is competitive with other successful promotion programs. The other TIS programs examined by the evaluators are either too new to have produced results (Sri Lanka, Indonesia), or require a change in design (Turkey, Portugal). Several valuable lessons have been learned. on strong in-country management, proactive marketing, and clear objectives. As far as possible, TIS must distinguish "winners" from "losers" and focus on healthy small and medium-sized firms that would not seek out partners on their own. (2) TIS programs are resource-intensive. TIS clientele (small and medium-sized firms) require significant assistance, and the program needs to be sufficiently funded if it is to provide the variety of services needed to make exports and investments happen -- the guaranteed presence of an in-country office, the provision of TA, market studies, matching grants, paid local and foreign consultants, etc. At the same time, these higher costs must lead to demonstrably quick and cost-effective results; otherwise, higher costs can become a red flag and undermine the program. (3) It is unlikely that any of the TIS programs will become self-sustainable over the next 2-3 years, nor should they be expected to. To date, no TIS programs have generated cash reflows through fees which could cover some of the operating costs. Some Advanced Developing Countries such as Turkey and Portugal have tried to charge success fees of 1% on total investment; since USAID is unable to finance in-country costs, such fees will be needed. In the case of less developed countries, it is questionable whether sustainability should even be an objective, since it might lead the TIS program to shift its focus from a developmental to a commercial orientation in which large firms are served. (4) Within the next 2-3 years, IESC will incorporate TIS into its traditional TA operations. The success of this move will depend on the existence of adequate systems to assure that U.S. management of TIS does not suffer, particularly with regard to control of market research and in-country and U.S. communication and implementation procedures. Conflicts between standard USAID regulations and innovative TIS approaches should be resolved by USAID.