PUBLIC-PRIVATE COLLABORATION FOR PRODUCTIVE DEVELOPMENT POLICIES THE CASE OF URUGUAY. long version non edited
The Public-Private Collaboration (PPC) for Productive Development Policies (PDPs) implemented in Uruguay in recent years have provided fertile ground for research. Many have achieved results that can be analyzed within the scope of their respective histories and institutional settings. The study inquires about what PPCs maximize the benefits of PDP results and minimizes rent-seeking behavior or the capture of government. In other words, it wants to disentangle how did the PPCs selected balanced these two apparently conflicting goals. The results show that some PPCs managed these matters better than others did. A history of private-public collaboration at the sectoral level was a key factor in understanding the different results. The imposition of foreign regulations to export-intensive sectors is another factor that reduces the imbalance. Additionally, the PPCs’ degree of sophistication and the lower risk of one-sidedness depend on the capacities of public and private actors. Finally, the study found that the PPC design that most likely has better results has to be consistent with the kind of good, that is, the public, club, or private good, the PDP is providing
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PUBLIC-PRIVATE COLLABORATION FOR PRODUCTIVE DEVELOPMENT POLICIES
THE CASE OF URUGUAY
IDB RESEARCH PROJECT
WASHINGTON D.C.
MONTEVIDEO, JULY 2013
Pittaluga, Lucía (Principal Researcher and team leader)
Rius, Andrés (Principal Researcher)
Bianchi, Carlos (Principal Researcher)
González, Macarena (Research Assistant)
Abstract
We study five cases of Productive Development Policy (PDP) which required Public-Private
Collaboration (PPC): meat traceability policy, two Sectoral Councils
(shipbuilding and
biotechnology) and two clusters programmes (blueberries and tourism in Colonia). We enquired
about the institutional arrangements that maximize the benefits of PDP results and minimize rent
seeking behavior or the capture of government. We wanted to how the PPCs we selected have
balanced these two apparently conflicting goals. We found that some of those PPCs manage
better these matters than others. Sectoral private-public collaboration background was essential
to understand those different results. The imposition of foreign regulations to export-intensive
sectors is another factor that reduces the imbalance. Additionally, the PPC degree of
sophistication (and consequently its lower risk to one-sidedness) highly depends on public and
private actor´s capacities. Finally, we found that the PPC design that probably has better results
has to be consistent with the kind of good the PDP (public, club or private good) is providing.
TABLE OF CONTENTS
INTRODUCTION........................................................................................................................... 4
1.
THREE PRODUCTIVE DEVELOPMENT POLICIES ....................................................... 6
1.1.
Agriculture policy: public-private institutional setting ...................................................................... 7
1.2.
Industrial policy: Tripartite Sectoral Councils ................................................................................. 10
1.3.
Cluster promotion policy in industrial, agricultural and service sectors ......................................... 15
2.
FIVE POLICY CASES BASED ON PUBLIC-PRIVATE COLLABORATION ...............18
2.1.
Case 1. Meat traceability................................................................................................................. 18
2.1.1.
Emergence and development of the meat traceability system .............................................. 19
2.1.2.
Does meat traceability generate economic value? ................................................................. 22
2.1.3.
Old and new, public and private actors from the meat value chain ....................................... 24
2.1.4.
Actor alignment process to meat traceability policy .............................................................. 28
2.1.5.
Public-private collaboration to design the cattle traceability system..................................... 30
2.1.6.
Public-private interaction to implement the cattle traceability system ................................. 32
2.1.7.
Public-private networks to innovate within the traceability system ...................................... 33
2.1.8.
Institutional design lessons .................................................................................................... 34
2.2.
Case 2. Shipbuilding Tripartite Sectoral Council .............................................................................. 35
2.2.1.
A suppliers development program to boost the shipbuilding sector ...................................... 36
2.2.2.
Actors and representation ...................................................................................................... 39
2.2.3.
Infant industry arguments and policies .................................................................................. 41
2.2.4.
Institutional design lessons .................................................................................................... 44
2.3.
Case 3. Biotech Tripartite Sectoral Council...................................................................................... 45
2.3.1.
Actors and representation ...................................................................................................... 46
2.3.2.
The biotech promotion Law: a tool for productive policy ....................................................... 48
2.3.3.
The register process for biotechnology products.................................................................... 50
2.3.4.
Institutional design lessons ............................................................................................... 52
2.4.
Case 4: Blue erries’ luster ............................................................................................................. 53
2.4.1.
The emergence and development of the blueberry sector .................................................... 53
2.4.2.
Actors and representation ...................................................................................................... 54
2.4.3.
A private sector leadership cluster ......................................................................................... 55
2.4.4.
The creation of a club good: essential to develop exports ..................................................... 56
2.4.5.
Institutional design lesson ...................................................................................................... 57
2.5.
Case 5: Tourism cluster in Colonia del Sacramento ......................................................................... 58
2.5.1.
Creating institutions among heterogeneous actors: a government-led experience ............... 58
2.5.2.
The uses of consensus strategy documents ............................................................................ 62
2.5.3. Institutional design lessons............................................................................................................ 66
2
3.
SUMMARY AND LESSONS LEARNED ............................................................................66
3.1
Summary of the five case studies ................................................................................................... 66
3.2
Conclusions and lessons ................................................................................................................. 68
3.2.1. Public-private is a two-way relationship........................................................................................ 68
3.2.2. Private sector capability: lobbying versus networking. ................................................................. 69
3.2.4 Public-public coordination failures. ................................................................................................ 70
3.2.5. Labor Unions capabilities: wage bargaining dialogue versus long-term vision. ............................. 71
3.2.6. Time horizons. ............................................................................................................................... 71
3.2.7. Policy learning spaces. ................................................................................................................... 71
3.
3.1.
INFORMATION SOURCES ................................................................................................73
Bibliography .................................................................................................................................... 73
3.2.
Other Sources.................................................................................................................................. 76
3.2.2.
Interviews ............................................................................................................................... 76
3.2.3.
Laws, i isterial resolutio s a d usi ess asso iatio s’ do u e ts ..................................... 77
3.2.4.
Stenographic records from parliament sessions ..................................................................... 77
3.2.5.
Press Releases......................................................................................................................... 78
3
Introduction
The Productive Development Policies (PDP) implemented in Uruguay over the last years provides a
highly fertile ground for research. Much of those PDP have already results that can be analyzed
within the scope provided by their respective institutional settings and their historical background.
A paper written by Haussmann, Rodrick and Rodriguez-Clare (2005) is our starting point to picture
a general panorama of the existing Uruguayan PDP system around the year 2004. The authors
sought to identify new growth opportunities in Uruguay in the perspective of self-dis o e .1 At
the time, the Uruguayan economy was recovering from the 2002 financial crisis that disrupted the
banking system and created a major economic slump. Still, they observed that the recovery of
macroeconomic balance, the achievement of more competitive real exchange rates and a political
system and institutions that had earned credibility and trust under fire, underpinned numerous
and very real investment opportunities with ample growth potential. Behind those opportunities
lied the presence of good sector-specific institutions, and the ability of the Uruguayan government
to achieve economically effective and socially legitimate public-private cooperation.
Despite this general positive finding, the authors detected important shortcomings in several
policies, which were hindering growth. The ou t s industrial promotion legislation remained
neutral in the signals given to investors, and created incentives for activities with few
demonstration effects or other positive externalities. In their view, this constituted a major
drawback for self-discovery and growth. Indeed, they pointed to the absence of a systematic, proactive strategy of going after investments in new areas. They concluded that investment
promotion remained a passive, ad hoc and an idiosyncratic affair. They also underlined that the
ai p o le
ith U ugua s approach to vertical policies is that they seemed to be the product
of historical circumstances (i.e. in the case of agriculture) and chance. Finally, the authors pointed
out that the National Innovation System (NIS) was not providing adequate support to innovation in
firms.
Since 2005, there has been a significant reframing of the PDP system in Uruguay. The government
that took office implemented institutional innovations that modified the scale and scope of
support for the transformation of the country s e o o i st u tu es.2 The administration that
started in March 2010, from the same party coalition as the previous one, continued and went
more deeply into the PDP priorities defined during the preceding five years.
Indeed, substantial modifications to the institutional setting in support of productive development
were implemented since year 2005. The government created new actors, for example, two
strategic organizations were created: the Unit for the Support of the Private Sector (UNASEP, for
its Spanish acronym) at the Ministry of Economy and Finance (MEF) and the National Agency for
Research and Innovation (ANII, for its Spanish acronym). UNASEP was designed to be a one-stop
1
2
Hausmann & Rodrick, 2002.
The government in place since 2005 pertains to the first coalition of left-of-center parties that governs in Uruguay.
4
window for those applying for tax benefits under the investment promotion regime3, and seeks to
fa ilitate fi s e ui ed i te a tio s ith the pu li se to o e ge e all . The ANII was created
to execute the National Strategic Plan for Science, Technology and Innovation (PENCTI, for its
Spanish acronym) with the mandate to design, organize and manage programs and instruments
for scientific and technological development and strengthening of innovation capacities.
Other organizations were modernized, like the Institute Uruguay XXI that has gradually become a
full-fledged trade and investment promotion agency. This institute, created in 1996, has been
strengthened and updated since 2009, and has been crucial to complement the tax incentives with
very active hand-to-hand work with firms in order to attract foreign investors or trade partners.
Barrios et al. (2010) reviewed and assessed some of the PDPs implemented in Uruguay between
years 2005 and 2009. They analyzed three horizontal and three vertical policies. The first include
the investment promotion bill of year 1998, its 2007 modifications, and the innovation policy; the
second include the forestry law and its modifications implemented since 2005, meat traceability
and a project of sustainable production in the soy industry.
Three general conclusions can be derived from the Barrios et al. (2010) study. In the first place, an
important generalized change is the commitment of the government to more active policies than
in past years. The institutional innovations introduced since 2005 seemed to them to be linked
with the objectives of greater diversification in production, environmental protection,
decentralization, and minimization of social conflicts. Nevertheless, the lack of financial public
resources to manage the process for achieving those objectives threats its consecution. In the
second place, they did not find any institutionalized learning mechanism through which errors
could be corrected and policies changed based on consensus. Moreover, they detected
coordination problems with other industrial sectors and different horizontal policies, such as
infrastructure policy. In the third place, they perceived that there was consistency between
incentives and objectives of public and private actors. Although participation of the private sector
in the design, selection, and implementation of productive policies was not homogeneous; and
some public actions were seen as too much intervention, subject to public failures.
The objective of this paper is to go more deeply into the exploration of the institutional
arrangements of PDPs implemented in Uruguay in recent years. PDPs are understood here as
policies aimed at increasing the productivity of firms in specific sectors or clusters, and/or
improving the likelihood of emergence and growth of new competitive firms in industries
p e iousl ot p ese t i the ou t s structure.4 The focus is on the Public-Private Collaboration
(PPC) that has been intentionally designed as collaborations between the government and the
private sector to design, implement and/or assess PDPs.5
3
The investment promotion (tax incentives) regime was approved in 1998 (Law N° 16.969), and its specific regulations
were significantly revised twice in the last two administrations (Decree N°455/2007 and Decree N°2/2012).
4
Call for Research Proposals (2011), Public-Private Collaboration for Productive Development Policies, (RG-T1861), InterAmerican Development Bank (IDB).
5
Idem
5
We enquired about the institutional arrangements that maximize the benefits of PDP results and
minimize rent seeking behavior or the capture of government. In other words, what we wanted to
know is how the PPCs we selected to study have balanced these two apparently conflicting goals.
We found that some of those PPCs manage better these matters than others. Sectoral privatepublic collaboration background was essential to understand those different results. The
imposition of foreign regulations to export-intensive sectors is another factor that reduces the
imbalance. Additionally, the PPC degree of sophistication (and consequently its lower risk to onesidedness) highly depends on public and private actor´s capacities. Finally, we found that the PPC
design that probably has better results has to be consistent with the kind of good the PDP (public,
club or private good) is providing.
We organized the exposition as follows. In chapter 1, we describe the three PDPs that harbor the
fi e sele ted PPC s ase studies. We a al ze the i stitutio al setti gs of the ag i ultu e poli , the
Sectoral Councils implemented by the industrial policy and the cluster promotion policy. Then
(chapter 2) we go into detail on the experiences of the meat traceability system, two Sectoral
Councils (shipbuilding and biotechnology) and two clusters (blueberries and tourism in Colonia).
The scope for PPC and the outcomes in these policy experiments are highlighted in the analytical
section after each case study. Finally, in chapter 3 we expose the lessons that can be learned from
these five case studies in terms of institutional settings of PPCs for PDPs.
1.
Three Productive Development Policies
The relationship between public and private actors has always been an important concern in the
Uruguayan policy. Although, as we will see in this chapter, while PPCs in PDPs -especially in
agriculture- existed before 2005, during these two last government administrations the focus of
cooperation has been significantly different.
A second, not less important, priority of policy-making since 2005 has been public-public
collaboration. Four public-public coordination spaces were created in 2008: the Productive
Ministerial Cabinet6, for the ministries of the executive branch linked to production issues; the
Innovation Ministerial Cabinet7 for the coordination of innovation matters; and the Bio-Security
Ministerial Cabinet for issues related to genetically modified organisms.8 A fourth Ministerial
Cabinet was created to deal with social issues.
The Ministerial Cabinets were installed to engender an inter-ministerial reflection on long-term
development issues from the different angles of each government agency in order to articulate
6
The Productive Cabinet is integrated by the Ministry of Industry, Energy and Mining-MIEM; the Ministry of Livestock,
Agriculture and Fishery–MGAP; the Ministry of Tourism-MINTUR; the Ministry of Economy and Finance-MEF; the
Ministry of Transportation and Public Works-MTOP; the Ministry of Foreign Affairs-MRREE; the Ministry of Labor-MTSS
and the Office of Planning and Budget-OPP.
7
The Innovation Cabinet is integrated by the MIEM, MGAP, OPP, MEF, the Ministry of Public Health-MSP and the
Ministry of Education and Culture-MEC.
8
The Bio-Security Cabinet is integrated by the MGAP, MIEM, MEF, MSP, MRREE and the Ministry of housing, territorial
planning and environment –MVOTMA.
6
strategic public policies. The long-term vision of the Ministerial Cabinets (explicitly formulated by
the Productive and Innovation Cabinets) is to modify the productive structure of the country to
achieve a sustained and sustainable economic growth with social justice.
The Ministry of Agriculture and Fishing (MGAP, by its Spanish acronym) carries the Agricultural
Policy forward. The strategy of the MGAP, in line with the Ministerial Cabinets objectives, aims
to enhance agriculture and agroindustry competitiveness to achieve sustainable development with
social inclusion. The design of public policies to pursue these strategic objectives clearly goes
beyond MGAP and requires the coordination within the structures of the government and the
collaborating with the private sector. The first section of this chapter (section 1.1.) describes the
institutional settings of the agriculture policy in order to explain the policy context in which the
meat traceability system was adopted (this case study will be exposed in chapter 2).
The Ministry of Industry, Energy and Mining conducts the Industrial Policy (MIEM, by its Spanish
acronym). Its goal, also i li e ith the Mi iste ial Ca i ets o je ti es, is to achieve the
diversification of the production structure with environment protection and equality. The
transformation of the productive structure is based on the promotion of three sectoral pillars:
agroindustry, strategic goods and services and new sectors.
The public policies designed to achieve the objectives established by the MIEM since 2010 are
based on the TSCs. These are public-private collaborations spaces among government, business
leaders, and workers channeled to elaborate and implement sector-specific industrial plans. As we
will see below, the councils are relatively new, but different modalities of PPCs were already in
place in the majority of the sectors promoted by the TSCs. The second section (section 1.2.) of the
chapter will describe the institutional functioning of the TSCs to understand the policy context in
which our two cases (biotech and shipbuilding exposed in chapter 2) are integrated.
The cluster promotion policy started in Uruguay in 2005 with two simultaneous programmes, the
Progama de Apoyo a la Competitividad de Clusters y Cadenas Productivas (PACC) and the
Programa de Apoyo a la Competitividad y Promoción de Exportaciones de la Pequeña y Mediana
Empresa (PACPYMES). The Office of Planning and Budget (OPP, by its Spanish acronym)
implemented the first9 with the Inter-American Development Bank (IDB) support; while the
second was implemented by MIEM, with support from the European Union (EU).10 These
programmes, as usual in this kind of policy, aim to create collaboration spaces between key public
and private actors in clusters and co-finance competitiveness-enhancing activities. Our two cluster
cases (blueberries and tourism in Colonia detailed in chapter 2) are from PACC.
The expression of PPC in the Uruguayan productive policies can be observed by means of these
three policies that we will detail in the next sections.
1.1.
Agriculture policy: public-private institutional setting
9
OPP has the status of a Ministry.
To date only PACC is still operating. P
ACPYME“ losed i
e ause EU s fu ds e e e ti el e e uted.
10
7
Since 2005, the agriculture policy is transforming its institutional setting to a more coordinated
and efficient system. The system is composed by the central structure of the MGAP, its various
programs and projects, an autonomous entity (INC)11 and six non-state public entities. The latter
are specialized entities in meat sector (INAC), agricultural extension and training (IPA), agricultural
applied research (INIA), dairy sector (INALE), wine sector (INAVI) and seed sector (INASE).12 All
seven institutes (the six non-state public entities and the INC) have private sector participation
through business associations in their Board Directories.
The seven institutes are called the "expanded agricultural institutions". They are legal instruments
to organize, manage and finance the public policies. In these cases, the State considers that they
will be better developed with this legal form. In the case of non-state public entities, it is also
recognized that the distinction between public and private is not based solely on the State nature
or not of the entity. It also implies the participation in different degrees of the private sector in
their board directories. Thus, it also implies the private participation on the political and strategic
decisions that are taken within the entities (Arboleya, 2007).13 Some institutes are mandatory
advisors of the Executive Branch, explicitly or implicitly, but none is responsible for defining the
policy. They all execute the policy defined by the government. Some institutes have regulation and
control functions (INAVI, INAC and INASE) and other are explicitly released from them (INIA).
The laws that create the institutes include in all cases clauses providing a specific funding source.
For INIA, funding comes in equal parts from the national budget and from a specific tax to
agriculture sales (INIA). Others, like INASE or IPA, have part of its budget financed by the national
budget and part from the sale of their services and other sources. INAC14 and INAVI have
independent funding from specific charges or taxes. Finally, INC funds its activities by the asset
management of lands and other sources.
The seven institutes are the expression of PPC in the agriculture policy. Still, there is a great
diversity in the origin of the membership of their Boards of Directors. In some, the State is
majority (INC) and in others, the private sector is majority (INAC, INAVI and INASE). In the case of
INIA, INALE and IPA the public-private relationship is equal, but the president of the board
appointed by the executive branch has the possibility of voting twice. Apparently, this kind of
board composition with double vote for the president is the tendency in the recent years
institutional changes, as the new Institutes15 or their modifications16 have adopted it. The
argument to justify this is that the government has the right to drive its policy guidelines and for
11
Instituto Nacional de Colonización was created by a law from 1948 and was modified in 2007 and 2011. Its objective
is the promotion of a rational division of land, assuring its best exploitation and the welfare of the farmer.
12
Instituto Nacional de la Carne (INAC), Instituto Plan Agropecuario (IPA), Instituto Nacional de Investigaciones
Agropecuarias (INIA), Instituto Nacional de la Leche (INALE), Instituto Nacional de Vitivinicultura (INAVI) and Instituto
Nacional de Semillas (INASE).
13
In 2007, INALE didn´t exist yet, but the study of Arboleya (2007) refers to the future entity in several occasions. It can
be asserted that INALE fulfills the same functions than the older ones.
14
INAC is fi a ed a pe e t of eat s e po ts a d do esti sales.
15
A law from December 2007 created INALE.
16
IPA was created by a law from January 1996 and was modified in August 2011.
8
that, it must have the majority on the board. Based on the accumulated experience of some of the
well-functioning institutes, like INIA, this seems to be an efficient safeguard mechanism to prevent
rent seeking from private actors.17
Nevertheless, there are other modalities, which intend to achieve the same results. For instance,
according to Arboleya (2007), in INAC, were the public sector is in a minority position in the board,
its president from MGAP has the ight to eto the oa d s esolutio s that o t a e e the
guidelines or policy definitions that come from the executive branch. In INAVI18 where there is also
a majority from the private sector on the board, the government representatives have double
vote, resulting in the end to be majority. Moreover, in some cases balance is searched by means of
the integration in the Board Directory of diverse private interests from the same value chain. For
instances, cattle producers versus meat processors in INAC, winemakers versus vine growers in
INAVI, or seed producers versus seed traders versus seed users in INASE.19
Two periods can be clearly observed during the 50 years development of the precedent
institutional framework. During the first period, INC is created first and then INAC.20 In these cases,
the main arguments to create them were the strategic importance that their functions seemed to
have for the country's development (land distribution and the main product of the country's
agricultural production). In the second period, four institutes (INAVI, INIA, INASE and IPA) were
created with very similar characteristics and under the same standards in a short period of just 10
years.21 In this last period, also other factors, like the inefficiency of the public sector, the private
sector participation, the search of independent funding, were relevant to justify the creation of
the new entities (Arboleya, 2007).
Indeed, the Uruguayan agricultural public institutions are the result of various processes that did
not escape to the influences of the international and regional context. In the decades of the '80s
and '90s in all the Latin-American countries the role of the ministries of agriculture were changing
to fulfill what was considered their substantive commitments, such as the definition of sectoral
public policy, regulation and control. Uruguay's case is no exception to the general rule. MGAP
started to change in the late 80s. The main features of these reforms were the reduction of the
number of the central structure s units from 33 to 16 in the nineties and then until eight in 2000.
During the former transformation, the newly created institutes absorbed the functions removed
from MGAP. The second transformation involved a sectoral grouping of the ministry functions
(livestock, agriculture, forestry, farm, etc.) (Arboleya, 2007).
Summing up, according to Arboleya (2007) …the Uruguayan Agricultural Public Sector resulting
from the precedent process is heterogeneous and different public governance models coexist: at
17
Though to date, INIA never had to use this mechanism (Arboleya, 2007).
INAVI was created by a law from November 1987 and was modified in January 2009.
19
INASE was created by a law from February 1997 and was modified in February 2009. These last modifications didn´t
change its Board Directory composition.
20
In 1984 was enacted the law that creates INAC, but it was already operating since 1967 with many of its current
functions.
21
The four institutes were created between years 1987 and 1997.
18
9
the MGAP level a centralized bureaucratic one and at the level of the institutes and some
programs and projects one more inspired by the "new public management". Moreover, the
coordination capabilities of the State are weak (and in many ways still are) which makes it
impossible to implement proactive policies to guide the actions of the government .
Since 2005, but especially after 200722, the government has modified the "expanded agricultural
institutions" in order to align it to the poli ies of the se to s lo g-term strategy. This represents a
third period in their evolution. The creation of a new institute very similar to the others (INALE)
and the modification of some of the existing ones (INC, INAVI, INASE, IPA) -incorporating the
learning cumulated until now- is the proof that these institutions, with the mentioned
adjustments, are a powerful tool for PPD based on PPC for these two last administrations. The
case of meat traceability examined further below exposes good illustrations of how can these
institutes play that role (in this case are involved INAC, IPA and INIA).
However, in terms of PPC, the government is also proposing to go beyond the co-governance
model of the e pa ded ag i ultu e i stitutio s a d uild i te -institutional innovation networks.
The Agricultural Progamme and Policy Unit s (OPYPA, for its Spanish acronym) director addresses
these issues i the MGAP s i o atio poli guideli es fo the p ese t ad i ist atio Paoli o,
2010). He asserts that the agriculture innovation public policies designed under the PENCTI are to
be executed by means of public-private networks. The development of skills for managing a
network requires actions and mechanisms for coordinating and monitoring the different nodes.
The first mechanism is constituted by the g upos i teg ado es . These groups represent
workspaces where there is room for deliberation and group decision. These groups (stable over
time, institutionalized and with high legitimacy) allow synergic decision-making among different
institutions and actors. The grupo integrator" can coordinate, integrate, and resolve conflicts
between different participants. The second mechanism is an information system to be shared by
all the nodes. In addition, the third is the assignment of teams, human resources and financial
resources to monitor and asses the network activities.
Until now, this new institutional engineering to organize PPCs for agriculture policy is far to be
applied. Some interviewees mention the lack of critical capabilities (from the State and private
sector) to get involved in such sophisticated collaborations. Nevertheless, there is maybe a more
parsimonious pathway to evolve towards new forms of PPC. The example of an embryonic publicprivate inter-institutional network (MGAP, INIA, INAC, other research institutes and rural business
associations) that has the objective to converge the meat traceability platform with genomics in
order to enhance meat competitiveness is a signal that more sophisticated PPC can be looming in
the future. We will go more into the detail of this innovation network when dealing with the meat
traceability case.
1.2.
Industrial policy: Tripartite Sectoral Councils
22
The study elaborated by Arboleya (2007) was ordered by a special commission from MGAP to generate the inputs to
t a sfo the e te ded ag i ultu al i stitutio s .
10
The Productive Cabinet promoted the TSCs since 2010. The starting point of this initiative was the
need to clarify institutional roles and responsibilities in the implementation of the highly
pu li ized U ugua P odu ti o st ateg . The T“Cs e e the efo e see as a tool fo the
i ple e tatio of U ugua P odu ti o , p o idi g a o siste t f a e o k fo so e e isti g
dialogues and other consultative mechanisms. The establishment of the TSCs institutionalized
those dialogues and formalized the development of industry-specific growth strategies. The
setting of clear goals around strategic objectives was expected to clarify the way in which
industrial policy could contribute towards the consolidation of a more diversified productive
structure for a more inclusive society.
Although councils are new in Uruguay, they are not new for many othe ou t ies as De li s
(2012) paper reports. Based on the examples of Ireland, Finland, Czech Republic, New Zealand,
Singapore and Malaysia Devlin draws up a framework for contemporary public-private policy
alliances at the national level to support strategic policymaking. The Uruguayan TSCs can be
classified in what he calls Area 1 (an alliance that aims at dialogue and consensus decisions) -like
Ireland, New Zealand and Finland-; and has the type of participation in the alliance like New
Zealand (Government, business, academia and unions).
Indeed, in Uruguay TSCs are public-private deliberation spaces where participate government,
workers and private actors (and in some cases academia) with the aim to design and implement
industry-level growth strategies. These strategies are embodied in sectoral plans which include a
isio
lo g te , o je ti es a d goals ediu & short term), and an action plan -with a time
frame until 2020- containing a detailed list of tools and indicators to measure the results of the
plan´s implementation. Following Rodriguez-Clare (2011), the development and implementation
of the industrial plans can be seen as a mix of horizontal and vertical policies, where the
government provides some combination of grants, market interventions and public inputs.
Furthermore, the individual sectors combine these instruments in different proportions.
The first round of industrial TSCs launched in 2011 included the following sectors: Automotive,
Shipbuilding, Wood and Forestry, Biotech, Pharmaceutical and Textile-apparels.23 In our two case
studies analyzed in chapter 2 we will go deeply inside the implementation of two objectives of the
Biotech Plan (the Biotech promotion Law and the register process for Biotech products) and an
implemented provider development program that searches to build into the expansion of the
Shipbuilding sector (the first objective from the Shipbuilding Plan).
One critical aspect that affects the possibility of achieving the stated goals in the plans relates to
the financial support for the designed actions to achieve each goal. One of the strengths of the
developed strategic plans in comparison with past experiences is that every action intended to
achieve a specific goal is associated to an estimation of the required financial requirements, and
23
The first round´s plans (except textile-apparels) are available at http://gp.gub.uy/es/node/639 and
http://gp.gub.uy/es/node/640 [last access 04/01/2013]. The second round of TSC was launched in 2012 including
Construction Building, Chemicals, Metallurgical industry and Design and their plans will be published on 2013. The third
round of TSCs will be launched in 2013 and will include Milk, Meat, Leather and Grains, renewable energy, ICT and
nanotechnology.
11
has identified a source for the financial support. This does not mean that these are simple
processes, but implies a great advance in terms of policy design. In Uruguay, examples of policies
that lack the necessary funding are abundant and therefore extremely difficult to evaluate.
Each sector from the first round s pla s had PPC backgrounds before the TSC constitution.24 In
pharmaceutical, automotive and textile-apparels, there were sectoral public-private roundtables
since 2008 and 2009. In the forestry-wood sector, three networks, which gathered small and
medium sawmills, were created by PACPYMES in 2008. Finally, the Biotech council relied on the
advances achieved by the Life Sciences cluster launched by PACPYMES in year 2005; as well as the
shipbuilding council which was constructed in the basis of the shipbuilding cluster launched by
PACPYMES in 2007, and the sectoral public-private roundtables which functioned in 2008 and
2009. In chapter two we will analyze in detail the PPCs established in these two last sectors.
The MIEM officials are primarily involved through the activity of technical teams devoted to
coordinating the different TSCs. They are entirely made up of professionals, some with
postgraduate training. They mainly report to MIEM under various types of term contracts, but
they usually do not enjoy the benefits of assured tenure enjoyed by regular civil servants. These
professionals in charge of the TSC coordination were either hired or relocated from other
assignments within MIEM, since the National Industry Directorate (DNI) did not have enough staff
with the required skills for the jobs. One of the future challenges of the public administration is
how to retain the existing cuadros profesionales by encouraging professional growth and making
a public sector career attractive. One can infer that those who have been leading the process at
the ou ils le el e e highl
oti ated, a d e jo ed the halle ge of uildi g a innovative
policy. However, considering that these people work very close to the private sector, where they
could eventually get a better job, the lack of employment benefits may affect their commitment to
look after the interests of the public sector when negotiating with private sector representatives.
However, there is dedicated and competent technical staff to coordinate and assure progress in
the work of the councils. The risk put by Ross-Schneider (2010) to cheap talk caused by the lack
of competent staff to follow up the council is relatively low today, but sustainability of the working
teams is not assured in the future. We will come back to this crucial issue in more detail in the
case studies below.
Uruguay s la o o e e t is o ga ized a ound a single national federation (PIT-CNT) that, despite
some normal infighting and uneven unionization rates by industry, is clearly perceived as the
legitimate representative of firm and industry level organizations. Depending on the scope of TSC
activities, representatives of industry-wide unions have participated since the early times. In
general, such participation is an added responsibility on professional union leaders (the law
protects labor activism, and senior leaders are allowed indeterminate leave as long as they are reelected to representation roles).
24
The published plans elaborate the complete recent PPC story of each sector.
12
The private sector, in turn, is mainly involved in TSCs through industry-level business chambers or
associations (but individual firms can participate on its own behalf if they want to). Like labor
unions, these business organizations are funded through member contributions, and exhibit
varying degrees of organizational effectiveness, or sophistication of their agendas. The differences
among TSCs in the organization of the private sector a ou t fo so e of the Cou ils
achievements and failures. The e a e T“C s he e p i ate se to i ol e e t o u s through
t aditio al i dust -level business associations.25 These cases, such as the automotive or the
textiles sectors, typically correspond to sectors with a long tradition of collective action. On the
other hand, there are cases in which participation occurs through more recently created and less
experienced (but sometimes more modern) leadership (like biotechnology or shipbuilding).
The existence of business associations accustomed to have traditional relationships with the
government, and difficult to change because of path-dependence, poses a challenge to the
government. Devlin (2012:13) puts that in the following way: A government must also be clear
about the degree to which it wants the alliance council to be a primary channel of communication
for stakeholders vis-a-vis more traditional bilateral consultations and lobbying by social groups and
firms. If the government is not clear about that then the public bureaucracy could become so
porous as to erode the legitimacy of the council as a relevant forum of interface with government
officials.
Moreover, an overall problem of the Uruguayan industrial business associations is the adequate
qualification of its professional staff. As Ross-Schneider (2010:13) highlights in his study of several
councils cases i Lati A e i a: Professional staff in associations, usually long-term employees,
can help provide high-quality information, long-term relations, and counterpart technical staff to
work between meetings with government officials. However, beyond the largest peak associations
in Latin America, few associations have much staff to speak of, certainly compared to developed
countries. However—and here time horizons are critical—if associations are invited to participate
in a council over the longer run, this invitation itself can convince association leaders that they will
need to invest in technical staff.
There are sectors where private actors participate through associations that are supposedly
represented by the senior leaders but, according to some private sector actors, they are
entrenched organizations that do not convey effectively the sector's needs and future challenges.
On the other hand, there are organizations with more innovative features (such as AUDEBIO26, in
the Biotech industry) in which important players of the sector are absent, but that nonetheless
have a clear and modern agenda. While that agenda may not represent the whole of the private
sector, it raises issues of significance to the whole sector, with some degree of legitimacy. Some
councils, like the one for the shipbuilding sector, enjoyed the benefits of their previous trajectory
as part of a cluster-development policy (in the case, PACPYMES and then PACC), and had in that
25
26
Namely, associations based on lobbying capability to promote private interests.
Asociación Uruguaya de Empresas de Biotecnología.
13
context developed an ad hoc governance mechanism that, at least, provides legitimacy to
representatives of the organized segments. We will come back to these issues in the case studies.
Moreover, in some TSCs academic and research institutes are also involved. It is worth mentioning
that while the academic community in Uruguay is heavily concentrated in the public Universidad
de la República, private research and education institutions (Universidad ORT, for instance) also
participate in the councils. The academic sector has been actively contributing and participating in
setting the agenda and working together with public and private actors.
The asi p i iple of the T“C is o se sus-building .27 This methodology begins by clearly
defining the objectives of the TSCs, associated to a medium and long-term productive policy. Once
TSCs are accepted as a valid tool for pursuing this, the public-private interaction is focused on
defining the sector´s vision, the objectives of the plan, then are set the goals, tools and successive
steps of the action plan. Thus, it is fair to say that the public sector has been the leader in the
definition of the methodology and procedures. However, in defining the contents of the agenda,
the private sector participation has been crucial in all cases. The provision of relevant information
to construct credible plan goals has been the decisive issue in their participation. Nevertheless, the
elaboration of the first round of strategic plans was a long negotiation process, until consensus
was reached. This method is maybe slow and can achieve sometimes-imperfect results (e.g.
training courses in some TSC were not detailed because companies and workers didn´t reach to an
agreement) but it certainly legitimates the plans.
Mo eo e , T“C s do ot ha e e pli it safegua d e ha is s agai st possi le oo di atio failu es,
nor to prevent capture, from either the public or the private sector. According to the information
collected so far, the actors involved do not perceive it as a problem. This does not mean that this
risk does not exist, simply that it is not considered a priori as such. Government-hired
professionals involved in the councils see it as a possible problem but one that so far has not
appeared (the risk may be greater in other industries where we did not conduct interviews).
Finally, the TSCs appear vulnerable to the risk of their premature abandonment by a new
administration that does not understand their purpose, does not value its achievements or
strategies, and/or attaches a lower priority to them. It is important to bear in mind that this
methodology has some original features but planning of industrial development strategies is not
strictly new. There have been experiences of strategic planning at the sectoral level in the late
1990s (so- alled Co petiti e ess Age das , which were discontinued by incoming
administrations. This issue will be further investigated based on the evidence from the case
studies.
According to Ross-Schneider (2010:10), The vast majority of consultations between business and
government probably do not generate many benefits. Generating more of these benefits seems to
depend heavily on appropriate institutional arrangements and strong motivations or valuable
27
As defined in Devlin & Moguillansky (2009).
14
incentives, conditions that are frequently lacking . Our two cases from TSC analyzed in chapter 2
will confront these hypotheses.
1.3.
Cluster promotion policy in industrial, agricultural and service sectors
The cluster promotion programme agreed between the IADB and the Government of Uruguay in
2006 set the foundations for the establishment of PACC. It was based on the identification of a
number of productive agglomerations that might be facing problems to improve their
competitiveness due to coordination failures and the under-provision of public goods (or, more
st i tl , lu goods i the a eas of a ket a ess, te h ologi al de elop e t, a d go e a e
of the multi-actor cooperation (BID, 2006a).
The PACC was clearly designed and run as a contribution to inc ease fi s competitiveness, and
this permeated many of its features and the key steps in its evolution. To achieve that overarching
goal, it was structured in three components that also reflect its specific objectives:
(i)
(ii)
(iii)
Development of clusters Pla s fo Strengthening of Competitiveness (Planes de Refuerzo
de la Competitividad, or PRCs) through a participatory process facilitated by governmenthired specialists. This included the identification, mobilization and selection of
agglomerations to be included in the program, and the latter was done through an open
call for private-public joint initiatives with the endorsement of at least one local
government.
Public-private co-financing of competitiveness strengthening actions clearly aligned with
the PRCs. These were classified in three types: i) Estructurantes (structuring) initiatives
leading to the production of goods or services of broad and non-rival benefits (such as,
e.g., creation and promotion of a luste s collective brand and image-building tools); ii)
Abiertos (open) were those actions available to all but benefiting the firms actually
involved in their execution and use, such as e.g., training activities; and closed projects;
and iii) Cerrados were those designed to benefit a smaller group of firms, and that had
some rivalry and exclusion properties (e.g., establishment of a jointly owned distribution
subsidiary). The share of non-reimbursable funding from the program was high for the
structuring projects and rapidly declining for the other two categories; and
Facilitate the reorganization of the public institutional configuration and its functional
integration with the private actors. This involved removing bottlenecks and creating or
recreating inter-stakeholder links, with a view to strengthening collective competitiveness.
While similar programs were developed more or less simultaneously in other parts of the Southern
Cone, the Uruguayan program had three distinctive features that reveal some of the underlying
strategies (the following is based on Rius, 2011). First, the coordination of the PACC was placed
outside the sectoral ministries, at a high-level agency that had a track record of managing IADBsupported projects efficiently and effectively. This was thought to facilitate a horizontal
coordination within the public sector departments and agencies interacting with the private sector
in each cluster.
15
Second, the selection of clusters to be supported was done through an open call. In fact, the
p og a s staff did p o ote the p og a
o e a ti ely among more promising groupings, and
encourage some to apply, but the call was open to any others that would meet the requirements.
This helped to convey the message that no group had a privileged relationship with the program,
and that any could drop out if it ceased to meet the criteria for inclusion, as there were other
pote tial e efi ia ies aiti g to e suppo ted.
The third distinctive feature was the style of facilitation (for development of the participatory
competitiveness plans and early organization of the governance structures). In addition to a
proactive team of program staffers, the external facilitators were individual sectoral specialists or
facilitation experts, rather than large international companies. There might have been a risk that
this solutio ould ha e ade it easie fo the p i ate se to to aptu e those i di iduals, a d
push a rent-seeking agenda. However, the experience has shown that this resulted in greater
o e ship of the PRCs by the private sector, without the feared capture of the agenda and
rather a greater private commitment to the PRCs themselves.
Like other similar programs in the region, the strong presence of the private sector in the agenda
setting and management of cluster activities was expected and achieved in the best performing
cases. This included the participation of representative firms and groups of firms in the
governance of the cluster, the definition of priorities, and even the approval of specific activities. A
cluster government structure was expected to emerge, with some specific form of coordination
and/or integration with mixed and public sector entities or spaces. In the process, the public
se to , th ough the p og a s oo di atio u it, as the ai facilitator, reflecting a peculiar and
innovative perspective on the role of public actors in the implementation of productive
development policies.
This odel o pape
as la gel the o e o se ed i ealit si e
, ut this did ot
preclude the occurrence of small or larger shifts in tactics or higher-level principles and strategies.
In particular, the intervention model was gradually improved in the period between 2006 and
2009, which saw the rise (and fall) of ten (and three) clusters that had developed the governance
structures and project achievements to call them (at least fairly) successful.28 The change of
administration after march 1st 2010 brought with it the replacement of the senior tier of program
executives, an impasse to the public approval of new activities, and a slow return to more or less
normal operation since 2011 (if with a narrower focus on competitiveness-enhancing activities not
supported by other existing policies and program). It is not clear if the program will continue after
the end date of the IADB project, after 2014.
28
By three successive calls, between 2005 and 2009, a first batch of clusters was selected and implemented in the
following sectors: gemstones, clothing, footwear and leather goods, wine, blueberries, audiovisual, beekeeping,
software development, tourism, design and processed food. A second clusters batch was selected in 2011 from the
automotive, forestry-wood, olive growing and oil crops sectors.
16
17
2.
Five policy cases based on public-private collaboration
In chapter 1, we described the three PDPs that give rise to the five selected PPC case studies that
we expose in this chapter. In the first sub-chapter (2.1.), we expose the meat traceability policy,
which involves strong PPC within the agricultural policy. In the following sub-chapters (2.2. and
2.3), we examine two PPC cases in shipbuilding and biotech sectors propelled by the industrial
policy through the implementation of TSCs. Finally, we look into the PPCs created by the cluster
promotion policy in the blueberry sector and tourism in Colonia.
2.1.
Case 1. Meat traceability
Meat alo g ith ool has ee U ugua s ost t aditio al e po ts, although toda dai
products, agriculture (rice, soy, wheat) and forestry are also in the top product export ranking list.
Still, in 2011 Uruguay is the eight leading exporter in world meat exports 29 and one of the scarce
meat producing countries that exports the majority of its production (75% in volume).
According to OPYPA s di e to Paoli o,
the agricultural development priorities for the
present administration are the growing importance of crosscutting policies and sectoral policies
for agribusiness chains. Meat traceability policy pertains to both, as in one side it is considered the
first step to build an overall National System of Agriculture Information; and on the other side, it is
a tool to achieve the objective to industrialize meat products with high value added.
As we will analyze hereinafter, the implementation of meat traceability was an enormous
challenge. In the first place, because until then there was not one country in the world that had
implemented a universal electronic system, including the totality of the bovine heads, as did
Uruguay. In the second place, because it involves the coordination of a large number of actors
spread all over the country and many located in remote rural areas. Finally, it implied a cultural
change: new technologies were to be introduced in a production with deeply rooted traditions in
the way things are done.
Some actors refer to meat traceability as a e olutio i the field p odu tio only compared to
the barbed wire fencing of cattle ranches completed at the end of 19th century. The latter is a
main milestone of the cattle technological trajectory in Uruguay. According to Moraes (2003), the
barbed wire fencing of cattle ranches not only introduced new and more rationale forms of
breeding and raising livestock production, but was the via regia to strengthen property rights and
to shape ode
a kets to ag i ultu e s p odu tio fa to s. As we will observe below, it is too
early to know if meat traceability is going to transform to that extent the cattle production and
other links of the value chain. However, considerable progress has been made, which we will
document in this sub-chapter.
29
OECD/FAO (2012), OECD-FAO Agricultural Outlook 2012-2021, OECD Publishing and FAO
http://dx.doi.org/10.1787/agr_outlook-2012-en
18
Our goal is to describe and analyze what sort of PPCs were important to implement successfully
the meat traceability system. In the first place (section 2.1.1), we describe how was the system
implemented. Then (section 2.1.2) we explain how do the actors use traceability until now and in
section 2.1.3 we immerse in the actors involved in the system and analyze their characteristics by
describing their roles and representatives. In section 2.1.4, we explain how actors were aligned to
commit to the policy; then, in section 2.1.5 we discuss the PPC to design the cattle traceability Law
and in section 2.1.6. mechanisms installed to interact between actors within the implementation
of the Law are examined. Finally, (2.1.7.), we describe an emerging innovation network that uses
the traceability platform and we conclude (2.1.8.) by discussing the tendencies that seem to take
PPCs in this PDP.
2.1.1. Emergence and development of the meat traceability system
Meat Traceability policy is one of the few examples in Uruguay of a State policy as three
consecutive administrations have prioritized it. It is inextricably linked to the control of the Foot
and Mouth Disease (FMD). Only after the last FMD outbreak in 2001 -that subtracted nearly 40%
of the eat sales alue- government and private actors started to seriously consider the need to
implement a suitable information system to regain the confidence of the markets.
Meat traceability system can be divided in two subsystems along the value chain: a) Cattle
Traceability (CT) and b) Black Boxes (BB). The former implies the tracking of data from the farm up
to the slaughterhouses, while the latter consists of tracing information on meat cuts at the
industrial stage to the retail stage. The complete link between the two subsystems allows for the
tracing of beef cuts from the retail level to the farm of origin f o farm to plate ).30
As regards to the CT, in August 2006 was enacted the law No. 17,997 that installed the Animal
Identification and Registration System (SIRA, for its Spanish acronym) in Uruguay under the MGAP.
This mandatory bovine cattle individual traceability31 was not totally new to the participants of the
meat value chain. Since 2004, the National Livestock Information System (SNIG, for its Spanish
acronym) managed a voluntary individual Traceability Pilot Program under the MGAP. Before that,
since 1973 existed a mandatory group identification system -managed by the Livestock Control
Office (DICOSE, for its Spanish acronym) under the MGAP- to control the stock and movements of
bovine throughout the national territory. Currently, the three Units co-exist. The SIRA is a subsystem of the SNIG, since the latter has a more comprehensive function and is meant to be
transformed into the National Agricultural Information System.
30
There are very few publications about meat traceability in Uruguay. MGAP & IICA (2009) contains a very complete
description of the system and Barrios et al. (2007) analyses meat traceability using economic analytical tools. Both
documents were the background of our analysis.
31
The World Organization for Animal Health (OIE) defines animal identifi atio as the o i atio a d li ki g of the
identification and registration of an animal individually, with a unique identifier, or collectively by its epidemiological
u it o g oup, ith a u i ue g oup ide tifie . It defi es a i al t a ea ilit as the ability to follow an animal or group of
a i als du i g all stages of life ; defi es a a i al ide tifi atio s ste as the i lusio a d li ki g of o po e ts
such as identification of establishments/owners, the person(s) responsible for the animals, movements and other
e o ds ith a i al ide tifi atio . Bo li g et al.,
19
The CT allows following the path of an animal, from registration until slaughter, providing
information such as date and place of birth, sex, race, physical movements within national borders
and changes of ownership. The CT information system is capable to respond to the following
questions: Where was the animal? When was it in that place? With what other animals was it in
that place? Where are now those animals with whom it was?
The introduction of mandatory CT was progressive. First, the cattle born since the second
semester of 2006 was compelled to be identified and registered. 32 Five years latter –on June 2011all the cattle born and raised in the Uruguayan territory was legally enforced to be into the SIRA
(old animals which were already born in September 2006 were identified). Graph 1 shows the
progressive inclusion of bovines into the SIRA. Between 2007 and 2010, the average number of
tags delivered to users was annually 2.5 million (the differences between semesters are due to
diffe e t seaso s i ths . U til 2011, the tags deli e ed e e o e tl pla ed i the a i als ea .
The inclusion of the 2.5 million supplementary old animals created a gap between delivered and
attached tags that will be adjusted in figures from the second semester 2012. 33
As regards to the BB, the initial goal was to obtain reliable information related to taxes paid by
meat processors. The first proposal to incorporate electronic scales at processors plants took place
in 1998 when the government discovered an important tax fraud in a slaughterhouse.
Consequently, since 2000 the Executive Branch obligated slaughterhouses to install an Electronic
Information System of the Meat Industry (SEIIC, for its Spanish acronym). The SEIIC is mainly a
system of electronic scales located in each of the seven data control points strategically located
32
This binds the producers to identify each calf with two ear tags (a visual ear tag placed in the ear of each bovine cattle
head, with a printed number to enable the identification of the animal at first sight; a second ear tag contains a
radiofrequency identification device –RFID- to store the same number of the visual ear tag) and to send the registration
form by physical courier to the SNIG.
33
Apparently estimates of the quantity of old animals still alive were wrong and too many tags were distributed . This
created a severe but temporary lack of coordination as tags are not interchangeable between different herds. So
producers which over received tags had to send back the unused tags to the SNIG and then they were retired from the
database.
20
throughout the industrial process.34 Weights and identifying information are scanned at each scale
that connects to a local server and to a national database in INAC. INAC developed the SEIIC and
manages it now. Barrios et al. (2010) illustrate the functioning of the BB by the following way:
BB a tuall a ts as a ig othe ! At INAC, e e e sho ho the s stem warns (a beep is heard)
controllers every time a carcass passes through the different electronic scales. Information on weight,
cut, origin, etc. is displayed on the monitor. Beeps sound every five or six seconds!
Later on, INAC further developed the BB project into a more comprehensive system to allow a
more fluid interaction between processors and producers. The goal of the SEIIC was then
broadened not only to be an income audit tool for the Internal Tax Revenue Office but also to be
part of the traceability system. Progressively BB systems have been installed in slaughterhouses
since 2004.35 The project was executed in two phases. Phase one, including from control point 1 to
4 (from live weight to classification) is currently completed (i.e. traceability is enabled from birth
to carcass cutting). Although Phase 2 (control point 5 through 7) is extremely more complex since
labels start to grow exponentially as the meat cuts are opened by destinations and clients. This
later one is still not totally installed in all the 39 authorized slaughterhouses. Ranchers can access
information about their product by logging into a secure web page in INAC, where they can
calculate yields. From 2013, the 21 slaughterhouses authorized to export will be included in the
new program that harmonizes the two subsystems (CT and BB).
Figure 1 summarizes the milestones of the implementation of the meat traceability system
depicted before.
34
1. Live weight, 2. Bleeding, 3. Dressing, 4. Classification, 5. Deboning room entry, 6.deboning room packing, and 7.
Dispatch of boxes.
35
In August 2003, the Decree N°364/003 established that the cattle sellers to slaughterhouses paid US$ 1 dollar for
every animal processed to fund the BB project.
21
Summing up, the experience accumulated during thirty years from group CT functioning was the
basis to fruitfully implement individual voluntary CT since 2004 and mandatory since 2006. From
2007, BB started operating in slaughterhouses functionally to traceability, completing the
provision of information from the first four scales; the next phase, completing the industrial
process (until scale 7), is not yet accomplished. Finally, since December 2012 an overall system is
capable to harmonize CT and BB.
2.1.2. Does meat traceability generate economic value?
So far, not a single market is requiring individual bovine traceability to Uruguay, not even the EU
and yet, as we will see below, it is already ruling the bovine domestic market.
I do ´t u aste isks sa s a wintering cattle producer. By this, he means that he doesn´t buy
animals with a listed problem (codified by an asterisk and a problem number 36) in the traceability
system. A particular problem is the *
that indicates that the animal lost its trace in some
phase of its live, thus it is a non-traced animal but it was registered. According to data from July
2012, 23% of the animals had lost their traceability in some stage of their live (see Graph 3 below).
Given that the registered animals are 11.5 million, there are 2.6 million of non-traced animals. As
can be observed in Graph 3, the proportion of non-traced animals (approximately 2%) is uniform
year after year since 2007. The majority (14%) of the non-traced animals come from the inclusion
of adult bovine to the SIRA system in 2011.
36
There are 24 possible listed p o le s elated to the a i al s status, the electronic devices or the a i als att i utes.
22
Those non-traced animals are circulating by a parallel market in this moment.37 Slaughterhouses
can export non-traced animals -even to the EU-, but brokers o t buy the , complains the
“NIG s di e to .38 This government concern relates to the vision that the mandatory traceability is
meant to be inclusive, meaning that it should not segregate poorer producers that probably are
the majority in the parallel market. Nevertheless, several interviewees assert that the parallel
a ket ill disappea soo to the e te t that the te de
of the * p o le s is di i ishing over
time. In short, even if meat traceability does not have any economic value in exports yet, it is
ruling the domestic bovine market. This is a proof that the CT system was successfully
implemented.
However, why would traceability generate economic value? To answer the question it must be
clear that traceability output is information and as such, it must be treated as an economic good,
but an odd one. Hobbs (2003, 2009) detects three sorts of information resulting from the
traceability system: i) Reactive ex post information. Livestock traceability facilitates the trace back
of animals in the event of an outbreak. In that case the traceability system allows ex post cost
reduction after a problem has arisen; ii) Ex post information stemming from the aftermath of a
food safety problem. A traceability system can also enhance the effectiveness of a tort liability law
as an incentive for firms to produce safe food; iii) Ex ante information of credence attributes (It
refers to invisible characteristics of a product). This third function of a traceability system is prepurchase quality verification to reduce information costs for consumers.
Those three outputs relate to different outcomes. A first main outcome of a bovine traceability
system is the outbreak management. The traceability output in that case is reactive ex-post
information that is non-rival39 and non-excludable.40 Thus, the information provided by the
traceability system is a pure public good and there is a rationale for public sector funding. The
Uruguayan CT provides without doubt the ex-post information to identify, locate and isolate the
source of contamination of a bovine outbreak. Thus, it allows a sanitary regulation outcome that
has the feature of a public good.41 The public good feature is reinforced by the CT and BB
ha o izatio to o plete the hole alue hai , a d get lose to the fa
to plate
traceability.
Depending in the degree in which the information is excludable the meat traceability system can
provide other sorts of goods (club goods or private goods) that have different outcomes (e.g.
increased market access or product differentiation). The previous is the basic conceptual
framework to reason the economic good nature of traceability. For instance, to sell to the EU very
high quality meat (quota 620/481) the traceability system is providing since year 2012 information
37
An interviewee estimates that price differences between the two markets are from 10 to 20%.
38
Interviewee conducted on September 20, 2012
The use of specific piece of information from a traceability database (e.g. animal identification and/or movement
39
information) does not preclude its use by someone else.
40
Means that it is impossible to exclude any individuals from consuming the good or service once it is provided
41
Access to traceability information is restricted and only the SNIG (as representative of the State) is
responsible for privacy and data stewardship. Ho e e , “NIG e site s use s a a ess to thei o
account.
23
to e tif the a i al s age a d the e ui e ent compliance to confinement in a calving pen during
the last 100 days before the entrance to the slaughterhouse. The outcome in this case is an
increasing market access, as Uruguay never before had the possibility to sell its meat to this high
value market.42 At first sight, this outcome is rather more a club good than a public good, but
thinking it more in detail, the provided information is actually an externality of the first outcome
(age and animal movements are already provided by the traceability system to serve as a sanitary
regulation). Thus, it officiates as if it was a public good.
From that point on, the traceability infrastructure is available to producers and/or industrials to
add information in order to create club goods or private goods. The question is if the Uruguayan
cattle producers, meat processors and other actors from the value chain are ready to use this tool
to differentiate products and processes. Until now, there has been timid progress in that direction.
However, in the next sections, we document some experiences that can be signals of more
disrupting changes.
2.1.3. Old and new, public and private actors from the meat value chain
The meat traceability system adds new links to vertical and horizontal actors from the meat value
chain. The later involves different actors with vertical (cattle breeder, wintering producer,
consignees, industrial processors, retail operators) and horizontal (operators, veterinaries,
transporters, software database and electronic suppliers, service firms to cattle producers, cattlefood suppliers, meat waste processors, etc.) linkages. It includes as well the State officials from the
MGAP, a d th ee i stitutes f o the e pa ded ag i ultu al i stitutio s , the territorial
government agencies, the State Courier Company and the State Telecommunications Company. All
these actors will be described in this section.
The principal private actors (cattle producers, wintering producers and meat processors)
participate through their representative entities that have a long and traditional involvement in
meat production issues. Four are the principal cattle producer entities: the Asociación Rural del
Uruguay (ARU), the Federación Rural (FR), the Cooperativas Agrarias Federadas (CAF) and the
Comisión Nacional de Fomento Rural (CNFR).43 The meat processors are represented by the
Asociación de la Industria Frigorífica del Uruguay (ADIFU) and the Cámara de la Industria Frigorífica
(CIF).44 The consignees participate through their representative entity Asociación de
Consignatarios de Ganado (ACG) which is a newly active actor. Veterinaries have their association
named Sociedad de Medicina Veterinaria (SMVU) that is a traditional and very active actor in the
value chain.
42
On February 2012, the first high quality meat was shipped to the European Union (EU). Uruguay is at this moment the
first Latin-American country to access to the 20.000 tonnes non-tariff quota that will augment to 48.300 tonnes in 2013.
This group is also integrated by the U.S.A, Canada, Australia and New Zealand.
43
ARU was founded in 1871, FR in 1915, CAF in 1941 and CNFR in 1915.
44
CIF was founded in 1967 and ADIFU in 1986.
24
A new relevant actor from the meat processors´ link is the transnational corporations that are
transforming over the last years the whole meat value chain.45 Bittencourt et al. (2011) analyze the
recent impacts of these sectoral foreign direct investments. In the first place, historically the meat
chain has been characterized by its weak coordination between primary and industrial phases.
However, transnational companies have promoted more stable and reliable links with livestock
producers through various programs that involve formal agreements. 46 In the second place, unlike
other countries where production clusters exist, the Uruguayan meat industry is poorly linked with
other horizontal related industries that process wastes from the slaughterhouses. Several newly
arrived corporations, have business in Brazil from those related industries, thus in the future it is
probable that these can develop in Uruguay. Finally, historically, the national meat processors
sold their products to major brokers in the destination markets that incorporated their own
brands and then distributed the product. To date, regarding the marketing strategies, there have
been no significant changes. However, to the extent that those transnational groups are making
large acquisitions and partnerships with European and U.S.A. companies, they will possibly achieve
to access those markets with their own brands.
The public actors that participate in the meat value chain are part of the already mentioned
"expanded agricultural institutions" (specifically INAC, IPA and INIA). Two members of the
executive branch (president and vice president), two members of the rural business associations
(ARU and FR) and two members of the industrial associations (ADIFU and CIF) compose the
Directory Board of INAC. As we will observe further below, the interaction between rural and
industrial actors triangulated by State Officials in this precise environment was to be a key
element to align the private actors with the Government policy on traceability.
For its part, IPA s oa d is o posed t o e e s of the e e uti e a h p eside t a d i e
president), and two from the private sector (one member proposed by ARU and FR and another
proposed by CAF and CNFR). Finally, two members of the executive branch (president and vice
president), one member proposed by ARU and FR and another proposed by CAF, CNFR and the
Uruguayan Federation of Regional Centers of Agriculture Experimentation (CREA) compose INIA s
board. Three private sector associations (ARU, FR and CAF) are repeatedly present in the
institutional structure associated to meat value chain. These three associations, as we expose
further on, will prove crucial to convince producers to adhere to meat traceability.
Beside the above actors, the SNIG (and the SIRA) is responsible for the meat traceability policy at
the primary phase inside the MGAP central structure. It depends directly from the General
Direction Unit of the ministry and not from the Livestock Services Department as it was in its early
days. Nevertheless, the creation of the SNIG inside the MGAP central structure did not involve an
institutional reorganization. The new institutions were added side by side with the old ones. The
result is the co-existence of the old system (fire-heated mark and paper physical support from
45
In general, the transnational corporations integrate one of the two industrial business associations (ADIFU or CIF).
46
However, there were some formal agreements from the same kind before this.
25
DICOSE) with the new system (electronic from SNIG-SIRA) managed by different departments of
the same ministry.
In the countryside, the traditional local public actors (police, regional offices of the MinistryMGAP) with proximity relationships continue to enforce to comply with the system. It must be
emphasis that there is a long-standing culture to fill in administrative forms in the bovine business.
The actors (cattle producer, consignee, veterinary, truck driver, etc.) are accustomed to a system
that, since DICOSE was created in 1973, is very severe to whom doesn´t comply with the
administrative procedures. The FDM outbreaks reinforced the severity of measures to noncompliance.
Additionally, a new actor emerges, called the electronic system operator. Operators are
individuals or firms registered at the SIRA and certified by it after a training course. The operators
must have the appropriate training and infrastructure to supply electronic information on livestock
movements and changes of property. They have to be at the ranch or/and at the livestock fair at
the precise time when the cattle moves because they are responsible for the appropriate data
collection (reading the electronic tags by means of a digital reader). After this, they have to send
this i fo atio to the e t al “NIG s data ase.47 This new agent, moreover, needs to have basic
knowledge of software and other computing technologies that are scarce skills in rural areas.
However, many veterinaries are adding traceability operator skills to their professional service
offer, probably impeding bottlenecks in this area. In July 2012, there were 1569 authorized
operators (plus 55 that are suspended)48 and there are much more candidates waiting to attend
courses.49
Other new private actors in the meat value chain are the software and electronic firms. A local
private consortium (SONDA, ICA and GeneXus consulting from ARTech) designed and implemented
the “NIG s t a ea ilit database and continues to manage it. 50 In the electronic sector as well,
several authorized devices like digital readers, were designed and produced by local firms.
Moreover, the diffusion of the use of digital readers by farmers may boost the emergence of other
actors from the service sector. The drafters of the traceability law had a clear idea on how
technological and economical spillovers resulting from the diffusion of digital readers could
operate in the future:
Regarding the digital readers, we had since the beginning the idea that there must be a lot
circulating throughout the farms. The sheer number and availability of digital readers will generate a
47
Because there is low connectivity quality in the middle of the countryside, operators have to store the information
and send it from other locations (near villages or cities). To address this problem the Government is launching a program
to use cellphones to send information to the central database. Cellphone signal has better quality than the Internet
connectivity in the countryside as (unlike the Internet) its use is massive in rural areas.
48
Livestock, Agriculture and Fishery House of Representatives Commission, Uruguayan Parliament, July 12, 2012,
stenographic records.
49
Estimates put 5000 operators to cover the country (if each one has a radius of influence of 60 km). Lately the MGAP
has transferred to IPA the function to train the new operators.
50
ARTech is a very successful database software company catalogued as a pioneer of the Uruguayan software sector
(Snoeck and Pittaluga, 2012)
26
dynamic se i e s market. It is reasonable that this market must be from the beginning in private
hands because in the public sector, it will be less efficient and it will not develop itself at the same
path. These devices have many functions other than solely traceability, for instance it is a very
suitable tool to farm level productive management. Thus, it is likely to think that tomorrow there
could be a multiplicity of services firms that provide, for example, weight control, barn change
51
control, regime vaccinations control or other services .
There are no updated figures to measure the diffusion of digital readers.52 However, another
indicator to measure to what extent producers are using the information generated by the
traceability system is the quantity of producers that have an account in the SNIG database. From
52.000 producers registered in the SNIG database only 10% have a username to access their
personal website account.53 Thus, until now, only a small group of producers is taking
full advantage of the opportunities created by this available new information.
Nevertheless, the Hererford Uruguayan B eede s Association manager asserts that a cattle
p odu e s core is using intensively the electronic identification for production management.54
There are from 200,000 to 300,000 head cattle that are intensively fed gathered in AUPCIN
(Asociación Uruguaya de Productores de Carne Intensiva Natural)55 , the Litoral Group of Cattle
Producers and feedlots vertical integrated to slaughterhouses. During the ultimate production
phase, when the cattle remain in the calving pen, there are very high costs related to food and
human resources. Therefore, the production management must be very precise because losses
can easily result. These best production practices, though already existing, were boosted since
Uruguay started to produce for the new quota 620/481 for the EU in 2012. There is also spillover
effects as a lot of specific software was developed, as well as electronic devices for the feeding
machinery.
Regarding the BB, INAC centralizes the SEIC system. It links with equipment and supplies (readers,
servers, scales, industrial computers, printers) importers and local software and professional firms.
Moreover, INAC is developing with a local electronic firm the harmonization of CT and BB.
According to interviewees from the government, to date five meat processors are able to
complete the whole process using the seven scales. That tool provides an enormous opportunity
to link retailors also to the value chain a d i teg ate U ugua s eat i dust to Global Value
Chains.
Summing up, the meat traceability system is pushing to create a more complex structure of
vertical and horizontal linkages of the meat value chain. To date these ramifications have not
emerged dynamically, but little by little, innovations start to appear. This is probably correlated to
51
Livestock, Agriculture and Fishery House of Representatives Commission, Uruguayan Parliament, December 5, 2005,
stenographic records. Daniel Garín, MGAP advisor.
52
In 2008-2009, a survey to cattle producers with more than 100 hectares found that 22% had its own digital reader
(http://www.allflex.com.uy/Home.aspx).
53
SNIG source.
54 From interview conducted on December 21, 2012.
55
A cattle association that gathers approximately 40 producers that uses feedlots at the ultimate life phase of the
animals.
27
the new business opportunities that are surging. However, innovation policy has not digged into
traceability yet -nor has the productive policy with a modern value chain approach (Kaplisnky et al.
2002, Sturgeon, 2008)-, but there are some promising public-private endeavors that throw
evidence of the enormous potential of the traceability system to be an instrument to diversify the
production structure. We will describe one as an illustration further on in this sub-chapter.
2.1.4. Actor alignment process to meat traceability policy
In spite of the implementation problems that still subsist, actors from private sector agree today
that meat traceability puts the country in the forefront -as for not only the cattle electronic
registration and identification- but also for the capacity to certify the meat exported products.
The above alignment with the policy is the result of a long and intense process, which started back
in year 2001 when the administration in place pleaded to install individual traceability as a longterm solution to alert and confine FMD outbreaks. With certain nuances private sector actors from
cattle producer associations have evolved from its opposition to its compliance and even more
recently to its defense.
An illustration of the opposition arguments can e fou d i F‘ s p eside t de la atio to the p ess
in year 2002:56
In a country of the third world where 45 % of the producers do not have rural electrification and
much less telephone, how can we demand to the producers to have information in real time if they
a t to o ilize attle? …. I additio , what happens, for example when the system falls in
Vichadero (a very isolated location) and nobody can come to solve the problem? What happens if a
Europe Union inspection comes that day and the technological process falls? It is sure that at
Vichadero no technician will be there to solve the problem. In addition, if there is bad weather,
a e the ai aft a ´t la d… The the Eu opea
issio a take the te i le efe e e that the
Uruguayan system does not work, when the system we have today (group traceability) works well.
These are practical aspects to be considered when the government wants to impose a new system
with an enormous cost, as if it was a priority, which is not such and which is totally exaggerated for
the Uruguayan needs .
Instead, meat processors were from the beginning pro-individual cattle traceability, although they
were not ready to better price it. The CIF president declares the following:57
On the one hand, the new system will improve the existing group identification system which is
what the most demanding markets are imposing over Uruguay at present; and on the other hand, the
individual traceability is a bet to the future. Although there is no basis to think that cattle individually
traced can be better priced at the present, but unquestionably it will happen when the buyers (high
income countries) will require for it .
56
57
Press release: September 20, 2002- EL PAIS DIGITAL.
Press release: February 1, 2004- EL PAIS DIGITAL
28
In June 2005, before the start of the public consultation process to write the SIRA law, the
principal cattle producers and meat processors associations (ARU, FR, CAF, CIF and ADIFU) were
aligned with mandatory individual traceability. They create an ad-hoc work group to collaborate
with the government to implement the new system and to design a public-private solution to its
funding. This kind of gathering is very unusual in the meat value chain, as historically cattle
ranchers and meat processors have had controversial relationships. A detail that is not
unimportant for our further arguing is that ARU announced its position at the board of directors at
INAC (where, as we already mentioned, are congregated the Executive Branch and representatives
from the cattle producers and meat processors).58
The Europe Union (EU) requirements are certainly a central factor to explain the above alignment
process. The EU observed in consecutive audits problematic aspects of the Uruguayan group
identification system (from DICOSE), and pressured the government to take the steps they
requested towards a system offering greater guarantees. In consequence, in 2005 MGAP and INAC
signed an agreement with the EU that compelled Uruguay from April 2010 to fulfill the Hilton
quota with meat from animals individually identified from the birth to the slaughterhouse.59
In short, the threat to comply with those requirements was the principal trigger to join positions.
In 2005, meat exports to EU represented 19% of the total value (9.6% in tonnes) and in 2011, it
represented 30.6% (17.9% in tonnes).60 However, the proportion raise between 2005 and 2011
cannot be explained by traceability because until now the EU hasn´t required it.61
Nevertheless, there may also be i te al reasons to the value chain that can explain the position
convergence to mandatory individual traceability. An interviewee pitches the idea that cattle
producers and meat processors had interchangeable interests that facilitated a win-win resolution.
The latter where being rather reluctant to BB but were compelled by the government to
incorporate it, meanwhile the formers had great interest in its implementation. In the other side,
meat processors had great interest in a mandatory CT because the voluntary CT already in place
wasn´t a paying-off system for them.
Indeed, until the BB installation meat processors determined the cattle weights using their own
scales. This was normally subject to a lack of trust between the two parts, since the weight fixes
the price paid to the cattle producer. 62 As the BB allows weighting the animal at its arrival to the
slaughterhouse and in the subsequent process stages, cattle producers can verify the performance
58
Press release: June 9, 2005 -EL PAIS DIGITAL.
Although the deadline date was later revised to postpone it until July 2011.
60
Figures are from the Uruguayan Central Bank.
61
Except for the very recently exports of high quality meat (quota 620/481) in which traceability is used to certify the
a i al s age a d the e ui e e t to a 100 days confinement.
62
The live weight of the bovine is a parameter to use in a trade agreement; either to give a first approximation of the
animal that is being offered, whether – though falling in disuse- to fix the price of the animal. The live weight may be
stated at the field and/or at point 1 of the SEIIC. The carcass- eight peso a al is stated at poi t of the “EIIC
(former second scale). The carcass-weight is handled for the establishment of the price by the majority of the meat
processors. (Source: INAC and interviews). However, today meat processors and cattle producers are negotiating within
the INAC directorate to change the price setting system to point three of the SEIIC.
59
29
of its animal and have an objective indicator for the price they receive. 63 Therefore, BB is an
important tool to reduce information asymmetry between meet processors and cattle producers.
This is the reason why cattle ranchers were pro-BB. The implemented system is working in that
precise way. The BB project has made a significant contribution by incorporating an independent
weighing system.
Regarding the mandatory versus the voluntary characteristics of the CT system, the latter creates a
double cattle market (traced /not traced) which has high associated costs for slaughterhouses due
to the necessary adaptation of their processes to the different products (as it is very difficult to
specialize in one of them). This is probably why meat processors advocated for the mandatory
system.
Thus, there were exchangeable issues between the two negotiating parties: the cattle processors
wanted the BB and the meat processors wanted the mandatory CT. Several interviewees assert
that the e pa ded ag i ultu al i stitutio s" related to the meat sector already described in
chapter 1, was a fruitful environment to arrive to a converged position between the two tiers of
the meat value chain. Since INAC is the only institute where eat p o esso s and attle a he s
representatives share the Directory Board with the government, it probably played a very relevant
role in that issue.
Summing up, private-public alignment to meat traceability was the result of two intertwined
factors. On the one side, the threat put by the EU to compel to individual traceability from a
certain date was a fundamental trigger to converge positions. Yet the threat hasn´t been fulfilled,
but the Uruguayan meat traceability system is in place. On the other side, the private actors
assimilated the system through a tough negotiation between the two central actors of the value
chain (meat processors and cattle producers) and this was possible because there were acceptable
quid pro quo from both parties.
2.1.5. Public-private collaboration to design the cattle traceability system
In September 2005, a Public Debate Document (PDD) to design the individual bovine traceability
system was written by officials from the MGAP, INAC and IPA. An agronomist with a PHD in
livestock electronic identification led the team of specialized officials. Besides local forums
gathering the organized communities all around the country where the PDD was discussed, the
representative entities from cattle ranchers, meat processors, livestock services agents and
livestock professionals were called to give their written opinion. Starting from that, a specific task
force was created to allow for public-private deliberations. However, the different Directorate
Boards from INAC, IPA and INIA were more informal environments were discussions in this issue
took also place. The consultative process finished in December when the MGAP presented to the
parliament the SIRA project law.
63
Only 12% of producers use their personal account at the INAC website to verify their a i als ields in the
slaughterhouses. Yet, this i di ato does ´t efle t e a tl ho
a p odu e s e if thei a i als ields e ause
consignees normally facilitate this information to their clients.
30
An ad-hoc work group of the five main private sector associations from cattle producers and meat
processors presented a common document containing their position regarding the PDD. They
declare that the consultation mechanism instituted by the government seemed to them well
established. They present a document that contains agreements, disagreements and proposals.64
The latter includes their willingness to go deeper and faster in the mandatory traceability than the
PDD had stated. It also proposes to simplify the MGAP institutional organization and to study the
possibility that the ear tag could substitute the fire-heated mark as the legal instrument for cattle
property. Moreover, very importantly related to innovation, they recommend that identifiers must
incorporate information of pedigree animals, selection programmes from the breeders
associations or other selection programmes that enhance production; finally, they demand that
there must be a promotion to purchase digital readers.
The five associations intensively backed the MGAP autho ities tour along the country inland to
receive PDD reactions from very diverse actors. It allowed gathering information from a large
quantity of actors that possess the specific expertise in these issues. Several practical topics were
redesigned after these interactions. Two interviewees from MGAP, which were part of the tour,
assert that this three month intense process covering the whole country, from big cities to isolated
areas, and accompanied by the rural leaders associations, legitimated the system and was the key
to its later implementation success.
The parliament took six months to write the SIRA law (between December 2005 and August 2006).
During that period, the five private sector associations (ARU, FR, CAF, ADIFU and CIF) were invited
in two occasions to the parliament and the Executive Board (the MGAP minister and its advisors)
was invited three times.
The main issue discussed in the two parliament sessions with private sector participation was the
fu di g of the “I‘A. A‘U´s p eside t Fe a do Mattos i te e tio s thesis the p i ate sector´s
position:
We understand that the protection over the sanitary condition of the country is a State
responsibility, which assignment is under the orbit of the MGAP. The law project on traceability
presented by the government depicts this in the same way. We agree that the MGAP must be the
one that leads all the operative aspects. Though the information (in the sense of propriety) and the
protection over the sanitary condition belong to the State responsibility -logically, incorporating the
whole support of whom we are directly involved in the topic-. Consequently, we understand that the
State must regulated the funding, but not necessarily with resources from the treasury. Financing will
have to come from a genuine source of resources that departs from the chain - there are sufficient
resources to finance the SIRA by for this way. 65
64
Consideraciones sobre el documento Propuesta de Diseño del Sistema de información y registro animal para el
ganado bovino del MGAP (ARU, CAF, FR, ADIFU, CIF).
65
Livestock, Agriculture and Fishery House of Representatives Commission, Uruguayan Parliament, December 14, 2005,
stenographic records.
31
These funding discussions ended with the State taking in charge the finance of the traceability
system.66 As we argued above, the public funding of this technological platform is rational in terms
of the available economic analytical tools. The sanitary condition of the country depends on it.
Summing up, the PPC we examined above is certainly of the modern type we named in chapter 1.
This is principally because the private sector had the ability not only to achieve its private
interests, but also to put itself in a position vis-à-vis the State counterpart in order to propose
innovative issues to design a suitable traceability system. In the other side, the State had
competent professional bureaucrats that designed an adequate traceability system and applied an
appropriate consultative process methodology, which facilitated the PPC.
2.1.6. Public-private interaction to implement the cattle traceability system
The SIRA Law includes the creation of the Committee for the Evaluation and Monitoring of the
System where the Government and the private sector discuss the evolution of the system, assess
it and propose changes to its improvement. However, the Committee has had only sporadic
meetings until now.
In 2010, the MGAP convened technicians from rural business associations that were involved in
the design process to start up the Committee, but it stopped functioning after regular weekly
meetings during three months. Apparently, MGAP did not call for any more meetings. A second
attempt to resurface the Committee occurred last December 2012 when the MGAP launched an
interagency task force to detect and correct problems of the SNIG. The novelty is that other
business associations were convened, apart from the rural associations: meat processors
ha e s, the o sig ees asso iatio , the e ha e f o calving pen producers, live cattle
exporters representatives and dairy fa e s representatives.
However, to date less formal processes are the principle channels of interaction, where the public
sector detects how to solve practical problems with valuable information from the private sector.
These channels are the traditional ones with meetings between officials from the public sector and
rural associations. There is also a call center at MGAP that resolves punctual problems.67
According to private sector interviewees, the principle complains are that they have to deal with a
more and more cumbersome system due to bureaucratic slowness and inefficiencies, and that
internet connectivity is very problematic in the country side (downloading and uploading are very
slow and there are sites with no connectivity at all). Regarding the first problem, there are no
major proposals from the private sector on the table to simplify the procedures. Regarding the
connectivity issue, this is a major problem in Uruguay. According to figures from Jordan et al.
(2010), the average download/upload speed indicator places Uruguay at the bottom group from
66
In a first phase by the General Revenues from the National Budget and after that, the MGAP incorporated the
updating and management of the database in its own budget and INAC is financing the ear tags since several years.
67
Interviewees from the private sector declared that they go directly to the MGAP office at Montevideo when they have
to resolve punctual problems.
32
Latin-American countries with lower speed. In the countryside, this is probably even worse.68 The
State National Telecommunications Company (ANTEL) has implemented several programmes to
face these problems, but the results are apparently not visible yet.
The fact is that there is no organized mechanism involving PPC to enhance the system. Time must
be allowed to verify if that latest attempt, from last December, to organize a problem solution task
force will remain over time. Meanwhile, we can assert that CT implementation went back to the
same traditional channels of public-private interaction where private sector puts itself in a
demanding position (in this case it reveals the problems it faces to comply with the SIRA law) and
the government responds to it.69 Without doubt, these channels have been efficient to put
forward the CT, but it lacks of a creative space where the actors are able to change their
traditional roles involving their other more innovative capabilities.
2.1.7. Public-private networks to innovate within the traceability system
However, some government officials have a clear view about the necessity to move forward in
policy making to transform public-private relationships. As we already mentioned, the government
is proposing to develop public-private innovation networks. However, certain specific conditions
ust e fulfilled as the OPYPA s di e to u de li es:
A ag i ultu al i o atio pu li poli that alte s o i tio s o t ies to ha ge i g ai ed eha io
patterns must be based on persuasion of those institutions that perceive change as a potential threat
of its current position. Political consensus is needed on the network to the extent that the
interdependence encompasses to go beyond coordination and cooperation, and involves joint
responsibility between organizations, accountability and responsiveness. Autonomous organizations
would be willing to commit resources and trust in an emerging network insofar that the government
agrees with it and emboldens it. Paoli o,
To build those networks, capabilities of each node are crucial. Starting from the public sector that
has to be able to mobilize actors around a common strategic plan and establish coalitions in line
with the public policy. It also has to resolve power conflicts among actors. This is particularly
important when the networks are not built spontaneously, and involve role adjustments of the
auto o ous o ga izatio s. P i ate a to s apa ilities a e u ial e ause the a e the
beneficiaries and / or active participants of the innovation policy. A capacity assessment of private
actors will establish the method and opportunity to participate of a given network innovation. 70
As we already asserted, these new institutional settings have not progressed until now. However,
a recent experience (still in its project profile stage) could spark off this new PPC mode. It is a
public-private innovation network where the division of work is between the MGAP, INAC, INIA,
the National Institute of Biological Research (IIBCE, by its Spanish acronym), the
Hereford U ugua a B eede s Association and ARU. The general objective is to enhance meat
68
No figures are available to verify the territorial speed differences in Uruguay.
This kind of standings does not include the public-private INAC directorate. However, INAC while very engaged with
the meat traceability system is responsible for the managing BB, but not for the CT.
69
70
Paolino, 2010.
33
competitiveness through the integrated use of meat traceability (CT and BB) and genomic tools.
The technological convergence will allow the genetic improvement of food conversion efficiency
and carcass quality of Hereford cattle.
The basic principle is that the animal that goes to slaughter is a source of information to measure
the genetic potential of its parents, because the most accurate method to now the genetic value
of an animal is in slaughter. The Hereford U ugua a B eede s Association manager explains the
endeavor in the following way:
The beauty of this system is that, because of traceability, I can use all the Uruguayan Hereford
animals (Hereford breed represents near to 60% of the existing bovines) to construct the database.
We ha e to add e data ase fields i the ‘FID that ha gs f o ea h a i al s ea he e i fo atio
a out the a i al s ki ship is goi g to be stored. After that, this information reaches the BB system in
the slaughterhouse, which is sent to the INAC database. There we retrieve information about the
a i al s ua tit a d ualit of eat a d e at h it ith its fa il tree (ancestors, progeny and
congeners). With that information, we can apply a superior method of genetic selection within the
a i al s li i g elati es to eate a elite eedi g sto k for the Hereford cattle to enter the market
through multipliers. In turn, those animals with improved genetic will go to slaughter and will feed
the database, resulting in a circular up grading of the database (Interview December 21, 2012).
The result of this network will be clearly a club good that involves different nodes with
complementary functions. From the MGAP and the expanded agricultural institutions : OPYPA
elaborated the background studies, SNIG-SIRA manages the ear tags and the CT database, INAC
manages the SEIIC that contains the information from BB, and INIA carries out the genomic
research jointly with the IIBCE. From the private sector: the Hereford Uruguayan
B eede s Association intervenes with its genetic improvement programme and has the
fundamental role to persuade its members to load the kinship information in the ear tag; finally,
ARU keeps the national genealogical registry from pedigree animals.
Summing up, the example of this embryonic public-private inter-institutional network is
pointing out that some public and private actors have those critical capabilities to move on to
collaboration spaces were their innovative skills are potentiated. However, that result cannot be
understood without the preceding evolution of the overall agriculture´s institutional setting we
exposed in chapter one and the particular development of meat traceability we examined in this
sub-chapter.
2.1.8. Institutional design lessons
In the preceding sections, we detailed the PPCs that ruled the three phases of the meat
t a ea ilit poli : the a to s alig e t to policy, the system design and the system
implementation. The meat e pa ded ag i ultu al i stitutio s" (particularly INAC, but also IPA and
INIA), where public and private actors encountered within the Directorate Board, have been
fruitful environments during the three phases. However, in each phase the PPC was of a different
type.
34
In the first alignment phase, the State triangulated negotiations between private actors of the
different tiers from the vertical value chain to reach a joint alignment to the public decision of
mandatory individual traceability. The public-private forum in INAC occupied a pivotal place to
make this happen. During the second design phase, private actors were particularly active to
recommend relevant contributions to the traceability design first proposed by the government.
Besides dis ussio s ithi the I stitutes Directorates Boards, private actors created an ad-hoc
group to agree a common position vis-à-vis the government. However, the methodology to carry
out the consultative process as p oposed the go e
e t a d it eated a spe ifi spa e fo
it. We understand that this PPC was of a modern type because there was a collaborative learning
process that ended successfully in the enacted SIRA Law. Finally, the third implementation phase
comes back to old fashion relationships between private and public actors. Private actors put
themselves in a demanding position and the government responds to them. A hypothesis is that
this latter PPC form is because there are no specific spaces for other modalities. Thus, there is no
evaluation and monitoring of the traceability system as the SIRA law foresaw it. There is no publicprivate learning space to do it.
To date the meat traceability implementation in Uruguay has delivered public goods. The results
-in terms of institutional settings (MGAP s central structure, expanded agricultural institutions and
ad-hoc task forces) to achieve the process- were satisfactory even though if in the implementation
phase the creation of a public-private learning space could have accelerated the process. From
that point on, the traceability infrastructure is available to innovation, to create club and/or
private goods.
An innovation network that is taking shape based on the traceability platform establishes a new
form of PPC. It shows that some public and private actors are ready to undertake sophisticated
relationships to achieve the private or club goods that the traceability system can provide. This is
maybe a signal of structural change, which a well-defined and mature PPC can forge.
However, there is still an enormous room to potentiate meat traceability for innovation. For
instance, the newly presence of transnational groups that are integrating U ugua s eat i dust
to global value chains is an opportunity to find niches business where traced meat cuts are
profitable. On the other end of the value chain, there are plenty of opportunities as well, related
to attle p odu e s good p a ti es to use i fo atio f om traceability to manage production or
to the emergence of new services fi s. To boost those innovations, suitable policies must be
found.
2.2. Case 2. Shipbuilding Tripartite Sectoral Council
The second case examined is one of the two TSCs, namely the one set up as an instrument of
industrial policy for the shipbuilding sector. As we mentioned in chapter 1, in the Shipbuilding TSC
plan a main objective is to develop the sector in order to capture the dynamism of the regional
35
and national demand of barges and other kind of ships.71 Without an augmented infrastructure
with direct sea access, the former would be impossible. The construction of an industrial
“hip uildi g Pole ea Mo te ideo s ha o is thus one the most crucial tools to achieve the plan´s
objective. However, at the same time the Pole´s construction has important sunk costs that
require a minimal critical mass of possible ship-builders tenants to capture. The T“C s spa e,
he e e t ep e eu s, la o u io s leade s a d go e
e t offi ials i te a t, as espe iall
active to generate the opportunities in order to create these indispensable core business activities.
The present case study analyzes the process undertaken by one of those ventures and some of its
results.
More specifically, to explore the traction of some analytical hypotheses we examine the recent
process of government-private buyer negotiation, private-p i ate supplie s pa t e ship, iddi g,
and construction of three barges for a major pulp and paper project. We present a concise account
of the process that unfolded in the last two years (2.2.1) and then zoom out to examine the
identity of the key players and the modes of representation in the PPC (2.2.2). In 2.2.3, we look at
the policy as a case of infant industry protection, highlighting some specificities and raising some
known concerns about revealed preference and time inconsistency. The final sub-section discusses
two institutional configuration issues that may be relevant to other collaborations of the type.
2.2.1. A suppliers development program to boost the shipbuilding sector
In May 2011, the Chilean-Finnish-U ugua a o pa
Mo tes del Plata MDP sig ed a o t a t
for the transportation of raw materials (timber), by water, to their projected pulp mill in the South
of U ugua , ith a g oup of lo al fi s. A fe
o ths ea lie , MDP had sig ed hat as U ugua s
first i est e t o t a t
ith a ulti atio al i esto , u de e
egulatio s set
la s
passed
the u e t ad i ist atio . MDP s ti e and pulp investments in Uruguay are the
ou t s la gest e e , a ou ti g to o e tha t o illio U“ dolla s, a d i ludi g fo est
development, and production of pulp of cellulose, but also the construction and operation of a
power plant with excess capa it to feed ele t i it i to U ugua s atio al g id, a d the
construction and operation of a port terminal. In that context, MDP had announced its intention to
i ite ids fo the suppl of fou a ges to o e supplies a ou d U ugua s e i ed po ts.
The government of Uruguay, through its cluster promotion programs (PACPYMES and PACC), had
been instrumental in bringing together a number of actors from the ship repair and shipbuilding
sectors, and made them partners in designing sectoral policies and setting up an umbrella
organization. The early support from PACPYMES had allowed in years 2006 and 2007 members of
the cluster to cooperate in bids for contracts with another Finnish pulp and paper company
(BOTNIA, now UPM), and the state-owned oil and gas company ANCAP, with varied success
(Freira, 2012).72
71
Available at: http://gp.gub.uy/es/node/640 [last access 4/01/2013]
According to Freira (2012), in 2006-07 Botnia expressed interest in buying four barges and the government took
i itiati e to e su e that it p o u ed f o lo al supplie s. The a ges
T ea h e e p odu ed the Na s do k a d
72
36
The cluster-building process resulted in the establishment in 2010 of a mixed (public-private)
organization, the Shipbuilding Cluster Association (ACLIN, for its Spanish acronym). The
encouragement from the MIEM and after that from PACC had ee
u ial to ACLIN s p og essio
to e o e the luste s go e a e a d ep ese tatio
e ha is . It is o th oti g that, u like
typical business associations, ACLIN brings together different actors from and related to the
industry, including shipbuilding firms, shipyards and dockyards, the Na s o kshops and
dockyard (i.e., a state-owned-company), vocational education institutions (UTU73), and the se to s
labor union (UNTMRA74). ACLIN is now a participant of the TSC, along with other actors from the
private shipbuilding sector, from educational and technological centers and from the government.
One of the key objectives, first for the cluster, and now for the TSC has been the establishment of
a services hub for the i dust
the Polo I dust ial Na al , in an undeveloped area near
Mo te ideo s ha o , e pe ti g to ge e ate e o o ies of agglo e atio .
The industry is made up of small firms that own and run workshops and do small jobs for the
transportation companies, or are sub-contracted for larger firms. To become players in the
regional or global shipbuilding industry they need to achieve a minimum scale, and join forces in
various other functions besides production. The opportunity to produce several large barges was
seen as both a challenge and an opportunity for the actors of the incipient sector. It could offer
the opportunity to reduce the drain of ualified o ke s due to the se to s e e t la k of
dynamism. The TSC had generated a sectoral plan that aimed to revitalize a ship construction
industry, and this was expected to build on existing human capital, relatively strong private-private
cooperation and improved public-private relationships.
However, it was not obvious that Uruguayan firms could coordinate efforts, had the know-how or
could sort out financial issues to make a competitive bid in a market where there are highly
competitive suppliers from the region and beyond.75 Through contacts first established in the
context of the cluster-development project (PACPYMES), a consortium between Uruguayan firms
and a Spanish shipbuilding company (Galictio) was formed, and it was able to bid for the contract.
The story of how this happened, and why, allows us to see the potential and perils of PPCs.
The process that concluded with the agreement to build three barges for MDP can be regarded as
a success for the government, since it was largely consistent with its goals for the sector. In fact,
besides resulting in a big sale for the sector (and the creation of some temporary but immediately
needed jobs), it has allowed the shipbuilding sector to buy time necessary to prevent a more
and the long-standing foreign repair firm Tzakos, and delivered in 2008-09. In 2009, ANCAP opened negotiations to buy
two gasoline-carrying barges, and got them two years later from a consortium of Spanish and local firms.
73
Universidad del Trabajo de Uruguay.
74
Unión Nacional de Trabajadores del Metal y Ramas Afines.
75
Smaller but more complex barges had been built in the country for ANCAP, the state-owned oil and gas company, but
the venture was known for the delays in delivery.
37
dramatic loss of qualified workers, to international or inter-sectoral migration. 76 As one of the
MIEM officers put it:
The o je ti e is the Polo Industrial Na al , not the construction of the barges. The construction of
the barges is an intended outcome to reach the Polo .77
The production orders also allowed the government to showcase a different type of constructive
tri-partite (labor-firms-government) relationship, with the three parties committed to
(re)constructing an industry. The sharing of some business information that usually remains
forbidden to government or unions, and which happened in some cluster interactions, is
symptomatic of relatively high levels of trust and willingness to cooperate.
For the government, and probably for the trade union, getting MDP to buy three barges in
Uruguay, produced by mixed Spanish-Uruguayan teams, could become an achievement in terms of
transfer of technologies and hands-on training of workers. The latter can be regarded as more
valuable than the wages earned, as soon as one recognizes that workers being trained are
available for future related projects and this is a positive externality that justifies some public
intervention.
However, the result was not what MDP had in mind, and it reveals the complicated trajectory of
the shipbuilding industry to subsist and expect to grow in Uruguay. 78 MDP received offers from
Brazilian, Paraguayan, Polish, Chinese and Uruguayan firms. We have established that the
cheapest offer (the Chinese) asked for approximately 2.9 million US$ per barge. The offer had
some added complications, since the buyer must inspect the barges in China, and once built the
barges have to be transported from a very long distance. The next best offer was the Paraguayan,
and the price tag was about 3.8 million US$ per barge. Based on our sources, the Uruguayan bid
asked for 5.1 US$ per barge and promised the same delivery times of all the others. 79
According to knowledgeable industry sources, there was a tough negotiation between the Ministry
and Director of Industry and MDP (with the Spanish-Uruguayan bidding consortium as a side
player). In the negotiations, the MIEM brought the investment contract to bear on the result,
construing it as a binding agreement to help Uruguayan firms develop their supply capabilities.
MDP, instead, argued that it could not require them to develop a barge-construction business,
which is quite removed from its core business. We are told that the Spanish-Uruguayan
76
The suppl of th ee a ges to MDP is a ig sale lo al sta da ds, ut ot fo ell-established competitors such as
the Paraguayan industry. In the daily El País (of September 10, 2012) it is reported that the Paraguayan company Chaco
Paraguayo – CIE has produced over 200 barges since 1990, and has standing orders for 90; a picture appears to show ten
a ges ei g uilt i the o pa s do k a ds.
77
Interview to Miguez, Adrian
78
This and next paragraph based on interviews with senior industry managers. Press reports sometimes contradict this
account. For example, in the periodical Revista Semanario Crónica of 27/07/2012 MDP managers are reported to declare
that the first barge was delivered on time. In the same article, the Uruguayan participation in the personnel that
produced that barge was established at 80%, far from the 30 out of 80 workers (or 37.5%) that our sources quoted.
79
Freira (2012) reports that the price agreed for the barges was 50% greater than the Chinese offer (p. 47). The
difference could be in remote inspection in China and expensive transportation from the Chinese docks to the Río de la
Plata by sea.
38
consortium revised its costs and reduced the price in approximately 0.3 million US$, and the
remaining difference with respect to the Paraguayan offer was split between the government and
MDP in equal parts (which amounts to half a million US$ per barge contributed by the government
a d a si ila o e -p i e paid
MDP . What the o pa o tai ed i those egotiatio s is ot
80
entirely clear.
In terms of delivery times, the first barge, originally agreed to be delivered in May 2012 was
delivered in September and was produced with a majority of Spanish workers. At the time of this
writing, the second barge, due in October, and the third one, due in January 2013, are expected to
be delivered with a similar delay. The proportion of Uruguayan workers in the production teams
was expected to grow for the second and third barges but there is so far conflicting evidence on
the figures at the end of the project. Whatever the terms of the agreement with MDP, it seems
the government invested significant resources (political capital, contacts in the relevant market,
and also financial resources) to force the company to agree to subsidize the development of the
shipbuilding industry through over-prices in their purchase of capital assets.81
I othe o ds, the go e
e t s i te e tio a d the esulti g ag ee e t a e a lea i sta e of
p ote tio fo the i fa t i dust , th ough subsidies that may create the space to develop
competitive strength in due time, or just postponed the decline of the industry for a few years.
This raises questions of incentives and institutionalization that are discussed below.
2.2.2. Actors and representation
The possibility of partnering with the Spanish Galictio was crucial to keeping the construction
contract in Uruguay, both because of its financial capacity as well as for its actual industrial
expertise to run it. To establish the partnership, the participation of ACLIN in the TSC and the
history of exposure of Uruguayan firms to international practices through attending industry
events, contributed greatly. Some go as far as to link the participation in NAVALIA, a major
international shipbuilding fair in Vigo (Galicia, Spain), as decisive to establish the joint venture.82
Others point out that Galictio had shown no or very little interest in investing in Uruguay when it
was approached to bid for the MDP contract, and that it got interested when it became clear that
it could benefit from some form of benefits from the Spanish and/or Uruguayan governments.
However, not the only legitimate voice from the non-government side, ACLIN has broad
recognition as a cluster governance mechanism, and has had an active involvement in moving the
TSC agenda forward. Its role is not made easier by the configuration of the industry. Regarding the
80
Some key informants explain the deal differently, with the government making available as much as US$ 2 million in
te h olog t a sfe a d o ke s e-tooling and training expenses, and/or some of the over-price paid by MDP being
returned through the investment promotion regime.
81
The investment contract between MDP and the government stated the agreement to set up a bilateral task force to
oversee the suppliers development program. Based on interviews, the group met a few times at the beginning of the
construction process, but not much has been achieved since some early positive steps.
82
It is said that the first meeting between Galictio representatives and Uruguayan members of the cluster happened in
the 2010 edition of NAVALIA, attended by a mission of 10 businessmen, accompanied by a representative from
UNTM‘A, a ep ese tati e f o the Na s ship uildi g u it, the a age of ACLIN a d the T“C oo di ato .
39
small and medium firms, that ake up the ship uildi g luste , thei pa ti ipatio has ot ee
through chambers or business associations. The TSC method requires that formal business
organizations are invited to participate, ut the p i ate se to is also ep ese ted th ough
individuals that do it on that basis, and also partly by ACLIN. The traditional business association –
the Shipbuilding Industry Chamber, established in 1967—does not participate as such in the TSC
but four of its ten members are involved in the TSC.
Neither does the cluster include the leading private firm –Tzakos Naval Industries S.A.--, which is a
well-established, foreign-owned company specialized in ship repairs. Clearly, its strategy has not
coincided with those of the PACPYMES Shipbuilding Cluster, first, and the TSC more recently.
Apparently Tzakos prioritizes its repairs business over shipbuilding, which could account for its
avoidance of the chosen strategies.
Mo e ge e all , the p i ate se to s involvement and commitment to PPC can be understood as a
esult of the o pa ies st ategi o je ti es. Like i the othe T“C discussed below (Biotech), not
all eligi le fi s pa ti ipate i the ou il s a ti ities, ut i both cases, those that do participate
have a very active role, and have been keen supporters of the agreed agenda.
This type of private participation could be typical of initiatives to create new sectors. It is logical
that those more active are either workers, seeking to expand employment opportunities, or firms
whose growth strategy is associated to the growth of the new subsector. The development
strategy for the shipbuilding sector that the TSC has promoted, and that is somehow an extension
of the objectives defined in the Shipbuilding Cluster, is closer to a vertical policy oriented to create
a d o solidate a e se to i the la ge tha to a poli to ode ize a e isti g o e. This
could explain divergence with the main private actor in the sector. It is worth noting that from the
TSC there has always been the willingness to integrate the repair sub-sector but so far these
companies have not responded to the calls.
As one observer said, though representation is not perfect, what these initiatives need to succeed
is to have the involvement of those who need to be involved. Moreover, many results of the TSC
work have the characteristics of a public good that can be enjoyed by all private actors without
detriment to others, and regardless of their participation in the TSC. To some extent, the latter is
the case of the benefits from training programs that contribute to a more skilled labor force
(though those who offer the best work conditions and salaries can expect to crowd out others, if
demand exceeds supply). That allows us to understand that, as in any sector where there are
pote tiall e
o petito s, esta lished fi s follo a
ait a d see st ateg , i.e. use thei
market and financial clout to wait for the outcomes of collective action, in which they will only
participate if the new initiative is successful and/or may become a threat to its market standing.
Engaging with the PPC is therefore a part of classic industrial strategy decisions.
The TSCs in Uruguay have an interesting specificity in that they include organized labor in the
PPCs. This partly reflects a view in the government that their participation could improve the
quality of policies endorsed by the TSC. Some sources even saw unions as playing an
i fo atio al ole: the ould p o ide a added o trol on companies that may want to
40
exaggerate their employment or salary contributions to the general welfare, or demand more
support than is warranted given their financial situation. It is worth highlighting that a single
national federation of sectoral unions characterizes Uruguay, under which there are unique
sectoral federations of firm-level organizations or small groupings of these. In our case, the
national metal-mechanics union (UNTMRA, for its Spanish acronym) is the one formally involved in
the TSC, which means that in high-level dialogues, national union leaders participate, but there is a
lower level of union leaders also involved in the functioning of the sector.
The union s ole in the construction of the first barge for MDP is generally seen as constructive,
ai l e ause it e su ed la o pea e to help the o so tiu
eet the deli e deadli es.
According to sources interviewed, when the stringent contracts with local suppliers started to
hurt, the sub-sector leaders and the rank and file considered the possibility of industrial actions,
but were discouraged by national leaders. The latter seemed to recognize the symbolic value of
sho i g a a ge uilt at least pa tl
lo al o ke s a d eeti g MDP s sta da ds, as ell as
the importance fo the T“C s ai spo so –the MIEM/DNI—of demonstrating the potential of
tripartite collaboration. Apparently, they succeeded in postponing demands and actions until
completion of the first barge.
“o e sou es lose to ACLIN epo t that o ke s response has been more disappointing when
unions have been asked to participate in other strategic consultations or planning, as they seemed
less prepared and –unless they touch on salaries or jobs—less interested. There is not much
evidence to sustain the observation, but it seems quite plausible. Among the candidate
explanations, two can be suggested that do not seem far-fetched for the country: (i) that a classconflict perspective still has strong influence in Uruguay and workers/union leaders do not feel
totall o fo ta le ith olla o atio that tou hes o fi s a age e t issues a d the suppl
of se i es
the go e
e t to i dust ialists; a d ii that the st ategi pe spe ti e i
organized labor is held at high levels in the national federation s st u tu e a d lo e le el leade s
ha e less capabilities to e gage i su h dialogue, ut that all esou es a e ought to ea o
negotiations when it comes to wages and jobs (and these negotiations require less strategic vision
than, say, labor force re-training, productivity related issues, etc.).
2.2.3. Infant industry arguments and policies
The ope i g of the MDP s i te atio al te de i
a ele ated the egotiatio s to de elop a
joint bid between Galictio and a group of local firms. It was clear from the beginning that, to
compete for the contract, the Spanish-Uruguayan consortium must reduce production costs.
These are higher than in Paraguay or Argentina, because of a technological gap and (particularly in
Paraguay) the relative levels of real wages.83 The MIEM s g a d isio fo the se to is to a age
national and regional demand (which comes mostly from state-owned companies or large foreign
investments), with the hope of reaching production levels at which economies of scale kick in. The
government seems to be aware that, barring that, the industry has a bleak future in Uruguay. That
83
To illust ate i te atio al ost di e ge e due to U ugua a la o a ket poli ies, a se to o se e poi ted out
that nominal wages have risen around 15% per year, in the last two to three years, while inflation has stayed around 8%.
41
the jump from small shops to major firm is not easy is acknowledged and addressed by stating the
i te t to e plo
a of the se to s o ke s a d o e s i a e I dust ia Na al Del Estado,
“.A. , a d aki g ope atio al the Polo Industrial Na al .84 Yet, the experiment under way is
raising some issues of underlying theory and practice.
Galictio had the expertise to produce more efficiently than the local firms did by themselves, but it
appears that costs could not be easily cut further to really become internationally competitive.
Two different sources in a position to know the sector well report that Uruguayan firms are the
weakest in one or more of the following:
i)
ii)
iii)
iv)
v)
The management of production processes, including the sequential and parallel
arrangement of tasks, and monitoring and adjustment of procedures (i.e., process
optimization over time or resource use); 85
the commercialization and customer relations functions;
the learning capabilities (e.g., 60% of local firms interviewed by Freira, 2012, report not
changing their practices after the collaboration with more advanced foreign companies);
the management of human resources, including the recruiting of nimble and adaptable
workers, the appropriate supervision, the technical training; all resulting in fewer days lost
to bad planning, lack of coordination or lack of timely alerts; and
Financial accounting, reporting and planning, including lack of proper investment analysis
before buying expensive equipment.
Some of these weaknesses were known (Freira, 2012), and others became more evident when
working for the MDP barges. Key informants indicate that Galictio was extremely good at process
and workshop management, and negotiated with local suppliers based on predesigned contracts,
that imposed stringent conditions that were hard to meet for some partners. Interestingly, the
firms rushed to sign contracts and did not use the legal counsel available to them through ACLIN.
Some found themselves earning less and/or working more than they are used to. That led some of
the local firms not to participate in the production of the second barge, but some of their
employees (and even some small firm owners) signed up for the job and got it. The result so far is
that it is very unclear whom and how could kick-start a local company to partner with Galictio or
others in the future.
Moreover, the design of the joint venture seems to assume that learning by Uruguayan firms or
workers was going to happen more or less spontaneously by working together with the Spanish
workers. The technology transfer process initiated with the first barge included hands on training
of local workers, and the construction of infrastructure. Since October 2011, workers are being
84
The previous three sentences are from the interview with Sebastián Torres, Director of the Industrial Direction
(MIEM).
85
This as put i a e diplo ati e e if so eho o t adi to
a
the p i ipal of Gali tio i U ugua : We
practice an engineering of small details that is very effective, very efficie t, hi h is esse tial to a oid failu es … It is
innovative for Uruguay and it can be applied anywhere in the world where there is a thriving shipbuilding industry We
did not invent anything new, it was already invented, what happens is that it is necessary to apply those new techniques
that here in Uruguay were somehow forgotten adio i te ie f o jou alist E ilia o Cotelo to José A to io Ga ía,
principal manager of Galictio in Uruguay, Radio El Espectador, Montevideo, July 26, 2012; emphasis added).
42
trained in advanced welding, to meet international standards. Yet, it is unclear if the transfer of
knowledge and technologies will succeed in transmitting process management skills and human
resources management abilities that could be context-specific and tacit. Other capabilities that
were listed above as underdeveloped are also hard to learn from just watching or being part of
production teams. The minimization of the learning challenge as exposed above is a technical
failure of the industrial policy being implemented, and one that could be related to the fact that
most of the public officials involved are from the economic field without any qualification in
management issues.86
In any case, it is hard to tell now if the child is learning because there are no report cards. Indeed,
the monitoring of the joint projects, and the assessment of capacity development is agreed by
e e o e as ke to the e essa fi e tu i g of this ki d of e ti al poli ies, ut the i pe ati e
of running many similar efforts simultaneously (perhaps to avoid being seen as preferring some
sectors over others) leaves little time for fine issues of policy.
Other more conventional observations can be made: they relate to revealed preference and
incentives, and to time inconsistency. Regarding the first, while the heavy-handed negotiation
with MDP may in the future become the symbol of timely government intervention to create
space for the growth of an incipient industry, it reveals to workers and investors that the
government has a stake in seeing some firms/sectors survive even at high costs. The incentives
part of the uestio is hat ill p o pt lo al fi s a d thei fo eig pa t e s i those fa o ed
sectors to enhance their productivity and competitiveness, if they can be optimistic that underperformance will probably go unpunished by the government. The time frame of this study does
not allow us if this risk materializes.
The time inconsistency issue takes a peculiar expression in the specific context examined here. In
the traditional setting, time inconsistency arises because the value for a player (e.g., government)
of action X in time (t) is greater in (t-1) than in (t). Thus, the government has an incentive in a
future time to do something different to what it is promising today that it will do. It does not
require uncertainties of any type, and it can arise among fully informed players. Typically, in the
industrial policy setting it would arise if the government promises to provide protection for a
limited time, since once the deadline is reached there will be similar incentives for the policymaker
to protect the industry again, with similar arguments to those that justified the initial protection.
In the case of the TSC industrial policy mechanism, weak institutionalization generates uncertainty
on whether the policies will remain unchanged under a new administration, and another type of
ti e i o siste : i this ase, the go e
e t s p efe ed poli to a ds the se to
ight
ha ge ith a e ele tio e ause the e go e
e t s p efe e es are different from the
p e ious . Ti e i o siste
ould a ise e ause the poli i o atio T“Cs ith st o g politi al
and financial backing from government) could not be made more permanent; i.e.,
86
Industry sources point out that there is a very large business potential for the shipbuilding industry around the
hid o ía Pa a á, Pa agua , U ugua , ut that othe pla e s ha e ost a d k o -how advantages from decades of
experience (Paraguay) or have updated technologies and powerful state institutions to support them (Argentina and
Brazil).
43
i stitutio alized . I su h a o te t, the p i ate sector may expect that the benefits of protection
will not last and decide to better enjoy them while they last (and minimize own contributions,
including investments with long maturity).
Many sources pointed out to the extreme dependence of the TSCs initiative on the technical
capabilities, determination, hard work and political skills of the Director of Industry. The same
pe so al o
it e t a e see i so e of the Di e to s staff a d o stitutes a st e gth of
the PDPs vis-à-vis a program that could have tried to run within the existing bureaucratic
structures. In fact, the TSCs are an instance of innovative policies implemented largely through an
ad-hoc structure, sometimes facilitated or imposed by an agreement with a multilateral
organization or bilateral agency. These are much more flexible, and allowed to hire younger and
more prepared specialists, than regular civil service structures. During the administration that
creates them and supports them, these structures can be quite effective. The innovative policy
ake the has the hoi e et ee o ki g th ough the “tate s old st u tu es, iski g failu e afte
strenuous efforts, or setting up a nimble and technically solid ad-hoc structure.
I stitutio alizatio of the i o ative industrial policy mechanism is sacrificed to results when
the second is chosen, and therefore the rest of the actors have reason to worry about continuity
beyond the next election.
On top of that, the type of structural changes envisaged by the administration requires long
horizons and patience. Even if the protection of the infant industry had a case in the Uruguayan
shipbuilding sector, in the prevailing local and international environment that was taken into
consideration by the government, the child could be killed before we could assert her potential,
due to the lack of institutionalization of the policies. Some informants close to the MIEM express
hope that the participatory foundations of the sectoral plans will facilitate their appropriation by
the private sector, and their shielding from partisan interference. However, so far there has not
been enough time to assess the extent of such appropriation and how strong it is vis-à-vis other
forces that might conspire against it in the future.
2.2.4. Institutional design lessons
As a gued
‘oss “ h eide
, p i ate-pu li ou ils his la el fo PPCs o e i a ied
sizes and shapes, and their institutional analysis should focus on what types of councils/PPCs can
be empirically linked to what outcomes. Moreover, he recommends examining links to policy
outcomes (competitiveness, export growth, jobs created, etc.) as well as the links from
institutional configuration of councils/PPCs to the quality of policies. 87
In that spirit, the shipbuilding TSC case can shed light on some relevant institutional design issues.
First, regarding the participation of the private sector in PPCs, the case confirms that it does not
need to be complete to allow the mechanism to generate operationally meaningful and useful
agreements. This can be deduced from the achievement of complementary actions by public and
87
Ross Schneider provides valid objections to the use of experimental designs to assess these causal links; in particular,
he observes the difficulties in creating meaningful counterfactuals, and the challenge of separating the effect of publicprivate collaboration from the effect of the policy itself, when the outcomes assessed are outcomes of policies.
44
private parties to keep qualified workers active through the supply contract with MDP. We are
highlighti g a ualit of poli , si e to o side the o t a t a su ess in terms of outcomes it
would be necessary to know for sure of its contribution to capacity development and
competitiveness. In general, the case shows that a mixed membership organization conceived as
the keystone of sectoral governance, such as ACLIN, can play constructively and facilitate
consensus. On the other hand, it is not entirely clear that it was a crucial actor to get the contract
ith MDP, o apa le of aki g it a lea step to a ds the i dust s de elop e t.
Second, an innovative policymaker supported by a lean professional ad-hoc structure has
de o st ated that it is possi le to attai those ualit of poli
a hie e e ts, ut aises dou ts
about sustainability without institutionalization . Forced to choose ad-hoc semi-external
structures to achieve something soon, the policymaker that does so struggles with how to make
the poli ies last at least u til the a p o e thei o th. Whethe the othe a to s se se of
o e ship is e ough to p ote t the poli f o politi al i te fe e e or suppression will be
known when a new administration or Ministry leadership takes over.
Third, the TSCs are interesting because of the participation of workers through their trade unions.
The case shows that wage bargaining can be left out of the table and o ke s a e a le to
manage conflicts to support a long-term vision, even if they are less consistently interested or
a ti e o othe st ategi de elop e t age das. I pa ti ula , putti g jo s dis ussio s u de a
long-term lens could help in engaging the . The ase o tai s so e e ide e that the u io s
national-level leaders could see the value of making sacrifices to promote a longer term industrial
development, which challenges other analyses that see unions mainly as shortsighted and
obsessed with salaries.
Fourth, neither the pre-e isti g luste st u tu es, the o ke s o ga izatio s, o the te h i all
excellent government teams seem to have paid enough attention to the design of technology
transfer mechanisms for managerial (not the production) skills, and to the monitoring and
evaluation of the experiment to assess the extent of capacity development. If indeed the reason to
support the industry with public funds is to generate a capacity development trajectory, and
facilitate positive spillovers, these outcomes should be assessed regularly, to allow the
introduction of adjustments. The consensus on the importance of learning in industrial
policymaking should legitimize allocation of resources to those all-important tasks.
2.3.
Case 3. Biotech Tripartite Sectoral Council
The third case examined is another sector promoted by the TSCs. To develop the Biotech sector it
is necessary to implement what Hausmann et al. (2007) all i dust ial poli ies i the la ge . It
implies thinking of an industry or an activity (for instance, an entrepot of certain kind) one would
want to see develop, and then backing up all its public input needs plus some subsidies to get the
private juices going. This requires more centralization and more prioritization: which customized
sector programs we design, how we assure coordination between the different complementary
public inputs, which is in charge of guaranteeing the coordination, and so on. It calls, therefore, for
a second set of institutions that can range much wider in its exploration along the frontiers of the
45
production space than can deliberation councils, and which are thus able to stimulate capacitybuilding jumps (Idem).88
Between 2008 and 2009, the Productive Cabinet worked in the characterization of the Biotech
sector and in a general identification of policy actions to lift its growth restrictions. In 2010, the
Biotech TSC started working with a bunch of actors from the private sector, different government
agencies, universities and R&D centers.89 One year later, on June 30, 2011, the Biotech Sector
Strategic Plan was launched.90 Its elaboration was based on the participative methodology we
already described in chapter 1, with an active involvement of public and private actors, both in the
definition of the agenda and, after that, in the process oriented to achieve the stated objectives.
As we mentioned in chapter 1, the Biotech plan has several main objectives, but we will zoom here
into the analyses of two objectives that involve the creation of missing public inputs: the
elaboration process of a regulatory law for the sector and the register process of Biotech products.
We i sist i the p o ess side of oth o je ti es e ause e elie e, as Haus a et al.
:
assert, …neither economists nor public officials, on the one side, nor private actors, on the other,
know where the relevant distortions are. A key feature of the policy process is to identify them, or,
more precisely, to organize searches to identify and respond to them . These search processes
are what we will try to shed light on in the next paragraphs.
We will first describe the actors of the Biotech TSC (2.3.1.); then we immerse in the process that
led to write a regulation law for the promotion of the Biotech activities (2.3.2), in sub-chapter
2.3.3. we analyze some of the main challenges entailed by the registration process for Biotech
products; finally, we conclude on the institutional settings that require a transversal sector as
Biotech (2.3.4.).
2.3.1. Actors and representation
Today the TSC includes 25 representatives of public and private institutions. It is important to
underline that in about eighteen months, several players have joined the TSC, some of them of
crucial importance to the sector. Even if some of the present close followers may not have been
involved in the elaboration of the sectoral plan, they already began to make important
contributions to its implementation.
Biotech is a crosscutting sector, which influences many other activities throughout the productive
structure. In this regard, the private actors related to Biotech are not affiliated to a classic sectoral
chamber; all of them have another sectoral affiliation beyond their activities in the Biotech area.
This complicates policy targeting and a to s coordination.
88
By opposition the authors call industrial policy in the small to a … strategy based on improving the provision of
public inputs to existing activities with the hope that this will lead to higher productivity and quality for existing activities
and a higher likelihood that nearby products will emerge .
89
The la o u io s representative to offi iate as the o ke s i te lo uto i the T“C as ot lea as the se to is
organized in a different logic than are the labor union s branches. Finally, a symbolic representative came to the TSC
from the e t al la o u io s te h i al suppo t i stitute.
90
Available at: http://gp.gub.uy/es/node/639 [last access 4/01/2013]
46
Private actor´s participation in the TSC is through the Biotech business association AUDEBIO.
Among its members, there are private companies as well as education and research centers.
AUDEBIO was boosted under the Life Science cluster initiative driven by PACPYMES since 2005.91
In that period were elaborated economic indicators to measure the new sector that existing
statistics don´t (so entrepreneurs and policy makers could start to refer to that atypical se to ;
the first participative diagnosis was elaborated; and the PACPYMES space helped to begin joining
forces and meeting to know each other.
Nevertheless, AUDEBIO started to grow in number of members very recently, coincidently with
the blossoming of the TSC.92 Another factor that is certainly influenced the growing importance of
AUDEBIO is the new opportunities that Biotech is offering to enhance intensive natural resources
p odu tio s, the ai ou t s spe ializatio . This, alo g ith p epa ed hu a apital and
updated technological infrastructures, can explain the new Biotech endeavors that are emerging
these days. However, it is fair to say, following Cornick (2011), that it was more intense PPC that
permitted to lift the development of this business association.
Currently, AUDEBIO has sixteen formal members, including companies, public research
laboratories and universities. While the absence of some companies with an important experience
in Biotech in Uruguay is well known, members of the association believe that it is a natural growth
process and that in the medium term new companies will join AUDEBIO. In addition to the
absence of some relevant Biotech companies, the absence of other pharmaceutical companies is
also evident; although this is not perceived as a weakness by some interviewees from the sector.
Thus, it appears that their integration could strengthen AUDEBIO. In this sense, AUDEBIO has
achieved a cohesive political action inside the group, but has not yet obtained the same results
outside the group.
Actually, the AUDEBIO s members are not grouped around a concentrated market because there
are several relevant markets for Biotech products and services. This heterogeneity could affect in
both a positive and a negative way, depending if compromises to search for solutions to basic
problems that affect the whole are found. Nevertheless, in spite of the mentioned absences and
the small number of AUDEBIO members, AUDEBIO has become the legitimate representative of
the private Biotech sector in Uruguay.
Other relevant actors participating in the Biotech TSC are the Institute Pasteur Montevideo (IPM),
the ORT University and the Pando Technology Pole. IPM, following the model established by its
headquarters Institute Pasteur Paris, is a world-class scientific institution. Its main objective is the
development of science in the domain of biology, with a particular focus on biomedicine, and
based on strong industry/academy collaboration and a technology transfer strategy. The ORT
University is a private institution that has earned reputation because of its pioneer programs in IT,
International Studies, Management, Design, Communications and Biotechnology. It is a relevant
university in Uruguay in business incubation. The B.Sc. in Biotechnology, licensed at the ORT
91
92
AUDEBIO was created by a group of firms in 1987, but didn´t have a very active presence until then.
The TSC contributed to restructure the association, with a new agenda .
47
University is meant to provide the lacking technical skills demanded by the Biotech sector. The
Pando Technology Pole is an initiative taken by the School of Chemistry of the single public
University (Universidad de la República) and is the first Technology Pole in Uruguay, founded in
2001. Recently the public National Vocational Training University (UTU, by its Spanish acronym)
has joined also the Biotech TSC.
Finally, relevant public actors approached the TSC recently. In particular, MGAP has expressed its
interest to participate, and the Minister of Public Health (MSP, by its Spanish Acronym) has
considered some issues that concern it. The innovation agency ANII is articulating several activities
with the TSC. The latter has a key role to play in the development of the Biotech sector. The ANII
has different financial support instruments to foster innovation. The recently created trust fund
Orestes Fiandra in partnership with the commercial State bank (Banco de la República) is
particularly suited for Biotech companies.
2.3.2. The biotech promotion Law: a tool for productive policy
A major objective of the Biotech plan is to elaborate a legal framework to promote the Biotech
industry. This responds to the need to harmonize the existing regulatory framework, while
advancing on a main goal to create an appropriate legal framework to promote Biotech activities.
Actually, the Biotech regulatory system involves different governmental institutions that have
implemented a multiplicity of uncoordinated regulations, which are not appropriate to the specific
dynamic of the Biotech sector. A comprehensive and coherent regulatory framework for the
concerned activities is a pillar for sectoral development.
A law to promote the Biotech industry is being elaborated by public and private actors within the
TSC. This represents an exception, since although different sectoral promotion laws were
developed in other countries; they were elaborated in response to requests, demands or
pressures from the private actors. In this case, the draft law arises from the dialogue between
public and private actors that defined it as one of the main objectives of the plan.
Some aspects of the elaboration law process are worth highlighting:
First, a survey of international legislation on Biotech and related areas has been an important
input to the process, not only with respect to the content of the law itself, but also for its
useful ess regarding the assessment of its potential broader contribution to the development of
the sector. In particular, and for its (regional) proximity to Uruguay, the case of Argentina was
examined carefully since the neighbor country has a Biotech Law that has never been regulated.
Second, the public-p i ate o positio of the o e tea
that i te e ed i the p o ess is to e
underlined. They present very mixed profiles: (1) one of the actors from the private sector is the
president of AUDEBIO, and is at the same time the Head of the production department of one of
the most important local Biotech firms; (2) another member of the team works for a French
multinational and at the same time is a recognized Uruguayan scientist; (3) a third actor was
already working for the PACPYMES program (Science Life cluster) and her salary is being now paid
48
by the MIEM to articulate with the AUDEBIO. These are only some examples of some relevant
actors of the Law elaboration process.
Additionally, contact with policy makers was frequent, in particular with legislators from both the
House of Representatives and the Senate. One of the members of the House of Representatives
(member of the Science and Technology Commission) was a qualified interlocutor. He is a chemical
engineer, with vast experience in the private sector as director of research at a Spanish Biotech
company, and is now a deputy representative of the government party.
Thi d, the o positio of the o e tea of la e s is to e highlighted also. Through the active
members of the TCS, lawyers of various institutions have been consulted. Such an expert team in a
specific matter as Biotech was not easy to assemble for some segments of the Biotech industry
(because they are small and medium firms), neither for the government. In addition to that, a
lawyer was hired by the TSC, to translate all the inputs into the appropriate legal formulae and at
the same time to train the actors of the council on regulatory aspects, from the very basic to the
more specific issue-related concepts.
In terms of the concrete results, there is currently a first draft law that will be formally introduced
by the MIEM for discussion in Parliament (although a draft was already discussed in the House of
‘ep ese tati es “ ie e a d Te h olog Co
issio apparently in the first months of 2013.
Once the law is approved, it must be regulated by a decree from the executive branch in order to
become applicable.
Regarding the contents of the Law, it uses a broad definition of Biotech ( a te h ologi al
application that uses biological systems and living organisms, or derivatives thereof, to make or
odif p odu ts o p o esses fo spe ifi use ). This has the potential shortcoming that it could
encompass numerous heterogeneous sector activities.
Based on the above definition, the Law to promote Industrial Biotech defines seven activities: (i)
R&D; (ii) Technology transfer; (iii) Biotech entrepreneurship; (iv) Biotech production and
commercialization; –(v) Incorporation of Biotech in traditional productive processes; (vi)
Systematizing and streamlining of public procurement; and (vii) Educational and other training
activities in biotechnology.
The law establishes that Biotech activities are to be declared of national interest, in the context of
the Investment Promotion Law (N° 16.906), which provides fiscal incentives. In this regard, the
Biotech law establishes a number of tax benefits for the private agents that undertake at least one
of the enumerated activities. In order to access to those benefits the Biotech's firms must register
in a National Register.
The register will be under the responsibility of the TSC. In this sense, the law establishes the
formalization of the Council in the area of responsibility of the National Directorate of Industry
(MIEM). The creation of the National Register will establish an administrative criterion for the
49
defi itio of the se to . These i stitutio al ha ges ill probably affect the consolidation of the
Biotech sector or, more precisely, the part of the Biotech sector that is composed by private firms.
The law will also establish the institutionalization of the TSC, giving it a formal mandate and
funding its activities. Thereby, the continuity of the policy tool for this sector is more or less
guaranteed, i.e. the formalization and funding of TSC seems to be a necessary investment if the
Biotech is supposed to be a st ategi a ea . The formalization of the TSC may have another
consequence. It will provide a formal conduit for the sectoral policies. This change implies a new
challenge for the institutions related to the Biotech policies. The TSC was created, as part of the
sectoral council policy, as a tool to promote the industrial development. Arguably, to coordinate
the agenda in order to avoid bureaucratic capture is one of the main challenges for the TSC.
When the draft law was presented to Parliament, legislators stressed that the new Council
integration should be explicitly stipulated in the law. In any case, the regulation should take into
account all the actors that ideally should participate in the TSC in the future. It is important to
consider the inclusion of other private actors that are not part of the Biotech industry itself but
represent the national demand for Biotech products (probably from the food industry,
environmental services, forestry industries or medical services). This kind of private actors do not
have to participate actively and regularly in the TSC, but their participation in the discussion of
strategic goals would greatly facilitate their achievement. This will involve coordination with other
T“C s. It is the efo e a e phase f o a i stitutio al poi t of view, which must come after the
current incubation and consolidation stage. As for the public sector, this means ensuring the active
participation of the ministries that are reluctant to coordinate within the TSC. This last aspect is
one of the most critical issues emerging from the institutional analysis of the TSC, which does not
efe to the st e gth o eak ess of T“C s ut athe to the legiti a of the P odu ti e a d
Innovation Cabinets.
Experiences collected by Devlin (2012:20) suggest that national strategic policy alliance councils
can usually work effectively whether it is written into a law or not. Although in our case, we might
be inclined to think that the institutionalization of the TSC in the Biotech Law can be a safeguard to
assure its permanence as a policy tool beyond the governing parties.
2.3.3. The register process for biotechnology products
The process for the registration of biotechnology products is a critical factor for the development
of a Biotech industry. Right now, it is a requirement for the consolidation of the area. The Biotech
products require a particular process to be publicly registered in order to establish their safety and
quality standards and prevent undesired results or accidents with potentially large negative
effects. Nevertheless, the process to establish a registration system is not only a technical matter
but also it is also part of a policy to correct bureaucratic failures, and improve the requirements
imposed on the firms.
The plan identified the current regulatory framework as a barrier for the development of the
Biotech activities in Uruguay:
50
Uruguay is lagging behind when it comes to the regulation of biotechnology products records and
the provision of appropriate human resources for their analysis. Companies (from the TSC) consider
these two factors as a major bottleneck for their insertion in the local and international market.
They perceive that an unfair competition exists in the local market with regard to imported
products. These are more easily accepted in the domestic market given the acceptance of their
93
source records by national control authorities .
In this regard, the TSC pointed out that the problems with existing registration procedures are
operating as an obstacle for the development of the sector. Indeed, there are several cases
reported by interviewees in which international companies come to Uruguay to carry out R&D
stages of a product, but are forced to set up their plant in neighbor countries –mainly in Argentinabecause the Uruguayan regulatory framework obstructs them to undertake the product
development phases. In this sense, the TSC stresses that the regulatory failures operate as an
incentive for specialization in certain research stages (downstream), giving up phases of high
added value; or focus on product segments with smaller markets (reagents and diagnostics kits). In
the health area, the Ministry of Public Health (MSP) is the regulatory authority and so it is in the
Biotech related health area. The same applies to the cases of animal and agricultural Biotech with
the MGAP.
The TSC participants had an active role in defining and monitoring the agenda on this issue. As for
the composition of the TSC, the main problem is related to the lack of representation of some
government actors, in particular from the MSP and the MGAP. The weak involvement of these
ministries implies that some fundamental issues cannot be fruitfully processed within the TSC.
The absence of representatives from the MGAP and the MSP is a problem that remains despite the
many efforts made by the TSC to incorporate such representation, despite also the public-public
coordination spaces, namely the Innovative and Productive Cabinets. From 2010 to 2012, several
meetings were held with officials of the two ministries, in order to implement the cooperation on
regulatory issues, product registration, trade promotion, etc. As part of these initiatives, the TSC
identified a set of problems, challenges and activities to be developed. However, the result of
these initiatives did not go beyond creating some joint committees that failed to operate. This
represents a major problem for TSCs, at least for two reasons. The first is that there are highly
relevant objectives for the TSC that cannot be addressed because there are no available
government representatives from relevant ministries. In this sense, an established protocol for
registration of Biotech products would be a concrete achievement of great importance for the
Biotech sector.
The second reason seems more diffuse, but shows a problem that can be wider than the first. It
refers to the legitimacy of the Biotech council as a tool for productive development. TSCs are
based on horizontal and crosscutting criterion of public governance, which is the impulse behind
the Productive and Innovative Cabinets. This approach assumes that there are political objectives
that cannot be achieved without the coordinated involvement of different ministries and other
93
Biotech plan (available at: http://gp.gub.uy/es/node/639), page 73.
51
government agencies. In turn, a coordinated participation of private actors is required. Hence, the
non-participation of representatives of the MSP and the MGAP can be read as a disinterest or low
priority given to the specific issues of the Biotech council; or it can be seen as a major problem,
which refers to the horizontal strategic interactions on productive issues that are not recognized
as important by other ministries besides the MIEM. This would imply that T“C s might be seen as a
policy of MIEM and not of the Productive and Innovative Cabinets. This is particularly critical
because all the strategy of the Directorate of Industry is based on the support from the Productive
Cabinet. Although it seems that, this support is a rhetorical device to gain legitimacy.
It is important to note that this problem is placed "before" the problems related to institutional
failures or capture attempts of the TSC tool. It refers to the ability of the Uruguayan government
to address issues in a coordinated manner that requires the articulation between different
ministries. As e al ead o se ed, this ki d of oo di atio is iti al fo the su ess of poli ies
in the large that promote transversal sectors. This shows the complexity of the problem.
Therefore, it is not possible to establish their causes in a sharp manner. It is probable that the
regulatory problems are linked to vested interests associated with small plots of power in the
public administration. However, there are also problems of inefficiency inherent to an old
management structure organized vertically, where crosscutting areas as Biotech find many
barriers.
So far, the analysis of the TSC shows that it is a tool of great potential. However, it faces great
challenges that have to do with the organization of the Uruguayan State. Beyond these general
challenges, the TSC has worked regularly and has met the goals it had settled.
2.3.4.
Institutional design lessons
This case analyzed the process to create two public inputs through the Biotech TSC. The
elaboration of the regulation Biotech Law can be considered as successfully completed, but the
registration of Biotech p odu t s process not to date. The analyses pointed out several institutional
arguments that possibly explain the two results.
In the first place, the process that led to elaborate the Law was a multi-party fruitful process. It
seems that AUDEBIO, bringing together private firms, universities and R&D centers, is an
appropriate forum to address the common technical problems of the industry within the TSC.
Because Biotech is a general-purpose technology, which depends intensively on R&D, this atypical
usi ess asso iatio -that cuts across industry, academia and technological centers- seems
appropriate to deal with the elaboration of a regulation Law of such a broad sector. Indeed,
addressing some productive development objectives may require specialized and legitimate inputs
to develop legislation and regulation, and in some sectors (particularly, high technology sectors)
a i ade uate i put a hi de the se to s de elop e t a d delay it for many years. Such
inadequacy could come from lack of technical expertise but also because legislation or regulations
could be defined without some sub-se to s o elated i dust s i put. U like othe se to s,
complementarity among core and non-core activities is a dominant feature of high-tech sectors,
and even localized exclusions can block progress of a whole industry.
52
Second, the Law, if approved and regulated, will establish the institutionalization of the TSC, giving
it a formal mandate and providing funding to carry it out. Unlike shipbuilding, the Biotech TSC is
designing its institutionalization to assure its survival as a policy tool when governments will
change.
Finally, the most challenging issue raised by the Biotech TSC case is the weakness and sometimes
lack of public-public coordination. This coordination issue was already highlighted by the
Haus a et al. s uotatio efe i g to industrial policies in the large. However, it is even more
critical when dealing with transversal sectors, as Biotech. As we underlined above the inadequate
registration for Biotech products in Uruguay is obstructing the development of a very dynamic
sector with large opportunities. Sectoral development can only go so far if the key ministries are
not committed to collaboration. Yet, the problems of a high-tech industry that affects indirectly on
their specific areas of responsibility can be low in the priorities of some government agencies (like
Health Ministries) of a relatively unsophisticated government structure.
The new institutions created since 2005 to assure public-public coordination (Productive and
Innovative Cabinets) along with PPC (TSC) have not been sufficient until now to assure an efficient
governance model to address policies that promote transversal sectors as Biotech. The challenge
is enormous because cross-sectoral policy questions are growing in importance. More and more
PDP issues will concern coordination of different government agencies and multi-party
collaboration. This doesn´t mean that government officials aren´t aware of it, but concrete results
are missing. The registration problems of Biotech products are one illustration of it.
2.4.
Case 4: Blueberries’ cluster
The first case of the support for clusters and conglomerates policy is the creation of blueberry
cluster. We examine a case of a private sector-initiated PPC, in which the dynamic entrepreneurs
were to bring create club goods to allow the sector to take off. We describe the emergence of the
sector in section 2.4.1. After that, we describe the actors and representation (2.4.2.) and what
were the first steps of private sector (2.4.3.). We analyze then the needs of the sector and how did
the cluster resolve them (2.4.4). Finally, (2.4.5.), we conclude with the institutional settings lessons
2.4.1. The emergence and development of the blueberry sector
The first blueberry plantations in Uruguay date back to 1988, but commercial use has increased
since early 2000. The season 2006/2007 was the first of significant exports (100% to European
countries). According to Uruguay XXI (2012), Uruguay is ranked among the top 10 exporters of
blueberries in the world. Uruguay's exports are concentrated in the supply in counter-season to
U.S.A, Europe and Canada markets, and to a lesser extent to Asia.
In a few years, Uruguay has achieved to position itself as market leader in the provision of inseason fruit major consumer markets, highlighted by the quality of their product. This fact,
together with various actions of exporters, is contributing to further develop the sector, beyond
the slight slowing of its exports growth rates in recent years.
53
The export companies exported have greater invested in machinery and equipment in order to
increase profitability and increase competitiveness. It has also begun to develop new products,
such as pickled and frozen blueberries, seeking greater value to the product and a longer-term
horizon.
In the light of the results (see exports graph 3 below) the followed strategy seems today to be
right as exports continued to grow and the US market represented in 2011 32% of total exports
(and Europe Union 62%).
2.4.2. Actors and representation
The p odu tio is di ided i to t o geog aphi al a eas: the oast of the ‘io U ugua a d the
South. Besides the presence of Argentinean investors since 2006, the presence of Chilean
multinationals is to be remarked, the latter with access to marketing channels and supply of inputs
such as planting and cultivation technology. In any case, as it occurs more generally in the fruit
exports, investors do not come primarily from the traditional agricultural or horticultural areas in
the country but from other economic activities.
In 2007, 73 producers, in a total area of about 600 hectares, performed the primary production.
The production is intensive in technical knowledge, given the sensitivity of plants to pests and
climatic and soil conditions. Together, these parameters show that it is a primary production
which demands significant amounts of capital and expertise, and where one would therefore
e pe t to fi d a high p ese e of
ode
a d ell-informed producers. The plants used in
Uruguay consist of free and protected varieties of the Southern Highbush Group, which in 2007
were provided by a small group of companies.
In 2007 there were three packaging plants, all situated in the South of the country. Although it was
expected that additional investments would be made, it was estimated that the installed capacity
54
would be insufficient to the projected production to 2010. In addition, Uruguay lacked specific
processing and freezing plants.
Initially, the sector had two producers' associations: the Uruguayan Chamber of Blueberry
(CUDELAR, for its Spanish acronym), national in scope but with substantial weight of the largest
producers, and the National Association of Producers of Blueberries in Uruguay (ANPAU, for its
Spanish acronym), mainly composed of producers with smaller planted areas in the South.
The initiative to create an institution to facilitate exports was a long-standing necessity prioritized
by producers before the blueberries PACC came to action. This aspiration materialized in 2007
with the creation of UPEFRUY (Union of Producers and Exporters of fruit and vegetable Uruguay).
The private leadership gave to the clustering initiative substantial "representativeness" and
"legitimacy" on the one hand. But on the other hand, the same involvement of the private sector
through higher-level representatives implied that the same could be occasionally playing more
than one role simultaneously (for example, representing a company, a trade group, and the
government cluster), possibly generating conflict of interest.
2.4.3. A private sector leadership cluster
The Blueberry Cluster started operating in the orbit of the PACC in the second half of year 2006.
The application to be selected by the Program was promoted by private actors, and mainly by
producers ready to export. As mentioned before, the role that the PACC assigns to the private
se to is u ial: the P og a a ts o de a d, i.e. p i ate a to s just ha e to gi e the ight
sig al . The PACC does ot i pose to the private sector what to do, but lets the private sector to
indicate what is needed. This requires the private sector to be well organized, sure of what they
want. Moreover, PRC s a e de eloped i a pa ti ipato
a , a d de i ed f o the a e the
priorities for allocating funding to the different cluster projects
In 2007, the Blue e ies PRC was developed. It identifies six strategic objectives of the cluster:
(1) to place Uruguay on the world market as an exporter of counter seasonal blueberries to the
Northern Hemisphere.
(2) to develop agro-technologies adapted to national conditions.
(3) to develop an effective and efficient system of postharvest handling.
(4) to ensure the availability of human resources at all stages.
(5) to strengthen the institutional organization of the cluster and its members.
(6) to generate a favorable framework for sectoral policies. It is important to put the emphasis in
the involvement of the private sector in the design and implementation of policy responses to the
problems identified in the cluster.
In 2007, the Institutions that conform the Support Group of the cluster were integrated by public
entities related to the operations of the fledgling blueberry industry. Since the creation of the
cluster, the public sector was represented by the MGAP and the municipal governments where
plantations are located.
55
In the case of municipal governments, they have few policies or instruments available with
potentially significant effects on competitiveness of blueberry enterprises, and they have probably
also low or no availability of human resources with the appropriate profile to represent that level
of government in instances such as the PACC. Hence, among the public sector, local governments
("municipal governments") do not play a significant role, although they have been formally
recognized in the institutional representation of the cluster. In the case of MGAP, it has been
observed by key informants, that it does not have appropriate institutional frameworks or
tradition in relationship with an incipient mostly export-oriented cluster. It is to be noted, that the
Honorary Commission of the Citrus Plan, a long-standing institution, has been shut down, and that
the institutional framework to support the farmer sector does not seem responsive to the
requirements of a dynamic export-oriented fruit sector.
2.4.4. The creation of a club good: essential to develop exports
The main initiative of the blueberry cluster for its integration into the PACC was the creation of
institutional infrastructure to meet the health requirements for accessing the U.S. market. This
initiative was pursued from the beginning, aligned with priority strategic objectives, and with
particular economic significance for producers. It can be said that, since the origin of blueberry
plantations in the country, this was viewed as a requirement to achieve desired levels of
profitability. It can be seen as a test of the maturity of the conglomerate in its ability to access the
most demanding markets. The initiative itself largely crystallized the "shared vision" among private
entrepreneurs of a new sector, whose viability and growth is directly dependent on exports.
Private actors, especially the larger companies with greater export experience, were well aware of
the need and had knowledge of the specific requirements for obtaining such access. The USDA
requires that a single organization representing the private sector engage in the health
certification institution, a role assigned to UPEFRUY. Creating and sustaining that institution, which
is clearly a "club good", involves significant costs considering the current export levels of the
sector.
UPEFRUY, an institution managed by the private sector and specialized in the international
representation of the cluster, assumed the global representation of the conglomerate in the
operation of the program. This role taking, and acceptance by the private sector, evidences the
fact that the conduction of this entity has remained focused on its core mandate, and apart from
any trade disputes between firms, or other issues outside its specific scope of action. The cluster
governance created in 2007 under PACC guidelines to integrate these organs only with private
sector representatives, key members of the existing business associations were participating,
ensuring a wide representation of the relevant private sector.
The main contribution expected from the MGAP came from the Agriculture Services General
Direction (DGSA, by its Spanish acronym), which deals with sanitary issues, and is the National
Phytosanitary Protection Organization for international agreements on the subject. It is important
to note that collaboration between the DGSA and the cluster appears to have been functional to
the established goals. In 2010 a "structuring project " is approved ("Monitoring of fruit fly in Origin
56
and Phytosanitary Certification") that provides resources to strengthen cooperation between the
DGSA, UPEFRUY and the Animal and Plant Health Inspection Service (APHIS), as a way of
monitoring the most significant pest, guarantee its treatment and the flow of export certification
in the main point of departure (Carrasco international airport). It is important to remark, that
cooperation between the DGSA and the cluster moved almost on a parallel lane to the formal
representation of MGAP in the Support Group, and created direct links between the Directorate
and private actors, largely independent of the guidelines that such a formal representation could
have taken.
2.4.5. Institutional design lesson
The Blueberry case proposes some institutional design lessons. First, even if the involvement of
the public sector was relatively low in this case, and its contribution to the trajectory of the cluster
as li ited, the pu li se to did ot lo k the p i ate se to s i itiati e. The latte se to o the
other hand was strong, was well organized from the beginning, with few business associations that
were clearly representative of the sector. In this context, the private actors showed signs of
dynamism and commitment, took the initiative, and was supported by both the Program and the
weak public sector, being then able to get involved in the design and implementation of policy
responses to the problems identified in the cluster.
Second, at the same time, from the public sector, active cooperation from the DGSA -MGAP was
required. On the one hand, access to the U.S. market demands keeping the "fruit fly" effect under
control and the latter demands private investment in plantation treatment as well as monitoring
the presence of the pest in the whole country. In the latter regard, the DGSA has no physical
presence throughout the country, which leads to the assembly of a mixed monitoring system, in
which producers themselves are involved. In addition, the DGSA must certify compliance with the
health requirements of the merchandise that is exported to the U.S. Although the sector lacked
extensive collaboration experience of working with the DGSA, informants reported a good
elatio ship, hi h as ot affe ted the dista t" i ol e e t of the politi al ep ese tatio of
MGAP in the cluster. DGSA even mentioned to have been trained to provide services to the sector,
which reveals both the responsiveness from the public actor, its professionalism, but also the
relative backwardness compared to the dynamism of the sector.
Third, agencies from the NSI, like INIA or Laboratorio Tecnológico del Uruguay (LATU), could have
played a more significant role, but they were rather followers of the private sector. The weak
integration with technical and research agencies of the public sector is noteworthy. Although INIA
conducted research, even before the launch of the PACC and in collaboration with private
companies, technicians and entrepreneurs consulted observed that even in 2011 the
conglomerate was based on a technological package based on technical knowledge brought
mainly from Argentina. Thus, the country does not have a long-term research program articulated
at high-level between the public and the private sector in this sector.
It is important to remark that beyond the understandable divergence between the private and
public on the priorities and resource allocation for publicly funded research, the case highlights
57
some tensions that can arise in incipient sectors that are not used to interact with research
institutions. A deeper dialogue and collaboration between the private sector and research
institutions for incipient sectors would be desirable. However, there is no endogenous sectoral
innovation strategy, which is certainly a shortcoming of the PRC.
2.5.
Case 5: Tourism cluster in Colonia del Sacramento
The second case of the support for clusters and conglomerates policy is the creation of cluster
institutions, and early steps towards solving coordination challenges, within the tourism sector in
the departamento of Colonia. We examine a case of a government-initiated PPC, in which the
policymaker was able to bring together an extraordinarily heterogeneous set of private sector
actors that were a necessary part of the cluster. Getting them to set up and support a lasting
cluster go e a e i stitutio
as a positi e ualit of poli
out o e see ‘oss “ h eide
2010), and the trajectory followed is examined in 2.5.1. The case illustrates the uses of detailed
competitiveness strategies, which go beyond identifying policies and public inputs needed and can
o k as so ial o t a ts fo the PPC . . . Based o
hat it has a hie ed a d hat it has ot,
the section concludes by identifying institutional features of the cluster that may account for the
sectoral performance.
2.5.1. Creating institutions among heterogeneous actors: a government-led experience
The port of Colonia del Sacramento is the main tou ists entry point for Uruguay, and the city and
the departments are worthy destinations in and of themselves (the best-known area is the old
quarters , e og ized as "Wo ld He itage" site by UNESCO in 1995).94 Only an hour by ferry from
downtown Buenos Aires, 180 kilometers away from Montevideo, with clean river beaches, model
farms, colonies of traditionalist European immigrants, and tourist infrastructure in full swing, the
departamento (Colonia) and its capital city (Colonia del Sacramento) have many assets to affirm
their leading role in the country's tourism scene.
Among the destinations in Uruguay, Colonia benefits from a less pronounced seasonal cycle
explained by the nature of its attractions and its geographic position (Fernández, 2007). The
departmento can be seen as made up of four zones, connected to interdependent urban systems,
with differences in economic dynamism that follow from their varied predominance of different
economic activities (Fernández, 2007). In particular, the significance of tourism ranges from the
dominance of an international destination, rich in various resources, around Colonia del
Sacramento, to the departamento s Northern zone that is virtually disconnected from the tourism
business.
When the PACC decided to include Colonia among its supported clusters, the departamento was
undergoing gradual but deep transformations, and was at an acceptable but not excellent level of
quality and overall supply of touristic services. As in other parts of the country, the traditional
fa il hotel was giving way to new facilities run by international hotel chains according to
94
In 2010, 670 000 tourists entered the port of Colonia, and in 2006, the year local actors got together to join the PACC
Program, almost 450 000 had entered (the population of the entire departmento in 2004 was estimated at 119 000).
58
modern standards. In 2006-07, the sub-secto s usi ess asso iatio , the Hotelers Chamber (HC)
had 50 members related to 66 establishments, who were responsible for a supply of about 1400
rooms and 3200 beds (Fernandez, 2007). Chains like Sheraton, Four Seasons, Kempisky, Radisson
and Days Inn were contributing to the growing arrival of visitors from North America and Europe,
which was changing the profile of the city. The range of prices and quality of accommodation was
broad, while specific segments might experience occasional quantitative bottlenecks. The supply
of food services and restaurants was considered to be adequate, and it had good price-quality
ratios. Similar positive evaluations would extend to passenger transportation services; although in
2006-07, the passenger terminal at the port was awaiting a major overhaul.
As a touristic destination with a relatively long history, Colonia had a complex institutional
landscape posing a challenge for any new competitiveness and relationships-building initiative.
The Colonia Tourism Corporation was supposed to channel demands from a variety of local
tourism leagues, but it was not unanimously considered a legitimate voice of the whole sector.
Some strong organizations (e.g., the HC, with large presence of international operators) did not
feel represented and used to make that known. There were also occasionally divergent views, or
vague distrust among a larger group of actors, which should include at least the largest passenger
transportation operator (the buses and ferries company Bu ue ús , the Cha e of ‘eal Estate
operators, and associations representing food services operators.
One of the distinctive features of cluster-building in this case is that the approach to the PACC was
an initiative of the local government, the IMC. In 2006, the IMC appointed a young and highly
trained specialist to head the Tourism Direction. Traditionally, the job had been a "political
appointment", with it usually being commissioned to someone politically close to the Mayor,
regardless of technical, managerial or sectoral background. Instead, the main player in the
integration of Colonia in the PACC program was completing postgraduate training in tourism and
local development policies when she first applied for a career job in the IMC, and was promoted to
Director soon after. 95 Her hiring broke with political bad habits and put in the key job someone
with the necessary motivation and skills, all which was crucial for the cluster-building process.
The private se to i this ase a ted at the egi i g as a follo e of the lo al pu li i itiati e.
Despite some previous experiences in trying to achieve coordinated action to address shared
problems (for example, the HC had implemented since 2004 a cluster-development methodology,
working out its own strategic plan) the private sector was largely divided and lacked a common
vision, organized as it was in sub-sector associations that were mainly lobbying groups.
Experiences like the one spearheded by the HC had made clear that, for tourism services,
complementarities between the different links of the value chain are quite strong. The HC s
strategic plan had identified a number of private and public-private initiatives before the PACC,
where cooperation had been started but appeared to be fragmentary, irregular or lacking
medium-term vision.
95
Press release: Interview with Andrea Schunk, UruguayVision, not dated
59
The former Director of Tourism, currently at the Ministry of Tourism and Sports, recognizes that
the cluster-building model applied by PACC was not only appropriate for what it expected from
the IMC, but also that access to (even limited) financial resources was attractive to the units within
the municipal government that normally do not get enough resources to fulfill their mission. For
that reason, from the beginning, the Direction of Tourism took the PACC policy very seriously,
sharing the analytical approach and benefitting from technical and financial support she could not
easily get from the IMC. For example, the Direction lacked technical staff and the cluster program
contributed funds for technical assistance, a work methodology to bring the private sector
together, and funds to carry these out. It has been observed that the HC had, to a certain extent,
leadership within the private sector, helping "coordinate" other segments. Its support to the effort
initiated by the IMC was also quite crucial.
The following two diagrams, translated and adapted from PACC documents, maps out the complex
arrangement of actors connected to the tourism industry in Colonia, before the creation of
governance institutions promoted by the PACC:
Diagram 2.5.1:
Markets and sub-sectors related to the tourism cluster in Colonia
Source: Translated and adapted from PACC documents
Diagram 2.5.2:
Business groupings and formal private and public institutions
related to the tourism industry in Colonia
60
Source: Translated and adapted from PACC documents
The diversity of relevant actors, as evident from the diagrams, and the heterogeneity of
management and marketing skills and other capabilities of the actors, are a distinctive feature of
this conglomerate and probably of the tourism industry in reasonable size destinations. From the
diagrams, it is striking (e.g. compared to the blueberries cluster) the number of boxes representing
very different organizations and agencies relevant to the cluster, which evidences the complex
challenges for coordinated collective action and policymaking.
As mentioned before, the IMC s leadership and support for the initiative was crucial. However, it
was not just the initial support required to break a non-cooperative equilibrium that mattered.
The IMC also led efforts to encourage the participation of the least organized and inadequately
represented segments (e.g., handicrafts shops, small rural tourism operators), which made its job
harder but contributed to a potentially farther-reaching impact. Among the actors that were
already relatively better organized, the Gastronomy Chamber (GC) deserves special attention. This
is an important player but relationships were not smooth. The interviews suggest that there were
issues of representation with the sub-sector, and pre-existing personal differences were allowed
to influence the interactions. Apparently there was also a misunderstanding by the GC of the logic
of private financial contribution in the PACC model.
The former Director has also pointed out a counterintuitive but quite plausible complication: the
cluster process and PPC was parallel to a phase of rapid dynamism of the demand for touristic
services in the country in general, and particularly in Colonia. The former Director notes that,
paradoxically, in good times the i dust s problems become less visible, and this can conspire
against the commitment and o t i utio s to fi a e lu goods ai ed at improving medium
and long term competitiveness. To some extent, she relates this factor to an initial reluctance of
the HC to join the cluster structure.
A distant attitude, but perhaps for other reasons, was maintained by the leading passenger
transport operator, the firm that controls the system of ferries and buses connecting Colonia,
Montevideo and Buenos Aires. While we could not gather direct evidence on the reasons for the
old elatio ships, some observers have noted that the firm has direct communication channels
61
with national authorities, which may make it feel that lower level collaboration is unnecessary. It
was not possible to assess what kind of relationship Buquebus has with the IMC, but the company
is known for its tough bargaining tactics, and conflicts with different levels of government have
f e ue tl heated up a ou d the fi s u de i est e t i the passe ge s te i al at Colo ia s
port.
The former Director visualizes as very positive the contribution of the technical staff from the
PACC Coordinating Unit. She highlights their approach to the implementation of the program,
pushing the locals to set ambitious but realistic targets, and keeping the attention centered on
competitivity-enhancing initiatives. Among other contributions, it is worth mentioning the
solidarity and mutual support felt by the Director of Tourism, which helped them to promote a
clea isio of the " luste tool occasionally at a relatively high le el of a st a tio , but
contributing to raise the bar for the PPC), the specific collaboration around concrete initiatives,
particularly in the management of the partnership (branding initiative), and coordination with
other public actors (MINTURD). In brief, this appears as a case of a successful, publicly-initiated
PPC fo PPD, espe iall i the soft a ea of o e i g a d suppo ti g a et o k-building effort.
Among the public sector, another the other important player is the Minister of Tourism and Sports
(MINTURD). It had developed in parallel a number of initiatives which could complement or
overlap with those that would be promoted by the PACC. That said, the actors consulted dismissed
the s e a io of steppi g o ea h othe s toes , a d highlighted that MINTURD has been active in
the "tourism roundtable" promoted by the Direction of Tourism of the IMC. In general, the
dialogue and coordination throughout the cluster-building and PPC process seem to have
remained fluid.
The cluster governance structure had initially the "standard" PACC configuration, evolving then
quickly towards an original, locally-grown model. In addition to a Cluster Management Group
( Grupo Gestor del Cluste , made up of 11 members, all from the private sector), a "Tourism
Roundtable" was set up, with participation of other IMC units and other public actors (MINTURD).
This was the local version of the "support groups" referred to in the PACC methodology (the
Support Group, or GA, is formed with representatives of MINTURD, IMC and the PACC s
Coordinating Unit. The new governance bodies created by the PACC policy are presented below,
when we discuss modus operandi and some interim results. However, it was already a PPC
achievement, and one that enhances the quality of policies, that the IMC through its committed,
skilled and politically adept medium level officials was able to generate enough trust and interest
to develop PPC initiatives, regardless of their early limited impact.
2.5.2. The uses of consensus strategy documents
As mandated by the PACC policies, the Strategic Plan of the cluster was developed in a
participatory manner in 2007, based on a detailed study of the luste s situation at the time. It
examined the outlook and key areas of strategic involvement for four market segments and many
other sub-sectors and activities. This plan identified nine strategic guidelines of the "tourist
destination", namely:
62
1. Strengthening the management systems for the destination
2. Territorial and sectoral planning
3. Improvement of touristic infrastructure
4. Development of the business network
5. Development of vocational education and training in the tourism sector
6. Creation of Colo ia as tourism product
7. Promotion and marketing of the destination and its products
8. Improvement in the quality of tourism services
9. Promotion of increased integration of information technologies in the sector
In late 2007, the cluster created the Colonia Tourism Association (ATC), a joint
governance/management entity for the coordination of private-private and public-private
collaboration in the cluster. The ATC is a joint initiative of the organizations of the private sector,
the Direction of Tourism of the IMC, and MINTURD. The ATC is led by a Steering Committee, which
states longer term strategies and makes executive decisions on most issues.
The cluster development tasks are undertaken by seven committees that implement the strategic
guidelines stated in the Plan; each committee, in turn, includes the key stakeholders for its
primary objectives. This institutional makeup formalizes and provides greater legitimacy to the
similar previous model of collective management, based on the leadership of the HC. Such
legitimacy is further reinforced by the clear intention and efforts to integrate less organized or
poorly represented industry actors. In terms of representation, as mentioned before, the
integration of the largest transportation actor remains pending, which cannot be attributed to
managerial weakness or lack of interest among the luste s players.
The establishment and relative stability of the ATC, highlighted by several actors, is considered as
an achievement of the conglomerate. This has required careful handling of a delicate balance
between being too close to the public sector (i.e., the IMC o e o i g spokespe so s fo the
private sector. These dilemmas are intensified with conflicts between political authority and
segments of the private sector, but are not limited to the most visible conflicts. In this sense, the
strategic plan provides constant guidance and support, since its consensual foundations serve to
aligne demands and pressures to the original objectives and priorities. The legitimacy of the ATC
seems solid. The Executive Secretary of the ATC in 2011 said "The challenge is that each actor
understands what is that balance, how to use the ATC (...) how close to be to the private sector
and how close to the public? The basis for decisions is the continuous improvement of
competitiveness, because the ATC often has to go to one side or to the other. "
The initiative to develop a "tourism brand of the departamento (Colonia) " is valued not only for its
product but also for the process of collective decision making involved. It is important to recognize
the consensus that the initiative had generated in the development phase of the strategic plan. In
addition to that, by developing the initiative in constant communication with private actors, a
sense of ownership was generated, valued by the parties as an achievement of the cluster as a
whole. Among the reasons that may explain active and constructive involvement of the private
63
se to , the ta gi le ha a te of the a di g p odu t i itiati e is sig ifi a t, being appropriate
for the early stages of PPC when other projects with diffuse benefits a e ha de to sell to
reluctant partners. In brief, in the trajectory of the cluster, the initiative seems to have contributed
to raising levels of trust among actors, spreading a sense of ownership and accomplishment,
adding legitimacy to the Strategic Plan, besides the valuable actual results which are necessary for
the marketing and communication strategy of the conglomerate.
Two milestones in the evolution of the cluster help to visualize the achievements: (a) the rapid
evolution from the standard institutional model of the PACC to a local governance centered on the
ATC (and the latte s esilie e to i di iduals replacements and turnover in key roles), and (b)
some conflictive episodes from which the ATC and the cluster as a whole seem to have emerged
strengthened. Regarding the former, the early replacement of a facilitator , who was questioned
by some of the private sector players, by a technocrat from the orbit of the Direction of Tourism of
the IMC, who would eventually become Executive Secretary of the ATC and eventually leave for a
national-level job; the resignation for personal reasons of the Director of Tourism, the deadlock
after her departure and the stabilization with a new Di e to s a i al a d he o
it e t to
96
continue the work done before, mark some of the changes that had to be withstood by the
cluster in its formative years. This was accompanied by a gradual strengthening of the ATC, and
the growth in its legitimacy.
Regarding the conflicts among key actors, at least two are to be mentioned. One is the temporary
withdrawal of the Gastronomy Chamber first, and then of the HC from the ATC. Observers
attribute these movements to an incomplete understanding of the role and functions of the ATC,
and the spillover of these confusions into the field of personal or political differences. The second
o fli t episode as t igge ed
the eatio
u i ipal de ee of a tou is fee to e
charged to sales in the departamento, and which was vehemently resisted by the CH that argued
the insufficient prior consultation. It is noteworthy that, despite the heated controversies, the
involved actors avoided doing permanent damage to the luste s i stitutio s, hi h has also ee
favored by the strong protective stance of the IMC towards the cluster/PPC initiative.
In this context, the case suggests that consensus strategies to achieve greater cluster
competitiveness can serve multiple purposes. A first purposes is the more straightforward of
identifying priorities for policy changes, joint public and private action, and the resolution of
coordination failures. In this line, the competitiveness plans serve as a navigation tool for PPC
participants. A second purpose relates to the benefits that follow from the participatory process to
develop the plans. In this sense, private-public dialogue may serve to enhance the information
base on which policies or private strategies are made, but also may help develop a sense of
ownership of the jointly developed strategies. Still a third and perhaps under-estimated function
that can be served by the plans is illustrated vividly by this case. When turnover of key staff is high,
and when conflicts may emerge that challenge PPC-generated policies, the participatory
o petiti e ess pla s a o k as fou datio al so ial o t a ts a ong participants, reminding
96
Press release: Interview with Mariela Zubizarreta in ElEcoDigital.com.uy, 27 August 2010
64
them of what once was agreed among all and seemed the most convenient course of action. They
do not foreclose change and adaptation, but the plans remind partners that the new initiatives, or
departures from the old, require a new consensus.
This function is backed by observations from key players. The head of the HC during the early
years of the PACC observes:
I always have the strategic plan in mind, from the establishment of the ATC and up until now. I
always go back to it, in general directives and specific strategies and actions. I do not let others to
de iate f o it. … If o e de elops a pla , o s ie tiousl p odu ed, the it has to e espe ted
and applied to the reality. It is like the Bible, it has to be complied with one way or another. And
this also helps a lot, because in the Associations there are a lot of people, the participants change,
and without a guide, something that sets the course, things can go astray. 97
The same source, past President and Council member of the ATC explains:
I al a s had the ATC s statutes a d the st ategi pla ha d , a d ith that ou ha e hat
decided by consensus and what must be done. That is the way people learn to be orderly.
The first Executive Secretary of the ATC seems to confi
as
that the pla s o k as so ial o t a ts :
Some general lines are clear, the strategic plan helps a lot and imposes some order. This is one of
the positi e o t i utio s of this p o ess. The pla s li es a e ge e al ut at the sa e ti e o tai
specific actions, they state what actions must be undertaken to improve competitiveness of the
tourism industry in Colonia. Although there is room for creativity, this is within a delimited
framework.98
The use of the financing mechanisms that were envisaged in the PACC policy is telling about the
focus of this specific PPC and its results. Most of the resources (adding together the nonrefundable contribution from the PACC and the private se to s contribution) have gone to
st u tu i g p oje ts, i.e. those projects with non-appropriable benefits for all members of the
cluster, largely related to cluster governance. In particular, two phases of funding for the
esta lish e t of the luste s lead age , the ATC, account for just under half the funding
allocated between 2007 and 2011, and the figure reaches almost 70% if one adds the resources
allocated to the project of creation of the destination brand . Comparatively, the cluster has
allocated relatively few resources (for example, compared with the almost one million dollars
allo ated
the lue e ies luste , a d has ot app o ed a
losed p oje ts, revealing
difficulties to develop other initiatives and multi-actor collaboration beyond the more basic supply
of "club goods". This somehow suggests that the PPC s ai su ess has ee to uild t ust a d
generate a multi-stakeholder space where various links of the tourism value chain can cooperate
to address growth-related issues. On the other hand, the impacts on competitivity appear, based
on the allocation of funding and effort, to be very modest so far.
97
98
Interview with Carlos Camarotti.
Interview with Martin Cuadrado.
65
2.5.3. Institutional design lessons
The Tou is i Colo ia ase suggests so e i stitutio al desig lesso s. Fi st, the PACC s ad issio
procedure requiring joint private and public support for the application was able to open the door
to a perhaps unlikely but successful instance of a government-led cluster-building initiative. The
heterogeneity of the private sector in a small to medium scale, international touristic destination
was not an obstacle for the institutionalization (with substantial PACC facilitation assistance and
adept local public leadership) of governance institutions.
Second, the evidence about this case suggests that technical capacity supplemented with relative
political autonomy creates o ditio s fo ta gi le achievements even in "complex" contexts.
This seems to have been helped by the possibility of reaching early results (e.g., branding
exercise), and in that way generating interest and commitment that encourages the private
sector s involvement. The development of trust and a sense of shared goals is valuable in itself,
but by itself does not trigger demands for more ambitious, pro-growth collaborations.
Thi d, o se sus st ategies i the fo
of luste s st ategi pla s a serve other purposes
besides listing policy and collective action priorities. Their production can generate ownership of
the initiatives resulting from the participatory planning process, and perhaps more importantly
they can become convenient reminders of fou datio al ag ee e ts so ial o t a ts , to
overcome the challenges of maintaining course when there is high public and private personnel
turnover.
3.
Summary and Lessons Learned
3.1 Summary of the five case studies
Five sectoral policies that were established by PPCs were described and analyzed in the above
hapte s. We a al zed poli ies elated to the t o ou t s fi st ge e ato s of exports (meat and
tou is th ough eat t a ea ilit poli a d Colo ia s tou is cluster promotion policy; and we
also e a i ed th ee poli ies i the la ge to eate a d/o de elop e se to s iote h olog ,
shipbuilding and blueberries) through the functioning of industrial councils and a cluster. The five
policies are adequately funded either by multilateral organizations, by the national budget or by
non-state public entitiesy. The PPCs that we addressed take different forms and expressions,
reflecting different institutional backgrounds.
Meat traceability policy inherits the agriculture institutional framework where for over 45 years
public and private actors have co-governed boards of the specialized institutes related to meat.
That was crucial to align private actors to the public decision of mandatory individual traceability.
The traceability system was co-designed between private and public actors by means of their
participation in the institutes´ boards, but above all, through a creative consultative process,
where the private sector had the ability to propose innovative issues to design a suitable
traceability system. In the other side, the State had competent professional bureaucrats that had
the capability to present skillful and consistent proposals. Finally, during the implementation
66
phase private and public actors came back to a demanding-responding relationship, where no
specific spaces are involved to allow contributions that are more creative. Additionally, there is no
learning policy space that can help to accelerate the implementation process. However, the
o e all p o ess i te s of i stitutio al setti gs MGAP s e t al st u tu e, e pa ded ag i ultu al
i stitutio s a d ad-hoc task forces) achieved to deliver a public good. The provision of club goods
(or private goods) seems to require other institutional settings. An illustration is a fledgling
innovation network based on the traceability platform that establishes a new form of PPC, where
there is a division of work among private and public actors to provide a club good.
The sectors promoted by the first round of TSC launched by MIEM in 2010 had all PPC
backgrounds. The shipbuilding council enjoyed the benefits of the private sector previous
trajectory as part of a cluster-development policy. The cluster-building process resulted in the
establishment of a mixed organization ACLIN that, unlike typical business associations, brings
together different sectoral private firms and a state-own one, vocational education institutions
a d the se to s la o u io . In general, the case shows that a mixed membership organization
conceived as the keystone of sectoral governance, such as ACLIN, can play constructively and
facilitate consensus. In the other hand, an innovative policymaker supported by competent and
committed staff has achieved intermediary goals, but raises doubts about sustainability without
i stitutio alizatio . Thus, the T“C appea s ul e a le to the isk of its p e atu e a a do e t
by a new administration. In third place, participation of workers through their trade unions in the
ou ils sho s that age a gai i g a e left out of the ta le a d o ke s a e a le to
manage conflicts to support a long-term vision, even if they are less consistently interested or
active on other strategic development agendas. Finally, no attention has been paid to the design
of technology transfer mechanisms for managerial (not the production) skills at the workshop
level, and to the monitoring and evaluation of the experiment to assess the extent of capacity
development. Again, there is no learning in industrial policymaking.
Alike shipbuilding, the Biotech council relied on the advances achieved by the Life Sciences cluster
launched by PACPYMES in year 2005. It boosted AUDEBIO, the Biotech business association, which
is the private actor´s representation in the TSC. It seems that AUDEBIO, bringing together private
firms, universities and R&D centers, was an appropriate forum to address the common technical
problems of the industry within the TSC to elaborate the Biotech regulation Law. However, unlike,
shipbuilding the La , if app o ed a d egulated, ill esta lish the i stitutio alizatio of the
Biotech TSC, giving it a formal mandate and providing funding to carry it out. The Biotech TSC is
thus designing its institutionalization to assure its survival as a policy tool if governments change.
Finally, the inadequate registration for Biotech products in Uruguay is obstructing the
development of a very dynamic sector with large opportunities. This is due to the weakness of
public-public coordination. The new institutions created since 2005 to assure public-public
coordination (Productive and Innovative Cabinets) have not been sufficient until now to assure an
efficient governance model to address policies that promote transversal sectors as Biotech.
The two cases of cluster promotion are symmetrical actor-initiated PPC. While the blueberry case
was initiated by the private sector, the government originated the tourism case. In the blueberry
67
case the private sector was strong, was well organized from the beginning, with few business
associations that were clearly representative of the sector. In this context, the private actors
showed signs of dynamism and commitment, took the initiative, and was supported by both the
Program and the weak public sector, being then able to get involved in the design and
implementation of policy responses to the problems identified in the cluster. The agencies from
the NSI, could have played a more significant role, but they also were rather followers of the
private sector. However, there is a lack of strategically oriented public actors to boost an
endogenous innovation sectoral policy. This is possibly the consequence of the private sector
demand oriented of PACC.
In the tourism case, the policymaker was able to bring together a heterogeneous set of private
sector actors that were a necessary part of the cluster. Getting them to set up and support a
lasting cluster governance institution. The private sector in this case acted at the beginning as a
follo e of the lo al pu li i itiati e. Despite so e p e ious e pe ie es i t i g to a hie e
coordinated action to address shared problems, the private sector was largely divided and lacked a
common vision, organized as it was in sub-sector associations that were mainly lobbying groups. In
this context, the case suggests that consensus strategies to achieve greater cluster
competitiveness can serve multiple purposes. First, the competitiveness plans serve as a
navigation tool for PPC participants. Second, the private-public dialogue may serve to enhance the
information base on which policies or private strategies are made, but also may help develop a
sense of ownership of the jointly developed strategies. Finally, when turnover of key staff is high,
and when conflicts may emerge that challenge PPC-generated policies, the participatory
o petiti e ess pla s a o k as fou datio al so ial o t a ts a o g pa ti ipa ts, e i di g
partners that the new initiatives, or departures from the old, require a new consensus.
3.2
Conclusions and lessons
3.2.1. Public-private is a two-way relationship.
The Uruguayan government (at least the MGAP and MIEM) has a clear position on PPC for PDP and
policy designs are elaborated in that precise direction. But when is put a magnifier on the way
these designs are being implemented by the government, as we did in this research by means of
five PPC cases, the result are in general a bit disappointing. In the sense that there is a sort of
inertia from the government not to move from relationships with private sector that are already
ongoing, still that many officials and authorities agree that movements in another direction must
be done.
However, the meat traceability case exposes that when critical capabilities (from the State and the
private sector) are built, it is possible to consider relationships that are more sophisticated. The
innovation network that is in construction is a proof of that. From the shipbuilding and Biotech
cases, e lea ed that if the p i ate se to o ga izes itself i so e i o ati e a the
government is responsive to establish new ways of collaboration. The TSCs are institutional
settings that allow and potentiate these new relationships. However, TSC can also allow more
traditional relationships like in apparel-textile or automotive (not studied here).
68
3.2.2. Private sector capability: lobbying versus networking.
Cluster promotion background in both shipbuilding and Biotech is without doubt the tool that
allowed private sector to get organized and opened the possibility to interact with the government
in this new way. This is also observed in the blueberries and tourism PACC cases. Thus cluster are
powerful tools to organize the private sector to be able to collaborate with the public sector within
new schemes. These programmes generate trust relations among players from the public and
private sector, and accumulation of knowledge (mostly tacit and originated in the practical
experience). This, together with the public-public coordination failure issue that we explain below,
is maybe the main findings of our research.
In slightly different ways, the TSCs, like the clusters, have made significant contributions to the
institutionalization of representation of the private sector. This is necessary and desirable for
sustaining PPC, and can be achieved without full participation (or even with the exclusion of some
big player). Yet, a more cohesive business sector may be also a more powerful player demanding
forms of protection or subsidization that could harm other sectors or consumers, or stifle
innovation. While the PACC erected a barrier to these processes by putting competitivity
enhancements at the center of its requirements, and by being flexible in its choice of private
sector players to involve, the TSCs are more exposed to those risks by supporting industries, like
shipbuilding, with more uncertain prospects.
The blueberry case is a case where the private sector makes the right efforts to achieve a
successful PPC. It does this despite a weak public sector. On the other hand, private sector capture
is a real danger in this case. Our hypothesis turns around the sort of public sector that makes it
easier to achieve this result and at the same time protects against private capture. In this case, our
esults a e that the odel of i te e tio of PACC ith a e a li g hall a k has these ualities
mentioned before. Despite there are no explicit safeguard mechanisms against possible
coordination failures or to prevent capture, this is not perceived to be a risk in the light of the
E a li g “tate o ept.
Finally, in the meat traceability and blueberries cases we found that foreign regulations
(requirements stated by the main foreign buyers) enforced private sector to align with each other
and with the domestic regulation authority. The shipbuilding case shows that private actors do
respond to incentives and that exogenous pressures may trigger positive processes. The
requirements imposed by the main buyer forced the private sector actors to cooperate.
3.2.3. State capability: administrative versus political capabilities.
In Uruguay, the State capacity -or lack of it- has operated as a restriction on the implementation
of new forms of PDPs. This means that when an institutional space has no managerial capacity to
properly fulfill its function, institutional spaces are created that overlap with the existing ones, if
there is no capacity to transform them. Thus, policy innovation faces the innovative policymake s
dile
a: eate apa ities outside the e isti g u eau ati st u tu e, hi h ill e o e agile,
responsive, dynamic than conventional policies, but will disappear with the next change in political
leadership. Or to attempt changing the modus operandi of old but still defensively powerful pre69
existing bureaucracies (which will make the innovations an uphill battle). The later requires
political capacities and, if the path to break with institutions is taken without adequate capacity,
there is a risk that the old structures and the power resources related to them will impede the
new policy to prosper. In the former case, it is assumed an inefficient use of resources, but it has
the virtue to avoid the potential obstruction derived from political weaknesses.
In the case of meat traceability, a mid- a
esolutio of the i o ati e poli
ake s dile
a
was implemented. New capacities were created inside the existing bureaucratic structure, but
with no attempt to change (improve) the modus operandi of the pre-existing. The new institutions
were added side by side with the old ones. The result is the co-existence of the old system (fireheated mark and paper physical support) with the new system (electronic) managed by different
departments of the same ministry.
The experience of the TSC-Shipbuilding to date sheds light on three key issues, relating to state
capabilities and their role in the success of PPCs for PDPs. First, as observed in other cases in
Uruguay, technical sophistication and commitment are essential for collaborative public policies of
the new type. In the shipbuilding case, the key role played by MIEM team and the Director of
Industry, demonstrates the value of deep technical understanding of the policy challenges as well
as the apa it to pull o e s eight i so eti es-difficult negotiations. The Director´s ability to
e uit o
itted ou g p ofessio als a d the latte s te h i al o t i utio s a d e e g
account for a good part of the achievements.
Nevertheless, the tourism case reveals other features of the capacities of the Uruguayan State. It is
a successful case where the public sector is the leader of the venture. Our hypothesis in this case is
that the creation of the mixed public-private institution ATC with autonomous management
assured the protection against capture. Additionally, with changes in the PACC and the departure
of former Director of Tourism, between 2010-11, the cluster governance appears to have retained
the capacity to act as "memory of policy," allowing for the continuity of initiatives despite relay of
key players. In a next step, the institutions may require a better specification of the legal status of
the ATC and the representativeness of their managers
3.2.4 Public-public coordination failures.
It arises that PDP weaken if they depend on public-public coordination because of the lack of
effective coordination and governance across different State agencies.99 That is the case despite
the public-public coordination spaces created by the Productive and Innovation Cabinets. This
issue is central for the councils and to a lesser extent for PACC. Meat traceability is encapsulated
in the MGAP and its "expanded agricultural institutions", which is to some extent strength of this
PDP because public-public coordination is facilitated. However, it is also a limitation when we
think that meat traceability may be a basis to build a new meat competitive advantage based on a
value chain approach. In this case, innovation networks are the foundation to public-private
collaboration and public-public coordination outside the agricultural space is essential. Because
99
Cutler (2012:4) asserts the same for the case of Australia and links this problem with the smallness of the countries.
70
the development of new sectors or activities like software or electronics needs coordination with
other public agencies, like MIEM for example.
On the other hand, one of the main shortcomings in the Biotech case is related to public-public
coordination. As mentioned before, it has obstructed until now the achievement of the
registration of Biotech products, and the development of the sector depends on this. This kind of
problems is particularly relevant for cross-sector technologies like Biotech, but is relevant to any
productive area that requires a transversal regulation.
Thus, the emphasis on public-public coordination must be an essential issue in the design,
implementation and assessment of PDPs. The five cases studied here show the difficulties of this
kind of coordination and sometimes we arrived to think that this research should have put the
stress also in this collaboration.
3.2.5. Labor Unions capabilities: wage bargaining dialogue versus long-term vision.
The la o u io s ole i the o st u tio of the fi st a ge i the ship uildi g ase as see as
o st u ti e, ai l e ause it e su ed la o pea e to help the o so tiu
eet the deli e
deadli es. The T“C ith o ke s pa ti ipatio also ha ges the logic of private-private relations,
turning it into a more regular dialogue on longer-term issues and not just about short-term wages
a d o ki g o ditio s. Ho e e , so e sou es epo t that o ke s espo se has ee
oe
disappointing when unions have been asked to participate in other strategic consultations or
planning, as they seemed less prepared and –unless they touch on salaries or jobs—less
interested.
3.2.6. Time horizons.
In our five cases, time horizons to public-private interaction have been from medium to long term.
In the case of meat traceability, we showed that there is a long-standing PPC tradition in
agriculture policy. In the case of industry less, but the precise and systematic work of cluster
promotion programmes can operate as a catch-up mechanism. Related to that, is that policy
continuity is a basic condition to attain long time horizons. Since 2005, there has been continuity
because the same political party has governed, but institutional instability has been the norm.
Thus, the TSC institutionalization that is meant to be done in Biotech through the Law is an
interesting pathway to stabilize policy tools.
3.2.7. Policy learning spaces.
The monitoring and assessment of productive policies, even if the policy design normally includes
it, are totally absent of the PDPs studied here. We highlighted in all the cases the absence of
learning policy spaces to be able to replicate the successes or correct the missteps.
The case that shows the most unexpected shortcoming to become a success story because no
learning mechanism was applied during the technological transfer process is the shipbuilding
industry case. Indeed, there is not a mechanism in place to learn from the technology transfer that
is taken place through the Spanish-Uruguayan joint venture. Moreover, without such mechanisms,
it ill e a o e s guess hethe the p odu ti it gai s a hie ed a d asso iated a age ial
71
lea i g ould sustai the i dust s o petiti e ess i the futu e. Given the resources invested,
it would seem essential to have adequate learning strategies in place.
Concerning the infant industry protection and the truncated technological transfer this process
must be further documented to understand, through figures, what was invested by the State?
What learning curve was covered? Again, without the appropriate policy assessment tools the
State will never learn from its good and bad experiences. The lack of management capabilities at
the level of the shipbuilding workshop (plant managers) and the neglection of the importance of it
ought to be documented to fully understand how must a technological transfer process be
subsided.
72
3.
3.1.
Information Sources
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Fa Poli De elop e t a d Te sio s ith NAFTA , Mo t eal, Ca ada, Ap il -26.
Hobbs J.H., Kerr W.A. & Yeung M.T. (2009), Growing Forward. Public and private goods: The
Canadian National Livestock and Poultry Traceability Program Agriculture and Agri-Food Canada,
CAT: A34-13/2009E-PDF
INIA & FORBEL (2005),
Paysandú: INIA.
ª Jo ada de Difusió Culti o del A á da o, Co e io INIA-FO‘BEL “.A. ,
Jordán V., Galperin H. & Peres W. (Coord.) (2010), Fast-tracking the digital revolution:
Broadband for Latin America and the Caribbean, United Nations, ECLAC, DIRSI, IDRC, Europe
Union, @lis Europeaid , Santiago de Chile.
74
Kaplinsky, R. and Morris, M. (2002), A Handbook for Value Chain Research, Institute of
Development Studies, Prepared for the IDRC.
http://www.srp-guinee.org/download/valuechain-handbook.pdf [last access 04/01/2013]
MGAP & IICA (2009), U ugua s E pe ie e i Beef Cattle T a ea ilit , Montevideo, Uruguay
Ministry of Livestock, Agriculture and Fishery (MGAP) & National Meat Institute, Inter-American
Institute for Cooperation on Agriculture (IICA).
http://www.inac.gub.uy/innovaportal/file/6323/1/libro_trazabilidad_ingles.pdf
[last access 04/01/2013]
OPP
‘egla e to Ope ati o. Programa de Competitividad de Conglomerados y Cadenas
P odu ti as , Mo te ideo: Ofi i a de Pla ea ie to
P esupuesto de la P eside ia de la
República.
PACC (2007), Turismo en Colonia: Plan de Refuerzo de la Competitividad, PACC-Uruguay,
Montevideo: DIPRODE, OPP.
PACC (2009), Insumos para políticas de competitividad y conglomerados: Lecciones aprendidas,
PACC-Uruguay, Montevideo: DIPRODE, OPP.
Paolino C.
, U‘UGUAY: las políti as tecnológicas agropecuarias y el Plan Estratégico
Nacional en Ciencia, Tecnología e Innovación (PENCTI), Anuario de OPYPA, 2010, MGAP.
http://www.mgap.gub.uy/opypa/ANUARIOS/Anuario2010/material/pdf/20.pdf
[Last Access 4/01/2012]
Paolino C.
, Estrategia de Desarrollo Agropecuario en Uruguay , and 7 de diciembre,
CEPAL, Santiago de Chile, Seminario internacional "Políticas para la agricultura en América Latina y
el competitividad, sostenibilidad e inclusión social".
http://www.eclac.org/ddpe/noticias/noticias/4/45184/6_Carlos_Paolino.pdf
[last Access 04/01/2013]
Pittaluga L. (2012), Lecciones aprendidas por los Programas del BID de apoyo a Clústers en el
Cono Sur. Resultados de los estudios de caso en Argentina (Río Negro), Brasil (San Pablo), Chile y
Uruguay, mimeo.
Polidano, C. (2000), Measu i g Pu li “e to Capa it
May 2000, Pages 805–822
Porto, L.
La fo a ió de lúste s e
(presentación, sin datos de publicación).
World Development Volume 28, Issue 5,
U ugua : etos, i st u e tos
est ategias
Repetto, F. (2004) Capa idad Estatal: e uisito pa a el mejoramiento de la Política Social en
A é i a Lati a . Depa ta e to de I teg a ió
P og a as ‘egio ales. I stituto I te a e i a o
para el Desarrollo Social. BID. Serie de Documentos de Trabajo I-52
75
Rius, A.
Coo di a ió i stitu io al la ola o ación de los sectores público y privado:
Estudio de aso U ugua so e la oope a ió de a to es últiples , i fo e de o sulto ía pa a
el BID.
Rodriguez‐Clare, A. (2011), Institutions for Productive Development Policy , background paper
for the Inter-American De elop e t Ba k s esea h p oje t Poli ies a d I stitutio s fo
Productivity in Latin America and the Caribbean.
Ross Schneider, B. (2010), Business-Government interaction in policy councils in Latin America ,
IDB Working Paper Series No. IDB-WP-167, Washington DC: Inter-American Development Bank
Snoeck M. & Pittaluga L. (2012), Chapter 10. Software Discovery in Uruguay: Public-Private
Solutions to Coordination Failures , in Export Pioneers in Latin America, Sabel CH., FernándezArias E., Hausmann R., Rodríguez-Clare A., Stein E., (editors). Inter-American Development Bank,
David Rockefeller Center for Latin American Studies, Harvard University.
Sturgeon T. J. (2008) From Commodity Chains to Value Chains:Interdisciplinary theory building in
an age of globalization MIT-IPC-08-001 Industrial Performace Center, Massachusetts Institute of
technology, Working Paper Series January 2008
http://web.mit.edu/ipc/publications/pdf/08-001.pdf [04/01/2013]
UNASEP (2008), La age da de o petiti idad del U ugua , Julio, Mo te ideo: Mi iste io de
Economía y Finanzas.
3.2. Other Sources
3.2.2. Interviews
Adrián Béndelman, Ejecutivo del Programa de Apoyo a Clusters y Conglomerados,
Area de Políticas Territoriales, Oficina de Planeamiento y Presupuesto, Uruguay
(Interview 6-Sep-2012)
Adrián Miguez, Shipbuilding TSC coordinator
Alejandro Hourcade, Frigorífico Canelones, cost manager in Meat Processor
Andrea Schunk, Tourism Director, Intendencia Municipal de Colonia, IMC 2006-2011
Carlos Cammaroti, Ex Presidente de la Cámara Hotelera, Presidente de la Asociación
Turística Departamental de Colonia
Carlos Mermot- consulter specialized on cattle issues -PROMESUR
Carlos Paolino, OPYPA (MGAP) director
Carolina Da Silva, Biotec TSC coordinator
Daniel De Mattos, Sociedad de Criadores de Holando, manager
Daniel Garin- former coordinator of the Work Group to design and implement the
bovine identification and register system (MGAP) and former vice minister (MGAP).
Danny Freira, ie
o Co isió Di e ti a Aso ia ió Cluste I dust ia Na al del
U ugua i te ie
-Nov-2012).
Edgardo Vitale, MGAP official
Gonzalo Gonzalez, former MGAP ministre (2001-2004)
76
Guzmán Tellechea producer and active member of Asociación Rural del Uruguay
(ARU)
Juan Fonseca cattle consignee
Juan Peyrou, cattle producer
Luis Bianco cattle producer and active member of Cooperativas Agrarias Federadas
(CAF)
Mariana Sienra, Coordinadora del Programa de Apoyo a Clusters y Conglomerados,
Área de Políticas Territoriales, Oficina de Planeamiento y Presupuesto, Uruguay
(Interview 6-Sep-2012)
Marianela Gonzalez, SNIG director
Martín Buxedas, former OPYPA (MGAP) director
Martín Cuadrado, Ex funcionario de la IMC, Facilitador del Clúster en 2008, ex
Secretario Ejecutivo de la Asociación Turística Departamental de Colonia
Pablo Caputi- Director of the Instituto Nacional de la Carne (INAC)
Pablo Gallinal wintering producer
Ricardo Brunner, Gerente de Logística de Montes del Plata (interview 25-Sep-2012)
Sebastián Torres, Director Nacional de Industrias, Ministerio de Industrias, Energía y
Minería del Uruguay (Interview 8-Nov-2012)
3.2.3. Laws, ministerial resolutions a d usi ess asso iatio s’ do uments
Law N° 17.997- August 2d 2006, Law that declares of national interest the Animal
Identification and Registration System to construct the animal product traceability
Law Nº 18.656- April 16th 2010, modifies the law Nº 17.997
Resolution N° 1001, September 20th, 2005, MGAP. Creation of the Work Group to
design the bovine identification and register system (designation of government and
technical members)
Consideraciones sobre el documento P opuesta de Diseño del “iste a de
información y egist o a i al pa a el ga ado o i o del MGAP, ARU, CAF, FR, ADIFU,
CIF. www.caf.org.uy/IMG/pdf/Gremiales_a_MGAP_Trazabilidad.pdf [04/01/2013]
3.2.4. Stenographic records from parliament sessions
(http://sip.parlamento.gub.uy)
Livestock, Agriculture and Fishery Senate Commission
o December 21st, 2005- are invited Daniel Garin and Edgardo Vitale advisors to the
MGAP
o March 16th, 2006- are invited Rodrigo Herrero and Eduardo Hughes- president
and secretary fo the Federación Rural; Fernando Mattos- president of the
Asociación Rural del Uruguay; Luis Bianco- vice president of the Cooperativas
Agrarias Federadas; Jorge Barrios – secretary of the Asociación de la Industria
Frigorífica del Uruguay; Daniel Belerati – executive director of the Cámara de la
Industria Frigorífica
77
April 27th, 2006 are invited the Minster of MGAP and advisors (Ernesto Agazzi,
Edgardo Vitale and Daniel Garín)
o May 4th, 2006 no invitations, session with the six senators from the commission
Livestock, Agriculture and Fishery House of Representatives Commission
o December 14th, 2005: - Rodrigo Herrero and Eduardo Hughes- president and
secretary fo the Federación Rural ; Fernando Mattos- president of the Asociación
Rural del Uruguay; Luis Bianco- vice president of the Cooperativas Agrarias
Federadas; Jorge Barrios – secretary of the Asociación de la Industria Frigorífica
del Uruguay; Daniel Belerati – executive director of the Cámara de la Industria
Frigorífica
o July 4th, 2006 are invited the Minster of Cattle, Agriculture and Fishing (Ernesto
Agazzi) and advisors (Edgardo Vitale, Daniel Garín)
o March 17th, 2010 no invitations, session with the five representatives from the
commission
o April 6th, 2010 are invited the Minster of Cattle, Agriculture and Fishing (Tabaré
Aguerre) and vice Minster (Daniel Garín)
o July 12th, 2012 are invited the Minster of Cattle, Agriculture and Fishing (Tabaré
Aguerre) and vice Minister (Enzo Benech) and advisors (María Nela González and
others).
Livestock, Agriculture and Fishery House of Representatives Session- Annual Budget
Accountability session
o July 26st, 2011 are invited the Minster of MGAP (Tabaré Aguerre) and vice Minster
(Daniel Garín)
3.2.5. Press Releases
Hay tiempo de cambiar ministro antes que gastar sin necesidad . Gonzalo Gaggero,
Presidente de la Federación Rural, 20 de setiembre de 2002- Año 85 -Nº 29138
Internet, Año 7 - Nº 2248, Montevideo - Uruguay EL PAIS DIGITAL.
www.elpais.com.uy/02/09/20/pecono_12238.asp [access 4 Jan 2013]
Quién es el que debe pagar las cuentas? , 1 de febrero de 2004- Año 86 - Nº29627
Internet Año 8 - Nº 2737 | Montevideo – Uruguay EL PAIS DIGITAL
www.elpais.com.uy/04/02/01/pecono_78308.asp [access 4 Jan 2013]
Asociación Rural pide trazabilidad obligatoria y gradual de los bovinos , 9 de junio de
2005 - Año 87 - Nº 30111, Internet Año 10 - Nº 3222 | Montevideo – Uruguay EL PAIS
DIGITAL.
http://www.elpais.com.uy/05/06/09/economia.asp?mnunot=economia
[access 4 Jan 2013]
Bota e Pa agua , la ª a aza pa a Mo tes del Plata e o tu e , El País
(September 10, 2012) http://www.elpais.com.uy/120910/pecono662939/economia/Botan-en-Paraguay-la-4rcaza-para-Montes-del-Plata-en-octubre/
[access 4 January 2013]
Revista Semanario Crónica of 27/07/2012
Entrevista radial del periodista Emiliano Cotelo a José Antonio García, principal de
Gali tio e U ugua , El Espectador, Montevideo, 26 de julio 2012
o
78
http://www.espectador.com/noticias/244708/importantes-proyectos-de-transportefluvial-ponen-de-manifiesto-el-potencial-de-la-industria-naval-uruguaya accessed
[access 4 january 2013]
UruguayVision, not dated, Interview with Andrea Schunk,
http://www.uruguayvision.com/sistema/ficha.php?accion=mostrar&id=1077&ruta=%
3AInformaci%C3%B3n+de+Uruguay%3AArt%C3%ADculos+de+Turismo%3A&rutaId=:2:
193:&cl=112&ub=1&pr=ficha.php%3Faccion%3Dbuscar%26tm%3Db%26ruta%3D%253AInformaci%25C3
%25B3n+de+Uruguay%253AArt%25C3%25ADculos+de+Turismo%253A%26rutaId%3D
%3A2%3A193%3A%26cbClasificacion%3D112, [access 4 Jan 2012]
ElEcoDigital.com.uy, Interview with Mariela Zubizarreta, 27 August 2010,
http://elecodigital.com.uy/index.php?option=com_content&view=article&id=1043%3
Anueva-directora-de-turismo-mariela-zubizarreta&catid=1%3Ageneral&Itemid=22,
[access 4 Jan 2013]
79
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