El Salvador Competitive Project   2

This Statement of Work (SOW) is designed to procure a new five-year "EL SALVADOR COMPETITIVE" Project, hereinafter "the Project," with the intent of increasing El Salvador's key economic sectors competitiveness by strengthening capacity of micro, small and medium enterprises (MSMEs) to compete in domestic and export markets, and improving the national and subnational business environment to encourage private sector investment, innovation, and business expansion to foster economic growth and job creation. The Development Hypothesis is: if firms improve their business management skills through innovation and implementation of new technologies, the government improves the regulatory framework and streamlines doing business procedures, and the public and private sectors work together to achieve mutual economic growth objectives, El Salvador's key economic sectors will be more competitive.

This Project builds upon lessons learned from prior development investments and complements current USAID/El Salvador activities to enable Salvadoran businesses to become more competitive in global markets while ensuring participation of men and women, including those with disabilities and those from the lesbian, gay, bisexual, transgender, and intersex (LGBTI) community. The Project will partner with national and subnational governments, the private sector, civil society organizations, universities, and technical/vocational institutions.

Competitiveness is the ability of a firm or a nation to offer products and services that meet the quality standards of the domestic and world markets at prices that are competitive and provide adequate returns on the resources employed or consumed in producing them. The World Economic Forum, in its Global Competitiveness Report, defines competitiveness as the set of institutions, policies, and factors that determine the level of productivity of an economy. National competitiveness is said to be particularly important for small, open economies, which rely on trade, and typically foreign direct investment, to provide the scale necessary for productivity increases to drive increases in living standards.

This Project is part of the Improving Business Enabling Environment Project No. 519-0469 and the Increasing Business Productivity Project No. 519-0470, which help achieve USAID/El Salvador's FY 2013-FY 2017 Country Development Cooperation Strategy (CDCS) Development Objective 2 (DO2): Economic Growth Opportunities in Tradables Expanded (See Section J for Website link), and respond directly to Intermediate Results (IR) 2.1 Business Enabling Environment Improved and 2.2 Productivity of Targeted Business Improved.

The Project will advance the U.S. Strategy for Engagement in Central America (CEN Strategy), and also contributes to the goals of the Plan of the Alliance for Prosperity in the Northern Triangle. Additional information regarding these strategic documents is further discussed in the
Background Annex to the RFP El Salvador Competitive. To these ends, the Project will advance two inter-related objectives:
1) Equipping for Growth, will increase the capacity of the private sector to compete in the export value- and supply-chains. Equipping for Growth will improve business development service providers to support MSMEs increase through innovation and implementation of new technologies, their value added in export-oriented value- and supply-chains. The impact of this objective will be measured by the annual change in El Salvador's non-traditional products exports.

2) Governing for Growth, will strengthen the national and subnational business enabling environment to make El Salvador more competitive. Governing for Growth, will improve capacity of financial institutions to serve efficiently the large market segment of MSMEs, and improve the business enabling environments at the national and subnational levels. The impact of this objective will be measured by the country's improvements in the World Economic Forum Global Competitiveness Report.