Investment Reform Index

Structure l Methodology l Analytical benefits l Contact

The Investment Reform Index (IRI) is a practical tool developed to measure and communicate the progress made by countries in South East Europe (SEE) in improving their investment climate.

The first Investment Reform Index was published in 2006. Country consultations and assessments for the revised IRI are underway the 2010 Investment Reform Index is due to be published in March 2010.

A hallmark of the IRI process is a series of consultations with governments, the private sector and independent experts. Independence and consensus-building during the analytic work are essential features of the IRI, and a key to facilitating the progress of reform.

Structured around the OECD Policy Framework for Investment, which incorporates good practices from OECD countries, the IRI goes beyond the typical components of investment policy (e.g. national treatment of FDI, network of bilateral investment protection treaties, investment incentives) and measures progress in the following policy fields:

• investment policy and promotion
• trade policy and facilitation
• human capital development
• the role of parliaments in economic reform
• access to finance
• tax policy and administration
• infrastructure for investment
• SME policy
  

The IRI methodology follows a series of carefully designed and executed phases:

• A first round of country missions is conducted to present and explain the IRI and to collect inititial information. In addition, a launch seminar is held, with policymakers from the region, in order to intrdouce the process and determine the fields of policy the analysis of which is considered of greatest importance.
• Detailed assessment frameworks are prepared in consultation with international experts, governments and experts from the SEE region, as well as staff from the OECD Secretariat. These frameworks systematise the collection and assessment of qualitative data (usually on institutional strengths and policy settings)and quantitative data (usually on policy outcomes). The qualitative indicators in the assessment frameworks use a scoring system of 1 to 5, with explicit criteria for each score: A score of 1 represents a situation of minimal policy development, while a score of 5 represents a situation equivalent to best practice in the OECD area.
• Governments conduct self-evaluations along all IRI policy dimensions using the assessment frameworks developed by the Investment Compact for South East Europe.
• At the same time, evaluations are performed in each country by independent experts, using the same assessment frameworks.
• A second round of country missions is organised to discuss the government and independent evaluations, and to reconcile divergences that sometimes exist between these two information sources.
• During this second round of country missions, structured focus group meetings are also held with private sector and foreign investor representative organisations, which provide their perspective on policy developments in each country.
• Follow-up questions are then sent to the governments of all participating countries.
• Country scores for each indicator in each assessment framework are finalised and draft texts are prepared. The texts go beyond describing how countries perform in terms of developing a conducive policy environment by providing numerous reviews of international best practice in policies and programmes identified as important to the SEE region.
• Draft texts are then submitted to governments with a view to verification of all factual data, as well as to a team of international experts for additional quality control.
• The evaluation is then finalised and published in a final report.

The IRI has several analytical benefits for governments, since it

• provides an overview of each country's performance on investment policy reform.
• allows policy benchmarking relative to peers in the region and to OECD best practice.
• supports the setting of policy priorities necessary to improve the investment environment.
• provides a rigorous and independent evidence base for donor organisations wishing too support the investment and growth agenda in the SEE region.
  

For further information on the Investment Reform Index, please contact Alistair Nolan, Executive Administrator of the Investment Compact for South East Europe, at alistair.nolan@oecd.org.