The financial crisis has taken a heavy toll on government finances and taxpayers are still footing the bill. Could private investors do more to help out? Mohamed El-Erian, CEO and co-CIO of PIMCO, believes they should. He explains to the OECD Observer.
The recent financial crisis has left a hole in the public finances of many countries. Yet, with the right preparation, governments may have been better placed to fund that gap. This holds lessons for future crisis resolution strategies.
In his first state of the union address on 30 January 1961, John F. Kennedy saw the newly formed OECD as an organisation that would “provide for the hopes for growth of the less developed lands.” The president expanded on this vision in this statement on the ratification of the OECD, issued on 23 March 1961.
It would be easy to think that the organisation created in 1961 was the inevitable next stage in the evolution of the OEEC, the European body originally set up to administer the Marshall Plan in 1947. But the OECD did not simply replace the OEEC. Nor was its creation inevitable or easy.
“To reform and to perform” is the goal of many a serious politician. It is not an easy task.
Synthetic biology has the potential to drive significant advances in biomedicine. But there are myriad scientific, social, commercial and legal issues, which policymakers have set out to address.
Did globalisation contribute to the economic crisis and if so how? This is one of several interesting questions asked in Measuring Globalisation: OECD Economic Globalisation Indicators 2010. In snapshot mode, this book looks at the financial crisis, trade, technology and multinational enterprises, and asks how these may have influenced the proliferation of the crisis, just as they helped spread prosperity and wealth in the first place.
As the OECD reaches 50, it must continue to become more relevant, useful and open within a new architecture of global governance, argues Angel Gurría, in this extract from remarks delivered following the renewal of his mandate as OECD secretary-general.*
Structural economic challenges and preparing for recovery were the dominant themes at this year’s Ministerial Council Meeting (27-28 May), under the chair of Italy’s prime minister, Silvio Berlusconi. Fiscal challenges, jobs, green growth, innovation, development, trade and investment, and societal progress all figured on the agenda. These highlights are based on the full conclusions, which can be read at www.oecd.org/mcm2010
Can greater use of information technology to manage whole healthcare systems help? The National Health Service Information Centre (NHS IC), England’s central, authoritative source of health and social care information for frontline decision makers, believes it can.
The healthcare sector rarely features prominently in trade policy. This is unfortunate, since the enormous differences in healthcare costs between countries imply that there are large potential gains from increased trade, writes economist Dean Baker.
That the health of citizens in OECD countries is improving is not in question. How sustainable healthcare systems are, however, is more of an issue. How can information technology help?
The cost of healthcare is on the rise, and with budgets tight, governments are anxious to contain expenditures. There is ample room for getting better value for money.
Remember New Labour? The election triumph of Tony Blair’s Labour Party in 1997 captivated the world.
According to the latest Economic Outlook, growth in the OECD will reach some 2.7% in 2010. But while the global economy may be out of intensive care, it remains very fragile, as underlined by market volatility, rising public debt and high unemployment. A key missing ingredient is confidence. What must be done to restore it?
The road from conflict to peace and from destruction to development is far from smooth. In fact, research shows that half of all countries that have been ravaged by conflict are at war again within a decade. Transition Financing: Building a Better Response, part of the OECD’s Conflict and Fragility series of books, examines how the international community can help countries move from resolving conflicts to a lasting peace, grounded in what the authors describe as “sustainable development”. It involves a transition to greater national ownership and a greater capacity to ensure public safety and welfare.
Growth is picking up in the OECD area–at different speeds across regions–and at a faster pace than expected in the previous Economic Outlook (November 2009). Strong growth in emerging-market economies is contributing significantly. However, risks to the global recovery could be higher now, given the speed and magnitude of capital inflows in emerging-market economies and instability in sovereign debt markets.
What has changed in the decade since former OECD experts Flip de Kam and Chiara Bronchi wrote one of this magazine’s most downloaded articles, “The income taxes people really pay”. There have been a few changes, though the need to look behind headline tax rates remains as true as ever.
As the world economy splutters back to life, policymakers have been focused on ending the jobs crisis. But despite the arsenal of policies aimed at assisting young people, the long-term unemployed and the unskilled, one of the most vulnerable groups of workers risks being forgotten.
Health spending rises; Round up; Soundbites; Benvenuto!; Economy; Food speculation question; Chinese flexibility welcomed; Slovenia joins the OECD; Plus ça change...
Praising the co-ordinated international actions in response to the economic crisis, International Labour Organization Director-General Juan Somavia, World Trade Organization Director-General Pascal Lamy, German Chancellor Angela Merkel, OECD Secretary-General Angel Gurría, World Bank President Robert B. Zoellick, International Monetary Fund Manager Director Dominique Strauss-Kahn (L-R in the photo) and issued a joint press statement on 28 April 2010 calling for continued “international efforts with the aim of ensuring a lasting recovery in the financial sector and strengthening growth in the long term, and to address the impact of the crisis on poor countries and vulnerable populations”.
Innovation can bring benefits, but possible risks too. The emergence of nanotechnology, which manipulates barely visible materials for industrial purposes, is a case in point, and policymakers are taking a close look.
Can a durable recovery come from greener growth? That largely depends on the policies. In 2011 the OECD will deliver its Green Growth Strategy. Here are some early pointers.
The best intentions in the world will not be enough to undo the damage done by the global economic crisis to the hopes of fully achieving the Millennium Development Goals by 2015. With just five years left to that target date, the 2010 edition of the OECD’s Development Co-operation Report alerts readers to the probable shortfalls in aid expected in 2010, as compared with commitments made in 2005 at the Gleneagles G8 and UN Millennium +5 summits. Since the report was published, new OECD data estimate a shortfall of $18 billion in 2010 compared with the 2005 pledges, largely because of reductions in gross national income among donor countries. Africa will be most affected, because some European donors who give large shares of their official development assistance to that continent will not meet their ambitious targets.
According to European Union data, around 20% of jobs in Europe are either in the information and communication technology sector or require skills in that field. How prepared are today’s students for living and working in a digital world? The OECD’s New Millennium Learners project explores what drives students to use computers, and how computer use affects education performance. Its study, Are the New Millennium Learners Making the Grade? Technology Use and Educational Performance in PISA, shows that there is not a simple correlation between using computers and doing well in school. Rather, there is evidence of a second “digital divide” emerging–not between students who do and don’t have computers, but between those students who have the skills to benefit from computer use and those who don’t.
In 2004, net exports of fish reeled in more than $20 billion to developing countries– nearly four times more than coffee exports and nearly ten times more than tea exports. According to the UN Food and Agriculture Organization (FAO), that same year, fish provided more than 2.6 billion people around the world with at least 20% of their average per capita animal protein intake. As Globalisation in Fisheries and Aquaculture: Opportunities and Challenges makes clear, only through international co-operation will these vast and crucial industries be saved from their own success.
A global crisis of long-term unemployment is looming. How can public-private partnerships help?
Why is innovation so important for growth and what can governments do to improve it? The OECD has been working on this question for several years and is delivering a comprehensive perspective, the OECD Innovation Strategy, to governments from around the world at the OECD Ministerial Council Meeting on 27-28 May. Here are some highlights.
Innovation is not just about new gadgets, but also about using old technologies in new and improved ways. Sails are a case in point, as SkySails GmbH & Co. KG explains.
Innovation in organisation and management will be needed if sectors are to adjust to new, oil-challenged realities. Supply chains will evolve as a result, notably in transport.
“The Red Arrow”, a poem by Paul Durcan, an Irish poet, opens with the line “In the history of transport–is there any other?” Anyone looking at innovation in transport would do well to consider this line. Is history really the history of transport, more than, say, the history of wars and kings, as some would have it? It is a tempting proposition.
The tax system can be a powerful policy instrument for spurring innovation. Here is how.
Companies and non-governmental organisations are forging new types of relationships. Do they really work for the benefit of both?
Financial literacy might not help ordinary people outsmart Wall Street professionals, but it can help people manage their funds.
Despite signs of recovery, make no mistake: this crisis is far from over. We are in the midst of the most serious jobs crisis since the Great Depression and the economic recovery is still very weak and fragile.
As we are now beginning to see the signs of a fragile recovery, the 2010 Forum will emphasise the role that innovation must play in the future of the transport sector. Decision-makers, experts and practitioners from all modes will consider the transport systems of tomorrow, the barriers that must be overcome to get there, and the innovative technologies, policies and collaborations needed for success.
The Caisse des Dépôts, a publicly-led longterm investment group, which has entered a partnership with the OECD focusing on the role of long-term investors, has founded, together with three other European public financial institutions–Cassa Depositi e Prestiti, KfW Bankengruppe and the European Investment Bank–the Long-Term Investors Club. What is it all about?
Unemployment has risen sharply during the recession, and young people have been particularly hard hit. Even in good times, unemployment among 15-to-24-year-olds can be two to three times that of adults, but youth unemployment has increased much more rapidly during the crisis. In Germany, which has a successful apprenticeship programme, young people are now one and half times more likely to be unemployed than prime age workers, while in Sweden their risk is four times greater.
The OECD has developed new guidelines to help make lobbying more transparent and even-handed.
There have been major successes since the OECD’s Anti-Bribery Convention entered into force. But it will take a lot more to clean up unfair business practices.
Rumours of capitalism’s demise may be premature. The question now is: what kind of capitalist system will emerge from the current crisis?
Current theories of portfolio management are at odds with the wellbeing of citizens. Only government policy can address this.
The recent economic meltdown was at root not a failure of character or competence, but a failure of ideas.
One of the side-effects of the global crisis has been a temporary narrowing of current account imbalances among the world’s major countries and economic areas. This is good news, but will it last? Policy actions may be needed.
Is policy sowing the seeds of the next crisis? There is a danger that it is. Imbalances in particular must be tackled.
One of the difficult challenges for governments facing a crisis is to keep an eye on the wider picture. This is particularly true in OECD countries today, as they fight down unusually wide fiscal deficits and heavy debt. These problems are a sequel to the financial crisis that started in 2008. Now, most countries, from the largest to the smallest, have to make new sacrifices. People are understandably angry, feeling they are not responsible for the current situation.
As an OECD “veteran”, I was delighted to see that “human progress” is now on the OECD agenda (see www.oecd.org/progress). If you compare the OECD strategy to emerge from the oil-shock recessions of the 1970s (the McCracken Report) to the OECD Strategic Response to the Financial and Economic Crisis of today, you can see that in three decades the OECD has been transformed.
As biofuel production grew fourfold from 2000 to 2008, criticism of the industry seemed to increase nearly as dramatically. Production of these transport fuels, which are based on food crops such as grains, sugar cane and vegetable oils, competes with food crops and drives up food prices, experts argue. Also, from land-clearance needed for cultivation, production and use, these biofuels may actually increase, rather than reduce, greenhouse gas emissions.
