OECD countries need growth if they are to emerge from the crisis and create jobs. But where will that growth come from? Also, with challenges such as climate change and global development, how can cleaner, smarter economic activity be unleashed? Answering these questions may help us plot a path out of the crisis and build a safer future.
For more than two decades, the world’s economic growth and development was largely fuelled by globalisation–the opening up of financial and product markets, and the integration into the world economy of the emergence of economies such as China, India and Brazil. This process was hit by an earthquake with the global financial crisis of 2008, an event which some have dubbed the “first crisis of globalisation”.
A heated debate between Princeton University economist Paul Krugman and Harvard economic historian Niall Ferguson was a highlight of the 11th World Knowledge Forum*–held in Seoul, Korea from 12-14 October–and among the conference’s most attended sessions.
Public debt in the OECD area is fast approaching 100% of GDP, as the financial and economic crisis badly deteriorated government budgets. A concerted move towards more balanced budgets is needed, while preparing the ground for economic growth.
How can governments restore public finances and promote sound economic growth at the same time? With budget deficits stretched and public debt at historical highs, it will not be easy. But the OECD believes that with the right mix of policies much progress can be made.
Chile and Latin America are at a historic crossroads. For Chile’s president, Sebastián Piñera, today’s new revolution in knowledge, technology and information will benefit only those countries that embrace it, but could be cruel to those who let it pass them by.
What is the state of world economy as we enter 2011? Have we made progress over the past 12 to 18 months in putting an end to the worst economic crisis in our lifetimes and laying the foundations for a stronger, cleaner and fairer world?
Governments and central banks managed to avoid a global economic catastrophe, but the crisis has left a legacy of nearly bankrupt governments. A quick return to solvency is required.
An update of the OECD’s Guidelines for Multinational Enterprises is due in 2011. The changes will include stronger guidance for businesses on preventing human rights abuses, both in their own operations and in those of suppliers.
Pensions are a major component of public expenditure, and a target for governments looking to streamline budgets. What are countries doing to manage costs at a time when populations are ageing at an accelerated pace?
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.
Slower activity ahead?; Economy; Soundbites; Roundup; Corruption work praised; iLibrary launched; Israel joins the OECD; Secretary-General reappointed; Plus ça change...
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.*
When Chile became the first South American country to join the OECD in 2010, the event was greeted as a seal on years of progress, not to mention hard work. Still, challenges remain, including in the fight against poverty, as Minister of Planning Felipe Kast explains in this interview with the OECD Observer.
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
In the aftermath of the financial crisis, one question is how to balance the short-term pressure on the health budgets with the long-term obligations to deliver ever better health services to the public. Striking the right balance is not an easy task.
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.
With austerity the order of the day in most OECD countries, the public is understandably anxious that budget cuts do as little harm as possible to the services they depend on. Few sectors capture the dilemmas this poses for policymakers quite like healthcare.
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?
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.
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”.
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.
House prices in many OECD countries rose for more than a decade from the mid- 1990s–an unusually long and steep climb. Previously, booms typically lasted for about six years and house prices rose by about 45%; by contrast, the recent boom went on for twice as long and prices increased by an average of 120%.
Anyone who doubts that policy can spur innovation should look at the Kyoto Protocol. After it was adopted in 1997, the number of patents for certain technologies used to mitigate climate change climbed worldwide. In fact, just six years later, the number of patents on wind technologies had grown more than five-fold, and those on solar photovoltaic and hydro/marine technologies had more than doubled. The number of new patents for other climate change mitigation technologies, such as carbon capture, biofuels and geothermal energy also rose, though at a rate that was not much faster than the increase for patents in general over the same period.
“Special drawing rights”, a little-known quasi-currency, are important for developing countries and could become one of the world’s reserve monies.
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 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.
If the transport sector is to make deep cuts in carbon emissions, the carbonintensity of travel must be reduced. For that, policy analysis has to be based on how world markets actually function, and that means understanding what consumers look for when deciding to buy a vehicle, and what drives manufacturers’ decisions too.
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.
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?
Countries must quickly agree new financial rules to boost bank lending and strengthen the global economic recovery, said OECD Secretary-General Angel Gurría at a conference in Berlin.
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.
Chile has become the 31st member of the OECD this May and the first from South America. The country joins the organisation during a time of uncertainty both globally and at home, as the shock of February’s tragic earthquake still reverberates. Chile’s finance minister, Felipe Larraín, shares some thoughts on that disaster and the country’s recovery programme
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.
Biotechnology has steadily evolved to become a potential motor of environmentally sustainable production and a proven source of a diverse range of innovations in agriculture, industry and medicine. Could we be at the dawn of a new bioeconomy? Public policies will influence the answer.
The deep scars of the crisis can be relieved through appropriate policy action, particularly in competition, jobs, taxes and financial services. This would bolster long-term growth too.
Now for sustaining growth–; –as China sets the pace; Greening Greece; Soundbites; Economy; Aid shortfall; Chile's new president; Tax watch; Plus ça change...
Spring is finally in the air for most OECD countries, as the signs of recovery start to multiply. The recession has been long and hard, so this is reassuring news. But while the worst of the crisis may be behind us, the recovery remains fragile, and there are still many policy challenges to address.
