Economic Policy Reforms: Going for Growth 218 An opportunity that governments should not miss Buenos Aires, 19 March 218 http://www.oecd.org/eco/going-for-growth/ @OECDeconomy @OECD
Global growth is back to cruising speed Real GDP, year-on-year growth Per cent 9 8 7 6 5 4 3 2 1 9 8 7 6 5 4 3 2 1 23-7 211-15 216 217 218 219 23-7 211-15 216 217 218 219 23-7 211-15 World G2 Advanced G2 Emerging 216 217 218 219 Note: Average of annual growth rates for 23-7 and 211-15. OECD Projections for 218 and 219. Source: OECD, Interim Economic Outlook, March 218. 2
Jobs are being created Employment rate Japan Euro area United States Note: All persons aged 15-64 years. Source: OECD Short-Term Labour Market statistics; and OECD calculations. 3
More rapid job gains are benefiting all groups Employment rate Employment as % of population in the group (27=1) 14 15-24 year-olds 25-64 year-olds 12 Low skilled (below upper secondary education) High skilled (tertiary education) 1 98 96 94 92 9 88 86 14 12 1 98 96 94 92 9 88 86 84 27 28 29 21 211 212 213 214 215 216 84 Source: OECD Employment database. 4
But most people in many OECD countries have seen little or no income growth for a decade Household real disposable income OECD average Top 1% Median Bottom 1% Note: The OECD average is a simple average of the 17 OECD member countries for which data is available for the whole period. Source: OECD Income Distribution database; and OECD calculations. 5
Gross investment is coming back, but net investment is still weak Rising depreciation rates are holding down net investment in productive capital Investment as per cent of productive capital stock % A. Gross investment % B. Net investment 9 8 214-16 1997-7 9. 8. 214-16 1997-7 7 7. 6 6. 5 5. 4 4. 3 3. 2 2. 1 1.. -1 DEU FRA GBR ITA JPN USA -1. DEU FRA GBR ITA JPN USA Source: OECD Economic Outlook database; and OECD calculations. 6
The take-up in digital technologies is uneven Diffusion of selected ICT tools and activities in enterprises, OECD countries, 216 Median 1 1 8 8 6 6 4 4 2 2 Broadband E-purchases Cloud computing E-sales Big data RFID Note: Radio frequency identification (RFID) is a technology that enables contactless transmission of information via radio waves. RFID can be used for a wide range of purposes, including personal identification or access control, logistics, retail trade and process monitoring in manufacturing. For RFID, data refer to 214.
The widening productivity gap - particularly in digitally-intensive services Average of MFP across 2-digit sectors (log, 21=) ICT-intensive services Non ICT-intensive services 1. 1..8 Frontier firms Top 2%.8.6.4 Top 1%.6.4 Frontier firms Top 2%.2. Laggards.2. Laggards Top 1% -.2 -.2 Source: Andrews D., C. Criscuolo and P. Gal (216), The best versus the rest: the global productivity slowdown, divergence across firms and the role of public policies, OECD Productivity Working Papers No.5
Per cent 45 4 The pace of structural reform is modest Responsiveness rates to Going for Growth recommendations Fully coloured bars refer to the share of fully implemented reforms 45 4 35 3 In process of implementation In process of implementation 35 3 25 25 2 2 15 15 1 1 5 5 211-12 213-14 215-16 217 211-12 213-14 215-16 217 Note: The estimated rate of responsiveness is captured by the Going for Growth indicator of reform responsiveness. For 217, reforms in the process of implementation are included to ensure comparability with previous two-year periods. Emerging economies include Chile, Mexico, Turkey, Argentina, Brazil, China, Colombia, Costa Rica, Indonesia, India, Russia and South Africa. Advanced economies include all non-emerging OECD member countries and Lithuania. 9
The Going for Growth priority selection framework
3 broad categories of recommendations Firms Skills Workers Promote business dynamism and the diffusion of knowledge Unlock skills development and innovation capacity Help workers benefit from a fast-changing labour market Barriers to entry, competition, exit, trade and FDI, Structure and efficiency of the tax system, Legal and physical infrastructure Primary and secondary education Higher education and VET R&D policies A more inclusive labour market (gender, migrants, low-skilled, etc.) ALMPs and social benefits Labour mobility and health sector Labour market regulation
GfG 217 priorities to achieve strong, inclusive growth remain valid Going for Growth 217 reform recommendations Percentage 1 9 8 7 6 5 4 3 2 1 Skills Workers Firms 1 9 8 7 6 5 4 3 2 1
Workers Firms Skills 4% 1% 13% 1% 1% 24% 5% 11% 8% Reform progress is slow on education Reform intensity by area Share of implemented Going for Growth recommendations, selection of largest reform areas Fully implemented and in process of implementation Limited steps or no action taken Primary and secondary education Higher, vocational and training R&D and innovation Barriers to entry, competition, trade and FDI Tax structure Physical and legal infrastructure A more inclusive labour market (gender, minorities, migrants, low-skilled) Active labour market policies and Social benefits Regulation and organisation of the labour market 1 2 3 4 5 6 7 8 9 1 Note: share of recommendations in total recommendations presented on the left margin. 13
Some significant actions were taken (examples) Firms Promote business dynamism and the diffusion of knowledge Countries with significant actions taken (including in-progress) Tax structure Physical and legal infrastructure Barriers to entry, exit, competition, trade and FDI (small) measures in a large number of countries
Some significant actions were taken (examples) Skills Unlock skills development and innovation capacity Countries with significant actions taken (including in-progress) Primary and secondary education Higher education and vocational education and training (VET) (small) measures in a number of countries R&D policies (small) measures in a number of countries
Some significant actions were taken (examples) Workers Help workers benefit from a fast-changing labour market Countries with significant actions taken (including in-progress) A more inclusive labour market (gender, minorities, migrants, low-skilled ) Active labour market policies and social benefits, health and mobility GRC, ITA, CHN, GBP, FIN Regulation and organisation of the labour market (EPL, minimum wages, wage bargaining, taxation) FRA, KOR,
Reforming across several dimensions can bring synergies Actions taken across several areas of Going for Growth recommendations Fully implemented and partially implemented reforms, share of all countries (%) 45 4 35 Advanced economies Emerging economies 45 4 35 3 3 25 25 2 2 15 15 1 1 5 5 Skills & Workers & Firms Skills & Workers Firms & Workers Firms & Skills
Countries tend to reform across several areas At least one action taken on each recommendation category Fully implemented and partially implemented reforms, share of all countries (%)
OECD Going for Growth 218: Main findings Favourable economic conditions for reforms should not be wasted. In 217, the pace of reforms is modest in both advanced and emerging economies, but some bold actions have been taken. The intensity of reforms has varied across policy areas: In promoting business dynamism and knowledge diffusion ( firms ): several significant measures on infrastructure and taxes but less on barriers to entry, competition, exit and trade. Not much in boosting higher education and innovative capacity ( skills ), Significant reforms in helping workers to cope with potentially rapid changes in jobs and tasks ( workers ). A coherent reform strategy is crucial to reap synergies, manage trade-offs and ensure that the benefits are broadly shared over time.
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