Long abstract

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The past year has underlined the importance of international co-operation in
a fast-changing global economy. OECD members have worked together to
improve corporate governance and restore confidence in markets. They have
also completed three years of work on making the health systems that
underpin our societies as efficient as possible, as well as taking stock of progress
in combating environmental damage and defining areas for future action.
Many challenges remain that call for international co-operation, not least
those of meeting the ambitious goals for the developing world set by the
Enabling growth
After a lengthy period of fits and starts, OECD-wide economic recovery finally
took hold in the second half of 2003 and appeared poised to strengthen in
the near term. But this encouraging scenario is not guaranteed. All large
OECD countries are now suffering from historically wide public deficits,
which could have an impact on the recovery. The persistence of very large
current account imbalances at this early stage of the recovery also
It is not enough to create the conditions to promote growth. The rapid ageing
of populations in OECD countries will create a mounting burden associated
with increased pension and healthcare costs. Governments must take
advantage of the economic upswing to restore the sustainability of public
finances. Ageing will also cause a marked slowdown in economic growth –
unless policies change. Part of the solution will be to increase employment
rates in OECD countries. OECD employment ministers met in 2003 to consider
ways to create More and Better Jobs, particularly for the low-skilled and older
Rebuilding trust
Market capitalism depends on a high degree of trust. Governments have
been taking steps to restore the trust in market institutions that had been
shaken by corporate scandals that caused major losses for investors. At the
OECD, governments have worked together, and with business, labour and
civil society, to strengthen the OECD Principles of Corporate Governance.
Technology increasingly underpins our economies and societies and has
been shown to be a key element in helping companies to innovate. Trust is
important here too. Science is moving fast and governments must keep
pace, with information, consultation and appropriate regulation to ensure
public acceptance of new technologies. Consumers’ appetite for information
technology is strong, but they want to be sure that their privacy is protected
when they shop online or surf the Internet. OECD governments, working
with representatives of manufacturers, business and consumers, agreed
in 2003 on guidelines for preserving online security and looked at ways to
control spam – or unsolicited e-mail.
Citizens also need to be able to trust their governments and the public sector
administrations that implement their policies. OECD governments in 2003
agreed on guidelines to guard against conflict of interest in the public sector,
an important factor in ensuring citizens’ confidence.
Safeguarding social cohesion
Increasing employment is a priority for OECD countries, both for reasons of
economic growth and as one of the principal means to sustain social cohesion,
especially in the face of ageing populations. Changing demographics will also
put further pressure on health spending. The OECD is now completing a
three-year Health Project looking at how governments can provide access to
high quality care for all as efficiently and cost-effectively as possible. Spending
on healthcare is rising steeply as health technology improves and demand
for care grows. But OECD countries spend widely differing amounts and
achieve strikingly different results. This has proved to be a field where there
is great potential to learn from the good practices of others.
Making development sustainable
The disappointing result of multilateral trade negotiations in Cancún (Mexico)
was a setback for all trading nations. The countries that had the most to lose
from delays in completing the Doha Development Agenda are developing
countries who have yet to become well-integrated in the multilateral trading
system. If OECD countries were to open up their agricultural markets, the
annual welfare gains to developing countries are estimated at more than
USD 100 billion. Emerging and developing countries would also benefit greatly
from opening to trade. The OECD produces substantial analysis of the benefits
of trade liberalisation. But opening markets alone does not bring development,
which requires a broad range of institutions and policies. The OECD is working
with developing countries and other international organisations to help
develop this institutional infrastructure.
Flexibility and reform
In a rapidly changing globalised economy, the role of the OECD is changing
too. The Organisation is continuing to reform its management, including
difficult issues such as burden sharing of the OECD budget, rules on decisionmaking
and how to respond to pressures to enlarge the OECD membership.
All these efforts are directed towards making the OECD a more effective
instrument of international co-operation.