9 April 2014, Tokyo, Japan
Dear Mr. Kihara-san, Mr. Sugita-san and Mr. Iwata-san, Ladies and Gentlemen,
We are here today to celebrate the golden jubilee of Japan’s membership of the OECD. I spoke a little earlier about the great transformation Japan has undergone during those past 50 years and the mutual benefits we have derived from our strong bilateral relationship. But this event, and this morning’s discussion, is as much about the future as it is about the past
Future-gazing - OECD@100:Economic Policies for a Shifting World
Just as the Japanese and global economies have been transformed over the past 50 years, so we can expect them to be transformed over the coming 50. Right now, policymakers are understandably focused on addressing the immediate legacies of the global financial crisis, an economic depression the likes of which we haven’t seen in nearly a Century. But the global economic landscape is also characterised by a number of “mega-trends” that pre-date the crisis and which will continue to shape it long into the future.
Wealth has been shifting away from the advanced economies; the middle class has been expanding in emerging economies; our societies are ageing and becoming more unequal; technological change is revolutionising the way we do business and interact with each-other; the climate is changing and rising temperatures pose new risks.
These are some of the broad trends that we have been trying to model at the OECD, and next month we will present to our Ministerial Council Meeting, or MCM, chaired by Japan, a new report: OECD@100:Economic Policies for a Shifting World. I would like to give you a sneak preview of some of the key forecasts which give us pause for thought:
Between 2012 and 2060, the share of today’s non-OECD countries in global GDP will increase from 45% to 69%.
Global growth will slow from a rate of 3.4% during the 1996-2010 period to 2.8% between 2010-2060.
As high-skilled work becomes better rewarded, earnings inequality is set to increase across the OECD by between 20-40%, with Japan among the most affected.
Climate change is set to negatively impact on GDP, which could be between 0.7% and 2.5% lower by 2060. The impact in South and South-East Asia could be as high as 5%!
Achieving a ‘NAEC State-of-mind’
These central scenarios arising from the OECD@100 modelling exercise don’t make for pleasant reading. The important question is ‘what can we do about it?’
Some of these global trends are interconnected, giving rise to new challenges which can in turn feed into and accelerate the underlying trends. This means that countries must adopt a multi-dimensional approach to economic, social and environmental challenges. They need to take into account trade-offs, and exploit synergies and complementarities between policy objectives with the aim of making our economies more resilient.
Indeed, it is precisely with a view to supporting such a comprehensive, multi-dimensional approach to policy-making that the OECD launched in 2012 the New Approaches to Economic Challenges (NAEC) Initiative. I would like to take this opportunity to reiterate my gratitude to the Japanese government for their support for, and championing of, NAEC since its inception. We look forward to presenting the Initiative’s first results next month in a Synthesis Report at our MCM under the Chairmanship of Japan.
Ultimately, we envisage NAEC becoming an organisational concept that will permeate every aspect of the OECD’s work, allowing us to better provide ‘whole-of-OECD’ policy advice, to mainstream new knowledge, to identify policy trade-offs and maximise potential synergies.
Ladies and Gentlemen,
We face profound challenges in the years ahead, not only to address the legacies of the recent financial crisis but also to confront the major underlying trends in the global economy. I look forward to hearing your views on how to address the most critical policy challenges of the next half century, and on what we can do to shape our future by working together towards ‘better policies for better lives’.