Opening remarks by Angel Gurría, OECD Secretary-General, delivered at OECD Eurasia Week
25 November 2014, Paris, France
(As prepared for delivery)
Excellencies, Ministers, Ambassadors, Members of partner organisations, private sector representatives, ladies and gentlemen:
Welcome to the first OECD Eurasia Week 2015, a new broad platform to enhance regional cooperation and to further strengthen the relationship between the OECD and Eurasian countries. I am delighted to see so many key players from the public and business communities here today for a series of events focusing on how to enhance competitiveness in the region.
OECD-Eurasia cooperation started over a decade ago with the Eurasian Corporate Governance Roundtable, established in 2001 to share good practices on corporate governance and institution building.
Since then, our relationship has steadily gained strength through our joint work in the Anti-Corruption Network for Eastern Europe and Central Asia, the Global Relations and its Eurasia Competitiveness Roundtable, to name but a few. This week’s events provide us with an opportunity to deepen our cooperation and exchange lessons on our various initiatives in the region.
Eurasia: A land of great potential
We are here to support a very dynamic region. Since the break-up of the Soviet Union and the difficult transition of the early 1990s, countries in Eurasia have witnessed a major leap forward. Governments have advanced economic goals, including transitioning to a more open and competitive economies, and citizens are enjoying improved living standards.
Eurasian Countries have been able to take advantage of their great potential in terms of natural resources, a young literate population, and their location as the crossroads between Europe, China, Russia and Turkey. Between 1999 and 2011, the region’s GDP more than doubled, and poverty rates fell by one-half.
The region’s average growth rate during the global financial crisis remained relatively high: in 2013 the region’s growth rate of 4.5% was particularly impressive when compared to the OECD’s rate of 1.3%. Even today, Eurasia growth projections remain very encouraging, in the context of a sluggish global economy. Projected growth rates for the region at 4.1% in 2014 and 4.9% in 2015 are significantly above the projected global growth rates of 3.3% and 3.7%.
Governments in the region have followed a bold and determined reform agenda to diversify their economies, improve the business climate and attract foreign direct investment. In fact, between 1997 and 2013, net inflows of FDI to the region increased more than six-fold. These are remarkable achievements.
Major challenges remain
However, Eurasian countries continue to face important challenges on their path to inclusive and sustainable growth. First, regional disparities remain large. Today, about 82% of the economic output of Eurasia is produced in Azerbaijan, Belarus, Kazakhstan, Ukraine and Uzbekistan, which represent 64% of the region’s population.
In addition, although income inequality within countries has fallen significantly since the mid-1990s, and although the regional average income is comparable to that of OECD countries, wealth disparities remain high in many countries.
Third, the business environment remains relatively weak and corruption is still rife. According to the World Bank, countries in the region, with large variations, rank on average 91st on the Doing Business Index, compared to an average 27th rank for OECD member countries. On average, and again with large variations across countries, Eurasia still ranks in the bottom quarter of the Transparency International Corruption Perceptions Index.
Last, but not least, the region faces major environmental challenges, largely relating to water resource management, biodiversity and adaptation to climate change. Compliance remains the weakest link in environmental policy implementation, largely owing to insufficient institutional capacities and resources of environmental authorities. Effectively tackling these challenges will require concerted efforts by all the governments in the region.
Strengthening the foundations of inclusive and sustainable growth in Eurasia
In most countries of the region there is scope for a vast reform agenda.
Firstly, governments need to put in place policies to further integrate within the world economy. For resource-rich countries, moving up the value chain beyond extractive industries remains a challenge; while economic integration and strengthened linkages with Global Value Chains is a priority for the development of resource-poor countries.
Eurasian countries have made great efforts to liberalise trade and investment; however, reforms to improve export promotion infrastructure and financing mechanisms need to be accelerated. This is especially the case in the agricultural sector.
Governments must increase exports of agricultural raw products, but also provide more sophisticated goods and move up the value chain from farm to fork. Similarly, the services sector has significant growth potential, and the region could become better placed in the world market with better policies supporting the development of the sector including skills development.
Cross-border trade also remains largely inefficient and suffers from complex and non-transparent customs procedures and often severe blockages. OECD trade facilitation indicators may help governments improve border procedures, reduce trade costs, improve transparency and ultimately reap greater benefits from international trade and economic integration.
Secondly, income disparities remain an important challenge for sustainable growth and well-being throughout the region. It is therefore crucial to promote a comprehensive package of structural reforms that include adequate safety nets, more effective labour market policies, and measures to improve the match between the skills provided by the education and training system and those required by a changing economic environment.
A stronger emphasis on improving the quality of education is also needed.
Thirdly, efforts to build efficient and transparent institutions and procedures are paramount and must continue. The region is showing its commitment to tackling these issues: 12 Eurasian countries today actively participate in the OECD Anti-Corruption Network (ACN) for Eastern Europe and Central Asia.
However, wider governance reforms are necessary regarding the transparency and accountability of public administration, and the corporate governance of state owned enterprises, two areas in which the OECD carries in-depth analysis and has developed numerous guidelines and principles.
Ladies and gentlemen:
Today’s launch of this first OECD Eurasia Week marks a further important milestone in our work with the region. It provides us with a unique opportunity not only to explore different perspectives on the challenges facing the Eurasian countries, but to also identify the most effective policies and the most promising reforms to drive Eurasia forward and deliver better lives for its population.
I wish you an interesting week and productive discussions.