OECD Forum 2015 - Investing in the Future: People, Planet, Prosperity
Opening Remarks by Angel Gurría
Paris, 2 June 2015
(As prepared for delivery)
Dear Minister Royal, Madame Clark, Ministers, Ambassadors, Ladies and Gentlemen:
Welcome to the 2015 OECD Forum. Welcome to the OECD Week. As every year, the OECD gathers a unique blend of creative minds, decision-makers and experts from all walks of life, to find the solutions to pressing global challenges.
This year we are plunging into the epicentre of economic activity and human progress: investment. Almost seven years have passed since the beginning of this crisis, and global investment is still weak and hesitant. In one of the greatest paradoxes of modern economic times, we have some of the lowest interest rates in history, while SMEs face difficulties to access finance. Corporations are sitting on trillions of dollars of liquidity, shied by what they find is an uncertain economic environment, while financial investors seem oblivious to risk, eagerly searching for ever higher yields. The evidence is sobering: flows of fixed investment in OECD countries are still well below their pre-crisis level; in the Euro area it stands 17% below the early 2008 level. Global foreign direct investment inflows have also been shrinking: after contracting in 2012, they were practically flat in 2013, and declined again in 2014.
2 June 2015 - OECD Secretary-General Angel Gurría at the opening session of the OECD Forum 2015, "Investing in the Future: People, Planet, Prosperity"
Photo: OECD/Julien Daniel
Let me put it bluntly: we need to fix this broken engine to leave the crisis behind. Stronger investment is important not only to sustain the cyclical recovery but also to raise productivity. That’s why we are here today. We need an internationally coordinated strategy to revive investment. We need to change our investment practices to build a brighter future. We need to focus our investments in the three Ps of human progress: People, Planet and Prosperity.
This time we need to facilitate investments that focus on people. After seven years of crisis, more than 200 million people remain unemployed globally (30 million more than before the crisis), while inequalities are reaching record levels. According to our recent study on inequality, “In It Together”, the average income of the richest 10% (in OECD countries) now represents nearly 10 times the average income of the poorest 10%. It was 7 to 8 times a generation ago. This inequality has become a serious obstacle for growth. It is also creating a power failure in our democratic systems, with public trust eroding day by day. It’s time to foster investments that create decent and well paid jobs, that help the young upgrade their skills, that promote gender equality and multiply opportunities for the many.
This time we need to promote investments that focus on the planet. We are on a collision course with nature. Our economies have imposed a heavy toll on the environment. Climate change is now breaking the delicate equilibrium of nature, threatening our health, our prosperity and our social stability. The rate of biodiversity loss through the extinction of species has accelerated by at least 100 times due to human activity. Every year we throw 20 million tonnes of plastic in the oceans with disastrous consequences to many species and human health. Our new investments cannot ignore this environmental mess!
This time we need to foster investments that focus on prosperity. We need to build more intelligent frameworks and incentives that stimulate stronger innovation and higher productivity. But we also need to extend the benefits of technological progress to all, so as to promote social inclusion and wellbeing. Our innovation capacity now offers promising solutions to huge global challenges, from poverty to climate change, from health to food security, skills development and employment. But we need to align our innovation policies so that investments flow towards activities that create human prosperity. As Professor Tim Jackson put it: “for human beings to flourish, to achieve greater social cohesion, to find higher levels of wellbeing and yet still to reduce their material impact on the environment”.
The challenge is how to trigger this new wave of badly needed investments. It is about building the necessary frameworks and the right incentives: designing predictable and stable regulatory environments; scrapping restrictive product market regulations and barriers to trade and investment; strengthening public equity markets and making our financial systems more resilient and supportive of real economic activity; providing the best possible R&D facilities; promoting competition in key network industries and in financial services; improving financial literacy among SMEs.
It is also essential to focus on sectors that need long term investment, like green infrastructure. Institutional investors are a powerful source of long term investment: by the end of 2013 they managed close to 57 trillion dollars of total assets ―the equivalent to 120% of the GDP of the whole OECD. We also need sound governance frameworks, with effective and transparent public procurement systems, competent regulatory authorities, adherence to the rule of law and a high quality judiciary system, and public sector efficiency and accountability.
Promoting a new wave of investments based on a new set of values like social inclusion and sustainability will demand a set of innovative policies. The 2015 OECD Policy Framework for Investment (PFI), which we will launch and promote among our Ministers during this week, provides a comprehensive checklist of key policy issues to help governments create an enabling environment for investments.
But going beyond traditional tools will also demand a revision of the existing concepts and theories at our faculties of economics; it will also demand a deep and critical revision of the role and curricula of business schools and MBAs. And it will require a constant revision and improvement in the economic awareness of international organisations, like we are doing at OECD with our New Approaches to Economic Challenges (NAEC) initiative.
We very much expect that this Forum becomes a launching platform for these efforts. You will be discussing key issues, like the social and environmental impact of investment and its relation to inequality, the potential of the sharing economy, the new production revolution, diversity in cities, education and jobs, health and innovation, the opportunities of the COP 21 and the Sustainable Development Goals, to mention just a few items. This is our chance to influence policy!
Ladies and Gentlemen:
It’s time to create “the next economy”. We need to imagine the new logics, the new systems, the new regulations, incentives and policy frameworks of a more human and dignifying economic model. A new economic model where the extinction of animal species is replaced by the extinction of youth unemployment; where the dismantling of governments is replaced by the dismantling of conflict of interest and corruption; where the ultimate goal is to multiply opportunities for inclusion, and the role of investment is valued as the DNA of our future.
I invite you to be creative and bold. I invite you to partner with the OECD to build a brighter future, designing, developing and delivering, together, better policies for better lives.