Remarks by Angel Gurría
Buenos Aires, Argentina - 19 March 2018
(As prepared for delivery)
Dear Minister, Ladies and Gentlemen,
It is a great pleasure to present the 2018 issue of Going for Growth here in Buenos Aires, [as it has become a tradition] on the occasion of the meeting of G20 Finance Ministers and Central Bank Governors.
Going for Growth is the OECD’s flagship report on structural policies. Its prime purpose is to help policymakers setting reform agendas for the wellbeing of their citizens. It is instrumental in supporting G20 countries in their efforts to achieve strong, sustainable balanced and inclusive growth.
Comprehensive reforms are needed to sustain growth beyond the cyclical upswing
This year’s report comes out at a time when all the major regions of the world are enjoying a widespread and largely synchronised up-swing. The more rapid decline in unemployment seen in recent months is clearly encouraging but there have yet to be clear signs that the improving labour market is translating into significant and broadly-based wage gains for workers.
If we want to sustain growth beyond the cyclical upswing, boost investment and productivity, create more and better paying jobs, improve opportunities and strengthen inclusion, we need comprehensive structural reforms.
Some bold actions have been taken but overall the pace of reforms remains slow
Unfortunately, we see little signs of an imminent pick-up in the pace of reforms. If anything, the review of actions taken on structural policy priorities reported in this year’s Report points to a further slowdown from the already modest pace observed in the previous two years.
Some countries have managed to introduce significant reforms: these include the labour market in France; access to childcare services in Japan; the goods and services tax in India; and the comprehensive tax reform that your government has just passed, Minister, counts among the major reform achievements we document in the Report.
But overall, significant reforms across G20 countries have been too few to boost productivity and lay the groundwork for their economies to make the most of the digital transformation.
Lifting the growth bottlenecks requires stronger investment
Business investment is finally gathering momentum but it remains weak in light of past expansions. Also, investment in digital technologies varies greatly across countries and firms, contributing to a growing gap between best-performing firms and lagging ones. According to data from the OECD Science, Technology and Industry Scoreboard, most firms with at least 10 employees have access to broadband connections, but only one-in-five use cloud computing and even fewer use big data.
Creating a more competitive business environment is one way to encourage firms to invest. This means lowering regulatory obstacles to firm entry, but also to foreign direct investment.
In many countries, insolvency regimes also need to be reformed to facilitate the orderly exit or restructuring of unsuccessful firms. One chapter of the Report presents new OECD indicators of insolvency regimes across countries, laying out and comparing the main design features.
Taxation is another area where governments can act to raise private incentives to invest. Most countries have ample scope for tax reforms that can reconcile growth and inclusiveness by broadening tax bases, eliminating loopholes, not least those that mostly benefit better-off individuals, and by relying on revenues from immovable property and inheritance taxes. Internationally, progress continues to be made to limit tax avoidance by multinationals through the BEPS action plan elaborated under the auspices of the G20 and the OECD.
A favourable outlook is no time for complacency
Ladies and gentlemen, Going for Growth provides policy priorities and recommendations to unlock skills development and innovation capacity, to promote business dynamism and the diffusion of knowledge, and to help workers benefit from a fast-changing labour market. The return of higher global growth offers a window of opportunity to make renewed progress on structural reforms, with much better chances that they bear fruit more rapidly. We urge G20 Ministers, who are meeting here today and tomorrow, to seize the opportunity.