Remarks by Angel Gurría,
Beijing, 24 July 2016
(As prepared for delivery)
Minister Lou, Vice-Ministers, Ladies and Gentlemen,
It is a real pleasure to join you today in discussing one of the most important initiatives of the OECD, the "New Approaches to Economic Challenges - OLD" (NAEC). We undertook this initiative in response to the financial crisis, with the purpose of doing some soul-searching, learning from the past, and updating our analytical frameworks in order to address the present and, above all, the future.
We now realise that "business as usual" is not an option, and that we have to transform our way of thinking and acting with respect to the economy. We are here today because we also accept that to do that we need to deepen our dialogue with others on the challenges that we all share.
In an ever-changing, complex and fragile global economy, it is essential that we work together to better understand policy linkages, spillovers, trade-offs.
For the OECD, China is an indispensable partner in this exercise and I would like to thank Minister Lou and the Ministry of Finance for organising this event. It is another milestone in our ever-expanding co-operation following the agreement of our memorandum of understanding (MoU) in March 2015.
The crisis has been with us for seven years now, and a robust recovery remains elusive. We are stuck in a “low-growth trap” involving a cycle where diminished expectations become self-fulfilling. The drivers of rising prosperity remain subdued: investment, trade and productivity.
For several years, OECD countries were buoyed by strong emerging markets like China. Today, those markets too are facing tougher times. Though China escaped the worst consequences of the crisis, new challenges are emerging in efforts to transition to a more technologically innovative, environmentally sustainable and socially inclusive growth model.
We hope that today’s discussions will contribute to these efforts. Because it is becoming abundantly clear that we all need a new growth model based on coherent policies. Growth is a means to an end – not an end in itself. Even before the crisis, economic, financial, environmental and social imbalances already showed that we were heading in the wrong direction.
In particular the convergence of two mega-trends – slowing productivity growth and rising inequalities - is creating a vicious cycle where individuals with fewer skills and poorer access to opportunities tend to operate in precarious jobs, often in the informal economy. This reduces aggregate productivity, widens inequality, and in turn undermines efforts to enhance growth.
Traditional approaches did not analyse these issues in an interlinked way and failed to appreciate the connections. People do not want "more of the same". They want a new start; they want new approaches to economic challenges. Thus, it is time to develop new concepts, new approaches, based on a broader examination of the complex inter-relations between productivity and inequality: what we call "the Nexus".
One of the major results of NAEC has been to place inclusive growth at the heart of our activity – a new type of growth, focused on people's well-being and the planet's sustainability, and one that will require us to change our mindsets, our approaches and ultimately our economies. With this approach, we have taken a hard look at the suite of structural policies, fiscal consolidation strategies and tax policy design to make sure they promote not just productivity gains and economic growth but also greater equity and job creation.
The OECD’s Ministerial meeting this June focused on the “Productivity-Inclusiveness Nexus”, the central message of which was a call for policy makers to adopt a broader, more inclusive approach to productivity growth; one that considers how to expand the productive assets of an economy by investing in the skills of its people; one that provides a level playing field for firms to compete, including in lagging regions.
The Nexus highlighted the importance of combining structural reforms - aimed at unlocking competition and innovation - with policies that gives the opportunity to everyone to share in their benefits.
This new approach to productivity must also be sustainable and respectful of the environment, ensuring that "green" and "growth" go hand-in-hand. The Agreement at the Paris Climate Conference (COP21) offers an historic opportunity to shift the course of history to decarbonise our economies and reverse climate change.
Crucially, through NAEC, we have learned that environmental policy stringency and green tape need not undermine productivity. What’s more, using natural resources more efficiently and cutting waste will enhance productivity and competitiveness. But we need to improve our data on the stocks of natural capital and place value on eco-system services, and make them part of the productivity discussion.
We commend China’s leadership in the G20 on greening the financial sector and greening growth which is so crucial in sending the right policy and market signals. Significant innovation in financing models coupled with policy support have increased investment in renewable energy to an all-time high of USD 286 billion in 2015 with innovative equity financing in OECD countries, and strong green bond issuance in China.
We must keep the focus on green growth and how to shift to a low-carbon economy. Moreover, we must ensure that this transition does not further increase inequalities, but rather creates opportunities for all.
Through NAEC, we are reviewing models and concepts, seeking new solutions that will not only be feasible and realistic but will also take account of the complex and multidimensional nature of public policies. Working through our Strategic Foresight team we are also discussing future scenarios for identifying potential challenges and determining whether we have the capacity to address them.
These efforts are thus helping the OECD to prepare its members and key partners to meet the Sustainable Development Goals (SDGs) by developing integrated analysis and policy advice for tackling an ambitious set of interlinked goals, as part of a forward-looking transformational agenda.
Together, we need to find new ways of addressing our current challenges through new growth models needed to seize the opportunities that the future offers us. With the ideas and the tools emerging from the NAEC initiative, and with your help today, we hope to continue our progress on the design, development, and implementation of better policies for better lives.