Getting globalisation right through improved policy coherence

Statement made by Angel Gurría, OECD Secretary-General
Discussion at the invitation of Chancellor Angela Merkel
“Fair overall conditions for a social and open global economy”
Berlin, 19 December 2007
 

Dear Chancellor Merkel, Dear friends, 

It is a pleasure to join you in this meeting. Thank you, Chancellor Merkel, for creating this opportunity, and thank you for your leadership. Congratulations on a very successful German Presidency of the G8 and the European Council, which culminated in a treaty for the Europe of the XXIst Century. The issue you have asked me to address lies at the heart of effective global governance. The need to provide coherent solutions to pressing global challenges calls for the involvement of many levels of government and society and of a wide range of institutions.  If this process is well managed, particularly at the level of international institutions, our messages will be better accepted and our impact will be greater.

With different perspectives, methods of work and constituencies, international institutions look at different aspects of globalisation.

At the OECD we are proud that many countries find our contributions relevant, as we provide a space where policies are determined by dialogue, where advice comes not only from experts but from peers, where the fine tuning of policies is based on best practices and not on doctrine. Peer pressure, a key instrument of our work, has shown to be a powerful trigger for change. This is all the more important as we develop a common understanding of the issues involved before addressing major challenges.

We are also proud to witness that international institutions can collaborate effectively. For example, we have just had an excellent session where Pascal brought us together on aid for trade. The ILO and the OECD are examining the social dimensions of globalisation, monitoring the labour laws and industrial relations, and further developing core labour and social responsibility standards. 

With the WHO we work on the economics of health and provide comparative analysis on the performance of health systems. In the just finished Bali Conference, our work of twenty years on the economics of climate change in support of UN agencies was acknowledged. Recently, we received a mandate to work on investment protectionism and on certain aspects of the emergence of Sovereign Wealth Funds, and to share our conclusions with the IMF and the World Bank. On education performance  we collaborate closely with UNESCO through PISA and other instruments. On support to fragile states we do this with the UNDP through the PDG. With the World Bank, we have just renewed our cooperation framework to address issues of climate change, innovation and growth, among others, beyond our usual co-operation in the fight against poverty through DAC. Under the initiative of the UN Secretary-General, several organisations were invited to form a group to monitor progress on the MDGs.

This form of cooperation, on an issue by issue basis, works well. It would be difficult to think of a “grand design” of international cooperation given our different constituencies, organisational interests and mandates. So it is not about “turf” but about whether the issues themselves are being well addressed. There are four main questions we need to answer: Are we are cooperating enough to ensure coherence in the political management of globalisation? Is the existing international governance infrastructure itself sufficient to deal with the multifaceted challenges we face? Does it appropriately reflect the new economic realities in the global economy? And how do we ensure that we address the right issues?

Globalisation is challenging us with new issues and problems. We are covering a lot of ground through our respective organisations but some issues still risk falling through the cracks of the global governance system, because they emerge so rapidly and because they touch on so many dimensions. Let me give you just one example: international migration. This is an extremely complex global challenge that has strong implications for growth and development and affects countries in very different ways. The institutions present here today look at it from different angles (remittances, integration policies, its role vis-à-vis ageing of population). But we do not yet have a comprehensive approach that could lead to more effective action.

As Robert Keohane from Princeton University recently wrote to me: to make a difference to the world, international institutions must be relevant (meaning that their member countries support them and heed their advice); must demonstrate efficacy (perform valuable functions for the State) and must be legitimate, that is, represent a balanced view of all the parties involved, rather than the systematic prevalence of a majority of small countries, or the imposition of the interests of a few very large players.

Being relevant, efficient and legitimate are concepts that should not only apply to the institutions we lead, but also to the solutions we provide. Actually, this second consideration seems much more important to our meeting today. In this, we still have some way to go. Globalisation has brought clear improvements to many, lifting millions out of poverty. But we are losing the debate about the social impact of globalisation. Anxiety about poverty, job losses, lower wages and eroding labor and environmental standards are widespread.  In order to stem this growing opposition to globalisation, we need to increase our relevance, efficacy and legitimacy. We need to be much more pro-active and seek to bring together all the stakeholders that can contribute to find solutions to each of the issues we choose to address. And we need to be better at communicating to the world’s public opinion what we are attempting to do, its costs and benefits and the time it will take, to gain support for the proposed reforms.

The collective answer of governments, international institutions and civil society to these pressing challenges cannot be to backtrack from globalisation. We see some evidence of that worrisome trend with the emergence of both trade and investment protectionism, the reticence to commit to specific targets to address climate change, and with the barriers that are built to deal with migration as a security threat rather than an economic opportunity, among others. We need to adapt the international governance structures to the requirements of these complex issues. At the OECD, we have launched the process of accession of 5 new members (Russia, Chile, Israel, Estonia and Slovenia) and an enhanced engagement with five other major emerging economies, with a view to membership (India, China, South Africa, Brazil and Indonesia). We believe it is important that they join our discussions on key issues facing the global community. It is also a way in which we can leverage our role as a hub of a dialogue on global issues, as was mandated by our member countries.  

Madame Merkel has taken the very first step on this path by promoting a structured cooperative dialogue among the G8 and the G5 in the Heiligendamm Process. This was a historic decision. We are honoured to serve as a platform for this dialogue that will include some of the most relevant topics of the international economic agenda: innovation, development, investment and energy.

There are many obstacles to overcome and a great deal of confidence to be created. Every one of the issues has a different meaning for the G8 than for the G5. But we must persevere to build a common understanding around these key issues.

Given all of the above, I would like to make a suggestion.  Could this informal G8/G5 governance framework be taken a step further by inviting the G5 as equals to the G8 summit? Could the long-standing idea of a G13 be pursued? Some of the emerging countries that have been invited to the G8 Summit have repeatedly asked to be present at the “whole lunch and not only at the dessert”. In other words, to have a role in the agenda setting, in the discussion of content, and in the final communiqué. I am aware of the complexities of this idea, already floated by some G8 leaders but we should persevere.

Or perhaps a full day of G8 meetings followed by another day or a half day with the G5 and move cautiously and gradually towards a G13 as a long-term goal?

Or keeping the G8 structure intact but transforming the G20 Finance Ministers group into an L-20 (Leaders-20), with the same membership, also an initiative already floated. Why bring back these ideas, when they were found wanting before? Because times change, and economic realities also change. The truth is that today, be it on trade, climate change, or the fight against organised crime, neither the G8 nor the G5 can effectively address global issues without each other. International institutions could also contribute more effectively to increasing the coherence in the political management of globalisation.  I would like to propose the establishment of an informal mechanism of cooperation among all the IGOs gathered here (and perhaps add the UNDP) to meet once a year at the highest level and, as required, perhaps twice a year at working-level. This could serve as a basis for experience-sharing and collaboration among our institutions and function as a kind of clearing house for our work. Each year, we would identify a limited number of issues (see Annex for proposed areas of work), compare notes on certain areas, avoid duplication and strengthen our comparative advantages, connect with the G8 Summit process to get guidance and provide inputs, and help with the follow-up of the commitments.

Besides the permanent “core group” we could invite other institutions, depending on the issues being discussed. The aim would be to produce joint proposals and input not only for the G8 but also for broader audiences, among them in particular the constituencies of our respective institutions. This two-tier interactive structure of governments and international organisations would provide considerable improvement to the coherence in the political management of globalisation.

Many of the international institutions that are here today, including the OECD, were born as a response to traumatic events. We should not wait for a major crisis to act. We know the issues (relevance). We know the solutions (efficacy). We can jointly propose pertinent and affordable approaches after carefully screening the alternatives and consulting with all shareholders and stakeholders (legitimacy).