Remarks by Angel Gurría, OECD Secretary-General, during the press conference of Going for Growth 2009 (Watch the webcast of the press conference)
Paris, 3 March 2009
It is a great pleasure to present the fifth edition of Going for Growth, the OECD’s flagship annual report on structural reform. I will speak first about the surveillance role of the report, and its relevance in the context of the current crisis. Then Klaus will introduce the analytical work that was carried out, which addresses how to think about structural reforms at a time of financial crisis, and includes special chapters on infrastructure, taxation, market regulation, and population structure.
The still-unfolding global crisis and recession is deepening, and emergency policy actions have been taken in nearly all OECD countries. This report is a critical part of the OECD’s response to the crisis, and it highlights the comparative advantage of the organisation in providing policy advice to improve the welfare of our Member countries.
Going for Growth brings together in a single but very rich volume the expertise of many of the OECD’s departments on how best to boost labour productivity and labour utilisation, especially in the long run. Looking in depth at countries’ performance and policies, we identify five structural policy priorities for each one – and for the European Union as a single economic unit. These priorities may evolve over time, as countries move ahead with reforms and new issues emerge. They mainly relate to labour and product markets, but also to other areas – in particular, education, health and innovation.
This surveillance is based on systematic and in-depth analysis of structural policies and their outcomes across OECD members. To carry out this work, we use a set of internationally comparable policy indicators with well-established links to performance. Using these indicators, along with the expertise of OECD committees and staff, policy priorities and recommendations are then derived for each member. From one issue to the next, Going for Growth follows up on these recommendations as priorities evolve, partly as a result of governments actually following-up on such recommendations.
The crisis has revealed major deficiencies in the area of financial regulation and supervision, and these areas are a particular priority for the United States and the European Union. Klaus will say more about this in a moment, but I would like to emphasise that the crisis should not drive us to lose sight of the policies that will improve our well-being in the longer term. Remember, this a financial, an economic, an employment and a jobs crisis. Thus, it is a human crisis. We should address them all.
Going for Growth identifies policies aimed at increasing labour productivity for all OECD countries and the European Union. Reforms to strengthen human capital are identified as a priority for most countries, as are reforms to strengthen competition in product markets, particularly by reducing entry barriers. Reforms of agricultural policies are also called for in the United States, the European Union and Japan, as well as in a few other countries with particularly high support levels.
Policies for increasing labour utilisation are recommended in nearly all OECD members. While reforms of tax and benefit schemes are identified as necessary in most OECD countries in Europe, reforms of the health care systems are recommended in the United States and New Zealand. Reforms of labour markets are also identified as a priority for the European Union, as well as in Japan, Korea and Turkey.
With the exception of a few specific areas, such as financial regulation, where there has been major re-thinking, the policy priorities identified in this edition are broadly similar to those of our previous edition. Indeed, 86% of each OECD country’s priorities have been retained fully or in part. This is not encouraging, although these policies sometimes need time to show their impact. We, the OECD, and our Member countries must do better. Of the 14% remaining priorities, which actually changed, less than two-thirds were replaced as a result of reforms undertaken; while the remaining ones were changed based on a re-consideration of newly available evidence. Thus, while the results of this exercise reflect modest reform progress, they clearly imply that much reform work is still pending.
A vital message in this year’s edition of Going for Growth is that the current crisis offers governments the opportunity to combine emergency action with the important structural reforms needed to improve long-term growth and resilience in their economies. This means that in the design of our response, particularly the composition of the fiscal stimulus packages in most OECD countries, we must have a proper balance of protection for the most vulnerable, while keeping an eye on the long-term implications of these policies.
Reforms will also take place in the context of a massive government intervention in several markets, so there is a need not only to continue with the stated reform agenda, but just as important, to properly rebalance the role of states and markets.
If the opportunity is seized to make lasting reforms that will improve long-term economic performance, we may look back at this period as one where we repositioned our economies to achieve stronger, cleaner and fairer growth.
I will now turn the microphone over to Klaus to say more about what specific measures may be appropriate at this very unusual time.