OECDEurasia@10: Drawing the Lessons, Shaping the Future
Remarks by Angel Gurría
21 November 2018 - Paris, France
(As prepared for delivery)
Dear Chief Executive, Deputy Prime Ministers, Ministers, Ambassadors, Ladies and Gentlemen:
It is my pleasure to welcome you to OECD Eurasia Week 2018: Drawing the Lessons, Shaping the Future. The presence of so many high-level participants, many of whom have travelled great distances to be here, confirms the importance that OECD Members and our Eurasia partners attach to our growing co operation.
Taking stock of challenges and opportunities
This year marks the tenth anniversary of the OECD Eurasia Competitiveness Programme, which supports the implementation of policies to enhance competitiveness, improve the business climate and facilitate the transition to market economies.
Interestingly, the Programme was born on the eve of the global financial crisis, which marked the start of a very difficult decade for the Eurasia region and the world. While Eurasia countries weathered the immediate effects of the crisis relatively well, they have not been immune to the wider impacts of weaker global growth and external shocks, including lower commodity prices and the conflict in Ukraine.
Aggregate growth in Eurasia slowed from just under 8% on average in the decade before the crisis to around 3% in subsequent years. Unfortunately, slower growth has also meant less inclusive growth. Before the crisis, the incomes of the bottom 40% of the population rose faster than the average in almost all Eurasia countries. However, this trend has not been sustained as growth has slowed. Most jobs in Eurasia countries are still in very low productivity sectors, while the leading sectors – especially resource extraction – are capital intensive and create little employment.
Despite this challenging context, there are many reasons to be optimistic about the future! Growth has been strengthening across the region, and could reach 4% in 2018. We continue to see significant reform progress, as governments work to create more favourable environments for entrepreneurship, investment and innovation.
For example, we have heard this week about the reduction in administrative burdens on entrepreneurs and the development of mobile platforms for public service delivery in countries as diverse as Afghanistan, Azerbaijan and Georgia. In Kazakhstan, we have seen a major overhaul of the subsoil investment regime, as well as moves to reduce the state’s predominant role in critical sectors.
And regional co-operation is advancing in ways no one could have anticipated just a few years ago, with a new and more positive dynamic among neighbouring states in Central Asia. This dynamic is linked, in part, to growing interest in connectivity across Eurasia to improve trade and transport connections linking East and South Asia to Europe.
Making the most of these opportunities will require diverse reforms related to transport policy, public governance, trade facilitation and investment. These issues are at the heart of the OECD’s work on connectivity in the region. We also need to ensure that these opportunities provide improved outcomes for all. The OECD’s new Framework for Policy Action on Inclusive Growth offers important guidance in this respect.
Drawing lessons for the future
Eurasia Week 2018 provides an opportunity to reflect on key lessons learned through the OECD’s engagement with Eurasia over the past decade. Let me highlight three:
First, Eurasia is committed to multilateralism. Multilateral co-operation and free trade are alive and kicking in this region and this is great news. Faced with the shocks of recent years, Eurasian countries have stepped up their co-operation rather than turning in on themselves.
Governments across Eurasia have negotiated more open trade and investment arrangements with the European Union. Within the region, we are seeing moves in Central Asia to facilitate cross-border flows, and countries are working together on new trade and transport connections. This is increasing their capacity to make the most of globalisation.
Eurasia’s deepening engagement with the OECD is part of this trend. This morning, Kazakhstan’s Minister of National Economy, Mr. Timur Suleimenov, and I will sign a new Memorandum of Understanding between the OECD and Kazakhstan, which will provide a framework for our co-operation over the years to come.
Second, in our collaboration we have also confirmed the great importance of economic diversification to promote more resilient and inclusive growth. In a number of Eurasia countries, hydrocarbons and metals account for 80-90% of exports, while many countries also depend heavily on agricultural goods with little or no processing.
The OECD is supporting countries in the region to pursue diversification by helping them to design policies and institutions to strengthen access to finance for small firms and start ups, to attract foreign technology and investment, and to develop stronger export promotion programmes. Our advice is shaped by our best practice international standards in tax, investment, anticorruption and integrity, corporate governance, and responsible business conduct, among others.
Thirdly, institutions matter. It remains paramount for Eurasia countries to continue developing their institutions. Building institutions is never easy and it rarely delivers “quick wins”. But our work with Eurasia shows its impact. In Ukraine, for example, we have actively supported decentralisation and the creation of new anti-corruption institutions, as well as a business Ombudsman.
The evidence increasingly shows that these efforts are having a positive impact on citizens and firms. This work also highlights the twofold link between better institutions and inclusion. First, corruption works against inclusion by favouring the better-off and the better connected. Secondly, regulatory quality and government effectiveness are critical to implementing policies to widen access to economic opportunities.
Getting institutions right is not an option, it is a necessary condition to achieve inclusive and sustainable economies and societies.
Ladies and Gentlemen:
In his recent book, “The Dawn of Eurasia” (2018), the Portuguese political scientist Bruno Maçães argues that we need to start thinking on a super-continental scale, and recognise the increasing strategic significance of Eurasia. Well, guess what? The OECD has been doing this for a decade, at least!
For many years, we have been working together with Eurasia countries to help lay the foundations for broad-based prosperity. We must strengthen this effort; especially now, when other important geopolitical and geo-economic regions are facing the complex challenges of nationalism and protectionism.
At the OECD, we will continue nurturing this strategic partnership, sharing our expertise, experiences, principles and standards, so that together we can design, develop and deliver better policies for better lives in Eurasia. Thank you.