Welcoming remarks by Angel Gurría, OECD Secretary-General, 2 July 2014 – OECD, Paris
Excellencies, ladies and gentlemen,
It is my pleasure to welcome you to the 2014 OECD Global Forum on Development. This year’s Forum is particularly important: over the coming year, deliberations over the shape and scope of a future global framework to replace the Millennium Development Goals will intensify. This is a moment for the international community to take stock of where we have come from, where we now stand, and to set out a vision for the future world we want to live in.
Before I share some thoughts on today’s agenda, allow me to say a few words about recent development trends and opportunities.
Setting the scene: many developing countries won’t converge by 2050, despite “shifting wealth”
Let us think back for a moment to 2010, the year when the share of non-OECD countries in the global economy surpassed that of OECD countries, when measured in terms of purchasing power parity. The pace of this shift has been remarkable: just ten years earlier these countries accounted for 40 per cent of the global economy. Large numbers of people have benefited from this rapid change, and it has been an important driver of poverty reduction worldwide.
Nevertheless, growth in emerging-market economies is slowing down. Countries such as Brazil, Colombia, Mexico and South Africa are not growing fast enough to reach the average income of OECD countries by 2050.
This growth slowdown also matters for the poorest countries. In today’s interconnected economy, their development prospects are linked to the growth of emerging and advanced economies.
Against this global backdrop, governments cannot afford to remain idle. The productivity challenge is now firmly on the international agenda. And it is gaining ground in the consultations on the post-2015 framework. At the OECD, we continue to emphasise the importance of “going structural for development”.
The theme of today’s meeting is “innovating for development”. I am encouraged to see that the issues of production, technology and innovation – which were largely absent from the Millennium Development Goals – are more prominent in the narrative which is emerging around their successors.
Today’s agenda has been structured to encourage debate around three “strands” of innovation that are crucial for development. Allow me to share some brief thoughts on each one in turn.
Policy innovations for productivity and growth
The first of these areas is policy innovation. More specifically, what policies are needed to address the challenges that I have just described – slowing growth in middle-income countries, and slowdowns in productivity?
Our latest Perspectives on Global Development report shows how, in middle-income countries, productivity slowdowns can be brought about by challenges in moving up the value chain. Over time, countries need to move away from growth paths driven by low-cost labour, and towards an upward path driven by innovation.
Better policies play a crucial role. Diversification isn’t an automatic process. Policies need to be set in motion in a coherent manner: from skills development to access to credit; from logistics and trade facilitation to innovation. Technology policy is also crucial: countries need to be able to adopt and adapt knowledge.
We also need to look more closely at the services sector. As India has shown, services can be an important source of export earnings. Tools such as the OECD’s Services Trade Restrictiveness Index can help us do that by showing where countries are in relation to the best practice frontier, and where they can do better.
Innovation in development partnerships
The second area of innovation I would like to highlight is innovation in partnerships. Earlier this year, the Government of Mexico hosted the first ever ministerial meeting of the Global Partnership for Effective Development Co-operation, which I was privileged to attend. It came only a few days after the OECD released data showing that aid to developing countries had reached an all-time high of USD 135 billion in 2013.
The deliberations in Mexico proved that aid is far from “dead”, as some have suggested it should be, but rather that development co-operation – in the broadest sense – continues to evolve and innovate. Some said: “Beyond Aid”; No! it is Aid and Beyond!
We must not forget that aid – or Official Development Assistance – can mean the difference between life and death in some countries. Between 2005 and 2010, it accounted for 60 per cent of external financial flows to the poorest and most fragile countries. Targeting aid well – at infrastructure, at education, at public administration – can help accelerate structural transformation, and help put these countries on a firmer path towards inclusive growth.
“Innovation” and “partnerships” seem to have infiltrated the development discourse over the course of the last decade. Newer tools and approaches – such as Advance Market Commitments for vaccines, development impact bonds, and impact investment – now form part of a bigger, more forward-looking toolkit to support development.
The OECD’s growing partnership with foundations and philanthropic organisations promises to bring about further innovation. And cross-OECD efforts will continue to push countries to look at the development footprint of all of their policies: only last year, we released our first ever assessment of OECD members’ own efforts to curb illicit financial flows – flows which have devastating effects on developing countries.
Innovation to eradicate poverty and promote social inclusion
The third element of today’s agenda – innovation for inclusive development – is crucial. Not all innovations are equal. Some are better than others in reaching poor and marginalised social groups.
When we look at innovation policies, we tend to look at them as a source of growth. But we haven’t really looked at them as a source of inclusive growth yet. Our thinking around innovation policy cannot just be aimed at leading firms, high-tech sectors, or central regions. It also needs to help create the opportunities for outsiders – young and small firms, traditional sectors, and outlying regions – to participate in the innovation process.
Inclusive innovation initiatives can provide low-income households with access to new products in their everyday lives. Kenya’s M-Pesa mobile payment technology is perhaps one of the best known examples, bringing access to basic financial services to many people for the first time. Company figures show that over one month in 2012, the value of transactions undertaken using M-Pesa was equivalent to almost a third of Kenya’s GDP!
Bringing inclusive innovations to a scale that really benefits large numbers of people remains challenging. And this is where public policy can play an important role. For example, it can shape incentives to include poor people in the product development process. It can encourage the private investment that will be critical to achieving scale and financial viability. And it can help connect innovation in the public and private sectors.
The OECD project on Innovation for Inclusive Growth will help develop policy solutions, and will build a bridge between the innovation and inclusive development agendas. Your active participation in today’s discussions will contribute to the success of this work.
Ladies and gentlemen,
We are all looking forward to a world in which growth is inclusive, in which development is sustainable, and in which poverty is a phenomenon that our children and grandchildren will only read about in history books.
I hope today’s deliberations lead to that much needed innovation and, in turn, to Better Policies for Better Lives.