Opening Remarks by Angel Gurría, OECD Secretary-General, delivered at the first meeting of the New Approaches to Economic Challenges (NAEC) Group
Paris, Wednesday 24 October 2012
(As prepared for delivery)
Ladies and Gentlemen,
We are now into the fifth year of the greatest economic crisis of our lifetimes and still wrestling with its dire consequences. According to the latest OECD Interim Assessment, the global economic outlook has deteriorated significantly since last spring. Several European countries are entering a recession. The United States is projected to have somewhat stronger growth, but failure to avoid the fiscal cliff might derail its recovery. China’s exports, meanwhile, are being hit hard, and growth is slowing.
This outlook is grim news for the more than 200 million unemployed around the world. In OECD countries, unemployment is likely to remain at 7.7% in 2013 – with some 48 million people out of work. All this is happening against a background of increasing inequalities in advanced and many emerging economies. And several countries, having accumulated vast amounts of debt, are under immense pressure to put their public finances back on a sustainable footing.
Thus, a simple return to “business-as-usual” is not an option. We urgently need to revisit models and theories to question conventional wisdoms and “established truths” to see where they have fallen short.
This is our objective and ambition with a new OECD initiative called “New Approaches to Economic Challenges”. We will examine what lessons can be learned from the crisis and what policy implications can be derived from these lessons as we address the challenges going forward. The main goal is to enrich our analytical frameworks, while identifying a renewed strategic policy agenda for inclusive growth and well-being.
How can this be accomplished? And where do we begin?
We clearly need to be open to drawing pertinent and sometimes difficult conclusions from the crisis. NAEC is not an exercise in self-flagellation or navel-gazing because we need to examine where we could have connected better the warning signals in the lead-up to the crisis, where we could have rung the alarm bells louder – perhaps in co-ordination with other international organisations.
We also need to examine where our analytical tools failed and how they can be improved. And where the crisis and the underlying vulnerabilities it exposed calls for us to take a closer look at the unintended consequences of some of our policy recommendations. Though already underway in many of our policy committees, NAEC offers the opportunity for more systematic, cross-cutting and deeper reflection.
When we say “go structural, go social, go green,” we need to look at the underlying pressures as a result of major global trends that have been building up for decades. While none were the immediate cause of the current crisis, some may have contributed to the vulnerabilities that led to it. All of these pressures will condition the prospects for recovery, long-term growth and well-being. These trends include rapid global economic integration and technological innovation, population ageing and demographic shifts and climate change.
These and other trends are fundamentally transforming our economies and employment prospects, compromising already fragile fiscal situations and putting further pressures on the environment and natural resources. Due to limitations, traditional policy tools and frameworks are a poor fit to address these challenges or harvest new opportunities posed by such transformations. They will also condition the policy environment for new financial sector reforms and macroeconomic, social, employment and a whole range of other policies that need to occur.
This begs the question, what kind of new frameworks exist to better examine the policy trade-offs between competing objectives in an integrated manner? How do we implement them, and what kinds of data will we need? How do we manage risks? And how do we move from a narrow focus on growth towards operationalising a broader notion of well-being and inclusiveness?
These issues, again, are very much at the heart of the NAEC agenda.
Ladies and Gentlemen, NAEC has struck a chord – with our Ministers, governments, policy committees, staff, and the broader expert community - as witnessed by the distinguished experts who have agreed at very short notice to speak at today’s seminar.
This level and intensity of interest is truly unprecedented.
We need to capitalise on this interest, this wealth of expertise and diversity of policy expertise assembled in this room and beyond.
In the first three sessions today, we will focus on whether and how the objectives for macroeconomic, financial and social and employment policies have been affected by the crisis experience and not least, how the crisis has affected the way that these objectives should be pursued. The fourth session identifies a number of important long-term trends that will further affect how policy objectives are best pursued. The discussion in this session will attempt to not only draw out the implications of these trends for policies, but also how the trends themselves may be affected by policies.
As I open this meeting, I ask each of you to bear in mind one simple question as the day's discussions unfold – how do we translate insights from today into an operational, analytical agenda for the OECD?
We will come back to this question in the various sessions and particularly the final wrap-up session. Let me thank all our high level speakers for being with us today. We really appreciate your presence and your contribution to this fascinating endeavour.
With that, I pass the floor to Deputy Secretary General and Chief Economist Pier Carlo Padoan for Session 1: Revisiting Macroeconomic Goals.