Opening Keynote Address at the London School of Economics and Political Science Seminar
Remarks by Angel Gurría, OECD Secretary-General
London, 16 March 2011
Minister Cable, ladies and gentlemen,
It is my great pleasure to be here today to celebrate with you the OECD’s 50th anniversary.
As with our own lives, this milestone is an opportunity to reflect on our past achievements, which must, however, go hand in hand with a reflection on the future challenges facing the OECD in the years to come.
If we take a quick look back in time, we can identify a host of accomplishments: from promoting European recovery and integration to developing comparable statistics and indicators measuring economic and policy performance; from forging international consensus through peer pressure, to macroeconomic policy coordination and from tax information sharing to improved aid effectiveness.
A globalising economy demanded evidence-based policy analysis, policy tools and a forum for policy sharing, exchanges of best practices and peer learning. Central to OECD is the understanding of member countries, by member countries, for member countries. This pioneering approach to cooperation put into everyday practice at the OECD, is now becoming more widespread, including in the G20 context.
Peer review is the most distinctive feature that typifies the functioning of the OECD; it is our production technology. Our well known Economic Surveys, for instance, bring policy makers from all countries to discuss and debate policy issues structured around the analysis of the Secretariat. The country that is subject to a review is brought under the gentle pressure of its peers – the “peer pressure” – to commit to policies they really intend to implement. While the OECD has no “sticks” to enforce implementation, countries are induced to do so by the subtle discipline of peer pressure. And more often than not, it works.
This afternoon, in fact, I shall be launching the OECD’s Economic Survey on the UK, together with the Chancellor. It will be the first time that we launch the UK Economic Survey in the United Kingdom.
But this knowledge sharing covers all areas of policy making and implementation. From education, where, with our PISA survey, we change the understanding of how high performing countries operate, to the environment where we provide recommendations to reach higher levels of growth while making sure we care about “green”, the OECD has been a pathfinder and an advisor to our member countries an increasing number of non members. The mission statement of our 50th Anniversary is “Better Policies for Better Lifes” and this captures our “raison d’être”.
What are the future challenges?
Turning now to the major challenges facing the OECD as it looks to the future.
We must recognise that the centre of economic gravity is moving from West to East, from the industrialised countries, to the large developing and emerging economies. OECD countries accounted for some 80 % of global GDP 50 years ago. Today it is about 60 % and in 25 years time it could be down to around 40%.
Policy making and the global governance architecture needs to recognise and take into consideration these changes. This is happening in the broader context through the G20 process, in which the OECD is an active player. For OECD policies and approaches to continue to be effective, this shift needs to be taken into account. We are working hard on building a more inclusive and open organization, and since my arrival to the OECD, we launched a process of opening up and of reinforcing our relationship with major emerging economies.
Indeed, we have concluded the accession process of Chile, Estonia, Israel and Slovenia and we have crafted innovative arrangements to engage with non-member states in an unprecedented effort to open the OECD to the world. Around 100 non-member countries participate regularly as equals in the work of our committees, expert meetings and forums.
Emerging-market and developing country economies participate on issues ranging from combating bribery and corruption, taxation, to investment and regulatory reform. And our Economic Outlook, our Going for Growth flagship reports and our Economic Surveys now cover all the BRICS economies. A simple measure of the transformation is the number of delegates from non-member countries coming to the OECD to participate in our fora. The number from India, for example, has doubled to reach 800 last year.
Thanks to these evolutions, we are now a more open and pluralistic organisation, sensitive to the complex challenges of middle income and developing countries. Nonetheless, a lot more needs to be done to ensure these economies have an equal and active voice in both the analytical and standards work of the OECD. We are exploring with these countries new modalities to strengthen our partnership. We are also changing our approach to development challenges, moving beyond aid and mainstreaming all our substantive competencies in our work on development. This will be a key issue in our 50th Anniversary Ministerial, which will be chaired by US Secretary of State Hillary Clinton and attended by several OECD leaders like Angela Merkel, President Sarkozy, Prime Minister Kan of Japan, Prime Minister Orban of Hungary, Ms. Iveta Radičová, Prime Minister of Slovakia, President Türk of Slovenia, and perhaps others that will confirm in the next few weeks.
A related challenge is to consolidate, with member countries of the G20 and other international organisations, an effective Global Governance system. The G20 has already delivered key benefits to the world economy, above all by managing the worst economic crisis of our lifetimes. Now it needs to deliver sustainable paths for growth in a context where the unevenness of the recovery pushes for different directions. Fuelling recovery while dealing with fiscal consolidation in some parts of the world; addressing huge capital inflows in some others; all while facing the challenges of high unemployment, especially among youths, high deficits, fast accommulation of debt and even the resurgence of inflationary pressures in a few.
Thus, reaching consensus in some areas has proven elusive, but we are confident that the G20 will continue to deliver results, and as one of the regular participating organisations, we are ready to continue providing our knowledge and advise to make it happen. In this regard, I have proposed recently the creation of an Observatory for Policy Coherence, bringing together the international organisations involved in the G20 (IMF, World Bank, FSB, ILO and WTO). The objective is to improve coordination and exchange of information among IOs; a sort of cross fertilisation of ideas. This will help us to stay at the frontier of new thinking and ensure we provide relevant and pragmatic advice to governments in their efforts to design and implement better policies for better lives.
The second challenge is a perennial and related one: relevance. How do we ensure that our work has the desired impact and pertinence, and that it transforms into real change? At the OECD, this is a question that we constantly ask ourselves.
We must continue to help countries to achieve a strong, balanced and sustainable recovery. This means, above all, identifying new sources of growth. Innovation and Green Growth are two examples of promising sources of growth where the OECD is harnessing its multidisciplinary expertise to identify the policy solutions to unlock this potential.
The Green Growth strategy will be launched this May at our Annual Ministerial Meeting. Last year we released our Innovation Strategy and it is still generating spin-offs and by-products.
The importance of innovation has grown significantly, and the potential pay offs are huge.
For example, if the UK were to achieve, on a sustained basis, the same intensity of business R&D as the average in the OECD, its GDP per capita could be some 7 per cent higher. While this calculation may seem too mechanical, it seems quite certain that a large potential exists in the UK to improve the capacity to innovate.
Innovation, however, depends not just on investment in R&D or supporting science and technology, but on a plurality of other factors and an ability to bring them together in a comprehensive framework.
For example, to enable people to innovate, they need to develop wide-ranging skills that go beyond formal education and governments need to adapt curricula and pedagogies to equip students with the will and the capacity to learn and apply such skills throughout their lives.
Public policies to promote entrepreneurship and support the creativity of young innovative firms – the so called “gazelles” – have a role to play too. These firms tend to be the source of radically new “disruptive innovations” and they also tend to generate large productivity and employment gains.
But there is no single quick fix. It is not useful to spend public money to boost this or that sector, or this or that “champion”, hoping it will inject higher productivity into the economy.
Rather, what is needed is a nation-wide “innovation thrust” capable of aligning different Ministries, research institutes and businesses, and built around a coherent set of policies that work to deliver a stable macroeconomic environment and well functioning markets. In this respect, removing little-noticed impediments may do more to create a favourable innovation environment than promoting headline grabbing schemes.
Visibility means impact, and impact means relevance
Part of the answer to remaining relevant lies in being more visible. The OECD is using Web 2.0 technology to disseminate and raise its profile and hence the impact of our work. New technologies are also helping us to improve the efficiency of how we work.
I have also proposed recently the creation of an Observatory for Policy Coherence, bringing together the international organisations involved in the G20 (IMF, World Bank, FSB, ILO and WTO). The objective is to improve coordination and exchange of information among IOs; a sort of cross fertilisation of ideas. This will help us to stay at the frontier of new thinking and ensure we provide relevant and pragmatic advice to governments in their efforts to design and implement better policies for better lives.
Ladies and gentlemen,
Let me conclude with a quotation: “Death is the inevitable fate of human beings, but it need not be the fate of organisations, provided they are sufficiently adept at adapting themselves to changed circumstances”. These were the words that Flinth Cahan, Deputy Secretary General of the OECD used in his speech to mark the establishment of the OECD 50 years ago! They remain as relevant today as they were then. And I trust we will continue to live up to them.
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