Remarks by Angel Gurría, OECD Secretary-General, delivered at the Parliamentarians
(As prepared for delivery)
Ladies and Gentlemen,
Let me welcome you to the OECD. I am very happy to see quite a few familiar faces. I’m also glad that some of you were able to join us after yesterday’s debate at the Parliamentary Assembly of the Council of Europe in Strasbourg.
The OECD’s mission is to help its member and partner countries to develop and put in place “better policies for better lives”. And you, Members of Parliament, are at the heart of policy making. I am thus convinced that this dialogue is critical to improve the relevance of our policy advice, by disseminating more broadly and by contributing to its implementation.
Today, I would like to share and discuss with you our ongoing efforts to restore confidence and to promote inclusive and green growth.
The social, economic and financial crises have led to a generalized loss of confidence.
As you know, we are now into the fifth year of the greatest economic crisis of our lifetimes and we are still wrestling with its dire consequences. Many countries have accumulated vast public and private debt and are under immense pressure to put their public finances back on a sustainable footing.14 million jobs are needed to bring employment back to its pre-crisis levels. The outlook is grim almost everywhere, as you hear in our assessment of the economic and social situation in the next session.
What is even more disturbing is the impact of this crisis on household and business confidence. There is a generalised loss in trust in markets, governments and institutions. Citizens are questioning the ability of policymakers to rise to current challenges. And they are becoming more and more impatient. They expect leaders to take bold but wise decisions, show vision and act upon it, to put our economies back on track and to offer our societies a better future… one that will ensure not only economic growth, but also fairness and inclusion.
New approaches are needed to face economic, social and environmental challenges
We badly need to revisit models and theories to question conventional wisdoms and “established truths” to see where they have fallen short. This means being open to drawing pertinent and sometimes difficult conclusions from the crisis.
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. The main goal is to enrich our analytical framework, while identifying a renewed strategic policy agenda for inclusive growth and well-being.
How can this be done? You, as Members of Parliament, know very well that tackling the current challenges requires a good understanding of the relationships and trade-offs between different policies. We need to understand better the likely side-effects and spill-overs of different policy options, the sometimes unintended consequences of policy initiatives. What are, for example, the mutually reinforcing aspects, if any, of growth and environmental policies?
Let me take another example: inequality. Income disparities have widened dramatically in many OECD countries in recent decades. As we show in our publication “Divided We Stand”, the gap in income between rich and poor is now widest in 30 years. The proverbial “rising tide” has not lifted all boats. We need to examine whether and which growth-enhancing policy reforms have positive or negative side-effects on income inequality.
For sure, some policies do boost long-run GDP per capita and reduce inequality at the same time. This is what you do by investing in education and skills and promoting the integration of immigrants. But other policies may end up benefiting some social groups to the detriment of others. We need to understand better this trade-offs to deal with the unintended consequences of policies in a more systematic manner.
We need to identify new sources of growth and competitiveness to put our economies back on a strong, more inclusive and more sustainable growth path. Well designed policies can place growth and sustainability on the same track. Encouraging greener sources of growth fosters innovation, while at the same time mitigating the expensive costs of problems like climate change, biodiversity loss, or water scarcity.
At the same time, governments need to update and upgrade their regulatory and implementation capacities at all levels. Also part of the “to-do” list is finding ways to address ageing, resource scarcity, climate change and global development. Finally, as growth and prosperity become more dependent on knowledge, rather than the accumulation of “physical” inputs, we need to incorporate software, design, organisation and other “intangible” assets into our economic models.
All this is what we are trying to do with our NAEC initiative. We will do so by focusing not only on “what to do” but also on “how to do it”. This is an ambitious agenda. And we count on the support of our member and partner countries to carry it through.
OECD contribution to an international agenda
To foot this ambitious bill, we work not only with and for our member and partner countries, but also in relevant international fora. We work closely with the G20 in many areas, carrying out tasks mandated by the members and in close co-operation with the Presidencies of the G20. We help to identify the relevant issues and develop strategies and policy options to address them. Together with other international organisations, such as the IMF, World Bank, FAO, ILO and WTO, we foster a real cross-fertilisation of ideas to provide relevant and pragmatic contributions.
Ladies and gentlemen,
We generally believe that exchanging views with the broader public policy community, in particular you, as Members of Parliaments, is critical to the future success of policy making. It is also critical for our specific work on New Approaches to Economic Challenges.
I am therefore looking forward to your comments and questions. They will provide food for both thought and action for this important OECD initiative.