France

Emerging Markets Forum: Global Trends and Implications for Policy Today

 

Remarks by Angel Gurría

OECD Secretary-General

13 June 2018 - OECD, France

(As prepared for delivery)

 

 

Michel, Ambassadors, Ladies and Gentlemen:


"Toute crise prépare la suivante." These words by Michel Camdessus are a warning, but should also be a stimulus for policy, an invitation to be alert, to be in constant reflection, in constant attention, to understand what happened, what is happening and what can happen.

 

This is why I am delighted that the OECD is hosting this Emerging Markets Forum for a second year in a row, focusing this year on Global Trends and Implications for Policy Today.

 

The world today gives us more than enough challenges to fill our agenda. The good news, as our latest Economic Outlook shows, is that economic growth will be close to 4% in 2018-19. This is similar to pre-crisis averages, but in per capita terms actually about half a percentage point better. Job gains are also strong – unemployment across the OECD is approaching its lowest level since 1980 – and the growth of trade and business investment has rebounded, while inflation is moderate (at most) in the major economies.

 

But risks and tensions loom large. For many households, real disposable income is still lower than before the crisis, and stubbornly weak wage growth is fuelling social discontent. Inequality and exclusion are still persistent problems. Rising populism and unilateral measures are calling into question our multilateral rules-based global system and co-operation. And because our economies are more interconnected than ever, a negative shock to trade is bound to do more harm than in the past.

 

In the past years, very low interest rates have encouraged borrowing by households and corporations in some countries and led to overvaluation of assets in many others. In this context, while widely anticipated, rising interest rates might be challenging for highly indebted countries, families and corporations. A swifter rise in interest rates in advanced economies might also lead to significant currency depreciation and volatility in some emerging markets that are highly reliant on external financing and facing internal or external imbalances.

 

Events in the past few weeks show how difficult it is becoming to advance multilateral responses to today’s challenges, both for emerging and advanced economies. We have seen the tariffs on aluminium and steel, tensions and disagreements in the G7, and the difficulty at our own OECD Ministerial to achieve a consensus. This is serious, because right now is when we need multilateralism the most. We are facing a moment of unprecedented transformation in our economies and our societies, in technological progress and in the nature, direction and intensity of global flows.

 

Globalisation has brought many benefits. It has helped to lift hundreds of millions out of poverty worldwide. However, its benefits have not been shared equally. Globalisation has left many people behind. Across the OECD, the average income of the richest 10% of the population is now almost 10 times that of the poorest 10%, compared with seven times only a generation ago. The concentration of wealth is even worse.

 

Inequalities harm growth. They erode trust in governments, in business, in modern capitalism, and in democracy. They also contribute to a polarised and dangerous environment where populism and protectionism tend to grow and spread. We urgently need to reverse these trends. We need to work together to create a more inclusive, people-centred and rules-based globalisation.

 

And we already have plenty of examples, many of them led by the OECD itself – on taxes with BEPS and automatic exchange of information; on corruption with the Anti-Bribery Convention; on trade with Global Value Chains (GVCs), Trade in Value Added (TiVA) and the Services Trade Restrictiveness Index (STRI); on education and skills with PISA and the Adult Skills Survey, PIAAC.

 

And we recognize our responsibility when it comes to delivering on the world that we all signed up to achieve by 2030, namely through our Action Plan on the SDGs and our contributions to the implementation of the Paris Agreement, such as with tracking climate finance and demonstrating how climate action can be coupled with enhanced growth as we show in our Investing in Climate, Investing In Growth report. Last month at the MCM we adopted the OECD Policy Framework for Inclusive Growth, to guide policymakers in developing people-centred growth models where all can contribute, and all receive a fair share of the benefits.

 

But, as we ponder global mega trends we must look beyond the present and prepare for the challenges of tomorrow. We need to be equipped to develop an understanding of the drivers of future challenges and potential crises to address them.

 

Strategic foresight means better policies

Strategic foresight is one way to inform good decisions. It is about questioning what we expect, and testing whether our hopes are realistic. It is about reaching beyond forecasting into exploring the unexpected.

 

At the OECD we are making further progress on integrating foresight thinking into policy making, both within our Directorates and in support of our members. Our Government Foresight Community is an epicentre for strategic foresight experts in national administrations. The insights generated have been used to support ambitious and integrated policy agendas, such as national development strategies for achieving the UN Sustainable Development Goals.

 

Other foresight-based projects underway at the OECD include discussions of long-term megatrends in our ‘Trends Shaping Education’ report; horizon scanning for new metrics in our Statistics and Data Directorate; and country-specific scenario planning in our Multi-Dimensional Country Review projects. I am happy to see that our foresight expert, Duncan, will be chairing one of these sessions.

 

Improving and strengthening multilateral co-operation

Even if the future is quite uncertain, even if there are serious risks on the horizon, we do know what we have to do: we need to strengthen multilateral co-operation by making it more effective, more efficient, more inclusive, more transparent, more democratic and accountable.

 

During the MCM, I shared my Strategic Orientations laying out my vision for the OECD in the years to come. I see an improved OECD that is able to maximise its support to members and partners around the three principles of Connectedness, Impact and Engagement. We are asking ourselves the following three questions: How can the OECD become more useful in helping countries reap the benefits of growing interconnectedness through multilateral co-operation? What are the specific policy areas on which the OECD should focus given its value added and skills set? And finally, what are the transformations that the OECD needs to undertake to deliver at its best through engagement with Members, Partners, stakeholders and within the Organisation.

 

And we have ideas on how to deliver. But the future is always a dialogue, not just a report. That is why we look forward to engaging with YOU today.

 

In the next decades we will see numerous big changes – expected and unexpected. There will be a continued shift in economic and cultural power to the East and South; climate change will have ever greater impacts; our existing institutions will have to adapt to new global realities. We are looking at a multi-polar world in which economic coordination is more complex, the number of key stakeholders more numerous, and the competing policy perspectives more diverse.

 

Dear Guests,


Discussing the future is sensitive, provocative, and potentially emotional. But avoiding it doesn’t solve anything. The future will go ahead whether we’re ready or not. What we do today in international organisations like the OECD will be a map, a genome, a revelator of our children’s world. Let’s not fail them. As the computer scientist Alan Kay has said, “The best way to predict the future is to invent it”.

 

At the OECD we will continue to make our contribution to the indispensable dialogue about what lies ahead, because that’s the only way to achieve better policies for better lives today.

 

 

 

 

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