With the proposed work programme, NAEC aims to:
Work under NAEC is divided under three streams of work:
Pillar 1. Reflection & Horizon Scanning
Pillar 2. Policy Trade-Offs and Complementarities
Pillar 3. Institutions and Governance
Until 2007, large parts of the world had enjoyed a long and sustained period of relatively strong economic growth and stability, the so-called “Great Moderation”. While there were signs of weaknesses and risks, most observers tended to underestimate these threats. The OECD was not alone in failing to connect or missing the warning signs. Other institutions involved in international surveillance, many finance ministries, credit rating agencies, national and supra-national financial regulators and financial institutions themselves had been lulled into a sense of complacency during the Great Moderation. Given the analytical models used to examine the financial sector, the extent of the crisis and the subsequent global recession were consistently underestimated, which contributed to significant policy failures. Five years since the crisis began many advanced economies remain fragile, with significant downside risks and high unemployment. In short, OECD countries were generally not prepared for the crisis and were poorly positioned to withstand it.
In light of work already undertaken by the OECD, as well as the extensive scholarly literature on the causes and lessons from the crisis, the proposals for further work under this category are necessarily selective and targeted towards addressing key gaps and priorities. This work includes:
For reasons related to measurability, comparability and tractability, economic growth has often been used as a proxy for living standards or wellbeing and thus the main objective for economic policy. Evidence suggests, however, that while economic growth is a necessary condition for improvements in wellbeing, it is not sufficient. Furthermore, policies aimed at increasing economic growth can have a mixed effect on the various components of wellbeing. The multi-dimensional nature of wellbeing, therefore, leads to numerous potential trade-offs and complementarities when different policy levers and instruments are adopted to maximise one or more dimensions of wellbeing. These trade-offs and complementarities have become even more relevant since the crisis hit, as they not only confirmed that previous analytical frameworks were unsustainable, but because they confirmed that “business as usual” is not an option in an increasingly interconnected economy.
The proposed work under this category will:
Policy makers are facing a number of near-term challenges in the wake of the crisis, including high and rising unemployment, stagnating growth, and weak fiscal positions. Long-term trends, such as population ageing and migration, pose additional challenges.
The crisis also sparked a debate on the role of governance failures in the crisis, many of which still need to be addressed. At the same time, there has been increasing demand from citizens for the state to better support inclusive growth and to offer greater transparency and access to information. In addition, new technologies including the internet and various social media have significantly changed the time frame and constraints under which governments operate, particularly in the context of a crisis.
These interconnected challenges require a rethinking of the role of the state. Against this background, this category of work will discuss approaches that could help to improve institutions and governance in order for national and sub-national governments to more effectively adopt and implement policies in an increasingly interconnected world. It will also examine how the OECD can better develop its work and assist governments in implementing reforms.
There are three streams in this category of work.
All these aspects aim to provide concrete options to reflect the notion of the ‘smart state’, which was introduced by Philippe Aghion at the first NAEC Group meeting in October 2012.
The NAEC Group: A multi-stakeholder working group, chaired by the OECD Secretary-General, provides a platform to discuss the substance of the initiative and the draft papers developed by the Secretariat. The group is comprised of representatives from OECD Member and Partner countries, relevant OECD policy committees, as well as the Business and Industry Advisory (BIAC) and Trade Union Advisory (TUAC) Committees to the OECD.