Speech by Angel Gurría, OECD Secretary-General, at the Storting (Norwegian parliament)
Oslo, 6 March 2008
Dear Members of Parliament,
It is a great honour to be here with you. I want to congratulate you as the debates and policies that emanated from this Parliament have placed Norway in the group of good performing OECD countries, with one of the highest living standards of the world.
The OECD has always interacted fruitfully with parliaments of its member countries. As we move more explicitly to support on the political economy of reform, our relationship with you has become a priority. Your reflections and opinions are essential for us to improve and to disseminate our policy advice.
Today, I will address two main issues. First, I will talk about how the OECD as an organisation is responding and adapting to the new global economic challenges. Second, I would share with you some of our current priorities which correspond to the issues currently debated in Norway.
If we could choose a concept to define our times, that concept would very probably be “change”. In all aspects of our lives, things are changing at remarkable speed. Like never before, the success of human beings, companies, governments or any type of organisation depends on their adapting capacity.
Most of our policy challenges now have a global dimension. Addressing them requires not only a common understanding of their causes and results; it also demands an inclusive international dialogue that can produce effective solutions.
Globalisation has delivered significant progress. Under its influence the world economy has experienced one of its most dynamic expansions ever. International trade and investment flows have boosted interdependence and allowed developing countries to connect better to the global economy, lifting millions out of poverty. Norway is a very good example of a country that has been particularly successful in recognising the benefits of globalisation and taking best advantage of its opportunities.
But we also need to acknowledge that globalisation has made the world more complex by linking local and global concerns, by blurring the borders between national and international. The future of humankind is being shaped by issues that are beyond any one nation’s ability to address them.
The changes in the world economy also have a strong impact on how international organizations operate and interact among themselves. A few simple figures can serve to illustrate what do they mean for the OECD. The share of OECD member countries in world GDP has declined. In 1975, we covered close to 65% of world GDP. In 2005 this figure is 55%, while the BRICs’ share already exceeds 25%. Projections show that our member countries’ share will fall below 50% in ten years- unless we succeed in bringing the emerging, high-growth countries into our discussions.
Last year the OECD initiated a two-tier process of enlargement and enhanced engagement with 10 new countries. These economies account for nearly half the world’s population, 15% of global exports and a combined GDP of 5.8 trillion dollars. Accession talks with Chile, Estonia, Israel, the Russian Federation and Slovenia are already well advanced. In parallel, we are enhancing our co-operation with Brazil, China, India, Indonesia and South Africa with a view to possible membership, recognizing their weight in the world economy. We are convinced that we need to work with them to successfully address any global issue. This view was endorsed by the G8 leaders during the past Summit of Heiligendamm, when the OECD was asked to act as a platform for a dialogue on selected topics between G8 countries and the major emerging economies.
At the same time, the OECD’s relations with nearly 100 other non-member countries are broadening and deepening. Developing countries are increasingly present in our work. We also support the poorest countries in the world with the work we do in development cooperation and analysis.
This new configuration of the OECD will help us achieve workable solutions to the global problems we face. The sub-prime crisis, for example, has revealed the remarkable vulnerability of the global financial markets. The current tax evasion scandal in Germany ─ regarding an issue on which the OECD had already set off the alarm some time ago─ is another example that tests international co-operation. Financial regulators need to adapt fast to the rapidly changing financial landscape. At the OECD, we are intensifying consultations to address these policy issues, both in our own committees and via the Financial Stability Forum.
Another problem that does not respect borders is climate change. It is testing our capacity for cooperation and our creativity as policymakers. It is not that we do not know what to do. Yesterday, we launched the 2008 OECD Environmental Outlook here in Oslo which shows that the ambitious and comprehensive policies necessary to tackle climate change are achievable, available and affordable.
Our results show that, to put us on the path to stabilising greenhouse gases in the atmosphere ( at about 450 parts per million in carbon dioxide-equivalents) would reduce global growth by only about one tenth of one percent per year (on average) from now to 2050. This is an affordable cost, given our expectations for growth and living standards in the coming years. The cost of inaction would be far higher.
But how do we manage the transition to a low carbon world in an economically efficient and socially responsible manner? Countries have a range of financial and economic instruments at hand to limit emissions. Carbon taxes and emission trading provide clear market-based incentives for the development and implementation of technological breakthroughs. But if we were to use a uniform global tax, many developing countries would face far bigger GDP losses than the industrial world. Thus, the real issue is not how much it costs but who pays for it. Fair burden-sharing is largely a political call.
The right solutions require political will, from both developed and developing countries, as well as the best technical expertise. The OECD stands ready to help put the post-2012 climate regime on a solid economic footing. We have developed a better understanding of the threats, and of the impact and effectiveness of alternative solutions.
Reducing world poverty is another priority for the OECD. The OECD is committed to help combat poverty to meet the Millennium Development Goals, through a multidisciplinary approach; but also with specific instruments like our DAC Guidelines on Poverty Reduction. Our recently launched Partnership for Democratic Governance is assisting developing countries in building their governance capacity and improving service delivery to their citizens. Our work on Aid for Trade, in close collaboration with the WTO, is helping to assess the effectiveness of trade related aid for development. We are also working to increase the attention on neglected infectious diseases. And we are helping OECD members and many other countries alike to improve their education, their tax regimes, their investment environment and their environmental policies; to mention a few examples.
Population ageing and international migration are other interwoven global challenges. By 2030, the number of people of working age in the EU-25 is forecast to decline from 303 million now to 280 million. Here in Norway, the working age population is still growing but it can be expected to stagnate in 2010 and to decline some years thereafter. Migration can help slow the erosion of population levels and alleviate the fiscal pressures caused by demographic transition in advanced economies.
At the OECD, we are working to provide more accurate information and a better understanding of the patterns of immigration. Our flagship publication, the International Migration Outlook has become an indispensable reference on migration. Just two weeks ago, we published a Profile of Immigrant Populations in the 21st Century, a report that sheds more light on questions such as who the immigrants in OECD countries are, where they come from, what their educational levels are, and what jobs they work in. These are just a few examples of our work on global economic and political challenges. But we addresses many more, such as the political economy of reform to help governments make reform happen, measures to combat corruption or how to boost countries’ innovation capacity.
In closing, I would like to ask you for your advice and support. As we fulfil our mandate to become the hub of dialogue on global issues a close relationship and cooperation with parliaments becomes crucial. Your knowledge and feedback on policy issues is thus an important ingredient find innovative and effective solutions to the emerging challenges of globalisation Your participation as policy-thinkers and policy-makers is crucial for us to contribute to solutions that make economic sense and are politically viable. I look forward to working with you and hearing your proposals on how we could best co-operate in building a better world economy.
Thank you very much.