Czech Republic and the OECD: the next 20 years – Better Policies for a Better Future

 

Remarks by Angel Gurría,

Secretary-General, OECD

During the conference on the 20th anniversary of the Czech accession to the OECD

Prague

6 June 2016

(As prepared for delivery)




Minister Zaoralek, Ladies and Gentlemen,


I am delighted to be here in Prague to reflect on the 20 years of a fruitful partnership between the OECD and the Czech Republic. It is in fact a double pleasure given the success story that is the Czech Republic’s transformation; a story that one tells with joy! I would like to thank Minister Zaoralek and the Ministry of Foreign Affairs for their invitation and for organising this important event.


Two decades of mutually beneficial partnership – two decades of achievements


Let me start by illustrating what I mean by a success story: The Czech Republic has achieved not only a prosperous transition to a market economy. In recent years it has attained high standards of living and has also managed to maintain a high level of growth despite the international turmoil.


The steady progress achieved in the last two decades is reflected in many aspects. GDP per capita has reached 76% of the OECD average in 2014. The Czech economy is one of the most open in the OECD, with exports rising from 41% of GDP in 1995 to 85% of GDP in 2015. It has also become the 4th most integrated of OECD economies in Global Value Chains: as of 2011, 41% of domestic value added was driven by final foreign demand.


This economic progress has also yielded significant social achievements: for example, the share of 25-34 year olds with tertiary education more than doubled over 15 years, from 11% in 2000 to 30% in 2014. And inequality is among the lowest in the OECD with a Gini coefficient of 0.25 compared to the OECD Average 0.32.


The OECD has played its part in this record of achievements. We worked hard with successive Czech governments to strengthen their reform capacity through a combination of knowledge sharing and capacity building in order to make the recommendations from Czech Economic Surveys a reality.


The reforms undertaken between 2000 and 2012 are estimated to have contributed to a 6% boost to potential GDP per capita. We have also worked together to support strong, inclusive, sustainable growth, including specific national reviews of early childhood education, healthcare quality, and employment and skills strategies.


More importantly, this knowledge sharing has been a two-way channel: we have greatly benefitted from your lessons learnt, as well as the experience of Czech secondees, from numerous Ministries.


But many challenges at home persist


However, the Czech Republic continues to face important challenges. One of the main ones is the convergence of GDP per capita toward the OECD average which has stalled. In order to accelerate the catching-up process, the Czech Republic needs to better utilise its domestic drivers of productivity growth, allowing successful firms to grow and ensuring value-for-money from public spending.


With productivity growth slowing down in recent years, new reforms are needed to raise domestic innovation: for instance, boosting business R&D spending, notably by curbing the complexity of R&D policies and the innovation system, and improving access to finance for SMEs and start-ups. Raising skills across the labour force and removing high entry and exit barriers – like steep bankruptcy costs – would boost dynamism across the economy.


Also, a more effective public sector will reinforce productivity growth. Reforms should seek to boost competition in public procurement processes and improve coordination of infrastructure investment projects; in particular, joint provision of services needs to be broadened to compensate for the small size of local government authorities.


Finally, the Czech Republic should put a focus on strengthening gender equality and the integration of minorities. These measures are beneficial to the economy and to fostering a cohesive society. In particular, I encourage the government to further expand childcare and reduce disincentives to returning to work. And Czech municipalities need sufficient financial resources and technical support to effectively integrate the minorities.


Looking at the global challenges ahead


But looking at the bigger picture and moving forward to the next 20 years, the Czech Republic also needs to reflect on how megatrends, such as ageing, digitalisation, and environment pressures will affect the future and what policies will be helpful. The UN Agenda 2030, with its universal Sustainable Development Goals, is an ambition that will require massive work and reforms not only of policies but also of the policy process itself.


Whole-of-government approaches, policy coherence, multidimensional measurement frameworks and strategic foresight are just a few of the prerequisites for delivering the SDGs and for tackling tomorrow’s emerging challenges. The OECD is already advanced in preparing tools and policies to support the Czech Republic and broader international community in this important endeavour.


We are upskilling our core capabilities and are working with foresight tools and hybrid methods in order to complement and challenge our more quantitative, long term, conditional projections. These methods include: horizon scanning; visioning and back-casting; and scenario planning, among others. And we look forward to discussing them, perfecting them and sharing them with our Member and Partner countries.


Minister, Ladies and Gentlemen,


President Václav Havel said “it would be good if intelligent people, not only from the various ends of the earth, different continents, different cultures, from civilization's religious circles, but also from different disciplines of human knowledge could come together somewhere in calm discussion”.


In this spirit of co-operation and on shaping the economies and societies of tomorrow; we look forward to the next 20 years of fruitful collaboration with the Czech Republic! Let me assure you that the OECD will always stand by and help you in creating ‘better policies for better lives’.


Thank you.