oecd Model Tax Convention at 50 T Do multinationals pay more? I Tax burden nears peak Why university league tables score low
Putting development aid to work No 269 October 2008 www.oecdobserver.org
Making sense of a oris
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Answers for the environment. SIEMENS 1 CONTENTS
Observer
No 269 October 2008
LETTERS U-IUI DEVELOPMENT
Food crisis solution; Taxing truth 22 Make aid work
Latin America: Rebalancing the wealth of nations EDITORIAL Javier Santiso From the financial crisis to the
economic downturn: Restoring Thoughts on the crisis, page 7 growth is a key challenge Angel Gurria OECD.ORG Ministerial Council: Outreach, reform and the economics of NEWS BRIEF climate change
4-5 UK warned on corruption; Gender 30 US presidents visit; OECD Forum; gap persists; Tax progress mixed; Don't forget the planet!; Critical Economy; News shorts (healthcare, Internet pollution, education, migration); Soundbites; Plus ça change... Tax celebration, from page 10 31 Thomas Bata; Recent speeches by Angel Gurria; New ambassadors
ECONOMY 32 Calendar; Frankie.org Financial crisis and the economy Interview with Klaus Schmidt-Hebbel
BOOKS Save our savings 33 Learning the future; Ethical 10 OECD Model Tax Convention: recruitment Why it works Making aid work, page 22 Jeffrey Owens and Mary Bennett 34 New publications on SourceOECD
1 2 A model to celebrate 37 Focus on taxation
Peter A. Barnes, General Electric 38 Fishy terms ORDER FORM.. .ORDER FORM... SOCIETY
1 5 Do multinationals promote better DATABANK
pay and working conditions? Ministerial Council highlights, page 29 41 Alexander Hijzen and Paul Swaim Healthy economy?; F igher prices
J2 Economic indicators 18 Education: Breaking ranks ft I oecd
44 Tax burden nears pee k; Importing Observer low skills
www.oecdobserver.org
On the cover The financial crisis sweeping world markets is the worst since the Great Depression. As the crisis bites into the real economy, hard Making sense of a crisis lessons are being learned. Understanding causalities is a pre-condition By OECD Observer for good policymaking, since bubbles and crises will occur again if ©Darren Whiteside/Reuters the sources are not addressed directly. The ultimate goal of our actions is to avoid a wide, protracted global economic downturn, restore the conditions for growth and ensure this crisis cannot be repeated. OBSERVER
Letters
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ISSN 0029-7054 Tel.; +33 (0) ] 45 24 80 66 Fax: +33(0) 1 45 24 82 10 Subscribe to the OECD's award winning* magazine today at www.oecdobserver.org/subscribe.html or use the order form [email protected] on page 38. OECD in Figures, the original pocket databook, free with every subscription. Founded in 1962 "Highly Commended Award 2002 from the Association of teamed and Professional Society Publishers. The magazine of the Organisation for Economie Co-operation and Development Food crisis solution wisely in agriculture, we can Financial Centre which has overcome the world food crisis rapidly emerged as a key global OECD Publications As your commentary "Food 2 rue André-Pascal Pnces: The Grain of Truth" and reduce chronic poverty and player. 75775 Paris cedex 16, France obse rvcr@oecd .org rightly points out, the response hunger in the long run. It has benefitted also from the www.oecd.org to the food crisis should expansion in Islamic finance. involve both short and long- Shenggen Fan and Mark Published in English and French This has helped to revitalise by OECD and term strategies, including Rosegrant Pressgroup Moldings Europe SA International Food Policy Labuan, Brunei and Bahrain. San Vicente, 16-6-3 policies that foster growth and Research Institute But we are also seeing the 46002 Valencia, Spain development and improve Tel.: +34 96 303 1000 Washington, D.C. emergence of four centres in the Fax.: +34 96 303 1234 agricultural productivity Caribbean Trinidad li. OECD Observer No 269 October 2008 EDITORIAL From the financial crisis to the economic downturn Restoring growth is a key challenge \f Angel Gurria, Secretary-General of the OECD The financial cnsis sweeping world markets is the worst since the Now, we must ensure that the rescue packages work, so that lending Great Depression. While the crisis is biting into the real economy, resumes and payments systems are secured. For this, markets must recover hard lessons are being learned. How should policymakers move some normality, while avoiding excessive volatility forward, particularly as room for manoeuvre is being squeezed? We must also think about the long term, and OECD is working alongside The size and duration of the crisis remain uncertain, but the cost is governments, central banks and international institutions in advancing the immense, in subprime losses, wiped-out stocks, rescue packages and reforms in regulatory and accounting standards, lending practices and more. corporate governance needed to address the crisis. We should also respond to the call of political leaders to rethink the global economic governance The OECD has from the outset welcomed the systemic rescue plans infrastructure, in order to increase its effectiveness and legitimacy in the US and Europe. By injecting liquidity, providing guarantees, dealing with troubled assets and recapitalising the banking system, Overall, a more holistic culture of risk management, compensation issues these actions should help relaunch bank lending and get the economy and responsible, ethical and accountable management must be forged, going again. grounded in better regulatory structures and stronger implementation of agreed standards, such as the OECD Principles of Corporate Governance, We have seen boom and bust cycles before, but these are exceptional as well as improved financial education and risk awareness among all users circumstances. This time the financial system-the conveyor belt through of financial markets. Other policies too must be improved, not just which the economy works-has been blocked. Governments had no concerning banking, but also related to housing, for instance, so that low- choice but to take action. income families are not unfairly exposed to risky mortgages. We have welcomed the strong leadership shown by several countries After all, what really matters is the economic welfare of people, their which has helped restore the functioning of the markets. We must now homes, businesses and jobs. The ultimate goal of our actions is to avoîd a tackle the underlying causes. Moreover, as markets remain volatile, the wide, protracted global economic downturn, restore the conditions for crisis has placed serious doubt in people's minds about the reliability of growth and ensure this crisis cannot be repeated. Already before the cnsis, their banks and financial services and indeed, about the credibility of the OECD had forecast a slowdown in some countries, and now the outlook market system itself. How can governments restore confidence and get seems dimmer as we prepare our next OECD Economic Outlook for late the markets back on their feet? November. It is as yet unclear to what extent government intervention will affect budget deficits and aggregate demand, but clearly sound fiscal Understanding causalities is a pre-condition for good policymaking, since management will be needed. Also, the degree to which lower inflation will bubbles and crises will occur again if the sources are not addressed allow for a more accommodating monetary policy remains uncertain. directly. There is wide agreement that markets need more effective monitoring and regulation, and stronger corporate governance. After all, Policy measures to restore economic growth are therefore essential. We from Wall Street to Main Street and across world financial centres, the should look at the underlying trends and policy levers that will allow a new- markets invisible hand had gone astray Excessive lending at cheap era of increased productivity and growth. But to do so, we also need to deal interest rales fed an insatiable demand for high-risk financial products, with issues such as competition, education, and the required reforms. Social backed by flawed approvals from rating agencies. An already complex measures will also have to be reinforced to address the expected rise in market became unreadable. What eventually transpired while asset prices unemployment. And we must not neglect other challenges either, such as dropped was a market excessively loaded with so-called "toxic" debt. meeting development aid targets and tackling climate change. The reaction was sudden, and the deleveraging brutal, but while the These exceptional circumstances may reshape priorities and policy crisis itself was not forecast, no-one can say it came completely out of the frameworks in several OECD countries. The crisis casts a shadow, but blue. Over the past year some OECD members expressed concerns about there is a bright side, as lower commodity prices create precious wiggle lightly regulated, highly-leveraged financial products, and several months room for policy, and robust emerging economies inject some balance to the ago we wrote about the gaps in regulatory and accounting standards, and world economy. highlighted failures in corporate governance. The market system is in crisis, and governments are in the driver's seat. Taie, there may have been ignorance about the amount of debt Our leaders must solve the financial crisis together. As a hub for dialogue outstanding and who was exposed, but clearly the regulatory structure on global challenges, our new, more plural and relevant OECD is helping was simply unable to deal with the likes of mortgage-based securities, to chart the way forward. Times are uncertain, but our commitment will derivatives and credit-default swaps. not be found wanting* OECD Observer No 269 October 2008 u UK warned Economy The latest composite leading Exports were up 5.6% on corruption indicators (CLI) continued to compared with the same period laws point to slower economic in 2007. US quarter-on-quarter activity ahead in the OECD export growth fell 0.2% and area, by falling 0.7 points in July imports were down 0.9%. 2008 to stand 5.2 points lower An OECD anti-corruption deficiencies in its laws on bnbery than a year earlier. The CLI, Unemployment in the OECD which reflects the likes of order body has sharply cnticised of foreign public officials and on area stood at 5.7% in May the UK's failure to bring its corporate liability for foreign books, building permits, 2008, 0.1 percentage point anti-bribery laws into line with its bribery, which it said has hindered sentiment surveys and long- higher than the previous month term interest rates, indicates a international obligations. The OECD's investigations. and 0. 1 percentage point higher Working Group on Bribery, chaired weakening outlook in all the G7 than a year earlier. Jobless by Mark Pieth (see photo), has now The group acknowledged positive OECD economies. It pointed to figures in the euro area, the US urged the rapid introduction of new aspects in the UK's fight against expansion in China, Brazil and and Japan were broadly stable, legislation to correct this at the foreign bribery, including Russia, but a more sluggish with some declines, including India. earliest possible date, so reiterating resourcing up a specialised unit of in Germany where it was previous recommendations from the police for foreign bribery Annual inflation in the 2003, 2005 and 2007. investigations. But recent cases OECD area at 4.7% in Consumer prices have highlighted the need to OECD lota! Current UK legislation makes it very safeguard the independence of the August 2008, easing difficult for prosecutors to bring an Serious Fraud Office and eliminate from 4.8% in the year to effective case against a company for unnecessary obstacles to July On a monthly basis, alleged bribery offenses, the group prosecution. Further reforms the pnce level decreased should be dealt with as a matter of by 0.1% m August, has found. Although the UK ratified Food 3 7 A compared with 0.4% in the OECD Anti-Bribery Convention political priority, the group says, 10 years ago-the convention makes including the need for effective July Energy consumer prices increased by bribery of foreign officials a criminal corporate liability for bribery and Energy ] 20.9 offence in all OECD countries-it has removing considerations of 20.9% year-on-year in so far failed to successfully prosecute national economic interest from all August, up from a rise of 7.2% in July. All items any bribery case against a company. investigative and prosecutorial non-food decisions. non-energy Despite a modest The OECD group, which brings Source: OECD recovery of quarterly together all 37 countries that are For more detail on the UK "phase trade volume growth in parties to the OECD Anti-Bribery 2bis" report on the application of the first quarter 2008 (2.5% for 7.4%, 1.1 percentage point Convention, is "disappointed and the OECD Anti-Bribery exports and 0.4% for imports), lower than a year earlier. seriously concerned" about the Convention, please visit year-on-year import volume for UK's continued failure to address www.oecd.org/daf/nocorruption the G7 countries continued to For more on these and other slow to only 1%, the lowest rate economic stories, go to since the first quarter 2006. www. oecd.org/statistics Gender gap persists more to ensure a level playing field. The report highlights policies to Women are 20% less likely than help fight discrimination, and men to have a paid job and they makes recommendations, such as in Plus ça change earn on average 17% less, education and training, reforms to according to the latest edition of incite managers to drop A unified financial market is now emerging in which a wide variety of OECD Employment Outlook. At discriminatory practices, and competitive forms of financing and savings instruments is available. . .In virtually least 30% of the gap in wages and enforcement of existing legislation. all OECD countries, policies now favour liberalisation and the gains it can bring 8% of the gap in employment The report also examines youth in resource allocation and the additional opportunities for savers and investors. rates in OECD countries result labour markets, informal "Liberating capital movements: A new OECD commitment", No 1 59, from discriminatory practices in employment, mental health at work August-September 1989. the labour market. and multinational pay (see article, page 15). A I oecd Virtually all OECD countries have anti-discrimination laws in place, Visit www.oecd.org/ Observer but governments still need to do employment OECD Observer No 269 October 2008 NEWS Observer lews to improve transparency and establish Tax progress mixed effective information exchange for tax Soundbites purposes. However, a report issued on The Isle of Man and the UK have signed a Trustwordy 29 September said that despite some bilateral agreement for the exchange of "Investors and lenders have moved from trusting advances, progress on exchange of information for tax purposes. The new anybody to trusting nobody." information on tax issues was more limited. agreement announced end-September 2008 Martin Wolf, Financial Times, 7 October 2008 "Significant restrictions" on access to bank was hailed as a further step in bringing "The west is down and the state is up. Moreover, greater transparency and fairness to cross- information for tax purposes remain in three OECD countries-Austria, democracy itself risks falling into disrepute if border financial transactions. Since the start solutions are not found." of 2007, jurisdictions committed to the Luxembourg and Switzerland-and in a Dominique Moisi of France's Institute for OECD principles of transparency and number of offshore financial centres, International Relations, quoted in the Financial exchange of information have signed a total including Liechtenstein, Panama and Times, 6 October 2008 of 17 bilateral agreements with OECD Singapore. Further, a number of such countries. In July, Germany and Jersey signed centres had failed to follow through on "The most urgent policy challenge. . .is to secure trust in transactions." the 16lh bilateral arrangement. commitments. Tax Co-operation: Towards a Level Playing Field-2008 Assessment by the Korea's president, Lee Myung-bak, referring not to Global Forum on Taxation is available at the financial crisis, but the Internet economy, quoted A total of 35 jurisdictions have now in The Chosun Ubo, 18 June 2008. See also page 30. committed to work with OECD countries www.oecd.org/ctp/htp News shorts which also examines water depletion, long-term, permanent demand for low- subsidies, organic farming and farm skilled labour in sectors such as home management, is available at care, food processing and construction. Health spending grew in real terms by www.oecd.org/agnculture, with Policies that encourage migrants to return just over 3% on average across the OECD data available at have limited impact too, the report shows. area in 2006, the slowest rate since www. oecd. org/tad/env/indicators Around 4 million people emigrated to 1997. But spending remained unchanged OECD countries in 2006 on a permanent- as a share of GDP compared with 2005, at In education, governments will face tough type basis, an increase of 5% on 2005. See 8.9%. The online edition of OECD Health decisions on funding and quality as more page 44 and www.oecd.org/migration Data 2008 includes joint OECD, Eurostat secondary school students enter university, and WHO data, and shows health OECD warns. Entry rates to university- Hungary should invest more in research expenditure by type of services and goods, level education have risen by nearly half and development to boost its economy, a healthcare providers and financing on average in OECD countries in the last new report says. Despite economic- sources. The data can be queried in 10 years, according to the 2008 edition of progress, business spending on R&D was English, French, German, Italian, OECD's annual Education at a Glance, but less than half the EU average in 2006, at Spanish, Japanese and Russian. See funding for tertiary education in many 0.48% of GDP, compared to 1.1%. To www.oecd.org/bookshop and countries is barely keeping up, and in remedy this, the OECD advises Hungary www. oecd . org/health some cases has fallen. Public money still to improve its science and technology pays most tertiary education costs in most system and put more emphasis on Pollution of rivers, lakes, and aquifers OECD countries, though average private innovation in small and medium-sized exceeds recommended limits for spending has risen sharply in recent years. firms, including services. For more, see drinking water in farming areas in many Order Education at a Glance at Hungary: OECD Review of Innovation Policy OECD countries, says a new report. www.oecd.org/bookshop or visit 2008, at www.oecd.org/bookshop According to Environmental Performance of www.oecd . org/education Agriculture in OECD Countries since 1990, Peru has become the 41st adherent to excess levels of nitrates, phosphorus or Developed countries should adapt their the OECD Declaration on International pesticides were found in more than one labour migration policies to demand for Investment and Multinational out of f 0 monitoring sites in 13 OECD workers in all areas of their economies, Enterprises. In adhering, Peru commits countries. Farm contamination of coastal not just the highly skilled, the OECD to treating foreign investors in the same waters is also a problem, the report says. International Migration Outlook 2008 argues. way as domestic investors and to Pesticide use has declined in OECD While OECD countries compete to attract promoting responsible business conduct. countries since 1990, but the persistence high-skilled immigrants, many are wary of The country in turn benefits from such in soil and water of older, even banned, accepting less-skilled immigrants, despite assurances for its investors abroad. See pollutants remains a concern. The report, strong demand. In fact, the report sees www.oecd.org/daf/investment OECD Observer No 269 October 2008 Guaranty Trust Bank Proudly African Truly International Guaranty Trust Bank First African bank listed on the London Stock Exchange (Main Market) Retail Banking Corporate Banking Private Banking Investment Banking Treasury Services I Wouldn't you rather bank with us Just dial : 0700 GTCONNECT (0700- 48266-6328), 234-1-448 0000, 0803-900-3900, 0802-900-2900 Please add the prefix 01 for trunk calls and 234 1 for international Nigeria Gambia Sierra Leone Ghana UK ECONOMY Financial crisis Financial crisis and the economy commercial-paper lending, and money markets come to a standstill, lending to Interview corporations and households freezes. Spending, production, and employment could potentially collapse. Governments and central banks are very What are the main impacts of aware of these huge risks to the world the financial crisis on the real economy as proven by their quite radical policy actions over recent weeks. These economy, and what lessons measures aim at rescuing the global financial might we draw from the crisis system by restoring trust and re-building for the future? The next OECD financial institutions' balance sheets. They were unprecedented in their scale, their use of Economic Outlook due on new policy tools, and their international co¬ 25 November will provide ordination across the major OECD economies. some answers. We asked the new OECD Chief Economist Now we have to see how fast and effective Klaus Schmidt-Hebbel for these actions turn out to be. Schmidt-Hebbel some early insights. What are the implications for the economy? OECD Observer: In its September update, "We expect a significant We in the Economics Department of the the OECD painted a rather sombre outlook OECD are in the process of preparing our weakening in the world for the G7. What issues are you focusing 2009-2010 projections for 30 OECD and 10 economy, the question is for on now in light of the financial crisis and non-OECD economies, which will be issued can you provide some indications of your in the Economic Outlook on 25 November. Our how long" thinking ahead of the forthcoming OECD view will clearly be shaped by the most recent Economic Outlookl available data and how we see the effects of The question is for how long. It is likely that the financial crisis unfolding. Klaus Schmidt-Hebbel: Our last assessment of recovery will be slower than in recent the economy in September came just before Our base scenario is built on the premise that economic downturns, but the actual pace of the financial turmoil turned into a full-blown the current freeze in short-term financial recovery will depend largely on how quickly financial crisis. That assessment was still financial markets resume transactions and markets will be resolved in a relatively short concerned with the effects of three factors that time span, but that bank deleveraging and lending, even if that lending remains relatively had developed since mid-2007, namely rising recapitalisation, as well as re-building of trust restricted, at least compared with 2002-2007. commodity prices, a housing market in the markets, will take much more time. contraction in several OECD economies and, This would mean a more protracted period of But beyond financial market interventions, yes, financial turmoil. But now that turmoil restrictive financial conditions and would let's not forget that macroeconomic policy has turned into a systemic crisis of world affect loans and the access to funding should also play an important role in financial markets, and this looms over generally. At the same time demand for loans cushioning the recessionary impact of the everything else. is shrinking anyway as slumps in asset prices financial crisis. In other words, as economies and a general feeling of uncertainty cause quickly weaken and inflation recedes, there Since mid-September of this year, mutual trust households and firms to rein in their will be room for interest cuts in some OECD between financial market participants has spending plans. economies, not to mention timely, temporary, quite simply evaporated, with a breakdown of and targeted fiscal stimulus as well. short-term financial transactions in major So, we expect a significant weakening in the OECD economies and a global meltdown in world economy, with many OECD economies Which are the main risks in your scenario? stock markets. When inter-bank lending, slipping into recession sooner or later. There are two major, related risks to the 71 OECD Observer No 269 October 2008 ECONOMY Financial crisis downside. On ihe one hand, the current remember that it started as a subprime Third, much better contingency planning and freeze in financial markets and lending could mortgage lending crisis m the US, but crisis management will be needed. After all, take more time to thaw out, with more severe gradually spread into other markets and this crisis was managed in a pretty haphazard effects on spending, output and employment. countnes through a combination of market way. Governments moved very late on from This would lead to a deeper and more failures and regulatory weaknesses. Where ad hoc and selective emergency bailouts to a persistent recession. markets failed was in poor governance and comprehensive rescue operation of their the structures of executive incentives that financial systems. And only very late on did The other downside risk we see comes from were inappropriate lor the stability ol financial they shift their locus from removing toxic- the as yet unknown budgetary costs of firms. They failed in the opacity of financial assets to providing comprehensive support to governments' rescue plans. When the instruments and their trading, and a lack of different components of balance sheets, by financial crisis and recessions are behind us, public information about balance sheets of providing guarantees on deposits and inter¬ fiscal adjustment will be called for 10 maintain financial institutions and their off-balance bank loans, acquiring bad assets of banks and confidence in public debt and currencies, sheet vehicles. non-banks, and providing new capital. The particularly in those countnes that have had approach got better only at the very end. to foot high costs in bailing out their banks. At the same time, regulatory omissions and failures were rife. Many countries lacked Last but not least, we require rethinking But there is also a favourable prospect to comprehensive and unified regulation of of our current international financial bear in mind, and that is the easing in oil, architecture. This includes international food and other commodity prices caused by co-operation in regulatory reform of a weaker world economy. If the downward Our first task is to get past financial and capital markets, accounting standards, and treatment of international trend proves larger than we currently this crisis and minimise the envisage, this would bring still lower financial transactions. The aim is to inflation and gains in real incomes for strain and suffering of the strengthen both integration and stability of commodity importers, as well as providing people most hurt by it world capital markets. In addition, we have more room for further monetary policy to rethink the way international financial easing. institutions provide support to countries financial conglomerates and their market facing capital and external-payments crises, Are public fears of a global depression instruments, while capital regulation and like Iceland, Hungary, and the Ukraine are justified? accounting rules exacerbated pro-cyclical today. A depression is an ambiguous concept, some bank leveraging and lending. Weak oversight think of it as a very deep and drawn out of the rating agencies did not help either. These are just some key lessons, there may be recession. I think that we are certainly not others. OECD can play a major role in there. Of course, this is the worst financial Future regulatory reform will clearly aim to addressing them. crisis in decades, but a repeat of the 1930s improve business models, transparency, Great Depression is highly unlikely, thanks in disclosure, and oversight of financial You have just joined the OECD after large part to those massive rescue plans now institutions. At the same time, financial several years at the Central Bank of Chile, in place. market participants must never assume which is a candidate country for OECD bailouts are the norm, and reforms must membership. What added perspective do Did you foresee the crisis? therefore minimise the risk of "moral you think your background can bring lo Most professional economists know that hazard" affecting future financial market the job? business cycles are alive and kicking, and behaviour. Also, while major regulatory You are right, 1 spent the last 12 years of my expected the particularly intense 2002-2007 changes of financial and capital markets will career at the Central Bank of Chile, and eight credit boom and economic expansion to turn be required, both nationally and across years before that at the World Bank. I am a downwards at some point. Yet the precise countries, there is a clear and present trap to citizen of both Germany and Chile, my timing and intensity of future recessions are avoid, and that is the risk of a regulatory children were born m the US, my wife is impossible to predict. In this particular case, over-reaction. Excessive regulation can do Chilean-German-Costa Rican, I lived during neither economists nor market participants, damage too, by inhibiting future financial some of my teenage years in Brazil, and I love nor indeed governments foresaw a financial innovations, market integration and growth. France. I truly feel more like a world citizen crisis of the type and magnitude we have We require better regulation, not just more than a national of any individual country, now. The collapse of trust and subsequent regulation. which provides a strong motivation for credit freeze m the wake of the Lehman joining the OECD. My professional life Brothers collapse was a shock not only to the The second lesson is that we really have to combines academic experience-1 am a lull system but to most economists and market work harder at strengthening the counter¬ professor at the Catholic University of Chile, participants as well. cyclical features of fiscal, monetary, and associate professor at the University of Chile, financial policies, both to reduce the intensity and just resigned as President ol' the Chilean What policy lessons can we learn? of future business cycles and lower the Economic Association- research and policy It is still early in the game, but I nevertheless likelihood of a global ensis like the current advice at both the World Bank and the see lessons to be drawn in four areas. First, one happening again. Central Bank of Chile. I also worked as a 18 OECD Observer No 269 October 2008 ECONOMY Financial crisis consultant with some 25 industrial and emerging-market economies and many Deposit insurance international organisations. Coverage limits, US$ equivalents, 2008* My specialities include growth and structural 500 000 reforms, macroeconomics and related policies, international economics and development, 400 000 Temporary limits as of 8 October 2008 and financial markets and pension systems. Early 2008 I have worked both on and in developing, 300 000 emerging-market, and industnal economies. So I have not only watched how the global 200 000 economy has shifted, I understand the pressures countnes face, whether rich or poor. 100 000 1 1 1 1 1 1 1 1 1 With the crisis, I certainly could not have 0 come to the OECD at a more testing time, both for our member countries and for me, :#/ * # From my perspective, the stakes are high but straightforward. Our first task is to work intensively to get past this crisis, and to minimise the strain and suffering of the Save our savings people most hurt by it. Beyond that, we have to work even harder in evaluating the policy Amid the worst current financial options and recommending the structural and payments may continue, proponents reforms that member countries require in crisis since the 1930s, EU leaders say, whereas critics of deposit insurance order to achieve higher, more stable, growth have pledged to protect savers' schemes suggest they encourage excessive and more welfare for their people. Finally, as deposits. Already most OECD countries risk-taking by banks as the institutions are the influence of emerging economies on the have explicit deposit insurance schemes protected by a public safety net if things global economy will continue to increase, we for savings up to certain limits. In a go wrong. To minimise this "moral will have to work on the integration of number of countries these have now been hazard" it is important to promote good emerging economies into the world economy raised temporarily. governance by banks and ensure a sound and their increasing engagement with our supervisory framework. member countries. For this reason, the Until the latest statements suggesting OECD's new global focus led by Angel Gurria unlimited guarantees, legal coverage was Financial safety nets consist of three must be fully supported. highest in Norway, France, Italy and interrelated elements: prudential regulation Mexico. In the US the amount covered has and supervision; a lender of last resort; and Finally, let me mention that I am both been raised temporarily to US$250,000 deposit insurance. If a country has developed happy and proud to join this exceptional from $100,000 per account. The graph mechanisms in only one or two of these organisation, with its teams of outstanding shows coverage in early 2008 and the three areas, it is still likely to face difficulties professionals both in economics and beyond. position as of 8 October 2008, based on in preventing or resolving serious problems We are all committed to provide the best government statements. in its banking system. SDB services to our member countries, and to help them return our economies to good health For a savings insurance system to be and robust long-term growth. effective in preventing bank runs in times * "Unlimited ?" is an interpretation of the of crisis, coverage must be set at adequate implication of recent announcements or policy levels. Savers need to know the limits of statements for effective coverage limits and that References the coverage. But consumer surveys have the data shown may not be identical to existing shown that knowledge of existing schemes legal limits. As such the data may not be strictly OECD Economic Outlook No 84 will be released is poor. A recent OECD study compared on 25 November 2008. comparable across countries. the extent of coverage as of June 2008 in OECD (2008), OECD Economic Outlook No 83, 33 countries (see references). OECD (2008) "Financial turbulence: some June, Paris lessons regarding deposit insurance", in "What is the economic outlook for OECD counlries? Such guarantees help banks and Financial Market Trends No 94, Paris. Available at An interim assessment", September, Paris. See www.oecd.org/dataoecd/0/5 1/4 1 229 145 .pdf depositors feel more secure so that lending www.oecd.org/finance OECD Observer No 269 October 2008 91 direct parents were those senior tax officials from European countries who, in 1956, began a collective project aimed at the development of uniform tax treaty provisions under the umbrella of the OEEC. Like all parents, they did not know what their baby would grow up to be. Back in those days the pace of life was more sedate. Delegates would come to Paris a few times a year lor week-long drafting sessions. By mid-week exhaustion would set in, so each Wednesday a trip to the countryside was arranged. Refreshed, the delegates would then return to their labours. By 1963 a full draft was ready though it was not until 1977 that the model Double Taxation Convention was published. The 1963 draft was essentially the consolidation of four earlier drafts, the first one of which was published in 1958. This is why we consider that the birth of the OECD model was 1 July 1958. At the outset, there were fewer than 1 5 countries involved in drafting the first text; by 1963 the OECD had expanded to 20 countries. It was primarily OECD member countries that contributed to the model, but since 1996 we have opened up the process to non-OECD countries and to business and each year in September, the OECD hosts a global forum of government officials from around the world who work on tax treaties. We have also put in place a Jeffrey Owens and Mary Bennett global network of tax centres for officials from non-OECD countries to learn the skills OECD Centre for Tax Policy and Administration (CTP)* of negotiating treaties and applying them: over 1,000 tax officials from across the globe Can the OECD Model Tax Convention, which is 50 years old have completed these courses. this year, continue to fulfill its role of helping to make Today there are more than 3,000 tax treaties international taxation fairer and more manageable? Probably in force around the world based on the yes, though there are challenges. OECD model. Some 30 non-OECD countries have set out their positions on the Half a century ago, the Fiscal question to resolve was straightforward model. We do not always agree with each Committee of the Organisation tor enough: how might governments claim their other, but at least we know where we European Economic Co-operation rightful taxation from growing international disagree. (OEEC), which later became the OECD, businesses, while not leaving corporations published a first draft installment of how a worried about being unfairly taxed across the Quite simply, the OECD model has model treaty on international taxation might different jurisdictions in which they operate? established itself as the means of settling the look. The global economy was starting to most common problems that arise in the become more integrated in the 1950s and The OECD Model Tax Convention was born. field of international taxation. By enabling a the intention was to assist businesses and It was an interesting baby. The so-called certain harmonisation of double tax treaties, governments by helping to avoid double London and Mexico models of the League of it guides bilateral negotiations and helps taxation and to prevent tax evasion. The Nations are clearly in the family tree, but the settle disputes on a uniform basis. no OECD Observer No 269 October 2008 ECONOMY Model Tax Convention Consider the issue of double taxation. If a US Since 1991, the Committee on Fiscal Affairs used, which would indicate that the company sells its products in the US and has provided periodic and more timely procedure was working as intended derives income from this activity, it will pay updates and amendments, without waiting because the parties had reached taxes in the US. If the same company sells its for a complete revision. To date, there have agreement without the need for binding products also in France, it may well have to been updates in 1992, 1994, 1995, 1997, arbitration. pay tax on the same income both in France 2000, 2003, 2005 and 2008. 2. Ensure a more consistent application and in the US. But how much tax should the of tax treaties. company pay and to which tax authority? Take the 2008 update, which has just been 3. Start work on a multilateral instrument The detrimental effects of getting this double approved with a number of interesting on value-added tax (VAT). It is changes based on reports issued by the OECD remarkable that 141 countries around the over the past couple of years. For instance, it world have a VAT, but there is no Today there are more than introduces a mandatory, binding arbitration agreement on many important issues, 3,000 tax treaties in force provision to resolve difficult unsolved issues such as the place of consumption. around the world based on the through what we call the mutual agreement procedure, with expanded and clarified 4. Find a way to speed up the process of OECD Model Tax Convention commentanes on how the mutual agreement updating treaties based on the model. procedure itself should operate. 5. Give greater recognition to the fact that taxation wrong on international trade, treaties are also about eliminating tax investment and confidence are self-evident. We have clarified the methodology for evasion and not just about eliminating Clearly, neither business nor government determining the profits attributable to a double taxation. wants to be out of pocket or feel discouraged permanent establishment (e.g. a branch) 6. Encourage a greater involvement of or discriminated against. Double tax treaties through which a resident of one country senior policymakers in treaties. Treaties help resolve these conundrums by providing carries on business in the other country-an are too important to be left to (more agreed rules for allocating taxing rights on issue of particularly keen interest to junior) negotiators. cross-border income between the two businesses operating in the financial sector. 7. Provide a greater co-ordination among countries, so that the US company is free OECD member countries \is-a-\is the from double taxation on its income. And we have also made clarifications with new countries that are entering the treaty respect to the thorny concept of "place of work for the first time (e.g. Hong Kong, The OECD Model Tax Convention helps effective management", which is the tie¬ China). resolve such problems, though it is not breaker test to solve cases where binding by law. Rather, the OECD issues a corporations have dual residency for tax 8. Review the nature of the reservations Recommendation based on the common purposes, and have provided an alternative and observations in the model, and how position of its members, who in turn commit provision that moves away from the "place of these relate to setting out minority views to follow the model and its commentaries, effective management" test and refers the m the commentaries. while taking on board its reservations, when case to the "mutual agreement procedure". 9. Increase the involvement of non- concluding or revising bilateral tax treaties. OECD member countries and work The extensive and regularly updated So what of the next 50? harder at gnftng them a seat at the table. commentaries that accompany the model The OECD Model Tax Convention has a 10. Finally, none of this will happen provide guidance on the accepted conundrum of its own to resolve: how to unless governments put more resources interpretations of the main text and have remain firm while adapting to new into national departments responsible for come to serve as a very useful reference to circumstances with ever greater speed. True, international tax issues. taxpayers, tax administrations and the we have met new challenges before-we courts, whether in OECD member countries answered how e-commerce should be taxed Raffaele Russo from the CTP also or elsewhere around the world. across borders, for instance-but new contributed to this article. challenges continue to emerge, such as References For this "soft law" approach to work, sovereign wealth funds, amid heightened adaptability and transparency are needed. expectations on the part of governments, OECD (2008), Model Tax Convention on Changes to the model are always published international business and the public. Income and on Capital, seventh edition of the in draft form in advance, and member condensed version, Paris. countries have time to discuss and decide Can the OECD Model Tax Convention For more on tax treaties, see whether or not further changes are required. continue to meet such challenges? We www.oecd.org/ctp/tt On-going dialogue with business and non- believe it can, but here is a wish list of ten See also www.oecd.org/ctp members is key in setting proper items which could really make a positive Special note on transfer pricing international tax rules and the model has difference for the next 50 years. A draft on the Transfer Pricing Aspects of always drawn strength from the input by tax Business Restructurings is now online for authorities and the changing experience of f . Make arbitration provisions the norm discussion at www.oecd.org/ctp/tp/br. Please business over the years. in treaties. It would probably be rarely submit comments by 19 February 2009. 11 OECD Observer No 269 October 2008 ECONOMY Model Tax Convention A model to celebrate Peter A. Barnes Tax Counsel-International, General Electric In half a century the OECD Model Tax Convention has established itself as a model for international business. Here is how. From the vantage point of a tax Model Income Tax Convention, worked position as the benchmark against which practitioner in 2008, it is easy to just fine, thank you. There was no need for essentially all tax treaty negotiations take forget that period just a decade a radical realignment of tax principles. place. ago when e-commerce was going to revolutionise the business world-and And therein lies the reason we celebrate the I recently talked with a former lax treaty the tax world. 50lh anniversary of the OECD Model Tax negotiator for China, who described one of Convention: while the world ol the key negotiations in which she Source countries; residence countries; international business has changed and participated with a major developing permanent establishment concepts; income grown and changed again, the OECD country. What was the template agreement attribution; we were worried that all of our Model Tax Convention has proven its value from which the two countries began their existing tax concepts would be undermined over five decades as a framework for how discussions7 The OECD Model Tax by e-commerce, so that we would need to we think about international tax, and the Convention, of course, even though neither invent a whole new way of taxing treaty shows every prospect of serving that country is an OECD member. international business. same role for five decades more. It is easy to be cynical about the OECD What happened7 E-commerce grew and The OECD's model tax treaty was not the Model Tax Convention. Yes, the OECD grew and grew. But after hundreds of first such treaty (that honour belongs to the represents the developed world and the articles in the tax press, reports by tax model tax conventions developed by the needs of its economies. Yes, the voices of authorities in the US and other countries, League of Nations in the 1920s), nor is it the developing economies are sometimes and an extensive review by the OECD's five the only such model of importance today heard only faintly, despite a vigorous Technical Advisory Groups on e-commerce, (because the United Nations model, first outreach effort by the OECD's Committee a startling consensus emerged: our existing issued in 1980, still has persuasive on Fiscal Affairs during the past ten years. tax concepts, and the framework for authority for some countries.) But the Yes, reaching consensus on reports and international tax embodied in the OECD's OECD model has achieved a consensus model language can be painfully slow. 112 OECD Observer No 269 October 2008 ECONOMY Model Tax Convention But make no mistake: the OECD is a Multinational companies are rapidly A second example to show the importance vitally important organisation and the establishing their own offices in emerging of the OECD model is the role it serves m OECD Model Tax Convention is a markets in Africa, the Middle East, South weighing competing positions and then tremendously important tool for America and Asia, where previously these reaching a decision. It may not always be smoothing the way of international companies relied on locally owned the right decision ("right", at least, in each business and global trade. distributors. These new offices are feasible of our own minds!), and it certainly is only because the basic principles of not the only possible decision. But it Examples abound; 1 will offer only two. taxation articulated and demonstrated by is a decision with finality. Therefore, First, the writing and analysis of the OECD the OECD and its Model Tax Convention a construction project constitutes a on principles of international taxation are are generally applicable. When a permanent establishment if it lasts more the most extensive source of guidance in multinational company first enters Kenya, than 12 months-not three months, or the field. Indeed, there is no other or Sri Lanka, or Uruguay, there is a six months or nine months. Profits from authoritative voice that even ranks m the common language to facilitate the operating aircraft in international traffic same tier as the OECD. discussion with the local officials on will be taxed on a residence basis, not a taxation. source basis. If a practitioneror, say, a government official in an emerging country-has only Without the OECD, we still would have The League of Nations was never able to two books on international tax in their "permanent establishments" and "taxation summon the courage or authority to issue at source" and many of the other building a single model. So, the League eventually blocks of international tax. But there developed four models. The OECD is at its There is no other authoritative would be much greater variation in how best when it weighs the competing those tax concepts would be defined and positions with respect to an issue and then voice that even ranks in the applied. offers a single consensus proposal. Once same tier as the OECD the OECD position is articulated, the Here is an analogy: imagine giving burden of persuasion shifts to anyone who athletes in different countries a net, a ball seeks to advance a different position. As library, it is fairly easy to guess what those and a field and telling them to "go play". the OECD membership expands and the books would be: the OECD Model Tax Everyone may enjoy the experience, lint number of countries with substantial Convention and its commentaries, plus the we can be sure that no two games would international business increases, arriving at 1995 OECD Transfer Pricing Guidelines. be alike. Similarly, imagine giving tax that single solution in every case will be Why is this important? Because the officials a few concepts-jurisdiction to more difficult-but also ever more critical. principles articulated in these documents, lax", "royalties", "withholding taxes"-and such as the distinction between a non¬ telling the officials to build a system to The challenges to expanded international taxable representative office and a taxable tax non-residents. The result would be trade in the 21st century are many, as the branch or business, the concept of income chaos. recent failure of the Doha round of attribution, and the broad principles of negotiations for a new world trade arm's-length transfer pricing, are There is much more to be done. As the agreement demonstrated. But international foundations in assuring a sense of fair play e-commerce experience demonstrated in business would be substantially more in international tax. the past, and as the globalisation of difficult if tax authorities operated financial services is demonstrating today, singly-we could even say blindly-in One of the great privileges of my early tax important work is needed to apply the determining the tax rules that apply to career was to sit beside Marcia Field and principles of the OECD Model Tax international transactions. Mordy Femberg, the lead US tax treaty Convention to specific business methods. negotiators for 20 years from the 1 970s to And, educating both experienced tax As international tax practitioners, we all the 1990s, and learn as they unwrapped practitioners and new tax officials is always share in the achievements and challenges the subtleties of various treaty articles; a challenge, because the principles of of the OECD and its work on tax treaties. these sessions were often with treaty international tax are not easy to We celebrate our significant progress negotiators of another country, who, like understand. But the OECD's continued during the past 50 years-ancl, armed me, were less knowledgeable about the focus on new areas of interest, such as the with the Model Tax Convention and a implications of particular language. The taxation of deferred compensation and willingness to work co-operatively, we will OECD model treaty has captured a retirement income for cross-border meet the challenges of the next 50 years hundred years of experience m workers, and on hearing new voices, as well. international tax and distilled the core especially from developing countries, principles. Many ol us learned international keeps the entire international tax This is adapted from an article originally tax by studying the model and its community moving forward to meet the published by Tax Analysts. See commentaries. new challenges. www. taxanalysts. com 13 OECD Observer No 269 October 2008 wy m* ' ftUt..- ' < V * ". ' Va 7**"'P^Tîl3». ft*:r .eclirhateisrigh r/je Global Leader iri Rail Technology ft jKd.T / '/ i/. ~-V*ft;. . /iVft' ^18S»ff8»Ss 1 ' r*-*- "Wk'-klM SOCIETY Labour better pay and working conditions? Alexander Hijzen and Paul Swaim, OECD Directorate for Employment, Labour and Social Affairs The effect multinationals have on wages and working conditions can be positive, but there are conditions to bear in mind, not least for policymakers wishing to attract foreign direct investment. If ever there was a question to provoke Crudely speaking, multinational Multinational enterprises have been a impassioned debate between supporters enterprises (MNEs) are corporations with force on the world stage for a century or and opponents of globalisation, the title headquarters in one country and affiliates, more-some say they have their roots in of this article may be it. A harbinger of subsidiaries or merged operations in one the British East India Company of the progress and higher standards of living, will or several others. These firms expand 18th century, though others point to the say the yeas, a cause of underdevelopment abroad to gain market share, or to tap Ijih century Dutch Verenigde Oost and Western-style exploitation, will roar the into local resources like raw materials and Indlsche Compagnie (VOC). nays. The protagonists rarely agree. cheaper labour. Think major US brands, such as Coca-Cola, Nike and Microsoft, or Today there are thousands of MNEs and Who is right? Before attempting an the French energy company, EDF, the not all are a symbol of Western economic answer, let's start by looking at what the British-Australian mining firm, Rio Tinto, dominance; just look at the FT's top firms term "multinational" actually means. and Japan's Toyota. ranked by market value for 2008 which 15 OECD Observer No 269 October 2008 SOCIETY Labour skilled employees. But the pattern would Hire pay not imply that they offer better rewards to Effects on wages of foreign ownership, % differences* equally qualified workers performing similar work in other firms. Effects of foreign takeovers of domestic firms on incumbent workers The authors argue that more precise Effects of worker mobility from domestic to foreign firms comparisons are required to detect whether MNEs pay higher wages and offer better working conditions. For this purpose, they examine how conditions change if a local firm is taken over by a foreign one, as well as the experiences of workers that move from a local to a foreign firm. Germany When like is compared with like, it still seems that MNEs pay better, but the * Average effects over tbe first three years after the takeover difference is quite muted. The OECD report focuses on three OECD countries Source: OECD Employaient Outlook 2008, Paris (Germany, Portugal and the UK) and two emerging economies (Brazil and Indonesia) for these more exacting comparisons. now includes firms from China, Russia, better pay and working conditions" Foreign takeovers lead to higher average India and Brazil. attempts to do just that (see references). wages within firms, with the effect being The authors compare and examine very small in Germany, 5% in the UK, Regardless of impassioned opinions, the differences between foreign firms and local 8% in Portugal, 11% in Brazil and 19% in role of MNEs in the world economy will firms by looking at wages and conditions Indonesia. Since MNEs tend to have a likely continue to grow, as governments like working hours and training. greater technological edge over local everywhere compete hard to attract competitors in developing countries, it foreign investment to their country. On the whole, the OECD report shows that makes sense that wage gains from FDI Already in 2006, foreign direct MNEs do tend to pay more than local would be larger there, than in more investment, which is a good measure of firms, though the difference lessens with developed economies. the growing internationalisation of local firms that compete in the same production, was worth about a quarter of markets. In general, foreign multinationals What is more, the pay gams following world GDP, compared with less than 10% pay 40% higher in average wages than foreign acquisitions are likely to increase in 1990. Foreign affiliates of MNEs account over time as modern production techniques for about a third of world exports. are transferred from parent to affiliate and employees accumulate new skills. This kind Foreign investment might not But are these MNEs really likely to bring in of foreign direct investment raised average more jobs, better pay, better conditions and have much effect on working wages by 18% at first in Indonesia, and better practices to host destinations or do conditions by some four points extra two years alter they hold developing countries in their the takeover. Similar patterns were seen grip, with little hope for progress? in Brazil, Portugal and to a lesser extent Arguments can be found to support both local firms, and the differential is higher in the UK. points of view. Optimists emphasise how low-income countries of Asia and Latin MNEs' superior technical know-how and America. They may offer higher pay than In short, these results suggest that the modern management practices provide their local counterparts because this helps conventional wisdom about FDls wealth them with the wherewithal to pay high to minimise worker turnover and reduce creating potential is probably not wrong, wages, whereas pessimists doubt they monitoring costs. particularly in developing countries. actually will do so since they are typically However, this applies to average pay in in a strong bargaining position vis-à-vis Besides paying higher wages, firms affected by a takeover. local workers. multinationals differ from local firms in many other ways, such as being much A closer look at individual rather than The only robust way to answer this larger and more productive. This raises the average wages enriches the picture. question is to compare labour practices possibility that MNEs pay higher wages Comparing workers who stay on in firms between local and foreign firms, and a only because they prefer to invest in that are taken over with their counterparts recent report, "Do multinationals promote capital-intensive sectors and rely on highly in domestic firms, shows that foreign 16 OECD Observer No 269 October 2008 SOCIETY Labour takeovers had only a very slight or no effect foreign-owned firms. The authors also the area of employment relations. Though at all on individual wages. This indicates show that local firms that recruit managers voluntary, adhering governments are that average wage gains due to foreign with experience in multinationals enjoy required to provide mediation services takeovers partly reflect changes in the skill higher productivity. Firms lacking direct when multinationals are alleged to have composition of the workforce that tend to links to MNEs are less likely to benefit violated one or more of these guidelines. accompany such takeovers. from positive spillovers. Indeed, FDI can Most of the cases treated by such crowd out labour supply lor local firms. mediation have, in fact, dealt with MNEs But what about workers who move from a Still, the wages of skilled workers in the behaviour as employers. domestic to a foreign-owned firm? The same sector as a multinational will likely OECD Employment Outlook shows quite rise over time. Governments in developing countries large wage gains for newly hired workers, should also be encouraged to recognise with a rise of 6% in wages in the UK, 8% If working conditions among suppliers are and enforce internationally accepted labour in German); 14% in Portugal and up to slow to improve, it is not always lor want standards. Indeed, to lift standards, local 21% m Brazil. In contrast, there were small ol trying on the part of the multinationals. regulations and norms count as much as losses or no effect on wages for those Take Nike, the sportswear producer which the activity ol the multinational moving from foreign to domestic firms. was much derided by the anti-globalisation corporation itself movement with accusations of sweatshops Certainly in the first few years after a and exploitation. Nike formulated its The authors believe the way forward for foreign acquisition, the wage premia of first code of conduct in 1992. By 2004. it policy also involves reducing the barriers working in foreign multinationals apply to to FDI, as recommended m the OECD workers who move to those firms, rather Policy Framework for Investment, and than to those who stayed on after a promoting the overall investment climate. takeover. It is via this route that FDI Any deliberate lowering of Economic and political stability, legal initially enhances wages in host countries, enforcement of contracts, anti-corruption labour standards to attract the report concludes. Over time, wage measures and infrastructure, should all be gains are likely to benefit a growing share investment would be ineffective priorities, but the report is clear on one of the workforce. thing: employment legislation may need to be made more flexible, but any deliberate But wages are only one side of the coin: employed 80 corporate social responsibility lowering of labour standards to attract FDI what about working conditions? One (CSR) and compliance managers. would be ineffective. On the contrary, argument used by proponents of FDI is Footwear factories were inspected daily weakening workers' core protection can that multinationals promote socially and apparel and equipment factories discourage investment, instead of responsible investment, and some of the weekly. In addition, Nike employed about attracting it. literature backs this view. However, the 1 ,000 production managers to work m analysis of foreign takeovers in the report close collaboration with its suppliers In the end, whether multinationals help suggests that FDI might not have much around the world. Despite these efforts, development depends on the firms in effect on working conditions. Nike reports that working conditions m question, but also on public policy. almost 80% of its suppliers have failed to Several earlier studies have also concluded improve (and may have even worsened). that multinationals tend to adapt to local A closer look shows that compliance References practices rather than impose their own. In programmes based on long-term OECD (2003), OECD Guidelines for Europe, US firms w~ere found to export production partnerships are more likely Multinational Enterprises, Revision 2000, Paris, management practices, but kept to local to bear fruit than those based on policing available at norms on matters concerning work-li le of working conditions alone. http://publications.oecd.org/acrobalebook/ 2100201E.PDF balance of employees. This partly reflects social rules and agreements that firms are But firms are not the only ones to make OECD (2006), Policy Framework for Investment, Paris. ISBN: 978-92-64-01847-1, compelled to accept, though may also such efforts. Governments and 60 pages, available at reflect a US business style, and may not lie- international organisations can promote http://publicatlons.oecd.org/acrobatebook/ representative of multinationals from other more responsible behaviour of MNEs, 2006051E.PDF countries. including in their role as employers. They OECD (2008), "Do Multinationals Promote can work with consumer groups and other Better Pa)' and Working Conditions?", There are of course other spill-over costs stakeholders to improve practices. One OECD Emplovmcnt Outlook, Paris. and benefits of FDI and multinationals, example is the OECD Guidelines for OECD (2008), "The Social Impact of Foreign which the report examines, and these Multinational Enterprises which provides a Direct Investment", OECD Policy Brief. show up in productivity and pay useful way for governments to encourage July 2008, available at http://www.oecd.org/ improvements among suppliers of responsible business conduct, including in dataoecd/53/8/40940418.pdf 17 OECD Observer No 269 October 2008 SOCIETY Education Breaking ranks University league tables are fashionable, but should not be taken as accurate measures of the quality of education. The OECD is investigating other tools to measure performance, policymakers and educators heard at a recent conference. Rumour has it that the two biggest fans Programme on Institutional Management performance. But that, of course, is exactly of university league tables are vice- in Higher Education (IMHE) in September, what people and the headline-hungry chancellors and mothers in China. Do Ellen Hazelkorn of the Dublin Institute of media do. league tables accurately measure what they Technology, cited a respondent to an claim to measure? Or are they, as their critics international survey which said that "the Short of hiring a Nobel Prize winner, what claim, simplistic and damaging? easiest way to boost rankings is to kill the can a university do to improve its standing Humanities". Clearly not a realistic in these rankings, assuming they should Excellence is the quarry The trouble is, proposition, though another survey told try? Alas, the best way to gain prestige is to excellence only seems to appear in the top her that "reputation, unfortunately, is already have it. ranks. Surely no university can be "world always based on research, and research class" in every aspect. Franz Van Vught of the attracts the best talent". The old schools like Harvard and Oxford European Centre for Strategic Management of are consistently in the top ten. Their mythic Universities put the problem succinctly at a Research is considered the most salient status draws the highest-calibre students recent conference called "Higher education: example of a nation's intellectual resources, and faculty, and guarantees generous quality, relevance and impact" held at the economic strength and global endowments. Does reputation give them an OECD in Paris (see references). He said that competitiveness. It is no surprise then that unfair advantage and make them hard to if only 3% of universities out of 17,000 real research rather than just teaching and dislodge? worldwide can be considered "world class", studying for exams figures highly in two of it cannot mean that the rest are failures. the world's most influential league tables. The Not necessarily Other established Shanghai Jiao Tong University (SJT) gives universities as old or older than Oxford, Exhortations to become world class have research a thumping 40% weighting, and such as Freiburg in Germany, figure much tucked universities into a Procrustean bed includes the number of faculty publications lower in the Shanghai top 100, while Italy's of indicators. Presidents anxiously cut back and citations in journals. The Times Higher Bologna, one of the oldest of all, does not programmes, reorient their university's Education rank gives research 20%. But the even figure. mission, swell application numbers to Shanghai rank also attributes another 40% to tighten student selectivity, faculty who have won Field Medals and Reputations may be based partly on and seek mergers with higher-ranking Nobel Prizes. This is a bit distorting, since assumption. In its peer review weighting, institutions-conversely, those higher up not every university or college focuses on the Times Higher Education queries some jealously guard their hard-won reputations maths or science, and even if they do, there 200,000 academics worldwide via email, and shy away from collaborating with is no clear evidence that having a Nobel asking them to name what they feel are the anyone but their peers. Deep excisions Prize winner on campus now, still less top thirty institutions. With no clear may be made into the social sciences and having had one fifty or more years ago, indicators as to what they should evaluate, humanities to leave more room for the helps students learn. The Shanghai survey compounded by the fact that the Times natural sciences and research. Speaking at cautions against using its tables as an Higher Education is published in English- the biennial conference of the OECD's overall assessment of a university's speaking countries and that the average 18 OECD Observer No 269 October 2008 SOCIETY Education response rate is 1%, it is hardly a surprise serious omission is that certain data leaves discussed this point at some length. But when British institutions come out on top. out what for many people is the very reason while some may argue say, that natural Also, it depends on what is being universities exist: actual coursework. sciences are more relevant than social measured: while neither Shanghai nor history, as Robert Berdahl, President of the Times rate French universities that highly, Indicators such as "teacher/student ratio" Association of American Universities, in the FT 2007 European Business Schools are too feeble to tell us much about pointed out, the problems of rankings six of the top f 0 are French. learning outcomes, nor anything about a contemporary society-migration, ageing, Incidentally, the Financial Times offers quite teacher's ability to teach. The Centre for climate change, the legacy of colonialism a range of rankings of business schools, Higher Education in Germany (CHE) and religious extremism-cannot be solved MBAs and the like, as much to earn publishes a variety of data from which by the natural sciences alone. Nor is revenue from the "infotainment" business students can construct their own rankings, judging what is relevant just a matter for as anything else. according to their needs. The CHE does not any one generation to decide. Look at the stamp them with a number but places them nuclear industry, which is back in favour There seems to be a whimsical element in in categories of "good", "medium" or "bad", as a source of energy, yet is faced with skill the rankings. A university high in the ranks and lists them alphabetically. Universities in shortages because of years of unpopularity one year may suddenly plummet forty or one category are of comparable quality, when students chose other subjects. Or more places in the next. Is this possible? If whereas those in different categories show what about today's stock market crash, so, what is to prevent it from rising fifty a marked contrast in performance. Unlike which appears to be rewriting the rules of places the following year? Nothing, one may rankings, this method prevents trivial economic orthodoxy by the day? say. Also, there may be very little difference differences from creating the false between institutions placed many tens of impression that one university is clearly But rankings are not going to go away. better than another. After all, they can provoke useful questions, such as "why exactly are we not There is no clear evidence that Rankings also overlook the "value added" in the top group?", or indeed, "how can we maintain this lead?". Governments and having a Nobel Prize winner on component of degree programmes. As might be expected, top universities draw universities will still use them, as fierce campus helps students learn A+ students and turn out A+ graduates. But competition between universities induces what of universities that accept B students copycat behaviour unless policy places apart, while small changes in the and produce A-level graduates? The added encourages diversity. Whether they serve as underlying factors have dramatic impacts. So value of the B-student's degree programme an accurate guide to higher education is why pay attention to rankings at all? To would be considerably higher. therefore strictly academic. underline the point, the 2008 Times Higher Education survey just published as we write, The OECD Assessment of Higher Education Even people that do not like rankings reduced Britain's rankings quite markedly Learning Outcomes (AHELO) study aims at cannot always resist them. Take this story, across the board, leading to more gloomy determining whether it is possible to make related by a woman from Germany at the headlines about the state of the country. meaningful statements about the education IMHE conference. When she asked the provided in universities in different vice-chancellor of a university in Bavana To squeeze out of such indicators, some countries, taking into account different whether he would like his university to be universities are turning the tables upside "strands" of competence: skill in a chosen included in a league table, his response down, using their lower position as a discipline, and generic skills such as critical was a firm "no". But then, when the marketing strategy Student mobility is thinking or the ability to apply knowledge woman succeeded in reassuring him that higher than ever before in history. In most practically. If successful, AHELO will the university would not be included, he OECD countries, the international student provide institutions with analysis to help asked-just out of curiosity-where it body is about 6.7% of the total; in them improve their own performance, and would have been ranked compared to Australian universities it is 19.3%, and in wall provide data that will help students the others. LT some as high as 50%. assess the suitability of the institution for their own needs. One of the biggest problems with rankings is References not the accuracy of the data, but how that Relevance is important. Is a degree Presentations from the OECD conference data is used, and to whom it is applied. programme relevant if it fails to prepare a organised by the Programme on Institutional student for the job market or demonstrates Another is that a good deal of data has never Management in Higher Education (IMHE) on been collected, how students are progressing no obvious social impact? In a world 8-10 September: "Higher education: quality, m the classroom for instance, or levels of increasingly nervous about shrinking job relevance and impact" can be found at students who leave compared to when they opportunities and faced with other www.oecd.org/edu/imhegeneralconference2008 joined. This makes it hard to build a full challenges, the relevance of a degree is For information on AHELO see picture of university performance. The most paramount, and the OECD conference www.oecd.org/edu/ahelo 19 OECD Observer No 269 October 2008 f Trucks I Leasing & Financing | Fleet solutions | Service & Parts Delivers everything you need. Inclue! For so much econo BlueTec" keeps the air in Europe's cities cleaner - thanks to particularly efficient, fuel-saving combustion and outstandingly low exhaust and particulate emissions. What's more, you can already comply with Euro 5 reliably and economically with the Atego and BlueTec*. mw i ^ r "^r^ X V V- à r,*^' \ r J "c *<&f&l&*ft ing future-proof emissions technology my we give our all And, depending on the legislation in force, BlueTec" can qualify you for exemption from certain operating restrictions. Now and in the future. For more details, visit www.mercedes-benz.co.uk Mercedes-Benz DEVELOPMENT Make aid work International aid conferences are famous for their promises develop] and commitments, but at Accra, donors and aid recipients may finally have was expe started to "walk the talk". Nonetheless, the trend donors wot 122 OECD Observer No 269 October 2008 DEVELOPMENT Aid Without a doubt, the UN recommendation partners agreed to take bold steps to The AAA aims to address other shortfalls of 0.7% of national income is a goal that make aid work better for the 1.4 billion that emerged in the survey, such as the donor countries should (and often try to) people who still live in extreme poverty. fact that donors choices concerning benchmark. But it is also true that while After months of negotiation, ministers at whether or not to use a country's systems there are success stories in development, the Third High Level Forum on Aid do not despite expectations seem to after 40 years of aid, the situation of Effectiveness (or HLF3 for short), hosted by depend on the quality of those systems. In some countries appears to have worsened. the government of Ghana, the OECD, and other words, all the effort in institutional Although aid levels have generally risen the World Bank, endorsed the Accra Agenda reform, to build strength and reliability since the mid-1990s, so has the incidence for Action (AAA). This roadmap to better into local systems, will not work if donors of poverty So clearly, it is just as aid signals a profound behaviour change for do not follow suit and use them. important to make each dollar of aid both donors and developing countries. Its work harder to make a real dent in purpose is to forge the new aid business It will not be easy to achieve the profound poverty and boost development. model set out in the 2005 Paris Declaration changes prescribed by the Paris Governments started to do just that and produce real, and immediate, results Declaration and reinforced at Accra. when they endorsed the Paris Declaration where they are most needed. Clearly, much will depend on letting go so on Aid Effectiveness in 2005. What they that countries can get on with their own signed up to was a set of commitments to The AAA calls for making aid transactions business. The survey shows that donors are make development aid give more bang for more transparent and predictable. It holds reticent to lose control: m 2007, the buck. The Paris Declaration set targets donors to task on reducing the conditions 49 developing country governments tor 2010 for issues such as providing they attach to aid and "untying" aid from received 14,054 donor "missions" almost predictable aid, using countries' own obligations to purchase goods and services one a day per country. Some countries financial systems versus donor-driven in the donor country. It challenges explicitly asked for "quiet periods" to get programmes and projects and working developing countries to engage their on with their real work, but even these together in a harmonised, cost-effective parliaments and citizens, while committing were not spared. fashion. But what made the Paris agreement unique is the fact that the Meanwhile partner countries in exchange world's governments agreed to track It is important to make each for being given the reins must become progress on meeting their commitments. more active, exercising their leadership, dollar of aid work harder Did they deliver? strengthening their capacity, and being more accountable to their citizens on their A survey ol 54 countries in 2008 shows donors to using recipients' national public development policies. The OECD survey there has, indeed, been progress but not financial management systems as the first shows that, so far, only one developing nearly enough to meet the 2010 targets. option to deliver aid. And the AAA country out of five has operational There was no overall increase in the use multiplies the value of every aid dollar by development strategies that meet World of country public financial management mandating donors to work together Bank standards and less than 10% run systems: since 2005 when the first effectively, divide labour and to ensure that results-oriented programmes. baseline survey was conducted the they are not overcrowding some sectors amount of funds that flow through while ignoring others. Sure enough, a growing number of country systems has increased only developing countries are implementing marginally. And this figure masks Another key feature of the AAA is that comprehensive and credible reform significant variations in practice among it allows countries to manage their strategies. And at least some donors are donors and within countries. In own development by increasing the making special efforts to build up the Honduras for example, US$283 million predictability of aid, with donors promising country systems by actually using them. out of $331 million flows through the to pledge medium-term funding so that In Zambia, for instance, there has been a country's budget execution systems, but recipients can effectively design, budget 25% increase in the use of country systems only $88 million uses the country's and implement their programmes over since 2006. Donors are also starting to auditing systems. This means that time. Our 2008 survey shows that in 2007, realise that using country systems can help countries like Honduras are not really in only some 66% of aid actually arrived on strengthen governments in fragile states. control of the funds they are supposedly schedule. Take Benin, one of Africa's given in other words, they are not poorest countries; it was due to receive There has been progress in untying more aid calling the shots on their own $477m, but ended up with just $151m. too; today, more recipient countries can use development. This shortfall badly affects sectors such as their aid to purchase goods and services on health, where it is not only a matter of local or regional markets, and no longer In Ghana this September, the Paris building hospitals, but of being able to necessarily from the donor countries. OECD principles were given new wings when an count on reliable funding to deliver drugs data show that 60% of contracts now go to unprecedented alliance of development and staff clinics. companies not in the donor territory, with 23 OECD Observer No 269 October 2008 DEVELOPMENT Aid more than 40% of these going to companies US aid), while the European Community belter development results will lead to from developing countries. opens its aid procurement to other donors better financing. Many donors have made on a reciprocal basis. commitments to significantly increase At Accra, donors made solid commitments their aid in the years immediately ahead, to untie aid further more types ol aid, As a result, the share of aid recorded as but the)' must be clearer about when. and to more countries. In 2001, the donors untied has increased from 43% in 2002 to Predictable assistance is needed to produce of the OECD Development Assistance 53% in 2006. The proportion reported as better results. Committee (DAC) the providers of tied has fallen from 7% to 3%. Armed with Official Development Assistance this evidence, the AAA calls on other The Pans Declaration and its commitments (ODA)-agreed to untie most ol their aid to donors to untie more aid too, notably are political undertakings. In the difficult the least developed countries. Now, in Austria, Canada, Greece, Italy, Japan, process of implementation, real issues response to the AAA, they will untie their Portugal, Spain and the US. of power and political economy will aid to the heavily indebted poor countries. come into play, which is why the lull This means that aid to the 60 poorest OECD will be tracking progress, calling involvement of all stakeholders is so countries is now mostly untied. members to account if the numbers don't essential. As the AAA moves from words to add up. action, civil society will be calling ministers Eight DAC countries have fully untied to task on their progress, practices and their bilateral aid Australia, Belgium, So what next? With the AAA, the pressure plans. Ireland, Luxembourg, Netherlands, is on to deliver results. There are serious Norway, Sweden and the UK. Four challenges ahead and rising food and oil The last paragraph of the Accra Agenda others Denmark, France, German)' and prices and the global economic turmoil are for Action sends out a powerful message: Switzerland have untied most of their not helping. "Today, more than ever, we resolve to work aid. The US Millennium Challenge together to help countries across the world Corporation provides its aid untied Yet just as there is an important link build the successful future all of us want (though this is just a portion ot total between better aid and better trade, so to see a future based on a shared commitment to overcome poverty, a future in which no countries will depend on aid". For now, we are still "talking the talk." If Development progress? the 1.4 billion people who still live m extreme poverty are to be given a real opportunity to improve their lives, then the real breakthrough will come when the 2005 2010 targets baseline governments and other participants at 1 Operational development ^_ . Distance to target (in 2007) Accra show they have really started to 75% strategies "walk the talk". 2 Reliable Public Financial | 36% Management (PFM) systems improve score 3 Aid flows are recorded 42% 48% 85% The OECD has started. The AAA is a step in countries' budgets that will help change the way assistance is 4 Technical assistance 48% is aligned and co-ordinated delivered so that developing countries may 5a Donors use country 40% | 45% (80%) become strong and work their way out of PFM systems assistance. That is what effective aid is all 5b Donors use country 39% | 43% (80%) procurement systems about. CG 6 Donors avoid parallel PIUs 1 817 1 601 611 7 Aid is more predictable 41% 46% 71% References 8 Aid is untied Progress 75% | 88% OECD (2008), Survey on Monitoring the Paris 9 Donors use co-ordinated 43% 66% Declaration: Effective Aid by 2010: What it will mechanisms for aid delivery | 46% 10a Donors co-ordinate lake: Vol. I Overview, Paris. 18% 40% their missions | 20% See www.oecd.org/dac/htfsurvey 10b Donors co-ordinate 42% 42% (no progress) 66% their country studies See www. http://www.accrahlf.nel for further 1 1 Sound frameworks details about the AAA. 7% 38% to monitor results (9% For more information, contact 1 2 Mechanisms for 22% 100% mutual accountability | 24% [email protected] or Christine .Graves@oecd . org See Report on the Use of Country Systems in Source: OECD, Survey on Monitoring the Paris Declaration: Effective Aid by 2010: What it will take: Vol. 1 Overview. Paris 2008. Public Financial Management, www.oeed.org/dataoecd/29/20/41085468.pdf |24 OECD Observer No 269 October 2008 DEVELOPMENT Rebalancing the wealth of nations Javier Santiso, Director and Chief Economist of the OECD Development Centre Emerging markets such as China, India and Brazil are increasingly regarded as central rather than peripheral players in the global markets. Can this "rebalancing" continue through the current crisis? Ten years ago, faced with a US were once dependent developing countries Cemex, the Mexican cement giant, is still slowdown, the economies of Latin might not only withstand the crisis, but headquartered in Monterrey but its strategic, America would have toppled like emerge from it feeling stronger than ever financial and economic research centres are dominoes. Lately, however, they are holding in relative terms compared to their OECD located in Spain. Brazil, m particular, is together relatively well in the midst of the peers. growing into a global trader, reaching into ongoing global financial crisis, as the US and distant markets such as the Middle East, other OECD economies struggle. Many The OECD share in global output has eased Africa or South East Asia. Companies like economists even said in recent months that in recent years, while the US stock market Vale, Petrobras or Odebrecht are active in Latin America had supposedly "decoupled", (before the crisis) accounted for a little over African markets while Embraer and breaking free of the economic dominance of 30% of world market capitalisation, Marcopolo are becoming big players m its northern neighbour. compared to 50% just 10 years ago. In 2007, China. These global multilatinas, with the share of foreign direct investment from headquarters m Latin America, are following There is certainly no decoupling, as the OECD countries decreased to 85%, while it a trend instigated by companies based in latest Latin American Economic Outlook represented nearly 100% in 1970. A sign of India, China, Russia, South Africa and shows. Latin America will face a slowdown these new realities is that Mexico, Korea and beyond. Indeed, it is somewhat ironic to see a in 2009, whose severity will depend on the Turkey, three leading emerging markets, are company like India's Tata now owning crown severity of slowdowns in OECD countries. already OECD members, while others such as jewels of the old Empire, such as Corus But we are witnessing a more profound Chile, Israel or Russia are on accession track. (formerly British Steel), Jaguar and Rolls- phenomenon than that. In fact, a tectonic- Royce. Far from decoupling, the periphery is shift has taken place, which far from a mere The same underlying trends apply to becoming part of a new, wider centre, or to decoupling between old neighbours, has led corporations. Just to name a few Latin put it differently, what we are witnessing is to a much more fundamental rebalancing in examples, a company like ImBev, born from the emergence of a much more multipolar the wealth of nations. As capital has spread the merger of Belgian and Brazilian brewers, world. around the globe, so too has wealth, trade is already an exotic bird hatched from these and power. So while the present global new global relationships: difficult to classify in All this does not mean that Latin America is financial crisis is striking financial markets either emerging market or OECD asset immune from a downturn in external everywhere, including in Latin America, classes, it recently bought the icon of North markets and in the US m particular. Mexico is there is every reason to believe that what American beer companies, Anheuser-Busch. clearly exposed: nearly 85% of its exports go 25 OECD Observer No 269 October 2008 DEVELOPMENT Latin America to the US, compared to the 40% average for to emerging countries, including Latin Emerging strength Latin America. Mexican exports to the US America. And the opposite is true, too. Chile, accounted for 27% of its GDP in 2007 Contribution to global growth by for instance, is already exporting 36% of its compared to less than 3% of GDP for Brazil. emerging and developing total products to Asia, more than to any other Another channel for the transmission ol countries, since 1998 region of the world, with nearly half of those going to China alone. shocks is the banking sector: 85% of banking 1)8 assets are held by foreigners (some struggling OECD economies banks among them), compared to less than Emerging and developing So, how will this new Latin America weather 0.7 30% for example for Brazil. an impending global recession? Like other emerging markets, it will likely not avoid the The impact of the current crisis will not be 0.6 storm clouds from the North, but its shift limited to Mexico or Central American towards Asian markets should prevent that countries. Like the Mexican peso, the recent 0.5 storm from becoming a deluge. What seems depreciation of the Brazilian real reflects the likely is that countries like China, India and degree of exposure of many Latin American Brazil will feel the global crisis, but are now firms with debt denominated in US dollars more robust than in the past to ensure that and exposures to credit derivatives markets. the re-centering of the world economy Deleveraging among all portfolio investors is 0.3 continues. We are just entering a brave new already affecting liquidity throughout world order, a mundoféliz, in which the old emerging economies, including Latin 0.2 OECD countries will remain key players, but America. Remittances will also suffer and are with Asia and Latin America sitting firmly at the table too. expected to decrease in real terms for the first 0 1 year in recent history: adjusted for inflation and exchange rate variations, the IADB 0.0 estimates that they will contribute 1.7% less CO CX> CD t CXI m CD CD CD CD CD CD CD CD CD CD CD CD to the household incomes in Latin America , t OO (XI Cxi CXI CXI CXI CXI CM CXI and the Canbbean than in 2007. Source: OECD Development Centre, based on International Nevertheless, Mexico, Brazil and most Latin Monetary Fund, World Economic Outlook Database, April 2008 American countries remain in much better shape economically than a decade ago and Latin American may yet weather the storm. Fiscal and Economic Outlook 2009 current accounts are sounder, public foreign China's growth is contaminated by the debt is low, inflation contained and high oil current financial and economic crisis in and mineral revenues have boosted OECD countries-and the possibility is far Bk investment by an astonishing 50% in 2007, from just theoretical- the impact will be though this will undoubtedly ease along with larger, above all through the commodity crade oil prices in the final quarter of 2008 markets. and beyond. Moreover, for the first time Latin America is benefitting not from one or One fundamental component of the re¬ two exogenous growth drivers (the US and balancing of wealth between nations is the Europe), but also from a third exogenous growth of south-south linkages as the new pillar of growth: Asia. centre of world economy evolves. The figures bear this out: in 2007, for the first time ever, The real question for 2009 and beyond is emerging markets exports towards China therefore not only about the US but also surpassed those to the US and is bound to OECD *;*t about China. If China's demand holds up, rise further with flatter US demand in 2009. exports of commodities might be resilient In turn, in 2006, for the first time, China enough to prevent Latin American countries became more exposed to emerging from being dragged into a recession. Barely a economies than to the rich G7 countnes: in References decade ago, any suggestion that Latin the early 2000s, Chinese exports to G7 America could ever escape the pulling force countries accounted for nearly 50% of the OECD (2008) Latin American Economic of the US would have been dismissed. total; since then, the share going to the G7 Outlook 2009, OECD Development Centre, However, a sharp downturn in the Far East countnes has fallen to about 40%, while Paris, available at www.oecd.org/bookshop could now be just as great a concern for exports towards emerging markets have been Santiso, Javier (2006) Latin America's Political Latin America as a recession in the US. If rising. Half of Chinese exports are now going Economy of the Possible, MIT Press 1 26 OECD Observer No 269 October 2008 OECD Leatning for life l'hTIlitlilill-l BRIAN KEELEY CAPITAL How what you know shapes your life ISBN: 9789264029088 www.oecd.org/insights -,«7 > I Low energy. High efficiency. Connected. Running environmentally-friendly networks starts with energy efficiency. As a world leader in developing energy-saving base stations that use renewable energy, we can help you conserve resources and save money. Environmental performance that delivers tangible business benefits - it makes good green business sense. Find out more at www.unite.nokiasiemensnetworks.com/environment Reinventing. The world. Connected. Nokia Siemens Networks /"" \\ www.unite.nokiasiemensnetworks.com/environment Copyright 2008 Nokia Siemens Networks. All rights reserved oecd.org Climate change is one of the greatest challenges, and while each Outreach, reform country had to devise its own mix of policies, many ministers observed that market instruments, including taxes and carbon-trading and the economics schemes, financial and tax incentives, removal of subsidies, loan guarantees, and elimination of tariffs on environmental goods and services are key, and must be backed by the likes of clean technologies of climate change and regulatory standards. OECD Council at Ministerial Level, Paris, Ministers emphasised the importance of international co-operation, with many stressing the principle of "common but differentiated 4-5 June 2008 responsibility and respective capability [...] for achieving an ambitious and affordable international agreement". An "effective post-2012 Concerns for the international framework on climate change and the related national policies will need to stimulate innovation" and diffusion of world economy technologies to developing countries accelerated. Ministers called on were already the OECD to continue appropriate work on climate change, "in building when collaboration with the IEA and other international organisations". OECD governments On multilateral trade, ministers "underlined the need for more open met for the annual markets for agricultural and industnal goods and services", as well as Ministerial Council the need to improve people's understanding of open markets and to build "a solid case for further trade liberalisation", which the OECD Meeting (MCM) would help communicate, as well as providing analysis and advice. last June. On sovereign wealth funds (SWFs), ministers welcomed the benefits that these can bring and they adopted an OECD Declaration on SWFs France's finance minister, Christine Lagarde (our photo), and Recipient Country Policies. Ministers from Chile, Estonia and chaired this year's annual ministerial council-the highpoint in Slovenia adhered to the Declaration. the OECD calendar-and her summary issued after the meeting carried a hint of premonition about the economy when Ministers then discussed how to manage and win support for reform in ministers called for "continued close policy co-ordination". The their countries, and looked to the OECD for support on the question. consensus view at the time was still relatively optimistic though, for Ministers also agreed on a major reform of financing to secure a long- despite the "shocks" which had hit the global economy, the OECD term foundation for the organisation in meeting its priorities and was showing "resilience to the headwinds" thanks to "structural "preserve the OECD's influence, relevance and excellence". RJC reforms and sound macroeconomic policies" of recent years. But a watchful eye had to be kept on financial markets, where "current Read the full 2,300-word Chair's summary at www.oecd.org/mcm2008 credit conditions are restraining investment". For more on climate change see www.oecd.org/env/cc The 2008 meeting built on "the landmark decision of the MCM For more on trade, see www.oecd.org/tad/trade 2007" to begin expanding its membership by welcoming for the first time the five candidate countries-Chile, Estonia, Israel, Russian For more on sovereign wealth funds, see www.oecd.org/daf/investment Federation, Slovenia-and the five so-called "enhanced engagement" For more on the Declaration on Policy Coherence for Development, countries-Brazil, India, Indonesia, China and South Africa-as see www.oecd.org/mcm2008 participants in the event. Ministers congratulated Secretary-General Angel Gurria on his strong leadership, which they said was reflected in a report examining new strategic orientations for the OECD entitled "The Pursuit of G8 summit Relevance for a Better World Economy", which would enable the OECD to adapt and respond to new challenges. "The economics of Climate change dominated the agenda at the G8 summit at climate change, pressure on resources, inequality and global poverty Toyako, Hokkaido, Japan on 7-9 July. OECD Secretary-General remain high priorities for the OECD", ministers agreed. Angel Gurria attended the meeting, which brings together seven Ministers encouraged the OECD to pursue its vision in the global OECD countries-the US, Japan, Germany, the UK, France, Italy governance architecture. They adopted the Declaration on Policy and Canada-and Russia, a candidate for OECD accession. The Coherence for Development. Estonia and Slovenia adhered to it. This summit approved a communiqué which said they would work pledges for more dialogue between partner countries and calls for with nearly 200 states in UN climate change talks to adopt a goal better international co-ordination to spread globalisation's benefits, of at least halving greenhouse gas emissions by 2050. For more on covering trade, agriculture, migration, environment and science and the communiqué, see www.g8summit.go.jp, and on G8/OECD technology, as well as energy and security. The declaration imites relations, see www.oecd.org/G8 OECD to present cases of the common benefits or trade-offs for policy coherence for development. 291 OECD Observer No 269 October 2008 oecd.org Critical US president's visit Internet OECD Ministerial Meeting on the Future of the Internet Economy, Seoul, Korea, on 17-1 8 June 2008 The first ever full OECD ministerial meeting held in Asia closed in June with a declaration to build US President George W Bush is greeted by OECD Secretary-General Angel Gurria confidence and secure the future of the Internet during a visit to the OECD headquarters on 13 June 2008. Mr Bush delivered a economy. The declaration sets out a roadmap to speech in commemoration of the 60th anniversary of the Marshall Plan, whose upgrade the communication policies that have spirit the OECD "carries [...] into a new century". President Bush's speech helped the Internet become the economic driver touched on the Franco-US friendship-'France was America's first friend"-US- that it is today and safeguard its future European relations, and wider global issues, including international security. A development. OECD will lead work with video and transcript of the speech is available at www.oecd.org developed and developing countries and international organisations to improve policies and to step up co-operation m the fight against Don't forget the planet! cybercrime and to improve security. Financial market turbulence and Most Forum participants agreed that the Reflecting today's more global OECD, member climate change also featured as financial situation should not be a pretext countries and the European Community were headline issues at this year's OECD for delaying action on climate change. joined by ministers from Chile, Egypt, Estonia, Forum (www.oecd.org/forum2008). The Strong partnerships and political will are India, Indonesia, Israel, Latvia, Senegal and Slovenia Forum is civil society's chance to more vital than ever lor taking action. in affirming their commitment to working together influence "OECD Week", and is held in This view was reported to ministers by to stimulate innovation, competition and investment Switzerland's minister of economic conjunction with the annual ministerial in information and communications technology affairs, Doris Leuthard, who highlighted meeting. They agreed on the need to work closely with the determination of different interests in business, civil society and technical experts on The rough financial weather was not a business, labour and civil society to fight policies that empower and protect consumers, and complete surprise, and European climate change together. But while there expand Internet access and use worldwide. Central Bank president, Jean-Claude was optimism about the potential of Trichet, recalled the first rumbles in technology, there was frustration about "Given that this infrastructure has become critical to the difficulty world leaders appeared to early 2007. He stressed the need for our economies and societies, we should all engage have in reaching agreements for action. transparency and prompt disclosure, in developing better, more broad-based, governance and said that new methodology was arrangements and policies", OECD Secretary- Yet political leadership is the space where needed to anticipate future turbulences. General Angel Gurria said in the closing session. Robert Kutlner, co-editor of The real action starts, said OECD Secretary- American Prospect, argued that what he General Gurria in a keynote session that included Prince Albert II of Monaco, The meeting was hosted by the Korean government already saw as a "crisis" called into New Zealand minister of trade, Phil Goff, and took place 10 years after the first OECD question the notion that financial Ministerial Meeting on E-Commerce held m Ottawa, markets are efficient, while Susan and UNFCCC chief, Yvo de Boer. The Canada when breakthroughs on such questions as George, board chair of the Transnational panel warned that climate change is not taxation were made. As Mr Gurria pointed out, "ten Institute, argued that mergers between someone else's problem, and urged years. . .is an eternity in Internet time", and he private financial institutions had created politicians to do more to harness pledged to review progress on the OECD very large firms that felt obliged to widespread public eagerness to tackle "bottom fish" and take on ever-riskier climate change. As the Forum showed, declaration within three years. investments. The rating agencies did not public dialogue and co-operation is the For full 10-page Chair's summary and speeches, sec flag these risks, and nor did the only real way to keep everyone's eye on regulators. the planet. John West www.oecd.org/futureinternet See also www.oecdobserver.org/internetseoul2008 |30 OECD Observer No 269 October 2008 oecd.org Remarks at the conference on the 50lh aged 93. A founding father of the Anniversary of the OECD Model Tax Business and Industry Advisory Convention, Committee to the OECD (B1AC) in OECD Conference Centre, Paris 1962, Mr Bata served as BIAC chairman Aid effectiveness from 1968-1970, and remained active 4 September 2008 in the organisation, chairing BIAC's Opening remarks at the Accra high level non-member committee at the time of forum on aid effectiveness - ministerial day, his death. Mr Bata, who lived in Accra, Ghana Canada, was born in Prague on 17 Water for all September 1914. He was a tenth 1 September 2008 generation cobbler, and ran the giant Remarks at the International Water Bata Shoe Organisation from the 1940s Resources Association during the 13th to the 1980s. The company returned to World Water Congress, Montpellier, France the Czech Republic in 1989 after the fall of the Soviet bloc, nearly 100 years Globalisation: A learning curve after the company was founded in 8 August 2008 Thomas Bâta, owner of the 1894. Mr Bata's passing drew tributes Reflections from the OECD's experience global shoe corporation that bears his from business and government leaders delivered at the University of Sydney, name, died in Toronto on 1 September, around the world. See www.biac.org Sydney, Australia The political economy of reform: Implementing policies for change 3 August 2008 New ambassadors Remarks delivered at the APEC Structural Reform Ministerial Meeting, Session 1 : Political challenges of structural reform, 11 July 2008 - Ulrik Vestergaard Knudsen 1 August 2008 - Antonio Armellini takes Melbourne, Australia takes up his post as the new ambassador up his post as the new ambassador for for Denmark. He replaces Steffen Smiclt. Italy. He replaces Bruno Cabras. The global financial crisis: Where to next, and what does it mean for OECD countries? 23 July 2008 - Dominic Martin replaces 26 September 2008 - Choongsoo Kim 30 July 2008 Address to Victoria University and the New David Lyscom as the new ambassador for succeeds Tae-shin Kwon as the new Zealand Institute of International Affairs, the UK. ambassador for Korea. Wellington, New Zealand Lifting productivity: Lessons from the OECD Recent speeches by Angel Gurria 29 July 2008 Address to the Chamber of Commerce of For a complete list of speeches and statements, including those m French and other New Zealand, Wellington, New Zealand languages, go to www.oecd.org/speeches Indonesia outlook The global economy and OECD: Distilling Keynote speech during the World Energy 24 July 2008 Remarks at the launch of the OECD lessons from a financial crisis Council: Energy Leaders Summit, London, UK 1 October 2008 Economic Assessment of Indonesia, Jakarta, Water prices for agriculture Indonesia Speech to the Parliamentary Assembly of the 12 September 2008 Council of Europe, Strasbourg, France South Africa outlook Remarks at the International Ad\isory 15 July 2008 The art of making reform happen: Learning Committee of Expo Zaragoza 2008, Zaragoza, Remarks at the launch of the OECD from each other Spain 25 September 2008 Economic Assessment of South Africa, Pretoria, South Africa Opening remarks delivered during the annual Quality education for all: Much more than a financial challenge meeting of Senior Officials from Centres of Challenges in an urban age: Rethinking Government on "The Political Economy of 9 September 2009 metropolitan regions in the OECD and Reform: Ensuring Stakeholder Support", Remarks at the presentation of Education at a beyond Mexico City, Mexico Glance 2008, OECD Conference Centre, Paris 12 July 2008 Energy, environment, climate change: 50th Anniversary of the OECD Model Tax Remarks at the conference on Urban Unlocking the potential for innovation Convention Challenges, hosted by La Conférence 16 September 2008 8 September 2008 Olivaint, Paris, France 31 OECD Observer No 269 October 2008 oecd.org Calendar Calendar of forthcoming events Please note that many of the OECD meetings mentioned are not open to the public or the media and are listed as a guide only. All meetings are in Paris unless otherwise stated. For a more comprehensive list, see the OECD website at www.oecd.org/media/upcoming, which is updated weekly. SEPTEMBER - highlights Europe on the OECD and the World International Organisation of Pension Economy. Strasbourg, France. Supervisors (lOPS). Mombasa, Kenya. 2-4 High-level forum on Aid Effectiveness, 2 High-level parliamentary seminar on organised by the Development Co¬ Climate Change, organised by the NOVEMBER operation Directorate. Accra, Ghana. OECD Division for Public Affairs. 8-9 OECD Model Tax Convention, 50th 3-4 OECD Policy Dialogue on Aid for 2 Financial Awareness, high-level Trade, meeting organised by Directorate anniversary conference. conference organised by the Central for Trade and Agriculture and the Bank of Hungary. Publication of the Development Co-operation Directorate, 8-10 Outcomes of Higher Education: Quality, Environmental Performance Review of Relevance and Impact, conference Hungary. Budapest, Hungary. 3-4 The Measurement of Human Capital, organised by the Directorate for technical workshop organised by the Education. Publication of Education at a 9-10 Tourism Economy and Globalisation: OECD Statistics Directorate and the Glance. An Engine for Innovation, Growth and Fondazione Giovanni Agnelli. Torino, Employment, organised by the Centre Italy. 9 International Migration Oui look 2008 for Entrepreneurship, SMEs and Local Development. Riva del Garda, Italy. published. 18-19 Innovation and Sustainable Growth in a Globalised World, joint OECD-World 11-13 Annual meeting of the IMF and the 17 Improving Health System Efficiency: Bank conference, World Bank. Washington, D.C, US. Achieving Belter Value for Money, 24-26 Latin American Round Table on conference organised by the Directorate 16 50lh anniversary of the Nuclear Corporate Governance. Mexico City, for Employment. Uibour and Social Energy Agency. Affairs, and the European Commission. Mexico. Brussels, Belgium. 20-21 Ministerial Euro-African conference on Migration and Development, in Paris. DECEMBER 23 Food and Fuel Prices, workshop organised by the OECD, the IMF and the 21 OECD Sciei\ce, Technology and 1-2 Financing and Pricing Water: the roles World Bank. Washington, D.C., US. Industty Outlook 2008, publication launched. of government policies, the private sector and civil society, meeting organised in the 29-30 Latin American Anti-Corruption framework of the OECD Global Forum Conference: Renewed Commitment and 21-22 Financial Education, conference on Sustainable Development. Enhanced Co-operation in the Fight organised by the Directorate for against Transnational Bribery, organised by Financial and Enterprise Affairs and Bank Indonesia. Jakarta, Indonesia. 1-2 Careers and Mobility of Doctorate the government of Mexico and the Holders, conference organised by the Directorate for Financial and Enterprise 27-28 Pharmaceutical Pricing Policy, high- Directorate for Science, Technology and Affairs. Mexico City Mexico. level symposium organised by the Industry Brussels, Belgium, Directorate for Employment, Labour 29/9-1/1 0 Schooling for Tomorrow, final and Social Affairs. 15-16 Official visit of the Secretary-General to conference of the CER1 project, organised Ankara, Turkey. Publication of the by the Directorate for Education. Helsinki, 28-31 Latin American Economic Outlook Environmental Performance Review of Finland. 2009 launched at the Ibero-American Turkey Summit of Heads of State and Government. San Salvador, El Salvador. OCTOBER JANUARY 2009 30-31 Global Forum on Private Pensions. I Annual Enlarged Debate of the organised by the Directorate for 28-1/2 World Economic Forum, annual Parliamentary Assembly of the Council of Financial and Enterprise Affairs and the meeting. Davos, Switzerland. :ranKie.org iiystiK 32 OECD Observer No 269 October 2008 The report looks at social impacts too, at Learning ageing for instance, which is having a Trends Shaping Education 2008 EDITION profound effect on schools in terms of the future teaching and investment. Fewer children are being born in developed countries, and so school rolls will decline, the report Trends Shaping Education argues, while overall teacher shortages will also persevere. This will affect local communities and the wider economy. One Education is a long-term investment, question raised in the report is how schools though at the same time it is faced ^f with pressures from constant social might meet the needs of older people. and economic change. This makes it Not that examining past trends is a reliable harder for educators and policymakers to guide to the future. Also, forecasting the plan for the future. Looking at present-day number of children who will enter primary trends can give some idea as to how c lire (or t7duc«lion»l »>i>5e«rQh «na Innovation education might evolve, and this is what education in 10 years' time is probably Trends Shaping Education sets out to do. It OECD easier to do than predicting, say, the next major technological breakthrough. But selects 26 major trends covering such Trends Shaping Education is not a crystal dynamics as population change, Take information technology: Since the 1990s ball, but a set of tools to help people think economic, political and social and the advent of the Internet, IT has become more deeply and openly about the developments, and the impact of an integral part of learning, from multimedia changing world in which education must technological innovation and climate and open source to the likes of Wikipedia grow. change. Each trend is explained and and blogs. Are schools doing enough to help assessed, and questions are asked about children develop their IT skills and make full the potential impact on future education. use of all these new technologies? ISBN 978-92-64-04661-0 Ethical recruitment the number of medical graduates in developed countries in 2005 still lies below the 1985 level. The Looming Crisis in the Health Workforce: How Can OECD Countries Respond? Another option is to hang on to current medical staff by addressing wage and workplace issues, delaying retirement and creating incentives to raise The developing world needs millions of trained productivity, such as by linking pay rises to health workers immediately just to provide the performance or investing in IT. most basic healthcare, yet doctors are leaving poor countries to go to richer ones. So how come even Then, there is that thornier option of recruiting personnel the wealthy countries are suffering a drastic shortage of doctors and from other countries. But already, nearly three quarters of nurses, says OECD's report The Looming Crisis in the Health Workforce? foreign-bom doctors and two thirds of foreign-bom nurses The US alone reports that it will need over 250,000 additional public onginate from non-OECD countries, says the report. As the WHO health workers within the next decade. warns, the shortage of medically trained staff in poor countnes threatens the Millennium Development Goals on reducing HIV and Published in collaboration with the World Health Organization, The malaria, and improving maternal and reproductive health. In the Looming Crisis in the Health Workforce reports on a two-year project poorest countries of the world, there is one doctor for every 100,000 that examined the interplay between a decreasing health workforce people, says Oxfam, compared to an OECD average of 3 per 1,000. and growing international migration. It addresses the demand for health workers around the world, which has countries recruiting The Looming Crisis in the Health Workforce emphasises that individuals internationally in a sort of cross-border tug of war. Yet, the shortage is have a right to seek opportunities internationally, but calls for still expected to get worse. enforcing international codes of conduct in recruitment, welcoming foreign medical students under mutually beneficial conditions, and How can OECD countnes meet future demand? While the most effective strengthening the health systems of developing countries. approach is to simply train more staff, the rate of training will not meet the shortfall, since despite an increase in enrollment in the last decade, ISBN: 978-92-64-05043-3 OECD Observer No 269 October 2008 331 SourceOECD (( New OECD publications Now available on www.sourceoecd.org SourceOECD: ECONOMICS OECD factbook 2008 www.SourceOECD.org/9789264045552 is OECDs OECD Factbook 2008: Economic, Online Bookshop: % comprehensive Environmental and Social Statistics www.oecd.org/bookshop79789264045552 tk statistical annual. -eft 10-Apr-2008, 285 pages, $50 £25 ¥4 800 m More than 100 SourceOECD: B indicators cover a HEALTH wide range of www.SourceOECD.org/9789264040540 areas with this Online Bookshop: The Looming Crisis in the Health Workforce: year's focus chapter www.oecd.org/bookshop79789264040540 How Can OECD Countries Respond? concentrating on productivity. Each «See left indicators two-page spread includes 1 3-Oct-2008, 85 pages, $29 £17 ¥3 300 a definition of the indicator, an SourceOECD: assessment of long-term trends, a OECD Economic Surveys: Canada www.SourceOECD.org/9264050434 list ol references and tables/graphs 2-Jul-2008, 1 62 pages, £52 $72 £37 ¥7 800 Online Bookshop: showing the key messages of the SourceOECD: data. A StatLink is provided for each www.oecd.org/bookshop79264050434 www.SourceOECD.org/9789264043930 table directing the user to an Excel® table. Online Bookshop: www.oecd.org/bookshop79789264043930 AGRICULTURE With a number of new countries lining up to Environmental Performance of OECD Economic Surveys: Germany join the OECD, the 10-Apr-2008, 190 pages, $72 £37 ¥7 800 OECD Agriculture since 1 990 \A - '$\JëjÉ£r ' ! ',)|,,K ^ SourceOECD: 16-Jun-2008, 579 pages, $126 £64 ¥12 500 www.SourceOECD.org/9789264043480 economic SourceOECD: Online Bookshop: assessments for www.oecd.org/bookshop79789264043480 www.SourceOECD.org/9789264040922 those with Enhanced Online Bookshop: Engagement status. Two of these assessments, one for Indonesia and OECD Economic Surveys: Indonesia www.oecd.org/bookshop79789264040922 «See left one for South Africa have just been Economic Assessment published. 30-July-2008, 128 pages, $72 £37 ¥7 800 SourceOECD: OECD/FAO Agricultural Outlook 2008-2017 Environmental 25-Jul-2008, 233 pages, $124 £57 ¥11 100 ^^^x^ Performance of www.SourceOECD.org/9789264048058 SourceOECD: Agriculture at a Online Bookshop: Glance provides www.oecd.org/bookshop79789264048058 www.SourceOECD.org/9789264045903 comprehensive data «See left Online Bookshop: and analysis on the www.oecd.org/bookshop79789264045903 environmental £ performance of OECD Economic Surveys: Japan agriculture in OECD 9-Apr-2008, 193 pages, $72 £37 ¥7 800 Agricultural Policies in OECD Countries at a Glance 2008 countries since 1990, covering soil, SourceOECD: water, air and biodiversity and looking 25-Jul-2008, 147 pages, $32 £17 ¥3 300 at recent policy developments in all www.sourceoecd.org/9789264043060 SourceOECD: 30 countries. Online Bookshop: www.oecd.org/bookshop79789264043060 www.SourceOECD.org/9789264032132 Online Bookshop: OECD Economic Surveys: South Africa www.oecd.org/bookshop79789264032132 Economic Assessment 24-Jul-2008, 141 pages, $72 £37 ¥7 800 DEVELOPMENT SourceOECD: www.SourceOECD.org/9789264046924 African Economic Outlook 2007/2008 Online Bookshop: 21-May-2008, 689 pages, $124 £57 ¥11 100 www.oecd.org/bookshop79789264046924 SourceOECD: www.SourceOECD.org/9789264045859 OECD Economic Surveys: Turkey Online Bookshop: 25-Jul-2008, 163 pages, $72 £37 ¥7 800 www.oeed.org/bookshop79789264045859 34 OECD Observer No 269 October 2008 SourceOECD ({ SourceOECD: www.SourceOECD.org/9789264046030 According to the OECD Employment Outlook 2008 Online Bookshop: OECD Employment 20-Aug-2008, 371 pages, $124 £57 ¥11 100 Outlook 2008, www.oecd.org/lxiokshop79789264046030 labour market SourceOECD: discrimination is www.SourceOECD.org/9789264046320 Measuring Sustainable Production still a big problem | Online Bookshop: in OECD 1 0-Apr-2008, 130 pages, $49 £25 ¥4 800 www.oecd.org/bookshop79789264046320 countries, *, SourceOECD: Women are still 20% less See right» likely than men to have a paid job in www.SourceOECD.org/9789264044128 OECD countries and they earn on Jobs for Youth: Canada Online Bookshop: average 17% less than men. At least 20-Jun-2008, 191 pages, $44 £20 ¥4 000 www.oecd.org/bookshop/9789264044128 30% of the gap in wages and 8% of the gap in employment rates result SourceOECD: from discriminator)' practices in the www.SourceOECD.org/9789264046702 labour market. This publication Online Bookshop: FINANCE AND INVESTMENT / INSURANCE shows what can be done. ,n PENSIONS www.oecd.org/bookshop79789264046702 Young people who leave OECD Journal: Financial Market Trends No. school without Jobs for Youth: United Kingdom qualifications find it 94, May 2008 l8-Jul-2008, 1 69 pages, $44 £20 ¥4 000 hard to get jobs and a i 2-]ul-2008, 238 pages, SourceOECD: start in the job '** ft subscription: $361 £183 Y44 800 market, which can www.SourceOECD.org/9789264046467 have a lasting SourceOECD: Online Bookshop: impact over their ,! www.oecd.org/lxiokshop79789264046467 www.SourceOECD.org/19952864 entire lives. This See right» Online Bookshop: series of reports on Jobs for Youth in OECD www.oecd.org/bookshop719952805 countries recommends practical See right» policy solutions to this widespread ENERGY problem. International Investment Law: Energy Technology Perspectives 2008 This issue of OECD's 1 7-Jun-2008. 650 pages, $124 £57 ¥11 100 Understanding Concepts and Tracking twice-yearly Financial Market Trends is SourceOECD: Innovations particularly topical as www.SourceOECD.org/978926404 1 43 1 4-Apr-2008, 344 pages, $133 £68 ¥13 200 it features an Online Bookshop: SourceOECD: overview of the www.oecd.org/bookshop7978926404 1 43 1 current financial www.SourceOECD.org/9789264042025 crisis as well as t Online Bookshop: articles on the Energy Policies of IEA Countries: Japan www.oecd.org/lxiokshop79789264042025 Subprime Crisis, I9-Jun-2008. 220 pages, $105 £54 ¥10 400 Deposit Insurance and Federal SourceOECD: Guaranty Insurance as well as Corruption: A Glossary of International www.SourceOECD.org/9789264043350 Sovereign Wealth Funds, all topics Standards in Criminal Law currently discussed in the news. Online Bookshop: www.oecd.org/lxiokshop/9789264043350 26-Mar-2008, 98 pages, $29 £17 ¥3 300 SourceOECD: C02 Capture and Storage: A Key Carbon www.SourceOECD.org/9789264027404 Abatement Option Online Bookshop: Oct-6-2008, 400 pages, $140 £72 ¥13 900 www.oecd.org/bookshop/9789264027404 SourceOECD: www.SourceOECD.org/9789264041400 Online Bookshop: GOVERNANCE wwwoecd.org/bookshop7978926404 1 400 OECD Public Management Reviews: Ireland 6-Jun-2008, 377 pages, $84 £43 ¥8 300 JWJhlilW/WH SourceOECD: w-ww.SourceOECD.org/9789264043251 Economic Aspects of Adaptation to Climate Online Bookshop: Change 6-Jun-2008, 138 pages, $46 £21 ¥4 100 www.oecd.org/liookshop79789264043251 35 OECD Observer No 269 October 2008 SourceOECD (( Brazil: Strengthening Governance for Growth SourceOECD: Part of the OECD 6-Jun-2008, 333 pages, $63 £32 ¥6 200 www.SourceOECD.org/9789282 1 01216 Reviews ol SourceOECD: Online Bookshop: ^"""""' Regulatory Reform www.SourceOECD.org/9789264042933 www.oecd.org/lxxikshop79789282 101216 series, this review Online Bookshop: i "'%» analyses the www.oecd.org/bookshop79789264042933 Trends in the Transport Sector, 1970-2006 Tjjjk'/ challenges of «See left 17-Jun-2008, 76 pages, $37 £17 Y3 300 strengthening SourceOECD: Removing Barriers to SME Access to ** regulatory www.SourceOECD.org/9789282112632 International Markets governance in Brazil Online Bookshop: to improve economic growth, 10-Apr-2008, 217 pages, $58 £32 ¥6 200 www.oecd.org/lxiokshop79789282 1 12632 with appropriate regulatory SourceOECD: frameworks for core infrastructure www.SourceOECD.org/9789264040243 sectors. The debate on a marketbased Online Bookshop: OECD Economic Surveys 2008: Luxembourg, economy has now entered a www.oecd.org/bookshop/9789264040243 Norway new phase in Brazil, addressing the broader context of quality People and Biodiversity Policies: Impacts, Issues regulation and the reduction of and Strategies for Policy Action regulator)' risk. The improved Staying Competitive in the Global Economy: Business for Development 2008: Promoting macroeconomic situation and the Compendium of Studies on Global Value Commercial Agriculture in Africa progress made by the sectoral Chains Multi functionality in Agriculture: Evaluating the regulatory agencies have paid off, l9-Jun-2008, 252 pages, $77 £36 ¥6 900 degree of jointness, policy implications and there is also wider social SourceOECD: Public-Private Partnerships: In Pursuit of Risk participation in the improvement of www.SourceOECD.org/9789264046306 Sharing and Value for Money the regulator)' framework with a Online Bookshop: Nuclear Development: Timing of High-level stronger consumer engagement. www.oecd.org/bookshop79789264046306 But Brazil still needs to further Waste Disposal improve its capacities for regulator)' Deploying Renewables: Principles for Effective NUCLEAR ENERGY Policies quality and increase transparency and accountability in the system to Uranium 2007: Resources Production and OECD Rural Policy Re\iews: Netherlands reinforce regulatory performance. Demand 17-Jun-2008, 424 pages, $186 £86 ¥16 600 RECENTLY UPDATED DATABASES SourceOECD: Responding to Main Economic Indicators: www.SourceOECD.org/9789264047662 concerns in SourceOECD: www.SourceOECD.org/1608 1 234 Online Bookshop: governments and www.oecd.org/bookshop79789264047662 Monthly Statistics of International Trade the business SourceOECD: www.SourceOECD.org/1608 1 226 community, the Nuclear Energy Data 2008 OECD launched National Accounts 25-Jul-2008, 120 pages, $53 £27 ¥5 600 SourceOECD: www.SourceOECD.org/16081 188 a project in 2005 SourceOECD: """«S, to assess the www.SourceOECD.org/9789264047969 International Trade by Commodity Statistics magnitude and impact Online Bookshop: SourceOECD: www.SourceOECD.org/16081218 of counterfeiting and piracy The www.oecd.org/bookshop79789264047969 Economic Impact of Counterfeiting LATEST OECD POLICY BRIEFS and Privacy presents the result of JJUiyjKHJ-IJIHMt.Td'Jfla^^ that project, focusing on six sectors: the audio-visual sector, the Remaking the Movies: Digital Content and Free online at : www.oecd.org/publications automotive sector, the electrical Evolution of the Film and Video Industries OECD Economic Surveys: Canada, Czech components sector, the food and 15-May-2008, 135 pages, $46 £21 ¥4 100 Republic, Finland, Germany, Ireland, drink sectors, pharmaceuticals, and SourceOECD: Luxembourg, Norway, Poland, Portugal, tobacco. www.SourceOECD.org/9789264043299 South Africa, Turkey; Economic Assessment Online Bookshop: of Indonesia This report examines www.oecd.org/bookshop79789264043299 the role tax Agriculture: Improving Policy Coherence for intermediaries play in The Economic Impact of Countcrleiting and Development the operation ol tax Privacy The Future of the Internet Economy systems and 8-Jul-2008, 396 pages, C80 $124 £57 ¥11 100 Ending Job Discrimination specifically to SourceOECD: understand their The Social Impact of Foreign Direct * www.SourceOECD.org/97892640455 1 4 role in Investment Online Bookshop: "unacceptable tax www.oecd.org/bookshop79789264045514 Competition Law and Policy in Ukraine minimisation arrangements". In «See left addition, the report identifies Measuring Regulatory Quality strategies for strengthening the Performance Budgeting: A Users Guide relationship between tax Making Trade Work for Developing Countries intermediaries and revenue bodies Oil Dependence: Is Transport Running Out of Affordable Fuel? and corporate taxpayers. Measuring Regulator}' Quality 13-Jun-2008, 213 pages, $116 £54 ¥10 400 36 OECD Observer No 269 October 2008 SourceOECD (( Focus on taxation TAX CONVENTIONS / GUIDELINES Tax Co-operation 2007: Towards a Level Playing HIGHLIGHTS Field, Assessment by the Global Forum on OECD Model Tax Convention on Income and Taxation Capital, Condensed Version, July 2008 The OECD's work in taxation has 7-NOV-2007, 222 pages, $78 £43 ¥8 300 always been an important part of the 2-Sep-2008, 415 pages, $92 £46 ¥9 600 SourceOECD: SourceOECD: OECD overall activities. Through its www.SourceOECD.org/9789264039025 work, it contributes to setting www.SourceOECD.org/9789264048188 Online Bookshop: standards in the international lax Online Bookshop: world. The OECD's Model Tax www.oecd.org/bookshop/9789264039025 www.oecd.org/bookshop79789264048188 Convention lias, for example, long See right» been recognised as the basis for the Encouraging Savings through Tax-Preferred global network of tax treaties, and The Convention on Mutual Accounts the OECD's 1995 Transfer Pricing Guidelines are used as the basis for Administrative Assistance in Tax 7-Mar-2007, 130 pages, S40 £21 ¥4 100 legislation in OECD countries and Matters: 20lh Anniversary Edition SourceOECD: an increasing number of non-OECD 26-Mar-2008, 133 pages, $29 www.SourceOECD.org/978926403 1 357 economies. The OECD's Centre for £17 ¥3 300 Online Bookshop: Tax Policy and Administration is the J SourceOECD: www.oecd.org/bookshop79789264031357 focal point for the Organisation's www.SourceOECD.org/978926404 1 035 work on taxation. The Centre Online Bookshop: examines all aspects of taxation Taxation of Capital Gains of Individuals: Policy www.oecd.org/bookshop/9789264041035 other than macro-fiscal policy. Its Considerations and Approaches work covers international and domestic tax issues, direct and Transfer Pricing Guidelines for Multinational 6-Dec-2006, 172 pages, $54 £28 ¥5 500 SourceOECD: indirect taxes, tax policy and tax Enterprises and Tax Administrations: Travel administration. The Centre's Version www.SourceOECD.org/9789264029491 statistical publications provide Online Bookshop: 18-Jun-2001, 262 pages, S68 £32 Y4 900 annual comparisons of tax levels and SourceOECD: www.oeccl.org/bookshop/9789264029491 tax structures in member countries. www.SourceOECD.org/9789264 1 86286 Online Bookshop: The OECD Model TAX STATISTICS www.oecd . org/bookshop?9789264 1 86286 Tax Convention just celebrating its Taxing Wages 2006-2007 50lh year! And TAX ANALYSIS Special feature: Tax Reforms and Tax Burdens with this 2000-2006 celebration Study into the Role of Tax Intermediaries comes a new 26-Mar-2008, 486 pages, $168 £86 ¥16 600 ]8-Mar-2008, 92 pages, $29 £17 ¥3 300 condensed SourceOECD: SourceOECD: version with updates www.SourceOECD.org/9789264042 1 00 www.SourceOECD.org/9789264041790 approved in July 2008. The updated electronic and loose-leaf versions Online Bookshop: Online Bookshop: will be announced shortly. www.oecd.org/bookshop79789264041790 www.oecd.org/bookshop79789264042100 «See left Revenue Statistics 1965-2006 Tax Effects on Foreign Direct Investment: 24-Oct-2007, 345 pages, $156 £86 ¥16 600 Recent Evidence and Policy Analysis SourceOECD: 22-Jan-2008, 191 pages, $70 £36 Y6 900 www.SourceOECD.org/9789264038349 SourceOECD: Online Bookshop: www.SourceOECD.org/9789264038370 www.oecd.org/bookshop79789264038349 Online Bookshop: www.oecd.org/bookshop79789264038370 Consumption Tax Trends: VAT/GST and Excise Rates, Trends and Administration Issues Fundamental Reform of Corporate Income Tax 16-Jun-2006, 121 pages, $50 £27 ¥5 500 27-Nov-2007, 174 pages, $63 £32 ¥6 200 SourceOECD: SourceOECD: www.SourceOECD.org/9789264038110 www.SourceOECD.org/97892640 14176 Online Bookshop: Online Bookshop: www.oecd.org/lxxikshoii/97892640381 1 0 www.oeccl.org/bookshop797892640 1 4176 37 OECD Observer No 269 October 2008 BOOKS Reviews by the name of the Fishy terms fish. For example, yakiboshi ayu is from The Multilingual Dictionaiy of Fish and Fish Products ayu sweetfish, and yakiboshi iwashi is Anyone ordering salmon in a European restaurant will easily from sardine or recognise the similarity between salmone (Italian), salmâo anchovy." (Portuguese), saumon (French) or solomôs (Greek), and may make the leap from the Yiddish lox to lachs (German), laks While it is commonly (Norwegian) or lax (Swedish). But identifying the same fish as known that fish names yeoneo (Korean), som bahgi (Turkish), sake masu-rui Qapanese) or employed for certain losos (Croatian) calls for a fish glossary. species are not always the same in different Sorry, we didn't catch your name! At over 360 pages, the recently published 5th edition of the OECD's countries or regions, Multilingual Dictionary of Fish and Fish Products is not intended as a this is true even where the same language is spoken. There are a pocket guide. It is rather an essential tool for international markets, number of differences between European and North American designed to promote and facilitate global trade in fish and lish terms such as pomfret/butterfish or pickerel/pike, or perch/sea products, by pro-siding a comprehensive list of products that are m bream/porgy The humble catfish, or loup in French, for instance, is commercial use around the world. also known in the UK as rock turbot, rock salmon, sea cat, sea wolf, sand scar or swine, although the recommended trade name The bilingual glossary opens with aalpricken, a "gutted small eel, for these species is rockfish. fried and packed in fine edible oil", produced in Germany, and ends with the European freshwater fish zanthe, also known as Korean has been added to this edition, which provides separate vimpa in Finland, strandslabbi in Iceland and certa in Poland. One indexes for the 21 languages covered, as well as an index of learns that yakiboshi is the Japanese name given to fish that are scientific names. "dried after boiling or toasting. . .processed as round, usually gutted and skewered with bamboo pins...Yakiboshi is usually subjoined ISBN 978-92-64-03989-6 ORDER FORM Subscribe to the OECD OBSERVER Special two-year rates available only at www.occdobscrver.org/subscribc.html Subscription will commence with the next available issue. Subscribers will be provided with the English U YCS, please enter my subscription for US$82 language edition unless otherwise indicated. six issues plus free OECD in Figures £43 annual supplement, worth 15. ¥8 900 English language edition ISSN 0029-7054 French language edition ISSN 0304-3398 You can order your BOOKS either online at www.oecd.org/bookshop or by mailing your choices from the New publications titles in this section to one of the addresses below. Where do we deliver? Name Country. . . Organisation Position held . Telephone . Address Fax E-mail Postcode . . City . Payment details Cheque/money order enclosed (payable to OECD) Please charge my VlSA/MasterCard/Amencan Express TOTAL amount due Card number Card Expiry Date . For customers in the US For customers in the rest of the world Where to send your mail or fax order Turpin Distribution Turpin Distribution Services Ltd. The Bleachery Stratton Business Park 143 West Street, New Milford Pegasus Drive, Biggleswade « Connecticut 06776 USA Bedfordshire SGI 8 8QB, UK Tel: (1) 800 456 6323 Tel: (44) 1767 604 960 Fax: (1) 860 530 0039 Fax: (44) 1767 604 640 OECD Email: [email protected] E-mail: [email protected] 138 OECD Observer No 269 October 2008 "We make it work" M&1 d fnki *&mk it \ %5& V No matter where you want to catch the sun, S.A.G. Solarstrom AG will take care of all the rest- from yield reports through to installations, operations and optimization, S through to XXL, rooftop or ground-mounted systems. Manufacturer-independent and with your vision in mind our experts excel in providing you with the best possible energy efficiency, quality and yield for your photovoltaic project. More than 10 years of experience combined with well-known German high quality standards are our assets - we make it work. S.A.G._ For more details, visit our website at www.sagsolar.com, send an e-mail to [email protected] Solarstrom or give usa call on +49-761-47 70-3 33 OECD Factbook 200 OECD Factbook 2008 Economic, Enviromental and Social Statistics wmm April 2008 6. In OECD countries, what percentage of the unemployed ISBN: 978-92-64-04054-0 population has been out of work for 12 months or longer? $50.00 £25.00 ¥4 800 A. 73% B. D 44% C. 32% D. 22% OECD Factbook 2008 is the fourth edition of a comprehensive statistical Science and technology annual from the OECD. Over 100 indicators cover a wide range of areas: economy; agriculture; education; energy; environment; foreign aid; health and 7. Which of these countries has the highest proportion of quality of life; industry; prices; economic globalisation; science and technology; households with access to a home computer? information and communications; population; labour; trade and investment; taxation; public finance and expenditure; and R&D. Data are provided for A. O Denmark B. \fj Iceland all OECD member countries with area totals, and for selected non-member C. Japan D. D Korea economies. The 2008 edition includes a special focus on productivity. EX332S3 Environment 1. Positive net migration means a country has more immigrants 8. By what percentage have global carbon dioxide emissions than emigrants. Which OECD country had the highest rate of increased since 1971? positiue net migration between 2000 and 2006? A. Q54% B. D63% C. D84% D. Q92% A. Spain B. Ireland C. Australia D. Canada <§> Education © Macroeconomic trends 9. In percentage terms, which of these countries has the highest number of university graduates? 2. In 2004, what proportion of the population of OECD countries A. Finland B. Japan resided in regions with a level of GDP per capita below the C. [J Canada D. \_j Russian Federation national average? A. D59% B. D53% C. D42% D. 37% Public jinance Economic globalisation 10. Luxembourg is the OECD country which spends the least on law, order and defence expenditure at 1.2% of GDP; as the 3. Which OECD country received the largest inflows of Foreign highest spender, how much does the United States spend? Direct Investment (FDI) in 2006? A. 6.4% of GDP B. D 5.1% of GDP A. Germany B. D Luxembourg C. 4.1% of GDP D. 3.3% of GDP C. United Kingdom D. United States <É> Quality o/li/e Prices 11. Eight out often of the world's most visited tourist 4. Which of these countries experienced the greatest growth in destinations are OECD countries; which of these is not in the consumer inflation between 1993 and 2006? top five? A. Brazil B. D Poland A. D United States B. D United Kingdom C. Turkey D. United Kingdom C. O France D. O Germany // Energy Productivity 5. In which of these countries does nuclear electricity production 12. Which OECD country had the largest increase in GDP per make up the largest proportion of total electricity production? hour worked during the period 2001-2006? A. D France B. D United States A. Poland B. D Korea C. Sweden D. D Belgium C. Hungary D. Slovak Republic .oecd.org/publicati DATABANK OECD in graphs Healthy Pharmaceutical spending Per capita spending on pharmaceuticals, 2005, in US$ purchasing power parities economy? us$ PPP son 792 700 The pharmaceutical industry's 600 important role in the OECD 5001 economy is reflected in 390 384 380 372 366 362 360 351 expenditure, with a total of US$569 billion on pharmaceuticals (excluding 300 pharmaceuticals for in-patients) in 2005. 200 While France and Spain consumed the highest number of pharmaceuticals per person, the US had the highest expenditure I^W^5^^^ at $235 billion, accounting for more than 40% of the OECD total; Japan in second 'FY2004 'FY2004/05 spent $71 billion, while France spent just $39 billion and Spain $21 billion. Source: OECD Health Data 2007 mil estimates Since the 1990s the growth in pharmaceutical spending was 5.6% per with several countries in the $400-600 assess how pharmaceutical pricing and year, significantly higher than the per head range. On the other hand, in reimbursement policies have contributed 4.2% annual growth for total health Mexico per capita spending was only to the achievement of certain health expenditure during the same period $144, just 18% of the US spending level, policy objectives, including availability, while at the same lime GDP grew at an and about $100 less than in Poland. accessibility and innovation. annual rate of 3%. Turkeys expenditure of $141 was calculated based on manufacturer prices, If calculated on a per person basis, the which may underestimate final spending. Pharmaceutical Pricing Policies in a Global US was in the lead at $792, but Market is available at otherwise expenditure variations between These figures are from a new OECD www.oecd.org/bookshop, many OECD countries is not very great, report which compares price levels to ISBN 978-92-64-04414-2 whole. Average monthly price rises eased Higher prices down from their high of about 0.5% per Inflation month in 1987-92 to 0.3% in 1998- Consumer price indices 2003 and to 0.2% in the period to 2006. July 2008, 2000 = 100 Consumer price inflation has been Indeed, as OECD in Figures points out, 200 rising in many countries for the since 2000 there have been 20 months Consumer Price (energy) first time in several years. Indeed, when prices did not rise at all! But Consumer Price (non-food non-energy) the consumer price index for energy overall price rises accelerated to 0.6% in tracked alongside prices for non-energy spring 2008. and non-food for most of the last two decades, but jumped to a far steeper trend Average OECD inflation stood at 4.4% in from 2003, the latest OECD in Figures 2008 mid-2008, with Japan at the low end, reports. The energy price index for fuel, recording a 2% annual rise in its electricity and petrol jumped by 68% from consumer price index, but Iceland's mid-2003 to mid-2008, compared with reaching over 12% in the same month. 32% in the five years to end-1992 and 24% in 1998-2002. (Commodity prices OECD in Figures 2008, 201'1 anniversary Jan have eased since August 2008, however.) edition, is free to OECD Observer 2008 subscribers. It can be ordered Overall consumer price inflation has separately at www.oecd.org/bookshop, Source: OECD in Figures 2008 statLink mora http://dx.doi.org/10.1787/466835403855 been modest in the OECD area as a ISBN 978-92-64-05563-6 41 OECD Observer No 269 October 2008 . DATABANK Indicators % change from: j le previous previous current same period period year period last year -13.61 Australia Gross domestic product 02 08 0.3 2.7 Current balance 02 08 -12.05 4.30 Leading indicator Aug. 08 0.0 -3.4 Unemployment rate Aug. 08 4.10 Consumer price index Q2 08 1.5 4.5 Interest rate Aug. 08 7.31 6.75 3.02 2.95 Austria Gross domestic product 02 08 0.4 2.2 Current balance 02 08 Leading indicator Aug. 08 -0.9 -6.6 Unemployment rate Aug. 08 3.30 4.70 Consumer price index Aug. 08 -0.2 3.7 Interest rate -10.85 1.41 Belgium Gross domestic product Q2 08 0.2 1.9 Current balance 02 08 Leading indicator Aug. 08 -1.3 -5.3 Unemployment rate Aug. 08 6.60 7.30 El Consumer price index Sept. 08 0.2 5.5 Interest rate Canada Gross domestic product 02 08 0.1 0.7 Current balance 02 08 6.69 6.49 Leading indicator Aug. 08 -1.5 -4.7 Unemployment rate Aug. 08 6.10 6.00 Consumer price index Aug. 08 -0.2 3.5 Interest rate Sept. 08 3.29 5.11 -2.67 -0.83 Czech Republic Gross domestic product Q2 08 0.9 4.6 Current balance Q2 08 Leading indicator Aug. 08 -0.8 -3.0 Unemployment rate Aug. 08 4.30 5.10 Consumer price index Aug. 08 -0.1 6.4 Interest rate Sept. 08 3.81 3.46 Denmark Gross domestic product 02 08 0.4 1.0 Current balance 02 08 1.57 1.40 3.80 ES Leading indicator Aug. 08 -1.9 -10.1 Unemployment rate Aug. 08 2.90 Consumer price index Aug. 08 0.2 4.3 Interest rate Sept. 08 5.03 4.60 Finland Gross domestic product Q2 08 0.8 2.4 Current balance Jun. 08 1.79 0.92 H 1 Leading indicator Aug. 08 -0.5 -4.1 Unemployment rate Aug. 08 6.30 6.80 Consumer price index Aug. 08 0.4 4.7 Interest rate France Gross domestic product 02 08 -0.3 1.1 Current balance Jul. 08 -6.03 -2.60 Leading indicator Aug. 08 -0.8 -5.6 Unemployment rate Aug. 08 8.00 8.20 Consumer price index Aug. 08 0.0 3.2 Interest rate 1.7 Current balance Q2 08 71.01 62.30 Germany Gross domestic product 02 08 -0.5 Leading indicator Aug. 08 -2.0 -7.6 Unemployment rate Aug. 08 7.20 8.30 Consumer price index Aug. 08 -0.3 3.1 Interest rate -4.12 Greece Gross domestic product 02 08 0.8 3.5 Current balance Jul. 08 -4.70 -0.5 -4,4 Unemployment rate Jun. 08 7.50 8.40 &=J Leading indicator Aug. 08 Consumer price index Sept. 08 2.0 4.6 Interest rate 1.7 Current balance Q2 08 -2.64 -1,83 Hungary Gross domestic product 02 08 0.6 Leading indicator Aug. 08 -1.0 -1.6 Unemployment rate Aug. 08 7.90 7.40 Consumer price index Aug. 08 -0.3 6.5 Interest rate Sept. 08 8.62 7.44 Iceland Gross domestic product Q2 08 4.9 4.9 Current balance 02 08 -1.79 -0.87 Leading indicator Unemployment rate Aug. 08 1.30 0.90 Consumer price index Aug. 08 1.2 14.5 Interest rate Feb. 08 19.00 16.52 Ireland Gross domestic product 02 08 -0.5 -0.7 Current balance Q2 08 -3.43 -2.36 4.50 i Leading indicator Apr. 08 -1.2 -13.1 Unemployment rate Aug. 08 6.20 Consumer price index Aug. 08 0.5 4.3 Interest rate ltalv Gross domestic product Q2 08 -0.3 -0.1 Current balance Apr. 08 -4.31 -4.84 Leading indicator Aug. 08 -0.8 -5.9 Unemployment rate Jun. 08 6.80 6.00 El Consumer price index Sept. 08 -0.3 3.8 Interest rate Jul. 08 14.56 15.40 Japan Gross domestic product 02 08 -0.7 0.8 Current balance -2.8 4.10 3.80 1 1 Leading indicator Aug. 08 -0.9 Unemployment rate Aug. 08 Consumer price index Aug. 08 0.3 2.1 Interest rate Aug. 08 0.75 0.74 Korea Gross domestic product Q2 08 0.8 4.8 Current balance Aug. 08 -4.82 1.75 Leading indicator Aug. 08 0.8 1.0 Unemployment rate Aug. 08 3.20 3.20 *** 1 Consumer price index Sept. 08 0.1 5.1 Interest rate Sept. 08 5.79 5.34 Luxembourg Gross domestic product 01 08 1.3 2.5 Current balance 02 08 1.07 0.96 Leading indicator Aug. 08 -3.2 -12.6 Unemployment rate Aug. 08 4.20 4.10 Consumer price index Sept. 08 0.1 4.0 Interest rate Mexico Gross domestic product Q2 08 0.2 2.1 Current balance 02 08 -3.24 -2.63 Leading indicator Jul. 08 2.3 3.1 Unemployment rate Aug. 08 3.80 3.60 El Consumer price index Aug. 08 0.6 5.6 Interest rate Sept. 08 8.32 7.36 Netherlands Gross domestic product 02 08 0.1 3.0 Current balance 02 08 15.88 13.26 Leading indicator Aug. 08 -0.9 -4.1 Unemployment rate Aug. 08 2.60 3.10 Consumer price index Sept. 08 0.4 3.1 Interest rate New Zealand Gross domestic product Q2 08 -0.5 -0.3 Current balance Q2 08 -3.59 -2.73 Leading indicator Aug. 08 1.5 -2.7 Unemployment rate 02 08 3.90 3.60 Consumer price index Q2 08 1.6 4.0 Interest rate Sept. 08 7.95 8.81 1 42 nt.Tlinkpr.pr Nn 7ftQ rVlnhet 2008 DATABANK Indicators % change from: previous previous current same period period year period last vear Norway Gross domestic product 02 08 0.6 3.3 Current balance 02 08 24,69 13.41 Leading indicator Aug. 08 -0.1 -5.2 Unemployment rate Jul. 08 2,40 2.50 E1^5 Consumer price index Aug. 08 0.1 4.5 Interest rate Sept, 08 6.82 5.51 Poland Gross domestic product 02 08 1.5 6.1 Current balance Jul. 08 -1.82 -1.61 Leading indicator Aug. 08 -1.2 -10.6 Unemployment rate Aug. 08 6.70 9.20 ^H Consumer price index Aug. 08 -0.4 4.8 Interest rate Sept. 08 6.63 5.01 Portugal Gross domestic product 02 08 0.3 0.7 Current balance Jun. 08 -2.59 -1.60 Leading indicator Aug. 08 -0.3 -5.3 Unemployment rate Aug. 08 7.50 8.10 Consumer price index Aug. 08 -0.5 3.0 Interest rate Slovak Republic Gross domestic product Q2 08 1.9 8.0 Current balance 02 08 -2.34 -1.04 Leading indicator Aug. 08 0.5 -1.7 Unemployment rate Aug. 08 9.90 11.20 Consumer price index Aug. 08 0.2 5.0 Interest rate Aug. 08 4.03 4.07 Spain Gross domestic product 02 08 0.1 1.8 Current balance Jul. 08 -10.13 -12.67 Leading indicator Aug. 08 0.2 -7.0 Unemployment rate Aug. 08 11.30 8.30 Consumer price index Aug. 08 -0.2 4.9 Interest rate Sweden Gross domestic product Q2 08 0.0 0.9 Current balance 02 08 7.66 8.39 Leading indicator Aug. 08 0.4 -7.3 Unemployment rate Aug. 08 5.80 5.90 ES Consumer price index Sept. 08 1.0 4.4 Interest rate Sept. 08 4.49 3.62 Switzerland Gross domestic product Q2 08 0.4 2.4 Current balance Q2 08 11.25 17.97 U Leading indicator Aug. 08 -1.2 -6.1 Unemployment rate Q2 08 3.50 3.70 Consumer price index Sept. 08 0.1 2.9 Interest rate Sept. 08 2.96 2,79 Turkey Gross domestic product 02 08 -2,4 2,1 Current balance 02 08 -12.91 -8.22 Leading indicator Aug, 08 -0,9 -5.8 Unemployment rate Jun. 08 9.00 8.80 Consumer price index Sept. 08 0.5 11.1 Interest rate Apr. 08 16.65 17.86 United Kingdom Gross domestic product 02 08 0.0 1.5 Current balance Q2 08 -21.59 -24.65 Leading indicator Aug. 08 -1.1 -6.1 Unemployment rate Jun. 08 5.40 5 30 sàkâ Consumer price index Aug. 08 0.6 4.7 Interest rate Sept. 08 5.87 6.58 United States Gross domestic product Q2 08 0.7 2.1 Current balance 02 08 -183.15 -194.09 Leading indicator -0.5 -5,3 6.10 4.70 r^^ Aug. 08 Unemployment rate Sept. 08 Consumer price index Aug. 08 -0.4 5.4 Interest rate Aug. 08 2.79 5.49 Euro area Gross domestic product 04 07 0.4 2.2 Current balance Jul. 08 -2.68 6.50 m Leading indicator Aug. 08 -1.0 -6.4 Unemployment rate Aug. 08 7.50 7.40 Consumer price index Aug, 08 -0.1 3.8 Interest rate Sept. 08 5.02 4.74 Russia1 Gross domestic product 01 08 1.0 8.7 Current balance Q1 08 34.63 19.33 kmà Leading indicator Aug. 08 -2.3 -0.4 Unemployment rate Consumer price index Aug. 08 0.3 15.0 Interest rate Jul. 08 7.73 6.26 Brazil2 Gross domestic product 02 08 1.6 6.2 Current balance 01 08 -8.88 1.97 sa Leading indicator Aug. 08 1.0 3.4 Unemployment rate Consumer price index Aug. 08 0.3 6.2 Interest rate China2 Gross domestic product Current balance Leading indicator Aug. 08 -0.7 -3.1 Unemployment rate Consumer price index Interest rate Jul. 08 4.47 3.14 India2 Gross domestic product 02 08 0.5 8.1 Current balance 01 08 -7.16 -1.68 Leading indicator Jul. 08 -1.2 -7.1 Unemployment rate m Consumer price index Aug. 08 1.4 9.0 Interest rate Indonesia2 Gross domestic product Q1 08 1.4 6.3 Current balance 01 08 2.65 2.48 Leading indicator Aug. 08 -1.5 3.8 Unemployment rate Consumer price index Sept. 08 1.0 1 1 .9 Interest rate Aug. 08 8.40 7.51 South Africa2 Gross domestic product 02 08 1.2 4.2 Current balance 01 08 -5,99 -4.30 Leading indicator Aug. 08 -1.7 -11.6 Unemployment rate Consumer price index Aug. 08 0.7 13.7 Interest rate Aug. 08 11.37 9.13 Dclinitions and notes Gross Domestic Product: Volume series; seasonally adjusted. Leading Indicators: A composite indicator seasonally adjusted apart from Turkey. Interest Rate: Three months; 'refer to Euro area. based on other indicators of economic activity, which signals cyclical movements in industrial production from ,.=not available six to nine months in advance. Consumer Price Index: Measures changes in average retail prices of a fixed 'Accession candidate to OECD basket of goods and services. Current Balance: Billion US$; seasonally adjusted. Unemployment Rate: % enhanced engagement programme of civilian labour force, standardised unemployment rate; national definitions for Iceland, Mexico and Turkey; Source: Main Economic Indicators, October 2008 43 1 OECD Observer No 269 October 2008 DATABANK OECD in graphs Tax burden nears Tax burden Total tax revenue as % of GDP, 2000 and 2007, ranked by latest year peak 2000 2007 60 r- 50 Denmark is confirmed as the OECD's 40 highest-tax country, followed by 30 I Sweden, while Mexico and Turkey 20 1 remain the lowest-taxing countries, the h latest 2008 edition of Revenue Statistics says. Denmark's tax-to-GDP ratio stood at 48.9% "I in 2007, while Turkey's was at 23.7% of GDP Overall, the average tax burden in the * 2006 ** Unweighted average 30 OECD countries-that is, tax revenue as a Source: Revenue Statistics, 1965-2007. 2008 Edition, available at www.oecd.org/bookshop percentage of GDP ratio-is close to its historic peak of 36.1% in 2000. In 2006, the latest average 3.9% of GDP in 2006, compared In 2007, tax burdens rose in 1 1 of the 26 year for complete OECD figures, the tax-to- with 3.7% in 2005 and 3.6% in 2000. That countries for which provisional figures are GDP ratio had edged up a percentage point to upward trend is unlikely to continue in the available and fell in 13 others. The biggest 35.9%, compared with 2005. current economic slowdown, the OECD has year-to-year increases were in Hungary, from warned, and some countries are already 37.1% in 2006 to 39.3% in 2007, and the The latest figures show a continued rise in downgrading their revenue forecasts from biggest drop was in the Netherlands, from an revenues from corporate income taxes to an the financial sector. estimated 39.3% to an estimated 38%. Importing low Upward trend 60 % of foreign-born among low-educated labour force, 1995-2006 skills 50 1995 2006 40 While OECD countries compete to attract high-skilled immigrants, 30 the 2008 International Migration Outlook finds that employers increasingly rely on immigrants for low-skilled work. Just a fifth on average of the low-educated workforce in 21 OECD countries in the report is foreign-born, whereas the EU25 // vw#y05? /// +&AfS?j& average is 14.1%. .# <# Jf The highest share of foreign-born workers is Source: OECD International Migration Outlook. SOPEMI 2008 StatUnk mna http://dx.di in Luxembourg, where more than half (52%) of the low-educated workforce is foreign- born. Switzerland and the US follow with their proportion has increased six-fold since transportation are especially reliant on low- 43% and 38.7%. Immigrants form over a 1995, reaching 1 2.4% in 2006. Greece and educated immigrants, according to the quarter of the low-educated workforce in Norway have also seen large increases and authors of the report. Low-skilled Germany and Austria. now over 10% of the low-educated occupations are expected to grow over the workforce is foreign-born in both these next decade, in part due to an ageing labour In almost all of the countries studied, the force, the report says. proportion of immigrants among the low- educated workforce has increased since Sectors such as food preparation and Order International Migration Outlook 2008 1995, even in countries that have limited the services, agriculture and fishery, personal and at www.oecd.org/bookshop, entry of low-educated migrants. In Spain, home care as well as construction and ISBN 978-92-64-04565-1 44 OECD Observer No 269 October 2008 The future of the Internet? Get ready for the Exaflood. s o) A massive wave of video and bandwidth-intensive traffic is headed for the web. It will present a world of social and economic benefits for consumers and economies. It will also be the biggest challenge the global Internet has ever faced. Some experts believe this could overwhelm existing network capacity and bring the flow of world Internet traffic to a crawl. To prepare, Internet providers need to make multi-billion dollar investments in network infrastructure upgrades and continue to develop innovative new technologies. They need to develop and implement network management solutions employing smart technology that meets demands o of time sensitive data while expanding capacity and improve network performance. Achieving this goal will require continuing the combined commitments of private enterprise and wise public policy. Policy that will 3 allow innovative services to flourish and ensure that Internet infrastructure can meet the challenge of the Exaflood. m Together we can ensure all users can access everything the Internet has to offer. 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