Can youth entrepreneurship work? Banking ethics still in question Can China’s economy avoid the doldrums? Trade in Value-Added: A minister’s view No 294 Q1 2013 www.oecdobserver.org Development aid’s defining moment

Policies for youth No time to waste

©Blend images/Alamy ©Blend images/Alamy IB kureli_20x27cm13.ai 1 24.05.2013 13:45 CONTENTS No 294 Q1 2013

READERS’ VIEWS ENVIRONMENT 2 Middle class rocks; Cypriot burden; Gender 25 The EU fish discard ban: Where’s the catch? perspectives; Planetary skills Carl-Christian Schmidt EDITORIAL HEALTH CARE 3 Action for youth 26 Clinical trials for better health policies Angel Gurría Susan B. Shurin, MD, Deputy Director, National Heart, Lung, and Blood Institute NEWS BRIEF (NHLBI), United States UK’s Lord Green on TiVA Page 10 4-5 Global tax problem–amid hesitant recovery; Soundbites; Economy; Country EDUCATION roundup; Aid falls; Regional tips; Plus ça 29 Lessons for educators change… Andreas Schleicher ECONOMY AND SOCIETY OECD INSIGHTS 7 It’s all about people 32 Beyond Babel Espen Barth Eide, Minister of Foreign Affairs, 33 Born a girl Norway 9 Can youth entrepreneurship work? OECD.ORG 10 Made in the world: How value affects trade 34 Speaking truth to power: Reflections on policy the future of the OECD Have banking ethics improved? Page 14 Lord Green of Hurstpierpoint, Minister of Ron Gass State for Trade and Investment, UK 36 Shimon Peres; Icelandic lead; Videowatch: 12 Will China’s economy avoid the doldrums? Education performers and reformers Ken Davies, President, Growing Capacity, Inc. 37 Recent speeches by Angel Gurría; New 14 Banking, ethics and good principles ambassadors Gert Wehinger 38 Calendar; Frankie.org 16 The economics of courage Robert A. Johnson, Executive Director, REVIEWS Institute for New Economic Thinking 39 Spain’s youth unemployment lessons; How are you, really? TRANSPORT 40-43 New publications on OECD iLibrary Why health care needs clinical trials Page 26 18 Transport potential 44 E-governance in Egypt Interview with José Viegas, Secretary-General ORDER FORM…ORDER FORM of the International Transport Forum DATABANK DEVELOPMENT 45 Tough terms for small businesses; Health 22 Development aid and finance: A defining care waiting times: Not so patient moment 46 Main economic indicators Jon Lomoy 48 Poverty gaps

48 NEW! OECD Observer Crossword President Shimon Peres at the OECD Page 36

Published in English and French by the OECD All signed articles and letters express the opinions of the EDITOR-IN-CHIEF: Rory J. Clarke authors and do not necessarily represent the opinion of SENIOR EDITOR: Ricardo Tejada the OECD. www.oecdobserver.org EDITOR/WEB: Loïc Verdier © OECD April 2013 Reprinted and translated articles should carry the credit line WRITER: Lyndon Thompson “Reprinted from the OECD Observer”, plus date of issue. Signed EDITORIAL COORDINATOR: Ileana Epsztajn articles reprinted must bear the author’s name. Two voucher ISSN 0029-7054 EDITORIAL ASSISTANTS: Alexandra Le Moniet copies should be sent to the Editor. All correspondence should Tel.: +33 (0) 1 45 24 80 66 be addressed to the Editor. The Organisation cannot be respon- Fax: +33 (0) 1 45 24 82 10 LAYOUT: Design Factory, Ireland sible for returning unsolicited manuscripts. sales@oecd.org ILLUSTRATIONS: Charlotte Moreau, David Rooney, Stik PHOTO RESEARCH: Rory Clarke The statistical data for Israel are supplied by and under Founded in 1962 The magazine of the Organisation ADVERTISING MANAGER: Aleksandra Sawicka the responsibility of the relevant Israeli authorities. for Economic Co-operation and Development The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Applications for permission to reproduce or translate all or parts Israeli settlements in the West Bank under the OECD Publications 2 rue André Pascal of articles from the OECD Observer, should be addressed to: terms of international law. 75775 Paris cedex 16, France The Editor, OECD Observer, 2 rue André Pascal, 75775 Paris, [email protected] cedex 16, France. www.oecd.org Readers’ views

(1998 UN Conference on the Family). We welcome your feedback. Notwithstanding… the recommendation that Send your letters to states create “household satellite accounts” that [email protected] include a valuation of unpaid work into GDP figures for a better indicator of development or post your comments at and well-being, unpaid care work remains www.oecdobserver.org or hidden from most statistics. www.oecdinsights.org An encouraging sign is that during the High Level Panel held at the UN during the Commission on the Status of Women on 21 Middle class rocks March, many countries expressed the desire From a historical standpoint, democracy has have been ignored throughout this EMU and recommendation that unpaid care work followed the middle class, has been practised crisis is ridiculous. The Russians are right to be recognised in national statistics, namely by the middle class and has probably never be furious. As with Ireland, this is a case of GDP, to underscore its importance and value to really existed without a middle class (“An Paris, Brussels and Berlin treating offshore society as a whole. emerging middle class”, OECD Yearbook 2012). banking centres with disdain. When Cypriot One way to accelerate progress would be For one example of a study on this issue, the banks offer above-market interest rates to integrate unpaid work in the post-2015 model of “anacyclosis” places the middle to large Russian corporations or private agenda: the implementation of an unpaid class in its long-term (3,000 year) historical individuals, then there is obviously a blurring work indicator would not only underscore its context and significance. In its most basic of the line between bond holders and economic value but also point to its uneven sense, the “middle class” is not defined with depositors. However, EU individuals and small distribution between men and women, forcing any kind of precision, but is understood businesses can be forgiven for assuming that states to act. simply to be the portion of the population that recapitalising banks and defending deposits UN delegation of Make Mothers Matter International is beneath the ruling aristocracy/oligarchy, was official EU policy. What depositor haircuts (MMM) but that has enough property to have some were levied in Spain? kind of leverage with respect to its fiscal or Mark Farrington, posted on www.oecdinsights.org military contribution, and enough numbers to Planetary skills organise/mobilise/collectivise to some extent, In the United States we are slowly embracing so as to be able to condition its contribution Gender perspectives the 21st century skills that require students to to the state on the right to participate in Extracts of comments posted on Wikigender be taught creativity and innovation. There are government. From our research on child well-being a companies now that pay individuals to solve few years ago, we were really struck by the problems. The individual simply signs up I think it happens in states and anywhere differences emerging in the priorities identified online and becomes a change agent for any else where people get a sense that they are by boys and girls in Ireland–particularly in the company around the world that has problems. indispensable. Whoever thinks they are older age groups. Among those still at school No longer are companies just leaving it to indispensable will bargain for more, and if (vast majority) post-compulsory education, their employees to come up with creativity they really are indispensable they will get there were markedly different issues emerging. and innovation; they are looking outside the it. When an economy is being formed, the While both boys and girls prioritised family company and their home country for that next middle class is indispensable. So as to your and friends, girls also prioritised themselves–at shining star to solve the dilemmas that the question: will these middle classes be the first this seemed a little strange, but the girls team could not solve, and paying great money agents of change? I don’t see how they could explained that they were going to become to do so. not be! mothers and have partners and needed to learn “knowlege is power” posted on oecdeducationtoday. Tim, posted on www.oecdobserver.org to look after themselves, as no one else was blogspot.fr going to do it for them. They were oriented to Cypriot burden the future (beyond education) much more than Comments and letters may be edited How burden-sharing was seen appropriate the boys of the same age were. for depositors–even those of businesses with for publishing. Send your letters to operating accounts above €100,000–while Saoirse nic Gabhainn, April [email protected] the risk capital of bond and equity holders has or post your comments at these portals: not been completely exhausted first is beyond *** www.oecdobserver.org, www.oecdinsights.org, reason (“Cyprus: Further compressing the Nobel Prize Laureate Gary Becker famously or at the other OECD portals on this page. coiled spring”). A dogmatic interpretation of stated: “The mother at home raising her the deposit insurance threshold of €100,000 children makes a greater contribution to the when so many other capital tiering rights economy than the father in the workplace”

2 EDITORIAL

Action for youth

the cohorts of young people for whom the world is both a learning Youth-oriented policies matter place and a job market stand a better chance of leveraging talent at home and abroad, and climbing higher on global value chains. because they advance the cause of building a stronger, fairer and Youth-oriented policies matter because they advance the cause of building a stronger, fairer and cleaner post-crisis world. Today’s cleaner post-crisis world young people don’t need to be persuaded about the importance of fighting climate change, corruption or inequality. But the Angel Gurría crisis and its mismanagement have undermined trust, breeding Secretary-General of the OECD scepticism and detachment rather than the solidarity we all need. It is revealing that the questionnaires on the OECD Better Life Index The current crisis has continued to affect people’s lives across the completed by citizens around the world (www.oecdbetterlifeindex. world, and nowhere is this more evident than in the deteriorating org) show that civic engagement as a dimension of well-being is labour market in many countries. Young people have been given a relatively low priority. hit particularly hard and risk being permanently scarred from joblessness and even exclusion. Youth unemployment often means We must invest more in what holds our societies together: material hardship, dire future prospects and delaying vital steps confidence, trust, solidarity and equal opportunities! As a first step, into adulthood, such as leaving home, building relationships policymakers must ensure that young people are given a proper or starting a family. These social milestones are fundamental to start. To support their efforts, the OECD is developing an Action health and well-being. Plan for Youth, to be presented at the forthcoming 2013 OECD Ministerial Council Meeting in late May. The jobless numbers should be enough to spur policymakers into action. Youth unemployment has risen sharply to over 16% in This OECD Action Plan will combine policies to boost inclusive the OECD area since 2008, affecting more than 50% of all young growth and jobs in the short term, with actions on education, women and men in countries such as Greece and Spain. The share training and labour regulations over the medium-term with the of youth not in employment, education or training–the so-called goal of achieving “employability” and generating decent, formal NEETs–has soared too, with only the Czech Republic, Germany jobs. Labour-market measures, such as assuring adequate income and Norway bucking the trend. Unemployment has risen among support during unemployment, career guidance, relevant training 25-34-year-olds, particularly among people without secondary and incentives for active job search, will be key features. school education. Apprenticeships, internships and entrepreneurship schemes Six years is a long time in a young person’s life. Today’s 18-year- will feature prominently, as will the need to address costs and olds were still enjoying childhood when Lehman Brothers regulatory barriers preventing young people, however talented, collapsed in 2008, and yesterday’s 18-year-olds have become from working. Co-operation between employers and workers will today’s young workers and job seekers. be encouraged.

What future are we building for our young people, and for On the education front, the Action Plan will push for more ourselves? Unskilled youths face a lifetime of lower earnings and responsive vocational education and training systems that prepare weaker career progression as a result of the crisis, leading to wider young people for work and living, while helping them to build inequality, exclusion and social division. They risk becoming a “lost up self-confidence. Special attention must be given to assisting generation” and an additional pressure on our ageing societies. vulnerable groups, such as NEETs and migrants, and to provide There is, however, still a chance to turn this bleak prospect into a pupils from poorer backgrounds with better early childhood winning opportunity, as long as policies are adopted without delay education and opportunities to improve their prospects later on. to develop young people’s talents and give them a better start in life. The OECD has built a rich knowledge base on youth-related There are several good reasons why a broad policy focus on young policies, including education, training, career starts, youth people makes sense, even in good times. They are digitally savvy entrepreneurship and more, which the new Action Plan will bring for a start, and for many youths, working in an IT environment is together and strengthen in light of recent evidence. second nature. This should make it all the easier for educators to gear up young people for a global economy in which knowledge- We must help policymakers not only to tackle the scourge of youth based capital and adding value to global value chains will be unemployment and exclusion, but also to engage with young decisive. As OECD PISA surveys of education indicate, the easiest people to nurture their potential, and to encourage the invigorating skills to teach are also the easiest to digitise. Education and opportunities they aspire to. It is high time to invest in young employment policies can do much to harness this new potential. people, and unlock a better and brighter future for them all.

Take also global mobility, which is fast becoming a new norm for www.oecdobserver.org/angelgurria millions of workers and students alike. Policies that engage with www.oecd.org/secretarygeneral

OECD Observer No 294 Q1 2013 3 News brief

–amid hesitant Soundbites recovery Dead-end diplomas “There is nothing worse than a training Global economic activity is picking up, but programme that leads to nothing.” the continuing crisis in the euro area is President of France, François Hollande, delaying a more solid recovery, the OECD criticising some internships in Le Monde, said in March. Chief Economist Pier Carlo 6 March 2013 Padoan said that the G7 economies were Growth goes boom expected to grow at an annualised rate of “High income countries remain stuck 2.4% in the first quarter of 2013 and 1.8% in a contained depression.” in the second, and noted that financial Martin Wolf, Financial Times, 30 January 2013 Global tax problem– markets were outpacing real activity, which was held back by low confidence. Global villagers The global tax practice whereby “The EU is the only one that does multinationals use strategies to pay 5% “The global economy weakened in late 2012 not protect itself against unfair in corporate taxes or less, when smaller but the outlook is now improving”, Mr competition. We have become the businesses are paying up to 30%, is unfair Padoan said. “Bold policy action remains idiots of the global village.” and must be addressed, a new report shows. necessary to ensure a more sustainable French minister, Arnaud Montebourg, The practice denies governments rightful recovery, particularly in the euro area, in Financial Times, 11 December 2012 where growth is uneven and remains revenue, and lands other taxpayers with Asian non-migration slower than in other regions.” heavier tax bills. “Despite the boom in Asian migration to these Anglo-Saxon countries, the “These strategies, though technically legal, Jobs were a particular worry, making it all Middle East remains the principal erode the tax base of many countries and the more urgent to implement reforms destination for Asian migrants. And threaten the stability of the international that can create jobs, Mr Padoan said. the emigration rate from the region tax system,” said OECD Secretary-General The next biannual OECD Economic Outlook is still very low at 0.6 %.” Angel Gurría in launching the report, (No 93) will be released on 29 May. John West, quoted on the Asian Century which “is an important step towards Institute website, February 2013 ensuring that global tax rules are equitable.” See www.oecd.org/oecdeconomicoutlook The OECD study commissioned by the Economy G-20–Addressing Base Erosion and Profit Shifting (BEPS)–also finds that many Leading indicators released in early April OECD-wide inflation rose by 1.8% in the existing rules which protect multinational pointed to growth picking up in the US, year to February 2013, compared with corporations from paying double taxation Japan and Germany, and a positive outlook 1.7% in the year to January 2013. This for China, but a weakening in prospects for slight increase masks opposing movements often allow them to pay none at all. Existing France and India. OECD composite leading in energy and food prices. Energy price rules do not reflect global economic indicators are based on the likes of order inflation accelerated to 3.4% in February, integration or the value of intellectual books, building permits and long-term up from 1.8% in January, while food property, nor the tough financial times interest rates, and help anticipate turning price inflation slowed to 1.8% in February, governments find themselves in. points in economic activity. compared with 2.1% in January. Excluding food and energy, the OECD annual Meanwhile, new data show that the Meanwhile, quarterly gross domestic inflation rate was broadly stable, at 1.6% average tax and social security burden product (GDP) in the OECD area fell by in February. on employment income edged up by 0.1 0.1% in real terms in the fourth quarter of percentage points to 35.6% in the OECD 2012, compared with growth of 0.3% in the Merchandise trade showed moderate third quarter. Destocking dragged down growth in the major economies during in 2012, adding to increases since 2010. growth by 0.3 percentage points. the fourth quarter of 2012. Compared to It rose in 19 member countries, though fell A contraction in government consumption the third quarter, the value of merchandise in 14 and remained unchanged in one. reduced GDP growth by a further 0.1 exports and imports for the G7 and percentage point. Contributions from BRICS countries increased by 1.2% For more details on BEPS and tax burdens, private consumption, fixed investment and and 1%, respectively, with individual see www.oecd.org/tax net exports only partially offset these falls. performances varying widely.

4 NEWS

Country roundup Aid falls Development aid from OECD to developing Colombia became the 40th Party to the countries fell by 4% in real terms in 2012, OECD Anti-Bribery Convention in January following a 2% fall in 2011. The continuing 2013. The country will now undergo financial crisis and euro zone turmoil has systematic reviews of its implementation of led several governments to tighten their its anti-bribery laws. The 34 OECD member budgets, which has had a direct impact countries plus Argentina, Brazil, Bulgaria, on development aid. Russia and South Africa were already party to the convention. In 2012, members of the Development Assistance Committee (DAC) of the Costa Rica has deposited its instrument of OECD provided US$125.6 billion in net ratification of the Convention on Mutual

©OECD/Andrew Wheeler Wheeler ©OECD/Andrew official development assistance (ODA), Administrative Assistance in Tax Matters, representing 0.29% of their combined a comprehensive multilateral agreement Colombian Justice Minister Ruth Stella Correa at the OECD Anti-Bribery Convention accession ceremony gross national income (GNI), a 4% drop developed jointly with the Council of Europe in real terms compared to 2011. to encourage tax co-operation and exchange of information. Signing it is encouraged by Norway should overhaul its approach to Since 2010, the year it reached its peak, the G20. mental health issues in the workplace in ODA has fallen by 6% in real terms. order to help more people find a job or stay Excluding 2007, which saw the end of In separate reports, the Czech Republic in work, and cut high and rising public exceptional debt relief operations, the fall has been asked by the OECD to do more spending, a report called Mental Health and in 2012 is the largest since 1997. This is to improve company awareness of the Work: Norway warns. Spending on sickness also the first time since 1996-97 that aid international fight against bribery to which and disability benefits is the highest in the has fallen in two successive years. it is party, while Denmark has been urged OECD at US$18 billion per year. This is to investigate cases more proactively and equivalent to nearly 6% of Norway’s annual For more detail, see www.oecd.org/ improve the enforcement of its foreign GDP. development. Read the article by Jon Lomoy bribery laws. on page 22. That is far higher than neighbouring France has avoided the most severe impacts Sweden, where mental health issues cost Regional tips of the global economic crisis and turmoil some 2.8% of GDP. Mental Health and in the euro area, but must take action to Work: Sweden, a report in the same series, Dynamic urban centres are drivers of boost competitiveness and create jobs, the says the government there should make national growth, but as an OECD report, OECD’s Economic Survey of France stated more effort to address mental health Promoting Growth in All Regions, shows, in March. The difficulties facing young problems among people under age 30. other regions can achieve greener, more people call for wide-ranging actions, the inclusive growth, too. report said. Visit www.oecd.org/newsroom With case studies comparing policies used by thriving regions with those of laggards, The OECD area’s unemployment rate the report recommends ways for regional eased to 8% in February 2013, from 8.1% in Change in OECD employment rates governments to promote investment and January. The unemployment rate decreased Percentage points improve living standards. by 0.2 percentage points to 7.7% in the US, www.oecd.org/gov/regional-policy/ but rose in Japan by 0.1 percentage points Q4 2011 to Q4 2012 Q3 2012 to Q4 2012 to 4.3%. By contrast, the jobless rate reached a new peak in several European 1.2 Plus ça change… countries, including France (10.8%) and 1.0 Spain (26.3%). 0.8 “Discrimination would appear to be an important obstacle to full employment: non-white workers, 0.6 The employment rate, meanwhile, edged though they comprised only 11% of the labour up a point compared with a year earlier, to 0.4 force in 1962, accounted for twice that share of 65.1% in the OECD area. It rose in the US 0.2 unemployment. Particularly hard hit are the young by 0.5 percentage points to 67.3% of 0.0 people: the unemployment rate for the non-white working-age people and by 0.3 percentage teenager stood at 21% for boys and 28% for girls -0.2 points to 70.9% in Japan, but fell in the in 1962.” euro area by 0.5 percentage points to -0.4 All Men Women Youth Prime-age Older From “Seeking a solution 63.6%. Youth employment fell right across persons workers workers to US manpower the OECD. problems” in Issue Source: OECD No 9, April 1964 Visit www.oecd.org/statistics

OECD Observer No 294 Q1 2013 5 shaping the world of work

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ad shaping the world 200x270.indd 1 28-05-13 15:44 ECONOMY AND SOCIETY

It’s all about people

Espen Barth Eide, Minister of Foreign Affairs, Norway* Fortunately, the picture is not all bleak. The in our countries have also fuelled fears Millennium Development Goal of halving among people in Europe and North extreme poverty was reached five years America that the progress made in ahead of the 2015 deadline. The number of emerging economies has been at their people living in extreme poverty has fallen expense. On the other hand, people in in every developing region. emerging economies are wary of losing their hard-earned gains. Such concerns are The world is becoming more among the reasons why multilateral rule- interdependent than ever before, in making on issues ranging from trade to terms of production processes, economic climate change has virtually come to a halt. stability, food security, climate security, and even health and political security. This is Undoubtedly, the world is better off than basically good news. in the 1930s. We have learned from our past mistakes. We have developed effective We see growth and increased wealth, more global and regional rules and institutions. and better jobs, and less poverty in many But we are clearly faced with a paradox: the parts of the world. This will ultimately help world is woven together in interconnected the “old” world recover faster and with less value chains. We are struggling to solve common challenges. Trade is more ©REUTERS/Scanpix Scanpix ©REUTERS/Scanpix A high degree of equality is also globalised than ever before, while trade Ultimately the economic crisis is about good for economic efficiency rules are increasingly being developed at people. That is why respecting human the bilateral and regional levels. rights and adherence to democratic principles are fundamental when pain from the current crisis. It also brings Part of the challenge is geopolitical. addressing the current economic crisis. hope for those who have not yet been lifted Institutions rooted in the old world order out of poverty, and will help to reduce are struggling to adapt to the emerging We are in this together, so we need tensions between world powers. one. A basic question is: Are emerging multilateral solutions more than ever. countries “advanced countries with many Globalisation, when properly managed, is poor people” or “developing countries Over the last five years we have lived an important driver of inclusive growth. with many rich people”? Until both sides through the severest economic crisis of And economic growth, when spread agree on the answer, consensus in major our lifetimes. Issues such as crippling widely, not just improves living standards, multilateral negotiations may continue to debt, struggling currencies, stagnating but eases tensions within and between elude us. growth and a painfully slow recovery now societies, too. dominate the agenda. We therefore need foreign policy interests Work by the OECD shows that inequality back at the negotiating table. After all, we But the crisis is about much more than is on the rise in most developed countries. do have a common interest in a well- economic numbers and issues. It is about Also, many countries with fast economic functioning international order. We all individuals and the real social drama they growth have experienced widening have a contribution to make. We, the live through every day. Families struggling, inequality. This is a worrying trend. We advanced economies, must understand fearing that they may lose their homes; know that more equality is not only a that emerging economies need a transition young people losing faith in the future, prerequisite for stable democratic societies period before taking on the same level of worried they will never be able to find a over time, but a high degree of equality is commitment in addressing global issues as job–the list goes on. also good for economic efficiency. we have. Emerging countries, on the other hand, must accept that they will eventually When hopes for the future fade, people The conditions that cause extreme poverty have to take on that level of commitment. lose confidence in governments and still need to be addressed. These range institutions. The economic crisis may not from hunger, poor health, lack of education But addressing the current challenges is undermine only social development and and depleted resources, to corruption and not the responsibility of governments and welfare. The very foundation of democracy poor governance, and war and conflict. intergovernmental institutions alone. Our itself is not beyond the reach of corrosive own experience has proven the value of forces. Restoring confidence is essential. Slow recovery and high unemployment developing strong tripartite

OECD Observer No 294 Q1 2013 7 co-operation between the government and governments and businesses accountable. regional and global levels. This effort social partners. This co-operation ensures Respect for basic human rights and demands we acknowledge the following: a stable framework for business and adherence to democratic principles are workers, reduces the risk of conflict, and essential for enabling inclusive growth First, the crisis is about people–respecting helps reforms win broad public support. and job creation, and reducing poverty human rights and adherence to democratic Over time this model, combined with and inequality. A rights-based approach principles is fundamental, as is confidence. our openness to trade and investments to development and gender equality are and strong participation of women in the crucial for inclusive growth. Second, common challenges require work force, has laid the foundation for joint solutions. We need multilateral productivity, wages and jobs to grow. The challenge is a formidable co-operation and institutions more than one. Restoring confidence; tackling ever. All of us–in advanced and emerging Moreover, civil society, businesses and unemployment, in particular among economies alike–will have to contribute. individual consumers have a key role young people; stimulating growth; and to play in promoting human rights, addressing inequalities will be key to *Norway chairs the annual OECD Ministerial Council basic labour standards, corporate social unlocking a brighter future. Meeting on 29-30 May 2013. For the Norwegian foreign ministry, see www.regjeringen.no responsibility and ethical trade. Civil society also has an important part to Addressing these challenges will require play in flagging up issues and holding concerted and consistent action at national,

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8 ECONOMY AND SOCIETY

Can youth entrepreneurship work?

inexperienced and lacking in finances, see entrepreneurship as a potential career. However, only 4% of 15-24 year-olds are self- employed in the EU, mostly in very small businesses, compared with 15% of adults generally. True, this low score could reflect the fact that many of young people study till their mid-20s, but also reflect barriers to setting up a business.

A closer look at that 4% can guide policy thinking in addressing them. For instance, youth-operated businesses are more likely than adult-driven ones to be involved in sectors such as construction and information technology. They operate locally, but are more open than older entrepreneurs to becoming more internationally oriented. Many of them operate on a part-time basis, which helps lower the risks and build up experience. This has practical advantages for education too: in the US, over 5% of young people in post-secondary education use part-time self-employment to fund their studies, for instance. But what about the success rate? No start-up is easy, and businesses run by young entrepreneurs have lower survival rates than those of older entrepreneurs. This is hardly surprising, given the many barriers young people face by way of experience, finance, networks, etc., and the very competitive sectors in which they tend to operate.

However, there is one encouraging trend which policymakers should seize upon: young people’s businesses that do survive have on average more growth potential than those of older entrepreneurs. Among businesses that survived three years, according to surveys, those run by people under 30 years old had

©Blend images/Alamy ©Blend images/Alamy an average growth rate of 206%—nearly double the growth rate of businesses run by those over 40. Larry Page and Sergey Brin were young doctoral students when they created the company we now know as Google. Virgin’s Youth Entrepreneurship lists an array of steps for policymakers to Richard Branson started out in business as a teenager selling follow, covering such issues as how to nurture entrepreneurial records. These big names are just part of a long list of young skills, provide advice, mentoring and financial support, and entrepreneurs that made it in business, a list that could include the founders of Facebook, e-Bay, France’s Free telecom and Young people’s businesses that survive have more more. Beyond such icons, readers of this article may know of less growth potential than those of older entrepreneurs celebrated but nonetheless successful neighbours or friends from school who started their own businesses at a young age. They may address infrastructure needs. It also contains some enlightening also know of some who failed. examples, of financing from Canada, the Think Big initiative in Europe, Project GATE in the US, and more. Making a go of it in business is not easy, but the idea is catching on, not least among the many young people facing a crisis- As the authors admit, more data and learning is clearly needed ravaged job market. Indeed, policymakers are also increasingly to build better youth entrepreneurship policies, but the talking of youth entrepreneurship as a possible way of reducing underlying message of this policy brief is clear: though young youth unemployment. Are they right to place such hopes in what entrepreneurship is risky and should not be seen as a panacea is, after all, an inherently risky pursuit? What, if anything, can for tackling unemployment, it has the potential to provide many policymakers do to give young people a start in business? people with real opportunities. Policymakers could do a lot more to make youth entrepreneurship happen, and by extension, bring Youth Entrepreneurship, a policy brief prepared by the OECD with benefits for society as a whole. EU support, presents some answers to these questions, and some Rory Clarke reality checks too. For instance, young 20-30-year-olds are far more OECD (2012), Policy Brief on Youth Entrepreneurship: Entrepreneurial Activities in interested in self-employment than older age groups, and though Europe, OECD LEED Division, Paris. Produced with EU support. Available online.

OECD Observer No 294 Q1 2013 9 How trade in value-added affects policy

Lord Green of Hurstpierpoint, Minister of State for Trade and Investment, United Kingdom success in this new world is not so much the production and sale of final goods, but using national comparative advantages to add most value along the production chain. By providing this new perspective, it forces politicians, including myself, to think again about how world trade and production work.

First, it puts into question the logic of restricting imports, either through tariffs, quotas, trade defence measures, or unnecessarily restrictive regulation. Consumers are increasingly aware that inputs to production can affect the prices The new OECD/WTO database they pay. For example, rising energy costs Lord Green of Hurstpierpoint © UKTI on trade in value-added is not just mean paying more for food, because about changing the numbers, but energy represents a significant part of The importance of services is something policymakers’ approaches too. It gives the cost of production for farmers. But the UK has known about for a long time, the same applies for products across the given our role as a financial centre. But the trade fresh importance, and puts it economy. Every pound, euro or dollar TiVA data underlines just how important high on the agenda of the UK’s G8 added to the cost of imported inputs services are for all exports: for half of the presidency. because of barriers to trade is a pound, countries covered by the data, over half euro or dollar added to both the price of of the value added of exports comes from The Opening Ceremony at the London exports and prices paid by consumers. services. Even in manufactured goods, this Olympics in July 2012 memorably depicted Hardly a recipe for competitiveness! proportion is typically 30%. the coming of the Industrial Revolution, with chimneys rising from the stadium In response we need to make it easier This means that to be competitive floor and proud engineers surveying and cheaper to import and export. A major abroad, our economies need efficient and their work. The UK, as the birthplace opportunity is coming up at the end of the productive service sectors. In the UK, we of the modern factory and the steam year at the ministerial meeting of the WTO are reviewing the stock of our regulation engine, led the way in this fundamental in Bali. A deal on trade facilitation could over a two year period, looking at whether transformation in manufacturing. And provide a US$70 billion boost to the regulation continues to be necessary and for many years, Britain’s ability to produce world economy. whether its burden can be reduced. Within goods cheaply and in large quantities gave the EU, the UK is strongly in favour of it a unique position in the world. Because of the importance of trade to the the full implementation of the Services world economy we have made trade one Directive. And we are active supporters The last few years have seen a new of our three key priorities for the UK’s of a plurilateral agreement on services revolution in how we manufacture. Today’s G8 presidency in 2013. We will use this internationally. goods, ranging from large planes to small opportunity to promote the contribution electronic devices, such as iPods, are made of open markets to growth, both through The OECD’s new Services Trade up of intermediate products, both tangibles the multilateral system and major bilateral Restrictiveness Index, which we hope to (such as cases, wings or wheels) and deals such as that between the EU and US. see completed for all major sectors by 2014, intangibles (such as design or computer will provide further useful information for programming). Each can be sourced from Second, the TiVA data from the where we should focus our efforts. a different country, and come together OECD/WTO underlines the importance into a final product through a global of services. Traditionally, we tend to Finally, TiVA forces us to think harder value chain. In effect, we are increasingly think of trade and production in terms about where the final markets for our observing “Made in the World” replacing of manufacturing–perhaps the primary exports actually are. I spend a lot of my “Made in Britain” or “Made in China”. symbol of globalisation is the container time travelling, promoting trade and ship. But just as important now are investment with the UK. Our ability to reap The new OECD/World Trade Organisation the satellite and fibre-optic cables the benefits of trade depends on exploiting (WTO) Trade in Value Added (TiVA) which facilitate the delivery of services every link in the global production database clearly shows that what counts for across borders. chain, not just our relationships with our

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immediate trading partners. It underlines little or no direct trading relationship remains the most effective way of avoiding the value of efforts to promote growth and with Japan. this “death by a thousand cuts”. structural reform globally. Of course, viewing trade from a value- As I set out in my initial reaction on But increased economic interconnectedness added perspective does not change 16 January, TiVA represents an important and global value chains mean that our everything. It reinforces the case for active step in broadening our understanding of trade performance can be affected by participation in the global economy and how trade really adds value to the UK and the benefits from tapping into global world economy, and will better inform trade Trade in value-added data value chains. Airbus is a great example. policymaking. As the database is expanded underlines just how important The UK has expertise in producing wings and improved, I look forward to continuing services are for all exports and engines. But it’s by being able to to work with the OECD and WTO to sell these on easily to France, where they develop and apply the lessons it offers. factors, which the new data reveals as are assembled into the final plane, that being important. For example, slow growth we indirectly gain access to markets in References or recession in one country won’t just third countries. “Lord Green response to OECD and WTO report on trade”, hurt the trading partners from which 16 January 2013, see http://news.bis.gov.uk/Press- it imports, it will also hurt anyone who TiVA also reinforces the argument for Releases/Lord-Green-response-to-OECD-and-WTO- provides components or contributions to an effective multilateral trading regime. report-on-trade-published-today-68627.aspx these imports. The Fukushima earthquake With goods and services crossing multiple Visit the UK’s G8 website: https://www.gov.uk/ demonstrated that global value chains borders before final consumption, a lot government/topical-events/g8-2013 can act like Newton’s cradle, with the of little barriers can have a significant For more on trade in value-added, visit www.oecd.org/ trade shockwaves felt in countries with cumulative effect. Multilateral liberalisation trade/valueadded

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YOUR PARTNER IN MARITIME TRANSPORTATION Will China’s economy avoid the doldrums?

Ken Davies, President, Growing Capacity, Inc., formerly of the OECD Directorate for Financial and Enterprise Affairs* At the same time, the government is trying to rebalance the economy away from high investment in labour-intensive export manufacturing and towards greater private consumption, a larger services sector and more high-tech manufacturing–a policy which is set back each time a new stimulus programme is adopted that boosts fixed capital expenditure as a proportion of GDP.

While there is a risk that growth will dip below recently experienced rates, don’t expect it to result in the “lost decades” that Japan has experienced, at least not yet.

Japan’s growth rates of up to 12% a year in the 1960s were not sustainable because Japan was already a relatively developed country and did not have the massive hinterland to expand into that China has. As the OECD’s China surveys have shown, © gyn9037. Under license from Shutterstock.com license from Under © gyn9037. urbanisation alone will keep growth high Will China’s growth slowdown last and leavers, according to OECD calculations. over at least the next decade, provided what does it mean for the rest of us? The government’s top priority is always there is no financial collapse. “social stability”, which also means The gradual US recovery is still not strong political stability, which is–rightly–felt to Also, expect the Chinese authorities to enough to pull up the rest of the world be threatened if living standards drop, by continue economic (though not political) economy. Abenomics has not yet worked income reductions, rapid inflation and/ reforms already initiated to enable some its magic in Japan, if it ever will. And or high unemployment. So maintaining necessary economic restructuring, though Europe is clearly out for the count. So can relatively high GDP growth is a paramount this will continue to be a gradual, not an China be the new engine of the world macroeconomic objective and policymakers overnight, process. One example of this economy? get edgy when it threatens to dip below is the internationalisation of the Chinese this rate, the low point of the business currency, which has made great strides but GDP growth in China has fallen from the cycle that has characterised the Chinese still has further to go. 10%-plus rates of the past two decades. It economy since economic reforms were decelerated from 10.4% in 2010 to 9.3% in initiated in 1978. The rest of the world will encourage such 2011 and 7.8% in 2012, and edged lower to reforms in China because we all need 7.7% in the first quarter of 2013. However, the Chinese authorities are Asia’s largest economy to remain healthy, constrained in their ability to boost the buy our products and, increasingly, provide Both leading and lagging indicators in economy. In 2008-2009 they pumped employment-generating investment. China suggest that growth is continuing in CNY4 trillion (about US$600 billion) to slow. The HSBC PMI (purchasing through a fiscal stimulus programme As the world’s factory, China is a huge manager index) fell to 50.5 in April, to counter the effects of the global exporter, but it is also a major importer. In showing that industry’s optimists now economic crisis. This exacerbated existing 2012, China accounted for 17.4% of US have the slightest margin over pessimists, overinvestment and overheating, while merchandise exports. In the same year portending a further possible slowdown also pushing up bad debts. Since then, in Japan, worries of a slowdown in trade in output. A sub-index measuring new there have been strenuous efforts to with China were voiced when its share fell export orders fell at the same time to 48.6, restrain inflation and prevent the property below 20% of Japan’s total trade for the reflecting poor demand in OECD countries. bubble from getting so big that it bursts. first time since 2009 (although this was in In September 2012 another CNY1 trillion part due to a boycott of Japanese products Chinese GDP needs to grow by around was promised in the form of infrastructure by some importers resulting from a 8.5% a year to employ school and college projects to keep growth going. dispute). For Europe, exports to China have

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been among the fastest-growing, though they are still not as high a proportion of Chinese exports to selected destinations as % of Chinese GDP total trade as in the US and Japan. 2000 2010 China has itself suffered since 2008 % of GDP % of GDP from the fall in global demand for its exports and also from the plunge in world 12 12 foreign direct investment (FDI) flows. The 10 10 continuing weakness of Europe, its largest 8 8 single export destination, is a source of some worry. 6 6

4 4 China is also an increasingly important source of investment capital. In 2012, non- 2 2 financial outward direct investment from 0 0 China reached US$77.2 billion, and the Americas OECD Europe OECD Asia OECD Other Asia Africa Other Americas government plan is for it to reach US$150 Source: OECD Economic Survey of China 2013 http://dx.doi.org/10.1787/888932787258 billion in 2015. Much of this is from large state-owned enterprises with cash reserves. Export worries If domestic growth falls far, outward OECD countries are clearly the main market for China’s Note: Americas OECD covers Canada, Chile, Mexico investment could slow as enterprises exports. Europe’s share has even grown, making weak and the United States. Asia OECD covers Australia, are forced to focus on demand-boosting demand there an area to watch. Japan, Korea and New Zealand. projects at home.

While China will continue to expand as a The millions of men from the villages who means to implement them at all levels. If market for OECD and emerging market build the skyscrapers and (mostly) women they act, then the future for China and exports and also as a source of capital to who go to work in the factories in coastal the world economy will be brighter. The both in the next few years, prospects are cities to make China’s exports should no alternative is economic stagnation for less certain once the population hits a longer be treated as second-class citizens. this great country and a higher risk of rapid ageing problem between 2020 and They are the ones whose achievements political instability. And if China were to 2030 as a result of its one-child policy, should be celebrated and rewarded. slip towards the doldrums, then the tone of which is costly demographically and my future writing on the prospects for the economically, and morally questionable. As well as raising labour productivity world economy would be solemn indeed. through education, this will also As pointed out in this year’s report by the redistribute rises in income towards those *Ken Davies worked until 2010 as Head of Global Relations in the Investment Division at the OECD, US Federal Reserve, labour force expansion with a higher propensity to consume, where he focused on China and other Asian economies. in China will then hit a plateau. Output which will help increase the share of In the 1990s he was Chief Economist, Asia, and Hong will grow thereafter only if productivity domestic consumption in national income. Kong Bureau Chief at the Economist Intelligence Unit. rises. Taking up slack in the education This rebalancing would be welcome not He is the founding head of a consultancy, system will produce a better-trained work just for China, but for the world economy. www.growingcapacity.com force, but there will also need to be major The views expressed in this article are those of the author alone. institutional reforms, for example in the And the efforts to protect the environment field of intellectual property rights, to and increase recycling promoted by recent References encourage innovation and enterprise. governments need to be stepped up so that Green GDP, which is what should be OECD (2013), Economic Survey: China, OECD Publishing. An important feature of economic measured, can also grow. Haltmaier, Jane (2013), “Challenges for the Future of Chinese Economic Growth”, International Finance restructuring is the enacting of measures Discussion Papers Number 1072, Board of Governors of to benefit the less well-off, including Many of these reforms have been offered the Federal Reserve System, Washington, D.C. the ending of the outdated household to China by the OECD as policy options 2012 OFDI figure retrieved from Invest in China registration (hukou) system and the that would help generate a positive outlook. website at http://www.fdi.gov.cn/pub/FDI/wztj/jwtztj/ granting of housing, health care and But they will happen only if China’s leaders t20130121_148636.htm on 8 May 2013. education benefits to migrant workers. can see their benefits and find effective Visit www.oecd.org/china

OECD Observer No 294 Q1 2013 13 Banking, ethics and good principles

Gert Wehinger, OECD Directorate for Financial and Enterprise Affairs a US legal firm which advocates for SEC (US Securities and Exchange Commission) whistleblowers. They show that despite reforms like the Dodd-Frank Act in the US–the biggest overhaul of the financial system since the Great Depression–or the Independent Banking Commission in the UK, the depth and sweep of misconduct remains astonishing.

There have been serious scandals too, such as when traders from 20 banks across three continents colluded to manipulate inter-bank lending rates–so-called LIBOR rates that determine what millions of people pay on their mortgages and the interest they receive on their savings. These events have undermined the already low confidence in the sector, and in the way banks operate and are being regulated and supervised. In fact, as pointed out by a participant at a recent OECD financial roundtable organised to discuss the issues, too many actions by the financial sector have been destructive, even cynical, leading to negative returns for pension funds, misallocation of resources, and scandals.

The public anger and cynicism that now afflict banking were reflected in an editorial published by The New York Times in March 2012. The piece, written by Greg Smith, a vice president at Goldman Sachs who resigned the day the editorial was published, accused the firm of denigrating its clients and even Whether you blame poor regulation, respondents would be prepared to break disregarding their interests. He wrote that the quickest way to become a leader at sloppy governance, greed or bad the law with a little insider trading if it Goldman Sachs was to persuade clients “to luck, banks were frontline culprits earned them US$10 million; a quarter of them have witnessed or have first-hand invest in the stocks or other products that in causing the crisis. Governments we are trying to get rid of because they are have been working on reforms to knowledge of misconduct; and nearly a third of them are convinced that getting not seen as having a lot of potential profit”. fix the financial sector and improve ahead in banking requires unethical, and governance, but a lot more work even illegal, conduct. The embittered editorial was tweeted remains to be done. Some OECD and blogged around the world. Though principles can help. Such statistics were typical of the hubristic Goldman’s bosses protested, saying banking culture in the years prior to the Mr Smith was just one vice president Has banking become cleaner, more 2008 crisis, but unfortunately they still out of 12,000, few other people rushed honest and more reliable since the crisis apply today. to Goldman’s defence. struck in 2008? Results from a survey of bank employees last year give little They come from a 2012 survey, conducted Has anything been done to restore trust in encouragement: at least one out of six in the US and the UK by Labaton Sucharow, banking in the aftermath of the crisis? To

14 ECONOMY AND SOCIETY

be sure, many banks and their authorities there is a clear sense that current banking hit, it had doubled to 8%. But that’s just have tried to reduce their exposure to models remain inadequate. An entirely the sector: entire economies now rely on risk by constantly deleveraging assets, new approach is needed if trust is to be the health of banking. Indeed, this poses restraining “shadow banking” activities, restored. Take pay and compensation. the question of whether banks should be sharpening up on their risk modelling, Despite some moves by regulators and likened to–and treated as–basic utilities, and focusing on strengthening their home even the industry itself to improve the such as water or electricity. markets. Some countries continued to situation, most people continue to feel push for a clearer separation between a that many bankers are unfairly and People’s trust is essential for financial bank’s retail and investment activities, excessively rewarded, but seem exempt markets, and our systems, to work. putting retail banks safely back on Main from appropriate penalties. The logic that Banks are the caretakers of the Street and away from the dangers of bank managers can be rewarded large financial system we all rely on, which investment banking. But defenders of bonuses in bad times as well as good times, is a responsibility that cannot be universal banking say separating activities or reap rewards during a credit crunch, underestimated. With this in mind, in does nothing to check sloppy management seems unfair, just as it seems unfair for 2010, the OECD, working with G20 and reckless risk-taking, and believe the the financial sector to be able to privatise members and the Financial Stability answer is in better price signals and risk economic gains but socialise any losses, as Board, developed the High-Level Principles modelling. it has done with the big bank bailouts that on Financial Consumer Protection, occurred in response to the crisis. which were subsequently adopted as Several governments are going beyond the a recommendation in July 2012. The new Basel III proposals to increase banks’ Although regulators have concentrated principles aim to improve the transparency, capital and liquidity requirements in an on making the financial sector more disclosure, and responsible business internationally coordinated fashion, by transparent and efficient for those who conduct of financial service providers, and adopting tougher, more binding, capital use it, they have paid little attention to to provide financial users with a means regulations, in particular with a view improving it for the benefit of society as of redress should they be the victims to improving banks’ risk management. a whole. Indeed, the social function of of misconduct. Restoring trust will be Efforts are also underway to reduce the banking remains in question. unachievable unless consumers and threat of “too big to fail”. investors feel secure, and it is now up to It is hard to believe that at governments and bank authorities to see Others have undertaken initiatives such one time, the financial sector that the principles are adopted and acted as the SEC whistleblower programme played a relatively minor role upon. The principles could help them stay in the US to encourage people to report in our economies ahead of developments and prevent a crisis wrongdoing by offering them financial from starting in the first place. incentives and protection. But while 94% Many observers agree that policymakers of respondents to the Labaton Sucharow and regulators need to evaluate financial References survey said they would report wrongdoing markets according to real outcomes, such Labaton Sucharow, LLP (2012), Wall Street, Fleet under the programme, only 44% knew of as access, safety and resilience, fairness, Street and Main Street: Corporate Integrity at its existence. performance, accountability and trust. a Crossroads: United States & United Kingdom Financial Services Industry Survey; July, available Indeed, the OECD has long stressed at www.labaton.com/en/about/press/upload/US-UK- In the euro area but also beyond it, that policymakers must understand how Financial-Services-Industry-Survey.pdf. governments have ring-fenced their banks market failures at the institutional level “Goldman Plays Damage Control.” Wall Street Journal, to prevent contagion and focus on home reverberate down the supply chain to 14 March 2012. http://online.wsj.com/article/SB100 markets. But this has dammed up the ordinary financial users. 01424052702304692804577281252012689294. cross-border flow of healthy capital into html?mod=googlenews_wsj countries where liquidity is scarce, which This is particularly true of banking. It “The Market Mystique.” Paul Krugman. New York Times, 26 March 2009. http://www.nytimes.com/2009/03/27/ can hardly be conducive to a recovery. At is hard to believe that at one time, the opinion/27krugman.html?_r=0 the beginning of the crisis, cross-border financial sector played a relatively OECD (2011), G20 High-Level Principles on Financial flows acted as a stabilising force; without minor role in our economies. Financial Consumer Protection; OECD, Paris; available at http:// that cash, banks clamped down on lending, companies were not even listed on the www.oecd.org/dataoecd/58/26/48892010.pdf. further weakening the system. Dow Jones Industrial Average until Wehinger, Gert (2013) “Banking in a challenging 1982. In the US, for example, the sector environment: Business models, ethics and approaches Amends have been made, but in light of accounted for just 4% of GDP in the towards risks”. OECD Journal: Financial Market Trends, persistent and major financial scandals affluent 1960s. By the time the crisis Vol. 2012/2. OECD 2013.

OECD Observer No 294 Q1 2013 15 The economics of courage

Robert A. Johnson, Executive Director, Institute for New examples among their colleagues. Those The deference that this concentration Economic Thinking (INET) who dare to venture outside the box of of wealth and power engenders in the Avoidance and false certainty are orthodox economics–outside the “safe economics profession creates significant common afflictions of economic and sane”–are met with the language of negative externalities for the rest of society, policymakers. Could this explain why marginalisation and a refusal to consider as we experienced very starkly in 2008. their arguments on their own merits. This is the cost of a dynamic where it is they missed something as big and more rewarding to be safe and wrong, than obvious in hindsight as the 2008 Instead, they face constant attempts to pick to challenge the orthodoxy in pursuit of financial crisis? Courage to take on the apart their methodology and undermine what’s right. The nail that sticks out does causes of the crisis is needed now. their credibility as professionals. They get hammered. aren’t granted the assumption of Nearly a century ago, Henry Louis “HL” competence, unlike mainstream But there is another dynamic at play Mencken provided a useful lesson in this economists who have been blessed with here that can be an adverse side effect regard in his famous essay on economics, the aura of legitimacy by those with power. of economists’ well-meaning intentions. “The Dismal Science”. In it, Mencken Opponents “play the man and not the ball”, When the world is faced with uncertainty, noted the example of a Professor Nearing, as soccer fans would say. as it is now, there is a great temptation who was kicked out of the University of for experts to provide false resolution to Pennsylvania because his “efforts to get As Mencken contended, economists sense the anxiety this uncertainty creates. The at the truth disturbed the security and what is too dangerous to present. Even if short-term rewards for doing so can be equanimity” of those wealthy few who this awareness is not fully conscious, it can considerable and exert a distorting pull controlled the university. “He was thrown seep through in avoidance rituals–hiding on economists’ analytic abilities. Being out because he was not safe and sane and in the monastery and behind the pretence a “guru” is a siren song of temptation, orthodox,” Mencken explained. of being “scientific”–that have been a if there ever was one. Who ever won a hallmark of mainstream economics over Nobel Prize for saying “Honestly, I do not Dr Nearing challenged the status quo by the last 50 years. know”? Rarely does one become famous trying to speak the truth, and power did for providing a narrative that is unsettling. not like what it heard. He paid the price. What this means is that instead of More often the emotional reaction to a This price was not lost on his colleagues, pursuing economic truth in service to disturbing vision is to relegate it to the certainly not on the members of the society, well-meaning economists are all footnotes, or the dustbin. profession whose theories, as Mencken too often focused on proving their chops in pointed out, often centred on price signals. the arcane rituals of modelling techniques This temptation can also interact

and working from within very limited dangerously with the rituals of avoidance Even today, academics who earnestly paradigms. Far more prevalent than simple detailed above, as it did in the lead-up to aspire to seek out truth see similar corruption are those who tacitly accept the financial crisis. The belief in a stable the status quo because they know the and knowable future led to risk-assessment price of challenging it. (Norbert Häring models in the financial sector that and Niall Douglas provide an impressive collapsed in the face of real turmoil. The account of this type of distortion in desire to provide false resolution and the professional analysis in their recent book, deference to power combined to provide Economists and the Powerful: Convenient descriptions of an economic reality that Theories, Distorted Facts, Ample Rewards; see were in fact quite useless to those who references.) earnestly wanted to guide the economy for the benefit of society. This dynamic becomes increasingly dangerous as wealth becomes concentrated So where does all this leave policymakers? in a particular sector, as it has in finance How are they to determine good in recent years. The clarity of analysis of economic analysis from bad? There that sector ceases to be dispassionate and are no easy answers, but there is one takes on the aura of fear–a fear of tangling important lesson to remember: making with those who could fight back and hurt good policy sometimes means being you. And these rituals of avoidance, as we willing to entertain uncomfortable truths.

© Enoch Pratt Free Library, Maryland’s State Library Resource Center. All Rights reserved. Center. State Resource Library Maryland’s Library, Free © Enoch Pratt have seen in the case of finance, can have Conventional wisdom is often unwise. H.L. Mencken, 1928 enormous real costs. Real economic analysis does not always

16 ECONOMY AND SOCIETY

recommend outcomes that are politically safe or within the contours of affirmation by established power. Real economic analysis is a public good. Order Now!

A willingness to listen earnestly to those A novel account of the inner who bring alternative points of view to the table is essential. An understanding of workings of our capitalist economy, in which competition is imperfect It is more rewarding to be safe and wrong, than to challenge the and influence of power is ubiquitous. orthodoxy in pursuit of what’s right Order now economic reality doesn’t emerge simply Anthem Press from one vision of the world, but from www.anthempress.com an active and ongoing conversation with a leading independent publisher of innovative academic research many visions. In the past, policymaking circles have become too dominated by one view of economic reality and have ignored any information outside the narrow orthodoxy. The problem was not a lack of information or too much information, but an unwillingness to consider information that wasn’t legitimised by power. Active controversy may be our best remedial antidote to the blindness that arises from intimidating consensus.

Policymakers, much like economists, face the same challenges of speaking truth to power and resisting the comforts of false certainty. And as is the case for economists, policymakers who would earnestly serve society require not just intelligence or wisdom. They require courage to think outside the box, to do what is not safe and to listen. True leadership can be the loneliest of arts.

References Häring, Norbert and Niall Douglas (2013), Economists and the Powerful: Convenient Theories, Distorted Facts, Ample Rewards, Anthem Press, New York. Mencken, HL (1922), “The Dismal Science”, chapter in Prejudices: Third Series, Alfred A. Knopf, New York. Visit the Institute for New Economic Thinking at ineteconomics.org

OECD Observer No 294 Q1 2013 17 Transport potential

Interview with José Viegas, Secretary-General of the International Transport Forum passenger trips–effectively those trips that are neither work or school related. In contrast, commuter traffic, passenger rail traffic and public transport were not hit as hard–or not so far, at least.

Freight and air passenger volumes had bounced back to near pre-crisis levels by 2011, but then stagnated again, particularly where economic activity weakened. Indeed, the up and down pattern in the transport sector reflects the performance of national economies, so it should be no surprise that freight traffic to fast growing Asian markets recovered fastest.

But in general the outlook is not bright. Take air freight volumes, which are a useful leading indicator of economic performance, not least because their data is available six months ahead of GDP figures. Well, I am afraid that the latest figures suggest more economic stagnation ahead. The financial crisis has also proved difficult for public-private-partnerships involved in developing transport infrastructure. A number of toll road programmes have become financially distressed as traffic volumes fell below projections, and some projects have either gone bankrupt or been bailed out by government. In Portugal, for example, the scale of the motorway liabilities makes up a significant part of the overall fiscal deficit.

What role can transport policy play in helping to boost economic growth?

An end to the economic and financial crisis requires growth even more than © D. Hurst/Alamy © D. fiscal responsibility. Growth in turn requires investment, including in Transport is not only a fundamental How has transport suffered from the transport infrastructure, especially where economic crisis? driver of economic activity, it is a it cuts costs and increases productivity. major sector in its own right. But José Viegas: The initial impact of the crisis Investment to relieve recurrent bottlenecks while transport has suffered from was particularly severe in the transport has to be the priority, and projects that can the economic crisis, as echoed in sector. Trade fell much more than overall advance quickly are particularly relevant downturns in trade and activity economic activity and transport fell more now. Fortunately, there is a rather long list generally, it could be a source of than trade. The result was a sharp decline of modest scale transport infrastructure recovery too. We asked José Viegas in freight transport volumes–international projects already in the planning pipeline– to explain. sea containers, international air freight, approved but not financed–which are road freight in Europe, rail freight, and so ready to go. Here, transport is a good on. The same was true for discretionary place to look for stimulus spending.

18 TRANSPORT

And policymakers should avoid the trap budgeting and accounting rules treat understanding of what your transport of postponing maintenance of public PPPs and publicly financed investment assets are worth and what needs to infrastructure to meet austerity targets. in the same way. This will focus attention be spent to keep them up to expected After all, the quality of roads, railways and on the right kind of project types for standards over, say, several decades. bridges is directly linked to productivity, them, rather than trying to use financial And because you cannot rely on taxation, and nuisances such as potholes and you must give serious thought to how reduced travelling speeds impose costs Transport is a good place to users and indirect beneficiaries can on everyone. look for stimulus spending contribute more through the likes of tolls, kilometre charges and ticket prices–and What are the three things that less via taxpayers. policymakers should do? engineering to jump the queue, regardless of the risks. In addition, more use could Leipzig summit First, increase public spending on be made of financial instruments, such “Funding Transport” will be the theme for discussion productive infrastructure investment, as project bonds to encourage private at this year’s annual summit of Ministers of Transport, with a focus on small scale projects that sector involvement in financing transport organised by the International Transport Forum (ITF) in Leipzig, Germany on 22-24 May 2013. The ITF is an can stimulate employment in the short infrastructure. intergovernmental organisation housed at the OECD in term. Second, improve programmes Paris and is the only global transport organisation that for attracting private finance to Third, think of the longer term, and covers all transport modes. It acts as a policy think tank infrastructure through public-private the financial sustainability of transport for 54 member countries, providing evidence-based partnerships–or PPPs–to make them infrastructure spending. This needs analysis and advice on a comprehensive range of issues, from road safety to airline regulation. more fiscally responsible. This requires careful examination. Policymakers should Visit www.internationaltransportforum.org limiting the overall financial volume of focus on asset management over the such partnerships to contain contingent entire life-cycle of the investment. This liabilities. It also means ensuring that means you first have to develop a good

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OECD Observer No 294 Q1 2013 19 CRICOS 00026A CRICOS Your Better Life Index

There is more to life than the cold numbers of GDP The OECD Better Life Index enables you to rate countries and economic growth. The OECD Better Life Index allows according to the importance you give to the 11 topics. you to compare well-being across different countries, You can compare your well-being priorities with those based on 11 topics the OECD has identified as essential, of other users by country, age and gender, and share in the areas of material living conditions and quality your results. of life. Each petal of the flower represents one topic and the size of the petal the country’s rating for that Create your own Better Life Index at: topic. The height of the flower shows the country’s overall rating. www.oecdbetterlifeindex.org Compare your quality of life with other countries

Find out more about how life compares in OECD countries by ordering the book, How’s Life? Measuring Well-Being. Available now on the OECD Online Bookshop: http://www.oecd.org/bookshop Development aid and finance A defining moment

Jon Lomoy, Director of the OECD Development Co-operation Directorate Development aid fell by 4% in real terms in 2012, following a 2% fall in 2011. Though this decline must be reversed, it is not the only issue to address. Also being questioned is how that aid is measured in the first place. As Jon Lomoy explains, while it is high time to revisit the concept of official development assistance, the outcome of the discussion will influence the effectiveness of development policy over the next decade or more.

22 development

The Millennium Development Goals come All this gives rise to tensions between rate repayments should be deducted from to term in 2015, and debate is gathering on ODA as a measure of development effort ODA totals. But at the same time, the policies and approaches for the post-MDG by donors, and the actual flows of funds importance of the public guarantees for era. One key question is how to define and available to developing countries to institutions providing loans, which address measure development aid. It is a fraught, reduce poverty and promote growth. This the high-risk factor of some development yet vital debate. is why ministers gave the OECD-DAC a investments, must be borne in mind. mandate to take a fresh look at the broader At issue is Official Development Assistance, financing concept, as well the concept and As the discussions continue, it is important or ODA, which is the conventional metric role of ODA itself. that these differences–and the data behind of bilateral development aid, and the them–continue to be publicly known and one that usually makes the headlines. Consider loans, for instance, which are available for scrutiny, not least for the sake Make no mistake: ODA is an important the subject of much public and policy of building an effective strategy for how to instrument, and is the only systematic debate at the moment. One reason finance the goals that will take over from means we have for assessing the efforts for this extra attention is the growing the Millennium Development Goals after 2015. the “traditional” donor countries make demand for loans by developing countries to support development. Those donors, themselves. This is good news, since it And with the increasing complexity of which comprise the OECD Development means those economies are expanding. development financing, the broadening Assistance Committee (DAC), account Loans have always been an important of the development agenda to incorporate for some 90% of bilateral official aid to part of development financing. They the likes of capacity, governance and so developing countries. But the world is include (mostly subsidised) concessional on, and the growing diversity among changing, and development finance is loans, such as the ones provided by the developing countries themselves, that changing, too. In this light, do we need to debate needs to be about both aid and look at the ODA concept again? I think we The world is changing, other sources of financing for development. agree that the answer is yes. and development finance It cannot be a question of either/or. In is changing, too other words, discussions about other There are several criticisms of ODA. sources of financing should not be taken Some say that it includes too much–that World Bank’s International Development as an excuse for donors to walk away from it goes beyond actual financial flows into Association (IDA), and non-concessional their very important aid commitments. developing country budgets by adding in loans provided by many bilateral and such items as administrative costs in the multilateral donors, for instance the As we move towards 2015, all OECD-DAC donor country, refugee costs and so on. World Bank’s International Bank for donors agree that we need to settle this How much is directly usable by countries Reconstruction and Development (IBRD). debate, while prioritising innovative means to fund their priorities and programmes to measure and promote development has to be made clearer, which is why the Part of the problem is that donors follow finance. That means working together, OECD introduced the concept of “country different approaches in determining what alongside other key stakeholders– programmable aid”. makes a loan concessional. Some countries including developing countries, as well as follow the approach of the multilateral the United Nations, the World Bank, the In contrast, some say that ODA cash- development banks–where only loans International Monetary Fund (IMF) and flow-based measurement includes too that have been subsidised are reported other international financial institutions–to little. Donors make efforts that are not as concessional. Others emphasise the ensure that we have a robust measurement counted as ODA–such as guarantees, recipients’ perspective, arguing that loans system for development finance in place callable capital, etc.–yet these help mitigate should be considered as concessional if by 2015. against investment risk. Such efforts they are given on more beneficial terms are particularly needed today when an than developing countries could otherwise If we are to navigate the post-MDG increasing number of developing countries attain on the market. world with clarity, the OECD-DAC must turn to loans, guarantees and equity–rather continue to be a key source of reliable and than grants–to finance their economic As former OECD-DAC Chair Richard transparent data on development financing. growth. Manning pointed out in his 9 April letter References to the Financial Times, there is a need Manning, Richard (2013), “OECD is ignoring its definition Finally, the ODA concept does not fully to revisit these calculations to ensure of overseas aid”, Financial Times, 9 April. capture the complex and continually that loans are indeed concessional in Provost, Claire and Mark Tran (2013), “Value of aid evolving interaction between the public relation to current market terms, and to overstated by billions of dollars as donors reap interest and private sectors. discuss whether, for instance, interest on loans”, The Guardian, 30 April.

OECD Observer No 294 Q1 2013 23 SODE_1306053_200X270_GB.indd 1 every day is whatmotivatesus Improving QualityofLife progress ofsociety. and development the in factor a as Life of Quality promote to OECD the with partnership in working is Sodexo Today, gift andmeal voucherstoconciergeservices. security services, facilities management to catering services, to reception from services of array unique a delivers Sodexo well-being of individuals and the performance of organizations, As the world leader in Quality of Life Services that improve the www.sodexo.com 13/06/13 17:05

© Sodexo 2013 – Photos credits: Sodexo Library ENVIRONMENT

The EU fish discard ban: Where’s the catch?

Carl-Christian Schmidt, OECD Trade and Agriculture Directorate ©REUTERS/Pascal Rossignol ©REUTERS/Pascal

The EU’s ban on discarding caught fish in February 2013 questionable moral as well as economic issue. Discards can also has received widespread applause. Why? significantly complicate stock management, as the total harvest of the resource is unknown. This means data and information gaps Like fly fishing, sea fishing has become a fine art. Most fishing for sustainable and responsible fisheries management. techniques will involve catching some fish which the fisher may not want or may not be allowed to take. This could be because they Some people claim there is no market for the unwanted fish. This are undersized or of a species that the fisher does not have a quota may be true in some cases, but in most cases fish are discarded not for. In some cases fishers are allowed to throw unwanted fish back because they have no value, but because the fisher can make higher into the sea, a practice referred to as “discarding”. profits by only keeping higher value fish.

Discarding can make up a significant share of the total catch, as is So here’s the catch: almost any fish can be used to produce fish the case in some shrimp fisheries where unwanted catch may be meal and oil, a key ingredient in animal and fish feed and for up to 90% of the total catch. While fishing gear technology and pharmaceuticals. And as fish meal and oil are in high demand skilled fishers can reduce by-catch, it is not possible to avoid it entirely. for feed in fish farming, there may be a ready market for the “unwanted” fish brought ashore. Regulatory tools such as seasonal or area closures can help but, alas, cannot completely eliminate the discard problem. Some Many fisheries around the world are overfished and deliver poor species of fish swim together and it may not be possible for even returns to fishers. Effective fisheries management is needed to the best fisher with the best technology to avoid catching some improve the economic situation of fishing communities. Part unwanted (or disallowed) fish. of the solution is finding ways to reduce incentives to discard by eliminating regulatory obstacles and finding market-based Once a fish is caught, it is almost certainly going to die either approaches that increase the value of all fish caught so that fishers because it is out of the water or because it was injured in the no longer choose to discard. process. You do not want to be the first herring taken in a fishing net being towed for miles and with tons of fish on top of you. The introduction of the EU discard ban is a step in the right direction, as it will improve resource use and management Discarding fish wastes resources. An EU ban adopted by the EU of stocks and thus contribute to green growth. However, the Fisheries Ministers in February 2013 will be phased in gradually, international fisheries sector still needs more action to rebuild beginning with the North Sea in 2014. By 2019 it will cover all fisheries and implement reforms to sustain them. the EU’s fisheries, with some exceptions. There are a number of reasons why a discard ban is a good thing. First, throwing away Visit www.oecd.org/fisheries valuable and edible fish protein does not make sense and is a

OECD Observer No 294 Q1 2013 25 Clinical trials for better health policies

Susan B. Shurin, MD, Deputy Director, National Heart, Lung, and Blood Institute (NHLBI), drug selectively killed CML cells in culture National Institutes of Health, Bethesda, Maryland, United States without harming normal cells. Two years later, the first reports of 31 patients treated with this drug were published; all had dramatic responses.

This impressive progress changed the outlook for these patients, and it could not have been made without clinical trials. And with life expectancy rising around the world, but haunted by the prospect of substantial disability, such clinical trials are likely to become more important in the years ahead. But they are not without their challenges.

Recently the OECD adopted a policy initiative on the governance of clinical trials in an attempt to define a new framework for better oversight of clinical trials, with a special emphasis on facilitating those trials that have public and charitable rather than industry funders.* Why was the instrument adopted and what can it help to achieve?

A tale of two studies

Clinical trials are rigorously designed experiments in which participants who have consented to receive a new therapy or to be assigned randomly to one of several possible treatments are carefully studied for the positive and negative effects of those therapies. The aim is to provide sufficient evidence to guide medical practice and public health policy. Clinical trials are a critical step for the production of new drugs and for the study of existing health treatments. They improve the health and quality of life of our citizens, add value to our economies, and guide policymakers responsible for laws and regulations. This benefit applies to both common and rare

© Mario Beauregard/Fotolia.com diseases.

A recent OECD Recommendation Chronic myelogenous leukemia (CML) is Take the promising results related to CML on the Governance of Clinical Trials a rare cancer that affects the bone marrow. again. Over the subsequent five years, issued in December 2012 could Until 10 years ago, a diagnosis of CML was multiple studies confirmed the efficacy of improve the outlook for fighting a death sentence unless you had a tissue- the drug, now called Gleevec™. In 2013, deadly diseases around the world. matched donor, usually a sibling, and bone marrow transplantation is rarely underwent a bone marrow transplant. In Here is how. required for patients with CML, whose 1996, laboratory scientists showed that a extended survival is expected. How did

26 Health care

this happen? University medical scientists and regulations governing the conduct especially between high income and supported by US taxpayer funds from of clinical trials. Following the Second lower income countries. Many policy the National Institutes of Health (NIH) World War, all nations adopted some basic barriers to conducting international worked with a pharmaceutical company, principles to guide the ethical conduct trials may exist, many deriving from Novartis, to take this drug from the shelf to of research. International guidelines are inconsistencies in definitions, assignment the clinic. Now patients all over the world detailed in the Nuremberg Code and of responsibilities and requirements for receive Gleevec™. Its approval came about the Declaration of Helsinki, while many oversight. The OECD initiative is a major because of rigorously conducted clinical countries have additional reports, such as step towards developing a harmonised trials in which participants with CML the Belmont Report in the US, that outline framework for the governance of clinical agreed to receive an experimental, untested common principles (see references). These trials. It introduces a risk-based oversight drug. They took significant risks because and management methodology, which no one knew whether the drug would work Research studies pose risks to combines risk categories based on the or have bad side effects. Later trials have participants, but failure to conduct marketing authorisation status of the included Gleevec™ as one of multiple research poses much greater risks medical product with a trial-specific therapies; participants are taking much approach that considers issues such as the less risk because the effects of the drugs are codified and implemented differently type of populations involved in a trial, and are now well-known. But because CML is in different countries and regions, but the the informed consent of the patients. rare, international studies were essential to common principles apply in all countries. carry out the test on enough patients to get While research studies may pose risks to In other words, besides facilitating significant results. participants, failure to conduct research the conduct of international trials, poses much greater risks to citizens the implementation of the OECD More common diseases also benefit from everywhere. Examples of treatments Recommendation helps to streamline clinical trials. About the same time that introduced without enough evidence procedures for low-risk trials, while at the Gleevec™ studies began, 3,234 healthy include thalidomide, which caused same time strengthening the protection people at high risk of developing type 2 disastrous birth defects in infants when of the patients, increasing the quality of diabetes agreed to take part in a clinical given to pregnant women; administration the data and improving the credibility of trial to see if their diabetes could be of high doses of oxygen to premature the results. It also addresses the thorny prevented. A third of the patients had no infants with consequent blindness; and the challenge of seeking an accepted method treatment, a third received an approved use first of radical mastectomy and, later, for assessing the risk that participants marketed anti-diabetes drug called of bone marrow transplantation for breast face in entering a trial, and hence the metformin, and the remaining third were cancer, with major toxicity and no benefit. responsibility borne by the study sponsor put on diet and exercise programmes. for compensation and care of participants Four years later, the people who changed Because of differences in laws and affected by the study. their diet and took exercise were found to regulations, there are often barriers be only half as likely to develop diabetes to conducting international research. In this together as those with no treatment. Metformin Regulations designed to assign reduced the likelihood of developing responsibility for protection of participants In December 2012, The Lancet published diabetes, but also provided less benefit and ensure accountability may hinder an entire issue on the Global Burden of than diet and exercise. The study was collaboration. Not all clinical trials pose Disease Study, demonstrating improved funded by US taxpayers and conducted at similar risks to participants. Treatments life expectancy with substantial disability 27 different sites. that are untested may create significant for the last decade in most countries. risks to participants and liability for Neither the quality of life nor our global Worldwide, about 370 million people have sponsors. In contrast, trials of established economy can afford to continue these type 2 diabetes; the WHO estimates that therapies (as in the case of the diabetes trends. this will rise to 552 million by 2030. Could study described above) pose little or no the results of the US study apply elsewhere, risk to participants. Existing regulatory Indeed, science, health care and disease in Germany and the UK, or India and systems often have similar administrative are now shared globally. Biomedical South Africa, for instance? Clinical trials in requirements whatever the risk, and research is resource-intensive. Evidence these countries could help us find out. sponsor liability may be significant. gathered in one country is used in others, sometimes without adequate study. The question is, how can we harmonise What is the new OECD Recommendation Especially for diseases in which large approaches and better compare results about? Health care systems and clinical numbers of participants and locations are for better policies? Every country has laws research infrastructure vary widely, needed to answer scientific questions with

OECD Observer No 294 Q1 2013 27 BETTER POLICIES FOR BETTER LIVES Southeast Asian

statistical validity, international studies are essential. In rare diseases, it is impossible Economic Outlook 2013 to do studies in single countries. An outstanding example is the development WITH PERSPECTIVES ON CHINA AND INDIA of arsenic trioxide for acute promyelocytic Science, health care and disease are now shared globally

leukemia, a treatment discovered in China, studied worldwide and now benefiting patients on every continent. Regardless of economic resources, all countries should participate in joint scientific enterprises to ensure maximal benefit.

The OECD Recommendation is designed to facilitate collaboration, leverage existing investments, and enable all nations to improve the health of their citizens and economies, enhancing technological development while prolonging healthier, more productive, lives.

References The 2012 OECD Recommendation on the Governance of Clinical Trials and its explanatory memorandum can be found at http://www.oecd.org/sti/sci-tech/oecd- recommendation-governance-of-clinical-trials.pdf See www.oecd.org/health The Lancet 2012), The Global Burden of Disease Study 2010, December 13. See www.thelancet.com/themed/ global-burden-of-disease National Commission for the Protection of Human Subjects of Biomedical and Behavioral Research (NCPHSBBR) (1979), “The Belmont Report: Ethical Principles and Guidelines for the Protection of Human Subjects of Research”, www.hhs.gov/ohrp/ humansubjects/guidance/belmont.html. “The Nuremberg Code”(1949), Trials of War Criminals before the Nuremberg Military Tribunals Under Control Council Law No. 10, Vol. 2, pp. 181–182, US Government Printing Office, Washington, see: history.nih. gov/research/downloads/nuremberg.pdf. World Medical Association (WMA) (1964/2008), Shutterstock.com Under license from © Picsfive. “The Declaration of Helsinki”, www.wma.net/ en/30publications/10policies/b3/index.html. *This Recommendation is the product of considerable effort by an international group of experts admirably chaired by Professor Jacques Demotes of ECRIN in France and organised by Dr Frédéric Sgard from the Browse and order at www.oecd.org/bookshop OECD Global Science Forum secretariat.

28 EDUCATION

Lessons for educators

Andreas Schleicher, Deputy Director, OECD Directorate for Education and Skills, and Special Advisor on Education Policy to the OECD Secretary-General © Picsfive. Under license from Shutterstock.com Under license from © Picsfive.

What are the key issues to know when standards, but the best performing done by the most effective and competitive devising better policies for education education systems internationally. individuals or enterprises, wherever on or simply trying to improve learning the globe they are located. Knowledge and programmes? Here are some personal Increasingly diverse and interconnected skills have become the global currency of reflections. populations, rapid technological change in the 21st century. the workplace and in everyday life, and the 1. In the global economy, the benchmark instantaneous availability of vast amounts 2. The skills that are easiest to teach and for educational success is no longer of information mean that all work that test are also the skills that are easiest to merely improvement by local or national can be automated or digitised can now be digitise, automate and outsource.

OECD Observer No 294 Q1 2013 29 When you could still assume that what able to do, and then provide teachers with succeed economically and socially unless you learned in school would last a lifetime, the tools to establish what content and their political leaders explain why they teaching content and routine cognitive instruction they need to provide to their must live by their wits now. skills were at the centre of education. individual students. The past was about Today, where you can access content on delivered wisdom; the future is about user- The goal of the past was Google, where routine cognitive skills are generated wisdom. standardisation; now it’s being digitised or outsourced, and where jobs are changing rapidly, the focus is In the past, the policy focus was on the about personalising on enabling people to become lifelong provision of education; today it’s on educational experiences learners, to manage complex ways of outcomes, shifting from looking upwards thinking and complex ways of working, in the bureaucracy towards looking The world has become indifferent and to live in a multi-faceted world as outwards to the next teacher, the next to tradition and past reputations, active and responsible citizens. school. unforgiving of frailty and ignorant to custom or practice. Success will go to Without sufficient investment The past emphasised school management; those individuals and nations that are in skills people languish on the now it is about leadership, with a focus swift to adapt, slow to complain, and margins of society on supporting, evaluating and developing open to change. The task for educators teacher quality as its core. This includes and policymakers is to ensure that their 3. Deprivation need not be destiny–equity coordinating the curriculum and teaching countries rise to this challenge. in education is also the key to social programme, monitoring and evaluating mobility and democratising knowledge. teacher practice, promoting teacher Adapted from www.thefivethings.org/andreas- professional development and supporting schleicher/#, courtesy of The Pearson Foundation. For more from the same author, see www.oecdobserver.org. Some of the world’s most advanced collaborative work cultures. education systems have far greater levels of income inequality and social heterogeneity 5. There is no future without investment than, for example, the US. Their in education Order this now! education systems are able to moderate inequalities because they attract the most Without sufficient investment in skills talented teachers to the most challenging people languish on the margins of society, Youth fundamentals classrooms and the most capable school technological progress does not translate leaders to the most disadvantaged schools, into productivity growth, and countries Browse and order at thus challenging all students with high can no longer compete in an increasingly www.oecd.org/bookshop standards and excellent teaching. They knowledge-based global economy. In the foster new forms of educational provision long term, stimulus or printing money is that take learning to the learner in ways not a way out of the economic crisis. The that allow students from all backgrounds to only sustainable way is to grow our way learn in the ways that are most conducive out, and that requires giving more people to their progress. The goal of the past was the skills to compete, collaborate and standardisation and conformity; now it’s connect in ways that drive our economies about being ingenious, about personalising and societies forward. educational experiences. In many countries with little in the way of 4. Modern education is about enabling natural resources, education enjoys strong professional autonomy within a outcomes and a high status at least in part collaborative culture. because the public at large has understood that the country must live by its knowledge In the old bureaucratic education and skills. Placing a high value on system, teachers were often left alone education may be an underlying condition in classrooms with a lot of prescriptions for building a world-class education system on what to teach. The best performing and a world class economy. And it may education systems set ambitious goals, be that most countries that have not had are clear about what students should be to live by their wits in the past will not

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between 15% and 22% in terms of tariff equivalents. Other estimates are more modest and obviously vary across sectors.

In 2007, Languages in crisis: A rescue plan for Australia identified the lack of language skills as a risk to the Australian economy. “For our nation to continue to prosper we must enhance our links with the world – we do that by improving our cultural understanding, our language skills.” While the Asian region represented 70% of Australia’s largest export markets, fewer than 3% of Australian university

© Reuters/Luke MacGregor MacGregor © Reuters/Luke students studied an Asian language. A Babel of global images in Trafalgar Square, London Language studies in Australia had simply collapsed since the 1960s. And Australia “The limits of my language mean the limits Europeans need better language skills to is hardly the only country where language of my world”, Wittgenstein said. This limit answer labour markets’ needs. In 2011, programmes have been hit by budget cuts. holds for English, the world’s lingua franca. only 42% of European 15-year-olds were In 2006, the British Council warned that competent in their first foreign language, Do our education systems “provide “monoglot English graduates face a bleak with huge variations between, say, Sweden students with the necessary outlook economic future as qualified multilingual (82%) and Britain (9%). and skills, including language skills, for youngsters from other countries are successful international co-operation”, proving to have a competitive advantage In a context of increasing global as Trends Shaping Education asks? Isn’t (…) in global companies”. competition, language skills are becoming higher education also supposed to help us crucial. A survey of SMEs found that a understand what is strange and foreign? The world’s economic centre of gravity significant amount of business is being David Lammy argued that a university is shifting, and so is its linguistic lost because of inadequate language without modern languages is “a university landscape, as the OECD’s Trends Shaping skills. Across the sample of nearly 2 000 that has lost much of its ability to look Education points out: “English was long businesses, 11% of respondents had lost outwards–a university without universality, the dominant language of the internet, a contract as a result of lack of language if you like”. This is also about remaining but that is changing. There are now skills. Contracts worth in total between alert as a society. To paraphrase Chomsky, over 250 languages represented on the €8 million and €13.5 million were lost by 37 “if a culture retreats into a circle of internet, with English, Chinese, Japanese, businesses, while a further 54 businesses comfortable and reinforcing language (…), Portuguese, and Spanish making up the missed potential contracts worth between then it will cut itself off from the creative top five.” €16.5 million and €25.3 million. SMEs energies that are its life source”–and from which have a language strategy achieve the world. Mandarin now is the most widely spoken 44% more export sales than those which language in the world, followed by English, don’t. Chomsky also reminds us that linguistic Spanish, Hindi, Arabic, Bengali, Russian, ability does not consist of learning specific Portuguese, Japanese, German and French. Languages matter not only for SMEs. In responses to specific situations. It is not The relative number of English native March 2006, Amazon announced it would mere performance, it is competence. In speakers will decrease whereas Spanish, move its European customer service centre dialogue, Chomsky argues, one should not Hindi and Arabic will soar. The number of from the UK to Ireland to take advantage seek victory, but rather creative openness. non-native English speakers will overtake of better language skills. More generally, In Language and creativity, he revisits that of native speakers over the next managing cultural diversity and linguistic the 1961 Cuban missile crisis as a good century. complexity can be a critical asset for large example of creative interchange. Openness companies. Large firms which have no instead of polarisation. Kennedy said at Androulla Vassiliou, EU Commissioner language strategy tend to fail to deal with the time: “If anybody is around to write for Education, Culture, Multilingualism day-to-day communication problems after this, (…) they are going to understand and Youth thinks that languages can according to the ELAN report. The cost that we made every effort (…) to give our help us out of the crisis. She stresses that of language barriers was quantified as adversary room to move.”

32 OECD Insights www.OECDInsights.org

Born a girl: bad karma?

Gusdorf’s approach is similar to The ILO estimates that at least 2.45 million women as inferior play a role too. Religion Chomsky’s: in language, we seek ourselves trafficking victims are currently working in is one of these, and one World Bank and others. Winning and refutation can exploitative conditions worldwide, and that report says that one of the factors pushing be put aside and reciprocity, mutual another 1.2 million are trafficked annually, women into prostitution in the Mekong enhancement, the enrichment of ideas and both across and within national borders. region is that under Theravada Buddhism, people become the goal. As Finnish author Of these, up to 80% are women and girls, “women and girls are thought to be unable Samuli Paronen puts it: “real winners according to the UN. to achieve enlightenment. Thus, while do not compete”. It is interesting to note men can show gratitude and respect to that despite doing so well in the PISA A widely-quoted UN estimate says that their parents by becoming monks and tests, the Finns never aimed to have (one human trafficking and slavery is the third pursuing the spiritual life, many girls feel of) the world’s best education system(s). most lucrative illicit business in the world, that they must make sacrifices for the Something they certainly did, though, after arms and drug trafficking, although benefit of their families, villages and their was to learn from others and enhance co- the UN doesn’t actually give any source own karma.” operative learning. for this claim. That could be because of the inherent difficulty in obtaining data on In addition, as a short guide published The Finns have also proved particularly criminal activity or because the estimate by the OECD points out, trafficking often creative and innovative. Over the past includes other activities like taking emerges where many human rights few years, research on (potential) links money to smuggle illegal immigrants violations are prevalent already. The between language learning and 21st century into a country. The US Department of most common violations are the right to skills (such as creativity, critical thinking, State definition of trafficking is “all of the personal autonomy, the right not to be collaboration or communication) has criminal conduct involved in forced labor held in slavery or servitude, the right to flourished. In Multilingualism and creativity, and sex trafficking, essentially the conduct liberty and security of person, the right to Kharkhurin argues that multilingualism is involved in reducing or holding someone be free from cruel or inhumane treatment, a facilitator of one’s creative potential. in compelled service.” the right to safe and healthy working conditions and the right to freedom of A year ago, the OECD published a Why does trafficking still happen, and why movement. Governments can be guilty wonderful book called Languages in a are women the main victims? Economics, too, even towards people who have escaped Global World: Learning for Better Cultural culture and tradition are all to blame. from trafficking. Policies often give priority Understanding. Looking at how the world is Economically, you can look at it on the to detention, prosecution and expulsion going, this book seems more relevant than global or local level. Trafficking and the of trafficked persons for offences related ever. Its praise of diversity is reminiscent modern slave trade are driven by the same to their status, including violation of of Segalen’s poem Advice to the Good factors that encourage other aspects of immigration laws, prostitution or begging. Traveller: globalisation, such as increased mobility, Victims may be treated as “disposable cheaper travel and the ease of organising witnesses” whose sole value is their ability “A town at the end of the road & international networks. The supply of to assist in prosecuting traffickers. a road extending women and girls is maintained by poverty Patrick Love a town: do not choose one or the other, (some UN estimates say that nearly 70% but one & the other by turns. (…) of the world’s poor are women) and lack of This is an adapted extract. For the complete version, Beware of choosing a refuge. (…) opportunity. But social norms that consider see www.oecdinsights.org. Visit www.oecd.org/gender Thus, without stopping or stumbling, without halter & without stable, without rewards or punishments,you will attain, friend, not the marsh of immortal joys, Order this now! But the intoxicating eddies of the great river Migration challenges Diversity.” Anne-Lise Prigent Browse and order at www.oecd.org/bookshop For the original version of this article, see www.oecdinsights.org

OECD Observer No 294 Q1 2013 33 OECD.ORG Speaking truth to power Reflections on the future of the OECD

Ron Gass* On the national scene, the mere act of getting strategic new issues on the table meets political obstacles. On the OECD scene, there is more freedom to test out new policy options, to bring them the point of best practice and then to bring to bear the various “name and shame” procedures which result (in the words of Carroll and Kellow) in “epistemic learning”.

One can understand those critics who would like to see more OECD “hard” legislation, as, for example, in the case of the World Trade Organization, and the International Labour Organization. Although the OECD has legally-binding codes and conventions, it operates mostly according to the “soft power” of peer pressure and persuasion. This has merit. Legislation will often be based on hindsight rather than foresight. And the complexity and political sensitivity of the policy trade- The simple truth is that all the major actors in the world economy are faced with the same challenges

offs between economic, environmental and social objectives gives soft power an advantage, particularly as new countries become important partners in the global economy.

From economic growth to human progress?

A striking example of this OECD soft power is the humanisation of material progress implicit in the dominant OECD ©OECD/John Tarver ©OECD/John communications slogan: “Better policies The OECD has transformed itself into problematique has changed. After five for better lives”. A life, after all, belongs to a policy pathleader on a whole range years of research, Carroll and Kellow the individual rather than the system. of public policies–national, regional have hit the nail on the head. The defining and local–with the avowed aim of character of the OECD, they say, is the When the OECD was born economic deep involvement of the committees of promoting human progress. But is growth was the central goal. Indeed, the national delegates in the search for “truth”. competition between countries to win the the new OECD a child or a prisoner As a senior Japanese diplomat once said, GDP battle still dominates the scene today, of its past? “When I participate in the meetings of as the emerging economies take the lead other international organisations, my from the United States, Europe and Japan. To answer this, one must understand the mind is in the negotiating mode; when institutional alchemy that has enabled I come to the OECD, I am in thinking Yet, it is clear that, even for the economic the OECD to reinvent itself as the global mode.” growth leaders such as China, India and

34 OECD.ORG

Brazil, the pursuit of economic growth are faced with the same challenges: how sine qua non, but not an open sesame. cannot ignore building social cohesion and to achieve a sustainable path of progress The OECD’s strategy expressed by the environmental equilibrium. This triangular based on a complex balance between communications slogan, “Better policies policy paradigm, built up over 50 years of economic growth, social cohesion and the for better lives”, and going beyond GDP as professional analysis and policy innovation, husbandry of the biosphere. What is new a measure of well-being, are a good start. is still one of the OECD’s major assets. is that there are no credible theoretical The OECD’s capacity to renew itself is the This is reflected in the declared OECD aim or ideological roadmaps to guide policy result of the unique organisational culture of “a stronger, cleaner and fairer economy”. action. Francis Fukuyama’s “end of history” born in the Organisation for European prediction that the fall of the Berlin Wall Economic Co-operation from which it was The triangular paradigm was built up, step meant the final victory of liberal capitalism forged in 1961. Again, it must carry that by step, by the professional work of OECD has been eclipsed by the new crisis. In this quality forward into the 21st century. committees and directorates.The OECD uncertain situation, the OECD’s capacity thus has a reserve of policy innovations, for policy innovation has a key role to The complex challenges facing the “new” ready to be brought into the mainstream play in the volatile arena of international OECD can only be met through soft strategy of the organisation as defined by co-operation. This is a task facing the power. In a sense, the word has to prevail the Ministerial Council and the secretary- New Approaches to Economic Challenges over the sword! Arnold Toynbee, after general. initiative, launched by the 2012 OECD a lifetime’s work on the rise and fall of Ministerial Council. civilizations, postulated that mastery of The persisting crisis in the global economy production techniques leads to affluence has made clear the systemic complexity To the OECD’s professional expertise and and power, but to fail to meet social and of the problems. No longer can the intellectual independence can be added environmental challenges leads to decline. underlying assumption be that the three a tradition of openness, as reflected in Toynbee is thus on the OECD’s side! legs of the OECD policy paradigm– its large publishing programme, the economic, social and environmental–move OECD Observer, blogs, and its interactions But OECD soft power cannot bear fruit forward together. Economic growth is with businesses, labour unions and civil unless its communications strategies obviously essential to the achievement of influence decisionmakers and the citizenry social and environmental goals, but it can The public’s confidence in across the world. The public image of also come into conflict with these goals. “progress” has declined “the experts” is a vital asset, and selling Strategic governance and a new analytical it widely, while sustaining it, is a delicate toolbox would help deal with trade-offs and societies. All citizens can benefit from the communications imperative. synergies. results of OECD work via the web and other forums. Its fight against corruption *Ron Gass is former founding director of the OECD From “rich men’s club” to global actor? and tax havens testifies to its political Directorate of Social Affairs, Manpower and Education, and the Centre for Educational Research and Innovation. neutrality, while its new OECD Strategy He is a former consultant to the European Union and A special issue of the Global Policy on Development has emphasised a more the European Bank for Reconstruction and Development journal sets out the views of a range of comprehensive and inclusive approach to (Economic Development and Research Center). independent observers. On the whole, the global progress. The “rich men’s club” tag opinion appears to be that the OECD is is losing its force. References now a recognised global player because of Carroll, Peter and Aynsley Kellow (2011), The OECD: A the high quality of its professional analysis The international community is faced Study of Organisational Adaptation, Edward Elgar and the data banks on which it is based. with two major challenges: security and Publishing. The OECD is becoming, in this view, a sort progress. The two are obviously linked, Clarke, Rory (2012), “The OECD Strategy on Development: Giving fresh impetus to a core mission”, in of global think tank. But it is also deeply because in the long run only inclusive OECD Observer No 292, Q3. involved in the policy innovation process. progress–englobing poor and rich nations– Clarke, Rory, Lyndon Thompson (2011), “A majestic start: can thwart the clash of civilizations as How the OECD was won”, in OECD Yearbook The real issue is whether “speaking truth to predicted by Huntington. Yet, the public’s Fukuyama, Francis (1992), The End of History and the power” (in the terms of Carroll and Kellow) confidence in “progress”, seen as the Last Man, Free Press. is effective in the present crisis. One human race’s capacity to master nature Gass, Ron (2011), “50 years of reconciling the economy, answer lies in the various OECD reports through science and thereby to promote nature and society”, in OECD Yearbook 2011. delivered to the G8 and G20 meetings affluence and power, has declined. The Global Policy (2011), “The OECD at 50”, Vol 2, Issue 3, on the crisis. The simple truth is that all challenge is now to redefine “progress” October, available at www.globalpolicyjournal.com the major actors in the world economy recognising that economic growth is a

OECD Observer No 294 Q1 2013 35 OECD.ORG

Icelandic lead

“Iceland is well placed to serve as a testing ground, as a laboratory, where the relevance of models and theories can be examined, where experience allows us to challenge prevailing orthodoxies and thus hopefully pave a clearer way to a more sustainable, prosperous and secure economic future”, the President of Iceland, Olafur Ragnar Grimsson (photo), said while on a visit to the OECD on 27 February 2013. The president held talks with OECD Secretary-General Angel Gurría and gave an address to a special session of the ©Julien Daniel / OECD OECD Council science, co-operation, women’s rights, on sustainable Shimon Peres democracy, the limits of power and the development and OECD Secretary-General Angel Gurría positive role of global corporations (in energy. For the greets the President of Israel, Shimon ending racism, for instance), while complete speech Peres, during an official visit to the OECD focusing his message on boosting and more on 8 March 2013 (photo). In his welcoming knowledge, innovation and development, information on the Icelandic remarks Mr Gurría described Mr Peres as for a “new order” and a “great human president’s visit, “one of the greatest statesmen of our times”. purpose”. Watch President Peres’s keynote see www.oecd. The Israeli president, who will be 90 in address here: org/iceland August, captivated a packed audience with www.oecd.org/israel/visit-of-president-of-

a wide-ranging address that touched on israel-8-march.htm ©Julien Daniel / OECD

performance substantially. The best Visit the site and watch how Singapore Videowatch: systems deliver strong and equitable has prioritised building a strong and learning outcomes across widely varying effective teaching force, how Portugal has Education performers cultural and economic contexts. By reorganised and modernised its school showing what they achieve, the PISA network, and how Korea uses IT to make and reformers tests demonstrate what is possible so a successful education system even that others can learn, too. The purpose better. There are also videos on Brazil, How can schools do better? A new short of these videos is to transmit ideas and Canada, China, Finland, Germany, Japan video series provides some useful pointers. stimulate debate. and Poland. Produced in association with the Pearson Foundation, the videos profile policies and www.pearsonfoundation.org/oecd/ practices for improving education systems, in light of the OECD PISA surveys.

The school systems featured were chosen for their strong performance in that survey. Every three years, PISA evaluates the skills of 15-year-old secondary students in three basic areas: reading, mathematics and science. Around half a million students participated in the latest round, carried out in 2009 in some 70 countries and economies.

Starting from very different levels, several countries and regions have succeeded over the last few years in raising their students’

36 OECD.ORG

Recent speeches by Angel Gurría

Innovative Approaches to Poverty Reduction, Global Forum on Competition Social Cohesion and Progress in a Post-2015 28 February 2013 World Closing remarks delivered in Paris, France. 4 April 2013 Remarks delivered at the Global Forum on Strengthening our Partnership for a Stronger, Development 2013, Paris, France. Cleaner and Fairer Global Economy 27 February 2013 Together We Stand: Inclusive Growth Remarks delivered at the meeting with 3 April 2013 the Economics and Security Committee Remarks delivered at an OECD Workshop on and the Political Committee of the NATO Inclusive Growth, Paris, France. Parliamentary Assembly, Paris, France.

Fiscal and Taxation Reforms for a More Financial Consumer Protection/Financial Inclusive Growth in China Education 24 March 2013 16 February 2013 © Osman Orsal/Reuters Remarks delivered at the China Development Remarks delivered at the G20 Finance Forum, Beijing, People’s Republic of China. Ministers and Central Bank Governors For a complete list of speeches Meeting: Financial Consumer Protection/ and statements, including those in OECD and China: Tackling Global Challenges Financial Education, Moscow, Russian Federation. French and other languages, go to 23 March 2013 Opening remarks delivered at the the 2013 Much More than Growth! www.oecd.org/speeches Party School-OECD Development Forum, Beijing, People’s Republic of China. 14 February 2013 Remarks delivered at the Institute of Capturing the Benefits of Global Value Chains International Finance Conference: The G-20 Agenda under the Russian Chairmanship, Investing in Prosperity in the United 19 March 2013 Moscow, Russian Federation. Kingdom: Skills, Infrastructure and Remarks delivered at a workshop on Innovation Global Value Chains, Development and Growth, Innovation and Competitiveness: 16 April 2013 Competitiveness, Paris, France. Maximising the Benefits of Knowledge-Based Remarks delivered at the London School of Capital Economics Growth Commission Seminar, International Summit on the Paris, France. Teaching Profession 13 February 2013 Opening remarks delivered at the Conference 14 March 2013 on Knowledge-Based Capital, Paris, France. Risks, Crises and Opportunities Remarks delivered at the 2013 Ministerial 10 April 2013 Summit on the Teaching Profession, OECD Parliamentary Days Keynote Address delivered at “Les Tables Amsterdam, Netherlands. Rondes de l’Arbois”, Aix-En-Provence, France. 12 February 2013 Secretary-General’s introduction of President Remarks delivered in Paris, France. Beyond the Financial Crisis – Pursuing Jobs, of Israel, Shimon Peres Sowing the Seeds of an Enduring Recovery Equality and Trust 8 March 2013 8 April 2013 Remarks delivered on the occasion of the 6 February 2013 Remarks delivered at the 9th European official visit of the President of Israel, Shimon Remarks delivered at the launch of the Regional Meeting of the International Labour Peres, Paris, France. Economic Survey of the United Kingdom, Organization, Oslo, Norway. London, United Kingdom. Second Global Forum on Transfer Pricing: Making Statistics and Everyone Count Addressing Base Erosion and Profit Shifting 5 April 2013 6 March 2013 Opening remarks delivered at OECD Opening remarks delivered in Paris, France. New ambassadors Statistics Day, Paris, France. 12 November 2012 Pavel Rozsypal took Unlocking South Africa’s Great Economic up his duties as new Ambassador for the Greening our Knowledge Potential Czech Republic, replacing Karel Dyba. 4 April 2013 4 March 2013 Opening remarks delivered at the 2nd Annual Remarks delivered at the launch of the 2013 18 February 2013 Paulo Vizeu Pinheiro Conference of the Green Growth Knowledge Economic Survey of South Africa, Pretoria, took up his duties as new Ambassador for Platform (GGKP), Paris, France. South Africa. Portugal, replacing Eduardo Ferro Rodrigues.

OECD Observer No 294 Q1 2013 37 OECD.ORG

Calendar highlights

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 comprehensive list, see the OECD website at www.oecd.org/newsroom/upcomingevents, which is updated regularly.

APRIL safety assessment (PSA) point of view. 3-4 Annual Meeting of OECD Senior Budget Conference organised by the International Official networks (SBO). 4 Tokyo Roundtable on Capital Market Association for Probabilistic Safety Reform in Asia, organised and sponsored 4-5 5th expert workshop on Measuring Assessment and Management (IAPSAM) by the Asian Development Bank Institute Regulatory Performance. and co-sponsored by the Nuclear Energy (ADBI) and the OECD, in cooperation with Stockholm, Sweden. Agency.Tokyo, Japan. the Government of Japan. Tokyo, Japan. 6 Parliamentary Assembly of the 19-21 World Bank and International Monetary

4-5 Second meeting of the Green Growth Council of Europe meets with the Comas © REUTERS/Andrea Fund Spring meetings. Knowledge Platform. OECD Secretariat. Washington D.C., USA. 4-5 Global Forum on Development: 10-12 Annual Conference of Montreal, 22-24 21st-Century mathematics: “What should Innovative Approaches to Poverty The International Economic Forum students learn in the 21st Century?”, Reduction, Social Cohesion and of the Americas. Participation of the conference organised by the Centre for Progress in the 21st Century, organised OECD Secretary-General. Montreal, Curriculum Re-design in collaboration by the Development Co-operation Quebec, Canada. with the Confederation of Swedish Directorate and the Development Centre. Enterprise and the OECD Centre for 10-14 Plenary of the Bribery in International 4-7 Annual plenary conference of the Educational Research and Innovation Business Transactions working group. Institute for New Economic Thinking (CERI). Stockholm, Sweden. 17-18 OECD High-Level Parliamentary Seminar, (INET) hosted by OECD Forum Knowledge 24 OECD/BIAC Workshop: Green Growth in hosted by the Swedish Parliament. Partner, INET, and co-sponsored by the the Agro-Food Chain: What Role for the Stockholm, Sweden. Fung Global Institute. Hong Kong, People’s Private Sector? Republic of China. JULY MAY 5 OECD Statistics Day, as part of the 10 Knowledge-Based Entrepreneurship, celebration to mark “International Year 14 Launch of Medium-Term Oil Market the Triple Helix and Local Economic of Statistics”–Statistics 2013. Report by the International Energy Agency. Development, workshop organised by the LEED Programme (Local Economic and 7-11 Decommissioning Challenges, Industrial 22-24 ‘F unding Transport’ – International Employment Development) as part of the Reality and Prospects, conference Transport Forum’s 2013 Summit. Triple Helix Conference, London. London, organised by la Société française d’énergie Leipzig, Germany. United Kingdom. nucléaire (SFEN) and co-sponsored by the 27-31 OECD annual Forum and Council Nuclear Energy Agency. Avignon, France. 15-25 International Summer School for ministerial meetings. co-operation and local development, 8-9 International Labour Organization’s JUNE organised within the framework of the European regional meeting. Participation OECD LEED Programme: “Community and of the OECD Secretary-General. 3-4 Livestock disease policies: Building local development – Building strategies for Oslo, Norway. bridges between animal sciences and local development”. Trento, Italy. economics, conference sponsored by the 15-17 Probabilistic Safety Assessment OECD’s Co-operative Research Programme SEPTEMBER and Management: spotlight on the with the participation of the World Fukushima Daiichi Nuclear Power 23-24 Global Forum on Environment Climate Organisation for Animal Health (OIE). Station Accident from the probabilistic Change Expert Group-Plenary.

38 REVIEWS OECD iLibrary

Spain’s youth unemployment lessons

Few countries For a start, the authors show that while Indeed, education could play a role in have suffered long-term unemployment among youth helping to address youth unemployment in the scourge has risen sharply across the OECD area Spain, where the transition from education of high youth during the crisis, unemployment and to a first stable job has customarily taken unemployment NEET (not in employment, education longer than in other OECD countries. as much as Spain or training) rates in Spain largely reflect Since the onset of the crisis, participation has. There, the much higher worker turnover, rather in education has risen in Spain, but NEET unemployment than, say, a higher prevalence of long-term rates and school drop-out rates among rate for under unemployment. teenagers also remain relatively high. 25-year-olds Moreover, vocational education degrees are

© REUTERS/Andrea Comas © REUTERS/Andrea exceeded 50% in Another point is the high incidence of much less widespread. Given the sharp 2012, nearly three times the OECD temporary employment in Spain, which is fall in the employment rates of unskilled average. However, the crisis has not been found to be the main determinant of both youths in the last few years, developing the only cause of this; in fact, high rates high worker turnover and the volatility of dual work-training programmes could of youth unemployment are not a recent youth employment. Meanwhile, the long markedly improve the ability of these young phenomenon in Spain. expansion period before the crisis, and the people to find work, the authors suggest. construction boom in particular, played This working paper, “Youth Labour a role in discouraging participation in Dolado, J. J. et al. (2013), “Youth Labour Market Market Performance in Spain and its education as young people were drawn Performance in Spain and its Determinants: A Micro- Determinants: A Micro-level Perspective”, by good wages, even for unskilled jobs. Level Perspective”, OECD Economics Department Working Papers, No 1039, OECD Publishing. http://dx.doi. tries to untangle the issues and suggest a With the crisis, these trends have gone org/10.1787/5k487n5bfz5c-en, see www.oecd.org/eco/ way forward. into reverse. economicsdepartmentworkingpapers.htm How are you, really?

The shortfalls of is now a widespread acknowledgement that people make of their lives and the GDP that were that measuring subjective well-being is an affective reactions of people to their already apparent essential part of monitoring progress and experiences.” before the crisis the quality of life. but made starker In other words, the guidelines shed light during it have led As a first step to filling this gap, the OECD on how to collect information on people’s to a panoply of has issued new guidelines on collecting, assessments and experiences of their own new initiatives to publishing, and analysing subjective lives, as well as on evaluating people’s find metrics that well-being data. The OECD Guidelines sense of purpose and psychological, ethical, can measure well- on Measuring Subjective Well-being are states–what ancient Greek philosophers being rather than just economic growth. part of the OECD Better Life Initiative, a referred to as eudaimonia. In this way, the But while GDP has stood accused of pioneering project launched in 2011 to guidelines identify the best approaches overlooking the environment and human gauge progress across several factors, for measuring the various dimensions well-being, it has one advantage which including health, civic engagement, the of subjective well-being in a reliable and policymakers and analysts appreciate: the environment and governance. consistent way, while providing guidance methods are objective and clear. Whether on reporting. The guidelines also include a measuring output or expenditure in an Subjective well-being is often assumed to number of prototype survey modules that economy, GDP produces a single number be restricted to measuring “happiness”, national and international agencies can that is easy to adjust and compare. but in fact covers a wider range of concepts. adopt in their surveys. For the new guidelines, a definition of Finding a similarly effective metric for subjective well-being is offered: Read it here: http://dx.doi.org/10.1787/9789264191655- well-being is not easy, particularly as well- “Good mental states, including all of the en. being is, by definition, subjective. Yet, there various evaluations, positive and negative, ISBN 978-92-64-19164-8

OECD Observer No 294 Q1 2013 39 BOOKS OECD iLibrary

All publications available at www.oecd.org/bookshop Current bestsellers and www.OECD-iLibrary.org

OECD Factbook Development Education Today 2013: Economic, Co-operation 2013: The OECD Environmental Report 2012: Perspective and Social Lessons in Linking Summarises what Statistics Sustainability and OECD currently Provides more Development has to say about than 100 indicators The key annual the state of covering a reference document education today wide range for statistics and in eight key areas: of areas, agriculture, education, energy, analysis on trends in international aid. early childhood education, schooling, environment, health, industry, information This year, it seeks to provide insights transitions beyond initial education, higher and communications technologies, into how to address today’s sustainable education, adult learning, equity, and trade and taxation, including this year’s development challenges. innovation. focus topic: gender. ISBN 978-92-64-17808-3, November 2012, 296 pages ISBN 978-92-64-17710-9, January 2013, 128 pages ISBN 978-92-64-17706-2, February 2013, 300 pages €100 $133 £80 ¥13 000 €24 $33 £21 ¥3 100 €50 $70 £45 ¥6 500 Latin American Trends Shaping OECD Economic Economic Education 2013 Outlook, Volume Outlook 2013: This book 2012, Issue 2 SME Policies for brings together OECD’s twice- Structural Change international evidence addressing yearly analysis This edition such questions as of the major focuses on the diversity, economic economic trends role of Small power shifts and prospects for and Medium among countries, the next two years. Enterprises in Latin America. and changing working patterns. ISBN 978-92-64-13062-3, January 2013, 272 pages ISBN 978-92-64-18072-7, November 2012, 184 pages ISBN 978-92-64-17708-6, February 2013, 106 pages €102 $147 £91 ¥12 200 €60 $84 £54 ¥7 800 €30 $42 £27 ¥3 900 Closing the Southeast Asian World Energy Gender Gap: Economic Outlook Outlook 2012 Act Now 2013: With Focuses on how Perspectives on Presents best to close China and India authoritative gender gaps projections of Examines medium- under four broad energy trends term growth areas: public through to 2035 prospects, recent policies, education, and insights into macroeconomic employment and entrepreneurship. what they mean policy challenges, and structural challenges for energy security, ISBN 978-92-64-17936-3, January 2013, 352 pages including human capital, infrastructure environmental sustainability and economic €80 $112 £72 ¥10 400 and SME development. development. ISBN 978-92-64-18076-5, February 2013, 250 pages ISBN 978-92-64-18084-0, November 2012, 700 pages €42 $58 £37 ¥5 400 €150 $210 £135 ¥19 500

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ECONOMY OECD EDUCATION Compendium OECD Economic Surveys: Australia 2012 of Productivity PISA ISBN 978-92-64-18495-4, January 2013, 140 pages Indicators 2012 Grade €61 $86 £54 ¥7 200 ISBN 978-92-64- Expectations: 18883-9, January 2013, How Marks and 88 pages Education Policies OECD Economic €28 $39 £25 ¥3 600 Shape Students’ Surveys: Ambitions Colombia 2013 ISBN 978-92-64- ISBN 978-92-64- 18750-4, January 2013, 17969-1, January 2013, AGRICULTURE 140 pages 136 pages €39 $54 £35 ¥5 000 €45 $63 £40 ¥5 800 Agricultural Policy Monitoring and Evaluation 2012: OECD Countries OECD Reviews of National Policies for Education ISBN 978-92-64-17352-1, October 2012, 288 pages Tertiary Education in Colombia 2012 €54 $75 £48 ¥7 000 ISBN 978-92-64-18068-0, January 2013, 320 pages €95 $133 £85 ¥12 300 OECD Economic Surveys: OECD Review of Fisheries: Luxembourg 2012 Country Statistics 2012 OECD Reviews of Evaluation and ISBN 978-92-64-18885-3, January 2013, 92 pages ISBN 978-92-64-18926-3, January 2013, 416 pages Assessment in Education: Mexico 2012 €61 $86 £54 ¥7 200 €125 $175 £112 ¥16 200 ISBN 978-92-64-17263-0, November 2012, 240 pages €30 $42 £27 ¥3 900 OECD Economic Surveys: DEVELOPMENT Slovak Republic 2012 EMPLOYMENT ISBN 978-92-64-18490-9, January 2013, 112 pages The Architecture of Development €61 $86 £54 ¥7 200 Assistance Activating Jobseekers: ISBN 978-92-64-17887-8, January 2013, 204 pages How Australia Does It OECD Economic Surveys: Spain 2012 €30 $42 £27 ¥3 900 ISBN 978-92-64-18591-3, January 2013, 252 pages ISBN 978-92-64-12832-3, December 2012, 104 pages €40 $56 £36 ¥5 200 €61 $86 £54 ¥7 200 DAC Guidelines and Reference Series Mental Health and Work: Belgium OECD Economic Surveys: Sweden 2012 Evaluating Peace- ISBN 978-92-64-18753-5, January 2013, 120 pages ISBN 978-92-64-17899-1, January 2013, 124 pages building Activities €24 $33 £21 ¥3 100 €61 $86 £54 ¥7 200 in Settings of ENERGY OECD Economic Conflict and Fragility: Surveys: Medium-Term Improving United Kingdom Coal Market Learning for 2013 Report 2012 Results ISBN 978-92-64- ISBN 978-92-64- ISBN 978-92-64-10679-6, January 2013, 100 pages 18234-9, February 17795-6, January 2013, €33 $46 £29 ¥4 200 2013, 112 pages 144 pages €45 $63 £40 ¥5 800 €100 $140 £90 OECD Due Diligence Guidance for ¥13 000 Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk National Accounts of OECD Countries, Areas: Second Edition Financial Accounts 2012 ISBN 978-92-64-18501-2, February 2013, 113 pages CO2 Emissions from Fuel Combustion 2012 ISBN 978-92-64-18774-0, December 2012, 332 pages €25 $35 £22 ¥3 200 ISBN 978-92-64-17475-7, November 2012, 540 pages €95 $133 £85 ¥12 300 €165 $231 £148 ¥21 400

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Energy Policies of IEA Countries: OECD International Direct Investment INDUSTRY AND SERVICES Australia 2012 Statistics 2012 ISBN 978-92-64-17072-8, November 2012, 150 pages ISBN 978-92-64-18570-8, January 2013, 228 pages Sustainable Materials Management: €75 $105 £67 ¥9 700 €100 $133 £80 ¥13 000 Making Better Use of Resources ISBN 978-92-64-17424-5, November 2012, 222 pages Energy Policies of IEA Countries: GOVERNANCE €60 $84 £54 ¥7 800 The Republic of Korea 2012 ISBN 978-92-64-17150-3, December 2012, 140 pages Restoring Public NUCLEAR ENERGY €75 $105 £67 ¥9 700 Finances, 2012 Update Nuclear Energy and Renewables: System Ukraine Energy Policy Review 2012 ISBN 978-92-64- Effects in Low-Carbon Electricity Systems ISBN 978-92-64-17151-0, November 2012, 224 pages 17944-8, December ISBN 978-92-64-18851-8, November 2012, 252 pages €75 $105 £67 ¥9 700 2012, 272 pages €60 $84 £54 ¥7 800 €76 $106 £68 ENVIRONMENT ¥9 800 SCIENCE AND TECHNOLOGY

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SOCIAL ISSUES, MIGRATION AND Global Forum on TRADE HEALTH, cont’d. Transparency and Exchange of OECD Statistics on International Trade Health at a Glance: Asia/Pacific 2012 Information for in Services, Volume 2012 Issue 1: ISBN 978-92-64-18372-8, January 2013, 108 pages Tax Purposes Detailed Tables by Service Category €30 $42 £27 ¥3 900 Peer Reviews ISBN 978-92-64-18604-0, December 2012, 105 pages All priced at €80 $112 £72 ¥10 400 Health at a Glance: Europe 2012 €36 $50 £32 ISBN 978-92-64-18360-5, November 2012, 154 pages ¥4 600 OECD Statistics on International Trade in €30 $42 £27 ¥3 900 Services, Volume 2012 Issue 2: Detailed Tables by Partner Country OECD Reviews of Health Care Quality: ISBN 978-92-64-18664-4, January 2013, 164 pages Israel 2012 Raising Standards • Argentina 2012: Combined: Phase 1 + Phase 2 €110 $154 £99 ¥14 300 ISBN 978-92-64-02987-3, November 2012, 176 pages ISBN 978-92-64-18193-9, November 2012, €36 $50 £32 ¥4 600 100 pages TRANSPORT • Dominica 2012: Phase 1: Legal and Strengthening Social Cohesion in Korea Regulatory Framework Sharing Road Safety: Developing an ISBN 978-92-64-18892-1, February 2013, 130 pages ISBN 978-92-64-17638-6, November 2012, €40 $56 £36 ¥5 200 International Framework for Crash 88 pages Modification Functions TAXATION • Marshall Islands 2012: Phase 1: Legal and ISBN 978-92-821-0375-3, January 2013, 132 pages Regulatory Framework €40 $56 £36 ¥5 200 Taxing Energy ISBN 978-92-64-18150-2, November 2012, URBAN, RURAL AND REGIONAL Use: A Graphical 76 pages DEVELOPMENT Analysis • Niue 2012: Phase 1: Legal and ISBN 978-92-64- Regulatory Framework 18125-0, February ISBN 978-92-64-18166-3, November 2012, Promoting 2013, 256 pages 72 pages Growth in All €60 $84 £54 Regions • Russian Federation 2012: Phase 1: Legal and ¥7 800 ISBN 978-92-64- Regulatory Framework 17462-7, January 2013, ISBN 978-92-64-18171-7, November 2012, 280 pages 100 pages €80 $112 £72 Inventory of Estimated Budgetary • Samoa 2012: Phase 1: Legal and ¥10 400 Support and Tax Expenditures for Regulatory Framework Fossil Fuels 2013 ISBN 978-92-64-18177-9, November 2012, ISBN 978-92-64-18760-3, January 2013, 440 pages 88 pages €110 $154 £99 ¥14 300 • Sint Maarten 2012: Phase 1: Legal and All publications listed on these pages Regulatory Framework are available at: Addressing Base Erosion and ISBN 978-92-64-18184-7, November 2012, www.oecd.org/bookshop and Profit Shifting 100 pages www.oecdilibrary.org ISBN 978-92-64-19265-2, February 2013, 88 pages • Slovenia 2012: Phase 1: Legal and €24 $33 £21 ¥3 100 Regulatory Framework A list of OECD publications distributors ISBN 978-92-64-18187-8, November 2012, in various countries is available at: Consumption Tax Trends 2012: 76 pages VAT/GST and Excise Rates, Trends www.oecd.org/publishing/ and Administration Issues • South Africa 2012: Combined: Phase 1 + Phase 2 distributors ISBN 978-92-64-18138-0, December 2012, 220 pages ISBN 978-92-64-18209-7, November 2012, €50 $70 £45 ¥6 500 96 pages A list of institutions subscribing to the OECD iLibrary is available at: www.oecd.org/publishing/ oecdilibrarysubscribers

OECD Observer No 294 Q1 2013 43 REVIEWS OECD iLibrary

E-governance in Egypt

The Arab Spring and social justice by the people. The upbeat, but see obstables. A key one is and the rise authors bring us back to January 2011, the budgetary allocation, which in Egypt tends of new social protests in the streets and the crescendo to be allocated by ministry and project, and democratic of rallies that finally led to the resignation rather than across government. This movements of President Mubarak. And so a grassroots’ creates a vertical approach based on silos, throughout movement, which was initiated and which, even if they give the impression large parts of sustained by vast, generally jovial, crowds of more ownership and direct control, the Middle East reflecting the rich tapestry of Egyptian reduce incentives to co-ordinate across and North Africa society, set forth a new chapter in this great departments. Everyone loses from this (MENA) may not country’s history. approach, which makes much-needed, have changed the world quite as much as large IT investments nigh impossible to millions had hoped, but at least they gave The role played by the internet, social launch. In short, state departments should a new impetus to the use of information media and smartphones cannot be remember the lessons of the Arab Spring and communications technology and underestimated, the authors argue, as it and do as the people did: use IT to flatten the potential of “e-government” to foster allowed citizens to spread information and the silos, coordinate their actions and seek participation and engagement, increase co-ordinate action to an extent rarely, if real change for the better. transparency and restore public trust. ever, seen before. OECD (2013), OECD e-Government Studies: OECD e-Government Studies: Egypt looks at As the dust settles, could e-government Egypt, Paris. the role IT played in the ongoing transition become a powerful tool of Egypt’s in this important North African country, emerging future, and transform spring triggered by demands for more democracy firmly into “summer”? The authors are ISBN 978926417877-9

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Tough terms for SME loans struggle upwards small businesses Trends in SME loans compared with 2007-2011 (2007=0) 120%

Small and medium-sized enterprises refers 100% to firms of up to 250 workers each, but did 2009 80% you know that these so-called SMEs make 2010 up some 90% of employment in the 60% 2011 OECD area? Surely therefore, to get the 40% economy moving again, the focus should 20% be on these motors of activity! 0% Financing is one area to change. Unlike *The base UK US year for Russia Chile Italy Turkey Korea France is 2008 large global firms which continue to *Russia Slovenia Canada Portugal Hungary Norway Sweden Slovak Rep borrow at cheap rates of interest and even Switzerland issue bonds, SME access to finance Source: OECD SME Scoreboard 2013 remains challenging. In fact, according to Financing SMEs and Entrepreneurs 2013: An SME lending grew moderately in many investments in venture and growth capital, OECD Scoreboard, SMEs generally faced developed economies, and that there was a but overall loans remained below 2007 higher interest rates for borrowing in 2011 more pronounced increase in financing of pre-crisis levels. than in 2009-2010. In fact, the interest small companies in emerging economies. rate spread between SMEs and large firms Financing SMEs and Entrepreneurs 2013: An grew in many countries too. The sovereign debt crisis is likely to have OECD Scoreboard provides detailed country led to a further deterioration in the lending profiles of financial conditions for SMEs in An analysis of financial indicators from 25 activities of banks in 2012-2013, the report 25 countries. countries between 2007-2011 shows that says. There was a flicker of recovery in See www.oecd.org/industry/smes

Travelling for faster treatment Not so patient Patients willing to travel to another EU country to receive medical treatment more quickly

Yes No Don’t Know/Not applicable Patients in most OECD countries face long 1 0 1 5 3 2 5 34 2 3 7 3 4 8 1 3 2 6 7 6 6 hospital waiting times, whether for primary 9 11 13 19 32 37 48 48 48 10 16 17 22 27 33 42 47 48 57 62 90 29 39 care, out-patient specialist care or even 88 86 85 81 79 79 emergency care. Tax payers rightly expect 76 70 66 better service, and hospital waiting times 64 64 61 54 are understandably a contentious political 53 50 50 50 47 46 issue. According to Waiting Time Policies 37 33 in the Health Sector: What Works?, which examines and compares different country cases, what really matters is the actual UK Italy Spain EU27 waiting time of patients on the list, and not Ireland Poland France Greece Austria Sweden Finland Estonia Belgium Denmark Portgual Slovenia Germany Hungary Slovak Rep Czech Rep just the number of patients. Netherlands Luxembourg Source: OECD Waiting Time Policies in the Health Sector: What works? 2013 http://dx.doi.org/10.1787/888932753913 What can patients do if waiting times are too long? One option is to go to where A European Barometer survey shows that accommodation for relatives and nurses are they are shorter. This is happening in the 64% of EU-wide respondents would travel included. As the trend for travelling grows, EU where in March 2011 a new directive to get faster treatment (our chart). good management will be crucial, both for (2011/24/EU) obliges countries to sending countries trying to reduce their reimburse patients for treatment received But would this decrease waiting times? One long waiting times and recipients trying to in other EU member states if treatment at Norwegian study says it would, but suggests safeguard theirs. home was subject to “undue delay”. costs might be higher too if travel and Visit www.oecd.org/health

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% change from: level: previous previous current same period period year period last year Australia Gross domestic product Q4-2012 0.6 3.1 Current balance Q4-2012 -15.2 -9.2 Industrial production Q4-2012 1.2 4.9 Unemployment rate Q4-2012 5.3 5.2 Consumer price index Q4-2012 0.2 2.2 Interest rate Q1-2013 3.0 4.4 Austria Gross domestic product Q4-2012 -0.1 0.5 Current balance Q4-2012 1.6 1.3 Industrial production Q4-2012 -0.5 3.4 Unemployment rate Q4-2012 4.6 4.3 Consumer price index Q4-2012 1.0 2.8 Interest rate Q1-2013 0.2 1.0 Belgium Gross domestic product Q4-2012 -0.1 -0.4 Current balance Q4-2012 -1.5 -0.9 Industrial production Q4-2012 -2.5 -2.5 Unemployment rate Q4-2012 8.1 7.2 Consumer price index Q1-2013 0.2 1.3 Interest rate Q1-2013 0.2 1.0 Canada Gross domestic product Q4-2012 0.2 1.1 Current balance Q4-2012 -17.4 -12.0 Industrial production Q4-2012 0.0 -0.7 Unemployment rate Q1-2013 7.1 7.4 Consumer price index Q4-2012 0.0 0.9 Interest rate Q4-2012 1.2 1.2 Chile Gross domestic product Q4-2012 1.5 5.5 Current balance Q4-2012 -2.3 -0.6 Industrial production Q4-2012 3.0 9.1 Unemployment rate Q4-2012 6.5 7.1 Consumer price index Q1-2013 0.2 1.5 Interest rate Q2-2012 5.1 5.3 Czech Gross domestic product Q4-2012 -0.2 -1.7 Current balance Q4-2012 -1.7 -1.0 Republic Industrial production Q4-2012 -2.7 -5.3 Unemployment rate Q4-2012 7.2 6.6 Consumer price index Q4-2012 0.0 2.8 Interest rate Q1-2013 0.5 1.2 Denmark Gross domestic product Q4-2012 -0.7 -0.7 Current balance Q3-2012 3.9 4.3 Industrial production Q4-2012 -1.9 -0.3 Unemployment rate Q4-2012 7.3 7.9 Consumer price index Q4-2012 0.0 2.2 Interest rate Q3-2012 -0.1 1.2 Estonia Gross domestic product Q4-2012 0.9 3.5 Current balance Q4-2012 0.0 0.1 Industrial production Q4-2012 -1.4 1.8 Unemployment rate Q4-2012 9.8 11.8 Consumer price index Q1-2013 1.2 3.5 Interest rate Q1-2013 0.2 1.0 Finland Gross domestic product Q4-2012 -0.5 -1.4 Current balance Q4-2012 -2.7 -3.3 Industrial production Q4-2012 0.5 -1.1 Unemployment rate Q4-2012 7.9 7.6 Consumer price index Q4-2012 0.3 2.4 Interest rate Q1-2013 0.2 1.0 France Gross domestic product Q4-2012 -0.3 -0.3 Current balance Q4-2012 -13.5 -8.7 Industrial production Q4-2012 -1.9 -3.2 Unemployment rate Q4-2012 10.5 9.8 Consumer price index Q4-2012 0.2 1.5 Interest rate Q1-2013 0.2 1.0 Germany Gross domestic product Q4-2012 -0.6 -0.4 Current balance Q4-2012 59.9 53.2 Industrial production Q4-2012 -2.6 -2.4 Unemployment rate Q4-2012 5.4 5.6 Consumer price index Q4-2012 0.4 -2.0 Interest rate Q1-2013 0.2 1.0 Greece Gross domestic product Q1-2011 0.2 -5.5 Current balance Q4-2012 -0.9 -5.9 Industrial production Q4-2012 -3.9 -0.2 Unemployment rate Q3-2012 26.4 20.6 Consumer price index Q1-2013 -2.0 0.0 Interest rate Q1-2013 0.2 1.0 Hungary Gross domestic product Q4-2012 -0.9 -2.8 Current balance Q4-2012 0.6 0.2 Industrial production Q4-2012 -3.6 -4.6 Unemployment rate Q4-2012 11.0 10.9 Consumer price index Q4-2012 0.4 5.4 Interest rate Q3-2012 7.9 6.7 Iceland Gross domestic product Q4-2012 0.5 1.5 Current balance Q4-2012 -0.1 -0.4 Industrial production Q3-2012 -3.2 -2.0 Unemployment rate Q4-2012 5.3 6.2 Consumer price index Q1-2013 1.6 4.3 Interest rate Q1-2013 6.2 4.8 Ireland Gross domestic product Q4-2012 0.0 0.0 Current balance Q4-2012 2.4 1.1 Industrial production Q4-2012 -4.8 -7.7 Unemployment rate Q4-2012 14.3 15.0 Consumer price index Q4-2012 -0.2 1.1 Interest rate Q1-2013 0.2 1.0 Israel Gross domestic product Q4-2012 0.6 2.6 Current balance Q4-2012 0.1 -0.3 Industrial production Q4-2012 -3.0 4.9 Unemployment rate Q4-2012 6.8 5.4 Consumer price index Q4-2012 -0.1 1.6 Interest rate Q1-2013 1.7 2.5 Italy Gross domestic product Q4-2012 -0.9 -2.8 Current balance Q4-2012 0.4 -11.3 Industrial production Q4-2012 -2.2 -6.6 Unemployment rate Q4-2012 11.2 9.2 Consumer price index Q1-2013 0.4 1.9 Interest rate Q1-2013 0.2 1.0 Japan Gross domestic product Q4-2012 0.0 0.4 Current balance Q4-2012 7.8 20.9 Industrial production Q4-2012 -1.6 -6.5 Unemployment rate Q4-2012 4.2 4.5 Consumer price index Q4-2012 -0.1 -0.2 Interest rate Q4-2012 0.3 0.3 Korea Gross domestic product Q4-2012 0.3 1.4 Current balance Q4-2012 12.6 8.8 Industrial production Q4-2012 2.9 1.9 Unemployment rate Q4-2012 3.0 3.1 Consumer price index Q1-2013 0.7 1.4 Interest rate Q1-2013 2.8 3.5 Luxembourg Gross domestic product Q4-2012 1.6 1.6 Current balance Q3-2012 0.6 1.0 Industrial production Q4-2012 0.7 -1.9 Unemployment rate Q4-2012 5.3 4.8 Consumer price index Q1-2013 0.2 2.1 Interest rate Q1-2013 0.2 1.0 Mexico Gross domestic product Q4-2012 0.8 3.3 Current balance Q4-2012 -4.8 -0.6 Industrial production Q4-2012 -0.7 .. Unemployment rate Q4-2012 5.0 5.0 Consumer price index Q1-2013 1.4 3.7 Interest rate Q1-2013 4.7 4.8

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% change from: level: previous previous current same period period year period last year Netherlands Gross domestic product Q4-2012 -0.4 -1.2 Current balance Q4-2012 20.8 22.6 Industrial production Q4-2012 -0.2 1.1 Unemployment rate Q4-2012 5.6 4.9 Consumer price index Q1-2013 0.7 3.0 Interest rate Q1-2013 0.2 1.0 New Zealand Gross domestic product Q4-2012 1.4 3.3 Current balance Q3-2012 -2.0 -2.2 Industrial production Q3-2012 0.2 2.7 Unemployment rate Q4-2012 6.9 6.4 Consumer price index Q4-2012 -0.2 0.9 Interest rate Q1-2013 2.7 2.7 Norway Gross domestic product Q4-2012 0.4 1.9 Current balance Q2-2012 15.9 18.6 Industrial production Q4-2012 -1.3 -0.3 Unemployment rate Q4-2012 3.4 3.3 Consumer price index Q4-2012 -1.2 1.2 Interest rate Q1-2013 1.9 2.6 Poland Gross domestic product Q4-2012 0.2 1.1 Current balance Q3-2012 -3.2 -6.3 Industrial production Q4-2012 -0.5 -1.8 Unemployment rate Q4-2012 10.4 9.9 Consumer price index Q4-2012 0.4 2.8 Interest rate Q1-2013 3.7 5.0 Portugal Gross domestic product Q4-2012 -1.8 -3.8 Current balance Q4-2012 0.0 -1.9 Industrial production Q4-2012 -3.8 -4.0 Unemployment rate Q4-2012 17.0 14.1 Consumer price index Q4-2012 0.5 2.0 Interest rate Q1-2013 0.2 1.0 Slovak Gross domestic product Q4-2012 0.2 1.2 Current balance Q3-2012 0.6 -0.7 Republic Industrial production Q4-2012 -2.0 6.4 Unemployment rate Q4-2012 14.4 13.9 Consumer price index Q4-2012 0.6 3.5 Interest rate Q1-2013 0.2 1.0 Slovenia Gross domestic product Q4-2012 -1.0 -2.8 Current balance Q4-2012 2.1 1.7 Industrial production Q4-2012 -1.8 -1.6 Unemployment rate Q4-2012 9.4 8.6 Consumer price index Q4-2012 0.9 2.6 Interest rate Q1-2013 0.2 1.0 Spain Gross domestic product Q4-2012 -0.8 -1.9 Current balance Q4-2012 11.9 -8.4 Industrial production Q4-2012 -2.0 -5.7 Unemployment rate Q4-2012 26.1 22.9 Consumer price index Q4-2012 1.6 3.1 Interest rate Q1-2013 0.2 1.0 Sweden Gross domestic product Q4-2012 0.0 1.5 Current balance Q4-2012 10.3 8.8 Industrial production Q4-2012 -1.7 -1.0 Unemployment rate Q4-2012 8.1 7.8 Consumer price index Q4-2012 0.2 0.1 Interest rate Q1-2013 1.0 1.5 Switzerland Gross domestic product Q4-2012 0.2 1.2 Current balance Q3-2012 22.5 14.3 Industrial production Q4-2012 1.0 -1.4 Unemployment rate Q3-2012 4.4 4.0 Consumer price index Q1-2013 -0.2 -0.4 Interest rate Q4-2012 0.0 0.1 Turkey Gross domestic product Q4-2012 0.0 1.4 Current balance Q4-2012 -10.3 -17.0 Industrial production Q4-2012 2.2 1.1 Unemployment rate Q3-2012 8.3 8.2 Consumer price index Q1-2013 2.5 7.2 Interest rate .. .. United Gross domestic product Q4-2012 -0.3 0.2 Current balance Q3-2012 -20.3 -14.0 Kingdom Industrial production Q4-2012 -2.1 -2.6 Unemployment rate Q3-2012 7.7 8.3 Consumer price index Q4-2012 1.2 2..7 Interest rate Q1-2013 0.5 1.1 United Gross domestic product Q4-2012 0.1 1.7 Current balance Q4-2012 -110.4 -118.7 States Industrial production Q4-2012 0.6 2.7 Unemployment rate Q1-2013 7.7 8.3 Consumer price index Q4-2012 0.0 1.9 Interest rate Q1-2013 0.2 0.3 Euro area Gross domestic product Q4-2012 -0.6 -0.9 Current balance Q3-2012 37.8 1.6 Industrial production Q4-2012 -2.1 -2.9 Unemployment rate Q4-2012 11.8 10.6 Consumer price index Q4-2012 .. 2.3 Interest rate Q1-2013 0.2 1.0

Non-members 2Brazil Gross domestic product Q4-2012 0.6 1.4 Current balance Q3-2012 -10.5 -12.2 Industrial production Q4-2012 0.1 -0.2 Unemployment rate .. .. Consumer price index Q4-2012 1.8 5.6 Interest rate .. .. 2China Gross domestic product .. .. Current balance Q3-2011 53.4 101.7 Industrial production .. .. Unemployment rate .. .. Consumer price index Q4-2012 0.6 2.1 Interest rate Q4-2012 3.9 5.7 2India Gross domestic product Q4-2012 1.3 3.9 Current balance Q2-2011 -14.2 -12.5 Industrial production Q4-2012 1.4 2.1 Unemployment rate .. .. Consumer price index Q4-2012 2.0 10.1 Interest rate .. .. 2Indonesia Gross domestic product Q4-2012 1.5 6.1 Current balance Q4-2011 -2.3 0.8 Industrial production .. .. Unemployment rate .. .. Consumer price index Q1-2013 2.1 5.3 Interest rate Q4-2012 5.7 7.0 1Russian Gross domestic product Q4-2012 1.8 2.4 Current balance Q2-2012 22.7 23.4 Federation Industrial production Q4-2012 -0.3 1.5 Unemployment rate .. .. Consumer price index Q4-2012 1.3 6.5 Interest rate Q4-2012 7.5 7.1 2South Gross domestic product Q4-2012 0.5 2.3 Current balance .. .. Africa Industrial production .. .. Unemployment rate .. .. Consumer price index Q4-2012 1.7 5.7 Interest rate Q1-2013 5.1 5.5 Gross Domestic Product: Volume series; seasonally adjusted. Leading Indicators: A composite indicator based on other indicators of economic activity, which signals ..=not available cyclical movements in industrial production from six to nine months in advance. Consumer Price Index: Measures changes in average retail prices of a fixed basket 1Accession candidate to OECD of goods and services. Current Balance: Billion US$; seasonally adjusted. Unemployment Rate: % of civilian labour force, standardised unemployment rate; national 2 Enhanced engagement programme definitions for Iceland, Mexico and Turkey; seasonally adjusted apart from Turkey. Interest Rate: Three months. Source: Main Economic Indicators, April 2013 OECD Observer No 294 Q1 2013 47 DATABANK

Poverty gaps Poverty gaps Will this be Asia’s century? When it comes to growth and social Poverty headcount ratio at US$2 a day (PPP), % of population, progress, there have been heady leaps forward, with every prospect 1990/2010 or latest years of continued dynamism over the next five years. But according 1990* 2010* to the Southeast Asian Economic Outlook 2013, if there is a blot on the map, it is in tackling poverty and the wide development gaps 90 that bedevil the continent. True, there have been huge decreases 80 in the rates of poverty since the 1990s, as the chart shows, but the 70 ratios remain worryingly high, particularly if judged against the 60 widely accepted yardstick of US$2/day. The poverty headcount ratio in China stood at nearly 85% of the population in 1990, and fell 50 sharply to just below 30% in 2008. This may be high compared 40 with, say, Malaysia (2.3% in 2009) or Thailand (4.6%), but is far 30

lower than the rates in Cambodia, India and Indonesia. More 20 investment growth will doubtless reduce poverty further, though the report also underlines the importance of specific anti-poverty 10 initiatives too, such as upgrading human resources in the labour 0 market, raising education levels, improving poor incomes, cash Cambodia China India Indonesia Malaysia Philippines Viet Nam transfer programmes and more. In the case of the Philippines, where the fall in poverty has not been that marked in 20 years, *or latest available year the authors urge more job creation, and see tapping into global Source: Southeast Asian Economic Outlook 2013, OECD Development Centre, ASEAN tourism as an area of real potential.

OECD Observer Crossword No 1, 2013 Across 33. Perimeter (4) 1. Able to last for the long term (11) 34. Levied (5) 1 2 3 4 5 6 7 6. Chart option (3) 8. It wasn’t so Great in 2008? (9) Down 10. Layer measured by a 1. Paramaribo is its capital (8) 8 9 10 spectrophotometer (5) 2. Withdrawal from a political entity (9) 11. Starting to emerge (7) 3. Spartan (7) 12. Ethanol, for one (7) 4. UN Secretary-General first name (3) 11 12 13. Staple food in many areas of the 5. Good for the environment (10) world (5) 6. Output (10) 15. Fraction of the world’s population that live 7. In an impartial fashion (6) 13 14 15 in areas where water is scarce (3,5) 9. Foreword, abbr. (5) 16. Me, myself, I (3) 16 17 12. Sugar source (4) 18. French for in/Short for English (2) 14. The elderly (4) 18 19 20 21 22 19. Desert that is taking over 1390 square 17. Negotiated (8) miles of grassland every year (4) 23 24 19. OECD Secretary-General, Angel ___ (6) 21. Workers, as a group (6) 20. Gave the essential information (7) 25 26 23. Pre-mp3 data storage (2) 21. Hens do this (3) 24. Important ancient Greek physician (5) 22. Saved by the ____ (4) 27 28 25. Third level education (other word for 23. The US “Fiscal ____” (5) 29 30 31 services sector) (8) 24. Country that dominated financial crisis 26. Great Britain and Northern Ireland (2) headlines in 2012 (6) 27. Send out a laser (4) 25. Poachers’ target these in Africa (5) 32 33 34 29. Non-renewable energy sources (6,5) 26. Take advantage of (3) 31. Pricing word (3) 28. Pinnacle (4) © Myles Mellor/OECD Observer 32. School of thought (3) 30. Relaxed, in a way (3)

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