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European banking’s New Year resolution Why EU-US trade talks matter Passive housing saves money Nelson Mandela: Personal reflections The Kennedy connection No 297 Q4 2013 www.oecdobserver.org PISA lessons Why Asia is smiling ©Jo Yong-hak/Reuters ©Jo CONTENTS No 297 Q4 2013 READERS’ VIEWS SCIENCE AND TECHNOLOGY 2 Nigerian giant; Environmental concerns; 28 Less is more: Emerging economies as End poverty? innovators EDITORIAL ENERGY AND THE ENVIRONMENT 3 For a resilient, inclusive and greener future 31 Gas-propelled competitiveness Angel Gurría, Secretary-General of the OECD Fatih Birol, Chief Economist, International Energy Agency News BRIEF 33 In deep: Brazilian oil 34 The active advantages of passive housing EU-US trade talks Page 12 4 Brake on health spending–; –as tax Brian McGarry, Economics Lecturer, revenues rise; Soundbites; Economy; Country La Salle-Ramon Llull University, Barcelona, Spain round-up; Trust deficit; Well-being worry; 36 Price the carbon! Trade breakthrough; Plus ça change DEVELOPMENT ECONOMY: THE YEAR AHEAD 38 Latin America’s challenge 7 Ireland leaves the EU/IMF programme Christian Daude Eamon Gilmore, Táinaiste (Deputy Prime 40 President Nelson Mandela: Some personal Minister), Ireland reflections 8 Is Greece at a turning point? Ian Goldin, Professor of Globalisation and Ania Thiemann Development, University of Oxford 9 OECD Economic Outlook French education minister and PISA Page 19 10 The automotive sector: Steering beyond OECD.ORG the crisis 42 John F Kennedy: Tribute Caroline Klein and Isabell Koske 43 Recent speeches by Angel Gurría 12 EU-US trade and investment talks: 44 Calendar; Frankie.org Why they matter Ken Ash BOOKS 14 Banking reform: A New Year’s resolution 45 Caring for cancer Gert Wehringer 45 Taxing carbon in British Columbia 16 Tax: Addressing the hybrids 46-50 New publications on OECD iLibrary 17 Tourism’s changing profile 51 Growing green agriculture Tax hybrids Page 16 EDUCA TION: PISA ORDER FORM… ORDER FORM 19 France and PISA: Spurring reform? 52 Print is not dead yet Interview with Vincent Peillon, Minister for Chandi Perrera, CEO, Typéfi Education, France 20 Class progress DATABANK 21 Some country snapshots; Overall trends 53 More gloom on the horizon 22 PISA’s hard lessons, Andreas Schleicher 53 Does school pay? 23 Creative minds 54 Main economic indicators Richard Venturi, Economics Teacher, 56 A modern killer Conservatoire National des Arts et Métiers, Paris 24 Which car? A test from PISA 2012 56 OECD Observer Crossword Kennedy and the OECD Page 42 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 December 2013 Reprinted and translated articles should carry the credit line PLANNING AND DEVELOPMENT EDITOR: Diana Klein “Reprinted from the OECD Observer”, plus date of issue. Signed WRITER: Lyndon Thompson articles reprinted must bear the author’s name. Two voucher ISSN 0029-7054 EDITORIAL ASSISTANTS: Leslie Diamond, Impreet Natt copies should be sent to the Editor. All correspondence should Tel.: +33 (0) 1 45 24 80 70 LAYOUT: Design Factory, Ireland be addressed to the Editor. The Organisation cannot be respon- Fax: +33 (0) 1 45 24 82 10 ILLUSTRATIONS: André Faber, Charlotte Moreau, sible for returning unsolicited manuscripts. [email protected] David Rooney, Stik PHOTO RESEARCH: Rory J. 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 OECD Publications 2 rue André Pascal Israeli settlements in the West Bank under the 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 Young people have to work with the frustrating fact that the environment was destroyed and resources were ravaged so the people whom we pay retirement for We welcome your feedback. could live in luxury and ignorance. Send your letters to Ben, commenting on “The conflict between generations: [email protected] Fact or fiction?” in No 290-291 2012 or post your comments at Which begs the question why is energy so www.oecdobserver.org or cheap? Why is the green movement not www.oecdinsights.org screaming to increase the price of energy? Why are people still buying SUVs? Why are SUVs allowed to be made? Why are aircraft still flying? Gordon, Canada, commenting on “21st century energy: Some sobering thoughts” No. 258/259, December 2006 End poverty? Our governments should focus on human development, more than in making industry grow, all people should be concerted in changing this way of Nigerian giant and researchers who are investigating thinking, because if we just think in Your view of Africa offers encouragement strategies that will mitigate the effects of terms of growing our industry we won’t (Africa’s century? No 296, Q3 2013). But this looming shift in the weather patterns care about poor people. If we want to it is hard to see how countries there we are complacent to. eradicate extreme poverty we should can rise up so-called global value Pauline Brez, commenting on “Stormy waters”, No 296 make our middle class grow, and control chains without some major economies Q3 2013 or monitor a little bit our economy sorting themselves out first. If there is because when we are talking about one country which should do this, it is The Middle East and North Africa region economic liberalism the differences Nigeria. It is by far the largest country by has the greatest absolute and relative in our society are going to be very population; with 170 million and growing, water supply problem, in fact, classified significant. Help for poor people should it is three times bigger than South Africa, as “high” stress compared to the rest of be available when our society becomes twice the size of Egypt and the seventh the world which is classified as moderate more solidarity-oriented than liberal. But biggest in the world. It has oil and other (Asia) and low (all other regions). It to spur people to show more solidarity is natural resources, a rich past and a legacy is estimated that the Middle East’s very difficult, I think that has to be a job of doing business with the west. But it population of 314 million will rise by of education. is torn by corruption and mistrust, and 34 million within 30 years, with an annual Daniel, commenting on “Can we really end poverty? The western governments and businesses water requirement of 470 billion cubic debate”, on oecdinsights.org December 2013 are not innocent in this. OECD countries metres–132 billion more than the total should make more effort to help Nigeria available supplies, based on current level Comments and letters may be edited sort out its issues now that the economy of consumption from both renewable for publishing. Send your letters to is looking stronger, and then issues like and non-renewable sources and on [email protected] value chains will take care of themselves. the assumption that there will be an or post your comments at these portals: Africa needs Nigeria to do well. improvement in conservation of about www.oecdobserver.org, www.oecdinsights.org, Melvin Jack, Owerri, Nigeria 2% annually. Arab Gulf states water needs or at the other OECD portals on this page. jumped from 6 billion cubic meters in 1980 Environmental concerns to 22.5 billion cubic meter in 1990 and As I gaze out my window at a very estimated to reach 35.5 billion by the end spring-like day in late December, I am of 2013. well aware of the lack of accustomed John Williams, commenting on “Water balance” in No 296 snow pack. I am grateful to the scientists Q3 2013 2 EDITORIAL For a resilient, inclusive and greener future greener future for all. In 2013 the OECD was again at the heart of multilateral efforts, by supporting the reform agendas of member and partner countries, as well as the G20 and G8 dialogue We must let mechanisms. For example, OECD work to promote international tax transparency through automatic exchange of information as co-operation guide the new single and global standard, and to address tax avoidance our thinking and by multinationals, based on the G20/OECD Action Plan on Base Erosion and Profit Shifting (BEPS), will help build a fairer and more our actions efficient international tax system. OECD work has continued to promote inclusive growth, boost Angel Gurría skills, and support our members’ efforts to create more and better Secretary-General of the OECD quality jobs, particularly for the young. The OECD also raised policy awareness about the role that investment in knowledge- based capital (KBC) and trade in value added (TiVA) should play in growth and development strategies, highlighted the importance Could the recovery from the worst crisis in half a century finally of participation in global value chains as a driver of growth, and take hold in 2014? There are several encouraging signs, not least in drew attention to global challenges, such as climate change and the US, where growth is expected to accelerate towards 3% in the cost of inaction in this area.