Slow growth, high uncertainty and rising levels of inequality should prompt policy makers to take urgent action to achieve stronger, sustainable and more inclusive growth, according to the OECD’s annual Going for Growth report.
Going for Growth 2019 points out that the weakening of growth comes at a time when globalisation, digitalisation, population ageing and environmental degradation are key forces shaping economic developments. To better manage these megatrends, governments must carefully select, prepare, prioritise and implement country-specific structural reforms that boost long-term growth, improve competitiveness and productivity, create jobs and ensure a cleaner environment and equal opportunities for all.
This year’s edition presents the top structural reform priorities in 46 OECD and non-OECD economies, alongside assessment of progress countries have made on key reforms in the past years. It points to a disappointing pace of reforms in 2017-2018, finding little sign of an imminent pick-up from the already modest pace of reform observed in the previous two years.
“As growth is slowing down, and new technologies are rapidly transforming our economies, it is urgent to pursue reform efforts to boost inclusive and sustainable growth,” said OECD Secretary-General Angel Gurría, launching the report in the run-up to the 17-18 July meeting of G7 finance ministers in Chantilly, France. “Going for Growth points policymakers where to focus their efforts to boost growth, enhance the equality of opportunities and inclusiveness and improve environmental sustainability. Our key recommendation extends beyond the G7, to all OECD and key non-member economies: the time for reform is now, for better lives today and for future generations!”
French Minister of Economy and Finance Bruno Le Maire, host of this year’s G7 finance ministers meeting, added: “Ensuring strong, inclusive and sustainable growth is a challenge for all G7 countries. In France, we take this very seriously, as evidenced by the labour market, education and tax reforms adopted by our government in recent years to improve competitiveness and transform the economy in the face of ecological and digital transitions. On behalf of the Government, I am pleased that OECD’s Going for Growth recognises our efforts. And we will continue to pursue reforms and invest in innovation, which is the key to tomorrow’s growth.”
Going for Growth 2019 points out that reform priorities to boost inclusive growth differ across countries. A common feature is that many of them can make the opportunities for succeeding in life more equal across workers and firms.
Education is the most common reform priority across countries and it is crucial to make sure current and future generations find quality employment and lead more productive careers. Addressing the pertinent issue of labour market segmentation and improving the conditions for labour market inclusion of women, migrants, minorities and older workers are also crucial so everyone can benefit from growth.
Shifting taxation from income to property would boost growth, particularly in advanced economies. Better public sector efficiency, rule of law and adequate, accessible infrastructure provision are equally important to save resources, access markets and create conditions for businesses to invest in innovation, in particular – but not only – in emerging-market economies.
Finally, reforms to boost competition in markets for goods and services are often difficult. But opening up markets to entry, competition and foreign trade and investment is essential for innovation, the diffusion of digital technologies and ultimately productivity growth and social inclusion. Such reforms remain among the most frequent Going for Growth priorities.
Among the highlights in this year’s report is an increased focus on reforms to make growth environmentally sustainable. Recognising the major challenges that still exist for addressing pollution, climate change and environmental sustainability, the report suggests countries make better use of environmental taxation, phase out agricultural subsidies and environmentally harmful tax breaks, and take additional steps to reduce emissions from transport, including more investment in better and low-emission public transport.
The main conclusions, as well as individual country notes on G20 countries, are accessible at: http://www.oecd.org/economy/going-for-growth/. You are invited to include this link in stories on the launch.
Compliments of the OECD