SG Annual Report to Ministers 2014

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SECRETARY-GENERALS

REPORT TO MINISTERS

2014


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Secretary-GeneralsReport to Ministers

2014


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This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed

and arguments employed herein do not necessarily reflect the official views of the Organisation or of thegovernments of its member countries.

This document and any map included herein are without prejudice to the status of or sovereignty overany territory, to the delimitation of international frontiers and boundaries and to the name of anyterritory, city or area.

Photo credits:

All photos are OECD except:

page 7 Cabinet Public Relations Office, Government of Japan

page 8 G20/Australia

page 11 REUTERS/Lintao Zhang/Pool

page 13 US Department of Education

page 15 UN Photo/Mark Garten

page 19 G20 Summit St Petersburg 2013

page 20 Pool Moncloa/Acceso libre

page 23 Trento Festival of Economics Press Office/Giovanni Cavulli

page 29 OECD/Jao Neto MEC

page 47 Ministry of Agriculture, Forestry and Fisheries of Japan

Corrigenda to OECD publications may be found on line at: www.oecd.org/publishing/corrigenda .

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Table of Contents

OVERVIEW

The OECD at a glance 4

Secretary-Generals Strategic Orientations 6

Secretary-Generals Activity in 2013 31

Secretary-Generals Cabinet 36

2013 Ministerial Council Statement 38

Ministerial Council Meeting 2013Chairs summary 41

Organisation chart 50

KEY ACTIVITIES

OECD horizontal projects and themes 54

New Approaches to EconomicChallenges (NAEC) 55

Inclusive Growth 56

The Strategy on Development 57

The Knowledge-based Capital Project 58The Green Growth Strategy 59

The Innovation Strategy 60

The Skills Strategy 61

The Gender Initiative 62

The OECD Better Life Initiative 63

DIRECTORATES

Office of the Secretary-General 66

Sherpa Office 69

Development Co-operation Directorate 72

Economics Department 74

Directorate for Education and Skills 76

Directorate for Employment,Labour and Social Affairs 78

Centre for Entrepreneurship, SMEs

and Local Development 80

Environment Directorate 82

Directorate for Financialand Enterprise Affairs 84

Directorate for Public Governanceand Territorial Development 86

Directorate for Science, Technologyand Industry 88

Statistics Directorate 90

Centre for Tax Policy

and Administration 92Trade and Agriculture Directorate 94

Public Affairs and Communications 96

Global Relations Secretariat 98

Internal Audit and Evaluation 100

Directorate for Legal Affairs 101

Council and Executive CommitteeSecretariat 102

Executive Directorate 103

Budget and Finance 104

OECD SPECIAL BODIES

AND OTHER SPECIAL ENTITIES

Development Centre 108

International Energy Agency 109

Nuclear Energy Agency 110

Africa Partnership Forum 112

Financial Action Task Force 113

International Transport Forum 114

Multilateral Organisation PerformanceAssessment Network 115

Sahel and West Africa Club 116

Business and Industry AdvisoryCommittee 117

Trade Union Advisory Committee 117


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Secretary-Generals Report to Ministers 2014 OECD 20144

\\\OECD/ Secretary-Generals Report to Ministers 2014

The OECD at a glancewww.oecd.org/aboutoecd

The OECD provides a forumin which governments worktogether to seek solutionsto common problems, shareexperiences and identify bestpractices to promote betterpolicies for better lives.

For more than 50 years, the

OECD has helped forge globalstandards, internationalconventions, agreements andrecommendations in areas suchas governance and the fightagainst bribery and corruption,corporate responsibility,development, internationalinvestment, taxes, and theenvironment, to mention afew. Co-operation, dialogue,consensus and peer review drive

the OECD as it seeks to fulfilits vision of a stronger, cleaner,fairer world economy and society.

The OECD supports policymakers in identifying challengesand address them throughappropriate policies. It is alsoa source of advice on almost

all areas of policy making andimplementation, and one ofthe worlds largest and mosttrusted sources of comparablestatistical data on economics,trade, employment, education,health, social issues, migration,the environment and manyother fields. It carries out itsmission thanks to more than 200committees and working groupsof national experts and decision

makers, and a high-qualitypermanent Secretariat.

The OECD includes 34 membercountries and is in accessiontalks with Colombia, Latviaand the Russian Federation1. In2015 the Council will decide onopening accession discussions

with Costa Rica and Lithuania.Brazil, the Peoples Republic ofChina, India, Indonesia and SouthAfrica are OECD Key Partners.The OECD also collaborates withmore than 100 other economies,many of which participate inits committees and adhere toits instruments. Additionally,the OECD hosts the secretariatof several internationalprogrammes.

1. The activities related to the accession process of the Russian Federation to the OECD are postponed for the time being.


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Secretary-Generals Report to Ministers 2014 OECD 2014 5

\\\OVERVIEW/ The OECD at a glance

OECD Member countries: Ambassadors* and year of accession

www.oecd.org/membercountries

Candidate for accession

www.oecd.org/accession

ColombiaLatviaRussian Federation

Key Partners

www.oecd.org/globalrelations/keypartners

BrazilChina, Peoples Republic ofIndiaIndonesiaSouth Africa

Austra lia His Excellency Mr. Chris Barrett 1971

Austria Her Excellency Ms. Marlies Stubits-Weidinger 1961

Belgium His Excellency Mr. Yves Haesendonck 1961

Canada Her Excellency Ms. Judith A. LaRocque 1961

Chile Mr. Luis Petit-Laurent (Charge daffaires, a.i.) 2010

Czech Republic His Excellency Mr. Pavel Rozsypal 1995

Denmark His Excellency Mr.Klavs A. Holm 1961

Estonia His Excellency Mr. Marten Kokk 2010

Finland His Excellency Mr. Okka-Pekka Salmimies 1969

France Her Excellency Ms. Pascale Andrani 1961

Germany His Excellency Mr. Hans-Juergen Heimsoeth 1961

Greece His Excellency Mr. George Prevelakis 1961

Hungary His Excellency Mr. Istvn Mikola 1996

Iceland Her Excellency Ms. Berglind sgeirsdttir 1961

Ireland His Excellency Mr. Michael Forbes 1961

Israel His Excellency Mr. Nimrod Barkan 2010

Italy His Excellency Mr. Carlo Maria Oliva 1962

Japan His Excellency Mr. Kazuo Kodama 1964

Korea His Excellency Mr. Sihyung Lee 1996

Luxembourg His Excellency Mr. Paul Dhr 1961

Mexico His Excellency Mr. Dionisio Prez-Jcome 1994

Netherlands His Excellency Mr. No van Hulst 1961New Zealand Her Excellency Ms. Rosemary Banks 1973

Norway His Excellency Mr. Tore Eriksen 1961

Poland His Excellency Mr. Pawel Wojciechowski 1996

Portugal His Excellency Mr. Paulo Vizeu Pinheiro 1961

Slovak Republic Her Excellency Ms. Ingrid Brockov 2000

Slovenia His Excellency Mr. Iztok Jarc 2010

Spain His Excellency Mr. Ricardo Diez-Hochleitner 1961

Sweden Her Excellency Ms. Annika Markovic 1961

Switzerland His Excellency Mr. Stefan Flckiger 1961

Turkey His Excellency Mr. Mithat Rende 1961

United Kingdom His Excellency Mr. Nicholas Bridge 1961

United States Ms. Jeri Guthrie-Corn (Charge daffaires, a.i.) 1961

European Union Her Excellency Ms. Maria Francesca Spatolisano 1961* As of 2 April 2014


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and help rebuild public trust. Inthis regard, the OECDs approachto go structural, go social, gogreen, go institutional, and gonational remains as pertinent asever.

Growth and Jobs

NAEC is already deliveringa multi-dimensional policyanalysis framework that isexpected to permeate acrossthe Organisation. We need tobuild on this effort and createand preserve a NAEC state ofmind, to continuously upgradeour capabilities, benefit from theinsight of Members and experts,and promote further horizontality

in how we approach policyanalysis and how we target policyrecommendations.

Going forward, the focus ofour work will be on promotingmore inclusive growth, fosteringeconomic activity that aims toimprove both peoples materialliving conditions and their qualityof life, while at the same timeconsidering the distribution

of well-being outcomes.

speed, leaving the recovery weak,uneven and fragile. Despite somerecent signs of improvementin trade and investment, creditgrowth and activity in emergingmarkets have yet to regain theirpre-crisis dynamism.

This challenge is compounded bypolicy makers limited room formanoeuvre. Expansionary fiscalpolicy has been accompaniedby a surge in public debt inOECD economies, while highlysupportive monetary policy isshowing diminishing marginalreturns and should be graduallynormalised. For leaders inadvanced and emergingeconomies alike, productivity-enhancing structural reforms

remain the best avenue forpursuing robust long-term growth.

But stronger growth alone isnot enough! We need growththat is balanced, inclusive andgreen, built on resilient nationalinstitutions and effectiveinternational co-operation.Structural reforms must aim toincrease productivity, but also toreduce inequality, improve well-

being, protect the environment

Executive Summary

My strategic orientations set outhow the OECD will continue tosupport member and partnercountries in addressing thefour main legacies of the globalfinancial crisis low growth,high unemployment, decliningtrust and rising inequality byproviding timely, targeted,evidence-based advice on thedesign and implementation ofbetter policies for better lives.

To effectively fulfil this role, theOECD needs to continuouslyupgrade its analytical frameworkand to better incorporate intoits recommendations the inter-linkages, trade-offs and synergiesthat are the defining feature ofthe current policy landscape.

This was the main motivationbehind the launching of theNew Approaches to EconomicChallenges (NAEC) initiative,the initial findings of whichwill be presented at this yearsMinisterial Council Meeting.

Global Outlook

The four cylinders of the global

economy are still running at half

Secretary-GeneralsStrategic Orientations


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\\\OVERVIEW/ Strategic Orientations

Again, building on the resultsof NAEC, we are developing

a comprehensive inclusivegrowth initiative that will resultin an enhanced analyticalframework and actionable policyrecommendations.

We should explore policies thatgenerate more and better quality

jobs and address the needs ofthe most vulnerable membersof society. Efforts should centreon training, skills, labour and

product market reforms, as wellas on complementary policiesthat favour inclusiveness andpromote a competitive businessenvironment. These shouldtake into account the impact oflong-term demographic changes,notably in health, pensions andfiscal policies.

We will also continue topromote labour market

activation strategies to reduceunemployment, especially amongyoung people, through our ActionPlan for Youth. Our work onresilience will also focus on therisk of poverty and inequality inold age and the challenges facedby ageing societies.

The search for new sources ofgrowth is essential and we willbuild on the second phase of the

Knowledge-Based Capital (KBC)project to intensify our workaround innovation, science andtechnology; promote a betterunderstanding of the implicationsand challenges of the digitaleconomy; deepen our work onentrepreneurship, employmentand productivity dynamics; and

Angel Gurra, OECD Secretary-General meeting with Prime Minister Shinzo Abe of Japan, Tokyo, April 2014

look at the potential drivers of anew industrial revolution. We

will also work with member andpartner governments to exploreoptimum policy mixes and newinvestment opportunities aseconomies transition to greenergrowth models.

There is a need to betterunderstand the risks of climatechange and the choices tomitigate and manage itsconsequences, to offer Members

solid advice about the mixof policy instruments thatcan support a clear, long-term pathway leading to thenet elimination of fossil fuelemissions to the atmosphereduring the second half of thecentury in line with the agreedgoal of limiting the increase in


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trust; improve the effectivenessof policy formulation and

implementation in areas wheretrust is particularly relevant(e.g. budgeting); and helpgovernments strengthen theinclusivity, transparency andcredibility of their policy-makingprocesses.

We plan to focus our tax workon the distributional impactof taxation: to complete theBase Erosion and Profit Shifting

(BEPS) Action Plan; to deliverthe Automatic Exchange ofInformation (AEOI) framework;to develop effective beneficialownership rules to help Memberscombat tax evasion, tax crimesand other illegal activities; andto explore the links betweentax, trade and investmentagreements. Through our Taxand Development Programme,we will continue to work withdeveloping countries to enhancedomestic resource mobilisation,benefitting from the OECDswork in areas including transfer

the average global temperatureto 2C. This will include exploring

complementary measuresto support the transitiontowards low-carbon economies,incentivising the necessarytechnological change, andaddressing the distributionalconsequences of this economictransformation. These effortswill support discussions leadingto the UN Climate Summit (NewYork); and the COP 20 (Lima)and COP 21 (Paris) climate

conferences.

Trust and Tax Policy

We will support governmentsefforts to build more effective,transparent and open institutionsto help restore public trust.Starting with delivery on ourcommitments with respect tothe Anti-bribery Convention,we will launch a comprehensiveeffort to promote integrity andanti-corruption measures;collect better data on public

pricing, combatting tax crimesand improving the global

transparency of tax information.

Trade, Investment,Developmentand InternationalCo-operation

We will continue to supportthe strengthening of themultilateral trade system andthe international investment

regime through our work onglobal value chains (GVCs), andby developing and expanding ourServices Trade RestrictivenessIndex (STRI) and Trade in ValueAdded (TiVA) databases, andexploring the relationshipsbetween value added, investment,development, innovation and jobs.

We will promote sustainablelong-term investment,developing together with the G20recommendations on incentives,for long-term investmentfinancing from both governments

Joe Hockey, Australian

Treasurer, and Angel

Gurra, OECD Secretary-

General, February 2014


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and private sources; explore howto ensure competitive neutralitywhenever state-owned enterprisesare involved; and promoteResponsible Business Conduct(RBC) and better corporate

governance. We will also developnew statistics for capturingforeign direct investment (FDI),promote policy frameworks forgreen investment, and expand ourwork on financial education andfinancial consumer protection.

We will continue to supportand shape the internationaldevelopment agenda, includingefforts to support the post-2015

global development framework.

We will mainstream developmentacross all our work; promotegreater policy coherence fordevelopment and inclusiveknowledge sharing; enhanceour contribution to the global

development architecture,including through Multi-dimensional Country Reviewsand thematic Policy DialogueNetworks (e.g. Natural Resources);and work to promote betterquality aid and developmentfinance.

We will further strengthen ourrole in global policy making asan international standard setter

and by leveraging our work

Angela Merkel, Chancellor of the Federal Republic of Germany, and OECD Secretary-General Angel Gurr a during the Chancellors

official visit to the OECD, February 2014

through the G8, the G20 and otherinternational co-operation efforts.We will step up efforts to betterintegrate Key Partners into theOECDs work and reinforce theregional components of our work

through targeted regional andcountry programmes.

Ultimately, the true test of ourgovernments, our institutionsand the OECD itself, is the abilityto improve the daily lives of thegreatest number of people, tobring about shared prosperityand widespread well-being. Ourshared aim remains betterpolicies for better lives and our

work has just begun!


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This note sets out my Strategic Orientations for the Organisation for Economic Co-operation andDevelopment. Reflecting the main challenges faced by member and key partner countries, thesepriorities build on the outcomes of the 2013 Ministerial Council Meeting (MCM), and draw on mydiscussions with leaders, senior government officials, ambassadors, and representatives from theprivate sector and civil society.

Consistent with the OECDsgoal to promote better policiesfor better lives, my StrategicOrientations are organised firstlyaround the policy responses thatcan help governments addressthe legacies of the global crisis high unemployment, risinginequality, declining trust and lowgrowth and, secondly, on theOECD initiatives and projects thatcan help promote stronger, morebalanced, more inclusive andgreener growth; support greaterinternational co-operation;strengthen the multilateral

trading system and roll backprotectionism; confront globalchallenges ranging from climatechange to migration issues; andfoster development.

Building on our Go structural,social, institutional, green, andnational approach to policyanalysis, and drawing on thelessons of the New Approachesto Economic Challenges

(NAEC) initiative, the OECD

will continue to upgrade itsanalytical framework to providepolicy makers with more timely,targeted, and impactful policyadvice that better captures theinterconnectedness, heterogeneityand complexity of policychallenges, and also focuses onimplementation issues.

Rethinking Policy SolutionsAround Stronger, MoreResilient, and MoreInclusive Growth

In the aftermath of the worstfinancial and economic crisisin living memory, governmentsmust address their enduringlegacies, while trying to kick-startsustainable economic growthamidst an increasingly constrainedpolicy space marked by budgetarypressures, growing socialdemands, low levels of publictrust, and diminished multilateralco-operation once the global

economic emergency has passed.

The Global Outlook andPolicy Challenges

The crisis is estimated to havereduced aggregate OECD-widepotential output by 3%. Globaldemand remains relatively weakwhile key drivers of economicactivity have yet to recovertheir pre-crisis levels: creditgrowth remains subdued as aresult of deep and widespreaddeleveraging and investmentcontinues to grow below trend.This in turn has a knock-oneffect on trade, which shows a

muted trend, despite some recentimprovement. Slower factoraccumulation, weaker commodityprices and subdued demand fromdeveloped countries have resultedin a general slowdown in growthin many emerging markets.

The OECDs go structuralapproach is particularlyrelevant at this time, as thecrisis and ensuing recession

have limited governments

Secretary-GeneralsStrategic Orientations

Main Section


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are interconnected, creating newchallenges, which can in turn feed

into and accelerate underlyingtrends. This means that countriesmust adopt a multi-dimensionalapproach to economic, socialand environmental challenges,taking into account trade-offs,and exploiting synergies andcomplementarities betweenpolicy objectives.

Over the coming year, we willmore closely centre our work on

structural reforms consistent withthe 2014 MCM theme of promotingresilient economies and societies,and explore synergies betweenpro-growth and pro-resiliencepolicies. More broadly, we willidentify structural reforms thatare not only conducive to long-term growth but also play a keymacroeconomic stabilising role.For example, adaptable labourand product market regulationsthat facilitate business creation

and support long-term growthby reducing the persistence of

shocks and fostering a moreeffective resource re-allocation.Also, social protection has provento be an effective mechanism forimproving equity and supportingresilience to shocks, making it akey element in poverty reductionand inclusive growth. We willcontinue sharing good practices,including with developing andemerging economies, to supporttheir objective of building

comprehensive social protectionsystems to address multi-dimensional vulnerabilities.

The OECDs work will beincreasingly horizontal andreflect a multi-dimensionalapproach that will helpmember and partner countriesattain the highest sustainableeconomic growth, employmentand living standards, whilemaintaining financial stability,

room for manoeuvre on fiscaland monetary policies. There

is an urgent need for furtherreforms aimed at liftingpotential growth, raising labourutilisation, regaining pricecompetitiveness and restoringfiscal sustainability. TheOrganisation is well placed to helpgovernments design, implementand assess comprehensivereform programmes for jobs andgrowth. Through our Going forGrowth, Better Policies, and Getting

It Rightseries, and the OECDEconomic Surveys, we can helpmember governments tackleunemployment, combat socialexclusion, enhance product-market competition, improveinnovation efforts, reinforcethe quality of education, and ingeneral undertake structuralreforms that are essentialfor economic prosperity andwell-being. Indeed, the OECDsexpertise on structural policyreforms constitutes one of theOrganisations comparativeadvantages, and represents amajor contribution to the G20Mutual Assessment Process (MAP).

The global economic landscapeis characterised by a numberof mega-trends, notablyshifting wealth away fromadvanced economies, growingmiddle classes in emergingeconomies; demographic shiftsand urbanisation; migration;increasingly scarce traditionalnatural resources, coupled withnewly exploitable resourceslike shale gas; climate change;innovation and technologicalchange; all of which havesignificant economic, social andenvironmental implications.

Several of these global trends

Chinese Premier Li Keqiang smiles as he flips through OECDs report China: Structural reforms for

inclusive growthgiven by OECD Secretary-General Angel Gurra, while meeting participants of the

China Development Forum inside the Great Hall of the People in Beijing, March 2014


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Angel Gurra, OECD Secretar y-General , with Franois Hollande, President of France, OECD headquarters, Paris, April 2013

and contributing to sustainableglobal development. We will

also respond to the growingpolicy interconnectedness byexpanding our contact beyondgovernments and engaging abroader range of stakeholders (i.e.parliamentarians, civil society,academics, social partnersand citizens); developing andcollecting more comprehensiveand meaningful comparativestatistics; and helping to forgeinternational consensus through

greater use of the OECDs peerreviews and collaborative workingmethods.

Promoting a NAEC Stateof Mind

The global economic andfinancial crisis was a wake-upcall to review the effectivenessand adequacy of our analyticalframework and policyassumptions. In the first phase,through the NAEC initiative, the

OECD engaged in an organisation-wide reflection about the roots

of and lessons from the crisis.Around these efforts, we haveconstructed an organisingstructure that can effectivelyscan for future challenges andassess relevant policy trade-offsand complementarities, includinginstitutional and governanceissues, to stimulate a process ofcontinuous improvement of theOECDs analytical framework.

The NAEC Synthesis Report willdeliver to the 2014 MCM the firstresults of its various projects andidentify directions for taking thework forward. These results willhelp deepen our understandingof the interconnectedness,heterogeneity and complexityof policy challenges; promotea more systematic approachwhen looking at data, includingmicro data and big data;and encourage the sharing ofknowledge more effectively

across the OECD. NAEC hasevolved into an organising

concept that can help us identifythe most innovative, forward-looking and relevant issuesacross the work of committeesand facilitate the mainstreamingof new knowledge. The NAECgovernance and discussionplatform allows for new policyideas to be debated and enrichedby ongoing work streams fromother OECD bodies. Theseefforts now form part of the

whole-of-OECD approach toimprove the Organisationsanalytical capabilities, and todevelop a dynamic process fororganising and mainstreamingnew knowledge. Over the nextyear we will propose to extendthis NAEC approach to othercross-cutting issues, buildingon the initiatives three pillars,which focus on: i) horizonscanning; ii) policy trade-offsand complementarities; and iii)institutions and governance.


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Arne Duncan, United States Secretary of Education, OECD Secretary-General Angel Gurr a and Amanda Ripley, journalist and author,

Washington, DC, December 2013

Inclusive Growth

The OECD will also deepen itsefforts to build an inclusiveagenda for growth and well-being. The crisis and itsimmediate aftermath havehad a detrimental effect onour societies. Inequality grewfaster between 2007 and 2010than during the previous12 years, contributing to political

disaffection and anti-marketsentiment. Ordinary citizensincreasingly feel that theyare losing out while a smallpercentage of the populationcapture most of the gains fromeconomic growth. It is criticallyimportant for governmentsto ensure that the economicrecovery is more broadlyshared, so as to improve socialcohesion and restore trust in our

institutions.

Reflecting its NAEC State ofMind, the OECD is pioneeringa multi-dimensional inclusivegrowth framework that exploresnew ways of combining stronggrowth with a better distributionof benefits. The frameworkwill enhance policy makersunderstanding of the adverseeffects of rising inequality, andhelp turn inclusiveness into adriver of strong economic growth.

The focus will be on promotingeconomic activity in a way thatimproves peoples material livingstandards, while also consideringthe distribution of outcomes inareas that matter for peopleswell-being such as in health andeducation among different socialgroups with a view to developingan actionable policy programme.As part of this effort, we will alsoexplore policies that generate

more and better rewarded jobs

and address the needs of the mostvulnerable members of society.Efforts will centre on training,skills, labour and product marketreforms; on complementarypolicies that favour inclusivenesswhile promoting a competitiveenvironment; and on the needfor coherence between economicand environmental sustainabilityobjectives. This work will alsobe relevant in the context of the

OECDs work on developmentand will contribute to supportingthe post-2015 developmentframework.

As part of our efforts to buildan agenda for inclusive growth,and building on the OECDsleadership in the field, wewill also pursue our workon financial education andfinancial consumer protection

issues to help reinforce trust


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in the financial systems andensure that economic growth

benefits the population at large,including vulnerable segmentssuch as youth, women andmigrants. These activities willencompass the developmentand expansion of internationalbenchmarks on financial literacyfor youth (through PISA financialliteracy) and adults, based onmethodologies endorsed by theG20. We will also work withmember and partner countries

to provide guidance on how toimplement these principles.

The Legacies of theCrisis: Unemployment,Inequality, Loss of Trustand Slow Growth

While the global economicoutlook is improving, growthremains weaker than beforethe crisis and productivity hasdecelerated. Unemploymentremains high and vulnerablegroups are in danger of becominglocked out of the labourmarket. The trend of increasinginequality that pre-dated thecrisis has accelerated and nowthreatens social cohesion andeconomic growth: people havelost confidence in the ability

of their leaders to chart a pathto shared and sustainableprosperity and overall trust inpublic and private institutionsremains notably low.

Unemployment

Many developed countriesremain plagued by persistentlyhigh unemployment, increasingincidences of long-term

unemployment and growing

concerns about structuralunemployment. The crisis hasdeepened inequality in labourmarket incomes and led to veryweak growth in earned incomefor many households. Consistentwith its Go national approach,the OECD will continue to provide

member and partner countrieswith targeted support to tackleunemployment, including adviceon structural reforms in labourmarkets, as well as education andtraining policies. There will be aparticular focus on the removalof barriers to the creation of moreand better jobs.

The Organisation will helpgovernments tackle weak

labour market adaptability and

inadequate skill development,which are the two key drivers ofpoor labour market outcomes forvulnerable groups and a potentialsource of inequality. Throughthe Employment Outlookwe willalso continue to monitor labourmarket development, identify

key policy challenges and reviewlabour market and trainingpolicy responses, in preparationfor the Labour and EmploymentMinisterial Meeting in 2015.

Youth Unemployment

The OECDs Action PlanGiving Youth a Better Startrepresents a first response toaddress the sharp increases

in youth unemployment and

Erna Solberg, Prime Minister of Norway, and Angel Gurra, Secretary-General of the

OECD, OECD headquarters, Febuary 2014


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Angel Gurra, OECD Secretary-General, and Ban Ki-moon, Secretary-General of the United Nations, New York, February 2014

underemployment, and tohelp governments eliminate

the long-standing structuralobstacles that impede asuccessful transition from schoolto the labour market, which iscritical for improving well-being,fostering greater social cohesion,boosting potential growth,and limiting future socialexpenditures. The results of thePIAAC survey on adult skillshave provided further insightsinto the difficulties some youth

face in successfully makingschool-to-work transitions. Wewill help countries implementtheir Youth Action Plans. Aninitial evaluation of the progressachieved will be presentedto ministers this year anddiscussions will serve to scopeout a more detailed project ofwhich the results would bepresented at a later MCM.

Inclusive Labour Markets

The OECD will work with memberand partner countries to fostermore inclusive labour marketsand enhance employmentprospects for all, but particularlyfor under-represented groupssuch as youth and older workers,people with disabilities andmental illness, women withyoung children, ethnic minoritiesand immigrants.

Current demographic changesmean that migration flows willbecome increasingly relevant forpolicy makers, as internationalcompetition for talent increases,and access to the right mixof skills impacts growth anddevelopment prospects. Throughbetter evaluation of migrationpolicies, the OECD will identifythe levers that can maximise the

economic potential of migrationwhile limiting adverse effects.

Deepening the understanding ofthe determinants of successfulsocial and economic integration,and identifying best practices inthis area will remain one of thetop priorities to support inclusivegrowth strategies. The OECDwill also work on internationalmigration issues through thewider dissemination of relevantpolicy recommendations, thedevelopment of migration

databases, and through theimprovement of policy evaluationtools of migration and integrationpolicies.

Education and Skills

Education and skills are criticalto restore long-term growth,tackle unemployment, addressinequality and promote


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Enda Kenny, Taoiseach (Prime Minister) of Ireland, Angel Gurra, OECD Secretary-

General, and Eamon Gilmore, Tnaiste (Deputy Prime Minister) and Minister of Foreign

Affairs and Trade of Ireland, during an official visi t to the OECD, February 2014

competitiveness. The economiccrisis and deteriorating socialconditions have amplified theimpact of skills on employmentand social outcomes. Highunemployment affectseducational aspirations, whilebetter skills are essential toimprove both employabilityand the prospects for upwardeconomic mobility. Successin converting skills into jobsand growth will depend ondeveloping a better understandingof those skills that drive strongand sustainable economic andsocial outcomes. The OECD willpromote a robust measurement

framework through the OECDSurvey of Adult Skillsand the PISAprogramme, but our work willextend beyond measurementand rankings to supportknowledge that empowerspeople and favours employment.For example, through PISA forDevelopmentwe will facilitatedeveloping countries use ofPISA assessments for monitoringprogress towards nationally-set

targets. We will also continue to

support efforts to help displacedworkers find jobs through skillstraining programmes.

Consistent with its Go nationalapproach, the OECD will useits international comparativeknowledge base to providecountry-specific support. Wewill continue to implement ourSkills Strategy, engaging withMembers and Partners to designand implement national skillsstrategies. The OECD Education GPSPlatform andPolicy Outlookserieswill provide country reviews withevidence on education policiesand practices. The OECD will also

conduct School Resources Reviewsto help countries achieve theireducation objectives, and focus onthe nexus of employability, skillsand economic development.

Meeting the Challengeof Inequality

Income inequality was alreadyon the rise before the crisisstarted, and the trend has

been accelerating since then.

While welfare transfers havemitigated the effects on

income inequality, sluggishjobs growth and budgetarypressures have contributedto increased inequalities andreduced disposable householdincomes. The result is thatthe most vulnerable groups insociety have been hurt the most.Inequality has also resulted fromthe increasing specialisation ofskills and the resulting wideningdistribution of wages and salaries.

Ageing Unequally

As part of the Inclusive Growthinitiative, the OECD will analysethe risk of poverty and inequalityin old age. Inequality in incomes,wealth, health status and otherareas of well-being which, whencompounded over the life-cycle,can result in growing numbersof older people in poverty anddestitution. A growing divide inthe well-being of older peoplewill not only put existing welfaresystems to the test, but alsocompromise the effectiveness ofrecent reforms in labour markets,pension systems and long-termcare arrangements. The OECDwill prepare an Ageing EquallyAction Plan, which will build onour extensive analysis of social

protection and health systems,labour market and migrationpolicies, and take into accountintergenerational aspects, withthe aim of reducing inequalitiesand promoting stronger and morebalanced growth. We will alsoexplore the vulnerabilities of socialprotection systems and assesstheir effectiveness. This work willalso focus on gender issues, asolder women are often the most

vulnerable among the elderly.


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The Well-Being Agenda

The OECD has been working toidentify ways to measure well-being, moving beyond GDP andexploring the areas that mattermost for peoples lives. As partof the Organisations missionto promote better policies forbetter lives, we launched theOECD Better Life Initiative. Thiswell-being framework resulted inthe report Hows Life?, featuring11 dimensions of human well-

being. The framework is also usedin the Multi-dimensional Country

Reviews(MDCRs) to inform theanalysis of economic and socialdevelopment in emerging anddeveloping economies. Thisanalysis has shown that a givenlevel of economic developmentcan be consistent with widelydiffering levels of well-being, andhence that policy priorities needto consider issues beyond pureeconomic growth. Work is alsounderway on the alignment of

the well-being framework with

the post-2015 and SustainableDevelopment Goals agendas.

In addition, the OECD activelypromotes the interactive webapplication, the Better Life Index,which builds on the framework tofacilitate a dialogue with citizenson what they consider to be themost important determinants ofwell-being.

In promoting inclusive growthand well-being, we will look forpolicies that address all types of

discrimination, whether based ongender, age, social class, disability

and/or sexual orientation.Reducing Inequality through

High-performing Health Systems

Governments face a challengein maintaining the best possibleaccess to quality health care,while at the same time reducingpublic spending despitecontinued growth in demand.In OECD countries, the scale of

the challenge becomes more

apparent as socio-economicinequalities, among other factors,

complicate policy design andflaws in co-ordination result inpoor quality and excessivelyexpensive care. The OECD willsupport governments effortsto move beyond a simple cost-cutting agenda to a more strategicunderstanding of how to get thebest out of new technologies andimprove productivity and qualityof care. This work will be a majorinput into the Health Ministerial

Meeting to be held in 2016.

Rebuilding Public Trust,Fighting Corruption, andEnsuring GovernmentTransparency

For many years, maintainingtrust in government andinstitutions has been a neglectedcomponent of public policymaking. People have been losingfaith in governments ability toaddress what matters to them,resulting in overall low levelsof trust in institutions. Thecrisis and the ensuing recessionhave accelerated this trend.Transparency, responsibility andaccountability are cornerstonesof public trust and a healthybusiness environment andresponsible business conduct

are good for the economy andfor society. Public trust has alsobeen eroded by the absence ofadequate and effective regulationto prevent money and influencefrom undermining the policy-making process. As identifiedby ministers during the 2013MCM, governments need betterdata on the level of public trustto support decision making andimprove policy formulation and

implementation in areas in which

Juan Manuel Santos, President of Colombia, welcomes Angel Gurra, OECD Secretary-

General, in Bogota, October 2013


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trust is particularly relevantto policy effectiveness (e.g.regulations, tax, and the budget).

Consistent with its Goinstitutional approach, theOECD will focus on improvingmeasurements and identifyingways to restore trust in our socialand governance institutions. Thiswill involve identifying innovativepolicies and instruments toreinforce the relationship between

citizens and their governmentthrough greater openness andtransparency. The OECD willfocus its work on strengtheningthe measurement and empiricalanalysis of both trust and publicservice quality and developinga comprehensive approachto address the risk of undueinfluence by powerful groups.We will also disseminate theresults from the Observatory on

Public Sector Innovation, identify

good practices that better aligngovernment objectives withresources and offer in-depthanalysis of governments medium-term expenditure frameworks. Wewill continue to support the workon open government to promotetransparency, increase citizenparticipation in public affairs,fight corruption and harnessnew technologies to strengthengovernance.

Corruption, and the perceptionof corruption, erodes trust ingovernments, businesses andmarkets. Beginning with deliveryon our existing commitmentswith respect to the Anti-briberyConvention, the OECD will launcha more comprehensive effortto promote integrity and anti-corruption measures, includingin support of the G20 agenda.Among other initiatives, we

plan to develop a compendium

of good practices on publicprocurement and work to close

gaps in high-risk sectors (likenatural resources) and to organisemajor events on issues likeconflict of interest, lobbying andpolitical finance. Building on theOECD Declaration on Propriety,Integrity and Transparency in theConduct of International Businessand Finance we will work onareas such as criminalisingbribery, business integrity, publicprocurement, and whistle-

blower protection. Throughits CleanGovBiz initiative theOECD will continue to identifypotential areas for co-operationand collective action withother international institutionsand stakeholders engaged inanticorruption and integrityefforts, upgrade its Integrity Scantoolkit, and undertake countryreviews.

As part of the OECD TrustStrategy, the OECD willsupport member countries instrengthening the rule of lawand good governance, focussingon the contribution of justiceinstitutions to public policyperformance and quality publicservice delivery. We will explorewith Members the possiblecreation of an OECD network of

judicial institutions, to address,among others, the improvementof their functioning, the qualityof access to justice, and theirrole in contract enforcementand dispute settlementmechanisms. In reaching outto judicial institutions, we willcapitalise on the Organisationsconvening power, expertise indata collection and the multi-disciplinary nature of our advice.

Angel Gurra, OECD Secretar y-General , and Pedro Passos Coelho, Prime Minister of

Portugal, OECD headquarters, Paris, May 2013


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Strengthening the integrity,inclusiveness, transparency and

credibility of the policy-makingprocess must be a priority forgovernments seeking to buildcitizens trust. Elections mustbe and must be seen to be fairand fully transparent, with noperception of democracy for thehighest bidder. The OECD willlaunch a global policy dialogue onthe key drivers of open, informedand fair policy making, coveringissues related to: a) political

finance; b) trust; c) lobbying;d) the revolving door; e) opennessand inclusion; f) illicit financialflows and political finance; g) localgovernance and political finance;h) politics and public service.These efforts will form part of,and will complement, the OECDTrust Strategy.

Tax Policy

The perception that multinationalcompanies do not pay their fairshare of tax in any jurisdictionundermines the legitimacy of ourtax systems, further complicatingthe political economy of fiscalconsolidation. It also underminesthe efforts of developing countriesto mobilise domestic resourcesfor development and reduce theirdependency on aid. To tackle

this phenomenon, the OECD hasmobilised political momentumat global level to restore integrityto the international tax systemthrough its Base Erosion andProfit Shifting (BEPS) initiative.We will continue working withmember and partner countriesto successfully deliver the BEPSAction Plan.

The 2013 MCM called on all

jurisdictions to move towards

the Automatic Exchange ofInformation (AEOI). The OECDhas developed a standard,consisting of a Model CompetentAuthority Agreement (CAA)anda Common Reporting and DueDiligence Standard (CRS) for theautomatic exchange of financialaccount information, and willbegin working on the technicalmodalities for its applicationand operation to enable all

jurisdictions, including developingcountries, to meet this objective.Going forward, we will continue toproduce tax statistics and cross-country analysis and offer soundtax policy advice to memberand partner countries, including

on the economic impact of VATpolicies, and build on the AEOIprogress to support internationalco-operation efforts in fighting taxcrimes and financial wrongdoingsand analyse beneficial ownershipissues.

Regulatory Policy

Regulatory reform is a key pillarof the OECDs work to improve

governance and the functioning

of markets. Consistent with itsgo institutional, go structuralapproach, the OECD will lead theway in scrutinising policies thatimpose unnecessary burdens fiscal or administrative andhinder economic growth orcreate additional budgetarypressures. We will develop toolsfor governments to identifyvalue for money policies that aresupportive of economic growth,contribute to social priorities andprotect the environment. Newwork will be aimed at identifyingbest practices in ex-antepolicyevaluation and focus on cost-benefit analysis.

The Organisation will also workclosely with governments toimprove regulatory frameworks,to push for reform in challengingpolicy environments, and tobetter assess the benefits ofreform. We will support adynamic market analysis of theimpacts of regulatory policiesand promote a multi-disciplinaryapproach that considers thepolitical economy aspects of

future reforms.

OECD Secretary-General Angel Gurra on the large screen, G20 summit, St Petersburg,

September 2013


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Pio Garca Escudero, President of

the Spanish Senate, Soraya Senz de

Santamara Antn, Vice-President of

the Spanish Government, Minister ofthe Presidency and Spokesperson, and

Angel Gurra, Secretary-Genera l of OECD,

Madrid, July 2013

Avoiding the Low-GrowthTrap

The global economy remainssluggish, heightening concernsthat there has been a structuraldownshift in growth ratescompared with pre-crisislevels. These concerns, alreadyprevalent among advanced OECDcountries for some time, nowencompass emerging-marketeconomies. A return to growthis an indispensable condition toincrease employment and furtherwealth creation.

New Sources of Growth

The OECD will identify andpromote a better understandingof the new sources of growthin the 21stcentury. Respondingto changing patterns ofproduction, employment,and entrepreneurship, theOrganisation will seek tounderstand the future ofmanufacturing and identifythe potential drivers of a new

industrial revolution. Also,

will explore policies that enablefirms to experiment with newideas and business models thatfacilitate their growth, includingby lowering barriers to entry,supporting their expansion, andallowing for an orderly cessationof activities.

KBC and Information andCommunication Technologies(ICT) are important sources ofgrowth that can have strong spillover benefits across the economy.To make the most of them theOECD will advise countrieson policy packages to fosterinvestment in basic research,

facilitate organisational change,and strengthen intellectualproperty rights. We will alsoanalyse the role of the Internet inboosting economic growth, trade,investment and in addressingsocietal challenges; and promoteeffective Internet governancethat fosters trust, transparencyand promotes the participationof business, consumers andgovernments in digital activities.

Another important focus of the

building on the second-phaseof the Knowledge-Based Capital(KBC) project, the Organisationwill intensify its work on science,technology and innovation, toreinforce the evidence on theeconomic value of intellectualassets. The continued rise of theInternet economy representsanother opportunity for theOECD to leverage its comparativeadvantage on privacy andsecurity issues to promote aglobal framework for dynamice-commerce that incorporatesappropriate safeguards andensures the free movement ofdata across borders without

diminishing the protectionof personal data. We will alsowork to foster entrepreneurshipand productivity growth, andpromote the upgrading offirms in GVCs. We will seek tostrengthen the functioning ofthe labour, product and financialmarkets so resources can flowto innovative firms. We willalso analyse young businessesand their contribution to net

job creation. More broadly, we


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OECD Secretary-General Angel Gurra and Dipu Moni, Minister of Foreign Affairs of

Bangladesh, Paris, June 2013

Organisations work will be onthe impact of science, technology

and innovation on economicgrowth and social welfare. Ourwork on converging technologieswill also inform the Science andTechnology Ministerial Meetingto be held in Korea in 2015.

Consumers are the drivingforce of the global economy,accounting for over 60% ofGDP in the OECD area. During2015 and 2016, we will focus

our attention on areas wherethe international dimensionof consumer policy is mostpronounced and linked to newsources of growth, namelye-commerce and enhancedproduct safety. This work willprovide governments with abetter understanding of thechallenges consumers faceand ways in which these canbe best addressed. Given thelink between tourism andsustainable growth, we willcontinue our work in this area.

New and emerging technologiesin food production, including

biotechnologies andnanotechnologies, hold promisefor improving nutritionaloutcomes and resourcesustainability, while reducingwaste. These technologiespresent both opportunitiesand challenges for food andenvironmental safety. TheOECD can help governmentsand industry respond tothese challenges, including

using technology to improvedata gathering on productionprocesses; dynamic labellinginformation; improving quality offood choices; and strengtheningfood traceability.

Supporting the Engine ofGlobal Growth

The four cylinders of theglobal growth engine trade,investment, credit and emergingmarkets are not yet running

at full speed, raising the globalspectre of a protracted period of

low growth. The financial systemhas not yet been fully repairedand further reforms are neededto reactivate bank and capitalmarket financing for productiveinvestment. While some of theseweaknesses reflect the economiccycle and prevailing uncertainties,stronger structural policy settingscould go a long way to increaseinvestment levels, foster tradeflows, facilitate access to credit

and kick-start emerging marketsgrowth.

Strengthening theMultilateral TradingSystem and theInternational InvestmentRegime

Multilateral co-operation, not leastthrough the WTO, can contributeto a trade environment that isconducive to sustainable growthin value adding trade, avoidingbeggar thy neighbour policiesand reducing unnecessary tradecosts at, and behind, borders. Inthis context, continuing to resistprotectionism and rolling backtrade-restrictive and distortingmeasures introduced to date iscrucial. The success of MC9 in Baliis a concrete demonstration of the

benefits of multilateralism. Forinstance, the full implementationof the WTO Trade FacilitationAgreement can reduce tradecosts by up to 15% for developingcountries. But much moreneeds to be done to re-engagemultilateral trade negotiations.Going forward, trade discussionsshould further deliver on theDoha Development Agenda (DDA)and, at the same time, reflect

the new realities of the global


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Laura Chinchilla, President of Costa Rica, and Angel Gurra, OECD Secretary-General,

OECD headquarters, November 2013

trade landscape, such as thedevelopment of GVCs. Growinginterest in mega-RTAs andpluri-lateral negotiations highlightthe continued interest in openingmarkets. However, more couldbe done, including through the

non-negotiating environmentof the G20, to recognise tradeand investment openness asone element of structural policyreform necessary for strong,sustainable and balancedgrowth. In this regard, the levelof ambition of the G20 AustralianPresidency is very encouraging.

OECD work on Trade in ValueAdded (TiVA) and global value

chains (GVCs) is changing

the way policy makers thinkabout trade policy, underliningthe importance of trade inservices, behind the borderregulations, investment policy,and competitive neutrality.Besides deepening its work on

global value chains and workingto ensure countries at all stagesof development can seize theopportunities of GVCs, the OECDwill expand its Trade in ValueAdded (TiVA) database andexamine scenarios that facilitatefurther service sector reforms.The OECD Initiative on GlobalValue Chains and EconomicTransformation, bringing togetherpolicy makers from member

and partner countries will be an

important platform to advancemutual understanding and

promote peer-learning.

The OECD is finalising its work onidentifying, collecting, cataloguingand verifying regulatory barriersto trade in services. This databasewill provide comparable dataon services trade policies across17 sectors and sub-sectors,and 40 countries that includeMembers and Key Partners. TheServices Trade Restrictiveness

Index (STRI) database is beingreleased during the 2014 MCMand covers: regulations enacted,rather than the GATS or RTAcommitments; all trade-relateddomestic regulation; sourcedocuments (law, regulation, rule,administrative decision); verifiedmeasures peer reviewed byall countries; updates of currentmeasures to reflect regulatoryreforms; and explanations anddefinitions of each measureincluded in the database.

Investment rates in mostadvanced economies havenot yet recovered their pre-crisis levels, particularly forinfrastructure, plant, machineryand equipment, as well as forintangible assets such as researchand development, new businessprocesses and workforce training.In several emerging-marketeconomies, infrastructureinvestment is not nearlysufficient to support high rates ofindustrialisation and urbanisationunderway, creating bottlenecksand hampering potentialgrowth. Going forward, higherinvestment rates are needed tosustain a higher trend growthrate. The OECD will also step up

its work on long-term investment


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OECD Secretary-General Angel Gurra and Federico Rampini, journalist and writer, at the

Festival dellEconomia, Trento, June 2013

including by analysing howto unlock investment in green

technology and infrastructure and mobilising investment fordevelopment, as well as updatingour Policy Framework forInvestment (PFI).

Building on the OECD leadershipon long-term financing issues,we will work with otherorganisations and the G20 toanalyse and develop policyrecommendations to promote

government and private sourcesof financing, including banksand institutional investors.We will also strengthen ourco-operation with relevantstakeholders and facilitate theimplementation of the G20/OECDHigh-level principles for Long-term Investment Financing byInstitutional Investors.

Building on the OECD treatydatabase, we will shed newlight on the investment treatyframework and the strengtheningof the international principlesthat underpin it. Internationalinvestment law provides rulesthat help improve investor

confidence, while promotinglong-term investment and greater

growth. A better understandingof evolving approaches andthe objectives of countriesin relation to internationalinvestment rules would benefitall economies. The final reportwill address investment treatylaw and investor-state disputesettlement issues, and reflectshared emerging positions ontransparency and arbitratorethics.

There is a need to expand ourknowledge of the economics ofcross-border investment. Thecrisis showed that investmentglobalisation is not always upwardtrending, as flows collapsed tohalf their value between 2007and 2009 and have yet to recovertheir pre-crisis levels. As part ofthis economics of investmentinitiative, the OECD will workon the next generation offoreign direct investment (FDI)data to provide governmentswith a more accurate picture ofreal FDI, which better capturestodays highly internationalisedinvestment chains and better

reflects domestic content ofinward FDI and the foreign

content of outward FDI. Thesemeasures will account for theeffects of artificial and circularFDI, and serve to inform policydebates on competiveness, aswell as GVCs and protectionism.This work will also look at howcountries and firms benefit frominternational trade, by extendingour accounting framework so asto better understand how benefitsare accrued through investment

flows.

Enhancing the Business Climate

through Increased International

Co-operation

Our 2011 update of the OECDGuidelines for MultinationalEnterprises (MNEs) has closelyassociated this instrument to thepromotion of Responsible BusinessConduct (RBC). The Guidelineshave inspired national policiesin the field of Corporate SocialResponsibility (CSR), and servedas a reference for RBC clausesin international investmentagreements. The OECD willimprove the governance andfunctional equivalence of NationalContact Points to implement RBCson a global scale, and work withmember countries to reinforce

their role. As part of this workwe will also promote responsiblesupply chain management,which is relevant to key sectorssuch as textiles and agriculture;further develop the guidelinesfor stakeholder engagement inextractive industries; promotedue diligence to combatillicit production and trade ofminerals; and, in general, boosttransparency in the key extractive

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Responsible business conductis an essential part of an openinternational investmentclimate and the Guidelinesoffer the most comprehensiveset of government-backedrecommendations in existencetoday. In co-operation withMembers, we will continue toencourage positive contributionsby MNEs to sustainabledevelopment and promote respectfor high standards of businessconduct, and discourage conductsthat neglect these principles andstandards in an attempt to gainundue competitive advantage,

particularly in countries wherethe regulatory, legal, andinstitutional frameworks areunderdeveloped or fragile.

Currently, state-ownedenterprises (SOEs) and othercompanies with significantgovernment investment accountfor more than 14% of the worlds2 000 largest enterprises. SOEs areincreasingly active in the global

marketplace, through trade,

investment and competitionin third markets. In order to

ensure a level playing fieldbetween privately and publiclyowned businesses, the OECDwill continue examining thechanging role of SOEs, identifyingkey challenges and options forpolicy makers. A report willbe presented at the 2014 MCMpresenting further evidence ontrade, investment and competitiveneutrality practices.

To ensure their continuing highquality, relevance and usefulness,we will conduct an in-depthreview of the OECD Principles ofCorporate Governance taking intoaccount recent developments inthe corporate sector and capitalmarkets. The reviewed Principleswill provide policy makers,regulators and other rule-makingbodies with a sound benchmarkfor establishing an effectivecorporate governance framework.The review is expected to last oneyear.

Increased internationalco-operation in enforcingcompetition law can promoteeconomic growth. Presently,competition agencies assesscross-border cases only for theireffects on the domestic market.

Businesses considering a globalmerger must file in multiplejurisdictions, sometimes in asmany as 60 places, and there areno mechanisms for governmentsor competition agencies toresolve differences in approachor reach common solutions. In2014 the OECD will deliver amajor piece of empirical analysison the problems caused by thisfragmented approach, with

future work aimed at scoping out

possible institutional or treaty-based solutions.

Reinforcing the FinancialSector; Improving CreditAvailability

The OECD is revisiting therelationships between finance,growth and inequality, andanalysing their implications foreconomic policy, while focusingon the role of finance for theeconomic stability of individual

households and firms. Deeperfinancial markets, financialinnovation and cross-borderfinancial integration havetraditionally been associated withgreater efficiency and strongereconomic growth. However, theglobal financial crisis has shownthat these phenomena can alsogive rise to greater volatility ineconomic output and, due tothe inter-linkages with the realeconomy, serve as a propagationmechanism for financialvulnerabilities. The OECD iscurrently analysing issues relatingto access to finance for SMEs particularly young firms giventhe role they play as generatorsof employment and income. TheOrganisation is also conductingwork in relation to banking sectorreform and analysing leverage

and capital adequacy ratios toidentify more comprehensivemeasures of bank vulnerability.

Kick-Starting EmergingMarket Growth

Emerging markets (EMs) enjoyeda decade of strong growth priorto the crisis, on the back ofintensive factor accumulation,strong commodity prices and

relatively loose monetary policy

OECD Secretary-General Angel Gurra and

Henk Kamp, Minister of Economic Affairs

of the Netherlands, March 2014


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in developed economies. Furtheraccommodative monetary

policy in the aftermath ofthe crisis ensured that EMsremained important drivers ofglobal growth. However, trendsunderpinning strong EM growthhave slowed, stopped or reversed,while the normalisation ofmonetary policy poses furtherchallenges. Productivity growthhas slowed and EMs are nowfaced with an urgent need toadopt structural reforms. The

OECD is well positioned to supportKey and other relevant Partners inthe design and implementation ofreform programmes to enhancethe resilience of their economies.

Accession and Key Partner

Countries: the Role of Regional

and Country Programmes

Consistent with the OECD50thAnniversary VisionStatement, we will continue tointegrate key partner countries(Brazil, China, India, Indonesiaand South Africa) into theOECDs work and enhanceour co-operation with otherrelevant Partner economies. Inparticular, we will strengthen ourengagement with China, pursuingthe strategic relationship we havedeveloped at different levels in the

government and with key Chineseinstitutions. We will also reinforcethe regional component of ourwork, particularly with SoutheastAsia and the MENA region,and strengthen our initiativeswith Africa, Eurasia and LatinAmerica. During 2014 we expectto roll out Country Programmeswith Kazakhstan, Morocco, Peruand Thailand, to share OECDsstandards and best practices and

support their reform efforts. The

accession processes of Colombiaand Latvia will each proceed at

their own pace; the activitiesrelated to the Russian Federationaccession process are postponedfor the time being.

At the 2014 MCM we will formallylaunch the OECD Southeast AsiaRegional Programme, to bring

participating countries closer toOECD standards and practicesand facilitate their access to OECDexpertise, while promoting theiradherence to its instruments.Following the high-level regional

event on 25-26 March 2014 inBali, Indonesia, we plan to selectco-chairs and define the workprogrammes of the six RegionalPolicy Networks that will becreated under the Programme.These efforts will be underpinnedby the OECD Economic Outlook forSoutheast Asia, jointly producedwith the ASEAN Secretariat,and the associated platformfor regional macroeconomic

monitoring. In implementing the

Programme, we will collaboratewith and benefit from the

expertise and support of otherregional organisations (e.g. ERIA,APEC, ADB, and UNESCAP).

The Organisations engagementwith members and observers ofthe Pacific Alliance (PA) has beensteadily increasing: Mexico and

Chile are Members, Colombia isan accession country, Costa Ricaparticipates in an intensified co-operation programme, Uruguayis undergoing a MDCR andPanama has recently joined theDevelopment Centre, bringing thenumber of its members to ninefrom the LAC region. Buildingon ongoing co-operation with PAmembers and observers, a moreformal link could be developed,involving the establishment of

joint policy networks that focuson issues related to regionalintegration (e.g. investment, trade,tax, SME policy, and regulatoryreform). This would enable

PA members and observers to

OECD Secretary-General Angel Gurra welcomes Dalia Grybauskait, President of

Lithuania, to the OECD, November 2013


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become more closely aligned withOECD standards and strengthen

the impact of the Organisation inthe LAC region. The OECD-LACinitiative, and the analytical workand policy dialogue underpinningthe Latin American EconomicOutlook, could support andcomplement these efforts.

The OECD has been working withthe Middle East and North Africa(MENA) region since 2005, throughthe MENA-OECD Initiative,

the SIGMA programme and,more recently, the G8 DeauvillePartnership. Going forward,the MENA-OECD programmecould co-operate more closelywith the countries from theGulf Co-operation Council (GCC)through a sub-regional initiative,encourage longer-term tradeand investment flows, andhelp to generate sustainableprivate sector-led growth. Wewill continue to engage MENAcountries through initiatives,like the Governance ProgrammeTraining Centre of Caserta, aimedat building capacity, improvingthe efficiency and effectivenessof public institutions, to promoteinvestment and good governancein the region.

The OECD has longstandingrelations with Sub-Saharan

Africa through the work ofthe Development Centreand initiatives such as theNew Partnership for AfricasDevelopment (NEPAD) and theSahel and West Africa Club(SWAC). The time is ripe to takethis collaboration forward andencourage Sub-Saharan countriesto move closer to OECD standards,inter alia, by exploring the possiblecreation of a regional programme

in co-operation with sub-regionalgroups, including the SouthernAfrican Development Community(SADC) and the EconomicCommunity of West AfricanStates (ECOWAS).

Following the request receivedfrom and the latest exchangeswith Ukrainian authorities, theOECD will strengthen its co-operation with Ukraine to help thegovernment address the countryspressing policy challenges,including on longstanding co-operation issues like governance,investment, competitivenessand business environment.Building on the existing ActionPlan for 2013-16, we will supportauthorities efforts to work

closer with committees andto enact the necessary policy

reforms. Membership in theOECD Development Centre couldalso be explored, given Ukrainesexpressed interest.

Enhancing the GlobalDimension of the OECDsWork

In an increasinglyinterconnected global economy

it is important to continuestrengthening internationalpolicy co-ordination. Sincethe Heiligendamm Summit in2007, the OECD has been at theforefront in providing analyticalsupport and policy advice to theG8. As the crisis unfolded, andas policy makers deal with itsaftermath, the OECD has becomean indispensable partner of theG20, participating at all levelsin the Group. Over the past fiveyears, the OECD has deepened itsanalytical contributions to the G8and G20, working closely with thetroika presidencies to help shapetheir respective agendas, andproviding evidence-based policyanalysis to support their work.The result has been increasedvisibility of OECD work and agreater impact on the debates

and policy making of bothgroups.

The OECDs Role asa Global Standard Setter

A critical element of the OECDsmission is to promote anddisseminate norms, standardsand best practices. We plan toconduct a broad review of ourguidelines, instruments and

codes to determine where there

Daniel Kablan Duncan, Prime Minister of Cte dIvoire, at the OECD Africa Forum,

October 2013


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is a need to update, supersede orfurther disseminate them. Over

the coming years, the OECD willfurther strengthen its role as aninternational standard setterand will also work on developingnew standards on emergingissues, like investment, corporategovernance, and Internetgovernance.

Transitioning to a Low-Carbon Future

The OECD can make akey contribution to betterunderstanding the risks of climatechange and identifying the

policies needed to mitigate andmanage these risks. Leveragingits 20 years of experience, theOrganisation can offer Memberssolid policy advice to elaboratea mix of policy instruments thatcan lead to the net eliminationof emissions to the atmospherefrom fossil fuels during thesecond half of the century, in linewith the internationally agreedgoal of limiting the increase in

average global temperature to

2C. In collaboration with the IEA,NEA, and ITF, we will build on

our work on carbon pricing, fossilfuel subsidies, tax exemptionsand regulatory and investmentpolicy to explore ways to alignpolicies in support of a clear, long-term pathway to tackle climatechange. We will also explorecomplementary measures to

accelerate technological changeand address the distributionalconsequences of the necessaryeconomic transformation. Theseefforts will support climatechange discussions in view of theupcoming COP meetings in Lima

(2014) and Paris (2015).The OECD will also continueworking to mainstream greengrowth, as well as to betterintegrate environmentalconsiderations into its economicprojections and horizon scanningexercises. Significant efforts arealready being made and includerelevant chapters in the EconomicSurveys, Environmental Performance

Reviews, Innovation Reviewsand

Investment Policy Reviews, as wellas the Green Cities Programme.

The challenge is to go a stepfurther, so that a green growthframework permeates all levels ofthe Organisations work.

The number of urban dwellersis projected to reach 6 billionby 2050. Globally, urban areascontribute significantly tonational growth goals, and serveas hubs in global trade andinnovation networks: Getting

cities right is a big step towardsaddressing global social, economicand environmental challenges.We will continue to develop ourextensive evidence database onregional development and multi-level governance, and disseminatebest practices across levelsof government. In particular,we will offer policy guidanceand tools in the area of publicgovernance and investment,emphasising a whole-of-government approach thataddresses the roles of differentlevels of government in the designand implementation of criticaland shared responsibilities.The Recommendation on EffectivePublic Investment across Levelsof Government, endorsed by theTDPC Ministerial meeting on5-6 December 2013 and adoptedby the Council on 12 March 2014,will inform ministers discussionat the 2014 MCM.

Disaster Risk Managementand Financing

Recognising the increasingprevalence and severity of naturaland man-made disasters, we willpromote the Recommendationon the Governance of Critical

Risks, working with governments

OECD Secretary-General Angel Gurra and Valdis Dombrovskis, Prime Minister of Latvia,

OECD headquarters, November 2013


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The Strategy recognisesthe importance of fosteringcomprehensive, multi-dimensional and inclusiveapproaches to development tounleash transformational changeand strengthen global resilience.Future OECD efforts will beguided by ministers discussionsof the Looking Ahead to GlobalDevelopment Beyond 2015: Lessons

Learnt from the Initial Implementation

Phase of the OECD Strategy on

Development and the 2014Reporton the Implementation of the OECD

Strategy on Development, to bepresented at this years MCM.

The Knowledge Sharing Alliance(KSA) is an integral part of theOECD Strategy on Development.The KSA, created in January2013 with the support of Koreaand the German Ministry forEconomic Co-operation andDevelopment, aims to leveragethe OECDs multi-disciplinaryexpertise and engage emergingand developing economies,working closely with bilateral and

multilateral organisations that

our policy design experience,methodologies and tools to betterunderstand the inter-linkagesbetween development andeconomic growth, environmentalconcerns, human well-being andpoverty eradication. The OECDwill also contribute to the post-2015 development discussionthrough its work on identifying,monitoring and mobilisingfinancing for development, andby improving the quality of ourmeasurement of developmentco-operation and the design andeffectiveness of interventions. Wewill also continue our work on Aidfor Trade.

The OECD Strategy onDevelopment has fostered amore focused, issues-basedapproach to policy coherencefor development. Key actorsamong advanced, emergingand developing economies areengaged and work also addressescommon challenges such asimproving framework conditionsfor achieving food security and

combatting illicit financial flows.

to implement comprehensiverisk management and mitigation

systems, and taking an allhazards approach to riskmanagement. We will work ondisaster risk management andfinancing to help communitiesbounce back from disaster,stronger and more dynamic thanbefore. The OECD Tohoku Schoolproject, launched following the2011 Great East Japan earthquake,will continue to provide a powerfulillustration of how innovative

education and skills policies canhave a transformative impact oncommunities as a whole.

The Strategy onDevelopment: Shaping thepost-2015 DevelopmentLandscape

We will leverage our expertiseacross the entire Organisationand its constituencies to supportthe post-2015 framework and itsfinancing. Aid remains a criticalelement for many countries,particularly least developedcountries and fragile states. OECDwork on development financewill reflect this, while exploringnew measures of support fordevelopment that reflect theevolving development landscape.

The Global Partnership forEffective Development Co-operation will provide anopportunity for an inclusiverange of actors to collaborateand partner in new ways toidentify how to best support theimplementation of post-2015targets. We will engage with thedifferent policy communitiesto improve the relevance, valueadded and impact of major

international processes, and share

OECD Secretary-General Angel Gurra and Benjamin Netanyahu, Prime Minister of Israel,

December 2013


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Therefore, we will look to raisethe visibility and better connect

efforts around three initiatives:a) the transition to a low carboneconomy; b) promoting long-terminvestments; c) ageing unequally.The OECD will also continueto work on other cross-cuttingissues (e.g. innovation, greengrowth, skills), capitalising onits ability to address inter-linkedpolicy challenges. Horizontalitywill gradually become the normin delivering our programme of

work.

Expanding the OECDsStrategic Foresight

We will reinforce theOrganisations forecasting andstrategic foresight capacity,developing an horizon-scanningnetwork to offer Members andPartners a better understandingof potential threats andopportunities. This work willalso capitalise on the OECDPerspectives on Global Development,which pioneered the analysisof shifting wealth and the

working collectively across theOrganisation.

Horizontality in theProgramme of Work

Analysing issues in a horizontaland cross-cutting way isincreasingly the approachfollowed by the OECD, driven bythe need to address the increasingcomplexity, multi-dimensionalityand interconnectedness ofthe policy challenges faced by

Members and Partners. Thisapproach also draws on theexpertise of directorates, aswell as on the accumulatedexperience of the Organisationand of member and partnercountries, across a wide spectrumof policy areas. The OECD hasbeen working for some time onpolicies related to climate change,long-term investment, newsources of growth, inequality anddemographic shifts. I believe thetime is right to raise the profileof this work and emphasisecollaboration among differentparts of the Organisation.

have implementation capacitieson the ground.

The OECD will continue toenhance inclusive knowledgesharing and an effectiveengagement with developingcountries, capitalising on itsMulti-Dimensional CountryReviews and Policy Dialoguenetworks. In this respect, theInitiative on Global Value Chainsand Economic Transformationand the Policy Dialogue on

Natural Resource-basedDevelopment will continue toplay a crucial role in promotingexchange of good practices andpeer learning among countries atdifferent levels of development.

Delivering the OECDsCorporate ProductsEfficiently and Effectively

Cognisant of Members prevailingchallenging budgetary situation,the OECD has launched acorporate effort to continuedelivering high quality outputs,while doing more with theresources provided and workingsmarter to provide even bettervalue for money for Members.The Value for Money (V4M)project involves a comprehensive

stock-taking of costs andprocesses, aiming to improveproduction processes andefficiencies. It will encourageinnovative ideas and promote thesharing of good practices linkedto efficiency gains and embeda culture of cost consciousnesswithin the Organisation. Linkedto this, we will continue todevelop new and improvedways to share information and

create knowledge and facilitate

Aloizio Mercadante, Minister of Education, Brazil, and Angel Gurra, Secretary-General of

the OECD, October 2013


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to become increasingly targetedalong both thematic and national

lines.

In deploying its communicationsstrategy the OECD will aimfor: global reach, reflectingthe growing diversity of itsmembership and increasinginteraction with partnercountries; competitive, unbiasedand authoritative analysis anddata; technological savoir faire,offering increasingly efficient and

effective ways to engage with allthe OECDs audiences; opennessand accessibility, offering publiclyavailable analytical content free ofcharge; coherence and efficiency,ensuring the maximum possibleimpact in the dissemination of itscontent.

In pursuing these objectiveswe will build on our collectiveexpertise and working methods,while improving the relevance,effectiveness and efficienciesof our committees work. Wewill also continue to supportMembers efforts to reach asuccessful conclusion of theOECDs governance review.

My Strategic Orientations aimto support member and partnergovernments ability to improve

the daily lives of the greatestnumber of people, and to bringabout shared prosperity and well-being, consistent with our goalof promoting better policies forbetter lives. Our work has justbegun!

ways to present our work in amore targeted and timely way.

In tandem, we will explore howto bring together our collectiveknowledge through a virtualOECD Institute portal.

The OECD relies on thedissemination of its work toensure that its analysis andfindings have a broad impact onpolicy makers, policy shapers,and society at large, making itscommunication strategy a critical

element to maximise its capacityto influence the public debateand shape policy challenges.Our communication work willrely on careful planning, whileat the same time preparing forthe unforeseen. Over the comingyears a number of major eventswill contribute to shaping theheadlines. In some cases, theseevents will offer opportunities forthe OECD to capitalise on mediaattention; in others, they willrequire redoubling our effortsto ensure the coverage andvisibility of the Organisationsoutputs. Among the events thatthe OECD will take into accountfor its communication planningwill be the elections in 11 OECDand key partner countries (andthe European Parliament); theG20 presidencies of Australia and

Turkey; China chairing APEC;Myanmar chairing ASEAN; the UNSG Leaders Summit on ClimateChange; the World EconomicForum in Davos; and the Forumof the Americas; as well as ahost of other events that willattract global media attention.The OECDs Global ParliamentaryNetwork will continue to be a corepillar of the OECDs disseminationwork. This will be further

strengthened in the coming years,

interactions between the OECD,emerging and developing

economies. We will also reviewour forecasting processes todevelop our capacities forscenario analysis and providereal-time crisis managementand advice. As part of theseefforts, the OECD could establisha surveillance mechanism toanalyse the vulnerabilities andresilience of economies againstshocks, including by developingearly warning indicators,

in co-ordination with otherinternational efforts and buildingon the OECDs country reviewprocess. The Organisation couldalso explore relaunching theInternational Futures Programme(IFP) with a view to promotinga better understanding of largesystem changes, transformation,and transition management,through multi-stakeholderdialogues that help us scale upour knowledge and capacities.

Leveraging the OECDsLeaders Programmeand SharpeningCommunications

We will continue to develophigh impact platforms fordelivering timely, targetedpolicy advice to the highest-level

officials, the Leaders Programmeand Better Policies series will beinstrumental in this regard.Through the Leaders Programme,we will consolidate the OECDas the nexus where leaderscan obtain real-time, targetedand comprehensive policyanalysis and offer a place toconvey important messages tothe international community.We will also expand our Better

Policies Seriesto develop new


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\\\OVERVIEW/ Secretary-Generals activity in 2013

the Secretariat and delegations have alsobenefitted from these visits through a programmeof public lectures, addresses to members of theOECD Council and interactive policy seminars.

The Organisations media presence and coverage

has also remained consistently high followingthe peak reached during the 50thAnniversary in2011, which was an exceptional year in termsof visibility. In 2013, the Secretary-General wasquoted in over 1 100 articles and author of 19, upsharply from only 6 articles authored in 2012. Helaunched 40 outlooks and flagship publications(up from 29 in 2012) and gave 259 speeches (upfrom 220 in 2012) and marking a steady year-on-year increase from only 84 in 2007.

The Organisations visibility took a number ofsignificant steps forward again in 2013. Totaldissemination of OECD content increased bymore than 38% to 16.6 million instances acrossall publishing platforms (iLibrary, Google books,etc.). Visits to the OECD website reached 16.4million for all of 2013, the final four months ofthe year registering a 23% increase in trafficcompared to the same period in 2012.

SG Annual Report to Ministers 2014

Documents

Transcript of SG Annual Report to Ministers 2014