Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard...

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OECD Skills Outlook Global Launch Skills and Global Value Chains @UniofBathIPR, @OECDEduSkills #OECDSkills 4 May 2017 Andreas Schleicher Andrew Wyckoff 1 Skills Outlook 2017 Skills and Global Value Chains 30 th May 2017 Stéphanie Jamet

Transcript of Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard...

Page 1: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

OECD Skills Outlook Global LaunchSkills and Global Value Chains

@UniofBathIPR, @OECDEduSkills#OECDSkills

4 May 2017

Andreas SchleicherAndrew Wyckoff

1

Skills Outlook 2017Skills and Global Value Chains

30th May 2017Stéphanie Jamet

Page 2: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

People are at the centre of Global Value Chains

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What Global Value Chains (GVCs) mean

Value added

The Smiling Curve

3

 

 

 

 

 R&D 

Design 

Logistic purchase 

Production 

Assembling 

Logistic

Market

Service

Pre‐production  

Upstream activities 

Post‐production  

Downstream activities 

Production  

Value chain activities 

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A comprehensive approach

Exports of manufactured goods include a large share of value added from abroad 

Foreign value added embodied in exports, manufactured goods and services, 2011

0102030405060708090

100

Domestic, in manufactured exports Foreign, in manufactured exportsForeign, in business services exports

Source: OECD Trade in Value Added database (TiVA).

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0102030405060708090

%

EU28 East and Southeast Asia (excl. China) NAFTAChina Rest of the world

Many jobs depend on demand in foreign countries

Source: OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society.

Jobs in the business sector sustained by foreign final demand, by region of demandAs a percentage of total business sector employment, 2011

5

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Skills Matter for globalisation

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• Realise productivity gains – offered by new technologies and participation in GVCs

• Protect workers against negative impact– Job losses, lower job quality 

• Specialise in advanced industries and services– Innovation, higher productivity, job creation

7

Why skills?

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0

0,5

1

1,5

2

2,5

Backward participation(exports)

Backward participation (finaldemand)

Forward participation (finaldemand)

Least fragmentable industries Most fragmentable industries

Percentage points

Average annual increase in productivity growth, 1995‐2009

Larger increase in: Transport eq., Electrical and optical eq., Food products, Chemicals

Smaller increase in:Computer activities, R&D and other business activities, health and social work

Source: OECD calculations based on OECD TiVA database and World Input‐Output Database (WIOD).

Participation in GVCs can lead to productivity gains, especially if associated with skills

8

Skills channel 

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Gap in job quality between high‐skilled and low‐skilled workersand participation in global value chains

More educated workers enjoy better job quality 

AUT

BEL

CZE

DNK

ESTFIN

FRA

DEUGRC

HUN

IRL

ITA

LUX

NLD

NOR

POL

PRTSVK

SVNESPSWE

TUR

GBR

0

10

20

30

40

50

60

0 10 20 30 40 50 60 70

Gap in the quality of the working environment between high-skilled and low-skilled workers

Backward participation in GVCs, %

In countries more integrated in global markets, the gap in job quality between educated and less educated workers is bigger

Source: OECD calculations based on OECD Job Quality Database and OECD Trade in Value Added database (TiVA).

Earnings qualityLevel and distribution of earnings

Labour‐market securityRisk of unemployment and available income support

Quality of the working environmentNature and content of work performed, work‐time arrangements and workplace relationships

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Production

Marketing

Services

Design

R&DValue added along GVCs

From economic to social outcomes

By investing in skills, countries can help make GVCs work for all

Skills

Employment

Social outcomes

ProductivityA scoreboard to on skills and GVCs  capturing for each country:• Skills• Participation in GVCs• Economic and social outcomes

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Limited share of low‐skilled workers

To participate in GVCs, ensure that participation translates into productivity growth and limit risk of employment loss, increased inequality and poor job quality

Developing skills To ensure that participation in GVCs translates into good economic and social outcomes, countries need to raise skill outcomes

Advanced skills To specialise in technologically advanced industries, the quality of skills at the top end of the skill distribution is important

Increasing participation in GVCs

How successfully have countries extended their participation in GVCs by importing foreign inputs for exports and producing inputs used in other countries inputs

Specialised in advanced industries

Specialisation in technologically advanced industries is linked to value creation, innovation and productivity gains (revealed comparative advantage)

Increasing specialisation in advanced industries

How quickly has the revealed comparative advantage grown

Increasing productivity

Increased participation in GVCs can lead to productivity gains through many channels, including specialisation, increased competition and technology diffusion

Increasing employment

Participation in GVCs can affect employment through both job destruction and job creation

Improving social outcomes

Increased integration in GVCs can affect wages and inequalities, labour‐market security and the quality of the working environment

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0

10

20

30

40

50

60

70%

W k

In both literacy and numeracy In literacy only In numeracy only

The proportion of low performers in literacy and/or numeracy 

Source: OECD calculations based on OECD Survey of  Adult Skills  (PIAAC) (2012 and 2015).12

More than 200m adults in OECD countries have low literacy or numeracy skills and 60% lack both

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Limite

d share of 

low‐skilled workers

Develop

ing skills

Advanced

 skills

Increasing

 pa

rticipation in 

GVC

s

Specialised

 in 

advanced

 indu

strie

s

Increasing

 specialisation in 

advanced

 indu

strie

s

Increasing

 prod

uctiv

ity

Increasing

 em

ploymen

t

Improving social 

outcom

es

Limited share of low‐skilled workers

To participate in GVCs, ensure that participation translates into productivity growth and limit risk of employment loss, increased inequality and poor job quality

Developing skills To ensure that participation in GVCs translates into good economic and social outcomes, countries need to raise skill outcomes

Advanced skills To specialise in technologically advanced industries, the quality of skills at the top end of the skill distribution is important

Increasing participation in GVCs

How successfully have countries extended their participation in GVCs by importing foreign inputs for exports and producing inputs used in other countries inputs

Specialised in advanced industries

Specialisation in technologically advanced industries is linked to value creation, innovation and productivity gains (revealed comparative advantage)

Increasing specialisation in advanced industries

How quickly has the revealed comparative advantage grown

Increasing productivity

Increased participation in GVCs can lead to productivity gains through many channels, including specialisation, increased competition and technology diffusion

Increasing employment

Participation in GVCs can affect employment through both job destruction and job creation

Improving social outcomes

Increased integration in GVCs can affect wages and inequalities, labour‐market security and the quality of the working environment

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Countries can shape their specialisation within global value chains  through the skills of their populations

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Change in specialisation, 2000-11: Increase Decrease

Source: OECD calculations based on the Trade in Value Added Database.

Most OECD countries have increased their specialisation in technologically advanced industries

Decreasein low tech. industries

Increase in high tech. industries

Austral

iaAu

stria

Belgi

umCa

nada

ChileCz

ech R

epub

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Finlan

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ael

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Low-tech manufacturing

Food productsTex tilesWood Pulp and paperManufacturing n.e.cCoke, petroleumRubber productsOther mineral productsBasic metalsFabricated metal productsWholesale and retail tradeHotels and restaurantsTransport and storagePost and telecom.Machinery and eq.Electrical machineryMotor v ehiclesChemicals Computer, optical Other transport eq.Finance and insuranceReal estate activ itiesRenting of eq.Computer R&D

Low-tech manufacturing

Medium/low-tech manufacturing

Business services (less

complex)

Medium/high-tech

manufacturing

High-tech manufacturing

Business services (more

complex)

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Specialising in most technologically advanced industries (incl. services) requires a good alignment of countries’ skills with industries’ skills requirements

For instance, the finance and insurance industry  requires :

Workers with a mix of skillsWorkers with good numeracy skills but also managing and communicating skills to perform the various activities

Pools of workers with qualifications that reflect what they can doMany technologically advanced industries involve long sequences of tasks and poor performance at any stage greatly reduces the value of output

16

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Specialisation opportunitiesin complex business services, high‐tech and medium high‐tech manufacturing resulting from alignment between countries skill characteristics with industry requirements

Revealed comparative advantage increasedRevealed comparative advantage decreased

Austr

alia

Austr

iaCa

nada

Chile

Eston

iaFin

land

Germ

any

Irelan

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Machinery and equipment n.e.c

Electrical mach., apparatus n.e.cMotor vehicle, trailers,semi-trailer

Chemicals and chemical productsComputer, electronic, and optical

Other transport equipment

Finance and insurance

Real estate activities

Renting of machinery, equipmentComputer and related activities

Research and development,other

Medium/high-tech

manufacturing

High-tech manufacturing

Business services (more

complex)

The revealed comparative advantage captures countries’ specialisation in industries within global 

value chains. It shows the comparative advantage/disadvantage a country has in an industry relative to other countries and all other industries

Revealed comparative advantage (2011 RCA>1)No revealed comparative advantage (2011 RCA<1)

Page 18: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

Specialisation opportunitiesin complex business services, high‐tech and medium high‐tech manufacturing resulting from alignment between countries skill characteristics with industry requirements

Revealed comparative advantage increasedRevealed comparative advantage decreased

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Machinery and equipment n.e.c

Electrical mach., apparatus n.e.cMotor vehicle, trailers,semi-trailer

Chemicals and chemical productsComputer, electronic, and optical

Other transport equipment

Finance and insurance

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Renting of machinery, equipmentComputer and related activities

Research and development,other

Medium/high-tech

manufacturing

High-tech manufacturing

Business services (more

complex)

Revealed comparative advantage increasedRevealed comparative advantage decreased

Austr

alia

Austr

iaCa

nada

Chile

Eston

iaFin

land

Germ

any

Irelan

dJap

an

Kore

a

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Electrical mach., apparatus n.e.cMotor vehicle, trailers,semi-trailer

Chemicals and chemical productsComputer, electronic, and optical

Other transport equipment

Finance and insurance

Real estate activities

Renting of machinery, equipmentComputer and related activities

Research and development,other

Medium/high-tech

manufacturing

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complex)

Skills characteristic provides opportunity for specialisationRevealed comparative advantage (2011 RCA>1)No revealed comparative advantage (2011 RCA<1)

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Specialisation opportunitiesin complex business services, high‐tech and medium high‐tech manufacturing resulting from alignment between countries skill characteristics with industry requirements

Revealed comparative advantage increasedRevealed comparative advantage decreased

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Machinery and equipment n.e.c

Electrical mach., apparatus n.e.cMotor vehicle, trailers,semi-trailer

Chemicals and chemical productsComputer, electronic, and optical

Other transport equipment

Finance and insurance

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Renting of machinery, equipmentComputer and related activities

Research and development,other

Medium/high-tech

manufacturing

High-tech manufacturing

Business services (more

complex)

Revealed comparative advantage increasedRevealed comparative advantage decreased

Austr

alia

Austr

iaCa

nada

Chile

Eston

iaFin

land

Germ

any

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Machinery and equipment n.e.c

Electrical mach., apparatus n.e.cMotor vehicle, trailers,semi-trailer

Chemicals and chemical productsComputer, electronic, and optical

Other transport equipment

Finance and insurance

Real estate activities

Renting of machinery, equipmentComputer and related activities

Research and development,other

Medium/high-tech

manufacturing

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Business services (more

complex)

Skills characteristic provides opportunity for specialisationSkills characteristics insufficient to meet requirements of advanced industries

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Specialisation opportunitiesin complex business services, high‐tech and medium high‐tech manufacturing resulting from alignment between countries skill characteristics with industry requirements

Revealed comparative advantage increasedRevealed comparative advantage decreased

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Machinery and equipment n.e.c

Electrical mach., apparatus n.e.cMotor vehicle, trailers,semi-trailer

Chemicals and chemical productsComputer, electronic, and optical

Other transport equipment

Finance and insurance

Real estate activities

Renting of machinery, equipmentComputer and related activities

Research and development,other

Medium/high-tech

manufacturing

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complex)

Revealed comparative advantage increasedRevealed comparative advantage decreased

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alia

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Machinery and equipment n.e.c

Electrical mach., apparatus n.e.cMotor vehicle, trailers,semi-trailer

Chemicals and chemical productsComputer, electronic, and optical

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manufacturing

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complex)

Skills characteristic provides opportunity for specialisationCould explore wide spectrum of specialisation 

opportunities

Sweden’s specialisation in most technologically advanced industries is not fully supported by the 

skills of its population

Page 21: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

21

Limite

d share of 

low‐skilled workers

Develop

ing skills

Advanced

 skills

Increasing

 pa

rticipation in 

GVC

s

Specialised

 in 

advanced

 indu

strie

s

Increasing

 specialisation in 

advanced

 indu

strie

s

Increasing

 prod

uctiv

ity

Increasing

 em

ploymen

t

Improving social 

outcom

es

Limited share of low‐skilled workers

To participate in GVCs, ensure that participation translates into productivity growth and limit risk of employment loss, increased inequality and poor job quality

Developing skills To ensure that participation in GVCs translates into good economic and social outcomes, countries need to raise skill outcomes

Advanced skills To specialise in technologically advanced industries, the quality of skills at the top end of the skill distribution are important

Increasing participation in GVCs

How successfully have countries extended their participation in GVCs by importing foreign inputs for exports and producing inputs used in other countries inputs

Specialised in advanced industries

Specialisation in technologically advanced industries is linked to value creation, innovation and productivity gains (revealed comparative advantage)

Increasing specialisation in advanced industries

How quickly has the revealed comparative advantage grown

Increasing productivity

Increased participation in GVCs can lead to productivity gains through many channels, including specialisation, increased competition and technology diffusion

Increasing employment

Participation in GVCs can affect employment through both job destruction and job creation

Improving social outcomes

Increased integration in GVCs can affect wages and inequalities, labour‐market security and the quality of the working environment

Page 22: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

Globalisation is being questioned

AUS

AUT

BEL

CAN CZE

DNK

ESTFIN

FRA

DEU

GRC

HUN

ISL

ISRITA

JPNKOR

LUX

MEXNLD

NZL

NOR

POL

PRT

SVK

SVN ESP

SWE

TUR

GBR

USA

-0.08

-0.06

-0.04

-0.02

0

0.02

0.04

0.06

-15 -10 -5 0 5 10 15

Change in the Gini coefficient

Change in backward participation in GVCs

IRL

Inequalities have increased or decreased in countries that have increased their participation in GVCs

Source: OECD Trade in Value Added Database (TiVA); OECD Income Distribution Database.

2000‐12

22

Page 23: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

23

Limite

d share of 

low‐skilled workers

Develop

ing skills

Advanced

 skills

Increasing

 pa

rticipation in 

GVC

s

Specialised

 in 

advanced

 indu

strie

s

Increasing

 specialisation in 

advanced

 indu

strie

s

Increasing

 prod

uctiv

ity

Increasing

 em

ploymen

t

Improving social 

outcom

es

Page 24: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

24

Limite

d share of 

low‐skilled workers

Develop

ing skills

Advanced

 skills

Increasing

 pa

rticipation in 

GVC

s

Specialised

 in 

advanced

 indu

strie

s

Increasing

 specialisation in 

advanced

 indu

strie

s

Increasing

 prod

uctiv

ity

Increasing

 em

ploymen

t

Improving social 

outcom

es

Germany

Korea

Poland

Seized the benefits of GVCs by increasing participation in GVCs, increasing specialisation in advanced industries and delivering better 

outcomes

Page 25: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

25

Limite

d share of 

low‐skilled workers

Develop

ing skills

Advanced

 skills

Increasing

 pa

rticipation in 

GVC

s

Specialised

 in 

advanced

 indu

strie

s

Increasing

 specialisation in 

advanced

 indu

strie

s

Increasing

 prod

uctiv

ity

Increasing

 em

ploymen

t

Improving social 

outcom

es

Germany

Korea

Poland

UK

US

Denmark

Ireland

Increased participation in GVCs but have seen weak outcomes, in part because of insufficient skills

Page 26: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

26

Limite

d share of 

low‐skilled workers

Develop

ing skills

Advanced

 skills

Increasing

 pa

rticipation in 

GVC

s

Specialised

 in 

advanced

 indu

strie

s

Increasing

 specialisation in 

advanced

 indu

strie

s

Increasing

 prod

uctiv

ity

Increasing

 em

ploymen

t

Improving social 

outcom

es

Germany

Korea

Poland

UK

US

Denmark

Ireland

Sweden

Japan

Could benefit more from participation in GVCs by deepening specialisation in technologically advanced industries and by 

increasing productivity and employment

Page 27: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

Implications for education and training policies 

Implications for: Education and training policies 

27

Page 28: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

Implications for skills policies

28

• Improve quality of education and training• Ensure relevant and reliable qualifications

There is huge variation in the skills of people with similar qualifications

• Better connect the worlds of learning and workCountries comparative advantage emerges from interactions between skills characteristics and industry requirements

• Remove barriers to further skills developmentDon’t expect workers to accept they lose their jobs if they don’t feel prepared to get or create a new one

Page 29: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

Equip graduates with reliable skills‐based qualifications

0

10

20

30

40

50

60%

Percentage of young graduates from university with a low level (level 2 or below) of numeracy skillsTertiary‐type A only, 20‐34 years‐old, 2012 or 2015

Source: OECD calculations based on OECD Survey of  Adult Skills  (PIAAC) (2012 and 2015). 29

Page 30: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

Remove barriers to further skills developmentPercentage of adults participating in education and training by employment status, 2012 or 2015

30

0102030405060708090

100

Employed Unemployed Inactive%

Source: OECD calculations based on OECD Survey of  Adult Skills  (PIAAC) (2012 and 2015).

Page 31: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

Implications for skills policies

31

• Improve quality of education and training• Ensure relevant and reliable qualifications

There is huge variation in the skills of people with similar qualifications

• Better connect the worlds of learning and workCountries comparative advantage emerges from interactions between skills characteristics and industry requirements

• Remove barriers to further skills developmentDon’t expect workers to accept they lose their jobs if they don’t feel prepared to get or create a new one

• Enhance international collaboration on skills– GVCs make it harder for countries to recoup their investment in skills– Recognition of qualifications– Financing arrangements that reflect the distribution and benefits of 

costs across countries

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Implications for education and training policies 

Policy effort has to go beyond education and training policies

32

Page 33: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

Adopt a whole‐of‐government approach

33

Co‐ordinate these policies with other policy domains: Industry Innovation Trade  Investment And others…

Look at full range of reforms affecting skills: Education and training  Labour market  Firms’ organisation and management 

practices Migration  And others…

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Countries can shape their potential to be part of global education, innovation and research networks

Countries' potential to be part of global education, innovation and research networks, a synthetic indicator

Source: OECD calculations based on the OECD Patent Database; OECD Main Science, Technology and Industry Indicators Database; OECD Education at a Glance Database;  OECD (2015), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society.

34

0

0.5

1

1.5

2

2.5Index

Receiving funding for R&D from abroad (private and public)

Receiving funding for R&D from abroad (private and public)

0

0.5

1

1.5

2

2.5Index

Attracting international students and high-skilled workers

Receiving funding for R&D from abroad (private and public)

0

0.5

1

1.5

2

2.5Index

Developing international co-operation in innovation and researchAttracting international students and high-skilled workersReceiving funding for R&D from abroad (private and public)

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Implications for education and training policies 

Implications for: Education and training policies 

35

Making global value chains work for all

Invest in skills

Adopt a whole‐of government approach to 

skills

Co‐ordinate this effort with other policies 

Develop international cooperation 

Equip the population with strong mixes of skills, well signalled by qualifications, aligned with industries’ needs 

Coordinate education, training, labour market, migration and other policies affecting the development and use of skills

Align skills policies with trade, investment, innovation, and industry policies to make the most of GVCs

As production, education, and innovation become internationalised, countries need to better co‐operate on 

their policies 

Page 36: Skills Outlook 2017€¦ · Source:OECD (2015b), OECD Science, Technology and Industry Scoreboard 2015: Innovation for growth and society. Jobs in the business sector sustained by

Thank you!http://bit.ly/skillsout17

36

Grundke, R., S. Jamet, M. Kalamova, and M. Squicciarini, (2017), “Having the right mix:The role of skill bundles for comparative advantage and industry performance in GVCs”,OECD Science, Technology and Industry Working Papers, 2017/03, OECD Publishing, Paris.http://dx.doi.org/10.1787/892a4787‐en.

Grundke, R., S. Jamet, M. Kalamova, and M. Squicciarini (forthcoming), “Skills and globalvalue chains: Characterisation and evidence”, OECD Science, Technology and IndustryWorking Papers, OECD Publishing, Paris.

Further reading