Policies to Make Trade
Work for All
Sebastian Barnes
Counsellor to the Chief Economist
Integration versus Isolation Conference
25-26 April 2017
www.oecd.org/economy/
ECOSCOPE blog: oecdecoscope.wordpress.com/
The “low growth” environment creates a
difficult economic and social context
Global GDP growth
Source: OECD March 2017 Interim Economic Outlook.
2
Deep challenges - widening productivity gaps
and growing wage inequality
Labour productivity
Real compensation per worker
Index, 2001 = 100
Index, 2001 = 100
Note: Frontier firms are the 5% of firms with the highest labour productivity by year and sector. Industries included are manufacturing and business
services, excluding the financial sector, for firms with at least 20 employees.
Source: Andrews, D., Criscuolo C., and Gal P. (2016), “The Best versus the Rest: The Global Productivity Slowdown, Divergence across Firms and
the Role of Public Policy”, OECD Productivity Working Papers, No. 05; Orbis data of Bureau van Dijk; and OECD calculations.
3
Package of fiscal and structural policies
to boost trade and for more inclusive growth
Long-term GDP gain
Note: Structural reforms shows the impact of a 10% reduction of product market regulations.
Source: Mourougane A. et al. (2016), “Can an increase in public investment sustainability lift economic growth?” OECD
Economics Department Working Papers, No. 1351, OECD Publishing, Paris; and OECD calculations.
4
OECD Going for Growth:
a wide-range of structural reform priorities
5
Source: Going for Growth 2017
Three key priorities that would help
economies to benefit more from trade
• Firms: Promoting business dynamism and
diffusion of technology and knowledge
• Jobs: Helping workers to cope with the rapid
turnover of firms and jobs
• Skills: Preparing young people for labour market
of the future
However, reallocation across firms has slowed
Share of firms
Percent
24
20
Young firms (0-5 years)
16
12
Mature firms (6-10 years)
8
4
Non-viable old firms (older than 10 years)
0
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Source: OECD Global Forum for Productivity, Background paper, “THE GLOBAL PRODUCTIVITY SLOWDOWN, TECHNOLOGY
DIVERGENCE AND PUBLIC POLICY: A FIRM LEVEL PERSPECTIVE, by Andrews, Criscuolo and Gal (2016)
Policies that would contribute to
dynamic economies
Estimated frontier spillover (% p.a.) associated with a 2% point increase in MFP
growth at the global productivity frontier
Policies that help workers to best
use their skills
The probability of skill mismatch and public policies
Entry and Exit
Labour mobility
Education
Ambition on structural reform has faded
OECD Going for Growth
recommendations implemented
13
Source: OECD Going for Growth 2017, forthcoming on March 17: www.oecd.org/eco/growth/goingforgrowth.htm.
Stronger efforts in some areas, but not
those key to making trade work
Indicator of number of actions taken in response to Going for Growth
recommendations over 2-year periods
Source: Going for Growth 2017
14
Policy packages would make sense,
but aren’t being pursued
Reform progress made in the areas of Going for Growth
recommendations 2015-16
Little
progress
Little progress
Some progress
CHL, DEU,
IDN
BEL, ESP,
LUX, ITA
Product market
measures
Some
progress
DNK, IND, JPN,
POL, SVN, TUR
AUT, FRA, FIN,
KOR, LVA
Labour market measures
Note: Reform progress based on responsiveness to Going for Growth recommendations by policy area. Little progress
corresponds to a reform responsiveness rate of 0 to 20% and some progress for a responsiveness rate of more than 20%.
Source: OECD Going for Growth 2017, forthcoming on March 17: www.oecd.org/eco/growth/goingforgrowth.htm.
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