Transcript Global Challenges

Enhancing the Growth Potential
during the Fiscal Consolidation
Ingrid Brocková
Permanent Representative of the SR to the OECD
Economics University in Bratislava
November 15-16,2012
Global Challenges – Context for
the Slovak Republic
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Historical context - importance of
public policies (www.gapminder.org)
Global challenges – key trends
Food for thoughts /questions relevant
to development in Slovakia
Key Trends
Public policies matter,...
www.gapminder.org
 Living standard
 Life expectancy
 Demographics
 Emerging powers
 Globalization
Economic Challenges
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Sustainable public finances (EU context), fair and
sustainable tax and spending balance, policy mix
Financial sector – balance between savings and investment
into real economy (separation/regulation of socially demaging
investment banking)
Regulation „failure to regulate market failure is a failure“,
good regulation as an integral part of the system, not an addon
Open economies – open markets and trade, whilst
managing the social, structural and sequencing impatcs of
globalization
Social and Environmental
Challenges
Social:
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Jobs – how to achieve job-rich growth
Inequality – OECD: Divided We Stand and the Jobs Study
Social Security – financing the health, education and
pension system (HOW?)
Ownership – the role fo all stakeholders (business
community, unions, etc.)
Environmental:
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Perfect storm – natural resource scarcity is growing rapidly,
accentuated by increasingly extreme and unpredictable
weather events and climate change.
Energy and environmental security
Institutional Challenges
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Domestically - a dramatic decline in trust in politics, public
services and democratic institutions at the very same time as
an increase in the need for good governance and smart
government
Internationally – a „zero-sum“ rather than „win-win“
mentality to most negotiations (trade, climate, etc).
Need for more holistic approach - Behavioural Economics and
Complexity Economics
OECD : New Approaches to Economic Thinking
Sophisticated integration, recognition of complementarities,
inconsistencies, trade-offs, spillovers.
Slovak Republic
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EU context (consolidation effort)
Goal: Balanced and sustainable economic growth
and employment while to achieve the
competetiveness; What kind of growth?
Environmentally sustainable? Job rich? Socially
inclusive?
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Focusing on policy making and measuring –
going beyond the GDP; measuring „what matters“
(not only trends, but stocks – natural and human
capital).
Long-term Unemployment
Youth Unemployment
U
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Fr s
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Educational Achievement
Average of PISA scores in reading, mathematics and
science
120
2009
2006
110
100
90
80
70
Direct public funding of business´s
research and development
Direct public funding of business R&D
Percentage of GDP
2007-2009¹
2002-2004²
0,45
0,40
0,35
0,30
0,25
0,20
0,15
0,10
0,05
0,00
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il e ec ico li c n d ada gal ds pan l ia n d k ey aly an d ark urg and n ia ary CD E U i um ay and and o m any ni a p ain bl ic den n ce orea rae t es tri a
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Structural changes in the Slovak Republic
(OECD Going for Growth 2012)
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Communication (country specific
approach in implementation of
structural reforms)
The optimal policy mix? Growth
friendly? Fiscal consolidation with
human face, choice of instruments
Long-term vs. short-term impact?
Priorities supported by indicators
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Improve funding and effectiveness of the education
system (Roma children, vocational training, student tuition);
Reduce regulatory barriers to competition (administrative
burdens, privatization process in network industries,
compulsory chamber membership); Regulatory Impact
Assessment (RIA);
Eliminate barriers to female labour participation (parental
leave, remove fiscal disincentives to work for second earners);
Reduce the implicit taxes on continued work at older ages
(index the retirement age to life expectancy and make pension
adjustment for earlier and later retirement more actuarially
neutral);
Priorities supported by indicators
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Improve activation policies (capacity of
PES, tighten conditionality requirements for
jobseekers, target job creatino subsidies
more narrowly);
Improve the innovation support
framework (reduce administrative burdens
on start-ups, access to the VC and ICT,
public funding of R&D, R&D framework);
Strengthen the judicial and law
enforcement systems (accountability –
performance indicators and court statistics).
OECD Economic Survey – Slovak
Republic 2012
Improving the fiscal framework to
enhance growth in an era of fiscal
consolidation
 Investing efficiently in education and
active labour market policies
Secretary General of the OECD,
December 6, 2012 in Slovakia
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Thank you for your attention
The Permanent Delegation of the
Slovak Republic to the OECD
www.oecdparis.mfa.sk