global parliamentary-network-oct2014 g20-eco
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Presentation by Christian Kastrop, Director, Policy Studies Branch, OECD Economics Department during OECD Global Parliamentary Network meeting on 2 October 2014. G-20 Finance Ministers and Central Bank Governors agreed in February 2014 to develop policies able to "lift the G-20 collective GDP by more than 2% above the trajectory implied by current policies over the coming 5 years". To that end, G-20 countries have been developing comprehensive Growth Strategies, which will form the basis of a Brisbane Action Plan to be endorsed by Leaders in Brisbane in November. The OECD has contributed substantially to the definition of this target, identifying the areas where reforms would have the most positive impact on GDP. The OECD has also provided an assessment of the reform commitments in countries’ Growth Strategies in two rounds of review, helping to identify the scope for additional efforts to achieve the 2% objective.TRANSCRIPT
THE OECD’S ANALYSIS OF G-20 GROWTH STRATEGIES
2 October, 2014 Christian Kastrop Director of Policy Studies Economics Department
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I. The role of the OECD’s Economics Department in the G-20 process
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The G-20 and the finance track
The G-20 is one of the premier bodies for international cooperation
Members: 19 countries + EU • Spain is permanent invitee; 5 others invited on year-by-year basis
Supported by 7 IOs: IMF, WB, OECD, WTO, ILO, UN, FSB
Rotating presidency – no set order, aim to achieve regional balance over time
Two “tracks”: finance and sherpas
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The G-20 and the finance track
G-20 leaders
Finance Ministers
+ Deputies
Framework Working
Group (FWG)
Infrastructure and
investment (IIWG)
Sherpas
Employment Taskforce
(ETF) Trade Development
Work Group
Anti-Corruption
Working Group
….
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OECD involvement in G-20 finance track
Macroeconomic coordination (Economics Department)
Structural reform and growth (Economics Department)
Investment (Directorate for Financial and Enterprise Affairs)
Financial regulation (Directorate for Financial and Enterprise Affairs)
BEPS and AITC (Centre for Tax Policy, Economics Department)
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2014 G-20 Growth Strategies
Framework Working Group’s mandate: Strong, Sustainable and Balanced Growth
2014 innovation: quantitative target for stronger growth
• Sydney objective: raise G-20 GDP in 2018 by 2% over baseline (October 2013 WEO)Each G-20 member to submit a Growth Strategy as their contribution to the Brisbane Action Plan
Draft Growth Strategies assessed at Framework Working Group in June and September
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Contributions of the OECD Economics Department to the Growth Strategies
1. Assessment of policy gaps (before growth strategies set)
• Gaps vis-à-vis priorities set out in OECD’s Going for Growth • Gaps vis-à-vis recommendations in OECD Economic Surveys • Other OECD analysis
2. Assessment of commitments in draft growth strategies
• How many? What sort? How new? How assessable? What contributions to Strong, Sustainable and Balanced Growth?
3. Quantification (with IMF) of growth impacts vis-à-vis 2% target
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II. Assessment of commitments and quantification of growth impacts
More than ever -- over 950 commitments
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Number of structural policy commitments
0
100
200
300
400
500
600
700
800
900
1000
Los Cabos (2012) St.Petersburg (2013) Brisbane (2014)
Commitments quite evenly spread by “theme”, with employment having the largest share
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Investment & Infrastructure
27%
Employment 29%
Competition 16%
Trade 14%
Other 14%
OECD/IMF approach to quantification
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Shock
• Impact of measure on OECD indicators or tax structure, R&D, active labour market programme spending, childcare
Impact • Apply elasticity to productivity/jobs based on existing research
Macro outcome
• Supply-side shocks calculated by OECD applied in IMF macro model (G20MOD) -- general equilibrium model allowing for spillover effects
Quantification - disclaimer
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There are major uncertainties at every stage of the quantification: • Distinction between “new” and “old” measures • Impact of measures on indicators • Effect of change in indicators on GDP • Assessing commitments falling outside the areas where
indicators help with quantification • Full and immediate implementation of commitments is
assumed Plus • No analytical framework available – one quarter of measures • Measures falling out of time horizon 2013-2018
Progress towards the G-20 objective
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Current OECD/IMF estimates of the impact of G-20 Growth Strategies suggest that they would raise GDP by approximately 1.8% in 2018 vs the baseline.
Product market reforms account for the largest part of the estimated gains
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III. Next steps
Brisbane and beyond
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Countries still finalising growth strategies
OECD/IMF assessment of commitments may still be refined
From 2015, the focus shifts to monitoring implementation
Growth strategies could be modified as circumstances change, creating further demand for quantified growth impact estimates
The G-20 has also asked the OECD to analyse the effects of the composition of taxes and expenditures on growth outcomes