1. Policies to Make Trade Work for All
Sebastian Barnes
Counsellor to the Chief Economist
Integration versus Isolation Conference
25-26 April 2017
ECOSCOPE blog: oecdecoscope.wordpress.com/

2. The “low growth” environment creates a difficult economic and social context
Global GDP growth
Source: OECD March 2017 Interim Economic Outlook.

3. Real compensation per worker
Deep challenges - widening productivity gaps and growing wage inequality
Labour productivity
Index, 2001 = 100
Real compensation per worker
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.

4. 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.

5. OECD Going for Growth: a wide-range of structural reform priorities
Source: Going for Growth 2017

6. 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

7. Key reform priorities: Skills
Preparing youth for labour market of the future while improving gender balance
Recommendation
Countries with a priority
Allocate resources in education more equitably
BEL CRI CZE DEU DNK FRA HUN ISL ISR LVA NZL POL PRT SVK SWE USA 
Expand and improve vocational training
ARG BRA CHN CRI DNK ESP EST FRA GBR GRC IND ISR LUX POL PRT TUR ZAF
and education
Improve access to childcare
ARG AUS AUT CHE CHL COL CRI CZE DEU EST JPN KOR LTU LUX MEX NZL POL SVK TUR USA
and early childhood education
Source: Going for Growth 2017

8. Key reform priorities: Firms
Promoting business dynamism and diffusion of technology and knowledge
Recommendation
Countries with a priority
Boost return on innovation by enhancing R&D collaboration between universities and firms
 AUS CHL COL CRI EST IRL ISL ITA LUX PRT SVN
Improve efficiency of business services by reducing regulatory barriers to entry in professional services
AUT BEL CAN DEU ESP FRA IRL LVA LUX MEX PRT SVN 
Help innovative firms to reach new markets by addressing infrastructure bottlenecks
AUS ARG BRA COL CRI EST EU IDN IND ISR ITA LVA POL GBR USA 
Raise efficiency and equity of tax systems by broadening the tax base and reducing tax expenditures
ARG AUS AUT CAN COL DEU ESP EST GRC ITA JPN NOR TUR 
Source: Going for Growth 2017

9. Key reform priorities: Jobs
Helping workers to cope with the rapid turnover of firms and jobs
Recommendation
Countries with a priority
Facilitate firm entry by streamlining permits and licensing and cutting red tape
AUS BEL CAN CHL CHN CRI GRC HUN IDN IND IRL ISR LVA POL SVN ZAF
Boost job creation by reducing the tax wedge on low-skilled workers
BEL DEU ESP EST HUN ITA LVA NLD POL TUR
Help laid-off workers to find a new job by raising the scope and efficiency of active labour market policies
ARG ESP EST GBR GRC ISR LVA LTU SVN USA ZAF   
Source: Going for Growth 2017

10. However, reallocation across firms has slowed
Share of firms
Percent
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)

11. 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

12. Policies that help workers to best use their skills
The probability of skill mismatch and public policies
Entry and Exit
Labour mobility
Education

13. Ambition on structural reform has faded
OECD Going for Growth recommendations implemented
Source: OECD Going for Growth 2017, forthcoming on March 17:

14. 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

15. Policy packages would make sense, but aren’t being pursued
Reform progress made in the areas of Going for Growth recommendations
Little progress
Some progress
CHL, DEU, IDN
BEL, ESP, LUX, ITA
DNK, IND, JPN, POL, SVN, TUR
AUT, FRA, FIN, KOR, LVA
Product market measures
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: