2. OECD’S ROLE IN GLOBAL GOVERNANCE: THE CONTRIBUTION OF STRUCTURAL INDICATORS AND BENCHMARKING
JEAN-PHILIPPE COTIS
OECD Chief Economist

3. A typology of world governances
Direct governance
Applies to international entities regulating global phenomenon, with instruments global in scope
Examples include the Kyoto Protocol and the WTO
Indirect governance
Seeks to reduce local inefficiencies which are global in origin through effective domestic policies
Examples are many: population ageing, financial pressures in health systems, adapting education systems to scientific and technical progress

4. Institutions for indirect governance
Each country has its own social and cultural characteristics which shape policy choices and must be respected
A diversity of policy choices is also a source of progress
Potential for experimentation by proxy, by observing others
But this is costly as it requires considerable time and expertise
Economies of scale are possible through the establishment of international institutions specialising in comparative analysis
However the country loses direct involvement in the analytical process and may subsequently feel alienated from the findings

5. OECD: an institution of indirect governance
A hybrid organisation where
Every country can be involved in selecting the issues
The results can be discussed with professional economists
A forum is provided for policy makers to debate with their foreign counterparts what practical conclusions should be drawn
Peer review serves as a catalyst for advancing policy reform
But countries are naturally cautious to extend indirect governance

6. The contribution of benchmarking
International comparisons must be able to distinguish between ‘legitimate’ societal choices and public policy failings
The OECD produces benchmarks, through rigorous methods that cover a wide range of structural areas. These are used:
To identify ‘apparent’ performance strengths and weaknesses
As inputs to analytical studies which measure the effectiveness of various policies
The results are scrutinised, criticised and debated by experts from national administrations and academia in an objective manner
Explaining divergences in growth performance: an example of benchmarking analysis

7. Real per capita GDP has dropped relative to the United States

8. Differences in labour utilisation mostly explain the gap in GDP per capita

9. The interpretation of growth decompositions requires care

10. Labour utilisation and productivity gaps relative to the U.S

11. Employment protection legislation and barriers to entrepreneurship in selected OECD countries

12. Disincentives in old age pension systems discourage older persons from working

13. Disincentives to older workers are also high in social transfer programmes

14. Work disincentives bear on the older-worker employment rate

15. Removing implicit taxes on older workers would raise participation