OECD Economics Department Annual Report 2018-2019

OECD Economics Department Annual Report September 2018 - August 2019

Contents Publication Launches Economic Outlook

3

Economic Policy Reforms: Going for Growth

6

Economic Surveys

7

G7and G20 Contributions

17

Global Forum on Productivity

18

Horizontal Collaboration

19

Slovenia: Development Strategy 2030

20

In-Depth Productivity Review of Beligium

20

Papers Policy Papers

21

Working Papers

23

Data Releases

26

Ecoscope Blog

27

NAEC Innovation Lab

30

Chief Economist Talks

30

Brown Bag Seminars

31

Cover image by TeroVesalainene from Pixabay

2 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

“The Economics Department is at the forefront of making integrated assessments of countries’ challenges and providing evidence based recommendations on macroeconomic policies and reforms that benefit all, based on peer experience. In the current challenging context where global expansion is threatened by risks such as trade tension, political risks and weakening of the international rulebased system, the Economics Department is well placed to provide relevant and impactful support to policy makers.”

LAURENCE BOONE, OECD CHIEF ECONOMIST

Staff from the OECD Economics Department, May 2019.

Photo: Patrice Orliange

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Economic Outlook 21 November 2018 Growth has peaked amidst escalating risks Presenting the Outlook, OECD Secretary-General Angel Gurría said: “Trade conflicts and political uncertainty are adding to the difficulties governments face in ensuring that economic growth remains strong, sustainable and inclusive.”

Laurence Boone, OECD Chief Economist, said: “There are few indications at present that the slowdown will be more severe than projected. But the risks are high enough to raise the alarm and prepare for any storms ahead. Cooperation on fiscal policy at the global and euro level will be needed.”

SPECIAL CHAPTER: DECOUPLING OF WAGES FROM PRODUCTIVITY: WHAT IMPLICATIONS FOR PUBLIC POLICIES? Several OECD countries have been grappling not only with slow productivity growth but have also experienced a slowdown in real average wage growth relative to productivity growth, which has been reflected in a falling share of wages in GDP. At the same time, growth in low and median wages has been lagging behind average wage growth, contributing to rising wage inequality. Together, these developments have resulted in the decoupling of growth in low and median wages from growth in productivity. This chapter takes stock of recent OECD research on the drivers of wage-productivitydecoupling and discusses implications for public policies.

OECD Chief Economist Laurence Boone, presents the November 2018 Economic Outlook Paris. 28 Nobember 2018.

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4 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

Economic Outlook 22 May 2019 Trade uncertainty dragging down global growth This Economic Outlook was launched during the annual OECD Forum in Paris on 22 May 2019 by Angel Gurría, OECD Secretary-General, and Laurence Boone, OECD Chief Economist. The report called on governments to act to ensure a stronger economic future. It called for a return to international cooperation and multilateral dialogue to restore predictability in policy and relaunch trade.

“The fragile global economy is being destabilised by trade tensions. Growth is stabilising but the economy is weak and there are very serious risks on the horizon.

Governments need to work harder together to ensure a return to stronger and more sustainable growth,” said OECD Chief Economist Laurence Boone, launching the Outlook during the annual OECD Forum in Paris.

SPECIAL CHAPTER: DIGITALISATION AND PRODUCTIVITY: A STORY OF COMPLEMENTARITIES This chapter describes recent progress in digitalisation and assesses how it has influenced productivity and inclusiveness, based notably on recent OECD work and in the broader context of the OECD Going Digital project, the transition agenda for the Future of Work presented in the OECD Employment Outlook 2019, as well as the OECD Skills Outlook and Jobs Strategy. In turn, it discusses the complementarities inherent to the efficient adoption of digital technologies, and the policy challenges and priorities to promote a successful digital transformation.

OECD Chief Economist Laurence Boone, launching the Outlook during the annual OECD Forum in Paris. 22 May 2019.

Photo: OECD/Hervé Cortinat

Paula Garda, Piritta Sorsa & Jens Arnold, launching the Perspectivas Económicas in Buenos Aires, 21 May 2019.

Photo: Paula Garda

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Interim Economic Outlook 20 September 2018

6 March 2019

High uncertainty weighing on global growth

Global growth is weakening as some risks are materialising

OECD Chief Economist Laurence Boone presented the Interim Economic projections on 20 September 2018.

She highlighted large revisions for some economies, and called on the euro area to coordinate fiscal support and structural reforms to avoid a downturn and spur wages.

OECD Chief Economist Laurence Boone presented the Interim Economic projections on 7 March 2018. She highlighted large revisions for some economies, and called on the euro area to coordinate fiscal support and structural reforms to avoid a downturn and spur wages.

This Outlook called on policymakers to enhance resilience, boost productivity and improve inclusiveness. Policy should address the root causes of financial market pressures, including excessive asset prices and indebtedness in various forms, both public and private; improve resilience to shocks in both emerging and advanced economies; steer fiscal policy toward measures that support long-term growth; and focus reforms on skills and labour market inclusion to improve opportunities for all.

This Outlook called on central banks to remain supportive, but stresses that monetary policy alone cannot resolve the downturn in Europe or improve the modest medium-term growth prospects. A new coordinated fiscal stimulus in low-debt European countries, together with renewed structural reforms in all euro area countries would add momentum to a growth rebound, boost productivity and spur wage growth over the medium term.

OECD Chief Economist Laurence Boone, launching the Interim Economic Outlook, 20 September 2018, OECD Headquarters, Paris.

Photo: OECD/HervĂŠ Cortinat

6 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

Economic Policy Reforms: Going for Growth 12 July 2019 The Time for Reform is Now! The 2019 Going for Growth report looks at structural reforms in policy areas that have been identified as priorities to boost incomes in OECD countries and selected non-OECD economies (Argentina, Brazil, the People’s Republic of China, Colombia, Costa Rica, India, Indonesia, the Russian Federation and South Africa).

The selection of priorities and monitoring of reform actions are supported by internationally comparable indicators that enable countries to assess their economic performance and structural policies in a wide range of areas. In addition to detailed policy recommendations to address the priorities, as well as a follow-up on actions taken in the recent years, the report includes individual country notes and, since 2017, a focus on inclusive growth.

The 2019 report also includes a special chapter on reform packages that boost growth while ensuring environmental sustainability, a new extension of the Going for Growth framework.

The 2019 editions shows that in both advanced and emerging-market economies, the most prevalent priorities to be addressed by reforms are in the areas of skills and education and product market regulation, competition and trade and FDI openness. In emerging-market economies, the majority of labour market priorities tackle the policy-related causes of informality and labour market duality. In advanced economies, a significant share of labour market priorities target reducing barriers to full-time labour market participation of women, older workers, migrants and minorities. A more growth-friendly tax mix is a priority in many advanced economies, with emphasis on increasing the share of revenues coming from the taxation of property, consumption and environmental externalities.

The provision of accessible, quality infrastructure and its efficient use are key priorities, in particular in emerging-market economies. Delivering on these priorities cost-efficiently will not only boost economic growth, but improve its inclusiveness and in some cases environmental performance. Securing the rule of law, fighting corruption and improving the efficiency of the judicial system are priorities in both emergingmarket and selected advanced economies. Addressing them is necessary not only for growth itself, but also for the ability to successfully implement other structural reforms.

A large share of 2019 Going for Growth priorities can be seen as improving the equality of opportunities among current and future firms and workers. This concerns priorities to lower entry barriers, improve market access and ensure a more level playing field in product and service markets, education and skills policies and policies to increase the inclusiveness of the labour market.

Overall, 11 countries and the European Union have priorities addressing environmental pressures among their Top 5 priorities. A large number of countries have reforms recommended to boost growth that can also reduce pollution and environmental degradation. Nevertheless, environmental sustainability remains a global concern and needs to be addressed through a combination of domestic and multilateral action.

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Economic Surveys 18 of which were released during September 2018 - August 2019, have inspired or supported reform processes in various countries through analysis and metrics.

From left: Angel Gurría, OECD Secretary-General, and Giovanni Tria, Minister of Finance of Italy, Launch of the Economic Survey of Italy, Rome, 1 April 2019.

Indonesia Spain Australia Denmark Hungary Slovak Republic Portugal Sweden Argentina Italy France Japan China Mexico Latvia New Zealand Luxembourg Malaysia

10 October 2018 22 November 2018 10 December 2018 13 January 2019 31 January 2019 5 February 2019 18 February 2019 29 March 2019 27 March 2019 1 April 2019 9 April 2019 15 April 2019 16 April 2019 2 May 2019 29 May 2019 25 June 2019 10 July 2019 24 July 2019

Photo: OECD/Silvia Da Rin Pagnetto

Angel Gurría, OECD SecretaryGeneral, and Bruno Le Maire, French Minister of the Economy and Finance, Launch of the Economic Survey of France, Paris, 9 May 2019.

Photo: OECD/Victor Tonell

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Magdalena Andersson, Swedish Finance Minister and Angel Gurría, OECD Secretary-General, Launch of the 2019 Economic Survey of Sweden, Stockholm, 29 May 2019.

Photo: Finance Ministry of Sweden

8 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

Economic Survey of Indonesia 10 October 2018 The 2019 Economic Survey of Indonesia was presented in Bali by OECD Secretary-General Angel Gurría and Indonesian Finance Minister Sri Mulyani Indrawati, with Laurence Boone and Christine Lewis.

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Indonesia’s steady economic growth, with help from government policies, has raised incomes and lowered poverty rates to record lows. Prudent macroeconomic policies have contributed to economic stability, muted inflation and limited government debt.

However, government infrastructure investment and social spending is constrained by low revenues. There is ample scope to grow revenues by strengthening the tax administration to raise compliance and broadening tax bases. Indonesia has a youthful population that will boost growth in coming years. Reaping the benefits requires shifting the employment mix towards better jobs in the formal sector.

That, in turn, means tackling informality and raising skill levels, including through further structural reforms and better quality education. Indonesia’s wealth of natural resources and rich cultural diversity offer many opportunities to grow tourism across the country. The recent surge in arrivals is generating export revenue but it is also increasing pressure on the environment. Developing tourism more sustainably will involve investing in skills and supporting infrastructure accompanied by local stakeholder involvement.

SPECIAL FEATURES: TAX POLICY; SUSTAINABLE TOURISM

Economic Survey of Spain 22 November 2018 The 2019 Economic Survey of Spain was presented in Madrid by OECD Secretary-General Angel Gurría and Nadia Calviño, Spain’s Minister of Economy and Enterprise, with Müge Adalet McGowan and David Law.

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The Spanish economy continues its strong growth, thanks to past structural reforms, robust employment growth and accommodative macroeconomic policies. However, the legacy of the crisis has not yet been fully overcome and imbalances remain. The robust recovery provides an opportunity to keep reducing macroeconomic and financial vulnerabilities, such as high public and external debt.

The resilience of public finances should be increased to address medium-term challenges, including spending pressures from demographic changes. Income inequality is high and displays regional differences in Spain. More effective use of taxes and transfers, bringing people back into employment and reducing regional disparities would make growth more inclusive. Improving productivity growth, which remains subdued, will require firms to be more exposed to competition and innovation. Policies to improve education and skills will deliver results not only in terms of productivity growth, but also better employment prospects and wages.

Spain is a highly decentralised country, making the effective implementation of national reforms dependent on regional policies. More effective coordination and cooperation across different levels of government are needed to improve the effectiveness of policies.

SPECIAL FEATURE: REDUCING REGIONAL DISPARITIES

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Economic Survey of Australia 10 December 2018 Australia’s long span of positive output growth continues, demonstrating the economy’s resilience. In the absence of negative shocks, policy rates should start to rise soon, as wage growth and price-inflation pick up. Fiscal discipline will nevertheless still be required to bring balances to surplus. Despite countervailing measures, the housing market and related debt pose macroeconomic risks. Furthermore, as flagged in previous Surveys, there is room to improve the tax system, notably through greater use of value-added tax and less use of inefficient and distorting taxes, such as real-estate transactions tax.

Levels of well-being are generally high but climate-change policy still lacks clarity and stability and there are socio-economic challenges. Some groups are at high risk of being disrupted by globalisation and technological change and this is the theme of this Survey’s in-depth chapter. Further reforms to education, including efforts to improve PISA scores and vocational education, and better target disadvantaged students, are important. So too is activation policy where there is scope to improve employment services, support for displaced workers and measures helping parents combine work and family life. Australia’s highly urbanised population means that good metropolitan transport, planning and housing policy can importantly boost labour-market flexibility, as well as living standards.

oe.cd/australia SPECIAL FEATURE: COPING WITH GLOBALISATION AND TECHNOLOGICAL CHANGE

Economic Survey of Denmark 13 January 2019 The 2019 Economic Survey of Denmark was launched in Copenhagen by Deputy Secretary General Ludger Schuknecht and the Minister of Finance Mr. Kristian Jensen, with Patrick Lenain, Douglas Sutherland and Mikkel Hermansen.

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Living standards and well-being are high in Denmark. Economic conditions have improved in recent years and the steady expansion is projected to continue. A prolonged series of pension and benefit reforms has delivered sound public finances and strengthened potential growth, among others by indexation of statutory retirement ages to life expectancy. Improving public sector efficiency remains a challenge and would benefit from further digitalisation and reform of collective bargaining. Danish firms are close to the technological frontier thanks to digitalisation and favourable business framework conditions. Nonetheless, productivity growth has been disappointing in the recent past with a particular weakness in less knowledgeintensive service industries. Boosting productivity growth is essential to ensure that living standards and wellbeing remain high. This requires further improving business framework conditions, notably competition pressures. Policy needs to embrace innovative technologies by leaning against attempts to discourage or exclude them and by tackling unintended or outmoded obstacles in legislation and regulation.

Reducing high marginal taxes, broadening innovation activity and attracting more high-skilled foreign workers are also priorities.

SPECIAL FEATURES: PRODUCTIVITY; BUSINESS FRAMEWORK CONDITIONS

10 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

Economic Survey of Hungary 31 January 2019 The 2019 Economic Survey of Hungary was launched in Budapest by Alvaro Pereira, Director of Country Studies in the OECD Economics Department, and Hungary’s State Secretary for Financial Affairs Gábor Gion, with Patrick Lenain, Jens Hoj and Ania Thiemann.

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The prospering economy has boosted employment and reduced unemployment to historical low levels. The risk of overheating is increasing with double digit growth in wages and higher consumer price inflation, although it remains within the central bank’s tolerance band. The recovery could be prolonged if the supportive macroeconomic policies become more restricitve. Looking ahead, public spending pressures are increasing with population ageing and unless corretive measures are taken public debt may increase again. Reform of the pension system needs to contain rising pension spending and old-age poverty. At the same time, a more flexible health sector is needed to respond to the changing demands arising from population ageing. Economic growth has been geographical uneven as the capital has benefitted from growth enhancing agglomeration effects and some regions, particularly in the west of the country, have benefitting from strong inwards FDIs. On the other hand, poor and rural regions are left behind as they lack integration into local and national supply chains. Development policies tend to pursue centrally determined objectives, while local authorities have few possibilities for identifying and implementing projects that are best suited for bolstering local growth.

SPECIAL FEATURES: AGEING; REGIONAL DEVELOPMENT

Economic Survey of the Slovak Republic 5 February 2019 The 2019 Economic Survey of the Slovak Republic was presented in Bratislava by OECD Secretary-General Angel Gurría and Slovak Republic Prime Minister Peter Pellegrini, with Nicola Brandt and Gabriel Machlica The Slovak economy remains strong. Thanks to sustained economic growth, almost 4% on average in the last two decades, living standards have converged towards the OECD average. The economy has benefitted from strong integration into global value chains, but the gains from this integration are likely to decline in the future. Foreign direct investment has focused mainly on downstream activities, which, although generating high productivity growth in the past, have low value added. Faced with rapid wage increases, technological change and labour shortages, Slovakia needs to upgrade the skills of its workers to protect their longer-term employability and foster productivity gains.While poverty and inequality are low overall, the majority of Slovakia’s Roma, about 8% of the population, face extreme social exclusion, with very low employment, widespread poverty and low life expectancy. Providing better living standards and economic opportunities to the Roma will require well-coordinated efforts across social, housing, education and employment policies.

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SPECIAL FEATURES: SOCIAL INTEGRATION OF ROMA; GLOBAL VALUE CHAINS

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Economic Survey of Portugal 18 February 2019 The 2019 Economic Survey of Portugal was launched in Lisbon by OECD Secretary-General Angel Gurría alongside Portuguese Minister Assistant to the Prime Minister and for the Economy Pedro Siza Vieira and Deputy Minister and Secretary of State of Finance Ricardo Mourinho Félix, with Rafal Kierzenkowski, Ben Westmore and Spencer Wilson.

Portugal’s economic recovery is now well established, with GDP back to its pre-crisis level. However, legacies of the recent crisis remain. A high public debt burden and ongoing financial sector vulnerabilities make the economy less resilient. The country is also facing a rapidly ageing population. In this context, there should be a continued focus on getting unemployed or marginalised workers back into jobs and promoting productivity growth. The latter will further boost the external competitiveness of the economy. Existing strict regulations in some sectors including professional services and transport harm productivity prospects, as do those that hold back competition in the ports. However, the institutions implementing regulations also matter. Improving judicial efficiency is particularly important in this regard. Recent reforms have lowered the time to resolve a court case, but it remains long. The information system that registers court proceedings should thus be better utilised and the courts should be granted stronger autonomy in managing their resources.

oe.cd/portugal SPECIAL FEATURES: FURTHER RAISING EXPORT PERFORMANCE; ENHANCING JUDICIAL EFFICIENCY

Economic Survey of Sweden 29 March 2019 The 2019 Economic Survey of Sweden was presented in Stockholm by OECD Secretary-General Angel Gurría and Swedish Finance Minister Magdalena Andersson, with Christophe André, Jon Pareliussen and Rafal Kierzenkowski.

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The Swedish economy is growing steadily, but the expansion has peaked and global uncertainties weigh on the outlook. Monetary and fiscal stimulus has supported the recovery, but is being gradually withdrawn as the economy operates close to full capacity. Strong public finances provide space for fiscal loosening in the case of a downturn, especially as low interest rates reduce monetary policy margins. Beyond a strong economy, Sweden enjoys high well-being, low inequality and strong environmental performance. Nevertheless, some structural issues need to be addressed, notably alleviating obstacles to housing affordability and enhancing the efficiency of public services by seizing the opportunities offered by digitalisation. Maintaining a high level of workforce skills is essential to sustain growth, competitiveness and social cohesion, calling for action to lift educational performance and promote lifelong learning. Against a background of lacklustre school results and increasing segregation, this Survey proposes a coherent set of reforms to strengthen education institutions, better target funding to pupils’ needs, enhance the steering of competition and school choice, increase the attractiveness of the teaching profession and reinforce teacher education.

SPECIAL FEATURE: EDUCATION

12 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

Economic Survey of Argentina 27 March 2019 The 2019 Economic Survey of Argentina was presented in Buenos Aires by Alvaro Pereira, Director of Country Studies in the OECD Economics Department and Argentina’s vice Minister of Finance Miguel Braun with Piritta Sorsa, Jens Arnold and Robert Grundke.

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Over many decades, Argentina’s economy has been held back by weak policy settings and productivity has stagnated. Recent and additional reforms will help to raise prosperity for all Argentinians in the medium term. Strengthening competition by reducing barriers to market entry and foreign trade has particularly high payoffs.

Tariff barriers have prevented a stronger integration into the world economy, which could raise consumer purchasing power, reduce the cost of firms’ inputs and lead companies in shielded sectors to become more productive. Currently, many jobs are trapped in activities with limited potential for productivity and wage growth. As job reallocation can result in temporary income losses, policies should ease the transition by enhancing training and social protection. Social policies are effective in reducing inequalities and poverty continued its declining trend during 2016 and 2017, until a severe economic crisis pushed the economy into a deep recession in 2018. This has shifted the immediate policy focus to restoring confidence and unwinding significant fiscal and external imbalances. Swift and decisive policy responses were necessary and their implementation will lay the grounds for a return of macroeconomic stability and a recovery from the recession, although significant risks remain.

SPECIAL FEATURE: FOSTERING INTEGRATION INTO THE WORLD ECONOMY

Economic Survey of Italy 1 April 2019 The 2019 Economic Survey of Italy was released in Rome by OECD Secretary-General Angel Gurría and Giovanni Tria, Italian Minister of Finance, with Mauro Pisu, Tim Bulman, Stephen Di Biasio and Chiara Di Stefano.

In recent years Italy achieved a modest recovery, supported by global economic conditions, expansionary monetary policy and structural reforms. However, the recovery has recently weakened and Italy continues to suffer from long-standing social and economic problems. Living standards are roughly the same as in 2000 and poverty rates for young people remain high. Large regional disparities have widened over recent decades. A comprehensive reform package, raising productivity and employment growth, holds the key to stronger growth and social inclusion. In-work benefits and a moderate guaranteed income scheme would boost employment and reduce poverty, if supported by improved job-search and training programmes.

Rationalising and improving coordination among bodies involved in regional development policies and strengthening capacity at the level of local administrations would help to boost growth and social inclusion in lagging regions.

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SPECIAL FEATURE: TACKLING ITALY’S SOCIAL AND REGIONAL DIVIDE

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Economic Survey of France 9 April 2019 he 2019 Economic Survey of France, was presented in Paris by OECD Secretary-General Angel Gurría and French Minister of Economy and Finance Bruno Le Maire with Pierre Beynet, Antoine Goujard, Pierre Guérin and Rafal Kierzenkowski.

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France’s economic growth has slowed down after a gradual recovery. Limited productivity and employment gains have reduced the growth of GDP per inhabitant; public spending remains very high. Reducing public expenditures is needed to put debt on a firmly declining path. This and streamlining the tax system would also help reducing taxes, which would boost economic activity eventually. Continuing to foster a more flexible labour market would lead to higher productivity growth and living standards. The unemployment rate is particularily high for low-skills, and young and older workers: higher skills and better education outcomes would support a more inclusive labour market and intergenerational mobility. The quality of the public capital stock is high in France: improving its maintainance would strengthen this asset. New investment should help drive the economy towards greener growth – in particular investments in energy and transport – and more digitalisation. This should be achieved by applying rigourous cost-benefit analyses even more widely.

SPECIAL FEATURES: LABOUR MARKET PERFORMANCE; PUBLIC INVESTMENT

Economic Survey of Japan 15 April 2019 The 2019 Economic Survey of Japan was presented in Tokyo by OECD Secretary-General Angel Gurría with Randall Jones.

Japan’s current economic expansion is its longest of the post-war era, with per capita output growth nearly matching the OECD area since 2012. However, the expansion has peaked and global uncertainties weigh on the outlook.

Growth is projected to continue at a moderate rate, supported by expansionary monetary policies and fiscal measures to offset the 2019 consumption tax rate hike. Notwithstanding rising female participation, labour shortages are intensifying, reflecting Japan’s shrinking and ageing population, thus underlining the importance of labour market reform. Traditional labour practices, such as seniority-based wages and mandatory retirement, are poorly suited to the era of 100-year lives. Comprehensive reforms, including abolishing the right of firms to set mandatory retirement and removing obstacles to female employment, are essential. Population ageing also puts further upward pressure on public social spending and government debt, which relative to GDP is already the highest ever recorded in the OECD area. Japan needs a comprehensive fiscal consolidation plan oe.cd/japan covering specific spending cuts and revenue increases to ensure fiscal sustainability.

It is essential to contain the rise in health and long-term care spending, while expanding the joint provision of local public services across jurisdictions and developing compact cities in the context of depopulation.

SPECIAL FEATURES: LABOUR REFORM IN AN AGEING SOCIETY; ENSURING FISCAL SUSTAINABILITY

14 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

Economic Survey of China 16 April 2019 The 2019 Economic Survey of China was launched in Beijing by OECD Deputy Secretary-General Ludger Schuknecht with Patrick Lenain and Margit Molnar.

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China’s growth continues to slow, but it is still high by international standards and contributes about a quarter of global growth. The growth model based on capital accumulation has led to misallocation of capital and excess capacity in a number of industries as well as falling investment efficiency, dictating a slower pace for investment. The reining in of shadow banking, an important source of financing for local infrastructure projects and for the private sector, weighs further on investment.

Investment has been financed by debt, fuelled by interest subsidies and implicit guarantees for state-owned enterprises and other public entities. Slower growth implies lower enterprise profits and lower ability to service their debt, which has been accumulated primarily by state-owned enterprises and has reached unsustainable levels. Slowing growth and swiftly enacted tax cuts also imply lower fiscal resources to make growth more inclusive. In the medium term, productivity gains and more inclusive policies could sustain growth. Local protectionism increases transaction costs and hinders competition and restrictions on the hukou and the fragmented pension system limit labour mobility.

SPECIAL FEATURES: SINGLE PRODUCT AND LABOUR MARKET; REGIONAL POLICIES FOR EFFICIENCY AND EQUITY

Economic Survey of Mexico 2 May 2019 The 2019 Economic Survey of Mexico was launched in Mexico City by OECD Secretary-General Angel Gurría and Mexican Finance Minister Carlos Urzúa with Sonia Araujo.

Mexico’s robust macroeconomic policy framework has supported moderate growth despite several headwinds in recent years. However, low productivity growth has hindered Mexico’s convergence to higher-income OECD countries and inequalities remain high. These factors call for a renewed strategy to boost productivity and inclusiveness. Rising crime and insecurity are negatively affecting economic activity and citizens’ wellbeing, particularly the underprivileged and women. Strengthening institutional quality is a priority. Improving the weak rule of law will also facilitate the effective implementation of policy initiatives in other areas. In spite of recent achievements, tax revenues remain low and fiscal policy has little redistributive impact. In the near term, improving the efficiency of tax collection and spending will allow the public debt-to-GDP ratio to stabilise and provide some room for greater social and infrastructure spending. In the medium term, raising tax revenues and modifying the tax mix will allow reductions in public debt, create further fiscal space and increase progressivity. Reducing high informality will require coordinated actions in enforcement, taxation, business and labour regulations and the social oe.cd/mexico safety net to better align incentives to formalise and drive resources towards more productive (formal) firms. Increasing educational outcomes for all will increase equality of opportunities and build the foundations for higher productivity. Raising access to quality early childhood education and care will also encourage greater female labour market participation. Improving urban planning and transportation would raise the productivity potential of cities and improve environmental outcomes.

SPECIAL FEATURE: STRENGTHENING INCLUSIVE GROWTH

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Economic Survey of Latvia 29 May 2019 The 2019 Economic Survey of Latvia was launched in Riga by OECD Secretary-General Angel Gurria, alongside the Latvian Minister of Economics Ralfs Nemiro and Minister for Environmental Protection and Regional Development Juris PĹŤce. The OECD delegation also Duncan Cass-Beggs and Liva Stokenberga (OSG); Isabell Koske and Nicola Brandt (ECO); and Nathalie Girouard and Ivana Capozza (ENV).

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Latvia enjoys strong economic growth and the catch-up with living standards in higher income OECD countries continues. Much remains to be done, though, to close the remaining gap and improve equal access to social protection and economic opportunities. Latvia faces one of the fastest declines in its working age population among OECD countries due to ageing and migration. Strong productivity growth is needed to counter this demographic challenge and improve living standards faster.

The Economic Survey calls for more investments in skills, research and innovation and efforts to strengthen competition. It also stresses the need for more spending on health, social protection and housing for a more inclusive society. The capacity of the judiciary and law enforcement agencies needs to be strengthened to improve trust in institutions, address corruption, high levels of informality and money laundering issues.

SPECIAL FEATURE: STRONGER PRODUCTIVITY GROWTH

Economic Survey of New Zealand 25 June 2019 The Economic Survey of New Zealand was launched in Wellington by OECD Deputy Secretary-General Ulrik Vestergaard Knudsen and New Zealand Finance Minister Grant Robertson, with David Carey.

Well-being in New Zealand is generally high, although there is room for improvement in incomes, housing affordability, distribution, water quality and GHG emissions. Economic growth is projected to remain around 2½ per cent. The main risks to the outlook are rising trade restrictions and a housing market correction.

Labour market reforms have been initiated to increase wages for the low paid but will need to be implemented cautiously to minimise potential adverse effects.

Substantial planned increases in bank capital requirements should reduce the expected costs of financial crises but might reduce economic activity. To improve the well-being of New Zealanders, the government is amending legislation to embed well-being objective setting and reporting, developing well-being frameworks and indicator sets and using well-being evidence to inform budget priority setting and decision-making. Immigration increases well-being of both immigrants and most of the NZ-born, although associated increases in housing costs, congestion and pollution have had negative effects. A raft of measures is oe.cd/new-zealand underway to make housing supply more responsive to demand. However, strict regulatory containment policies, which impede densification, need to be replaced by rules that are better aligned with desired outcomes and alternative sources of finance found to relieve local government infrastructure funding pressures.

SPECIAL FEATURES: WELL-BEING; MIGRATION; HOUSING

16 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

Economic Survey of Luxembourg 29 May 2019 The 2019 Economic Survey of Luxembourg was presented in Luxembourg City by OECD Secretary-General Angel Gurria, Luxembourg’s Finance Minister Pierre Gramegna and Housing Minister Sam Tanson. The OECD Delegation also included Geoff Barnard, Álvaro Pina and Jan Stráský.

Luxembourg is one of the most prosperous economies in the OECD. However, prosperity and quality of life cannot be taken for granted. This Survey focuses on three main challenges. The first concerns housing: strong population growth and supply constraints have made prices surge, which worsens affordability and creates vulnerabilities for some households and some banks. Tackling housing supply constraints and increasing the supply of social rental housing are key to improving housing affordability. The second challenge is reviving productivity growth, which will require supporting viable non-frontier firms to catch up and to help frontier firms to innovate more. The third challenge is to achieve a more sustainable and inclusive growth. This would require, among other measures, fiscal reforms to address rising pension expenditure and tilt revenues towards environmental and property taxation.

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SPECIAL FEATURE: HOUSING

Economic Survey of Malaysia 24 July 2019 The 2019 Economic Survey of Malaysia was presented in Putrajaya by OECD Deputy Secretary-General Masamichi Kono and Malaysia’s Deputy Secretary-General (Policy) of the Ministry of Economic Affairs Dato` Noor Zarid, with the support of an inter-directorate team comprised of Patrick Lenain, Kosuke Suzuki, Hidekatsu Asada, and Tan Kay Kiang (ECO), Andrew Bell (SKC), Marieke Vanderweyer (ELS), and Massimo Geloso Grosso (Jakarta Office)

Malaysia’s economy is doing well, but social and governance challenges must be addressed. The new government prioritises inclusive growth and improving trust in public institutions. Further progress towards the planned target of highincome country status by 2024 will also require focusing on productivity growth with structural reforms to move up the value chain and improve skills. Ensuring environmental protection will improve the quality of growth.

Growth is set to moderate in the near term, mainly due to slowing global trade.

The rising cost of living has been a source of concern for large segments of the population. Progress could be made by providing a more targeted support, boosting entrepreneurship, improving productivity and employability among the low-income households.

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SPECIAL FEATURE: REDUCING SKILLS IMBALANCES TO FOSTER PRODUCTIVITY GROWTH

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G7, G20 The Economics Department closely collaborates with the Sherpa Unit in the Office of the Secretary-General and with other directorates across the house to deliver on the G20 and G7 agenda. In the finance track (in collaboration with the IMF).

Contributions of the Economics Department to the G7 Finance track: Fighting inequalities: At the request of the French Presidency, the Economics Department prepared a report on “Progress on pursuing economic growth that works for all” that served as support for discussions among Ministers. Fighting inequalities was a priority of the G7 Presidency against the backdrop of rising global inequalities, rising populism and the unequal sharing of benefits from globalisation and technological progress. The report built on the progress made by previous G7 Presidencies, in particular by building on the dashboard of indicators prepared by the OECD under the Canadian Presidency in 2018.

Competition: With a view to informing the G7 Finance Ministers’ discussions, the OECD (DAF, ECO, STI, OSG/ Sherpa office) co-organised with the Autorité de la Concurrence, Banque de France and the French Ministry for the Economy and Finance a high-level Conference promoting an exchange of views and experience between policymakers, academics and competition authorities on “Competition and the Digital economy” in June 2019. The conference included participation from Bruno Le Maire, French Minister for the Economy and Finance; Margrethe Vestager, European Commissioner for Competition; Isabelle de Silva, President of the Autorité de la Concurrence, France; as well as the OECD Secretary-General, Chief of Staff and Chief Economist.

Contributions of the Economics Department to the G20 Finance track: Monitoring on global economic outlook and risks: The Economics Department actively supported G20 discussions on the global economy and risks through speeches, presentations and notes on the global economic outlook and risks to G20 members by the Secretary General, the Chief Economist and the Economic Counsellor at various G20 fora. Particularly well-received analysis included assessments of (i) how much fiscal and structural policy space G20 economies would have to respond to a significant growth slowdown; and (ii) to what extent synchronised macroeconomic and structural actions by G20 members would help to lift GDP if a downturn materialised.

Ageing: To support the priority of the Japanese Presidency on ageing and demographic change, the Economics Department prepared a report to G20 Finance Ministers and Central Bank Governors (Fukuoka, 27-28 June 2019) on “Fiscal challenges and inclusive growth in ageing societies” analysing the macroeconomic and fiscal implications of ageing. The report supported comprehensive discussions by Ministers on how to address these challenges. The Chief Economist participated in the Symposium on Ageing organised by the Japanese Presidency.

Structural reform agenda: The Economics Department is preparing the second report taking stock of progress on structural reforms to boost growth and employment as well as to address inequalities to be launched in November 2019. The Economics Department also collaborates with the IMF on the annual report on Strong, Sustainable Balanced and Inclusive Growth (SSBIG). Both of these reports build on our extensive analysis on structural reforms through the work of our committees collected in Going for Growth.

Growth Strategies: ECO, in collaboration with the IMF and the World Bank, has helped to monitor the implementation and impact of G20 countries’ Growth Strategies - a collaborative effort by the Department’s Front Office team, country desks and the Going for Growth team.

18 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

Global Forum on Productivity Workshop on Spatial Dimensions of Productivity (Bolzano, Italy) OECD countries have been confronted with decreasing and persistently low aggregate productivity growth, declining business dynamism and job reallocation rates, and increasing regional productivity disparities. During this event, 98 participants from 19 countries sought to address the potential relations between these trends and discuss what policies can be used to effectively revert them. The event featured a number of highlevel speakers from academia and public bodies, such as Arno Kompatscher (President of the Autonomous Province of Bolzano), Flavia Terribile (Italy’s Council of Ministers), Claire Lelarge (RITM Université Paris-Sud), Philip McCann (University of Sheffield), Peter Berkowitz (European Commission) and many others.

4th Annual Conference of the GFP (Sydney, Australia) The 4th Annual Conference of the GFP gathered around 200 participants from 31 countries to discuss issues such as the decline in business dynamism, staggering productivity and the expanding gap between frontier and laggard firms. Among other highlights of the conference, the role of intangible assets, technological change and dynamism-enhancing policies were covered in a series of lectures by leading experts and practitioners.

Top academics participating in the conference included Chad Syverson (University of Chicago), Erik Brynjolfsson (MIT), Steve Davis (University of Chicago), Eric Bartelsman (Tinbergen Institute) and Diego Comin (Dartmouth College), among many others.

The Human Side of Productivity The research project `The Human Side of Productivity’ – supported by contributions from 19 member countries of the OECD Global Forum on Productivity (GFP) – seeks to understand how the composition and skills of owners, managers and workers, and their interactions through management and organization, affect firm-level productivity. It aims at providing a novel set of comparable stylised facts across countries on the human characteristics of successful versus less successful firms. This will improve our understanding of critical factors for firms to be successful in times of rapid technological and structural change.

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Horizontal Collaboration The Economics Department has collaborated with 9 other OECD Directorates on multiple papers and projects over 2018/19.

CFE

Chapters on tourism: Economic Surveys of South Africa & Indonesia, 2019 Contribution to Chapter of Territorial Review of Greece Paper on regional trade and labour market dynamics

CFE/ENV/ELS/SDD

Housing Horizontal Project

CTP/GOV/CFE

Fiscal network

CTP

Preparation of a Chapter on Tax Policy Reforms

DAF/ELS

Preparation of monthly Council note on The Economic, Financial and Social Situation

EDU/ELS

Chapter: Malaysia Economic Assessment, 2019

ELS

Jobs strategy Modelling the impact of chronic diseases WP3 special paper, January 2018 Chapters: Economic Surveys of Colombia & Italy, 2019

ELS/STI

Review of Productivity in Belgium

ENV

Green growth: Economic Survey of Australia, 2018 Paper: The economic cost of air pollution: Evidence from Europe, 2018 Paper: The joint impact of the European Union emissions trading system on carbon emissions and economic performance, 2018

ENV/STD

Report for Slovenia on their national development strategy, 2019

SDD

Well-being chapter: Economic Survey of New Zealand, 2019

SDD/STI

TiVA and GVC trade data

SDD/EDU/ELS/CTP/GOV

Public Finance Data Portal, 2019

STI

Going Digital Horizontal Project Presentation to Steel Committee on Global Economic Developments Global Forum on Productivity Joint Paper: “Gender Bias in Start-up Funding: A Micro Data analysis using Crunchbase” Empirical analysis on innovation incentives: Economic Survey of Italy, 2019 Joint Paper: “Gender Bias in Start-up Funding: A Micro Data analysis using Crunchbase” , 2019 Empirical analysis on innovation incentives: Economic Survey of Italy, 2019

TAD

Project: Trade modelling Project: Trade tensions escalation Paper: Global imbalances Paper: Brexit spillovers scenarios Chapters: Economic Surveys of India & Argentina

20 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

Slovenia Development Strategy 2030: Prospects , challenges and policy options to achieve the main objectives 8 April 2019 The Slovenian Government has developed a strategic vision for the country supported by a long-term national development strategy to achieve a number of goals towards that vision by 2030 and meet its commitments to the UN Sustainable Development Goals (SDGs). This report, co-written with the Environment and Statistics Directorates, uses a multi-country and multi-sector modelling framework to develop a baseline scenario of the Slovenian economy until 2050, taking into account developments in neighbouring countries and, more broadly, the major regions of the world.

The baseline scenario, which is developed under the assumption of unchanged policy settings, underscores a number of areas where achieving the targets set by the government will be challenging as well as other areas where targets appear more easily within reach. The latter include the goals related to productivity and environmental objectives, even though some specific areas such as transport-related pollution emissions will pose major challenges. Among the targets that will be more difficult to achieve, the main ones are the employment rate increases, rises in average income (GDP per capita), public finance consolidation and income inequality reductions.

The report proposes a menu of policy options that could support the strategy elaborated by the government to achieve the main goals. The scope for improving the economic performance through structural reforms across a broad range of policy areas is illustrated through multiple scenarios developed with the modelling framework as alternatives to the baseline projection. Each scenario shows how productivity, employment (overall and for specific groups), life expectancy, greenhouse gas emissions and energy efficiency are impacted by changes in labour and product market policies, as well as by reform in the health sectors and environmental policies.

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In-Depth Productivity Review of Belgium 8 July 2019 Belgium has a high level of productivity. However, growth of productivity has declined quite strongly over the past two decades, and more so than in other advanced economies. This is a worrying development, as fewer productivity gains mean less wage growth and a slowdown in improvements to pensions, health care and well-being. This In-Depth Productivity Review of Belgium, co-authored with the Directorate for Employment, Labour and Social Affairs (ELS) as well as the Directorate for Science, Technology and Innovation (STI), assesses in detail the drivers of productivity and recommends a 7-Point Action Plan to reignite productivity growth in Belgium. Reviving productivity growth requires action in many areas cutting across governments and ministerialcompetences. Measures are needed to instil more dynamism in Belgium’s economy, both among businesses and in the labour market, and to make the public finances more growth-oriented.

In addition to recommending detailed policy measures to revive productivity growth, the Review contains three analytical chapters that lay out the evidence base: Chapter1 on economy-wide and sectoral trends in productivity; Chapter 2 on the role of firms for productivity, with a focus on the dispersion of performance among businesses; and Chapter 3 on the worker dimension of productivity, with a focus on the role of wage bargaining and skills.

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Policy Papers Public finance structure and inclusive growth Boris Cournède, Jean-Marc Fournier and Peter Hoeller 17 December 2018 Tax and spending reforms offer numerous opportunities to promote inclusive growth. There is potential for socalled win-win reforms that simultaneously boost economic output and enhance income equality. Other changes in the structure of public finances will produce benefits only along a single dimension, while some involve trade-offs between average income gains and adverse distributional effects. Empirical analyses of the experience of OECD countries provide evidence about which tax and spending reforms influence prosperity and income distribution — and by how much.

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Tax Policies for Inclusive Growth Robert Hagemann 17 December 2018 Against a backdrop of the widening income distribution in most countries, OECD governments need to formulate policies that support sustainable and inclusive economic growth. Tax policies play a crucial role in this endeavour.

Both tax theory and mounting empirical evidence suggest that many countries could achieve both higher and more broadly shared income growth. Many countries, however, seem hesitant to fundamentally restructure their tax systems to achieve higher and more inclusive growth.

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Income redistribution across OECD countries: Main findings and policy implications Orsetta Causa, James Browne and Anna Vindics 14 February 2019 Income inequality has increased in most OECD countries over the past two decades. This is both because market incomes (wages, dividends, interest income) have become more unequally distributed, and also because redistribution through taxes and transfers has fallen. New OECD work explores cross-country evidence on trends in income redistribution since the mid-1990s to shed some light on the main drivers of the general decline.

oe.cd/income-redistribution

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Digital Dividend: Policies to Harness the Productivity Potential of Digital Technologies Stéphane Sorbe, Peter Gal, Giuseppe Nicoletti and Christina Timiliotis 12 February 2019

This paper presents a range of policies to enhance adoption of digital technologies and firm productivity. It quantifies illustratively the effect of policy changes by combining the results of two recent OECD analyses on the drivers of adoption and their productivity benefits. Increasing access to high-speed internet, upgrading technical and managerial skills and implementing product and labour market reforms to facilitate the reallocation of resources in the economy are found to be the main factors supporting the efficient adoption of a selection of digital technologies.

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Fiscal challenges and inclusive growth in ageing societies Dorothée Rouzet, Aida Caldera Sánchez, Théodore Renault and Oliver Roehn 10 September 2019

This paper was prepared in support of Japan’s G20 Presidency. It takes stock of ongoing and projected population ageing across G20 economies and its far-reaching implications for economic growth, productivity, inequality within and between generations and the sustainability of public finances. Rising old-age dependency ratios will put the financing of adequate pensions, health and long-term care under high pressure. The paper provides recommendations on policy responses to address ageing-related challenges and highlights good practices. A comprehensive approach is needed, tailored to each country’s institutional and policy settings and social preferences, and may span many areas of public policy: improving the design of public pensions, incentivising private savings, enhancing the efficiency of health care provision, expanding the coverage of social security systems, promoting employability and skills of older workers, and striving for a better labour market inclusion of women, youth and migrants.

oe.cd/age Photo by sasint from Pixabay

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Working Papers SEPTEMBER 2018 Cyclical vs structural effects on health care expenditure trends in OECD countries Luca Lorenzoni, Jonathan Millar, Franco Sassi, and Douglas Sutherland Boosting investment in Greece Panagiotis Barkas and Mauro Pisu Generating employment, raising incomes and addressing poverty in Greece Tim Bulman and Mauro Pisu Design of insolvency regimes across countries Müge Adalet McGowan and Dan Andrews Labour share developments over the past two decades: the role of technological progress, globalisation and “winner-takesmost” dynamics Cyrille Schwellnus, Mathilde Pak, Pierre-Alain Pionnier and Elena Crivellaro OCTOBER 2018 The Potential Macroeconomic and Sectoral Consequences of Brexit on Ireland Christine Arriola, Caitlyn Carrico, David Haugh, Nigel Pain, Elena Rusticelli, Donal Smith, Frank van Tongeren and Ben Westmore Resource curse in oil exporting countries Evgeny Kakanov, Hansjörg Blöchliger and Lilas Demmou Enhancing dynamism in SMEs and entrepreneurship in Korea Randall S. Jones and Jae Wan Lee Reforming the large business groups to promote productivity and inclusion in Korea Randall S. Jones NOVEMBER 2018 The potential economic impact of Brexit on the Netherlands Donal Smith, Christine Arriola, Caitlyn Carrico and Frank van Tongeren Changes in Economic and Financial Synchronisation Alessandro Maravalle and Łukasz Rawdanowicz Improving skills and their use in Germany Andrés Fuentes Hutfilter, Stephanie Lehmann and Eun Jung Kim Regulatory framework for the loan-based crowdfunding platforms Olena Havrylchyk To what extent do policies contribute to self-employment?

Mark Baker, Balázs Égert, Gabor Fulop and Annabelle Mourougane DECEMBER 2018 Changes in economic and financial synchronisation: A global factor analysis Alessandro Maravalle and Łukasz Rawdanowicz Impact of Brexit on the Netherlands Donal Smith, Christine Arriola, Caitlyn Carrico and Frank van Tongeren Increasing inclusiveness for women, youth and seniors in Canada Andrew Barker Making the most of immigration in Canada David Carey Fan charts around GDP projections based on probit models of downturn risk David Turner, Thomas Chalaux and Hermes Morgavi

24 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

Improving the Czech health care system Falilou Fall and Daniela Glocker The drivers of regional growth in Russia: a baseline model with applications Hansjörg Blöchliger and Olivier Durand Lasserve Keeping track of global trade in real time Jaime Martinez-Martin and Elena Rusticelli Do EU Funds boost productivity and employment? - Firm level analysis for Latvia Konstantīns Beņkovskis, Oļegs Tkačevs and Naomitsu Yashiro Who’s in your export market? The changing pattern of competition in world trade Sonia Araujo, Thomas Chalaux and David Haugh Making Employment More Inclusive in the Netherlands Mark Baker and Lindy Gielens Firm Dynamics in South Africa Mpho Tsebe, Veron Vukeya, Christine Lewis, Flavio Calvino and Chiara Criscuolo Boosting productivity and inclusiveness in Lithuania Vassiliki Koutsogeorgopoulou and Demetrio Guzzardi Going local: A regional perspective on how trade affects labour markets and inequality Elena Rusticelli, David Haugh, Axelle Arquie and Lilas Demmou Can productivity still grow in service-based economies?

Stéphane Sorbe, Peter Gal, Valentine Millot Income poverty in Australia: evidence from the HILDA survey Urban Sila and Valéry Dugain Job displacement in Australia: Evidence from the HILDA survey Urban Sila Labour share developments over the past two decades: The role of public policies Mathilde Pak and Cyrille Schwellnus JANUARY 2019 Upgrading business investment in Turkey Seyit Mümin Cilasun, Rauf Gönenç, Mustafa Utku Özmen, Mehmed Zahid Samancıoglu, Fatih Yilmaz and Volker Ziemann FEBRUARY 2019 Digitalisation and productivity: In search of the holy grail – Firm-level empirical evidence from EU countries Peter Gal, Giuseppe Nicoletti, Theodore Renault, Stéphane Sorbe and Christina Timiliotis Raising more public revenue in Indonesia in a growth- and equity-friendly way Christine Lewis Making the most of tourism in Indonesia to promote sustainable regional development Patrice Ollivaud and Peter Haxton State-owned firms behind China’s corporate debt Margit Molnar and Jiangyuan Lu Benefitting from globalisation and technological change in Australia Urban Sila and Philip Hemmings Income, wealth and earnings inequality in Australia: evidence from the HILDA survey Urban Sila and Valéry Dugain MARCH 2019 Using probit models of downturn risk to calibrate GDP Fan charts for New Zealand Nikki Kergozou and David Turner Calibrating GDP Fan Charts Using Probit Models with a Comparison to the Approaches of the Bank of England and Riksbank David Turner and Thomas Chalaux

OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019 . 25

APRIL 2019 The potential economic impact of Brexit on Denmark Donal Smith, Mikkel Hermansen and Sune Malthe-Thagaard Adapting business framework conditions to deal with disruptive technologies in Denmark Mikkel Hermansen and Valentine Millot MAY 2019 Objectives and challenges in the implementation of a universal pension system in France Hervé Boulhol Increasing the benefits of Slovakia’s integration in global value chains Claude Giorno Enhancing the social integration of Roma in Slovak Republic Michaela Bednarik, Slavomir Hidas and Gabriel Machlica Gig economy platforms: Boon or Bane?

Cyrille Schwellnus, Assaf Geva, Mathilde Pak and Rafael Veiel Reducing regional disparities for inclusive growth in Spain Müge Adalet McGowan and Juan Antona San Millán Like it or not? The impact of online platforms on the productivity of incumbent service providers Alberto Bailin Rivares, Peter Gal, Valentine Millot and Stéphane Sorbe Productivity growth and finance: The role of intangible assets - A sector level analysis Lilas Demmou, Irina Stefanescu and Axelle Arquié Going National: Implementing the OECD Jobs Strategy Elena Crivellaro, Alexander Hijzen and Cyrille Schwellnus JUNE 2019 Public policy reforms to further improve Portuguese export performance Ben Westmore and Paula Adamczyk Housing Markets and Macroeconomics Risks Maria Chiara Cavalleri, Boris Cournède and Volker Ziemann Labour Supply of older people in advanced economies: the impact of changes to statutory retirements ages Christian Geppert, Yvan Guillemette, Hermes Morgavi and David Turner JULY/AUGUST 2019 The 2018 Indicators on the Governance of Sector Regulators - Part of the Product Market Regulation (PMR) Survey Lorenzo Casullo, Alexis Durand and Filippo Cavassini The OECD Potential Output Estimation Methodology Thomas Chalaux and Yvan Guillemette Empirical links between housing markets and economic resilience Boris Cournède, Sahra Sakha and Volker Ziemann Who pays the price of folly? The business cycle and income and wealth mobility in Spain Clara Martínez-Toledano, David Law, David Haugh and Müge Adalet McGowan

Améliorer l’efficience de l’investissement public en France Pierre Guérin Améliorer les performances du marché du travail en France : mise en oeuvre de la Stratégie pour l’emploi de l’OCDE Antoine Goujard Educational Attainment, Age and the Consequences of Job Loss: Empirical Evidence from Germany Alexandra Effenberger, Verena Lauber, Sebastian Schmitz and Charlotte Senftleben-König Realising regional potentials through better market integration in China Margit Molnar

26 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

Data Releases & Updates 2018 OECD Product Market Regulation Indicators The economy-wide PMR indicators measure the regulatory barriers to firm entry and competition in a broad range of key policy areas, ranging from licensing and public procurement, to governance of SOEs, price controls, evaluation of new and existing regulations, and foreign trade. The sector PMR indicators measure the regulatory barriers to firm entry and competition at the level of individual sectors, with a focus on network industries, professional services, and retail distribution.

The 2018 PMR indicators are based on a considerably revised methodology. These modifications have been made to ensure that the PMR indicators maintain their relevance in the context of evolving insights from economic theory, modifications in the economic and business environment, and changes in the practice of regulation.

oe.cd/pmr

OECD Structural Policy Indicators Database for Economic Research (SPIDER) The OECD’s Structural Policy Indicators Database for Economic Research (SPIDER), launched in 2018, provides a broad range of data to researchers in ready-to-use formats to facilitate empirical/econometric research investigating the nature and the impact of structural policies.

It includes about 500 policy and institutional indicators from almost 50 different OECD and non-OECD data sources.

The policy variables stored in the database are annual or less frequently available (every five years or only once). The database will be updated on a yearly basis.

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OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019 . 27

Ecoscope Blog Posts SEPTEMBER 2018 11

Statistical Insights: An x-ray view of inflation

by Pierre-Alain Pionnier, Francette Koechlin, Anne-Sophie Fraisse and Elena van Eck, Statistics and Data Directorate

17

Speeding up economic catch-up in the BRIICS with better governance and more education

by Yvan Guillemette, Long-Term Analysis Workstream, OECD Economics Department

20

High uncertainty is weighing on global growth

by Laurence Boone, OECD Chief Economist

OCTOBER 2018 5

Making the most of Riga metropolitan area can boost wellbeing and economic growth in Latvia

By Daniela Glocker and Andrés Fuentes Hutfilter, Latvia Desk, OECD Economics Department

10

How best to keep up rapid tourism growth in Indonesia

by Patrice Ollivaud, Indonesia Desk, OECD Economics Department

16

If potential output estimates are too cyclical, then OECD estimates have an edge

by Yvan Guillemette and Thomas Chalaux, Long-Term Analysis Workstream, OECD Economics Department

26

Fostering formal sector job creation to further improve living standards in Indonesia

by Christine Lewis, Indonesia Desk, OECD Economics Department

NOVEMBER 2018 14

Making trade and digitalisation work for all

by Laurence Boone, OECD Chief Economist

21

Growth has peaked: Challenges in engineering a soft landing

by Laurence Boone, OECD Chief Economist

21

La Croissance est à son pic, la négociation d’un atterrissage en douceur s’annonce délicate par Laurence Boone, Cheffe économiste de l’OCDE

22

Positive economic outlook for the main economies in Latin America but downward risks have intensified

by Alvaro S. Pereira, Director of Country Studies, and Latin American Desks, OECD Economics Department

22

Las perspectivas económicas son positivas en los principales países de América Latina pero los riesgos a la baja se han acentuado para Alvaro S. Pereira, Director of Country Studies, y mesas de países latinoamericanos , OECD Economics Department

26

Reducing regional disparities for inclusive growth

By Müge Adalet McGowan, Spain Desk, OECD Economics Department

28

Sustaining growth to benefit all in Spain

By David Law, Spain Desk, OECD Economics Department

DECEMBER 2018 7

The output cost of the global financial crisis

by David Turner and Patrice Ollivaud, Macroeconomics Division, OECD Economics Department

9

Australia’s cooling housing market - is the economy at risk?

by Philip Hemmings, Australia Desk, OECD Economics Department

9

Some Australians are at a significant risk of poverty, despite the strong economy

by Urban Sila, Australia Desk, OECD Economics Department

17

How can public finance reforms boost economic growth and enhance income equality?

By Boris Cournede, Public EconomicsWorkstream, OECD Economics Department

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JANUARY 2019 15

Ambitious retirement age indexation ensures sustainable public finances in Denmark

by Mikkel Hermansen, Denmark Desk

21

Statistical insights: Are international productivity gaps as large as we thought?

By Nadim Ahmad, OECD, Statistics and Data Directorate

31

The pension system in Hungary is under pressure from demographic changes

By Ania Thielmann, Hungary Desk

FEBRUARY 2019 5

The social exclusion of Roma in the Slovak Republic calls for immediate policy action

by Gabriel Machlica, Slovak Republic Desk

12

Are digital technologies the new Holy Grail ?

By Stéphane Sorbe, Peter Gal, Giuseppe Nicoletti and Christina Timiliotis, Productivity Workstream

14

Income redistribution across OECD countries: main findings and policy implications

By Orsetta Causa, OECD Economics Directorate, and Anna Vindics and James Browne, OECD Directorate for Employment, Labour and Social Affairs

18

Will the tourist flocks keep landing in Portugal?

by Ben Westmore , Portugal Desk

21

Does Denmark need yet another tax reform?

by Mikkel Hermansen and Valentine Millot, Denmark Desk

27

France, inequality and the social elevator and La France, les inégalités et l’ascenseur social

by Laurence Boone, OECD Chief Economist, and Antoine Goujard, France Desk

MARCH 2019 6

Global growth is weakening: coordinating on fiscal and structural policies can revive Euro Area growth

By Laurence Boone, OECD Chief Economist

22

How’s Life for Women in the Digital Age?

by Fabrice Murtin, OECD Statistics and Data Directorate

22

Alan Krueger, a friend and a source of inspiration for the OECD

by Laurence Boone, Giuseppe Nicoletti and Cyrille Schwellnus

27

Argentina: Laying the foundations for strong and inclusive growth

By Jens Arnold and Robert Grundke, Argentina Desk

29

Sweden’s schools: lessons from history to build a better future

by Jon Pareliussen, Sweden Desk

APRIL 2019 1

Reviving Italy’s Growth

by Mauro Pisu and Tim Bulman, Italy Desk

8

Nine questions and answers on the 2019 Economic Survey of Italy | Nove domande e risposte sul Rapporto Economico sull’Italia 2019 dell’OCSE

By Laurence Boone, OECD Chief Economist and Mauro Pisu and Tim Bulman, Italy Desk

10

Boosting growth in France and making reforms beneficial to all | Stimuler la croissance en France et s’assurer que les réformes profitent à tous

by Antoine Goujard and Pierre Guérin, France Desk

15

Meeting Japan’s intertwined challenges of population ageing and high government debt

By Randall Jones and Haruki Seitani, Japan Desk

16

Where is China headed? Five key insights from the 2019 OECD Economic Survey of China

by Margit Molnar and Patrick Lenain, China Desk

OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019 . 29

MAY 2019 2

7

A renewed strategy to boost growth and well-being in Mexico | Una estrategia renovada para impulsar el crecimiento y el bienestar en México

by Sonia Araujo and Lisa Meehan, Mexico Desk Statistical Insight: men’s employment more dependent on trade than women’s

by Fabienne Fortanier, Statistics and Data Directorate

21

A fragile global economy needs urgent cooperative action | Urge una cooperación internacional para enfrentar una frágil economía mundial | La fragilité de l’économie mondiale exige de toute urgence un effort de coopération

by Laurence Boone, OECD Chief Economist

21

América Latina: las perspectivas económicas repuntan levemente pero se requieren reformas para impulsar la productividad y disminuir desigualdades

by Alvaro S. Pereira, Director, Country Studies Branch

29

Latvia: Working towards stronger and more inclusive growth

by Naomitsu Yashiro, Latvia Desk

JUNE 2019 3

Le temps de travail en France : comment expliquer sa faiblesse relative ? par Antoine Goujard, Bureau France

12

Strengthening institutions to improve the prosperity of all MexicaNS | Fortalecer las instituciones para mejorar la prosperidad de los mexicanos

by Sonia Araujo and Lisa Meehan, Mexico Desk

24

Delivering greater well-being in New Zealand: policy steps to increase housing affordability

by Andrew Barker, New Zealand Desk

24

Better policies for better lives, the Kiwi way

by Carrie Exton, OECD Statistics and Data Directorate

JULY 2019 10

Making access to housing more affordable to all in Luxembourg

by Jan Strasky, Luxembourg Desk

12

The time for reform is now to respond to global challenges

by Laurence Boone, OECD Chief Economist

13

Des réformes doivent être engagées maintenant pour s’adapter aux évolutions du monde par Laurence Boone, Cheffe économiste de l’OCDE

18

Are there ways to protect economies against potential future housing busts?

by Boris Cournède, Maria Chiara Cavalleri, Volker Ziemann, OECD Housing Project

24

Offering better labour-market opportunities to all Malaysian women: a win-win strategy

by Marieke Vandeweyer, OECD Directorate for Employment, Labour and Social Affairs

24

Stronger productivity growth would put Malaysia on a path to become a high-income economy

By Hidekatsu Asada and Patrick Lenain, South-East Asia Desk,

AUGUST 2019 9

Housing-related policies matter for economic resilience

By Boris Cournède, Sahra Sakha and Volker Ziemann, OECD Housing Project

27

Statistical Insights: The ADIMA database on Multinational Enterprises

by Graham Pilgrim, OECD Statistics and Data Directorate

30 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

NAEC Innovation Lab Implementing new approaches to economic challenges requires new tools and techniques to make sense of a wide range of economic and social phenomena. The NAEC Innovation LAB, co-ordinated by the NAEC Unit and the Office of the Chief Economist, encourages the adoption of new and innovative analytical methods across the Organisation to address new policy questions and bring new policy insights. It focusses primarily on machine learning, big data, agent-based models/networks and expiremental approaches. It promote co-operation across the Organisation, as well as providing a platform to engage with broader research communities LAB Associates are currently working on projects that include: looking at how financial networks propagate shocks across borders to the real economy, the spread of antimicrobial resistance, the changing structure of demand/supply of skills in the digital era, and how macroprudential policies can stabilise housing markets.

Chief Economist Talks 13 September 2018

Maurice Obstfeld, IMF Exchange Rates and the Global Financial Cycle

18 December 2018

Penny Goldberg, World Bank The Times: Are They A Changin’?

1 April 2019

Debora Revoltella, European Investment Bank (EIB) Retooling Europe’s Economy: the EIP Investment Report

5 Jun 2019 Hal Varian, Google, Automation and Procreation 1 July 2019

Sergei Gurier, European Bank for Reconstruction and Development (EBRD) Work in Transition: Demographics, Skills & Migration in Emerging Europe

OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019 . 31

Brown Bag Seminars The Brown Bag Seminar series has been very successful and grown over time to become the main vehicle for workshop and seminars organised by the Economics Department staff. Topics cover a broad range of issues of interest to the Economics Department and can be addressed by both theoretical or empirical approaches. The seminars are given by ECO or other OECD staff, visiting academics and researchers from international organisations or national governments. Attendance is also not limited to the Economics Department and can include other OECD staff as well as delegation officials.

SEPTEMBER 2018 6 Sep | Why and how is Universal Credit failing?

by Sharon Wright, University of Glasgow, Peter Dwyer, University of York and Lisa Scullion, University of Salford 7 & 17 Sep | 2018 PMR Indicators: What’s changed and how to use them

by Cristiana Vitale, Rosamaria Bitetti and Eszter Danitz 11 Sep | Efficiency analysis of Swedish secondary schools by Christophe Andre, Jon Pareliussen & Hyunjeong Hwang

by Nicolas Woloszko, ECO, with participation of David Leite and Thierry Hounsa 21 Sep | Distributional implications of housing with a focus on wealth: preliminary results

by Orsetta Causa, Nicolas Wolosko, David Leite Neves 26 Sep | Can productivity still grow in service-based economies by Stéphane Sorbe, Peter Gal and Valentine Millot

by Stephane Sorbe, ECO 28 Sep | Macroeconomic Evidence suggests that Asylum Seekers are not a Burden for Western European Countries

by Hippolyte d’Albis, PSE Professor and Research director OCTOBER 2018 5 Oct | What makes a productive Russian firm?

by Lenka Wildnerove CFE & Hansjörg Blöchliger ECO 15 Oct | A macro-structural policy framework for a monetary union which is not an optimal currency area

by Christopher Loewald (South African Reserve Bank) and Andreas Wörgötter ( TU Wienna) 19 Oct | Data Mining and Text Comparisons in Public Finances: The Experience of Brazil

by Bradson Camelo, Paraíba Audit Court in Brazil 22 Oct | Productivity, wages and market dynamism in Australia

by Dan Andrews, The Treasury of Australia 23 Oct | Does graying Japan choose the consumption tax increase for the fiscal consolidation?

by Masahiko Tsutsumi (Hitotsubashi University) , Manabu Shimasawa, and Ryoichi Nanba (Chubu Region Institute for Social and Economic Research) 26 Oct | Presentation of Chapter 2 and Chapter 3 of the latest IMF World Economic Outlook (WEO)

by Mico Mrkaic, IMF’s Research Department NOVEMBER 2018 6 Nov | The Cyclical Behavior of Unemployment and Wages under Information Frictions

by Camilo Morales-Jimenez, Federal Reserve Bank in Washington D.C. 8 Nov | The Limits of Lending? Banks and Technology Adoption across Russia with Cagatay Bircan and Ralph De Haas (EBRD) 15 Nov | NAEC Innovation Lab: Agent-based modelling/networks

by Eleonora Mavroeidi 16 Nov | Monetary policy normalization and global spillovers: the US, China and the rest

by Paul van den Noord, Amsterdam School of Economics

32 . OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019

21 Nov | Common Factors of Commodity Prices

by Laurent Ferrara, Banque de France 23 Nov | An Overview of the OECD Skills Strategy

by Montserrat Gomendio, Head of the OECD Centre for Skills 28 Nov | Short term Effect of Structural Reforms – Comparing and Combining ECO and ELS results

by Eleonora Mavroeid 28 Nov | Gender Bias in Start-Up Funding: a Micro-Data Analysis Using Crunchbase

by S. Breschi, Bocconi University, N. Johnstone (STI), T. Kozluk (ECO), J. Lassébie (STI), Carlo Menon (STI), S. Sakha (ECO) 30 Nov | Public Insurance and Wealth Inequality: A Euro Area Analysis

by Lien Pham Dao, Bundesbank, Research Data and Service Centre of the Deutsche Bundesbank, Frankfurt DECEMBER 2018 4 Dec | Digitalisation and productivity: in search of the holy grail

by Stéphane Sorbe and Christina Timiliotis based on a paper they are producing with Peter Gal, Giuseppe Nicoletti and Thédore Renault, Structural Policy Analysis Division and Front Office, Economics Department 6 Dec | China’s practice of ending inter-generational transmission of poverty

By Mr Mai LU, China Development Research Foundation (CDRF) 10 Dec | Human Capital in the OECD’s Quantification of Reforms

by Balázs Égert, Jarka Botev, Zuzana Smidova and Dave Turner, 14 Dec | The Employment Effects of the EITC Program in Israel: Evidence on the Differential Effect of Family vs. IndividualIncome Based

by Adi Brender and Michel Strawczynski, Bank of Israel & University of Jerusalem; Presented by Michel Strawczynski.

JANUARY 2019 11 Jan | Growing in the Shadow: Challenges of Informality

by Franziska Ohnsorge & Shu Yu from the World Bank 18 Jan | Fiscal policy responses to trade war escalations

by Daragh Clancy,, European Stability Mechanism.

22 Jan | China’s Economic Growth: Long-term trend and short-term adjustment

by Prof Heng Quan, Shanghai Academy of Social Sciences and Institute of world Economy (SASS) 30 Jan | Inclusive Growth: The Potentials and Limits of a Concept

by Dr. Michael Grömling and Dr. Hans-Peter Klös, German Economic Institute (Institut der deutschen Wirtschaft).

FEBRUARY 2019 5 Feb | How is China’s stimulus shaping up?: Consequences for the financial sector

by Alicia Garcia Herrero, Chief Economist Asia Pacific, Natixis 13 Feb | Workforce Aging, Pension Reforms, and Firm Dynamics

by F. d’Amouri, Bank of Italy 15 Feb | Argentina: Fostering the integration into the world economy

by Robert Grundke & Jens Arnold 19 Feb | Like it or not? The impact of online platforms on the productivity of service providers

by Peret Gal, Valentine Millot & Stéphane Sorbe 28 Feb | Short term Effect of Structural Reforms – Comparing and Combining ECO and ELS results

by Eleonora Mavroeidi MARCH 2019 12 Mar | The state of education in Israel and its socioeconomic impact

by Dan Ben-David, Shoresh Institution & Tel Aviv University & Prof. Ayal Kimhi, Shoresh Institution and Hebrew University

OECD ECONOMICS DEPARTMENT ANNUAL ACTIVITIES REPORT 2018-2019 . 33

19 Mar | Short-term macroeconomic forecasting and turning-point detection after the Great Recession

by Pierre-Alain Pionnier SSD/NAD APRIL 2019 17 Apr | The impact that divergent responses to the risk of secular stagnation in the US and Europe have had on the global economy, and the risk that China becomes more “European” over time”

by Brad Setser, Council on Foreign Relations 26 Apr | MOLES: OECD’s new model for the analysis of housing markets and urban transportation

by Walid Oueslati and Loannis Tikoudis, ENV 29 Apr | Determinants of bilateral trade and spillovers from tariffs

by Florence Jaumotte, IMF MAY 2019 07 May | Tool to quantify the impact of public finance reforms on output and income inequality

by Manuel Bétin JUNE 2019 3 Jun | The Rise of Corporate Market and its Macroeconomics Effects

by Romain Duval, IMF 4 Jun | Green Finance and Climate Policy

by Julien Dubanes from University of Geneva, MIT and CESifo 6 Jun | The Effects of Vendor Allowance Contracts: Big Data Evidence from the Israeli Food Retail Market

by Oren Rigbi, Israel Competition Authority 11 Jun | The Rise of Market Power and Macroeconomics Implications

by Jan Eeckhout, Pompeu Fabra University in Barcelona 13 Jun | Monetary Policy, Asset Prices and Financial Variables

by Philip Turner, Basel University 18 Jun | Strengthening the Euro Area: The Role of National Structural Reforms in Enhancing Resilience

by Shekkar Aiyar, Romain Duval and Davide Mlacrino, IMF 18 Jun | Roadshow for World Bank’s Global Economic Prospects 2019: Subdued Investment

by Carlos Arteta, World Bank 19 Jun | Fiscal Transfers without Moral Hazard?

by Jacopo Cimadomo, European Central Bank 27 Jun | Estimating Corporate Income Tax Gaps: A Bottom-Up Approach for Slovakia

by Marek Chudy, Ministry of Finance of Slovak Republic JULY 2019 2 Jul | Assessing House Prices with Simple Valuation and Prudential Measures

by Michal Andrle, IMF 3 Jul | Populism: Demand and Supply

by Helios Herrera, University of Warwick Jul 11 | The Aggregate Effects of Budget Stimulus: Evidence From the Large Fiscal Expansions Database

by Jérémie Cohen-Setton, PIIE, Egor Gornostay, PIIE & Colombe Ladreit, Bocconi University Jul 12 | Technology and Investment for a Clean Energy System

by Lazslo Varro and Michael Waldron, IEA; Presentation M. Varro AUGUST 2019 Aug 27 | The Different Shades of Digitization in Manufacturing: Automation Versus Smartification

by Changkeun Lee, Yonsei University Wonju Campus

OECD Economics Department 2, rue AndrĂŠ-Pascal, 75775 Paris Cedex 16 www.oecd.org/economy