OECD Observer No 307 Q3 2016

Spotlight on the digital economy Building trust, openness, connectivity Robots, jobs, Internet of Things Measuring GDP in the digital age No 307 Q3 2016

www.oecdobserver.org

Tax and digital disruption Ministers’ roundtable: What policies?

Trustworthy

Cities for development Interviews: Volker Türk, UNHCR; Ugo Rossi, Trento region Italy Crossword; Economic indicators; New books; OECD calendar

nnected

Digital economy

Securing the future Inclusive

Open Open

©Cultura RM/Alamy

Connected

CONTENTS No 307 Q3 2016

READERS’ VIEWS 2

Top earners; Disengaged youth; Algorithmic improvement; Engender equality; Twitterings

26 28

EDITORIAL 3

One Internet: A social compact for the digital age Angel Gurría, Secretary-General of the OECD

NEWS BRIEF 4

OECD backs G20 innovation drive; Education must do better; Agricultural ambition needed; Soundbites; Economy; Country roundup; Latvia; Other stories; Plus ça change

29 30 31

OECD.ORG

32

6 7

34

BlogServer Multimedia; Bookshop

CITIES FOR DEVELOPMENT 9

10 12 14 16

Where cities can take Africa Ibrahim Assane Mayaki, Chief Executive Officer (CEO), New Partnership for Africa’s Development (NEPAD), Laurent Bossard, Director of the OECD Sahel and West Africa Club, and Mario Pezzini, Director, OECD Development Centre, and Acting Director, OECD Development Co-operation Directorate Urban pollution: Clearing the air Clara Young Building better cities: Why national urban policy frameworks matter Rudiger Ahrend The use of land: Why planners cannot go it alone Tamara Krawchenko and Abel Schumann Greening Bangkok Clara Young

SPOTLIGHT ON THE DIGITAL ECONOMY 19 Digital economy: Securing the future Andy Wyckoff 21 The digital economy in the age of disruption Ildefonso Guajardo Villarreal, Secretary of Economy, Mexico, and Chair of the OECD Ministerial Meeting on the Digital Economy 22 Roundtable on the digital economy, with: Navdeep Singh Bains, Minister of Innovation, Science and Economic Development, Canada ; Eng. Yasser ElKady, Minister of Communications and Information Technology, Egypt; Axelle Lemaire, Secretary of State for the Digital Economy, France; Alejandra Lagunes, National Digital Strategy Coordinator,

www.oecdobserver.org ©OECD September 2016 ISSN 0029-7054 Tel.: +33 (0) 1 45 24 9112 Fax: +33 (0) 1 45 24 82 10 sales@oecd.org Founded in 1962. The magazine of the Organisation for Economic Co-operation and Development OECD Publications 2 rue André Pascal 75775 Paris cedex 16, France observer@oecd.org www.oecd.org

36 38 39 40

42 44 46 47

Mexico; Baroness Neville-Rolfe DBE CMG, Minister of State, UK Jobs and skills in the digital economy Vincenzo Spiezia Robots versus workers: Towards an open, equitable and inclusive digital economy Anna Byhovskaya Business brief: Randstad Openness and digital innovation Protecting digital consumers Nathalie Homobono, Director-General for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF), and Chair, OECD Committee on Consumer Policy Open season Geoff Huston, Chief Scientist, APNIC From people to things: Building global connectivity Gaël Hernandez and Verena Weber Bridging policy silos to boost trust online Ensuring a secure Internet of Things Leonard Cali, Senior Vice President, Global Public Policy, AT&T Business brief: SICPA Promoting innovation, protecting privacy Marc Rotenberg, President and Executive Director of the Electronic Privacy Information Center, Washington DC Big data, satellites and climate change Measuring the economy in the age of digitalisation Nadim Ahmad and Neïla Bachene Tax challenges, disruption and the digital economy Pascal Saint-Amans More digital views

BOOKS 57 Reviews: Digital security; The ocean’s new frontier 58 Most popular 59 Special Focus: Digital economy 60 Review: Greening France; Crossword

DATABANK 61 Cloud computing; Road death challenge 62 Main economic indicators 64 China’s urban-rural divide ORDER FORM... ORDER FORM

Building better cities, page 12

SOCIETY 50 We need to address the migration backlash Stefano Scarpetta 51 Refugees, facts and better policies Interview: Volker Türk, Assistant High Commissioner for Protection, UNHCR

Roundtable on the digital economy, page 22

OECD.ORG 52 OECD Ministerial Council Meeting 2016: Enhancing productivity for inclusive growth; 53 OECD Forum 2016: Productive economies, inclusive societies 54 Trento Centre: Interview with Ugo Rossi 55 Recent speeches by Angel Gurría; List of OECD Ambassadors 56 Calendar

Published in English and French by the OECD EDITOR-IN-CHIEF: Rory J. Clarke PLANNING AND DEVELOPMENT EDITOR: Diana Klein EDITORIAL ASSISTANT, WRITER: Neïla Bachene LAYOUT: Design Factory, Ireland ILLUSTRATIONS: David Rooney, Sylvie Serprix WRITER: Clara Young ADVERTISING MANAGER: Aleksandra Sawicka ADVERTISING SALES: LDMD PRINTERS: SIEP, France; Chain of Custody certified.

Applications for permission to reproduce or translate all or parts of articles from the OECD Observer, should be addressed to: The Editor, OECD Observer, 2 rue André Pascal, 75775 Paris, cedex 16, France.

OECD Week 2016, page 52

All signed articles in the OECD Observer express the opinions of the authors and do not necessarily represent the official views of the OECD or its member countries.

Reprinted and translated articles should carry the credit line “Reprinted from the OECD Observer”, plus date of issue. Signed articles reprinted must bear the author’s name. Two voucher copies should be sent to the Editor. All correspondence should be addressed to the Editor. The Organisation cannot be responsible for returning unsolicited manuscripts.

The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities.

The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

Readers’ views We welcome your feedback.

“Engendering the city: Women and urban governance”, www.wikigender.org, October 2016 _____

Send your letters to observer@oecd.org or post your comments at www.oecdobserver.org or www.oecdinsights.org

Top earners

Algorithmic improvement

The tired old defence of fat cat pay has now become so familiar that it goes largely unchallenged (“Top earners: Why did the 1% get so rich?”). “Employers seek to attract… the very best,” says Brian Keeley, repeating it verbatim, as if the astonishing pay gaps seen in today’s labour market were an inevitable consequence of a large number of firms fighting over a small number of superhuman business leaders: a simple question of supply and demand. In practice, however, this law applies only to the CEO’s mates in the boardroom. At every other level, the organisation will revert instinctively to the axiomatic rule of economics that one attempts to get as much as possible in return for as little as possible. Any analysis of income inequality must expose the disingenuous excuses of interested parties for what they are if it is to be useful.

The algorithmic society…I wonder what George Orwell would have thought about that? Artificial Intelligence can no doubt tell us the most efficient way of going from A to B; But it can’t define B for us i.e. where we want go. It is like productivity, which is nothing more than the way of getting more output for a unit of input. It doesn’t tell us what goods and services we should be producing to get to “better lives”. Ask Charlie Chaplin what Fordism did for better lives in “Modern Times”. The problem of the OECD is that economies and the technologies that drive them are means, not ends. That is what is changing the OECD ball game, indeed the global ball game. Hold your breath and look closely at the Sustainable Development

Yours faithfully, Juliet Davies

Letter to the editor on “Top earners: Why did the 1% get so rich?”, from OECD Observer No 306 Q2 2016

Disengaged youth Many of today’s economic and social problems–locally, nationally, globally–have accumulated for a long time and are the result of political and economic institutions’ stiffness, comfort-seeking, inability to (at times painfully) adapt to demands of the day.

I agree with the content, but disagree with semantics of the title–we need rebels! Not violent, not apathetic and cynical, but young, caring, educated rebels who would engage with and challenge the older generation to adapt and to appreciate that the world we are building today is for their generation.

Elbay Alibayov, commenting on “We don’t need rebels, we just need to create effective policies to support young people”, from http://oecdinsights.org, posted on www. medium.com, October 2016

2

Goals (SDGs)!

Ron Gass, commenting on “There’s an algorithm for that.

Or there soon will be”, http://oecdinsights.org, May 2016

Engender equality We clearly have a long way to go where equal representation is concerned in political spheres! Positive discrimination can be one short term measure albeit a contentious one. I would argue that an available route towards greater representation is to advocate and lobby that our elected leaders be feminists, if not representatives. When leadership positions arise and the pool of contenders are men, let us hold them fairly to account on their past records and future agendas to improve gender equality. The means to achieving equal representation may lie fundamentally on equal access to opportunity, but also relies on an appetite and understanding within political agendas for the social, cultural, economic and political equality of the sexes. Challenging political rhetoric on the ideals of feminism, could be one way to create the space for such an appetite to grow.

Hilary Murphy, commenting on the online discussion

To ensure gender friendly urban policy it is crucial to involve women at every level.

Women’s voices often remain unheard or lost while transforming policies into action. Just by mere presence of women at top leadership level doesn’t guarantee that crucial issues related to women will be included as part of policy framework and will be translated it in the desired way. In many countries there is a quota system that ensures women’s participation in various levels of governance.

Though rather than quota, the focus should be on empowerment; so that women can take up a leadership role and able to deliver as per need. […]

Usri, commenting on the online discussion “Engendering the city: Women and urban governance”, www.wikigender. org, October 2016

Twitterings Maria Vaalavuo @mjvaal So it is possible to get rich by working... #inequality #rich #top1percent @ OECDObserver https://shar.es/1wQRJo Paul Kirby @paul1kirby Remarkable how many countries use electricity bills to tax households and businesses. And how much. @OECD chart Kris Olds @GlobalHigherEd The @OECD’s Education at a Glance is now an epic tome - nothing the World Bank or UNESCO produces matches it.

Amine Ouazad @amine_ouazad Good: The @OECD now sets development goals both for so called developed and developing countries. “SDGs” rather than MDGs. #economics Carrie Ballard @AtelierEnglish @OECD @OECDtax @OECD_Social @ OECDeconomy “Tax burden” is a weighted term that frames tax contribution to commons as negative and heavy.

Follow us on Twitter @OECDObserver Comments and letters may be edited for publishing. Send your letters to observer@oecd.org or post your comments at these portals: www.oecdobserver.org, www.oecdinsights.org, or at the other OECD portals on this page.

EDITORIAL

One Internet: A social compact for the digital age of the four themes of our ministerial meeting on the digital

The Internet is now an essential part of our lives and a critical element of the world economy

economy this June.

Third, the undisputed necessity of building an environment of trust. Lately, many important companies such as Target, Home Depot, eBay or LinkedIn reported hacks and data breaches. Public

Getting Internet governance right has never been more pressing safety is`hile important financial losses can result from cybercrime.

We need to do more to strengthen trust across borders. Policy leaders, the private sector and civil society must join forces to effectively manage digital risks. Otherwise, as the report notes, users will modify their behaviour, and the online engagement that has made the Internet such a successful platform for growth,

Internet penetration increased almost sevenfold in the past 15 years, from 6.5% of the world population in 2000 to 43% in 2015.

The expansion of broadband networks has already brought 3.2 billion people online worldwide. Some 116 billion devices are already connected to the Internet and this number is growing faster than the number of Internet users. Internet and software companies such as Facebook, Apple and Google have all overtaken traditional companies such as GE or Exxon Mobile.

development and innovation will be eroded.

Besides these key areas of action, the report also touches upon a wide range of forward-looking aspects that are worth pointing out.

It includes a framework to understand the Internet as an ecosystem of technologies, protocols, hardware, software and content, as well as recommendations to ensure human rights for digital citizens.

The report is also a call on governments, corporations, civil society, the technical community and individuals to create a new social

These examples are just a foretaste of how fast the Internet is

compact for the digital age: a social compact that may bring about

transforming our economies, our societies and our cultures. That

a completely new mode of interaction, of exchange of ideas, of

is why we must strive to get the rules governing this incredible

negotiation that could also enhance policymaking processes in all

platform for growth and social well-being right. The “One Internet”

areas, with the idea of making them increasingly open, transparent

report from the Global Commission on Internet Governance sets

and, in the end, democratic.

us on the right path.

Getting Internet governance right has never been more pressing.

Three lines of action in the report particularly resonate with the

In the past few years, we have benefited significantly from the

OECD:

expansion of the Internet, the most powerful information system

First, the need to increase access for a truly inclusive global digital

the world has yet seen. But this outstanding evolution has brought

economy. Access to the Internet is essential to benefit from the

new challenges that we must address, collectively, if we want to keep

digital economy. Yet, over 50% of the world population remains

an accessible, inclusive, secure and trustworthy Internet. Count on

offline, most of them living in emerging and developing countries.

the OECD to help achieve these goals and develop better digital

To increase access and make it affordable, policy leaders must

policies for a better world.

encourage private investments and promote competition among providers, while increasing digital literacy. But we must also support governments in developing countries who want to provide free access internet spaces for their citizens.

Second, the importance of promoting Internet openness. The Internet is a global network of networks. We can capture its full potential only if we preserve the global free flow of information and promote the cross-border delivery of services. As the report

www.oecdobserver.org/angelgurria www.oecd.org/about/secretary-general @A_Gurria For this editorial online, see http://oe.cd/1oH Read also the OECD Secretary-General’s opening remarks at the Cancún OECD Ministerial Meeting on the Digital Economy, 22 June: http://oe.cd/1Dh For the “One Internet” report, see www.ourinternet.org/report

notes, the open and accessible qualities of the Internet are the very qualities that encourage creativity and innovation. This is why the OECD has made Internet Openness and Innovation one

OECD Observer No 307 Q3 2016

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News brief OECD backs G20 innovation drive

Soundbites Optimism–

©Xinhua/Pang Xinglei

Ultimately, perhaps, ongoing advances in artificial intelligence, robotics, Big Data, and other new technologies will push productivity onto a much higher growth path, generating a new leap in living standards and demonstrating that the pessimists were mistaken.

John Cassidy, The New Yorker, 10 August

committed to expand broadband access and investment in information and communications technologies, and urged countries to seize the opportunities of the New Industrial Revolution, while agreeing to strengthen co-operation and support workers affected by technological change.

The OECD will facilitate a new G20 Task Force on Innovative Growth, said Gabriela Ramos, the OECD’s Chief of Staff and Sherpa to the G20, who also emphasised the organisation’s input to other key areas such as skills and training, investment in infrastructure, and small and mediumsized enterprises.

Education must do better

the ten SDG targets for education. Most countries have increased their investment in education in recent years: between 2008 and 2013, spending per student was 8% higher in 2013 than in 2008. But many young people have yet to see the benefit of this increased spending, as a sixth of 25-34 year-olds have no upper secondary education and inequalities make it harder to find a job.

Governments need to implement more ambitious policies to address the global challenges facing agriculture, notably a shift away from direct support to farmers towards greater assistance for innovation systems that will improve productivity and sustainability. A new OECD report finds that support to producers in OECD countries has roughly halved in intensity over the past 30 years, and now amounts to 17% of gross farm receipts. However, more investment in people–education, skills and health services–and in strategic physical infrastructure and agricultural innovation systems is required.

See www.oecd.org/education/

See www.oecd.org/agriculture/

Real GDP growth in the OECD area slowed slightly to 0.3% in the second quarter of 2016, down from 0.4% in the previous quarter. Growth slowed in most G7 economies, with the exception of the UK and the US, where growth picked up to 0.6% and 0.3%. Growth decelerated strongly in France, Germany and Italy.

inflation was broadly stable at 1.8% in July 2016.

Achieving the UN Sustainable Development Goal (SDG) for education by 2030 will be a major challenge for all countries, the latest OECD Education at a Glance finds. The report, which measures countries’ efforts to achieve inclusive and equitable quality education, says that only 12 out of 35 OECD members are meeting the benchmark level for at least five of

Economy OECD leading indicators point to stable growth momentum in the OECD area as a whole, the US, Japan as well as the euro area. These composite indicators anticipate trends and turning points in the growth cycle, using data from the likes of order books, building permits and long-term interest rates. In Canada, China, Russia and Brazil, the composite leading indicators suggest growth is picking up, but weaker momentum in Italy.

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–pessimism–

Leaders of the G20 countries meeting in Hangzhou, China from 3-5 September, endorsed a series of action plans to implement their growth strategies covering a broad swathe of policy areas: from innovation, skills and entrepreneurship to investment finance, tackling money laundering and combatting tax avoidance, an area which OECD Secretary-General Angel Gurría pointed out was already bearing fruit. The OECD is an active partner in the G20 and Mr Gurría congratulated China for putting innovation at the heart of the growth strategy. G20 leaders welcomed the OECD’s work on the measurement of the digital economy,

See www.oecd.org/g20/

OECD-area inflation slowed to 0.8% in July 2016, compared with 0.9% in the previous month. Excluding food and energy, annual

Globalisation’s future depends on better management. Will that happen? Alas, I am not optimistic.

Martin Wolf, Financial Times, 7 September

–defeatism Very large firms pay [the taxes] they like where they like.

Headline, Libération (French daily newspaper), 7 September

Agricultural ambition needed

The unemployment rate in the OECD area was stable for the second consecutive month at 6.3% in July 2016, 1.8 percentage points below the January 2013 peak. Some 39.1 million people were out of work, 9.9 million less than in January 2013, but still 6.4 million more than in April 2008. In the euro area, the unemployment rate was also stable at 10.1% for the fourth consecutive

NEWS BRIEF

©Steve Allen Travel Photography / Alamy Stock Photo

Country roundup Australia should improve the quality of vocational education and training to help young people into work, according to a new OECD report. www.oecd.org/australia/ The Netherlands should step up its policies to attract and retain highly skilled migrants to help address labour shortages and bolster its position as a knowledge-based economy. www.oecd.org/netherlands/ Denmark has long been a generous provider of development aid, especially to the neediest countries, and is known for giving high-quality and flexible support.

However, it faces challenges from a reduction of its aid budget and fast-rising refugee costs, according to the latest DAC Peer Review of Denmark. www.oecd.org/denmark/

Latvia is 35th OECD member country Latvia deposited its instrument of accession to the OECD Convention on 1 July 2016, thereby becoming a full member of the organisation.

Visit www.oecd.org/latvia/

See www.oecd.org/employment/

pesticides and meet ambitious renewable energy targets, according to the latest

See www.oecd.org/skills/

according to the latest OECD Economic Survey of Turkey. www.oecd.org/turkey/ France has improved its environmental performance over the last decade, by lowering greenhouse gas emissions, reducing some air pollutants and cutting

Turkey’s economy has proven remarkably resilient, though further action can be taken to raise productivity and advance the shift to a more balanced and sustainable growth path that will boost living standards for all,

Mexico has become a frontrunner in making

its use of fresh water. Further effort will be needed to reduce pollution by nitrates and

Environmental Performance Review of France.

to a new OECD report.

Income inequality is worsening within many countries, and regional disparities in housing, safety and air quality inside countries are also growing wider.

Although regional gaps are narrowing in education and Internet access, disparities in GDP per head, disposable income, safety and air pollution are widening in many, according to OECD Regions at a Glance 2016.

www.oecd.org/mexico/

See www.oecd.org/regional/

www.oecd.org/france/ Japan must make fighting international bribery a priority. www.oecd.org/japan/

government data publicly accessible, and must use this to foster innovation, according

Consumer prices, selected areas

As for trade, total (seasonally adjusted) international merchandise trade of the G20 grew modestly in the second quarter of 2016, the first increase since early 2014, but remains significantly below post-crisis highs. Exports rose by 1.5% and imports by 2%, following seven and eight consecutive quarterly falls, and mirroring the rise in oil prices.

Labour markets are recovering but wage growth remains weak, according to the latest OECD Employment Outlook issued in July. With the global economy stuck in a low growth trap, better use of skills and structural reforms to unblock activity are needed to boost productivity, support job creation, improve job satisfaction and raise living standards.

Poor skills severely reduce a person’s chances of finding decent work, and have a major impact on how the benefits of economic growth are shared within societies. In countries where adults tend to have poor skills, it is difficult to introduce productivityenhancing technologies and new ways of working, which affects living standards, according to a new OECD report, Skills Matter: Further Results from the Survey of Adult Skills.

Chile has taken steps to address the rising environmental pressures from its rapid economic growth, strengthening its environmental institutions and introducing new instruments, including a carbon tax.

It now needs to thoroughly implement policy measures to stem the threat to its land, air and water, the OECD’s second Environmental Performance Review of Chile warns. www.oecd.org/chile/

month, falling most in Spain and Italy, by 0.3 and 0.2 percentage points to 19.6% and 11.4% respectively, while increasing by 0.2 percentage points to 10.3% in France.

Other stories

July 2016, % change on the same month of the previous year % OECD total 3.0 2.0 0.8 1.0 0.0 -1.0 -2.0 -3.0 -4.0 -5.0 -6.0 -7.0

1.8

All items Food

0.1

Energy All items non-food, non-energy

Plus ça change…

E-commerce is a marvellous thing. And while it may be suffering from hype today, I see it as a harbinger of the reality of tomorrow.

“E-commerce: From hype to reality”, by Donald J Johnston, former Secretary-General of the OECD, in Issue No 224, January 2001

-7.8

OECD Observer No 307 Q3 2016

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BlogServer Creating jobs in the developing world Elizabeth L. Littlefield

A generation ago, private capital flowing into developing countries was a small fraction of aid dollars. In recent years that ratio of aid to investment has flipped, and the amount of investment flowing to the developing world far exceeds aid dollars.

From OECD “Development Matters” platform.

More here: http://oe.cd/1Ai

The new terrorism Patrick Love

Fifteen years after 9/11, the world is now facing the threat of systemic terrorism. Apparently mindless, random attacks are in fact part of a strategy developed over a number of years, whose origins can be traced back to three major turning points, one ideological, one political, one military, that occurred at the end of the 1970s.

From OECD Insights. More here: http://oe.cd/1Ak

Economic complexity, institutions and income inequality César Hidalgo and Dominik Hartmann

Is a country’s ability to generate and distribute income determined by its productive structure? Decades ago Simon Kuznets proposed an inverted-u-shaped relationship describing the connection between a country’s average level of income and its level of income inequality.

From OECD Insights. More here: http://oe.cd/1Ah

Fabien Dworczak

A session at the 2016 OECD Forum entitled “Teaching & Learning with Robots” brought Nao, a humanoid robot, to meet with a class of young students from the Sections Internationales de Sèvres school. Catherine Potter-Jadas, head of the primary school, noted the children’s reactions to the robot.

From OECD Insights. More here: http://oe.cd/1Al

Can OECD’s data guide the world towards better education systems?

Complexity, modesty and economic policy

Dirk Van Damme

Lex Hoogduin, University of Groningen and GloComNet

What do we have to do to ensure that all children and adults around the world get the best possible education? This question is important not only for individuals’ futures, but also for the fate of the planet. The outcomes of education will determine whether mankind will be able to face the many challenges ahead, from climate change to migration, from peace to economic growth and social progress.

Societies and economies are complex systems, but the theories used to inform economic policies predominantly neglect complexity. They assume for example representative agents such as typical consumers, and they also assume that the future is risky rather than uncertain.

From OECD Education & Skills Today. More here: http://bit.ly/2feDTFZ

Revisiting policy options for more jobs

Gender gaps in emerging economies: the role of skills Despite unprecedented progress over the past century, gender gaps in the labour market persist throughout the emerging world and are accompanied by important skill gaps. Most notably, women tend to perform worse in Science, Technology, Engineering and Mathematics (STEM) subjects, have lower financial literacy and business knowledge than men.

In many OECD countries, the labour market has yet to recover the lost ground suffered in the aftermath of the financial crisis.

In some of them, unemployment has been persistently high, resulting in a very high incidence of long-term unemployment.

In part, this reflects the weakness of demand but given that a slow recovery has been a reality for many countries, a number of structural factors also contribute to the situation in the hardest-hit countries.

From OECD Skills and Work blog. More here: http://bit.ly/2anZD1z

From OECD Ecoscope. More here: http://bit.ly/2eCIOfX

Paolo Falco

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From rote learning to robotics

From OECD Insights. More here: http://oe.cd/1C4

Alain De Serres, Head of Division, and Peter Gal, Economist, Structural Surveillance Division, Policy Studies Branch, OECD Economics Department

OECD.ORG

Achieving and sharing the benefits of globalisation

Educating for innovation and innovation in education

Catherine Mann, OECD Chief Economist, and Ken Ash, Director of the OECD Trade and Agriculture Directorate

Andreas Schleicher, Director, OECD Directorate for Education and Skills

The latest OECD Interim Economic Outlook warns that trade growth is slowing, contributing to another slowing of global GDP growth in 2016 and with few signs of improvement for 2017. Does it really matter? If we believe the current anti-trade, anti-globalisation rhetoric, we might shrug our shoulders and say “no”. Trade has been so maligned and demonised, some might even be pleased.

From OECD Ecoscope. More here: http://oe.cd/1CL

Global growth warning: Weak trade, financial distortions Catherine Mann, OECD Chief Economist

The global economy remains in a low-growth trap. In our latest Interim Economic Outlook global GDP growth is set to remain flat around 3% in 2016 and improve modestly to 3.2% in 2017. This is slightly lower than the June Economic Outlook forecast due to weaker conditions in advanced economies, including the effects of Brexit, offset by a gradual improvement in major emerging market commodity producers. More significantly, this string of feeble global growth rates is well-below historical norms.

From OECD Ecoscope. More here: http://oe.cd/1CM

People have quite different views on the role that digital technology can and should play in schools. But we just can’t ignore how digital tools have so fundamentally transformed the world around schools. Students unable to navigate through our complex digital landscape are simply no longer able to participate in our social, economic and cultural life.

From OECD Education & Skills Today. More here: http://bit. ly/2dvo90t

A new role for science in policy formation in the age of complexity?

Vladimir Šucha, Director General, European Commission, Joint Research Centre

The recent financial crisis was a wakeup call for both scientists and policy makers. It exposed new and unknown links between economic magnitudes but also between various parts of our modern, globalised world. It further helped to reveal the limitations of some approaches in economics as well as social sciences which proved to be unsuitable for this new world.

From OECD Insights. More here: http://bit.ly/2eLfIxv

These extracts from blogs are courtesy of OECD Insights, OECD Education & Skills Today, OECD Ecoscope, Wikigender, Wikiprogress and other content and social media platforms managed by the OECD.

MULTIMEDIA Digitisation is shaping the future of work

The OECD Inclusive Growth in Cities Initiative launch

http://bit.ly/1WVHFQI

http://bit.ly/2erjNIr

BOOKSHOP

To order these titles and more go to:

www.oecd.org/bookshop www.OECD-iLibrary.org OECD Observer No 307 Q3 2016

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CITIES FOR DEVELOPMENT

Where cities can take Africa

©Alamy

Ibrahim Assane Mayaki, Chief Executive Officer (CEO), New Partnership for Africa’s Development (NEPAD), Laurent Bossard, Director, OECD Sahel and West Africa Club, and Mario Pezzini, Director, OECD Development Centre, and Acting Director, OECD Development Co-operation Directorate

Sea change for the Moroccan port of Tangier Tangier in 2000 was a sleepy coastal city in the north of Morocco. Fifteen years later, Tangier’s population has exploded three-fold into a vibrant metropolitan area of 1.5 million inhabitants. The city’s freezones have attracted new industries, such as automobile producers. A new business district called Tangier City Center and new satellite cities arise around Tangier’s old town, providing local inhabitants with modern infrastructure and amenities that have been sorely lacking. A new high-speed train is being built to connect people with the state-of-the-art Ibn Batouta International Airport.

Examples like these prove how urbanisation is transforming African societies profoundly. Africa is urbanising twice as fast as Europe did. The share of urban residents in the total population has increased from 14% in 1950 to 40% today. It took Europe 110 years to move from 15% urban in 1800, to 40% in 1910. Africa has achieved that same

transformation in 60 years, nearly half the time. The continent is urbanising at a historically rapid pace coupled with an unprecedented demographic boom: the population living in cities has doubled from 1995 to 472 million in 2015. By 2050, about 56% of Africans are expected to live in cities.

Make no mistake about this: Africa’s cities and towns are engines of growth that, if harnessed correctly, can fuel the entire continent’s sustainable development. In fact, the African Economic Outlook 2016 concludes that Africa’s urbanisation holds immense potential for accelerating structural transformation that drives economic growth.

Cities, for example, increase the consumer base for African food producers. The urban sector accounts for 40% of the total population, 50% of total food consumption and 60% of the food market. The OECD’s Sahel and West Africa Club estimates

that this has created a food economy worth US$180 billion in 2010, by far the region’s biggest private sectorindustry. Consider that two-thirds of the investment in urban infrastructure needed by 2050 has yet to be made to accommodate the growing urban population. This is a huge economic opportunity for domestic and foreign investors, which could create millions of jobs. Higher agricultural productivity, industrialisation, services stimulated by a growing middle class and foreign direct investment in urban corridors create real ways to generate economic growth. Stronger social development is also possible through safer and inclusive urban housing and robust social safety nets. Sound environmental management in urban centres will go a long way too towards addressing the effects of climate change, as well as the scarcity of water and other natural resources, controlling air pollution, developing clean cost-efficient public transportation systems, improving

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waste collection, and increasing access to energy. Indeed, the economic, social and environmental benefits of effective urbanisation cannot be underestimated.

Yet, realising the promise of cities requires cashing in on the urbanisation dividend through bold policy reforms and sound planning. Well-functioning cities don’t just happen; they are created to function well.

What this requires are tailored and more sustainable urbanisation strategies. These have to be designed and implemented to reflect specific contexts and diverse urban realities and patterns. Better matching formal real estate markets with housing demands by clarifying land rights is one necessary policy reform.

Improving connectivity with rural areas as well as building infrastructure and

expanding services within and between cities are other strategic components.

Today, however, less than a third of African countries have national urbanisation strategies. Well-functioning cities also need capable, transparent governance.

Yet, local government jobs pay poorly and are not considered viable career options to attract Africa’s young talent. And sustainable urbanisation needs to tap into public and private sources of finance in innovative ways. Urban investment needs in sub-Saharan Africa alone are estimated between $12.5 billion and $35 billion per year depending on urban extension and population densities.

New and ambitious strategies for investing in sustainable urbanisation will top the global agenda as the international

Urban pollution: Clearing the air Clara Young, OECD Observer

community gathers in Quito, Ecuador for the Habitat III Conference in October 2016. As the continent refines its Common African Position on urban development, reflecting Agenda 2063 and Sustainable Development Goal 11 on cities, Africans have much to contribute to this discussion.

By understanding the challenges and optimising the opportunities of urbanisation, Africa’s cities are not only a model of lessons and best practices but also a blueprint for charting a future of inclusion, productivity and prosperity for the benefit of all Africans.

For more on Habitat III–United Nations Conference on Housing and Sustainable Urban Development, 17-20 October 2016–see https://habitat3.org Visit http://www.nepad.org/ and www.oecd.org/ development See www.oecdobserver.org/cities

into the lungs, they do lethal damage: lung cancer, stroke, heart disease, and chronic and acute asthma.

©Peter Treanor/Alamy Stock Photo

According to the World Health Organisation (WHO) Global Urban Ambient Air Pollution Database released in May 2016, Onitsha is the city with the highest PM10 count in the world. It has 30 times more than the WHO recommended levels of PM10. It is just one of four Nigerian cities in the WHO’s top 20 airpolluters, a list that includes Kaduna, Aba and Umuahia.

Air pollution in African cities is a major health and environmental challenge that must become a focus of urban policies. It’s hard to breathe in Onitsha, a major river port in Nigeria. The air is dark with car fumes. Old freighters on the River Niger expell smoke. Burning rubbish dumps outside the city’s many sprawling

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markets thicken the air even further.

Add to that diesel generators, and open coal, oil and wood fires, and this southeastern port town in Nigeria becomes handily the world’s biggest producer of small particulate matter (PM10). When these miniscule pollutants are inhaled deep down

Nigeria may be a particularly tough case, though the African continent as a whole needs to grapple with the startling increase in premature deaths from air pollution. According to the Global Burden of Disease Study 2013, (Institute for Health Metrics and Evaluation IHME, 2015) nearly 250,000 people died in Africa in 2013 of diseases attributable to ambient PM pollution; that is, air pollution from industry, power generation and road transport. Household air pollution, mainly from inefficient fuel stoves for indoor cooking, were contributing factors to diseases that resulted in the premature deaths of over 450,000 people that year.

Indoor and outdoor air pollution is not the only environmental risk

CITIES FOR DEVELOPMENT

factor in premature deaths. Childhood undernutrition, poor sanitation and unsafe water are other killers. And, though these last three factors have fallen since last measured by the IHME in 1990, they have by no means been vanquished: in 2013, 400,000 people died due to unsafe sanitation, 550,000 from unsafe water and 275,000 from childhood undernutrition.

Not only must Africa fight a multi-front war on these risk factors to health, its time frame for doing so is short. According to Climate Change News, Africa comprises 16% of the world’s total population and only 3% of all motor vehicles, though road transport still accounts for 50% of premature deaths due to ambient pollution.

The rate of industrialisation has been, with some exceptions, slow and has even reversed in some countries. Despite this, deaths from outdoor pollution rose by 36% between 1990 and 2013 to 250,000 and those from indoor pollution by 18% to over 450,000. Half of the world’s population growth in the next 30 years is expected to take place in Africa. If measures aren’t taken to control air pollution now, these numbers will skyrocket.

Though the WHO designated Onitsha as the city with the most befouled air, there was one problem with its data: Onitsha has only one monitoring station.

This compromises the statistical reliability of the information. To get serious about tackling air pollution, African cities need ground-monitoring stations that collect information on different emissions over longer periods of time, and various sources.

With a more detailed inventory of emissions, policy-makers can begin to explore ways to solve air pollution problems. Some ideas can come from what advanced economies have successfully implemented. To improve decisionmaking, the cost of air pollution and different ways to solve it need to be quantified. Currently, the cost of deaths due to air pollution in Africa is roughly US$450 billion.

Cost-benefit analysis can be applied to different proposals based on how much one is willing to pay to reduce

the risk of premature deaths, called Value of Statistical Life (VSL). The OECD determined in 2012 from multiple surveys that individuals were willing to pay $30

Africa needs to grapple with the startling increase in premature deaths from air pollution to reduce the annual risk of dying from air pollution from 3 in 100,000 people to 2 in 100,000. This establishes $3 million for every 100,000 people as a base amount for calculating the VSL for each country. This provides an important tool for calculating which air pollution policies yield the best value for money ratio for each country.

Of the panoply of air pollution measures in play, reforming fuel subsidies must be seriously considered in Africa. A working study by the International Monetary Fund (IMF) and OECD in 2015 claims that removing energy subsidies in sub-Saharan African countries would cut deaths from air pollution by over 50%. In North Africa, removing petroleum subsidies would reduce deaths from air pollution by roughly 80%.

Singling out car emissions, particular in North Africa with its growing vehicle congestion, would have an immediate health benefits, as well as help fight against climate change. Nigeria and South Africa have imposed emissions standards roughly equivalent to those introduced in Europe in 1996. But for emissions standards to work, three things are needed: cleaner fuel, more fuel-efficient cars and better enforcement capabilities.

Significant investments need to be made to upgrade refineries so that they can remove sulfur from fuel. Cheap old cars brought in from developed countries need to be phased out–governments could slap tariffs on secondhand car imports or ban them outright. And governments need to have the wherewithal to enforce emissions standards, whether on individual cars or industrial installations and power plants.

Household biomass fuel is another target area, particularly in sub-Saharan Africa. Here, candles and kerosene lamps are frequently the sole sources

of lighting because there is no access to electricity or supply is unreliable. Coal, candle and kerosene burning emits PM 2.5 particular matter. There are initiatives to replace candle and kerosene with clean solar lamps, but this needs to be more widespread. Upgrading kitchens with more efficient cooking and heating fuels would lower particulate matter even further, as projects in Niger reported in this magazine have shown. Senegal, Cameroon and Ghana have supported the switch from biomass to liquefied petroleum gas. Kenya has passed a law whereby new buildings must be equipped with solar water heating systems.

Africa is urbanising, so now is a good time to build effective ways of tackling air pollution into well-designed city planning.

From organising rubbish collection to reduce refuse burning and investing in public transport systems to piping natural gas to homes and replacing leaky stoves, to upgrading electricity grids and doing away with dirty diesel generators: it is possible to clear the air in African cities.

It requires good planning and budgeting, strong co-operation among stakeholders and investors, and political will to succeed.

References Godson Rowland, Ana (2011), “Air Pollution in the Niger Delta Area: Scope, Challenges and Remedies”, an Open Access chapter on www.intechopen.com, DOI: 10.5772/16817 “Cooking lesson” in OECD Observer No 284, Q1 2011, see http://oe.cd/1xd Global Burden of Disease Study 2013 (GBD 2013), Institute for Health Metrics and Evaluation: University of Washington, http://vizhub.healthdata.org/ gbd-compare/ IEA (2016), World Energy Outlook Special Report OECD et al (2016), African Economic Outlook 2016 Roy, Rana (2016) “The Cost of Air Pollution in Africa”, OECD Development Centre Working Paper for African Economic Outlook 2016 Smart-Abbey, Nii Akrofi, “Nigeria’s Onitsha, the city with worst air quality globally”, Africanews, May 18, 2016 Vidal, John and Dehghan, Saeed Kamali, “Which are the world’s two most polluted cities – and why?”, The Guardian, May 12, 2016 World Health Organization (2016), Global Urban Ambient Air Pollution Database Yeo, Sophie (2014), “Africa adopts sustainable transport plan”, at www.ClimateChangeNews.com, 30 October

OECD Observer No 307 Q3 2016

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Building better cities: Why national urban policy frameworks matter

©Gavin Hellier/Alamy

Rudiger Ahrend, Head of the Urban Programme, OECD Public Governance and Territorial Development Directorate

Tokyo from train in motion, not digitally altered In 1950 New York and Tokyo were the only urban agglomerations on the planet with populations in excess of 10 million.

By 2030, the number of megacities is projected to surpass 40, with seven of the world’s top ten megacities in Asia.

Cities of around 2-5 million are also becoming far more commonplace, and will present challenges and opportunities for policy makers.

This is a metropolitan century. Already today, more than 50% of the world’s population lives in cities. This figure is projected to reach 85% by 2100. Within 150 years, the urban population will have increased from less than 1 billion in 1950 to 9 billion by 2100. In much of Europe and

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North America, most of the urbanisation and basic city forms have already been set. Developing and emerging countries, however, have an unprecedented window of opportunity to shape their urban futures.

If the world is to meet ambitious goals, we need to work with cities. Whether it is for meeting the UN targets of limiting global warming or achieving the 17 Sustainable Development Goals, cities must be front and centre of our efforts.

Now more than ever, the world needs to understand urbanisation and its consequences for economic, social and environmental performance, and the New Urban Agenda of Habitat III in October

2016 can become a milestone by setting the agenda for the next 20 years.

Cities strongly influence the prosperity and well-being of city residents as well as people in rural areas. As such, they should be a national policy priority.

Workers in cities have higher productivity and wages, an effect that increases with city size. With the right approach, cities can therefore contribute to productivity growth, even in less advanced countries.

Non-urban regions, particularly those close to large cities, tend to be more prosperous and record higher economic growth than regions that are more remote.

There are many reasons for this, but even

CITIES FOR DEVELOPMENT

smaller cities are important for rural areas by serving as market towns and centres of service provision.

poorly catered to, including the role they can play in the national (and indeed international) economy.

Cities do not operate in isolation; they are part of a system of cities. OECD countries with multiple large cities, such as Germany, instead of concentration in

Setting the right policy frameworks National policies have a profound impact on cities, and must be increasingly seen through an “urban lens”. National urban policy frameworks need to consider the wider range of policies that are important for cities, not only those labelled “urban”.

Given the large number of ministries with portfolios that influence city development, many countries have inter-ministerial committees to improve dialogue on urban issues. Typically these should include transport, housing, economy, finance and the environment.

Policies on inequality should also focus on cities one or two dominant cities, tend to have higher per capita GDP. After all, a larger number of major metropolitan areas means a greater part of the national territory can benefit from proximity to a major city. Moreover, the presence of several big cities may reduce the likelihood that a shock in any one place seriously hurts national performance.

Furthermore, in Europe where cities tend to be smaller, it is possible to replicate some of the productivity bonus of big cities by being well connected instead.

In our metropolitan age, interconnected cities are therefore key.

Still, some cities struggle to realise that potential in terms of prosperity, innovation and well-being. Even some large OECD cities–such as Birmingham or Detroit–underperform their national economies. During the dozen years up to the global financial crisis, 15 of the worst performing OECD regions in terms of growth were predominantly urban.

There is also the particular challenge of addressing inequality within cities. Large cities are often characterised by highly successful business districts alongside pockets of very high unemployment and even poverty. Inequality between rich and poor tends to be higher in larger cities, and this gap appears to have widened in recent decades. In other words, policies to address inequality should also focus on cities.

But policies should not only focus on the problems but consider the potential of cities, too. Policies all too often target only what are deemed to be particularly “problematic” cities or neighbourhoods.

The broader needs of cities are often

National governments establish most of the ground rules for cities. National (and, in some federal systems, state/ provincial) legislation typically defines city responsibilities, powers and, crucially, revenue sources. Attention to the basic legislative framework for cities is essential but is too often overlooked, even though these frameworks influence, if not determine, what a mayor can do and what incentives he has to proceed.

The trouble is, different strands of policy often work at cross-purposes with one another. For example, property tax systems in many OECD countries may favour single-family homes over multi-occupancy dwellings or owner-occupied housing over rental accommodation. The evidence shows that preference for single-family units stimulates costly sprawl, while privileging home ownership tends to reduce labourmarket efficiency. Both have impacts on inequality. Moreover, such tax systems can undermine other national and citylevel policies intended to curb sprawl, improve labour-market efficiency and reduce inequalities.

Another issue is fragmentation of government. In the Paris region they call it the “mille-feuilles”, after a famous multi-layered custard pastry. Or take the greater Chicago tri-state metropolitan area, for example, which is home to no fewer than 1,700 governmental authorities

of various kinds. Even relatively modestsized metropolitan areas are often quite fragmented. This not only makes policy making difficult, but hurts both productivity and inclusiveness, as narrow interests are often privileged over the common good and weaker interests are easily overlooked. For a given population size, a metropolitan area with twice the number of municipalities is found to miss out on 6% of its potential economic productivity (each year). Some of this loss can be mitigated if institutions such as metropolitan authorities can ensure certain important decisions are taken in the interest of the whole metropolitan area. However, setting up such crossjurisdictional institutions may require new legislation or wider government incentives and support.

National governments can therefore play a crucial role in devising better policies for cities if they have a coherent framework in place to help them.

Different cities and countries will have different needs depending on their development levels, structure and preferences, but all countries should at least examine the urban impact of their policies, not just in areas such as national transport infrastructure planning and the environment, but in policy domains often left to cities but in which national governments typically intervene, such as housing. In short, coherent national urban policies can not only help to make our cities prosperous, livable, inclusive and sustainable, but our countries and our planet too.

References Habitat III Policy Unit 3 (2016), Policy Paper on National Urban Policy, www.habitat3.org/.

OECD (2015), The Metropolitan Century: Understanding Urbanisation and its Consequences, OECD Publishing OECD (2014), OECD Regional Outlook 2014: Regions and Cities: Where Policies and People Meet, OECD Publishing OECD National Urban Policy Reviews

OECD Observer No 307 Q3 2016

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The use of land: Why planners cannot go it alone

©Rights reserved

Tamara Krawchenko and Abel Schumann, OECD Public Governance and Territorial Development Directorate

Land-use and spatial planning is important for growing modern cities, but to be truly effective coherent public policies are also needed.

How land is used determines more in our daily lives than we may realise. Whether getting to work, school or a hospital, or taking a bus or a train, these choices are often made easier or more difficult by land-use planning. The location of a new airport, a major business development, inner city renovation project or new green belt depend on planning decisions that ultimately affect the economy and people’s lives.

Consider property values, for instance: the

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skyrocketing housing prices in many OECD cities are in part the consequence of land use policies that regulate building and the supply of land. Land use planning also influences air and noise pollution,

Planning decisions ultimately affect people’s lives and is a critical factor for the environment more generally, affecting biodiversity and even CO2 emissions. Indeed, according to a 2005 study, more than one third of all carbon emissions since 1850 were caused by changes in land use. Importantly, whether in Manhattan, Mumbai or Milan, planning decisions taken today can affect

lives for years, decades or even centuries to come. On the other hand, good planning can mean a brighter future not only for particular regions or cities, but the wider economy.

All of this places a particular responsibility on land-use planners, a group of professionals who by design or default, must juggle between competing demands, constraints and expectations to achieve important societal goals. But they cannot act alone, and need to work in concert with citizens, businesses and, not least, policy makers at every level.

Spatial and land use planners set high ambitions, and face many challenges

CITIES FOR DEVELOPMENT

along the way, as many case studies by the OECD and others show. Take Lodz in Poland, which has had to revive its historic centre despite competing pressures from suburban and peri-urban expansion. Planners in Amsterdam, as in many major capitals, must grapple with strong population growth and maintain

Land and the built environment constitute the largest share of wealth in the OECD area by far housing affordability while protecting green spaces and the historic core. In cities such as Umm al Fahm in Israel, the challenge is rather how to provide infrastructure and amenities, and unblock the land-use constraints on economic and social development.

These planners ask themselves the same questions: Do we have the right instruments and tools to effect change?

Are land use plans and regulation responsive enough to achieve our goals and are wider public policies helping?

What are the scenarios for the years and decades ahead?

There is a compelling economic interest in getting the right answers. After all, land and the built environment constitute by far the most important share of wealth among the OECD countries. They make up around 85% of the total capital stock, roughly evenly split between land and property– corresponding to nearly US$250 trillion.

Swings in the value of land and property can affect the distribution of wealth and impact on investment decisions, jobs and well-being. Beyond economic value, land also has great immaterial worth.

People are attached to land, to their regions and cities, and care strongly about how they are run.

There is a responsibility on all policy makers, and not just planners, to mobilise public policies for better land use. It goes beyond the use of spatial and land use plans, as well as

the environmental and building code regulations that are the traditional policy instruments for influencing land use.

These instruments restrict how land can be used and often leave little or no scope for community and market-driven land use patterns to emerge. Also, planning procedures can simply take too much time. The result may be urban decline in some places, or spiralling housing costs in others, with sprawl and congestion emerging at the expense of more compact, breathable urban spaces.

Other policy instruments are needed to influence land use, such as tax and transport policies. A major cause of suburban sprawl since the 20th century has been the declining cost of car use.

Public policy has played a major role in this decline, and so policy makers can help control sprawl by reducing subsidies to car use and increasing taxes, including congestion charges, while making public transport more appealing.

In too many cases, planning systems run up against overwhelming and contradictory incentives provided by other public policies. In fact, planners try to limit the likes of urban sprawl, to reduce the cost of public service provision and make cities more walkable, for instance. But too often they are thwarted by other government policies that provide financial incentives for long commutes or for the construction of thinly dispersed single-family homes.

If such contradictions were avoided, planning could become more flexible and more effective. Today, many restrictions on land use came into being only to avoid land use patterns encouraged by other public policies. If incentives were better targeted, the need for restrictive land use planning would be reduced. Of course, more flexibility will not be possible everywhere, with some areas requiring stringent regulations to protect biodiversity and cultural heritage.

But in most cases, flexible planning approaches can help transform areas

by allowing new, more efficient and innovative uses of land.

In short, flexible planning and targeted incentives should go hand-in-hand. The right mix is key to avoid unintended outcomes, such as a loss of biodiversity and defacement of historical cities. If the incentives and regulations are right, people are more likely to put land to desirable uses out of their own volition.

This means a broader range of policies is needed. It also requires greater efforts to co-ordinate policies between sectors and levels of government. Already today, land use policies are often co-ordinated across policy fields, such as environment, transport and housing. In the future, this co-ordination will have to intensify and bring finance ministries more firmly into the process. Indeed, all levels of government, from national to local, have to work more closely together if land use policies are to be optimised for everyone’s benefit.

It’s high time for policy makers of all stripes to take land use far more seriously. After all, land use affects individual and collective well-being and is a critical factor in meeting the overarching goals of environmental sustainability, economic growth and social inclusion. Planners cannot go it alone.

Reference Foley, J.A., DeFries, R., Asner, G.P., Barford, C., Bonan, G., Carpenter, S.R., Chapin, F.S., Coe, M.T., Daily, G.C., Gibbs, H.K. and Helkowski, J.H. (2005), Global consequences of land use, Science, 309(5734), pp.570-574

OECD Observer No 307 Q3 2016

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Greening Bangkok

©Damir Sagolj/Reuters

Clara Young, OECD Observer

For Thailand’s capital of Bangkok, and its surrounding five provinces, green cities are a matter of survival. And with extreme rainfall and summer heatwaves becoming the norm, Bangkok must adapt and develop climate resilience, or risk disappearing.

Bangkok lies in a flood-prone area, which climate change is now rendering more vulnerable. A flood in 2011, the worst in Thailand’s history, inundated nearly a tenth of the country, particularly in and around greater Bangkok, and caused over 650 deaths and some US$50 billion in damage.

No surprise, therefore, that the Bangkok Metropolitan Region (BMR), which consists of the city of Bangkok and its five provinces, should have a panoply of climate change action plans and green growth strategies. However, most

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of them focus on policies in the city of Bangkok, and not on the region as a whole. The 2013 Bangkok Comprehensive Plan lays out land-use, infrastructure and transportation plans for the city of Bangkok. Among its green measures, it requires 50% of open space areas to be given over to vegetation. It also provides incentives for developers to integrate rainwater storage and public parking spaces into new buildings. The 12-year Bangkok Development Plan, which was launched in 2009, aims to double the number of public transport users, now at a quite impressive 45%.

Public transport, is, seemingly, one of the BMR’s successes in sustainable public infrastructure. Greater Bangkok’s network includes a 25km elevated rail network (BTS SkyTrain), a 21km underground train network (MRT) and an Airport Rail Link.

The Bangkok Metropolitan Authority

(BMA) is also attempting to enhance its public transport system with a bicycleshare programme. It recently upped the number of bicycles it provides at stations from 500 to 10,000. Owing to Bangkok’s public transport and enforced fuel standards, the city’s air quality has improved remarkably in the last 20 years, and its sulphur dioxide and nitrogen dioxide levels meet World Health Organization guidelines.

About 43% of the city population travels on public transport, with the rest commuting by private cars and motorcycles. This public transport use is higher than many OECD cities, reflecting investment in transit systems.

Still, more must be done to lure motorists away from their cars and onto buses, trains, bicycles and canal boats.

In fact, the number of registered vehicles

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has gone up in Bangkok, almost doubling between 2004 and 2013, while public transport use could descend to 41% by 2037.

Policies like congestion fees, developing secondary roads and priority lanes for buses, increasing canal transport, and restricting private vehicles in certain zones will help. So will taxing petrol, stopping fiscal incentives for car ownership and ending fossil fuel subsidies. Proper planning in Bangkok’s surrounding provinces, where population and employment is growing rapidly, is another way to boost the use of mass transit.

The population of registered inhabitants in greater Bangkok grew by 24.9% between 2002 and 2013. Manufacturing activities, other than in the textiles industry, have also moved outside the city. This urban sprawl has exacted a high price: developments have depleted forests and natural water retention areas like mangroves and wetlands, making floods increasingly destructive. Sprawl and inadequate affordable housing have also created a substantial slum population; in 2013, it numbered roughly two million people in the city of Bangkok alone.

mass transit, conserved wetlands and created floodways through the BMR. Modelled on this kind of co-operation, the BMR should build mixed-use hubs of housing, commerce and employment around public transport stations outside Bangkok. It could make commuting via mass transit more user-friendly.

Comprehensive land-use zoning could also protect the remaining green areas, and mandate green, water-absorbent areas in new developments.

more. While the city of Bangkok started separating solid waste at its source in 2010, the BMR needs to support and

Another thing that is going on in the suburbs is the development of solar power plants by private firms. This may be in response to the government’s introduction of feed-in tariffs in 2007. Or, it may be prescriptive: with the increase in temperatures, air conditioners pushed electricity consumption up 240% from 1998 to 2008. Electricity, mostly derived from fossil fuels, is the second source of CO2 emissions in Bangkok. Change is possible: even without much government support for renewable energy sources, solar, wind and biomass made up 11% of Thailand’s final energy consumption (FEC) in 2013.

Policy could nudge this higher towards the OECD average share of 15%.

Water management from a leaky system also demands action, and the BMR could conserve potable water by improving the network efficiency and adjusting fees to reflect the value of water scarcity, thereby reducing high water-consuming and at the same time protecting low-income households through appropriate tariffs and better means-tested subsidies.

Bangkok needs to control peri-urban encroachment through proper land-use zoning. Large residential and commercial buildings in outer Bangkok have sprung up willy nilly. They frequently materialise where there are no links to public transport and public-utility services. A big part of the problem is that decision-making on and enforcement of land use legislation is fractured outside Bangkok. The Bangkok Metropolitan Administration governs the city of Bangkok but not the surrounding five (part urbanised) provinces, each of which has its own government.

Mechanisms should be put in place that enable these local governments to work together, and to co-ordinate with national policies as well.

Waste-to-energy incinerators, the first of which is currently being built in Nongkhem, will be another source of energy. They are also a sorely-needed solid waste management method. Bangkok collects about 10,000 tonnes of waste every day. A small percentage is recycled but only through informal community initiatives.

Some 90% goes to landfill, where it moulders away, releasing greenhouse gases (GHG) and ozone-destroying methane into the environment. None of the BMR’s solid waste will be properly incinerated until the Nongkhem incinerator comes online. Waste collection and processing is especially problematic in slum areas. And the amount of industrial and household toxic waste is increasing, with much of it not being properly collected or treated.

To see how this might work, take the 2013 Bangkok and Vicinities Development Structure Plan, which is one commission that has harmonised policies between Bangkok and its five provinces. It extended

The BMR needs to concert waste collection and management city and province-wide.

It should build more waste-to-energy plants equipped with emission control technology. And it should properly recycle

Only 46% of the water used in the city of Bangkok is treated expand community-based recycling programmes in the surrounding provinces, perhaps with the Thailand Institute of Packaging and Recycling Management for Sustainable Environment as a model.

Right now, only 46% of the water used in the city of Bangkok is treated. Industrial and household wastewater goes directly into drainage systems, rivers, canals and the sea, damaging the ecosystem and polluting freshwater. Bangkok already has monitoring stations along the Chao Phraya River and canals to test water quality and see where water treatment plants need to be placed. The data also tells them who the polluters are. The city and its outlying provinces should require big factories and commercial buildings to connect to the city’s wastewater system. Alternatively, industries could develop their own waste treatment facilities with local government regularly monitoring discharges. Furthermore, if the BMR prices wastewater treatment, it will help finance the existing 22 treatment plants and fund new ones.

Protecting green areas, lowering carbon emissions, slowing urban sprawl, conserving water, and cleaning up the waste water system will help the planet.

But in Bangkok’s case, it will help the city first of all.

OECD (2015), Green Growth in Bangkok, Thailand, OECD Green Growth Studies, OECD Publishing

OECD Observer No 307 Q3 2016

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SPOTLIGHT

DIGITAL ECONOMY

Digital economy: Securing the future Andy Wyckoff, Director, OECD Directorate for Science, Technology and Innovation The digital economy is here, and growing every day, sometimes in surprising ways.

As ministers at major meetings in Paris and Cancun expressed, government leaders should be in no doubt about the key role they must play in securing the digital economy’s future as a driver of productive and inclusive progress.

“Analysing the impact of electronic commerce in 1997 is about as easy as estimating the impact of the automobile in 1900. Intuitively you know that the ©Cultura RM/Alamy

impact will be large, but few people know how to drive, roads are of varying quality and gas stations and mechanics are nearly non-existent. With some confidence you can say that there will be a positive impact on supplying industries such as oil, steel, glass and rubber, and direct

highway”; we’ve gone from a mere

economy” have perhaps surpassed

competitors like horses, oat producers and

180 million “drivers” (about 3% of the

people’s expectations, even disrupting

carriages are likely to suffer, but beyond

world population) to over 3 billion (40%).

established structures and economic

that it is largely speculation. Who would

Seatbelts, let alone airbags, don’t exist yet,

arrangements. Many innovations were

have predicted that the car would lead to

but GPS is here following us wherever we

suburbs, air pollution and the geo-political

go and our “cars” now fit in our pocket.

importance of the Middle East? So it is with electronic commerce.” (OECD Observer, No 208 1997, see references).

Like the suburbs, digital technologies have sprawled into nearly every part of the economy and society: 80% of OECD

So I wrote, in a contribution to the OECD

citizens have broadband subscriptions

Observer magazine in 1997 during the

with the majority accessing the more than

run-up to the first ever OECD ministerial

300 million websites via a smartphone.

meeting devoted to the digital economy,

Some 95% of 16-24 year olds in the OECD

held in Ottawa, Canada in 1998. How

use the Internet and on average a 15-year-

prescient that meeting proved to be: not

old spends three hours a day online, while

only was it the year the Internet was

about half of OECD citizens now engage

colonised (indeed, privatised), albeit by just

in e-commerce.

2 million domain names (including www. oecd.org), but it was also the year that a firm called Google was incorporated, while barely a year after that, a company calling itself Amazon had an initial public offering.

We are entering a significant period of ICT-induced structural change that will simply transform the economy and society for the better. We have seen nothing yet. simply beyond our imagination: who could have guessed that we’d be experimenting with automated vehicles in 2016?

Some pundits say the big economic impact of information and communication technologies (ICT) may have already

Clearly, the goal at Ottawa to “realise the

passed as we harvested the low-hanging

potential” has been achieved–the digital

fruit of computerisation in the second-

platform is well deployed across most of

half of the 1990s. Others think that we

the OECD and quite a bit beyond too, while

are just at the beginning of another wave,

applications extend into every facet of

characterised by ubiquitous computing

Nearly two decades later, the OECD

the economy and society, disrupting and

as epitomised by the smartphone,

organised another ministerial meeting,

enhancing many sectors along the way

which is both a platform and a linked

this time in Cancun, Mexico, under the

and unleashing innovation, productivity

device par excellence. It is the harbinger

title: “Digital Economy: Innovation, Growth

growth and (as yet unmeasured) social

of the Internet of Things, expected to

and Social Prosperity.” Extending the

benefits. Newspapers, music, finance and

encompass between 20 and 50 billion

automobile metaphor, we now drive at

travel agents have been transformed, in

devices connected to the Internet by

speeds more than a thousand times faster

some ways as predicted, though Facebook,

2020, throwing off torrents of data and

than we did on the 1998 “information

Twitter, smartphones and the “sharing

supporting our daily routines. Already,

OECD Observer No 307 Q3 2016

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SPOTLIGHT

DIGITAL ECONOMY

more data are now being generated every

show that the digital economy does indeed

week than in the last millennia, as our

benefit productivity via several channels: by generating new innovative enterprises and clearing out old, badly performing, ones in a process of creative destruction; by allowing smarter, more efficient use of labour and capital to generate socalled multi-factor productivity growth, whereby even older firms can raise their game; by introducing new opportunities and services among people previously removed from the global economy, such as farmers, and local manufacturers and public services; by enhancing information efficiencies to improve stock management and shipping, for instance; the list goes on. Why all these “micro” increases in productivity do not add up to faster productivity growth at the “macro” level is a puzzle that the OECD is working to solve.

chart shows.

Crucially, the ability to analyse this data and extract strategic insights has made huge advances, with new data analysis techniques making it possible

Like the suburbs, digital technologies have sprawled into nearly every part of the economy and society to automate decision making (e.g. highspeed trading) and edge towards artificial intelligence (AI). All of the major Internet platforms as of 2016, including Google, Amazon, Microsoft, Facebook, Apple, etc, now see AI as the next big service that users will demand and already

to shoulder responsibilities and take its rightful place in the world. The agenda’s four main themes therefore reflected what is needed to plot the way ahead: Internet Openness and Innovation; Building Global Connectivity; Trust in the Digital Economy; and Jobs and Skills in the Digital Economy.

The digital economy is a powerful catalyst, and a driver of inclusiveness, by linking communities to each other in a sort of “global village”, sharing information, ideas and products, and allowing countries to rise up the value chain. It must be allowed to grow, by allowing our “young adults” to sow economic and social opportunities for more and more citizens. For a few days in June, Cancun became the centre of that global village, where a new chapter in the collective future for the digital economy and society can begin.

tempered with a reality check, that not

Clearly, the online world is at another inflection point, and it could go in more than one direction. That is why stakeholders at the international meeting in Cancun–from government, business, labour, civil society and the technical community–not only took stock, but took a step back to assess the big picture.

Where is the digital economy going, and how can policy help it deliver on even

all these advancements are universally

greater promise in the years ahead?

welcomed. Some people worry about

No one is in doubt about the transformative

technology taking our jobs, others about

role of ICT. It is neither an infant in need

Read the OECD’s summary of the 2016 Ministerial Meeting on the Digital Economy

privacy and data issues, while there

of protection, nor a teenager that needs

http://oe.cd/Digital-Economy-Cancun-Summary-2016

is a more widespread erosion of trust

oversight, but a young adult who needs

http://oe.cd/1nj

have applications, such as face and voice recognition. Many, including this author, think that we are just entering a significant period of ICT-induced structural change that will simply transform the economy and society for the better. We have seen nothing yet.

But this techno-optimism needs to be

References Wyckoff, Andy (1997), “Imagining the impact of electronic commerce” in OECD Observer No 208, Oct-Nov, available at www.oecd-ilibrary.org, at http://oe.cd/1ln Visit www.oecd.org/sti/innovation-imperative.htm Find out more about “The Digital Economy: Innovation, Growth and Social Prosperity”, OECD Ministerial Meeting, Cancun, Mexico 21-23 June, www.oecd.org/ internet/ministerial/meeting/.

Read the Cancún Ministerial Declaration on the Digital Economy at: http://oe.cd/Digital-Economy-CancunDeclaration-2016

fuelled by security breaches, including the Snowden revelations and abuse of the

Digital’s rise

Internet by the “dark side” (terrorists and criminals). Policy makers must take these concerns seriously and develop policies to mitigate the risks and unleash the benefits.

Estimated worldwide data storage in zettabytes (ZB, trillions of gigabytes) 10 9 8 7

number of firms and industries clearly

15 20

14 20

13 20

12 20

11 20

10 20

09

0

20

statistics. But three decades on, and the

08

1

20

2

everywhere except in the productivity

07

3

Solow’s 1987 remark that computers are

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and many people still refer to Robert

06

True, this has slowed in recent years

20

5 4

05

Another challenge is productivity growth.

data we have been gathering on quite a

20

6

20

Productivity’s macro-puzzle

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The digital economy in the age of disruption Ildefonso Guajardo Villarreal, Secretary of Economy, Mexico, and Chair of the OECD Ministerial Meeting on the Digital Economy

restriction or permission from authorities, as it has been to the present day. These data flows are important to trade, innovation, entrepreneurship, growth and social prosperity. Promoting the open, distributed and interconnected nature of the Internet and encouraging multi-stakeholder co-operation will be key to keeping us on the right path.

Regarding trust in the digital economy, we have come a long way: 18 years ago at the ministerial meeting in Canada, one of the main objectives was to promote the use of electronic commerce; today, in leading countries, for instance in the US, 90% of Internet users undertake online banking transactions and 80% carry out purchases online. Despite this breakthrough, in some regions, distrust of electronic transactions prevails, so we must develop the mechanisms to ensure the security of users’ data.

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Higher connectivity has been achieved in the last decade, allowing us to move from the era of “Internet People”, to the digital era of the “Internet of Things”, where the number of connected devices exceeds the number of connected people. And the trend will continue: it is estimated that by 2022 there will be 14 billion connected household devices in OECD member countries. This implies significant technological advances, but also policy challenges to facilitate the development of these technologies and at the same time, help strengthen the privacy of its users.

On 21-23 June, Mexico hosted the OECD Ministerial Meeting on the Digital Economy. The first ministerial of its kind on this subject (then called “electronic commerce”) was held in Canada in 1998, and the second one in Korea in 2008; hence Mexico is the third county to have this distinction and the first Latin American country to organise and lead this undertaking. For Mexico, this represents an important responsibility, and an opportunity to show the world the huge transformation that our telecommunications sector has gone through in the last two years.

As the use of information and communications technology (ICT) is favourable for productivity across a large number of strategic industries in any economy, we have chosen “Innovation, Growth and Social Prosperity” as this year’s theme, three goals that can hardly be achieved without the impetus of digital technology.

Under this axis, we have defined four key areas of discussion to promote the advancement of the digital economy: (1) Internet Openness and Innovation; (2) Trust in the Digital Economy; (3) Building Global Connectivity; and (4) Jobs and Skills in the Digital economy.

Take the first topic, Internet openness and innovation. It is essential that the participating governments focus on keeping the Internet free and accessible, so that all individuals can use it to exchange information, build and link networks, without

The Digital Economy and the Internet of Things are revolutionising not only the way we consume, but also the way we work, altering labour market needs. According to the OECD, 65% of today’s children will have jobs that have not yet been invented. This means that knowledge and skills required to enter the labour market will be very different from those provided by the current educational model. Therefore, the fourth area in which we must work, is to create new approaches to education and more flexible training and competencies, so as to allow the integration of students within highly technological environments.

The current period of rapid technological progress is leading us into a new era of disruption, where the way we interact, consume and work, is constantly being transformed by new technologies.

This means that the results we achieve in these four key areas will be the foundation that will allow us to move forward.

In the era of disruption, governments along with all stakeholders, need to work together to design strategies and promote comprehensive efforts to facilitate the transition, for our economies and especially for human capital, towards knowledge-based, innovative, growth. The celebration in our country of the OECD Ministerial Meeting on the Digital Economy is an important step in that direction for Mexico. We will concentrate all of our efforts, so that the Cancun Ministerial Declaration can become a work agenda which, through collaboration, will promote growth and prosperity for all.

Visit www.gob.mx/se/ Read the Cancún Ministerial Declaration on the Digital Economy at: http://oe.cd/ Digital-Economy-Cancun-Declaration-2016 http://oe.cd/1o4

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OECD Observer Roundtable

Digital economy With the digital economy set to transform our lives, governments will have a key influential role to play. In this OECD Observer Roundtable, we asked representatives from a range of OECD governments:

Canada Building the innovation mindset Navdeep Singh Bains, Minister of Innovation, Science and Economic Development

reputation for scientific research and discovery. We recognise that innovation is essential in today’s global economy, whether in developing new technologies, processes or business models.

Everyone plays a part in innovation, and Canada has successes to celebrate. But if Canada is going to be a place where our children have the opportunity to succeed and reach their potential, we must act now–and with confidence.

In the coming months, I will lead a government-wide approach to innovation in Canada with a focus on the digital economy. Because the digital economy is global, we must collaborate on an

Innovation is on everyone’s mind lately–and for good reason. But what is innovation and why does it matter?

Innovation is daring to do things smarter, faster and better to improve our everyday lives. It is a mindset. In today’s fastchanging world, innovation is the key to seizing the opportunities of the digital economy. I believe innovation needs to be one of Canada’s defining values.

We live in transformative times.

Technology continues to change all aspects of our lives, reshaping entire economic sectors from computernetworked devices, to artificial intelligence, advanced manufacturing and clean technologies. We have the opportunity to leverage technology and innovation for social good, inclusion and economic growth.

Canada is well placed to succeed in a global digital economy. Our society is inclusive and multicultural. We have a highly educated and connected population, strong public investment in research and development, generous R&D tax incentives, and a solid international

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We must get to a place where innovation is a core value international level as we consider these challenges and opportunities. We must make the leap from a culture of risk aversion to a culture of innovation.

We must leverage our strengths and get to a place where innovation is a core value.

My vision is to build Canada into a global centre for innovation, a nation renowned for its science, technology, creativity, entrepreneurial citizens and globally competitive companies. That’s how we will create well-paying jobs, drive growth across all industries and improve the lives of all Canadians.

Visit www.canada.ca/en/innovation-science-economicdevelopment.html

Egypt A gateway for our sustainable development plan Yasser ElKady, Minister of Communications and Information Technology Egypt’s digital technology sector has promising prospects; it is the second

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What policy actions are you taking to harness the benefits and address the challenges of the digital economy?

Yasser ElKady fastest growing economic sector in the country and has the potential to lead the development and growth process on all fronts, especially in an age when the world economy is turning to digital and where information and communications technologies (ICTs) are becoming the cornerstones of our societies.

We recognise that the economy based on ICT and the internet, or “the digital economy”, as the OECD Declaration states “... is a powerful catalyst for innovation, growth and social prosperity... promot(ing) a more sustainable and inclusive growth focused on well being and equality of opportunities... ”. Our sector is being mobilised in close collaboration with all other sectors towards the fulfilment of the different pillars of our country’s Sustainable Development Plan for 2030 including, first, the pillar of social justice. Indeed, as we seek to consolidate a fair and interdependent society characterised by equal economic, social, political rights and opportunities in which social inclusion and support for vulnerable groups are key, our community development programmes using digital technologies are steadily evolving, with entrepreneurship opportunities using ICTs being introduced throughout the country, for instance, and special programmes being launched for youth, children and people with disabilities.

Human resources and skills development in digital technologies form a corner stone of the second pillar of our national plan,

and we have adopted ambitious national initiatives as a way to foster “knowledge, innovation and scientific research” and pave the way towards a creative and innovative society. Our incubation and innovation programmes, as well as training programmes, offer a mix of learning and practical knowledge of the market place.

particularly access and e-inclusion which are so essential for a robust digital economy.

We have many challenges ahead including keeping pace with the modernisation of our infrastructure to fulfil the rising appetite of our citizenry for digital technologies and systems, and strengthening trust and security, notably with our draft legislation on cyber crime that is currently being discussed in parliament.

The third pillar is an economic one, aimed at multiplying the enormous opportunities offered by the sector through new technology parks which we have established throughout the

France Forging a digital society Axelle Lemaire, Secretary of State for the Digital Economy

The law I propose will bring the government operating system into the digital age and high-speed internet connections, data infrastructure for use by public and private data providers, increasingly open access to knowledge and support for those who are digitally disadvantaged. This is what lies at the heart of the bill that I am proposing in France, a law that defines a digital Republic, a law designed to bring every part of the governmental operating system into the digital age. This is an ambition that must also be developed and built upon at European level.

In the interests of democracy and transparency, it is of paramount importance that governments allow access to their data. Produced and stored by the state, this information represents a vital resource that can stimulate economic and social innovation in a digital society.

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land, especially in underprivileged regions. This pillar is coupled with our electronics manufacturing initiatives and the outsourcing industry. Thanks to different technology applications and support, we ensure subsidies reach the right beneficiaries and while keeping expenditures under control.

We have worked steadfastly to unleash the potential of digital technologies based on close collaboration with the different sectors and by consulting a range of stakeholders. We are endeavouring to further develop our infrastructure to keep pace with ICT advances worldwide and with the requirements of the knowledge society and digital economy, as our imminent introduction of 4G communications will testify. We are aware that our ICT sector must be the catalyst for a competitive and dynamic economy, both as part of a global market place and as an enabling platform for business and socio-economic development. That is why we have paid close attention to several fundamental areas, including infrastructure, cyber security and the legislative and policy frameworks,

an economy of abundance, one that is decentralised, connected, and data-driven.

France now faces the challenge of preparing that future in order to keep up with this innovation and the development of these new models by providing full territorial coverage for mobile telephones

Visit www.mcit.gov.eg

We are putting in place technologies to rationalise energy use

The 4th pillar of our plan focuses on the environmental dimension to preserve natural resources and support their efficient use and investment, so upholding the rights of future generations. For instance, we are putting in place technologies and IoT solutions to help rationalise energy use and preserve natural resources, particularly water.

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OECD OBSERVER ROUNDTABLE

Digital innovation is an opportunity–for governments, for business, for the public, and for the way in which they relate to each other.

Digital technology is providing new tools that are revolutionising institutional relationships and the way society operates, empowering individuals, and their ability to both participate in and contribute to decision-making and production. Examples abound, ranging from the use of social media in spawning democratic movements, the pooling of resources with regard to housing and transport, to public involvement in decision-making on municipal spending or proposed legislation.

We are currently experiencing the accelerated transformation of a centralised economy based on scarce resources into

France is determined to lead by example, and has allowed access to the national register of companies and their sites in all sectors of the economy. Nine million entities are listed, making this database the most complete record of French businesses in the country. The current paywall will be taken down as of the first quarter of 2017. Making data available in this way fuels the development of innovative new activities: in the Netherlands, for example, free access to meteorological data led to the creation of a dynamic ecosystem of professional re-users, whose activities have generated a return of €35 million for the Dutch government.

Access to public data also helps to improve public policies: France released the source code for its income tax calculation software, and within 48 hours

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a team of young developers had suggested a way to optimise the algorithm and cut the time taken to calculate a simulation by a thousand.

Developing our fledgling digital businesses will take different forms of financing from those used to developing more traditional activities. The support given to French start-ups, for example, has seen a dedicated investment programme rolled out through a state-

There needs to be full internet coverage throughout the land owned bank, and this has played a central role in defining how the start-up ecosystem is financed. The results are impressive, with a 100% increase in value from the €897 million raised in 2014 to €1.8 billion in 2015.

But innovation cannot happen on command, either in the digital industry or anywhere else. The role of the State is essentially to make sure conditions are right. One priority is to promote ecosystems of young digital businesses, at every stage of their development, at the national and international level. This is the idea behind the creation of French Tech, an initiative with a straightforward label designed to bring our innovator community in France together.

Not all companies are start-ups, however, nor are they all at home in the digital world, and some need support. French businesses are certainly well equipped with digital technology: 99% had high-speed internet access at the end of 2013, but just 64% of SMEs had a website, and a paltry 25% were selling their products online. In the digital age, businesses that are not online cannot compete on the market. Here again, the state has a role to play on the ground, through local representatives, raising awareness and guiding these companies as they master digital technologies.

An industrial revolution is taking place.

But it can only happen if everybody in society plays their part. There needs to be full internet coverage throughout the land, for both PC and mobile, if we are all

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to enjoy the growing potential of the digital world. Not only because needs are increasing in terms of network capacity and frequencies, but also and mostly because too many people are excluded from the digital world.

This shift will also materialise through training in these technologies. Demand is rising for new skills, and entrepreneurs will tell you that it is hard to find the right people. To create these jobs in the new sectors being created by digital business, training needs to be redesigned.

The digital world moves fast. It cannot be reversed or halted. It can help face major challenges such as social and economic fragmentation, or reduce unemployment, for example. But how can it achieve this if access is limited to the privileged few? Connection to internet will naturally become a right. The state must assist those who are least likely to have online access, and those who are least likely to use these technologies, and it must help them to do so.

This is how we can continue to build our society. www.economie.gouv.fr

Mexico Digital Mexico Alejandra Lagunes, National Digital Strategy Coordinator Under this administration we made the bold decision of building a Digital Mexico in which technology and innovation would contribute to maximise their economic and social impacts. As a first and crucial step, in 2013 we reformed the Federal Law of Telecommunications

Our reform recognises access to internet as a human right in order to design an innovative and competitive regulatory framework to connect citizens and to insert Mexico into the Information Society, building an ecosystem in which the ITCs become true enablers of our development goals.

The reform recognises access to internet as a fundamental human right and as the

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SPOTLIGHT

OECD Observer Roundtable

Alejandra Lagunes tool that represents the backbone for the digital economy. Furthermore, we have made a significant effort to increase the internet’s economic potential, particularly for small business as a powerful catalyst for innovation and economic growth.

Aware of this challenge, the President of Mexico launched the National Digital Strategy with the aim of harnessing the potential of ICTs as a catalyst for development. With five crucial objectives (government transformation, promoting a more inclusive and solid digital economy, transforming education through technology, enhancing universal health-care, and encouraging civic innovation and participation), the National Digital Strategy aims to make Mexico “the leading country in digitalisation in Latin America”.

To foster digital economy, the National Digital Strategy is working at the national level in: developing a national e-commerce strategy focusing on effective regulation and enhanced competitiveness; creating a more competitive market for digital goods and services; encouraging innovation and entrepreneurship through the democratisation of public spending; and promoting financial inclusion

DIGITAL ECONOMY

through mobile banking systems.

The UK government will shortly be publishing a Digital Strategy that will set out measures to ensure that the UK is at the forefront of digital transformation and remains a place of choice for entrepreneurs to start and grow new digital businesses. We are focusing on four key areas:

In Mexico we are convinced of the transformative power of technology therefore, we will keep working to enable a more modern, inclusive and digital economy that improves our citizens well-being.

Visit www.gob.mx

United Kingdom Towards a digital strategy Baroness Neville-Rolfe DBE CMG, Minister of State, Department for Business, Energy and Industrial Strategy* Given the pace of change, soon it may no longer make sense to speak about the “digital” economy, as it will simply be part of the “everyday” economy.

In the UK, the digital revolution is in full swing, bringing with it tremendous

The digital revolution adds billions of pounds to the value of the economy changes, opportunities and challenges.

There has been remarkably strong growth in the UK digital sector since 2010, placing it at the heart of the

•

Digital Economy: We will unlock growth and productivity in the digital economy, by removing barriers to innovation, championing the tech sector and promoting the adoption of new technology across every sector.

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Digital Government: We will lead by example on the digitisation of Government, recasting the relationship between citizen and state and making it simpler, faster and cheaper to interact with government.

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Digital Society: We will realise the benefits of a digital society, where technology has transformed everyday life–from how we teach our children to how we police our streets.

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Digital Foundations: We will underpin this digital transformation, creating world-class digital infrastructure, preparing individuals for the future by investing in digital skills, and building digital trust.

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We have also advanced an open data policy that promotes timely and disaggregated data, supporting the creation of new markets, businesses and jobs. We are also working to support entrepreneurs with more efficient ways of creating a business, simplifying fiscal systems and reducing the number of requirements throughout the National One-stop shop, www.gob.mx.

At an international level, Mexico leads in crucial international fora; through the eLAC2018 mechanism, we coordinate the regional Digital Agenda; as the next host the Internet Governance Forum (IGF), we encourage a space where government and civil society exchange best practices; and through the Open Government Partnership (OGP) we have placed transparency and innovation as central tools to create more responsive governments.

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Baroness Neville-Rolfe country’s economic and social life; adding billions of pounds in gross value added (GVA) to the economy; and being responsible for nearly one and a half million jobs in 2014.

We are also seeing an extraordinary process of convergence: traditional industries like consumer electronics, health care, domestic heating and banking are beginning to add as much value in their technology as in the original product or service.

All this makes it even more critical that we work together to address the opportunities and challenges of the digital revolution from the outset.

While it clearly has been a unique generation of innovators and entrepreneurs who have led this revolution, I believe that governments have a crucial role to play in creating the right environment for businesses to flourish and for citizens to reap the benefits. So, in the UK, we support a range of institutions to help digital businesses to grow and to promote innovation, as well as the development of emerging technologies such as the Internet of Things, with the added benefit of drawing on an excellent academic and research base.

While we are of course keen to support the UK through this “digital revolution”, we fully recognise that technology and innovation do not respect borders. Indeed, many economic and social opportunities lie in open technology, open dialogue and open digital economies.

The UK therefore welcomes the contribution of the OECD, by providing the analysis that will help show a clear way forward and bringing governments together to have an open dialogue and share best practice. The ultimate aim is to ensure all our economies and citizens reap the benefits, but understand the challenges accompanying the digital revolution. *Department for Business, Innovation & Skills until July 2016 www.gov.uk/DCMS

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Jobs and skills in the digital economy Vincenzo Spiezia, OECD Directorate for Science, Technology and Innovation

generally managed to generate enough jobs for their workforce. Particular sectors may use less labour but others use more and new ones open up. Will the digital economy be any different?

Digital technologies should make it possible to produce more goods and services with less labour, which will expose some workers to the risk of unemployment or lower wages. However, higher productivity also translates into lower prices and new products, and higher final demand and higher employment, and possibly higher wages, thus compensating for the initial disruption.

©Rory Clarke/OECD Observer

What makes this process challenging for policies and workers is its timing: the labour-saving effects of digital technologies hit employment quickly but new job opportunities emerge slowly.

New markets have to be created, assets transferred across sectors, business know-how built up and new skills developed. All of this takes time. Recent OECD analysis shows that investment in information and communication technologies (ICTs) over the last 20 years had negative effects on employment in some periods, but these effects disappear over time.

Pepper the humanoid robot, at OECD Forum 2016 To many workers, the words “digital technologies” may evoke one simple, dismaying image: a human-like robot sitting at their desk, doing the work that they used to do! This anxiety is not different from the fear of coachmen witnessing the diffusion of cars in the 1920s. In a sense, coachmen were right: cars did replace horse coaches. However, their children and grand-children found new and often better paid jobs in the wealth of new activities made necessary or possible by cars: automobile

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manufacturing, car repair, travelling sales, home delivery, mass tourism, road building, the petrol business, and so on.

It was hard back in the 1920s to imagine new jobs that did not exist at the time.

And it is still hard today–a fact that some sobering employment forecasts, such as Carl Benedikt Frey and Michael Osborn, tend to overlook. However, economic history shows that, after a period of disruption brought about by new technologies, economies have

To speed up job creation in the digital economy, investment in data and digital infrastructure is essential. However, the share of GDP invested in ICTs has been decreasing in real terms in many OECD countries since 2001. Business adoption of advanced digital technologies could be greater as well. Many firms may well have a broadband connection and a webpage, but few use advanced ICT applications such as enterprise resource planning software, e-commerce, cloud computing or radio frequency identification.

Also, the new jobs enabled by digital technologies require different skills.

Some of these skills are technical, such as software development, web management, etc., but others have little to do with technology. For instance, higher frequency of digital information in firms calls for

better planning and quicker responses, more co-operation across teams as well as stronger leadership. Marketing and selling over a social network require different skills than those involved in face-to-face sales.

In short, digital technologies is reshaping business models and firms’ organisation, and making “soft skills”, such as information-processing, self-direction, problem-solving and communication, become more important. Many people, however, do not seem to have such skills for a digital world; as OECD estimates show, less than 40% of those using software at work every day have the skills required to use digital technologies effectively.

Those who have the skills get ahead faster, which could cause higher inequality. In particular, some argue that digital technologies have raised the demand for high and low skills and reduced the demand for medium skills, though the extent to which this polarisation of jobs and wages is due to digital technologies remains a matter of debate. For instance, the OECD finds that while ICT investment led to job polarisation after 2007, the effect was only temporary.

The effects of digital technologies go beyond employment and skills to the very organisation of work, by enabling firms to segment tasks in new ways and to increase the use of temporary labour. With innovative online platforms, new intermediary firms are connecting individual providers with individual customers (and often in different locations), turning some full-time, long-term jobs into an uneven flow of “on-demand” tasks. A continuation of this trend would transform the traditional employer-employee relationship, with significant implications for labour market policy and social dialogue.

or administrative support to high-skill ones like programming, legal advice or business consulting.

For workers, greater flexibility in the choice of working time may mean lower job security, higher income volatility, less direct, if not lower, access to social protection and more responsibility for skills development. For firms, lower labour costs and wider access to a global pool of virtual workers may erode their human capital assets.

In fact, in co-operation with social partners, they should monitor emerging labour market trends and explore ways of developing labour market programmes and safety nets to help ensure inclusive growth and job quality in the digital economy.

Policies have to be ready to face the challenges inherent to the digital economy and the growing public angst that accompanies them. Fostering investment in ICTs and complementary changes will help sustain innovation, productivity and employment growth.

Promoting competition in markets, creating favourable conditions for

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DIGITAL ECONOMY

entrepreneurship and supporting the development of new goods and services enabled by ICTs, while promoting skills and preparedness, will sustain growth of new markets and bolster public confidence too. Supporting workers in their transition to new jobs will facilitate adjustment and reduce the social costs.

Active labour market policies, income support, lifelong learning and more responsive educational systems are more critical than ever in the digital economy.

References Autor, David and David Dorn (2013) The Growth of Low-Skill Service Jobs and the Polarization of the U.S. Labor Market, American Economic Review, 103(5), 1533-1597.

Frey, Carl Benedikt and Michael A. Osborne (2013) The Future of Employment: How Susceptible are Jobs to Computerisation?, Oxford Martin School.

OECD (2016a), New Markets and New Jobs, background report for the OECD Ministerial Meeting on the Digital Economy, 21-23 June 2016, Cancún, Mexico.

OECD (2016b) Skills for a Digital World, background report for the OECD Ministerial Meeting on the Digital Economy, 21-23 June 2016, Cancún, Mexico. http://oe.cd/1o6

Order this now!

Browse and order at

www.oecd.org/bookshop

Digital services online can help match demand and supply across different countries and over a wider range of tasks, from low-skill tasks like data entry

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Robots versus workers: Towards an open, equitable and inclusive digital economy Anna Byhovskaya, Policy Advisor, Trade Union Advisory Committee to the OECD (TUAC) A clash between robots and workers is unlikely. Rather, disruptive technology can make workers more efficient without replacing them, and raise profits, while maintaining or increasing a company’s workforce.

Disruptive innovation, if not well-managed and regulated, can have a negative impact on jobs and working conditions. The digital economy and the shifts it causes are moving at a fast pace across all sectors. It bears both opportunities for productivity and well-being, and risks for certain job profiles, specifically routine heavy tasks. It may also affect working conditions, as evidenced by the thriving platform economy.

A clash between robots and workers, however, is unlikely. More realistically, a disruptive technological process can be used, first, to make processes more efficient without replacing workers, and second, raise profits, while maintaining or increasing a company’s workforce. Therefore, how the digital economy evolves is as much about the organisational decisions a company makes together with trade unions as partners and the business models they adapt, as the digital technologies themselves.

Unions are by no means bystanders in the digital economy; they contribute to the development of future company strategies, support employee-driven innovation and accompany the introduction of new organisational models and technology (including in view of data protection and workers’ health and safety).

Operational robots are already among us. They displayed growth of over 70% in the last 10 years in numbers. Advanced manufacturing, where automation is already under way, is seeing the emergence of man-machine collaboration and 3D printing.

Job losses have so far been marginal. One reason is that information and communications technologies (ICTs) simply cannot manage complex processes on their own. Nor can a robot make the same reasonable choices or have the socio-emotional skills of a human worker.

Still, policy attention should be directed to the degree of routine content and the potential for ICT intensity in all occupations. While making use of intelligent systems to achieve more effective, tailor-made production, the employee must always come first.

To avoid any job displacements and rising inequalities, it is crucial to devise the right transition strategies. To make smart choices, policy makers and social partners must look at different dimensions: how jobs will change in terms of both design and tasks, and what new forms of employment are emerging.

Ultimately, innovation needs to be attached to the right goals, such as the creation of new and better jobs, the transformation of industries to a low-carbon economy or the use of ICT in the health sector. At the same time, new challenges need to be addressed straight away. One of them is the spread of precarious work in the platform economy–which in itself is a “business model versus workers” scenario. This contingent employment is by no means a new phenomenon, but has rarely been so deeply enshrined in business models.

As a contingent worker, you earn less on average due to the lack

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of (or reduced) employer and public benefits. Platform economy companies mostly rely on avoiding regulatory obligations (on the employment relationship, regarding consumer protection or taxation) to ease pressure on their profit margins. In doing so, they avoid employer responsibilities (including contributing to social security benefits) by classifying employees as independent contractors and paying them by “task”. They prevent them from obtaining any rights as employees,including paid or even sick leave, but have no problem setting fees, pricing and service standards for their employees to adhere to.

These companies spend substantial resources on lawsuits and in lobbying for relaxation or removal of important regulations.

On-demand jobs and crowd work could become much more widespread: platforms are growing exponentially and expanding to new sectors (think UberHealth or Amazon Flex). Other companies are acquiring some of these firms, leading to a potential proliferation of the underlying business models.

The question is whether such strategies are sustainable. There are other platform companies, who chose to refrain from the independent contractor approach and provide employees with benefits and rights (albeit to a varying degree). Some of the reasons for that is to retain and train employees to increase customer satisfaction. Others simply cannot afford 50 legal actions a year against them.

Another model should take centre stage: it is proven that firms, who provided adequate wages, job security and training for employees, will expand profits through the accumulation of tacit knowledge at any skill level and commitment of workers.

The opportunities and challenges arising from the digital economy should be addressed through effective regulatory frameworks and innovation policies that aim to bridge digital divides by enabling the widest possible diffusion of new innovation opportunities. Half of the world’s population still does not have proper internet access. This needs to be driven by systemic policies with public investment going into universal broadband access, knowledge-based capital, education and training.

As a priority, we need an “Action Plan for Quality Jobs in the Digital Economy”. The action plan would promote enabling working conditions and employment relationships with all labour rights and social protection in place, regardless of the type of contract, and underpinned by corporate accountability. Clearly, 21st century technology cannot be built on 19th century working conditions.

Workers need to have a voice, and the trade unions are the players able to ensure quality work and wages. Expanding union membership and collective bargaining coverage to the digital economy is not an oxymoron: after all, it was during the heady changes of the Industrial Revolution that the collective organisation of factory workers led to decent pay. From then on, the spread of the benefits of innovation accelerated. This is replicable: robotics, AI and IoT can go hand in hand with quality jobs. It’s not Robots versus Workers, but Digital Technology for Quality Jobs.

Visit www.tuac.org

Business brief

Jobs in the digital era work differently Jacques van den Broek CEO Randstad Holding NV

companies tend to concentrate in high-tech hubs where highpaid workers employed in STEM occupations are likely to spend their income on local non-routine services. The research shows that the creation of a single high-tech job generates between 2.5

©Randstad

The creation of a single high-tech job generates between 2.5 and 4.4 additional jobs outside high tech “We are the children of a technological age. We have found streamlined ways of doing much of our routine work. Printing is no longer the only way of reproducing books. Reading them, however, has not changed.” Lawrence Clark Powell Ongoing innovation in technology is changing labour markets worldwide. To understand the future of work in the digital era, we need to move away from the traditional economic classification of manufacturing and non-manufacturing sectors. The main differentiator in the digital era is routine tasks versus nonroutine tasks. Medium-skilled workers performing routinetasks in particular run the risk of being replaced by computers doing their job more efficiently, while the share of employment in non-routine tasks is growing. Research on the “Future of Work in the Digital Age” by KU Leuven and Utrecht University, and commissioned by Randstad for the flexibility@work 2016 publication, outlines the transition currently taking place in the labour market. For this the researchers assessed two related phenomena: deindustrialisation and job polarisation in OECD countries. These phenomena capture the shifting composition of a labour market, which is clearly in transition. Next to the decrease in manufacturing in the developed countries, the growth in services can be decomposed into low-tech, low-paying and high-tech, high-paying employment, which reveals the current trend of the job polarisation.

Job polarisation captures the increasing importance of the least and most paid occupations in the economy at the expense of mid-level jobs. In response to the digital economy many new markets and jobs are being created, but many existing jobs are and will be eliminated, or will have to be significantly re-tooled in the process. Mediumpaid jobs, such as machine operators and assemblers, office clerks, and customer service clerks, are disappearing as a result of automatisation, robotics and outsourcing. The research shows this phenomenon is taking place in all developed countries and across all sectors, with an emphasis on manufacturing.

There is a second kind of job polarisation occurring: both the least and most innovative or tech-intense sectors are increasing their employment share. In developed economies, investment in science, technology, engineering and mathematics–the socalled STEM disciplines–is increasingly seen as a means of boosting innovation and economic growth. The tech-intensive sectors create high-tech STEM jobs which are typically more productive and therefore generate additional demand. These

and 4.4 additional jobs outside tech-intensive sectors in these high-tech regions. This is an important fact because, contrary to what is sometimes claimed, boosting high-tech employment helps, rather than hurts, employment growth at the lower end of the labour market.

In many areas and regions employment is picking up, so much so that employers say they cannot fill their vacancies because even highly-qualified candidates have the wrong skills for the jobs available. The current education systems, employers argue, teach yesterday’s skills to tomorrow’s graduates. Many are concerned that applicants lack “soft skills”, such as interpersonal, communication and analytical problem-solving abilities. This clearly indicates that jobs in growing sectors, such as health, education and other in-person services, require a different skill-set than those acquired by people who previously worked in sectors with declining employment, such as agriculture and manufacturing.

The changes in the digital era raise profound issues on how to adapt labour market policy and institutions, as well as decent flexible work arrangements and social security, in order to provide adequate security for workers while harnessing the potential of new ways of working to enhance opportunities. As the authors state: “the technology change is clearly skill–or better said–routine biased”. The paradox lies in the fact that we still have little understanding about how we perform many tasks, particularly those that require a human touch and soft skills.

These tasks often require little effort for humans to accomplish, but still pose great difficulty for computer programmers to put into computer language.

We need to become as innovative in creating good jobs as we are in developing innovative products and services. What skills are needed for these non-routine tasks? What would it take for business, policy, and educational leaders to work together to make it happen? If our approach does not change, people will be denied the opportunities they need to develop the skills they require in the digital era.

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©David Rooney

Openness and digital innovation

Now more than ever, the digital economy is the economy. Digital technologies, or Information and Communication Technologies (ICTs), are boosting trade, innovation, entrepreneurship, and with them growth and social wellbeing. Those benefits depend on openness. Openness has technical, economic and social dimensions, from open standards for core technologies and protocols, and competitively priced access for users, to the respect for human rights, freedom of expression and privacy. In essence, openness enables people to access, and do more things with, digital technologies: start a business online, create new products and business processes or revolutionise existing ones, express opinions, raise capital, share knowledge and ideas, conduct research, interact with government, improve skills, and much more.

Openness enhances digital innovation in a number of ways–by boosting knowledge and data flows that support innovation, by underpinning the Internet as a platform on which entrepreneurs can construct new businesses and commercialise their ideas, and by enabling new avenues for businesses to obtain inputs, thereby lowering entry barriers and freeing up resources for innovative activity. People can share, access and exchange data, knowledge

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and technologies in ways that were previously not possible, with benefits for collaborative research, public service delivery and business activities. The Internet’s end-to-end design principle, in particular, makes it conducive to new applications and, combined with a competitive market and an absence of gatekeeping, means lawful new services can bubble up.

The diffusion of digital technologies, especially advanced ICTs, such as cloud computing, data analytics, and enterprise resource planning software, are associated with higher innovation performance. The share of businesses adopting ICTs is between 20% and 70% higher among innovators compared with other firms, depending on the year, the type of ICTs and the type of innovation considered. Furthermore, OECD work on data-driven innovation (DDI) shows that firms using data are more likely to innovate and to raise their productivity faster than non-users (by around 5-10%).

Moreover, the use of open government data among citizens can increase the transparency and accountability of government activities and thus boost public trust.

In short, openness is key, and barriers to openness can stifle innovation, not just by slowing the diffusion of ICTs, but of

exchange, ideas, innovative practices, public participation, and more. In terms of the economy, as OECD work has shown, the weak diffusion of technologies and knowledge from firms at the productivity frontier to other less innovative firms may be one of the key reasons behind the slowdown in overall productivity over the past two decades.

Indeed the diffusion of advanced ICTs still remains short of its potential, with small- and medium-sized enterprises (SMEs) and the public sector lagging in both adoption and use. For example, while almost 95% of enterprises in the OECD had a broadband connection in 2014, 40% of enterprises with 250 or more employees used cloud computing, compared to less than a quarter of SMEs).

Closing this digital divide should be an important of policy efforts not only on the economy, for promoting more inclusive societies, too.

Openness is clearly not helped where access to digital infrastructures at competitive prices is lacking. Mobile broadband and data, the promotion of appropriate open standards to increase competition and transparency, and reduce vendor lock-in, secure information flow systems: these are just some of the goals policy makers should aim for as they set about promoting a strong digital economy. Openness depends on reliability, and privacy and building trust online are essential for people to become confident users in the long run. In addition, the open availability and wide adoption of Internet standards and protocols are essential for providing a foundation on which new and improved products, services and processes can be built.

To promote openness, its benefits, and its challenges, the OECD is proposing a multifaceted and inclusive definition of openness, developing a framework for analysing how relevant actions and conditions affecting openness can boost digital innovation, presenting preliminary quantitative and qualitative evidence on the economic and social effects of more or less openness. www.oecd.org/sti

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Protecting digital consumers Nathalie Homobono, Director-General for Competition Policy, Consumer Affairs and Fraud Control (DGCCRF), and Chair, OECD Committee on Consumer Policy

transparency, such as who to contact when a problem occurs with a good or a service, do not often extend to improved disclosures about how personal data may be collected and used by businesses online. Although consumers now have more tools to help police market conduct, the role of well-equipped consumer watchdog authorities, like the French DGCCRF, remains essential to enhance trust in the digital marketplace.

©Robert Llewellyn / Alamy Stock Photo

Constant effort is needed to address the challenges of protecting and empowering consumers in a complex and rapidly developing online environment. Take the role played by the OECD Committee on Consumer Policy. Our work resulted in March 2016 in the adoption by the OECD Council of a revised Recommendation on Consumer Protection in E-commerce, updating one of the long-standing OECD pillars for building trust online. While the fundamentals of earlier consumer protection approaches remain sound, the evolving e-commerce landscape throws up new challenges.

When the OECD adopted its first E-commerce Recommendation in 1999, online spending on so-called e-commerce was well-below 1% of total retail spending. Fifteen years later, the figures have jumped to almost 8% in the EU and more than 11% in the United States. This is no longer some future trend: e-commerce is here and is critical for the economy, in which household consumption accounts for about 60% of total GDP in the OECD area.

Consumer shopping online is becoming as routine as driving to the local supermarket. In fact, across the OECD, half of all consumers made an online purchase in 2014. Could that portion rise? After all, 75% of those consumers access the Internet on a daily basis, suggesting

considerable untapped potential. This is particularly the case for cross-border e-commerce. In the EU, for example, only 15% of consumers shop online from another Member State, which is about one-third the rate for domestic e-commerce. So what are the issues?

The Internet and mobile technology have allowed business and markets to expand consumer access to goods and services at competitive prices, while bringing greater transparency through price comparisons and the like, to inform consumer choice. At the same time, online shoppers complain about complexity and uncertainty about delivery for instance, or dispute resolution, and can be victims of misleading or fraudulent business practices. And improvements in business

For example, today’s active consumers drive innovation and competition through product ratings and reviews. These shape business reputations and inform consumer decision-making, but can also be biased or untruthful. Another important change relates to consumer data, which is now at the core of e-commerce business models.

A growing number of online platforms, such as social media, offer “free” services in exchange for consumer data. While the data use can be beneficial to both businesses and consumers, the risk environment is higher and the 2016 Recommendation now explicitly recognises that offering these services triggers consumer protection responsibilities. Other changes address challenges associated with the access and use of digital content products, mobile devices, new payment mechanisms, such as those charged onto mobile phone bills, and the product safety issues raised by ordering goods that may be produced in several countries of variable standards along increasingly

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Open season complex (and possibly not that transparent) global supply chains.

Geoff Huston, Chief Scientist, APNIC*

©David Rooney

Another key change is the arrival of a growing number of platforms that facilitate consumer-to-consumer transactions. The scope of the Recommendation has been expanded to cover the business activity of “collaborative” online platforms that support transactions between consumers or “peers”, now commonly referred to as the “sharing” economy. These services, which blur the traditional boundaries between consumers and business, raise a number of difficult questions, including how to apply consumer protection frameworks to transactions involving non-traditional actors. These activities are also part of a broader set of policy issues affecting the online experiences of consumers and businesses, with implications for consumer protection, competition, taxation, social welfare and the effective protection of workers. Such challenges will keep policy makers busy for the foreseeable future adapting approaches that empower consumers with the tools they need to successfully navigate today’s dynamic e-commerce marketplace, while driving innovation, fair play and opportunity for all.

References OECD (2016), Recommendation of the Council on Consumer Protection in E-commerce, 24 March, OECD Council Document C(2016)13.

Consumer Policy Guidance on Intangible Digital Content Products (OECD Digital Economy Papers, No. 241, OECD Publishing, Paris; DOI: http://dx.doi. org/10.1787/5jxvbrjq3gg6-en).

Consumer Policy Guidance on Mobile and Online Payments (OECD Digital Economy Papers, No 236, OECD Publishing, Paris; DOI: http://dx.doi. org/10.1787/5jz432cl1ns7-en).

Protecting and Empowering Consumers in the Purchase of Digital Content Products (OECD Digital Economy Papers, No. 219, OECD Publishing, Paris; DOI: http:// dx.doi.org/10.1787/5k49czlc7wd3-en).

Report on Consumer Protection in Online and Mobile Payments (OECD Digital Economy Papers, No 204, OECD Publishing, Paris; DOI: http://dx.doi. org/10.1787/5k9490gwp7f3-en). http://oe.cd/1o5

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I’m sure you’ve all heard about “the open Internet.” The expression builds upon a rich pedigree of the term “open” in various contexts. It gives the impression that “open” is some positive attribute, and when we use the expression of the “open Internet” it seems that we’re lauding it in some way.

But are we, and if so, in what way?

A useful characterisation of “open” is the Internet’s use of free, publicly available standards that anyone can access and build on to. This represents a major shift from the world of closed vendor-specific technology standards of just a few decades ago, as was common, for example, in the realm of mainframe computer technology. These days, new providers can

introduce goods and services that they can confidently expect to be fully compatible with the existing Internet infrastructure.

Under this principle the Internet is not closed to new investments in the provision of good and services, and it minimises the barriers to entry.

Another useful characterisation is that the Internet is “open” to all forms of traffic, and will treat all traffic that flows across the network in roughly the same way.

This principle of the Open Internet is sometimes referred to as “net neutrality.”

Under this principle, consumers can make their own choices about what applications and services to use and are free to decide what lawful content they want to access,

The Open Internet also makes it easy for anyone, anywhere to launch innovative applications and services, changing the way people communicate, participate, create, and do business. If you develop an innovative new tool that allows communication, you don’t have to obtain permission to share it with the world.

At the same time, this openness is extremely fragile, and has very definite limitations that dampen this somewhat utopian ideal. The underlying technology may be freely accessible, but that is not the same as freely usable. The Internet is built upon a towering structure of smart, intelligent, efforts, which means it is by no means free of Intellectual Property Rights. Nor are the underlying network transmission and switching resources infinite, so when the aggregate sum of demand for access exceeds available capacity, then a service provider may choose to implement selective degradation of the services in order to preserve the integrity of the most essential traffic or protect the most lucrative revenue sources. Increasingly, we are shutting down the areas of potential innovation in communication models in order to concentrate our efforts to support a small number of service models.

Tensions are also apparent in the area of privacy and security. Should an open Internet support a user’s choice to use tools, services and devices that preserve the user’s personal privacy to the maximal capability of today’s technology?

Or should the considerations of security of the broader society place limits on the extent to which individual actions can be completely and totally concealed?

Should we tolerate an increasingly toxic open network that exposes all of us to various forms of attack and exploitation? How can we ensure that the millions of devices that people, businesses and public authorities connect to the Internet cannot be subverted and readily transformed into a catastrophic attack vector?

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None of these questions has a clear answer. But they are pressing questions for public policy. Behind a dazzling veneer of high technology, the Internet is still just another form of the public communications space, and whether the Internet’s various investment vehicles use private or public capital, the space in which we work and play on the Internet is always a public space. This means that while market forces strongly influence the day-to-day conversations about the Internet, the longer term debate needs the presence of a strong public voice to defend societal values. It is incumbent on us all to ensure that the open Internet continues to serve all of us, preserving essential qualities of ubiquity, accessibility, safety and utility that we should expect from every public common space.

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economy Spotlight: Ireland’s at the cutting edge

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As an international public organisation in pursuit of “better policies for better lives”, the OECD must now add its perspective to the continuing discussion about what it means to be responsibly “open” on the Internet.

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These days the means of communication on the Internet are limited to a conventional “client/server” transactional model, and it’s limited to a behaviour that sits upon a web transaction. Many other forms of interaction, such as peer-to-peer services, are often blocked by various forms of accreted network middleware. Perhaps the largest problem for open innovation in today’s Internet is the Internet’s own success and ubiquity. The incumbent providers can access economies of scale of operation that are inaccessible to all others, which allow them to gain positions of market dominance, and the stasis of the installed base means most forms of novel innovation fail to gain the threshold critical mass of acceptance needed to ensure a future. The larger the

installed base the higher this threshold of acceptance of innovation becomes.

©Serprix.com

create, or share with others. This openness promotes competition and enables investment and innovation.

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ement 1

http://oe.cd/1og

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From people to things: Building global connectivity

©Dennis MacDonald/Alamy Stock Photo

Gaël Hernandez and Verena Weber, OECD Directorate for Science, Technology and Innovation

But with newness and disruption come a range of challenges, as these over-the-top services undercut market

Connectivity is the foundation for the digital economy. The Internet has already connected more than three billion users across the globe and about 14 billion devices.

A major challenge is how to extend connectivity not only to the next several billion users, but also the next 50 billion devices. Thanks to the Internet of Things (IoT), the economy is digitalising on an unprecedented scale, as devices and objects connect to the Internet’s network of networks and communicate with each other. A world is emerging where smart sensors and actuators will increasingly monitor the health, location and activities of people and animals, the state of the natural environment, the quality of food and more.

If connectivity is the foundation and enabler, the driver that makes all this possible is convergence. Thanks to digitalisation and the growing capabilities of the Internet, there has been an ongoing convergence between once distinct parts of the communication ecosystem. Fixed and wireless networks converge, voice and text, and telecommunication and broadcasting too. Your car, your home appliances: all are being connected.

Companies best known for

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any place and consumers can increasingly interact with that content.

These changes have been equally profound in telecommunication with voice (VoIP) and text services such as WhatsApp, or KakaoTalk offered over the Internet, which are virtually toll free to users and competing head-on with traditional mobile texting. Both video and voice services may also be bundled on social media platforms such as Facebook and Linkedin. Meanwhile, many sectors from accommodation to transport have been disrupted as new applications enable new business services over the Internet.

communication equipment increasingly provide content, and vice-versa. Each firm may have a competitive edge and niche function but old lines are blurring as new services and possibilities emerge all the time. Much of the time you will not be aware that the tram or stop you are waiting at are connected to the Internet, but they will have IP addresses.

The underlying communication and digital services industries, which are essential for building up global connectivity, are transforming, spurred by growth in fixed and mobile broadband penetration rates and by ever more innovation in software and smart devices.

Services such as voice, video and music are now offered not just on television and radio, but over the Internet and are increasingly integrated as content with devices or software applications, such as search. Online video distributors, such as YouTube or Netflix, offer content over broadband networks, beyond traditional cable and broadcasting services. TV broadcasters and manufacturers are also going digital and offering online packages, which can be accessed over the web. Users can choose between several devices to receive content and different price models, often at any time and

The pervasive nature of the Internet of Things will be such that people will not always be aware of them in their home, city or workplace positions hitherto firmly held by telecommunication, cable and broadcasting companies.

Traditionally, these different areas have been governed by different policies, regulation and involve different market participants, which raises the issue of whether current regulation is adapted to this new reality.

In addition, industry consolidation is already taking place in communications markets, with more and more mergers being approved between mobile and fixed operators, and between communication networks and content providers. Many of these mergers can help bolster network capacity and are designed to offer integrated, bundled services to meet further customer demand. However, because of their market concentration these mergers may reduce choice of provider and competition for a time, as consumers in many countries have been finding out. In short, policy makers have several dilemmas to address. How can they ensure roll out and maximum access when it comes to broadband, for instance,

and not allow technologies, or indeed users, fall behind? How can competition, innovation and investment be assured at the same time? What role should public investment play? Is current legislation and policy fit for purpose?

Internet of Things Answering such questions is important as we embark on the era of the Internet of Things (IoT). This not only concerns cars and home thermostats, but the likes of medical devices, even whole infrastructures. The pervasive nature of the IoT will be such that people will not always be aware of them in their home, city or workplace, but will see them as a supporting infrastructure for their way of life. The IoT is also enabling firms and public authorities to meet their objectives in new and innovative ways. In the private sector, productivity and efficiency gains will come from transforming how firms

monitor their processes and outputs, equipping workers with smart devices to alert them to assembly line issues, stock changes, sudden market shifts, and more.

Such devices may also help governments address important public policy goals, such as monitoring emissions and improving the environment, managing traffic or delivering public services more effectively.

The Internet of Things is happening now, with an upsurge in the development of machine-to-machine (M2M) communication modules enabling remote management applications for equipment and machines with no human intervention. OECD data since 2012 show that the number of M2M SIM subscriptions have grown from 72 to 124 million, corresponding to 10 subscriptions for each 100 inhabitants.

Together with two other developments– that of big data analytics and the advent

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of cloud computing with its better processing power and cost-effective tools for globally scalable applications–a new digital economy is evolving fast. It is up to policy makers to stay ahead of these trends by asking the right questions: for instance, what are the implications of an increasingly widespread deployment of IoT for communications infrastructures and services? What changes in existing policies and practices could facilitate the adoption of IoT enabled services, such as remote health monitoring? And what actions can be taken to build trust in the IoT applications and services? But whatever the question, it is important to remember that as connectivity and convergence are at the basis of the Internet, they will influence the success of the Internet of Things too. www.oecd.org/sti http://oe.cd/1o7

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©Rooney

Bridging policy silos to boost trust online

Three out of four people access the Internet everyday across the OECD. But one-third of those daily users don’t yet buy online. Why not? According to a 2014 consumer survey the top two concerns reported by EU Internet shoppers are the misuse of personal data and security of online payments.

In a 2015 US Census Bureau survey 45% of online households reported that privacy and security concerns stopped them from conducting financial transactions, buying goods or services, posting on social networks, or expressing opinions on controversial or political issues via the Internet. These concerns extend to small business owners. While almost 95% of small and medium enterprises (SMEs) in the OECD had broadband access in 2014, only 20% used it to conduct e-sales. Recent surveys show that uncertainty on data privacy and digital security risk are critical elements.

Trust issues rank highest in the list of

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obstacles for SMEs to realise the full economic potential of the Internet.

The links between consumer protection, privacy and security have long been clear, but with personal data now at the core of e-commerce business models, and increasing digital security threats, the need for joined-up approaches in managing consumer protection, privacy and security risk has become compelling.

The vitality of the digital economy is at stake.

Today information communication technologies (ICTs) and the Internet are increasingly used for data-intensive economic and social activities which rely on an open and interconnected digital environment, and on the ability to move data easily, flexibly and cheaply across the world. Reduced transaction costs make it possible for a large number of buyers and sellers to interact over long distances. In this ecosystem, uncertainty

can be high and trust is essential to realising the full economic and social benefits of the digital economy.

Trust is the state of mind that enables a person to be willing to make herself vulnerable to another an essential

Another tricky issue is so-called algorithmic discrimination component of a healthy society and economy. From the privacy point of view trust is about the willingness of an individual to become vulnerable to an organisation by disclosing personal data. From a consumer protection point of view trust is the willingness of a consumer to risk time and money to engage in commercial activity. Digital security concerns can undermine trust, cutting across the consumer protection and privacy dimensions, but can also expand more generally to impact business, the economy and society. It

takes patience and effort for a company to establish customer trust; however, one wrong move can destroy it forever.

Traditionally, regulators and professionals charged with overseeing these issues come from different types of agencies and communities but there is increasing overlap in the substantive and organisational challenges they face. The need has never been greater for breaking down the traditional ‘silo’ approach and promoting more co-ordinated governance mechanisms. If even modest projections are correct, the growth of the Internet of things applications and big data analytics could represent a fundamental shift in how users and business alike engage with and are impacted by the Internet.

This will most likely raise new issues and different dimensions of existing challenges across consumer protection, privacy and security concerns. Ultimately, silo approaches will increase complexity rather than facilitate solutions for maximising the benefits of these new developments while minimising the potential risks.

The OECD began developing policy frameworks for trust online in the early 1990s with a view to helping governments realise the economic and social potential of the ICTs. With the Council adoption in March 2016 of the revised Recommendation on Consumer Protection in E-commerce (E-commerce Recommendation), the three OECD pillars for trust online (privacy, security and consumer protection) have now all been recently modernised. Prior to this, the OECD Recommendation on Digital Security Risk Management for Economic and Social Prosperity (Security Risk Recommendation) was adopted by Council in September 2015, and the landmark OECD Guidelines on the Protection of Privacy and Transborder Flows of Personal Data (OECD Privacy Guidelines) were revised in 2013.

Taken together, these three Recommendations represent a modern overarching policy framework for addressing the broad scope of the emerging promises and risks of the digital environment. More than that, they also

highlight tightening links across the three areas. There has always been a “security safeguards” principle in the OECD privacy guidelines, but the 2013 revisions also highlight the need for a risk-based approach. This is commonplace in the security world and the 2015 Security

Digital security concerns can undermine trust, cutting across the consumer protection and privacy dimensions Risk Recommendation explicitly notes the value of such an approach for implementing the OECD Privacy Guidelines. The revisions to the 2016 E-commerce Recommendation, in turn, bring “free” services exchanged for personal data within its scope and likewise include new provisions on privacy and security to reflect the corresponding need to protect consumer data.

One key element of this modern overarching policy framework is the role of risk management. Despite the increasing awareness of risks and uncertainties when using the Internet, such as security threats, digital risk continues to be approached as a “special” matter, in isolation from economic and social decision making. In businesses, for example, digital security risk is often viewed solely as a technical issue, while privacy and consumer protection are treated as legal compliance challenges.

The three areas are rarely understood by business leaders as having economic implications directly affecting reputation, operations, competitiveness, innovation and revenues, and even less so as possible market differentiators, and sources of competitive advantage.

Greater co-ordination across the security, privacy and consumer protection policy communities is called for in addressing an increasingly wide range of issues.

Take, for instance, digital security incidents that result in a breach of personal data, bundling privacy and consumer risks related to fraud and identity theft with security issues in

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ways that significantly impact trust. The revised OECD Privacy Guidelines call for organisations to provide notifications in cases where there has been a significant security breach affecting personal data.

Meanwhile, businesses and consumers rely on digital identity management in online transactions as a means to reduce fraud, protect personal information (including financial information) and to reduce the likelihood of digital security incidents. Effective approaches cut across security, privacy and consumer protection issues.

Digital risk insurance is another challenge. Although businesses and consumers are beginning to explore the possible benefits of digital risk insurance, standard policies are not designed to cover digital security and privacy risks.

Concrete efforts, for instance, to address uncertainties around definitions, or the absence of relevant data on past incidents and losses, are needed to open up opportunities in this area.

Data access and portability also raise trust issues. Data access rights have long been a part of privacy laws, and this is now expanding to data portability, with new initiatives to enable consumers to obtain their data in formats that enable its re-use in other services. Effective authentication and security measures will be essential to making portability mechanisms trustworthy.

Another tricky issue is so-called algorithmic discrimination. Automated decision-making, built on data-fuelled predictive analytics and machine learning, can generate valuable commercial and client insights. At the same time these operations bring risks of stereotyping and discrimination, which must be addressed.

These are but a few examples of the overlapping issues that could usefully be addressed in a more joined-up way by policy makers in the security, privacy and consumer communities as they work to address the digital risks that threaten trust online. www.oecd.org/sti http://oe.cd/1o9

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Ensuring a secure Internet of Things

©Alamy

Leonard Cali, Senior Vice President, Global Public Policy, AT&T

The rapid rise of a new generation of connected, intelligent devices–collectively known as the Internet of Things, or IoT–is more than just the latest digital enabler to impact organisations of all sizes. The IoT presents vast opportunities for governments and businesses to improve internal efficiencies, serve their customers or constituents better, and enter new markets or provide new services. Such services will transform the way we work and live every day. As the IoT develops, it is essential that security-by-design be a core feature of the connected device ecosystem.

You can see promising innovation in the automotive, shipping, industrial, healthcare, home security and smart city sectors, just to name a few. Take, for example, a wristband fitness tracker or health monitor. Such an item can be a purely personal device for tracking one’s daily exercise; or it can be used for medical purposes to determine a diabetic’s insulin demand. In either case, appropriate security practices are vital. And each member of the ecosystem as well as government has a role to play in ensuring effective security protections that take a holistic view of the threat management environment. Effective threat management involves many interrelated efforts.

First, the device itself must be secure–especially if the device is used to track sensitive medical information like insulin demand, rather than just the number of steps taken in a day. To ensure device security, it is essential that security issues be considered from the very beginning of device design, and should not be an afterthought or bolt-on solution. Furthermore, this design must permit security to be ensured over its complete lifecycle.

Although device security is often achieved using hardware based solutions, it may also be implemented through commercial arrangements that involve co-operation with network operators or applications providers.

Second, the device’s operating and applications software must be secure against unauthorised attempts to reprogramme or disable it. Possible solutions include the use of encryption or code signing. And because one may never know all future security threats, it is vital that device and applications providers be able to securely update the software on the device to patch

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vulnerabilities and security gaps as they evolve. Otherwise, older devices could become unacceptably insecure. Further, since IoT devices are commonly deployed in remote locations, update capabilities such as Firmware-Over-The-Air will be crucial. User data stored on-device needs to be secured, too– perhaps via on-device data encryption so even if the device is breached, the data stored on it remains secure.

Security in networks over which IoT devices communicate is also vital. It does not matter whether these networks are wired, or wireless wi-fi or mobile cellular, customers will demand that they be secure to ensure that data passes reliably between the device and its applications provider. One way this may be achieved is through a secure transmission service such as AT&T NetBond® to link devices to their cloud-based applications servers without exposing their traffic to congestion or online threats like DDoS (Distributed Denial of Service) attacks that exist on the public Internet.

Finally, the computer server managing the device’s application must not be a weak link in protecting the integrity of the service.

Regardless of whether this server is the application provider’s own machine or one located “in the cloud,” it must be secured using robust intrusion detection and prevention systems, and firewalls to prevent unauthorised access.

With security being one of the biggest priorities for IoT deployment, effective government partnership with the private sector will be key. This may take several forms. One is that government agencies may convene industry groups to develop cross-sectoral (e.g., device, network, applications) practices and expectations for IoT security. Furthermore, government may assist by providing clear interpretations and advance guidance as to what its general security laws and regulations require for IoT systems and ensuring these requirements are consistent across all units of government and ecosystem participants.

Finally, governments will themselves be deploying IoT solutions for initiatives such as smart cities, smart transportation or effective health care. Given the pervasiveness of these applications, governments will need to collaborate closely with IoT providers to understand security risks associated with their applications and create a framework for shared knowledge.

Working together, government and industry can accelerate innovation in IoT and in IoT security.

The IoT is growing exponentially and the need to secure its ecosystem end-to-end is an absolute necessity. This requires a bottom-up holistic approach to security design and implementation in which each ecosystem participant does its part. Continuing close partnership between the public and private sectors is also important to ensure that IoT security innovation continues and solutions are shared across industry and IoT system users. By following this path, the most valuable years of the Internet will always lie ahead of us.

Visit www.ATT.com http://oe.cd/1oe

Business brief

Building trust in global supply chains

Philippe Amon, Chairman & CEO, SICPA

Safe international trade is essential for the economic growth governments are currently seeking but is threatened by the ever evolving asymmetrical threat of fraud and illicit activity. These crimes, be it through sale of counterfeits, contraband, tax evasion, avoidance of quality controls or theft of intellectual property, damage governments revenues, undermine policies and put at risk public health and citizens well-being.

The work of international organisations such as the OECD in promoting co-operation and best practice between governments is crucial to tackling the issue. So is direct action by national governments to reinforce their own capabilities and build robust systems which can be linked across borders to build an interoperable international network.

SICPA is at the forefront of those in the private sector investing in developing up-to-date tools for governments so they can meet these challenges now and in the future. Our SICPATRACE® platform is designed to accommodate numerous products, to protect licit industries and help promote the conditions suitable for economic development and investment.

Our approach builds on our long experience providing security inks and security features to protect bank notes and in working in partnership with governments. SICPA has developed a modern tool box which can be implemented in a modular way and adapted to take account of national needs. At the core of the approach is secure track and trace which provides transparency and control for governments across the length of complex supply chains which criminals are so adept at exploiting.

Digital technology is crucial but needs to be complemented by material-based security Secure track and trace is based on marking legitimate product securely so as to guarantee authenticity and gives each item a unique identity so that it can be monitored through its life cycle from manufacturer to consumer. Digital technology is essential for monitoring and for the full exploitation of data, but to protect

against the vulnerabilities of cyberspace secure marking needs to use material-based features such as high security inks.

To meet government needs, a secure tracking and tracing system should be modular and adaptable to a wide range of products–be they excisable goods, medicines or sensitive equipment. At each stage there are benefits. At the beginning of the supply chain benefits include production control which tackles the mis- or under-declaration which result in tax losses. There are further tax and health gains from preventing diversion frauds, adulteration and illegitimate repackaging. At inspection stages there are tools to counter corruption. Business intelligence, risk profiling and reporting modules exploiting ‘Big data’ ensure best use of enforcement resources. Real-time information of evidential quality improves enforcers’ ‘hit rates’ for seizures and prosecutions.

Implementation requires a holistic approach and expertise SICPA knows from its experiences across the globe that implementing a successful track and trace system requires a holistic approach and proven expertise. It needs to address the needs of all stakeholders. Permissive legislation needs to be in place. A good system is unintrusive and has minimal impact on production processes – it copes with difficult industrial environments. The integrity of data capture is crucial – it has to be error free and acceptable to all supply chain actors. It requires a fully reliable and secured system of aggregation so that e.g. a bulk package does not require unpacking. Checks by the authorities need to be quick and easy, compatible with trade facilitation schemes based on AEO and contain anti-corruption safeguards.

The cost of illicit trade is high. The benefits of combating it are significant. The technology now exists to do so successfully. It is a tool par excellence of good governance. We stand ready to support governments to make it happen!

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OECD Observer No 307 Q3 2016

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Promoting innovation, protecting privacy

©Anna Berkut/Alamy

Marc Rotenberg, President and Executive Director of the Electronic Privacy Information Center, Washington DC

Few issues are of greater concern to Internet users today than privacy protection. Everyone wants the benefits of Internet access, but few want to sacrifice their privacy or face the risk of cyber theft as a consequence.

According to a recent poll, an overwhelming percentage of people believe that their information is not private. They want new rules about how companies and governments can use online data about them. Its global survey found that 83% believe new rules are required to compel governments and companies to handle data more responsibly, whether personal or medical data, or data picked up on social websites or other platforms where people routinely engage.

A recent report found the rate of data breaches accelerating and the cost to business and consumers increasing. Clearly action is needed. But while governments have a critical role to play, they should be careful of the policy traps that have littered the privacy field in the past.

First, “balancing” is a popular term in the policy world. But balancing privacy protection with the availability of new services is the wrong starting point. Users want both innovation and privacy protection. They should not be asked to trade-off basic protections for new services. Governments and businesses should make a commitment to achieve innovation and robust safeguards for personal data.

Second, “notice and choice”–presenting boilerplate terms and conditions that users are expected to accept–is a bad choice for privacy policy. In the Internet economy, the markets for personal data are two-sided. Companies stand between the users and the advertisers. Internet firms collect personal data and then sell the user preferences to the advertisers. The user is not the customer, but the product. And the very large firms that dominate search and social networking provide little opportunity for users to switch service providers because they are no real alternatives. Traditional market mechanisms, built upon transparency and competition, simply do not exist for the end user seeking to protect privacy.

That is why it is critical to establish baseline privacy standards as the foundation for the Internet economy.

Third “interoperability” is also a policy dead end online privacy.

The global network brings together consumers and businesses from around the globe. The key to online privacy are common standards for data protection that simplify data exchanges and provide trust and confidence in new services. End-to-end encryption, data minimisation, and Privacy Enhancing Techniques–

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not “interoperability”–are obvious solutions to many of the privacy and security challenges facing users today. Regrettably as user concerns about privacy have increased, and the risks of data breach and data theft have grown, many governments have followed these insufficient strategies, which have only increased public concerns.

The good news is that the OECD has been at the forefront of efforts to promote good policies and good technologies to promote growth and innovation while safeguarding privacy since the early days of the Internet. The OECD Privacy Guidelines of 1980 remain one of the most influential data protection frameworks in the world. The OECD Privacy Guidelines have provided the basis for national law and international agreements. For example, in the United States the OECD Privacy Guidelines provided the basis for the privacy law to protect the personal information of subscribers to cable television services. Of the many privacy laws in the United States, the subscriber privacy provisions in the US Cable Act are among the very best.

Now coupled with some of the recent innovations in privacy policy, including data minimisation and breach notification, the 1980 OECD Privacy Guidelines remain a good starting point for policymakers developing legal frameworks for privacy protection.

The OECD also promoted the use of robust encryption with the OECD Cryptography Guidelines in 1997. Encryption is a critical data security technique that has helped make possible the growth of the commercial Internet. No doubt crypto will pose some challenges for government, such as concerns about access to data of targets of criminal investigations. But the costs of poor security measures are also very real. Data breaches continue to rise, leading to identity theft and financial fraud. Many companies are collecting data they simply cannot protect. Governments should actively promote strong encryption particularly for cloud-based services, because it is not possible for users and businesses to monitor the security standards of those who store data remotely.

Of course, hi-tech firms are not waiting for policy makers to solve these problems. Companies such as Apple and WhatsApp have decided to build in strong security techniques to protect the data that has been entrusted to them by their users. These companies should be supported for addressing privacy challenges.

Protecting the interests of citizens is a key responsibility for governments, yet many governments have experienced data breaches, including medical records, tax records, and even voting records. The Internet drives innovation, productivity growth and communication. But it is also a harbinger of data breaches, identity theft, and financial fraud, all of which have trended up during the Internet era. Users are rightly concerned about the protection of their personal information. And the indicators all suggest the problems will accelerate over the next several years.

Governments have a central role to play, but they should avoid hollow solutions, slogans, and failed strategies. If they want the digital economy to grow strongly, there is serious work ahead.

For more on privacy,visit EPIC.org. For more on civil society and the digital economy, visit CSISAC.org http://oe.cd/1of

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Big data, satellites and climate change of extreme weather events through the observation of sea surface temperatures, wind speed and sea levels, and tracking storms via powerful optical satellites in geostationary orbit.

With new-generation satellites, both optical and temporal resolutions will be greatly improved, which will also lead to improved weather forecasting and climate modelling abilities, as well as better real-time monitoring of many variables in the next decade. Improved satellite instruments will allow a broader range of measurements, as new-generation satellites replace and supplement existing ©James Thew/Alamy Stock Photo

New-generation satellites will lead to improved weather forecasting and climate modelling abilities

Meteorology was the first scientific discipline to use space capabilities in the 1960s, and today satellites provide observations of the state of the atmosphere and ocean surface for the preparation of weather analyses, forecasts, advisories and warnings, for climate monitoring and environmental activities. Three-quarters of the data used in numerical weather prediction models depend on satellite measurements.

International co-ordination for climate monitoring is led by the Steering Committee of the Global Climate Observing System (GCOS). This group was created in 1992 by the World Meteorological Organization, the Intergovernmental Oceanographic Commission, UNESCO and the United Nations Environment Programme. Noting that climate change was at this time still poorly understood and documented in many countries, the GCOS championed the introduction of a range of “essential climate variables” or ECVs–physical, chemical or biological variables or a group of linked variables that critically contributes to the characterisation of earth’s climate–to more comprehensively

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and systematically monitor changes to the climate, in this way supporting the work of the Intergovernmental Panel on Climate Change (IPCC).

Earth observation satellites are firmly embedded in this international system to monitor climate change. Satellite data provide significant contributions to more than half of the 50 essential climate variables that are currently in use. Some of these contributions can only be provided by satellite. This includes satellite radar altimetry, which measures the distance between the spacecraft and the earth’s surface below and can provide precise and continuous measures of global sea levels. Groundwater storage, recharge and discharge can be measured by changes and variations in earth gravity, which, in turn are detected by satellites. […]Satellite instruments are also responsible for measuring the chemical composition of the atmosphere and tracking the presence of carbon dioxide, methane, ozone and other greenhouse gases; the monitoring of sea ice, polar ice caps, ice sheets and glaciers (using altimetry, radar imagery and gravitational instruments); and finally, the monitoring

missions. Several new missions will be launched within the next five years, including Eumetsat’s second-generation polar-orbiting satellites and thirdgeneration geostationary Meteosats and the European Sentinels in the Copernicus programme, as well as several Chinese satellites. Secondly, coverage and system resilience will be improved thanks to better international co-operation and more national providers and co-operative international missions. For instance, the Chinese FY-3 satellites will be the third pillar in the constellation of polar-orbiting systems, in addition to US and European satellites, according to the World Meteorological Organization Approximately 130 earth observation missions were operational as of October 2015, according to the database of the Committee for Earth Observation Satellites, which is a co-ordination body for earth observation satellite activities, originally established by the G7 countries in 1984. This includes missions and/or instruments to observe the atmosphere, land, oceans, ice and snow, as well as gravity and magnetic fields, and as such comprising weather satellites and many remote sensing satellites, operated by government agencies, thus excluding commercial constellations such as Skybox, GeoEye, WorldView, etc., which

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downstream services could affect data accessibility policies in the long run.

Public-private partnerships are one of the available options to pool costs and reduce government spending on satellite missions and on long-term data storage.

However, this could have a negative impact on data sharing and accessibility.

Extracted and adapted from “Could big data from satellites play a major role in climate change management?” in Chapter 4 of Space and Innovation, OECD Publishing, 2016, available at http://dx.doi. org/10.1787/9789264264014-en.

Contact Claire.Jolly@oecd.org

©NOAA/AFP

References

Image from the National Oceanic and Atmospheric Administration (NOAA) dated 16 November 2015 shows the satellite sea surface temperatures for October 2015, where orange-red colours are above normal temperatures and are indicative of El Niño. may appear in other databases for remote sensing. Some of these missions are dual-use (such as Italy’s CosmoSkyMED constellation), meaning that some of the instruments may also have commercial or military applications.

Many missions are also the result of international co-operation, with several agencies contributing instruments or other types of support. A satellite mission consists of one or several satellites (the GRACE mission, for instance, consists of two satellites flying in formation), carrying one or several instruments.

About 350 instruments are currently flown on missions supported by the CEOS. The majority of missions are operated by the United States, Europe (including the ESA, Eumetsat and national agencies), China and the Russian Federation. Future missions are in different stages of preparation and financial approval. So far, 66 missions have been approved to replace or supplement existing activities within the next 15 years, while another 100 are more uncertain, either planned or under consideration, some of which may eventually be abandoned.

Innovation is progressing but continuity

of observations remains a concern.

Government programme cuts, satellite failures and delays pose a constant threat to measurement systems. Indeed, gaps in the time series of meteorological data were mentioned in the US Government Accountability Office’s high-risk report for 2015. The Steering Committee of the Global Climate Observing System reports that measurements of certain essential climate variables (solar irradiance and of sea-surface temperature at microwave frequencies) are at risk of being discontinued.

For complete references and charts, see the above report.

OECD (2014), Space Economy at a Glance, OECD Publishing, Paris, http://dx.doi. org/10.1787/9789264217294-en US Government Accountability Office (2015), “High-risk series: An update”, GAO-15-290, Government Accountability Office, Washington, DC, www.gao.gov/ assets/670/668415.pdf World Meteorological Organization (2015), “Status of the Global Observing System for Climate: Full report”, GCOS-195, World Meteorological Organization, Geneva, October, www.wmo.int/pages/prog/gcos/Publications/ GCOS-195_en.pdf.

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Storage and long-term preservation of data is also an issue. With increased optical and temporal resolution, satellite missions produce an increasing amount of data. […]It may become more difficult to decide which data to archive for long-term conservation and which to use for further processing and then discard. […]

This raises the issue of data access and distribution. To maximise the societal benefits of the data, data need to be efficiently shared and distributed, and raw data must be transformed into value-added products.[…] There are discussions in the community on how the development of commercial

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Measuring the economy in the age of digitalisation Nadim Ahmad, OECD Statistical Directorate, and Neïla Bachene, OECD Observer

in particular how it treats transactions of goods and services that are effectively provided for free. Digitalisation has given consumers access to a multitude of maps, search engines, news, videos, social networking, cloud storage, and applications, all without any need to pay a fee. Indeed, it has also generated free benefits for producers, for example, through operating systems such as Linux.

Because these are free, there is no explicit corresponding consumption recorded in

©Serprix

One of the main criticisms of GDP concerns how it treats transactions of goods and services that are effectively free

Recent years have seen a rapid rise in digital transactions, notably through web-based “sharing economy” platforms that have bridged, and indeed blurred, the gap between consumers and producers. But this upsurge has also created new challenges for measuring GDP, and, against a backdrop of slowing rates of productivity growth, has led some to question whether the slowdown reflects these new transactions.

The underlying activities related to consumer-to-consumer transactions, which characterise the so-called “sharing economy”, are not that new. Households have long engaged in renting out their homes, offering taxi services and selling second-hand goods via the small ads in newspapers. Conceptually, GDP captures these activities and in practice countries have used a variety of approaches to measure them.

However, these activities have generally been small scale in nature, and so the approaches used to measure them have tended to elude scrutiny. What is “new” is the much larger scale of such transactions: Airbnb, for example, which specialises in consumer-to-consumer holiday rentals, now has a market capitalisation close to that of Hilton

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Hotels group. The question is not whether the accounting framework for GDP includes these transactions, but whether the current metrics, which were intended to measure low-scale and insignificant sums, are robust enough to adequately measure the same, albeit larger, activities today.

On balance, for consumer-to-consumer transactions, the available evidence suggests this is largely the case; indeed, the underlying activities resemble transactions in the informal, grey or shadow economy where a significant body of measurement guidance has been built up and implemented over the years.

However, things are less clear concerning the margins paid to the intermediaries running these platforms, which are also part of GDP, and especially when the payments for the related intermediation services cross borders. True, some useful data can be retrieved, for instance, from tax data as those selling services using platforms such as Airbnb are likely to declare income to the tax authorities, especially in countries where VAT is applied. But what about the wider macroeconomic aspects?

Perhaps one of the main criticisms of GDP concerns its conceptual scope and

GDP, nor are there estimates of household consumption or expenditures, including capital, by businesses. This has led some to question whether the scope of GDP is overly restrictive, particularly as the provision of free goods and services appears to widen the gap between GDP and measures of material well-being and consumer surplus. These criticisms in part reflect a misunderstanding of what GDP is (a measure of the income generated from production) and what it is not (a measure of well-being). But they also reflect a misunderstanding of the business models used to finance the provision of free goods and services. Many, if not most, of these models are financed via advertising or the acquisition of Big Data—the wealth of information generated by online users about their habits, preferences and so on that marketers attach such value to.

The ad model is not new: after all, free television programmes and newspapers financed via advertising pre-date the digital revolution. In any case, at least some consumers eventually pay by buying the advertised products, which are not really free at all.

The provision of free services financed via Big Data raises thornier (but again not new) issues for the conceptual accounting framework, particularly with regards to the implications on the measurement of knowledge, and by extension human capital, and whether these should be

included within the GDP production boundary; discussions among national accountants continue.

Consumers as producers The digital revolution has also blurred other traditional borderlines, such as the use of household-based web search engines to book flights, previously the preserve of travel agents. Has this shift to the individual (participative production) meant a corresponding hole in GDP? By convention, the answer is no, and certainly no more than doing your own cooking or shopping, largely reflecting the fact that the inclusion of households’ own production of services for their own consumption would potentially render GDP meaningless for macro-economic policy making, as the size of these nonmarket activities would swamp market based activity. However, that it is not to say that these flows are ignored by statisticians, on the contrary: the OECD, among others, has been estimating the size of these activities to complement GDP measures.

What about web knowledge based assets produced by households such as Wikipedia and Linux? These public goods are financed by voluntary donations (of time and money) from members of the public. Although time spent on these activities, for instance, updating a Wikipedia page, may include an element of production, the services provided in building up these public goods do not by and large show up in GDP; and because production is effectively free, as is the user of the assets, so too is the value of the assets. This partly reflects the fact that ownership of the assets is collective and so cannot be allocated to any particular economy. However, that is not to say that they are worthless, or that they have no value to users or the economy, and work is under way to estimate those economic benefits.

Digitalisation and prices All of the above relates (largely) to the measurement of GDP in current prices, but there is also great interest in understanding the volume of GDP changes over time by adjusting

for inflation. What is clear is that digitalisation affects prices. Airbnb is regarded as competitive, as are car sharing firms such as Blablacar. But is there a quality improvement in the services provided, compared to the conventional services they displace, that is not picked up in measures of inflation and price change? Has participative production in particular led to an increase or a decrease in the quality of the rented apartment or car trip, for example?

The Internet has had a democratising effect that has reduced the space between buyers and producers, in the process piloting consumers towards cheaper suppliers and producers of goods and services, even with the same country.

This reduces, other things being equal, recorded consumption for a given basket of products. But conventional price indices may not be able to capture this substitution effect, similar to the outlet bias problem (assuming of course that quality is unchanged) when people buy normal goods online or directly from wholesalers, and so possibly underestimating the effect on volume output. In short, digitalisation has exacerbated age-old problems in measuring price change and the grey area between price and quality. But progress has been made, for example, with the

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Eurostat-OECD Methodological Guide for Developing Producer Price Indices for Services (SPPI, 2014), which provides detailed guidance on price measurement across a range of services.

Overall, many criticisms of the conceptual accounting framework appear to confuse what GDP is and what it is not. However in many areas, notably prices, practical measurement of digital-related activities remains a challenge. Ironically, the new digital intermediaries may also hold the solution, because they provide potential access to data in what were previously unreported and invisible transactions.

Work is on-going, including under the auspices of the G20 and the OECD Working Parties on National Accounts and Trade in Goods and Services, to address these issues and to assess the size of the potential impact digitalisation may have on metrics of economic growth.

References Ahmad, Nadim and Paul Schreyer (2016), “Measuring GDP in a digitalised economy”, OECD Publishing Lequiller, François (2004-2005), “Is GDP a satisfactory measure of growth?”, OECD Observer No 246-247, December 2004-January 2005 For UK and Ireland examples of tax and letting, see https://www.gov.uk/rent-room-in-your-home/ the-rent-a-room-scheme, and http://www.revenue.ie/en/ tax/it/rental-income.html

Market capitalisation of Airbnb, £ billions 30 25 20 15 10 5 0

Hilton Airbnb Worldwide (2015)

Marriot

Host Hotels

Starwood Accor Hotels

Airbnb Wynham (2014) Hotels

Hyatt

Inter Extended Continental Stay

Source: Davidson L., (2015). ‘Airbnb boss calls the UK the “centre of the sharing economy”,’ The Telegraph.

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Tax challenges, disruption and the digital economy

©Serprix

Pascal Saint-Amans, Director, OECD Centre for Tax Policy and Administration

The digital economy is a transformative process, brought about by advances in information and communications technology (ICT) which has made technology cheaper and more powerful, changing business processes and bolstering innovation across all sectors of the economy, including traditional industries. Today, sectors as diverse as retail, media, manufacturing and agriculture are being impacted in some way by the rapid spread of digitalisation.

In the broadcasting and media industry, for instance, the expanding role of data through user-generated content and social networking have enabled internet advertising to surpass television as the largest advertising medium.

In other words, “digitalisation” is pervasive, making it very difficult, if not impossible, to ring-fence the digital world from the rest of the economy, including for tax purposes. This is the first finding regarding the tax challenges of the digital economy agreed by all G20 and OECD

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countries, under the Base Erosion and Profit Shifting (BEPS) Project. BEPS refers to tax strategies that allow Multinational Enterprises to shift profits away from the locations where the actual economic activity and value creation takes place, into low or no-tax locations.

Action 1 in the 15-point Action Plan to address BEPS, the work on the tax challenges of the digital economy, aimed to consider whether the international tax rules were sufficient to meet the demands arising from new business models and ways of creating value that are emerging with the rise of new technologies.

While finding that the digital economy cannot be separated out from the rest of the economy, it was equally clear that some specific features of the digital economy may exacerbate the risks of base erosion and profit shifting for tax purposes–namely mobility (e.g. intangibles, business functions), reliance on data (and other forms of user input),

network effects, and the spread of multi-sided business models.

Thanks to digitalisation, we now see businesses across all sectors having the capacity to design and build their operating models around technological capabilities, with a view to improve flexibility and efficiency and extend their reach into global markets. These advances, coupled with liberalisation of trade policy and reduction in transportation costs, have significantly expanded the ability of certain business models of the digital economy–e.g. electronic commerce, online advertising and cloud computing–to take advantage of BEPS opportunities. The techniques used to achieve BEPS by these businesses however, are generally not different from the ones used in other parts of the economy, and as such, countries agreed that the digital economy does not generate any unique BEPS issues, and that the solutions designed to tackle BEPS practices in the 14 other points of the

BEPS Action Plan should suffice to address these concerns.

Second, beyond the issue of BEPS and tax avoidance, the key features of the digital economy raise more systemic challenges for tax policy makers that are generally grouped into three categories–the so-called “broader tax challenges”: (i) the difficulty of collecting VAT/GST in the destination country where goods, services and intangibles are acquired by private consumers from suppliers based overseas which may not have any direct or indirect physical presence in the consumer’s jurisdiction. (ii) the ability of some businesses to earn income from sales from a country with a less significant physical presence in the past, thereby calling into question the relevance of existing rules that look at physical presence when determining tax liabilities. (iii) the ability of some businesses to utilise the contribution of users in their value chain for digital products and services, including through collection and monitoring of data, which raises the issue of how to attribute and value that contribution.

On VAT/GST collection, the project resulted in international agreement on recommendations to allocate the collection of VAT on cross-border B2C supplies to the country where the customer is located. For the remaining two broader tax challenges, the continuing technological developments and business models–the Internet of things, robotics and the “sharing economy”, to name a few–may prove influential and disruptive in the near future, and accordingly, raise questions as to whether the existing paradigm used to determine where economic activities are carried out and where value is generated for income tax purposes continues to be appropriate.

It is still too early to determine whether these challenges are sufficiently critical in scale and impact to justify more fundamental changes of the existing international framework, beyond what is proposed in the package of measures to tackle BEPS endorsed by OECD and G20 in October 2015. Some potential options to address these challenges have been analysed, ranging from a withholding tax on digital sales to a new concept of nexus based on having a “significant economic presence”. In the coming years, the Task

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Force on the Digital Economy under the Committee on Fiscal Affairs will continue to monitor new developments– both in terms of technologies as well as new tax policy responses governments develop to address them, with a review of the 2015 report on BEPS Action 1 planned for 2020.

Needless to say, the stakes in this work are high, and so are the objectives: appropriate policy solutions need to be considered that address these challenges, even while the digital world continues to advance at an exponential rate. In a short period of time, it is possible that we may be confronted with a fully-digital world that disrupts some of the fundamental assumptions of the international tax system.

OECD (2015), Addressing the Tax Challenges of the Digital Economy, Action 1 - 2015 Final Report, OECD/G20 Base Erosion and Profit Shifting Project, OECD Publishing, http://dx.doi.org/10.1787/ 9789264241046-en OECD (2013), Action Plan on Base Erosion and Profit Shifting, OECD Publishing, http://dx.doi.org/10.1787/ 9789264202719-en Visit www.oecd.org/tax/beps.htm, www.oecd.org/ctp/ beps-actions.htm and www.oecd.org/ctp/consumption/ international-vat-gst-guidelines.htm

More digital views from www.oecdinsights.org A bright digital future for all: global co-operation to make the best of the digital economy

Maximising the benefits of the internet economy

Andrus Ansip, Vice-President of the European Commission

The open Internet combined with today’s emerging technologies has launched the information revolution and is powering the global digital economy. Everyone has a stake in that development, both as individuals and in the organisations in which we serve and affiliate ourselves.

Slowly but surely, digitisation has transformed the world’s economy and people’s daily lives and our habits as consumers: how we work, travel, shop and are entertained.

Full article http://oe.cd/1Ct

Daniel Sepulveda, Deputy Assistant Secretary, US Department of State

Full article http://oe.cd/1Cv

The sharing economy and new models of service delivery Antonio Maudes, Director, Maria Sobrino, Head of Market Studies Unit, and Pedro Hinojo, Executive Adviser, Advocacy Department, National Authority for Markets and Competition of Spain

What is the “sharing economy”? Finding a precise definition is both challenging and controversial.

Full article http://oe.cd/1Cu

Digital innovation–what does it really mean?

Paul Chaffey, State Secretary, Norwegian Ministry of Local Government and Modernisation

Digital distribution has taken over many value chains in the last ten years. As we know, the marginal cost of such distribution is near zero. Thus, music, films, news stories, maps, encyclopaedias, books, charts, etc. may be made available for millions of people at almost no cost at all.

Full article http://oe.cd/1Cw

OECD Observer No 307 Q3 2016

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How do you measure

a Better Life?

For nearly a decade, the OECD has been working to identify societal progress – ways that move us beyond GDP to examine the issues that impact people’s lives. The OECD’s Better Life Index is an interactive tool that invites the public to share their thoughts on what factors contribute to a better life and to compare well-being across different countries on a range of topics such as clean air, education, income and health.

Over five million visitors from around the world have used the Better Life Index and more than 90 000 people have created and shared their personal Better Life Index with the OECD. This feedback has allowed us to identify life satisfaction, education and health as top well-being priorities. What is most important to you?

Create and share your Better Life Index with us at: www.oecdbetterlifeindex.org

The OECD Better Life Index enables you to rate countries according to the importance you give 11 topics. Each petal of the flower represents one topic and the size of the petal the country’s rating for that topic.

Find out more about how life compares in OECD countries by ordering the book How’s Life? Measuring Well-Being. Available now on the OECD Online Bookshop: http://www.oecd.org/bookshop

We need to address the migration backlash Stefano Scarpetta, Director, OECD Directorate for Employment, Labour and Social Affairs

were born elsewhere and one person out of five is either a migrant or was born to a migrant parent. More than 4 million new permanent migrants settled in OECD countries each year on average over the past decade.

If we want to reap the full benefits of migration and to heal the social schisms that seem to be appearing in too many countries, action is needed from policy-makers on three main fronts.

©Archive/Alamy

Countries must acknowledge and address the fact that the impact of migration is not the same for everyone. Immigrants are nearly always concentrated in specific regions and urban areas–often the most disadvantaged ones. The local impact of large-scale immigration may be far stronger than what is observed at the national level, and may be working in a different direction. In particular, OECD International Migration Outlook shows that large sudden inflows of migrants can aggravate longstanding structural problems and bottlenecks in local infrastructure, such as housing, transportation and education.

Human resources: Just some of the 12 million immigrants that arrived in the US via Ellis Island from 1892 to 1954

The public is losing faith in the capacity of governments to manage migration. Opinion polls in a wide range of countries suggest that the share of the public holding extreme antiimmigration views has grown in recent years and that these extreme views are more frequently heard in public debates. In part, this is due to the perception that no end is in sight for large migration inflows and that countries have lost control over them.

People are concerned about the short-term impact of large inflows of migrants, and refugees in particular, and many feel that migration is threatening their economic, social as well as personal security. Common concerns are that migration is unmanaged and borders are not secured; immigrants stretch local services, such as social housing, health and education, to the detriment of local populations; immigration benefits the rich, with the poor finding themselves competing with immigrants for jobs, and wages for low-skilled work depressed; and many migrants do not want to integrate and may even oppose the values of host societies.

In most countries though, refugee flows are still a relatively small part of overall migration. The OECD has collected a wealth of evidence showing that the medium and longer term effects of migration on public finance, economic growth and the labour market are generally positive. But this message is not getting through. However much the demographic and macro-economic arguments for migration are true, they seem abstract and long-term to many people. As a result, they have only a limited impact on public opinion, and mainly preach to the converted.

Governments need to develop better, more practical arguments if they are to counter anti-immigration voices.

The truth of the matter is that migration is a fact of life and is here to stay. About 120 million people living in OECD countries

50

Similarly, although this is not usually the case, in some circumstances, large numbers of low-skilled migrants arriving in a particular area may have a negative impact on the local labour market prospects of low-skilled residents already present.

Scaling up those local public services stretched by increased numbers of migrants is a necessary part of an effective policy response, as is ensuring that minimum wages and other labour market regulations are applied rigorously.

Global challenges need global solutions. Leaving individual countries to deal with massive inflows, as recently witnessed with the refugee crisis, cannot address the problems adequately.

International co-operation needs to be stepped up, with different countries making different contributions.[…]

We need a new generation of effective migration policies adequate to the challenges of the 21st century. These policies must be global, because no country can deal with large, unexpected migration flows alone and in isolation. And local, because policies must promote quick and effective integration of those who are going to stay in the local community; and address the specific concerns of those who feel they do not experience direct benefits from migration and fear that it will challenge the basic values of the host society.

Unless systematic and co-ordinated action is taken in a timely way to acknowledge and vigorously address these concerns, migration policy will continue to seem abstract and elitist, at best trailing behind the problems it is supposed to be addressing.

And, as is already apparent, the result is likely to be a more strident political populism.

Extract adapted from the editorial entitled “OECD countries need to address the migration backlash”, in International Migration Outlook 2016, OECD Publishing, Paris, available at http://dx.doi.org/10.1787/migr_outlook-2016-en

SOCIETY

Refugees, facts and better policies

©Rights reserved/UNHCR

Interview: Volker Türk, Assistant High Commissioner for Protection, UNHCR

Over 65 million people, or one person in 113, were displaced from their homes by conflict or persecution in 2015. This troubling statistic comes from UNHCR– also known as the UN Refugee Agency– and was a higher number than at any time in the agency’s history. UNHCR signed a memorandum of understanding (MoU) with the OECD in June 2016 to increase collaboration between the two organisations in addressing the problems that arise from such forced displacement, both for the people themselves and the communities that host and shelter them.

We asked Volker Türk, Assistant High Commissioner for Protection at UNHCR, to explain the motives and aims behind this latest MoU. OECD Observer: How significant is this new initiative between UNHCR and the OECD? Our new collaboration holds a great deal of potential for us. We’ve already seen successful co-operation with the OECD in the past, in areas such as pathways to protection and solutions, in engaging businesses in employing refugees, in areas like mixed migration, and in how to approach development assistance in a context of forced displacement, to list just a few. But today there’s a growing call for more evidence demonstrating how the presence of refugees affects host communities, including public services and the local economy. People want to

get beyond heated debates and get to know about the real challenges and opportunities this represents.

The OECD’s analytical capacity and role as a policy advisor to its member countries complements UNHCR’s role on the ground–our protecting and supervising efforts–and it helps us in our accountability to refugees, internally displaced persons, and stateless persons as well. By pooling our expertise, we hope to be able to provide a strong evidence base for decision makers and opinion leaders to go beyond the minimum and to support measures that really help these people and their host communities to realise their potential.

Turning to the refugee crisis itself, what progress do you see and what concerns do you have for the future?

Our greatest challenge at the moment is how to fulfil our mandate in the face of unprecedented numbers of forcibly displaced people, which has been made all the harder by the length of time this is likely to go on taking. Moreover, the weakening commitments to the institution of asylum in some quarters does not help either. Xenophobia and isolationist tendencies appear to be on the rise in several countries, including in some that helped to create the international protection system in the first place.

Another major challenge we face is that many refugees are currently hosted by relatively less well-off countries where their presence risks becoming a burden and where support is urgently needed for both refugees and their host communities.

Of course, providing peace, security and a future for refugees is a massive challenge when faced with such sudden movements and in such large numbers. We recognise this and are working around the clock with the affected countries to develop new ways of providing protection and facilitating admission. Part of our effort involves countries assisting each other in their respective roles, and working with NGOs, employers and workers’ associations, which are now playing a

very substantial and constructive role.

New approaches are being tried out, and together we are exploring how these positive forces of collaboration can be harnessed in welcoming and integrating new-comers. It is particularly pleasing to see how much civil society has actively engaged in this process, and our NGO consultations have produced some really promising initiatives, on how young people can help with integration for instance.

How do you think UNHCR and OECD can work together to address these issues?

As I mentioned earlier, I think the most important area for collaboration will be establishing a strong base of evidence in support of progressive policy development for forcibly displaced persons. Refugee communities have an enormous amount of economic potential, and our organisations will be instrumental in helping its OECD countries harness that potential. We also need to send out a

We need to send out a strong message against xenophobia strong message against xenophobia, to underline that it is ultimately damaging to everyone. We need to develop more tailored guidance for our members on refugee issues, including examples of best practices and new pathways for admission. We can also encourage more policy harmonisation among our countries, particularly with regard to development assistance where it is needed most. Together, we must continue to foster dialogue among all stakeholders so that the guidance we develop can address as wide a range of perspectives as possible.

That way, we can make real progress together on these human issues that are so vital for the future of our world.

UNHCR (2016), “Global forced displacement hits record high”, by Adrian Edwards, June, see www.unhcr.org.

See the UNHCR-OECD MoU here: http://oe.cd/1CC Visit www.oecd.org/migration

OECD Observer No 307 Q3 2016

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OECD.ORG OECD Ministerial Council Meeting 2016

©Julien Daniel / OECD

Enhancing productivity for inclusive growth

President Michelle Bachelet of Chile and OECD Secretary-General Angel Gurría The 2016 OECD Ministerial Council Meeting (MCM) was held at the OECD headquarters in Paris on Wednesday and Thursday 1-2 June 2016, back to back with the OECD Forum, which started on 31 May (www.oecd.org/forum; see next article).

The MCM took place under the chairmanship of Chile, with Finland, Hungary and Japan as vice-chairs. The meeting brought together OECD member and partner countries, to explore policies that respond to productivity growth and inclusion goals in mutually reinforcing ways. In a global economic context of slow growth, weak trade and investment, and persistently high unemployment, the ministers called on the OECD to explore policy solutions for enhancing productivity while fostering inclusive growth.

Special attention was paid to how to achieve higher productivity and enhance inclusiveness, at the individual (or household), firm, regional and country level. Ministers also discussed the economic outlook, the strategic orientations of the OECD Secretary-General, how to help achieve the UN Sustainable Development Goals and how to strengthen the contribution of trade and investment to productivity and inclusive growth, while making further progress on Responsible Business Conduct standards. They also discussed the future of work in response to digitalisation and rapid

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technological change and preparing for the Next Production Revolution.

This year’s MCM marked the accession of Latvia as the organisation’s 35th member country, and the launch of the OECD Latin America and Caribbean Regional Programme (see http://oe.cd/1AV). Ministers commended the progress made

by Colombia, Costa Rica and Lithuania in their ongoing accession processes. They welcomed the OECD’s strong collaboration with the G7, G20, APEC, and the Pacific Alliance, and called on the OECD to advance further its work on the international governance architecture, and its work with emerging and developing countries, to raise the global visibility and impact of the OECD’s work and standards. Ministers agreed on the value of the OECD’s global reach and called for a strategic reflection by the OECD on its future size and membership.

References Chair’s summary http://oe.cd/1wo Ministerial Council Statement http://oe.cd/1wp Strategic Orientations of the Secretary-General http://oe.cd/1wr Declaration on Enhancing Productivity for Inclusive Growth http://oe.cd/1wq The Productivity-Inclusiveness Nexus http://oe.cd/1ws Other reports from the 2016 meeting, and from annual Ministerial Council Meetings held since 2009, are available at www.oecd.org/mcm/documents (scroll to bottom).

Communiqués from 1976 to 2008 are available at www.g8.utoronto.ca/oecd/index.html For all archives, contact Library&Archives@oecd.org

OECD.ORG OECD Forum 2016

Productive economies, inclusive societies Inequalities, productivity and the digital economy are major concerns among citizens and policy makers, and these issues guided the key cross-cutting discussions at the OECD Forum on 31 May-1 June. The OECD Forum is a valuable opportunity for concerned citizens to debate the issues and garner new ideas ahead of the annual OECD Ministerial Council Meeting. Indeed, since its creation in 2000, this relationship with a major ministerial gathering has established the OECD Forum as a “must-go” multi-stakeholder event on the global calendar, and the 17th edition lived up to the billing. Some 2,700 participants from over 60 countries gathered to listen to experts, meet authors and network among idea factories, discovery labs, lunch debates and discussion cafés. People such as Nobel Peace Laureate Kailash Satyarthi, International School of Asia founder Lin Kobayashi, writer and journalist Shiv Malik, and CEO of Save the Children International, Helle Thorning-Schmidt, were among the 275 speakers and panellists from politics, business, labour, civil society, academia and the media to lead this year’s discussions. Many thousands of people followed the debates online and via social media channels, and tried out and shared the latest release of the OECD Better Life Index.

For highlights and a list of main speakers, see www.oecd.org/forum.

For reflections and outcomes of the 2016 OECD Forum, see http://oe.cd/1AS Visit www.oecdbetterlifeindex.org

Extracts from Highlights

OECD Observer No 307 Q3 2016

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OECD.ORG

©Rights reserved

Trento Centre continues forward Since 1982 the OECD Programme on Local Economic and Employment Development (LEED) has advised governments and local authorities on how to respond to economic challenges in a fastchanging world. One key initiative in this regard came in 2003 when it set up the Trento Centre for Ugo Rossi Local Development, with the Italian government and the Autonomous Province of Trento in Italy, with a mission to help build capacity and inform policy actions. So far the Trento Centre has issued more than 127 reviews, studies, guides and manuals; over 21,000 local development policy makers and practitioners have also benefited from Trento Centre capacity development seminars and activities. In May 2016 the mandate OECD LEED Trento Centre for Local Development was renewed until 2020. We asked the president of the Trento region, Ugo Rossi, to explain.

OECD Observer: Why have you decided to continue your support for the OECD Trento Centre?

President Rossi: By tradition, the Trentino has relied on high-level public administration and advanced policies in the areas covered by the OECD LEED Programme. However, we are determined to improve further and adopt innovative models, in order to build an even more cohesive and stronger region. This is only possible through innovation, co-operation and partnerships, and this is exactly what the Trento Centre can help provide. The centre has put down deep roots in our territory, while the partnership has now extended to the whole Triveneto area, spanning Trentino-Alto Adige/Südtirol, Friuli-Venezia Giulia and Veneto. We have also opened a new office in Venice. The dynamic and relatively prosperous Triveneto region is an ideal laboratory for working on issues related to economic and employment development. I am convinced that the enlargement of this partnership, apart from strengthening the Trento Centre in financial and logistical terms, will bring clear benefits for us and the OECD. How important is the Trento Centre to your region?

The Trentino, thanks to its special autonomous status within the national territory, has always been very much focused on creating favourable conditions for the development and openness of the region.

In recent decades, the Autonomous Province of Trento has made significant investments in the creation of a sophisticated network of institutions, research centres and university departments, with the aim of providing appropriate support to the social, cultural and economic development of the region. The OECD Trento Centre is an important cornerstone in this network, and provides an international perspective to the discussions and initiatives in our

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territory. It provides a window onto the wider world, which is strategically important for our small mountainous region.

Indeed, the Trentino participates in several working groups together with other regions and countries. One example is EUSALP, the European Alpine macro-region that includes 48 Alpine regions, whose mission is to address common challenges in a co-ordinated manner. Another is the EGTC “European Region Tyrol-South Tyrol-Trentino”, the European Grouping of Territorial Co-operation (EGTC), which promotes co-operation between the Autonomous Provinces of Trento and Bolzano and the neighbouring territory of Tyrol in Austria, which we share many common characteristics with, including our history.

Could the Centre act as a model for others to emulate?

The OECD Trento Centre for Local Development is a pilot project that could certainly inspire similar initiatives in other countries.

Hosting the Centre allows us to have more access and easier dialogue with the OECD, which is an advantage, not least because of the international perspective this offers. And it is an advantage for the OECD itself to have daily contact with local territories via the centre, so strengthening its own work.

What would you like to see improve in the next mandate?

Social cohesion could be one of the topics deserving more attention during this mandate. I believe that social cohesion policies aimed at not leaving anyone behind–the unemployed, elderly, women, young people and immigrants–should characterise all development policies: general and widespread prosperity is a value we cannot do without, if we want to ensure a future of peace and prosperity for our children and grandchildren. Indeed, immigration deserves particular attention by local authorities. The Trentino is committed to addressing the needs of those people who are forced to flee from wars. This implies closely co-ordinating reception and integration policies, as we must be very careful not to allow the pressures caused by extraordinary migration flows to jeopardise our strong levels of social cohesion.

Twitter @UgoGma For more on the OECD LEED Trento Centre, visit www.oecd.org/cfe/leed/ trentocentre.htm Read the full interview at http://oe.cd/1CD

OECD.ORG

Recent speeches by Angel Gurría For a fairer and more robust international tax system Remarks at the G20 Leaders Hangzhou Summit in Hangzhou, China, 5 September 2016 Remarks on the global economy Speech delivered at the G20 Finance Ministers’ session on the global economy in Hangzhou, China, 4 September 2016

Ambassadors Mr Paul Dühr, Luxembourg Mr Pavel Rozsypal, Czech Republic Mr Paulo Vizeu Pinheiro, Portugal Mr Dionisio Pérez-Jácome Friscione, Mexico Ms Marlies Stubits-Weidinger, Austria Mr Klavs A. Holm, Denmark

©OECD/Julien Daniel

Mr Noé Van Hulst, Netherlands

For a complete list of the speeches and statements, including those in French and other languages, go to: http://www.oecd.org/about/ secretary-general/

Putting water security at the heart of sustainable development

Mr Iztok Jarc, Slovenia

Opening remarks during the World Water Week in Stockholm, Sweden, 29 August 2016

Ms Claudia Serrano, Chile

Remarks on international tax

Ms Elin Østebø Johansen, Norway

Speech at the G20 Finance ministers and Central Bank governors’ meeting in Chengdu, China, 24 July 2016

Mr Ulrich Lehner, Switzerland

Launch of the 2016 Economic Survey of Turkey

Mr Gabriele Checchia, Italy

Presentation in Gaziantep, Turkey, 15 July 2016

Mr Pierre Duquesne, France

Back at work, out of pocket Speech on the occasion of the launch of the OECD 2016’s Employment Outlook in Paris, France, 7 July 2016

Ms Annika Markovic, Sweden

Mr Daniel Yohannes, US

Mr Carmel Shama-Hacohen, Israel Mr Zoltán Cséfalvay, Hungary

Mr James Kember, New Zealand Ms Michelle d’Auray, Canada Mr Brian Pontifex, Australia Mr George Krimpas, Greece Mr Matei Hoffmann, Germany Mr José Ignacio Wert, Spain

Strengthening the positive contribution of migrants and refugees Remarks at the UN Summit for Refugees and Migrants in New York, US, 19 September 2016

Making the Paris Agreement a reality Remarks at the seventh Petersberg Climate Dialogue in Berlin, Germany, 4 July 2016

Mr Jean-Joël Schittecatte, Belgium Mr Jong-Won Yoon, Korea Mr Christopher Sharrock, UK

Launch of the 2016 OECD-FAO Agricultural Outlook

Mr Erdem Bas¸çi, Turkey

The new urban agenda Speech delivered at an OECD-UN Habitat event on Africa in New York, US, 18 September 2016

Presentation at the Food and Agriculture Organisation headquarters in Rome, Italy, 4 July 2016

Mr Aleksander Surdej, Poland

Leveraging the SDGs: Delivering access to justice for all

2016 Skills Summit

Mr Kristjan Andri Stéfansson, Iceland

Welcome and opening remarks in Bergen, Norway, 30 June 2016

——

Keynote remarks at an OECD-Open Society Foundation joint event in New York, US, 18 September 2016 Launch of Education at a Glance 2016

OECD Ministerial Meeting on the Digital Economy: Innovation, Growth and Social Prosperity

Presentation in Brussels, Belgium, 15 September 2016

Opening and closing remarks in Cancun, Mexico, 22-23 June 2016

Remarks on taxation

OECD Open Government Data Review of Mexico

Speech at the September 2016 informal meeting of EU Finance ministers in Bratislava, Slovak Republic, 10 September 2016

Presentation in Cancun, Mexico, 22 June 2016

Ms Ivita Burmistre, Latvia

Mr Pekka Puustinen, Finland Mr Dermot Nolan, Ireland

Mr Juraj Tomáš, Slovak Republic Chargé d’Affaires a.i.

Mr Andrus Säälik, Estonia Chargé d’Affaires a.i.

Mr Osamu Hayakawa, Japan Chargé d’Affaires a.i.

—— European Union Ms Maria Francesca Spatolisano September 2016

OECD Observer No 307 Q3 2016

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OECD.ORG

Calendar highlights Please note that many of the OECD meetings mentioned are not open to the public or the media and are listed as a guide only. All meetings are in Paris unless otherwise stated. For a comprehensive list, see the OECD website at www.oecd.org/newsroom/upcomingevents OCTOBER 3

World Habitat Day

3

Asahi World Forum 2016: The environment and Beyond–Towards a sustainable society, Tokyo, Japan

4

2016 MENA-OECD Ministerial Conference: Better policies for inclusive growth and economic integration in the MENA region, Tunis, Tunisia

5

Launch of OECD Society at a Glance 2016

7

OECD Washington and Georgetown University International Affairs Seminar Series: Tackling the migration backlash in OECD Countries, Washington D.C., US

11

Launch of the OECD Regional Outlook

17-20

National Urban Policies and Habitat III Conference, Quito, Ecuador

24-25

2016 OECD Asian Roundtable on Corporate Governance, Seoul, Korea

24-25

Global Forum on Environment and Economic Growth, Paris, France

28

9-10

2016 Green Growth and Sustainable Development (GGSD) Forum, Paris, France

21-22

Cities for Life World Summit, Paris, France

28

Launch of OECD Economic Outlook, Volume 2016 Issue 2

27 Feb- Mobile World Congress 2017, Barcelona, 2 Mar Spain

MARCH

28 Nov- Global Forum on Competition, Paris, 2 Dec France

8

30 Nov- Women’s Forum Global Meeting, Deauville, 2 Dec France

JUNE

DECEMBER 1

15th OECD Global Forum on Competition, Paris, France

4-17

COP13 Convention on Biological Diversity, Cancun, Mexico

5

Launch of OECD Pensions Outlook 2016

6

Launch of PISA 2015 Results Volume I: Student performance in science, reading and mathematics

8

Launch of the 2016’s OECD Science, Technology and Innovation Outlook

Launch of Latin America Economic Outlook 2017, Cartagena, Colombia

NOVEMBER

JANUARY

7-18

17-20

UN Climate Change Conference (COP22), Marrakech, Morocco

FEBRUARY

International Women’s Day

4-7

World Investment Forum 2017, Newport Coast, US

OECD Week

OECD Forum 6-7 June; OECD Ministerial Council Meeting 7-8 June

12-16

World Summit on the Information Society Forum, Geneva, Switzerland

JULY 7-8

G20 Summit 2017, Hamburg, Germany

20-23

22nd Biennial World Conference: Global Perspectives in Gifted Education, Sydney, Australia

World Economic Forum Annual Meeting, Davos-Klosters, Switzerland

Power of prognosis The OECD Economic Outlook For forward-thinking decision makers www.oecd.org/bookshop

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BOOKS OECD iLibrary

Digital security While the digital world is a driver of innovation and productivity, it raises the issue of digital security, since online vulnerability can lead to financial, privacy and reputational damages.

Examples are not hard to find, whether among firms, government or individuals.

In 2012, it took over two weeks for the oil company Saudi Aramco to recover from the erasure of over 30 thousands hard drives connected to its internal networks by digital intruders. Digital security incidents can have far-reaching consequences for private companies, for instance in terms of loss of competitiveness–in case of theft or

trade secrets–or disruption of operations, through denial of service or sabotage.

In 2007, massive cyberattacks against Estonia affected the parliament and ministries, along with banks, newspapers and broadcasters. People’s personal data is constantly at risk of privacy breaches, from bank account to medical details, with potential material or moral damage.

And people can also be victims of financial fraud.

The growing volume of incidents and their increased sophistication result mainly from the migration of organised transnational criminal groups’ activities online. Other drivers include cyber terrorism, industrial digital espionage and “hacktivism”–the subversive use of computer networks to promote a political cause.

Although rare, digital security incidents could even cause loss of human life,

considering the increasing reliance of transportation systems and hospitals on well-functioning information and communication technologies and infrastructures.

The OECD, whose last Recommendation on digital security was in 2002, offers eight principles to guide digital security risk management, including on the responsibility of different actors, cooperation between stakeholders and the role of innovation. It recommends that countries adopt national plans to identify measures to prevent, detect, respond to and recover from digital security incidents and to treat security as an economic risk.

See www.oecd.org/internet/ieconomy/ OECD (2015), Digital Security Risk Management for Economic and Social Prosperity: OECD Recommendation and Companion Document, OECD Publishing

The ocean’s new frontier Oceans hold the promise of immense resource wealth and great potential for boosting economic growth, employment and innovation. In the same time, they are recognised as indispensable for addressing many of the global challenges facing the planet, from food security and climate change to the provision of energy, natural resources and health care. But they are already over-exploited, polluted and confronted with climate change.

The ocean economy encompasses industries such as shipping, fishing, offshore wind and marine biotechnology.

It is also a natural asset and ecosystem, whether for fish, shipping lanes, or carbon dioxide absorption. Its global economy’s contribution was valued at US$1.5 trillion and 31 million jobs in 2010. Offshore oil

and gas accounted for a third of total value added of the ocean-based industries, followed by maritime and coastal tourism, maritime equipment and ports. The largest employers were industrial capture fisheries with over a third of the total, and maritime and coastal tourism with almost a quarter.

The projections suggest that between 2010 and 2030 on a “business-as-usual” basis, the ocean economy could more than double its contribution to global value added, reaching over US$3 trillion, and employing some 40 million people in 2030.

While this “blue economy” is expanding rapidly, oceans are under stress. As anthropogenic carbon emissions have risen over time, the ocean has absorbed much of the carbon dioxide, leading to acidification.

Also, sea temperatures and sea levels are rising and ocean currents (and atmospheric air flows) shifting, resulting in biodiversity and habitat loss, changes in fish stock composition and migration patterns, and higher frequency of severe weather events.

The prospects for future ocean development are further aggravated by land-based

pollution such as agricultural run-off, as well as by overfishing and depleted fish stocks in many parts of the world.

Realising the full potential of the ocean will therefore demand responsible, sustainable approaches to its development. A new OECD report, The Ocean Economy in 2030, puts forward four main recommendations: fostering greater international co-operation in maritime science and technology; strengthening integrated ocean management; improving the statistical and methodological base at national and international level; and building more capacity for ocean industry foresight.

OECD (2016), The Ocean Economy in 2030, OECD Publishing Crawford Heitzmann, Martha (2006), “Don’t forget the coastal waters!”, OECD Observer No 254, March See OECD video on the blue economy: http://bit.ly/1Nkwkpq

OECD Observer No 307 Q3 2016

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BOOKS OECD iLibrary

Most popular OECD Factbook 2015-2016: Economic, Environmental and Social Statistics OECD Factbook 2015-2016 is a comprehensive and dynamic statistical publication from the OECD. Close to 100 indicators cover a wide range of areas. Data are provided for all OECD countries, the euro area, EU, and where data are available, Brazil, China, India, Indonesia, Russia, and South Africa.

ISBN 978-92-64-23256-3 June 2016, 228 pages €50 $70 £45 ¥6 500

OECD Tourism Trends and Policies 2016 This report analyses tourism performance and major policy trends, initiatives and reforms across 50 OECD and partner countries, providing up-to-date tourism data and analysis.

ISBN 978-92-64-24597-6 March 2016, 388 pages €75 $90 £60 ¥9 700

Low-Performing Students: Why They Fall Behind and How To Help Them Succeed This report both describes the factors that may contribute to students’ disengagement with school and offers suggestions on how education policy can reduce the incidence of low performance.

ISBN 978-92-64-25023-9 March 2016, 212 pages €32 $39 £26 ¥4 100

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All publications are available to read and share at www.oecd-ilibrary.org OECD-FAO Agricultural Outlook 2016-2025 This outlook provides an assessment of prospects for the coming decade of the agricultural commodity markets across 41 countries and 12 regions, including OECD countries and key agricultural producers, such as India, China, Brazil, the Russian Federation and Argentina.

ISBN 978-92-64-25322-3 July 2016, 136 pages €65 $78 £52 ¥8 400

Development Co-operation Report 2016: The Sustainable Development Goals as Business Opportunities The private sector can be a powerful promoter of sustainable development. This report explores the potential and challenges of investing in developing countries, in particular through social impact investment, blended finance and foreign direct investment.

ISBN 978-92-64-22275-5 July 2016, 316 pages €100 $120 £80 ¥13 000

PISA 2015 Assessment and Analytical Framework: Science, Reading, Mathematic and Financial Literacy “What is important for citizens to know and be able to do?”

The OECD Programme for International Student Assessment (PISA) seeks to answer that question through the most comprehensive and rigorous international assessment of student knowledge and skills. The PISA 2015 Assessment and Analytical Framework presents the conceptual foundations of the sixth cycle of the triennial assessment.

ISBN 978-92-64-25541-8 June 2016, 200 pages €40 $48 £32 ¥5 200

Economic Outlook for Southeast Asia, China and India 2016: Enhancing Regional Ties The annual Economic Outlook for Southeast Asia, China and India examines Asia’s regional economic growth, development and regional integration process.

ISBN 978-92-64-24378-1 February 2016, 400 pages €70 $84 £56 ¥9 100

Trends Shaping Education 2016 Trends Shaping Education 2016 provides an overview of key economic, social, demographic and technological trends and raises pertinent questions about their potential impact on education. This compilation makes use of a variety of robust international sources of data, including the OECD, the World Bank and the United Nations.

ISBN 978-92-64-25016-1 February 2016, 116 pages €24 $29 £19 ¥3 100

Taxing Wages 2016 Taxing Wages provides unique information on the taxes paid on wages in OECD countries.

It covers personal income taxes and social security contributions paid by employees, social security contributions and payroll taxes paid by employers and cash benefits paid by in-work families.

ISBN 978-92-64-25187-8 April 2016, 560 pages €110 $132 £88 ¥14 300

BOOKS OECD iLibrary

Special Focus: Digital economy Broadband Policies for Latin America and the Caribbean: A Digital Economy Toolkit This joint initiative by the Inter-American Development Bank (IDB) and the OECD seeks to encourage the expansion of broadband networks and services in the region, supporting a coherent and cross-sectorial approach, to maximise their benefits for economic and social development.

ISBN 978-92-64-25181-6 June 2016, 444 pages €90 $108 £72 ¥11 700

Digital Government in Chile: Strengthening the Institutional and Governance Framework This review analyses the governance and institutional framework of digital government in Chile. It is based on the OECD Recommendation on Digital Government Strategies.

ISBN 978-92-64-25776-4 June 2016, 100 pages €24 $29 £19 ¥3 100

Digital Security Risk Management for Economic and Social Prosperity: OECD Recommendation and Companion Document The report provides guidance for all stakeholders on the economic and social prosperity dimensions of digital security risk.

ISBN 978-92-64-24535-8 November 2015, 72 pages €24 $29 £19 ¥3 100

Data-Driven Innovation: Big Data for Growth and Well-Being This book improves the evidence base on the role of Data-Driven Innovation for promoting growth and well-being, and provide policy guidance on how to maximise the benefits of Data-Driven Innovation and mitigate the associated economic and societal risks.

ISBN 978-92-64-22934-1 November 2015, 456 pages €105 $147 £95 ¥13 600

Students, Computers and Learning: Making the Connection Are there computers in the classroom? Does it matter? Students, Computers and Learning: Making the Connection examines how students’ access to and use of information and communication technology devices has evolved in recent years.

ISBN 978-92-64-23954-8 September 2015, 204 pages €35 $42 £28 ¥4 500

OECD Digital Economy Outlook 2015 The OECD Digital Economy Outlook 2015 assesses how countries can maximise the potential of the digital economy as a driver for innovation and inclusive growth, and discusses the evolutions in the digital economy that policy makers need to consider as well as the emerging challenges they need to address as a part of national digital strategies.

ISBN 978-92-64-23227-3 August 2015, 284 pages €90 $126 £81 ¥11 700

All publications are available to read and share at www.oecd-ilibrary.org Adults, Computers and Problem Solving: What’s the Problem?

The report provides an in-depth analysis of the results from the Survey of Adult Skills related to problem solving in technology-rich environments, along with measures concerning the use of information and communication technologies and problem solving.

ISBN 978-92-64-236837 July 2015, 188 pages €40 $48 £32 ¥5 200

Dementia Research and Care: Can Big Data Help?

This report advances international discussion of the opportunities and challenges, as well as successful strategies, for sharing and linking the massive amounts of populationbased health and healthcare data that are routinely collected.

ISBN 978-92-64-22841-2 February 2015, 112 pages €30 $42 £27 ¥3 900

Addressing the Tax Challenges of the Digital Economy This book presents an analysis of the challenges the spread of the digital economy poses for international taxation.

ISBN 978-92-64-21877-2 October 2014, 200 pages €39 $55 £36 ¥5 000

OECD Observer No 307 Q3 2016

59

BOOKS OECD iLibrary

Greening France France has significantly improved its environmental performance over the past ten years, as evidenced by the signing of the Paris Agreement and the entry into force of the Energy Transition for Green Growth Act, both of which promote the protection of biodiversity, responsible management of resources and the fight against waste, and sketch out a new model of participative governance. But there remain gaps in the country’s environmental policy, according to the latest Environmental Performance Review of France, which advises the French government to waste no time in implementing its energy transition.

The OECD’s Environmental Performance Reviews assess the progress made by the organisation’s member countries and its

partners in terms of environmental governance. The review of France singles out specific fields where significant, concrete progress has been made, including the reduction of greenhouse gas emissions and the main atmospheric pollutants, the inclusion of a carbon factor in the taxation of fossil fuels and the adoption of a plan to fight against air pollution in the city of Paris (see references). This plan advocates the involvement of the public by offering subsidies for the acquisition of electric bikes and vehicles, expanding cycle lanes and incentivising the use of public transport.

The review identifies the challenges facing France: first, restricting land-take, and taking action against the pollution of groundwater with nitrates and pesticides, since France is one of the world’s biggest consumers of plant protection products.

Second, improving air quality, particularly at a time when over two million people living in the greater Paris area are

OECD Observer Crossword

For crossword soloutions do the OECD crossword online.

See www.oecdobserver.org/crossword

60

The multi-layered institutional mosaic of France’s regional administration– known by the French as a millefeuille after a layered pastry–hampers many initiatives, and some of the plans that have been introduced are not restrictive enough or are based on loosely defined forms of governance. The OECD review stresses that the recent reforms to the country’s regional organisation is a step in the right direction.

OECD (2016), OECD Environmental Performance Reviews: France 2016, OECD Publishing See www.oecdobserver.org/books

No 3, 2016 Across 1 Sector that plays a key role in innovation, abbr.

3 ____ security, protection against hacking and viruses 7 Confidence, it’s vital to restore this in consumers in relation to internet privacy 8 It’s often fiber optic, providing very fast internet connections 9 Range of frequencies available for internet and other communications 13 Urge 15 Digitalisation of this device has revolutionised creation and sharing of pictures 17 Wild guess 19 Leonardo’s nobiliary particle 20 Business transactions on the internet or mobile or tablet devices 25 Production output 26 Erased data

© Myles Mellor/OECD Observer

exposed to levels of fine particulates that exceed regulatory limits and have damaging effects on both the environment and human health. The country also needs to increase the protection of land and marine ecosystems, which form part of the country’s extraordinary biodiversity.

Down 1 Acronym for objects that are internet connected, abbr.

2 Peace agreement 3 Reduce 4 Remote storage of data in case of a system crash 5 Red gemstone 6 4G mobile communications standard, abbr.

9 The opposite of openness 10 Signal 11 People stream this 12 African nation 14 Short for a road in a city, abbr.

16 Epoch 18 Knowledge-_____ economy 21 Its square root is itself 22 Central prefix 23 Unprocessed, as data 24 Process to integrate and manage different parts of a business, abbr.

DATABANK

Cloud computing

Cloud computing brings many benefits:

% 60

50

40

30

20

10

Not that the trend is all bleak. The number of road fatalities in 32 IRTAD (International Traffic Safety Data and Analysis Group) countries decreased by 42% between 2000 and 2014, an impressive achievement for a relatively short period. Many countries saw reductions of over 50%, and some achieved reductions of up to 70%. However, in 2015 the number of road deaths increased in at least 19 countries.

Data for some countrie point to high rates, up to 26 deaths per 100,000 inhabitants in South Africa. The IRTAD countries with the lowest road fatality rates are all located in Europe. In 2014, five countries–Iceland, Sweden, the UK, Norway and Switzerland– recorded less than three fatalities per 100,000 inhabitants.

Reasons for this overall good performance include the implementation of systematic road safety strategies, addressing speeding and drink driving, better road infrastructure

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and enables teleworking. Yet, questions remain over potential environmental downside impact–cloud computing uses energy to remain “always on”–and digital security breaches.

quick and easy access and deployment, higher flexibility and potential savings in information and communication technology costs. The cloud also fosters increased collaboration between teams when working on shared documents

Road death challenge Every year about 1.2 million people die in crashes on the world’s roads and many millions are seriously injured. This heavy toll comes despite decades of efforts to improve traffic safety.

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Businesses more frequently invest in cloud computing services with a high level of sophistication, such as finance and accounting software, customer relationship management software and computing power, than less sophisticated services such as emails, office software or file storage.

Cloud computing Use of cloud computing by enterprises, %, 2014

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The diffusion of internet-based cloud computing among private companies has picked up over recent years, with higher uptake within large firms compared to small businesses. In 2014 22% of companies in OECD European countries relied on cloud computing services, with shares ranging from 50% in Finland down to 6% in Poland. In most countries, uptake is higher among large businesses–close to 40%–compared to small or mediumsized enterprises–around 21% and 27%, respectively. Only in Switzerland and the Slovak Republic are adoption rates higher for smaller companies than large ones.

Visit www.oecd.org/internet/ieconomy/

Road death challenge Road fatalities per 100,000 inhabitants, 2014 14 12 10 8 6 4 2 0 Ice

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and safer vehicles, and better road trauma management. Moreover, the economic downturn, which hit many countries over the past decade, may have contributed thanks to fewer trips.

But while car crash fatalities have fallen, fatalities among pedestrians, cyclists and people over 65 years old have not fallen

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and have even risen in some cases. In France, moped riders and motorcyclists account for almost a quarter of total fatalities, for instance. Drink driving, speeding and not wearing seat belts or helmets remain leading causes of serious and fatal injuries.

Visit www.itf-oecd.org/IRTAD

OECD Observer No 307 Q3 2016

61

DATABANK % change from:

62

previous period

previous year

level: current period

same period last year

Australia

Gross domestic product Industrial production Consumer price index

Q1-2016 Q2-2014 Q2-2014 Q1-2016 Q2-2014 Q2-2016

0.5 1.1 -0.4 3.2 0.4 0.5

3.1 4.8 4.7 3.0 1.0

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

-15.0 -12.8 5.7 5.9 2.1 2.7

-11.0 -12.9 6.1 5.6 2.2 2.9

Austria

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.2 0.1 -0.9 -0.7 0.8 1.0

0.9 1.4 0.2 1.6 0.6 1.8

Current balance Unemployment rate Interest rate

Q1-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

3.8 1.5 6.0 5.0 -0.3 0.3

2.6 3.1 5.8 4.7 0.0 0.2

Belgium

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.5 0.1 -0.7 0.6 -0.3 1.0

1.0 1.4 3.4 0.4 2.1

Current balance Unemployment rate Interest rate

Q1-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

3.4 -0.2 8.4 8.5 -0.3 0.3

-3.5 -5.0 8.7 8.4 0.0 0.2

Canada

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

-0.4 0.8 -2.4 0.8 1.3 1.2

0.9 2.5 -0.5 4.5 2.2 1.6

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

-12.2 -10.9 6.9 7.0 0.8 1.2

-13.7 -15.0 6.8 7.1 0.9 1.2

Chile

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

-0.4 0.2 -3.3 0.1 1.0 1.6

1.3 2.1 -0.6 -1.5 4.2 5.1

Current balance Unemployment rate Interest rate

Q2-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

-1.4 -2.0 6.6 6.2 3.5 3.9

-1.0 -3.1 6.3 5.9 2.9 5.0

Czech Republic

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.9 0.3 0.2 0.1 0.5 0.1

2.6 2.5 5.8 2.1 0.2

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

1.8 -1.9 4.0 6.2 0.3 0.4

0.6 -1.0 5.1 6.9 0.3 0.5

Denmark

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.2 0.5 0.6 0.4 0.6 0.4

0.4 1.1 0.8 0.9 0.6 0.1

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

3.7 5.3 6.1 6.4 -0.1 0.3

6.0 5.8 6.2 6.9 -0.2 0.3

Estonia

Gross domestic product Industrial production Consumer price index

Q1-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.0 1.1 0.0 3.3 0.8 0.3

2.9 1.8 -1.7 2.5 -0.7 0.0

Current balance Unemployment rate Interest rate

Q1-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

0.1 -0.1 6.6 7.5 -0.3 0.3

0.2 0.0 6.5 8.3 0.0 0.2

Finland

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.0 0.2 2.0 0.5 0.6 0.2

-0.1 0.4 -1.9 2.4 0.9 0.3

Current balance Unemployment rate Interest rate

Q1-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

0.0 -0.4 9.1 8.6 -0.3 0.3

0.1 -0.5 9.3 8.1 0.0 0.2

France

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.0 -0.5 -0.1 0.9 0.4

0.1 1.4 -2.1 0.4 0.0 0.6

Current balance Unemployment rate Interest rate

Q1-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

-9.1 -6.7 10.0 10.2 -0.3 0.3

2.8 -13.2 10.5 10.3 0.0 0.2

Germany

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

-0.2 0.4 -0.9 -0.7 0.2 0.5

1.3 1.7 0.8 1.5 0.1 1.1

Current balance Unemployment rate Interest rate

Q1-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

68.3 68.6 4.3 5.0 -0.3 0.3

67.2 65.0 4.7 5.3 0.0 0.2

Greece

Gross domestic product Industrial production Consumer price index

Q2-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016

0.2..

2.4 1.0 1.2 1.5

-0.9..

4.6 0.5 -0.9 -1.5

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2014 Q1-2016 Q2-2014 Q2-2016 Q2-2014

-0.6 0.4 24.1 27.1 -0.3 0.3

-0.8 0.2 26.0 27.6 0.0 0.2

Hungary

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.8 1.0 3.5 3.1 0.2 1.1

3.7 1.8 10.3 2.8 -0.2 0.0

Current balance Unemployment rate Interest rate

Q1-2016 Q4-2013 Q2-2016 Q2-2014 Q2-2016 Q2-2014

1.8 1.4 5.2 8.0 1.0 2.8

1.5 0.3 7.0 10.4 1.5 4.6

Iceland

Gross domestic product Industrial production Consumer price index

Q1-2016 Q2-2014 Q2-2014 Q1-2016 Q2-2014 Q2-2016

-0.5 -1.2 -6.0 -5.0 0.9 1.0

3.9 2.2 -10.2 -1.7 2.3 1.6

Current balance Unemployment rate Interest rate

Q1-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

0.1 0.0 2.9 5.1 6.6 6.1

0.2 0.1 4.0 6.1 5.5 6.2

Ireland

Gross domestic product Industrial production Consumer price index

Q1-2016 Q2-2014 Q1-2014 Q2-2016 Q2-2014 Q2-2016

-2.1 1.5 -4.7 3.8 0.8 1.2

2.8 6.5 -0.1 2.8 0.4 0.1

Current balance Unemployment rate Interest rate

Q1-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

9.4 3.0 8.4 11.7 -0.3 0.3

3.9 3.2 9.6 13.7 0.0 0.2

Israel

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.9 0.4 -3.9 1.4 0.4 0.5

2.9 2.2 -0.6 1.8 -0.8 0.8

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

3.3 2.2 4.8 6.1 0.1 0.7

3.0 1.7 5.2 6.7 0.1 1.5

Italy

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

-0.2 0.0 -0.5 0.2

-0.2 0.8 -0.1 0.2 -0.4 0.4

Current balance Unemployment rate Interest rate

Q1-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

11.6 7.9 11.5 12.5 -0.3 0.3

8.4 -0.1 12.2 12.2 0.0 0.2

Japan

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

-1.8 0.0 -3.6 0.1 0.3 2.5

0.0 0.6 -1.9 2.4 -0.3 3.6

Current balance Unemployment rate Interest rate

Q2-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

43.4 6.3 3.2 3.6 0.1 0.2

32.9 18.7 3.4 4.0 0.2 0.2

Korea

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.8 0.5 -0.9 1.0 0.3 0.1

3.2 3.5 1.2 0.9 1.6

Current balance Unemployment rate Interest rate

Q2-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

24.7 23.6 3.7 3.7 1.5 2.7

25.4 19.4 3.8 3.1 1.8 2.7

Luxembourg Latvia

Gross domestic product Industrial production Consumer price index

Q2-2016 Q1-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.8 0.6 -0.1 2.9 0.5 1.3

0.8 3.8 8.8 3.8 -0.7 0.9

Current balance Unemployment rate Interest rate

Q1-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

0.0 0.6 9.5 6.1 -0.3 0.3

-0.1 0.6 9.8 5.8 0.0 0.2

Luxembourg Mexico

Gross domestic product Industrial production Consumer price index

Q1-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.7 1.0 -0.5 0.9 -0.1 0.8

4.4 2.7 0.6..

0.0 3.6

Current balance Unemployment rate Interest rate

Q2-2014 Q1-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016

-7.1 0.3 5.0 6.2 3.7 -0.3

-5.7 0.8 5.1 6.5 4.3 0.0

Mexico

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2016 Q2-2016

-0.2 -0.5 -0.3

1.5 ..

2.6

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2016 Q2-2016

0.0 4.0 4.2

0.0 4.4 3.3

DATABANK level:

% change from: previous period

previous year

current period

same period last year

Netherlands

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.6 0.7 3.7 -1.1 0.8 1.0

1.7 1.1 -2.0 1.7 0.0 1.0

Current balance Unemployment rate Interest rate

Q4-2013 Q1-2016 Q2-2016 Q2-2014 Q2-2016 Q2-2014

24.7 17.3 7.0 6.3 -0.3 0.3

25.6 19.4 6.6 6.9 0.2 0.0

New Zealand

Gross domestic product Industrial production Consumer price index

Q1-2016 Q2-2014 Q2-2014 Q1-2016 Q2-2014 Q2-2016

0.5 -0.7 -1.1 0.3 0.4

3.3 3.1 2.7 1.1 0.4 1.6

Current balance Unemployment rate Interest rate

Q1-2016 Q4-2013 Q2-2016 Q2-2014 Q2-2016 Q2-2014

-0.7 -1.0 5.6 5.1 2.4 3.4

-1.8 -1.3 6.4 5.5 2.6 3.5

Norway

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.0 0.9 -0.8 -1.1 0.7 1.2

1.8 1.3 0.2 3.4 1.8

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

12.4 5.0 3.3 4.7 1.0 1.8

14.3 9.1 3.5 4.3 1.8 1.4

Poland

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.6 0.9 -0.2 1.2 0.0 0.5

3.3 3.1 4.2 3.4 -1.0 0.3

Current balance Unemployment rate Interest rate

Q1-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

-0.8 -0.5 9.2 6.3 2.7 1.7

-3.0 0.1 10.5 7.5 2.9 1.7

Portugal

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.3 3.4 1.6 1.0 1.7

0.9 0.9 1.5 -0.3 0.5

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

-0.1 0.3 14.4 11.3 -0.3 0.3

1.0 0.6 16.9 12.5 0.2 0.0

Slovak Republic

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q1-2016 Q2-2014 Q2-2016

0.6 0.9 -0.8 0.3 0.2

2.4 3.7 4.9 1.8 -0.7 -0.1

Current balance Unemployment rate Interest rate

Q1-2016 Q1-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

-0.8 0.5 13.4 9.9 -0.3 0.3

0.5 0.0 14.3 11.5 0.2 0.0

Slovenia

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.5 1.0 0.9 1.8 1.5 1.7

2.8 1.9 3.8 5.5 -0.2 0.6

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

0.7 0.9 9.5 8.1 -0.3 0.3

0.7 0.7 10.5 9.5 0.2 0.0

Spain

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.8 0.6 0.6 0.3 1.0 1.5

3.2 1.2 2.3 1.4 -0.9 0.2

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

-5.6 5.6 24.7 20.1 -0.3 0.3

1.3 5.3 26.2 22.5 0.2 0.0

Sweden

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.3 0.7 -2.0 -1.4 0.6

2.6 3.1 -0.6 -0.7 0.0 0.8

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016 Q2-2014

6.9 7.5 8.0 6.8 -0.6 0.6

9.27.1 8.0 7.6 0.9 -0.3

Switzerland

Gross domestic product Industrial production Consumer price index

Q1-2016 Q2-2014 Q4-2013 Q2-2016 Q2-2014 Q2-2016

0.0 0.1 -3.0 -1.0 0.5 0.7

0.7 1.1 -1.2 -0.4 0.1

Current balance Unemployment rate Interest rate

Q1-2016 Q4-2013 Q2-2016 Q2-2014 ..Q2-2014

14.3 9.8 4.4 4.3 0.0..

15.1 15.9 4.2 4.2 0.0 ..

Turkey

Gross domestic product Industrial production Consumer price index

Q1-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

-0.5 0.8 -0.9 0.3 2.6 1.3

4.4 2.5 2.9 2.6 6.9 9.4

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2014 Q1-2016 Q1-2014 Q1-2016

-9.3 -7.2 10.0 9.1 0.0..

-17.5 -9.4 8.5 10.5 0.0 ..

United Kingdom

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.6 0.9 0.3 2.1 0.6 0.7

3.2 2.2 1.6 2.1 0.4 1.7

Current balance Unemployment rate Interest rate

Q1-2016 Q1-2014 Q1-2016 Q2-2014 Q2-2016 Q2-2014

-30.6 -45.9 6.3 5.0 0.6 0.5

-27.3 -38.0 7.7 5.7 0.5 0.5

United States

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

0.3 1.1 -0.2 1.3 1.2

2.6 1.2 4.2 -1.1 2.1 1.1

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2014 Q2-2016 Q2-2014 Q2-2016 Q4-2013

-124.7 -98.5 6.2 4.9 0.0 0.6

-106.1 -114.5 7.5 5.4 0.2 0.2

European Union

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q1-2016

0.4 0.2 0.0 ..

1.8 1.2 1.3 1.2 -0.1 0.7

Current balance Unemployment rate Interest rate

Q1-2016 Q2-2016 Q2-2014 ..

0.0..

10.3 8.6 ..

0.0 ..

10.9 9.6 .. ..

Euro area

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q1-2016

0.0 0.3 -0.4 -0.1 ..

0.7 1.6 0.8 0.9 -0.1 0.6

Current balance Unemployment rate Interest rate

Q4-2015 Q4-2012 Q2-2016 Q2-2014 Q2-2016 Q2-2014

87.6 51.7 10.1 11.6 -0.3 0.3

87.3 17.2 11.0 12.0 0.0 0.2

1

Brazil

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

-0.6 -1.9 1.2 2.0 1.8

-0.8 -3.8 -4.2 -7.6 6.4 9.1

Current balance Unemployment rate Interest rate

Q2-2014 Q3-2015 .. ..

-19.6 -11.4 .... ....

-19.9 -47.0 .. .. .. ..

1

China

Gross domestic product Industrial production Consumer price index

.. ..

Q2-2014 Q2-2016

.. ..

-0.3 -0.4

.. ..

2.2 2.1

Current balance Unemployment rate Interest rate

Q4-2015 Q2-2013 ..

Q1-2016 Q2-2014

54.2 76.1 ....

4.6..

58.1 73.1 .. ..

4.7 4.6

1

India

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

1.4 1.2 2.0 1.6 2.4 2.5

5.9 7.1 0.5 4.3 6.9 6.2

Current balance Unemployment rate Interest rate

Q4-2015 .. ..

-6.4.. .. ..

-6.3.. .. ..

1

Indonesia

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 ..

Q2-2014 Q2-2016

1.3 1.2 ..

0.0 0.4

5.1 ..

3.5 7.1

Current balance Unemployment rate Interest rate

Q3-2015 Q4-2013 ..

Q2-2016 Q2-2014

-3.5 -3.9 ....

8.5 7.2

-7.3 -6.2 .. ..

5.7 8.5

Russian Federation

Gross domestic product Industrial production Consumer price index

..

Q1-2014 Q2-2014 Q2-2016 Q2-2014 Q2-2016

-0.3..

-0.2 0.9 2.6 1.3

0.7..

0.9 1.6 7.6 7.3

Current balance Unemployment rate Interest rate

..Q2-2012 ..

Q2-2014 Q2-2016

22.7.. ....

8.8 12.2

Gross domestic product Industrial production Consumer price index

Q2-2016 Q2-2014 ..

Q2-2014 Q2-2016

0.8 0.2 ..

2.0 2.2

0.7 1.1 ..

6.6 6.5

Current balance Unemployment rate Interest rate

Q1-2016 ..

Q2-2014 Q2-2016

0.0.. ....

5.8 7.2

23.4 .. .. ..

7.4 14.1 ..

0.0 .. ..

5.1 5.8

Non-members

1

South Africa

Gross domestic product: Volume series; seasonally adjusted. Leading indicators: A composite indicator based on other indicators of economic activity, which signals cyclical movements in industrial production from six to nine months in advance. Consumer price index: Measures changes in average retail prices of a fixed basket of goods and services. Current balance: Billion US$; seasonally adjusted. Unemployment rate: % of civilian labour force, standardised unemployment rate; national definitions for Iceland, Mexico and Turkey; seasonally adjusted apart from Turkey. Interest rate: Three months.

Current balance data are reported according to the BPM6 classification except Mexico and non-members.

..=not available, 1 Key Partners.

Source: Main Economic Indicators, September 2016.

OECD Observer No 307 Q3 2016

63

DATABANK

China’s urban-rural divide

The hukou system is one explanation for the large urban-rural income gaps in China because it restricts the ability of workers to move from poor rural areas to more productive urban regions. Moreover, easy access to the already densely populated coastal areas for trade and jobs,

30 000 Urban

Rural

25 000 20 000 15 000 10 000 5 000

as well as the country’s industrial policy, favoured faster urbanisation in eastern China, while boosting living standards in that region.

Caution is needed in assessing the full extent of these trends, not least owing to the difficulty of capturing migrants’ earnings, and because of the unclear

boundaries between urban and rural areas, with some densely built up places around cities still classed as rural.

Moreover, the available data do not take into account the cost of living or income subsidies, both of which are higher in urban areas.

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Note: Per capita disposable income for urban households as defined by NBS; per capita net income for rural households as defined by NBS.

Source: OECD Urban Policy Reviews: China

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This widening inequality has taken place against a backdrop of rapid growth in both urban and rural incomes, as well as in a sharp increase of the share of the urban population. The income gap fell sharply in the early years of reform, when the rural sector was then the primary focus of policy. But as the economy opened up and expanded, the urban-rural income gap began to rise again, though it fell back again in 2009-12.

1978-2012 nominal income, CNY

19

Income inequality between China’s rural and urban areas has surged in recent years.

The per capita income of urban households in 2012 was about three times that of the rural households, whereas in 1978 it was about two and half times higher.

Urban and rural income per capita

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