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No 313 Q1 2018

Women at work

Closing the gender gap From p11

SMEs: What policies for inclusive growth? p17 The fine art of financial balance sheets p7 Inequality: How taxes can help the bottom 40% p9 Why pricing disasters is good protection p24 Green budgeting p25


Liz Azoulay, a stevedore at Israel’s largest port p12

CONTENTS No 313 Q1 2018


Is AI too human–;–and leaving workers behind?; Risk of conflicts in Africa; Twitterings


SMEs are key for more inclusive growth Angel Gurría, Secretary-General of the OECD


Global economy is strengthening; Step up the fight against illicit trade; Making taxes greener; Soundbites; Economy; Country roundup; Other stories; Plus ça change

BLOGS 6 BlogServer

ECONOMY 7 The fine art of reading financial accounts and balance sheets Peter van de Ven 9 Income redistribution through taxes and transfers in OECD countries: A focus on the bottom 40% Orsetta Causa

GENDER 11 Closing the gender gap: Have we reached the tipping point? Gabriela Ramos 13 No longer a mancession: Getting Italian women out to work Alessia Forti 14 Can women win on the obstacle course of business finance? Clara Young

BUSINESS 17 Better policies for SMEs to scale up and go global Lamia Kamal-Chaoui ©OECD April 2018 ISSN 0029-7054 Tel.: +33 (0) 1 45 24 9112 Fax: +33 (0) 1 45 24 82 10 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

18 Roundtable: Small and medium-sized enterprises Elżbieta Bieńkowska, European Commission; Faruk Özlü, Ministry of Science, Industry and Technology of Turkey; Cathy Feingold, AFL-CIO; Jackie King, Canadian Chamber of Commerce; Elisa Giuliani, University of Pisa

GOVERNANCE 22 Flood watch on the River Seine: A return to 1910? Charles Baubion and Clara Young 23 Social trust: The invisible glue of urban planning Tamara Krawchenko 24 Cost of catastrophe: Why putting a price tag on disaster is our best protection Catherine Gamper 25 Green budgeting can spur governments to improve our planet’s bottom line Ronnie Downes

BOOKS 37 Reviews: Giving smaller businesses a leg-up; Better security, better jobs 38 New publications 39 Focus on SMEs and Gender 40 Review: Like adult, like child

DATABANK 41 Tourism trends: Where to next?; Corruption on show 42 Main economic indicators 44 The funding crowd; Crossword

DEVELOPMENT & INTERNATIONAL CO-OPERATION 27 Geography matters: A territorial approach to food and nutrition security Jennifer Sheahan 28 Sharing and caring for French Anne-Lise Prigent

The fine art of reading financial accounts and balance sheets, page 7

OECD.ORG 31 Creative multilateralism: Stronger collaboration for all 32 OECD, champion of knowledge access Toby Green 34 The power of 4 billion; A nudge in the right direction; The ongoing March on Gender; World Water Day; Strength in diversity 35 Recent speeches by Angel Gurría; List of OECD Ambassadors 36 Calendar; Frankie

Published in English and French by the OECD EDITOR-IN-CHIEF: Rory J. Clarke EDITORS: Kate Lancaster, Janine Treves EDITOR, WRITER: Clara Young EDITORIAL ASSISTANT: Cara Yakush EDITORIAL ASSISTANT, WRITER: Balázs Gyimesi WRITERS: Robin Allison Davis, Tomer Michelzon, Anne-Lise Prigent EDITORIAL INTERNS: Gabriella Elanbeck, Lena Hu, Sarah Polverelli, Murillo Salvador LAYOUT: Design Factory, Ireland ILLUSTRATIONS: David Rooney ADVERTISING MANAGER: Aleksandra Sawicka 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.

Can women win on the obstacle course of business finance? page 14

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. This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

Readers’ views Twitterings

We welcome your feedback. Send your letters to or post your comments at or

Philip Pierros @PhilipPierros EU champions effective integration of refugees and migrants within European Union Military Staff economies. Effective integration can prove mutually beneficial and maximise growth gains. Paul Mitchell @PaulMitchellLib Very generous unemployment benefits within both Switzerland and Luxembourg it seems! Kemal @bjkvictim Accumulating wealth is very difficult in the Netherlands. For example, 40% of houses in Amsterdam are given as social housing to the “poor” and the rest is taken by the rich for renting to the middle class of whom half of their salary is already taken by the state but whose rent income is tax-free! Kenneth Castillo @kcastilloh If GDP weren’t overestimated by extractive industries (such as mining in Chile) without the right adjustment for natural capital depletion, this could be a really good guide for health investment. For now, it indicates that our country just spends much less than that in health.

Is AI too human– The impact of AI seems to be that the humans who create them seem to not wish to face the “dark side” of being human. Our capacity to hate and destroy, if not acknowledged, will manifest in surprising ways. If the role of quantum entanglements is to be believed, simply the idea of a thing creates the thing. We need to support those developing AI and codes in order to work on their psyche so that it is not projected onto the technology they develop. As Einstein once said, “An idea never leaves its source.”

Leslie Brissett, commenting on “The cyberspace arms race: Artificial intelligence and cybersecurity” on the OECD Forum Network at

–and leaving workers behind? I’m one of those “technology” lovers but it’s a process that is causing, day by day, a higher unemployment rate (with higher cost for governments). Maybe you’ll say that it’s creating new jobs. But sadly the truth is


that this process is moving too fast, that it’s impossible for the workers to “upgrade” their capabilities in so short time. Be realistic and think about the consequences we are already living everywhere. Walk down the street, talk with the people, breathe the fear of losing everything. And this is only the beginning of the future we are going towards.

Irene Falkn, commenting on “The Brave New World of Artificial Intelligence” on the OECD Facebook page at 460/10155211487112461/?type=2&theater

Risk of conflicts in Africa This is a very practical article that speaks to the situation in most African countries. If not critically resolved with consideration for all the factors mentioned, the crisis could increase putting challenges on the already fragile nature of our nations. It could also increase migration, raising conflict over land rights and ownership, natural resources as well as ethnic division.

Emmanuel Munyeneh, commenting on “Herders vs Farmers: Resolving deadly conflict in the Sahel and West Africa” in

Blackcatprowliii @Blackcatprowl3 Or, you know, people could just double-check and research. Use common sense. What is with the obsession with computers and control? Prof. Paul Welfens @ProfPaulWelfens There’s a need for global #MinimumTaxation of #emissions from #ships. Diesel fuel emissions from most big ships are equivalent to about 100,000 diesel cars. #EmissionTaxes should be shared for emissions outside of the 12-mile zone collected by #UN and earmarked for promoting global #GreenInnovation Josephine Patterson @JPCambridgeMa Make gender equity in all elections everywhere a legal requirement.

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


SMEs are key for more inclusive growth At a time when the global economy is still underperforming, enabling SMEs to innovate and scale up is essential Angel Gurría Secretary-General of the OECD

The role played by small and medium-sized enterprises (SMEs) in our economies and societies is very significant. In most cases crucial. In OECD countries, SMEs represent approximately 99% of all firms. They provide the main source of employment, accounting for about 60% of jobs in the manufacturing sector and 75% in services, and generating between 50% and 60% of value added on average. In emerging economies, SMEs contribute up to 45% of total employment and 33% of GDP. New and small firms are often dynamic and innovative. In Europe, SMEs account for about 20% of patents in biotechnology-related fields. More than two-thirds of the national productivity champions in Europe– the most productive firms in their country and industry–are SMEs. This share exceeds 80% in knowledge-intensive services. A healthy SME sector is a vital ingredient for inclusive growth, creating jobs across regions and sectors, including for the lowskilled. SMEs provide opportunities for skills development and help support their employees’ access to healthcare and social services. SME’s are also a powerful tool against the curse of informality. However, the SME picture is mixed and challenging. Across the OECD, the level of productivity in micro enterprises is about half that of larger SMEs, which is lower than that of larger companies. The productivity gap has also widened since the global crisis, particularly in the manufacturing sector, exacerbating income and social inequalities. SMEs are also disproportionately affected by regulatory uncertainty, complexity and inconsistency. Regulatory and tax compliance generate costs, sometimes excessive costs, which leads to informality. Thus, small businesses looking to expand or move into higher value added activities may feel that it’s not worth their while. This then generates a “low productivity/ high-informality trap”. Many SMEs also struggle to access finance. Our 2018 OECD Scoreboard on Financing SMEs and Entrepreneurs reports that in the UK in 2016 new lending to SMEs fell by -4.1% year-on-year. In the Netherlands, the drop was -17.1%. Latin America is facing

similar challenges. According to last year’s OECD Latin American Economic Outlook, SMEs in the region receive only 12% of total credit, while SMEs in OECD countries receive 25% of total credit. In fact, one-third of small businesses in Latin America identify access to finance as a serious restriction. At a time when the global economy is still underperforming, enabling SMEs to innovate and scale up is essential to boost aggregate productivity and foster more inclusive and sustainable growth. However, this will depend to a large extent on the ability of SMEs to ride the wave of digitalisation. Too many SMEs are missing the opportunities of digitalisation and globalisation. If you are not riding the digital wave, sooner or later you are going to get stranded, probably without a paddle. Digitalisation is “globalisation on steroids”. It’s driving rapid change on an unprecedented global scale. This revolution brings great opportunities for SMEs. Digital technologies facilitate the emergence of “born global” small firms and offer new opportunities for established SMEs to scale up, enhance productivity and become global players. However, digitalisation also brings great challenges. Many SMEs are struggling to convert the potential of digital into better access to markets and stronger productivity. In OECD countries, only 20% of SMEs are engaged in e commerce sales, compared to 40% of larger enterprises. To enable SMEs to catch up, investments in skills, organisational change, process innovation, new systems and business models are needed to spur the adoption and effective use of digital technologies. Global value chains are also bringing new opportunities for SMEs to participate in the global economy. However, participation remains uneven across the SME population. Across OECD countries, on average 15% of micro-enterprises engage in international trade, compared to 60% of small enterprises and 80% of medium-sized enterprises. SMEs are also more affected by trade restrictions than large firms. For instance, for the cross-border export of services, an average level of trade restrictiveness means an additional 12% tariff for SMEs, relative to large firms. The OECD is working to help governments support SMEs to overcome these challenges, harness the digital revolution and make small businesses become big players in the global economy. The idea of producing an OECD Strategy for SMEs is under discussion. We should have one. In fact, we should have developed one a long time ago. So, let’s catch up and become the cathedral of SMEs, the “go to” place for SME policies. This editorial is adapted from remarks by OECD Secretary-General Angel Gurría on opening the 2018 OECD SME Ministerial Conference in Mexico City, Mexico, 22 February 2018. Read the full 1,300 word version here:; see also @A_Gurria

OECD Observer No 313 Q1 2018


News brief Global economy is strengthening The global economy is expanding rapidly as investment growth, a trade rebound and higher employment drive a broadbased recovery, according to the OECD’s Interim Economic Outlook in March. The global economy will grow by 3.9% in 2018 and 2019, with private investment and trade picking up on the back of strong business and household confidence. New

tax reductions and expected spending increases in the US and expected fiscal stimulus in Germany will boost shortterm growth. The report also highlights financial sector risks and vulnerabilities, particularly those posed by rising protectionism. See

Step up the fight against illicit trade Inconsistent penalties, insufficient checks on small parcels, and a lack of information on shipments in free trade zones allow criminal networks to traffick billions of dollars in fake and prohibited goods each year. In March 2018, the OECD launched Governance Frameworks to Counter Illicit Trade to help

governments close enforcement gaps and better protect consumers and businesses. On average, 2.5% of internationally traded goods are counterfeit, rising to 6.5% for information and communication technology products. See

Soundbites At the end of the day, women’s economic participation improves societies and drives growth. Levelling the legal playing field is not just a matter of fairness; it is an economic imperative that countries around the world ignore at their own peril. Rachel Vogelstein, Douglas Dillon Senior Fellow and Director of the Women and Foreign Policy Program, quoted in Foreign Affairs, Jan / Feb 2018 issue

We’re committed to ensuring all women have equal opportunity to realise their strengths; we’re committed to equal pay; and we’re committed to standing up for every woman’s right to participate fully in our society and economy. Jacinda Ardern, Prime Minister of New Zealand, quoted in OECD Forum Network, 7 March 2018

We need every girl and woman out there to help build a better society: the reality is that gender equality is not about individual achievement but the survival of society. Celia de Anca, Director of Diversity at IE Business School, quoted in OECD Forum Network, 16 March 2018

Making taxes greener


Greater reliance on energy taxation would hit at the principal source of both greenhouse gas emissions and air pollution, according to Taxing Energy Use 2018. In 2015, outside of road transport, 81% of emissions were untaxed, with coal taxed at the lowest rates according to the report. See:

Economy Real GDP growth in the OECD area slowed to 0.6% in the fourth quarter of 2017, compared with 0.7% in the previous quarter, according to provisional estimates. GDP growth slowed markedly in Japan to 0.1%, compared with 0.6% in the previous quarter and, albeit marginally, in the US and Germany, to 0.6%, and Italy, to 0.3%. On the other hand, growth picked up slightly in France, to 0.6%, and in the UK, to 0.5%, up from 0.4%. Year-on-year GDP growth for the OECD area decelerated to 2.6% in the fourth quarter, compared with 2.8% in the previous quarter.


The OECD’s composite leading indicators continue to anticipate stable growth momentum in the OECD area as a whole. By using data from the likes of order books, building permits and long-term interest rates, these leading indicators help anticipate trends and turning points in the economic cycle. Stable growth momentum remains the outlook in the US, Japan, Canada and the euro area as a whole, including France and now also Germany and Italy. In the UK, the indicators continue to point to easing growth. OECD-area inflation slowed to 2.2% in January 2018, compared with 2.3% in

December 2017. This slight decrease in the annual rate of inflation was driven by energy prices. Excluding food and energy, annual inflation slowed marginally to 1.8%, compared with 1.9% in December. The OECD unemployment rate was stable at 5.5% in January 2018. Across the OECD area, 34.5 million people were unemployed, 1.9 million more than in April 2008. Within the euro area, the unemployment rate was stable at 8.6% in January. Outside Europe, the unemployment rate fell by 0.3 percentage point in Japan, to 2.4%, and by 0.1 percentage point in Korea and Mexico, to


Country roundup

Rula Ghani, First Lady of Afghanistan, speaking at the OECD Global Forum on Development, 5 April 2018


An international development success story, Korea is now a driving force in global aid, focusing on the neediest countries. Korea will have even greater impact if its plan to increase aid volumes is in line with its stated ambitions. A favourable growth outlook offers Chile an opportunity to address its low productivity levels compared to other advanced economies, improve access to quality jobs and take steps to reduce its persistently high inequality.

household consumption have picked up while the boost to jobs and a rapidly declining unemployment rate have led to strong wage growth.

Brazil’s recent structural reforms are starting to bear fruit. Sustaining Brazil’s recovery, unleashing its full economic potential and spreading the benefits fairly will require Brazil to rein in public spending and focus it on those most in need.

The Israeli economy is enjoying strong growth, low and falling unemployment and sound public finances in its 15th consecutive year of economic expansion. Further reforms are needed to drive down inequality and raise living standards for all Israelis.

Lithuania’s GDP, wages and employment levels are back up to their pre-crisis levels. The country should now focus on its fast-declining population and making the job market more inclusive.

Providing US seniors with better work incentives and opportunities will be crucial for the country’s rapidly ageing population. By 2028, more than one in five people in the US will be aged 65 and over, up from fewer than one in six today.

Latvia should strengthen old-age safety nets and raise the basic state pension to reduce pensioner poverty, especially among women, and address a fast declining population, according to a new OECD report. Ireland’s economy is recovering robustly. Business investment by local firms and

Other stories

Poland’s rising family benefits and booming jobs market are lifting household income while poverty rates and inequality are falling. To sustain rising living standards, Poland must innovate and invest in skills and infrastructure.

Socio-economic disadvantage and language barriers are the biggest obstacles for students with an immigrant background. Better targeted education and social policies are needed to help them integrate and fulfil their potential, according to Resilience of Students with an Immigrant Background: Factors that Shape Well-Being. See education/ Small and medium-sized enterprises (SMEs) are turning to alternative financing as new bank lending declines in a number of countries. Many SMEs remain overreliant on bank credit, however, and the take-up of instruments other than straight debt varies greatly from one country to another, according to Financing SMEs and Entrepreneurs 2018: An OECD Scoreboard. See Ministers and high-level officials from Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia have signed the BEPS Multilateral Convention, bringing the total signatories to 78. This convention updates the existing bilateral tax treaties and reduces opportunities for tax avoidance by multinational enterprises. See

Plus ça change… 3.6% and 3.3%, respectively. It was stable in the US with 4.1%, and rose by 0.1 percentage point in Canada, to 5.8%. International merchandise trade among G20 countries, seasonally adjusted and expressed in current US dollars, grew for the seventh consecutive quarter, with exports up 2.7% and imports up 3.0% in the fourth quarter of 2017.

Consumer prices, selected areas January 2018, % change on the same month of the previous year

% OECD total 6.0



All items

4.0 3.0 2.0 1.0 0.0





Energy All items non-food, non-energy

“ [Most developing countries] consider that an increasing number of small units of industrial production can foster development by creating jobs in local labour markets, thus providing productive outlets to rural manpower made redundant by increased productivity in agriculture and acting as a source of new investment.” “ Encouraging the development of small businesses”, in Issue No 57, April 1972

OECD Observer No 313 Q1 2018



BlogServer Communication, connection, community: Why a woman’s place is in politics Silvana Koch-Mehrin, Founder and President, Women Political Leaders

A hundred years ago, World War I ended and the League of Nations was founded; the first Oreo cookie was baked and the pop-up toaster patented. It is the stuff of history books. According to the latest World Economic Forum Global Gender Gap Report, it will take another 100 years for the world to consign inequality in political representation to history–if the past trajectory, measured since 2006, remains at its current speed, that is. From OECD Forum Network. More here:

A shared future: Time for policymakers to invest in women entrepreneurs Chiara Condi, President and Founder, LED BY HER

Seizing opportunities to sustain peace: A road map

This year, world leaders such as Angela Merkel and Justin Trudeau placed women’s entrepreneurship as a key driver for gender equality at the top of the global agenda. They are right. If women business owners in the US could form a country, its GDP would rank fifth globally. Integrating women and fully realising their potential is both a necessity to keep economies growing and an accelerator for our future. However, there is still a long way to go.

Sarah Douglas, Deputy Chief, Peace and Security, UN Women, and Tatyana Jiteneva, Policy Specialist, Peace and Security, UN Women

From OECD Forum Network. More here:

From social media platforms to the streets of major cities worldwide, women organising for equality and justice has increasingly been grabbing attention and headlines. It is key at a time when the world is grappling with a multitude of crises that threaten decades of development, undermine people’s confidence in multilateralism and worsen risks associated with disasters. From OECD Development Matters. More here:

Are women holding up Chinese and African skies? Hannah Wanjie Ryder, CEO, Development Reimagined, and China Representative, China Africa Advisory

In 1968, Chairman Mao might have proclaimed that women hold up half the sky, but it remains a sad fact that the majority of top African and Chinese politicians are still men. No woman has been president of any African country since Ellen Johnson Sirleaf stepped down last year, and in a recent study by the World Economic Forum, China was ranked 77th out of 144 countries in terms of female political representation, and 86th for economic participation and opportunity. From OECD Development Matters. More here:

To fear or not to fear the future of work? Opportunities, disruptions and policy challenges Dorothée Rouzet, Economics Department

Rapid technological change–from digitalisation to artificial intelligence, 3D printing and nanomaterials–is transforming the way goods and services are produced and consumed. It will have profound implications for the dynamics of productivity, jobs, investment and trade over the next 10 to 15 years. From OECD Ecoscope. More here:


Imagining the life of a Fearless Girl Mathilde Mesnard, OECD Directorate for Financial and Enterprise Affairs, and Bill Below, OECD Directorate for Public Governance

Fearless Girl looks to be about 8 or 9 years old. What kind of world can she expect to find when she enters the job market some years from now? Abundant determination and the ability to face down her own fears will be important qualities as she heads out into the competitive world. Statistically, she will find herself outperforming many of her male peers all the way through university if life conditions and her own choices take her in that direction. From OECD On the Level. More here:

Why access to quality early childhood education and care is a key driver of women’s labour market participation Eric Charbonnier, OECD Directorate for Education and Skills

We are in 1961. JF Kennedy is president and has just designated Eleanor Roosevelt as chairwoman of the new US Commission on the Status of Women: “We want to be sure that women are used as effectively as they can to provide a better life for our people, in addition to meeting their primary responsibility, which is in the home.” Just think how far we have come since then. In 1961, only 38% of women were employed in the US. In 2015, this figure was at 70%. From OECD Education Today. More here:

These extracts from blogs appeared in Q4 2017 and courtesy of OECD Insights, OECD Education & Skills Today, OECD Ecoscope, OECD On the Level, Wikigender, Wikiprogress and other content and social media platforms managed by the OECD.


The fine art of reading financial accounts and balance sheets

©REUTERS/John Gress

Peter van de Ven, OECD Statistics and Data Directorate

Worried what the future holds in store for the world economy? Picking through national accounts data can improve your understanding. It’s 2018 and that means a decade has passed since the collapse of financial markets that led to the onslaught of the worst economic and social crisis in our lifetimes. And we are not out of the woods yet! Indeed, we are still grappling with the consequences of the crisis today. True, the economy as measured by GDP and employment have returned to their

pre-crisis levels in many countries, but unorthodox monetary policies remain in place, such as expanding the money supply through “quantitative easing” and low or even negative interest rates. Some experts worry that we may be entering into a new era of asset price bubbles. Central bankers are pulling their hair out trying to figure out how to reverse these policies without disrupting capital markets and the economy at large. Rapid credit expansion is happening in emerging market economies, which may exacerbate financial vulnerabilities

worldwide, while high public debt levels in developed countries could cramp governments’ ability to act if there is another financial crisis, as it has in the past. Trying to understand all these phenomena underlines how useful and important it is to be able to reach for timely, reliable and comprehensive data to help you monitor financial and economic developments, and their interconnections across sectors and countries. The framework of financial

OECD Observer No 313 Q1 2018


accounts and balance sheets (part of the system of national accounts) is the mechanism that delivers essential macro-economic information to help assess financial risks and vulnerabilities, and analyse links between the world of finance and the “real” economy, key elements that policymakers need to make informed decisions. However, policy analysts and researchers often overlook this rich source of information, and underestimate the useful role such accounts play in the pyramid of official statistics. Financial accounts and balance sheets basically provide a complete and consistent overview of the assets and liabilities of sectors such as households, non-financial corporations, financial corporations, and government, as well as the financial relations of a country with the rest of the world. You can derive, for example, how much national governments and households are indebted, according to narrower and broader definitions. The financial accounts and balance sheets not only provide information on the stocks of financial assets and liabilities, but show how savings are used to invest or how investments are financed by incurring liabilities, and how stocks are affected by holding gains and losses. They show, for example, how investments by corporations are financed by retained profits or by additional borrowing. Or whether holding gains on assets accumulated by pension funds help to sustain the payments of future pension benefits. The macro-economic framework brings coherence to hundreds of statistical sources on finance available for our countries, be it annual reports of corporations, government financial budgets, supervisory information for banks, insurance corporations and pension funds, foreign direct investment, or statistics on household wealth. The fact that interpreting financial accounts and balance sheets can be a


challenge should be no excuse for not looking at them. Back in 1777, David Hume started his Essays on Commerce and Trade with a surprising warning that can apply to the intricacies (and importance) of financial accounts: “The greater part of mankind may be divided in two classes,

The framework of financial accounts and balance sheets is the mechanism that delivers essential macro-economic information to help assess financial risks and vulnerabilities that of shallow thinkers who fall short of the truth; and that of abstruse thinkers who go beyond it. The latter class are by far the most rare and, I may add, the most useful and valuable.” Why is there such a lack of awareness of the system of national accounts? For a start, few university degree programmes in economics include macro-economic statistics in their curriculum. There is discussion about GDP, household disposable income and debt, but there is very little education on how these aggregates are defined, what they include or exclude, and how they are measured. The OECD has decided to take these challenges on by publishing more accessible explanations of the basics of national accounts. Understanding Financial Accounts responds to the renewed interest in monetary and financial stability issues, and in monitoring financial risks and vulnerabilities, including their impact on growth and employment. You will not be surprised therefore to find a special emphasis on the links between the financial accounts and balance sheets and the non-financial accounts section of the system of national accounts, which deals with the “real” economy. As an example, it shows that in some countries non-financial corporations did not invest their earnings in new capital assets such as new production facilities and employment, but instead used their profits to invest in liquid financial assets. All too often, financial accounts and

non-financial accounts are treated as separate systems, partly because they are compiled by different national statistical authorities, but also because policy and research frequently concentrates on one or the other. If you are a young statistician, student, journalist, economist, or concerned policymaker, delving into national accounts will take you straight to the heart of financial developments in OECD economies. You might not be able to predict the future exactly, but you will be better able to understand and respond to it, when it comes. Understanding Financial Accounts is the fruit of a fully co-operative effort between the OECD and the Bank for International Settlements (BIS), the European Central Bank (ECB), Fondazione AIB, the International Monetary Fund (IMF), National Central Banks (Austria, Italy and Portugal) and National Statistical Offices (Australia and Canada) and the Treasury of Canada. Further reading van de Ven, P. and D. Fano (eds.) (2017), Understanding Financial Accounts, OECD Publishing, Paris, Share article at

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Income redistribution through taxes and transfers in OECD countries: A focus on the bottom 40% Orsetta Causa, OECD Economics Department

paper, we ask whether, given this decline, welfare systems are becoming less effective at ensuring income adequacy among vulnerable households.

©Ksenia Kuleshova/The New York Times-REDUX-REA

Looking at pre-tax and transfer income and redistribution among “bottom 40%” households can help shed some light on this question. We consider both households where the members do not have jobs (“workless households”) and ones where the members do (“working households”).

Income inequality has risen since the crisis. How could taxes and transfers help?

We indeed find, in line with the overall decline in redistribution, that income support provided by cash transfers to the bottom 40% of workless households has declined in the majority of countries for which data are available. Given the overwhelming weight of cash transfers relative to pre-tax and transfer income among that group, their disposable income has declined markedly relative to median income. In the majority of countries, cash transfers have become increasingly ineffective at preventing workless households from falling into relative poverty, especially those with children. In contrast to workless households, however, income support through taxes and transfers to the bottom 40% of working households has increased in most countries, thanks to lowered income taxes and social security contributions. This has helped soften the blow of widespread declines in people’s market incomes, or in other words, in their incomes before tax and transfers.

Over the past decades, household incomes have become more unequally distributed in most OECD countries. Rising income inequality has not only been driven by soaring top income shares, but also, in a number of cases, by a tendency for lower incomes to fall increasingly behind relative to the rest of the population. While the extent, timing and characteristics of rising inequalities vary among OECD countries, one common feature is the increasing variation in wage levels across jobs and sectors, or wage dispersion, and the increasing polarisation of jobs into high-skill or low-skill ones in a number of countries with middleskill jobs disappearing. These forces are unlikely to go away, considering the pace of technological change and the (still uncertain) impact of digitalisation.

The simultaneous decline in redistribution to workless households and rise in redistribution to working households may partly reflect policy reforms to “make work pay”. Beginning in the late 1990s, several OECD governments experimented with tax and transfer reforms that lowered income tax and social security contributions for low-income earners and shifted from “passive” to “active” unemployment support: stepping up job search assistance and counselling services for the unemployed while also tightening eligibility criteria for unemployment-related cash transfers (and sometimes cutting the amount of such transfers). The objective was to make work more attractive by lessening people’s dependence on benefits or cash transfers and increasing the incomes of those who take up jobs.

This challenges governments’ ability to redistribute through tax and transfer systems, all the more so in a context where new forms of work are calling into question the effectiveness of traditional social safety nets, and population ageing is putting pressure on the redistributive capacity of governments’ budgets. Yet the tax and transfer system is a fundamental pillar of an inclusive growth policy agenda that aims at sharing the benefits of growth more equally and securing decent living standards for those in most need. Thus, in order to deliver evidence-based policy recommendations in this area, we must document and take stock of the extent to which tax and transfer systems mitigate income inequality among the working-age population today, and how this has changed over the last decades.

Tax and transfer reforms should be considered in the context of broader policy packages to make growth more inclusive. They should be designed within an array of complementary policy instruments to address equity and efficiency objectives, taking into account each country’s particular constraints and social preferences. Well-designed “springboard” packages should combine tax and transfer policies to make work pay, that is, to give people incentives to accept jobs, but as well to increase the quality of jobs people take on successively with policies to improve their employability, skill adaptability and, ultimately, wage prospects. In other words, to raise job quality for less skilled and at-risk individuals such as disadvantaged youth, immigrants, and older workers facing displacement in declining sectors.

Since the 1990s, redistribution through taxes and transfers has gone down both on average and in the majority of OECD countries for which data going back to the mid-1990s are available. The bulk of this decline took place before the mid-2000s. In a recent OECD


Falling behind: Social welfare queue in Germany

Causa, O. and M. Hermansen (2017), “Income redistribution through taxes and transfers across OECD countries”, OECD Economics Department Working Papers, No. 1453, OECD Publishing, Paris,

OECD Observer No 313 Q1 2018


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Closing the gender gap: Have we reached the tipping point? Gabriela Ramos, OECD Chief of Staff and Sherpa to the G20 As we celebrate International Women’s Day and continue to increase awareness, I am pleased to say that gender issues are not issues just for a day at the OECD. All year long we promote gender equality–in our member and partner countries and inside the organisation. Indeed, if there is any real progress, it is in the level of awareness that we have to make progress on this agenda. In fact, this year’s global theme for International Women’s Day is #Press for Progress. But where are we on that?

The OECD’s report, The Pursuit of Gender Equality: An Uphill Battle, shows there’s further to go. There has been progress in some areas, for example, education, where girls in OECD countries now outperform boys and are reaching higher levels of education. Gender gaps in employment have also narrowed, although we continue to have differences of 10 percentage points or more, with some countries like my own (Mexico) reaching 30. We have made progress in bringing this issue to the leaders’ agenda at the G20 and G7, and establishing a target of narrowing of the gap in labour force participation: the OECD helped establish at the 2014 Brisbane Summit. Nowadays, gender is a cross-cutting issue both in the G20 and the G7, and I am proud to have contributed so that this is the case. We are promoting inspiring role models through the NiñasSTEM Pueden, and have worked to increase leadership in the public sector. We are developing tools like the gender budgeting or the SIGI index of discriminatory cultural norms. But even if the effort is there, it doesn’t translate into fast change. Even with higher levels of education, girls are not well represented in rewarding disciplines like science, technology, engineering and mathematics (STEM). And in developing countries they are still lagging behind. The digital revolution is also opening another worrisome divide with girls lagging behind in the ICT world,

in the production of software–90% of which is produced by men–on capital for their start ups, and on representation in ICT industries. The different algorithms in the AI world may be reproducing the biases of the analogue world. While the new technologies will open up opportunities that are more flexible, they can also be linked to low-quality jobs. We still have a wage gap of 15% in OECD countries and there are still many positions in senior management, public leadership and entrepreneurship that are unreachable for women: the private sector is really lagging behind. In 2016, women made up only 4.8% of CEOs. Women who dare to become entrepreneurs have less access to finance and networks. No wonder until last year, the Mexican Council of Businessmen was just that: only men. Politics is better, but not much. Women held 28.7% of seats in lower houses of OECD parliaments. Progress has been slow in breaking the glass ceiling but also in cleaning the sticky floor! Some countries promote gender balance on company boards and affirmative action in public office–quotas are the only measures that seem to be effective, quickly. And while quotas need to be carefully designed, they do not come with great risks. My country now has parity in the Federal Congress and even though the quota generated doubts regarding the competencies of women that arrived in their jobs thanks to quotas, I would underline in defence that this is exactly the case for men, who not only reach high-level positions without a quota, but also without competency checks. And then you have the really serious issue of violence against women: 35% of all women have experienced sexual violence. This happens all over the world but it is a particularly difficult problem in developing countries with weak justice institutions, or with violent practices like genital mutilation or early marriage. In Niger, 3 out of 4 girls are married before their 18th birthday. Some 36 countries do not have specific legislation to address

sexual harassment. And yes, many girls are subject to exploitation and slavery. That’s why we commend the UK’s initiative on Modern Slavery and the leadership of people like Nobel Prize winner Kailash Satyarthi, who is working to save hundreds of thousands of children from the slave trade. For our part, the OECD last month launched the Call to Action to protect migrant children. Analysis and solutions So, why are we not tipping over into gender equality yet? Notwithstanding progress in public awareness and policies in many countries, lack of equality has much to do with entrenched gender-bias in cultural patterns and institutions, beliefs and behaviours. Cultural norms are especially strong in some developing countries and this concerns women and men. For example, in Afghanistan, 80% of women believe domestic violence can be justified for certain reasons. These gender norms have enormous spillover effects on the rest of society, and purely economically speaking, they are costly: last year, the OECD estimated that gender discrimination in laws, attitudes and practices costs the global economy close to US$12 trillion. Cultures and norms define gender roles, both at work and at home. The sharing of caring responsibilities–of children and the elderly–is still seen as a woman’s role. In OECD countries, women spend an average of over 1.5 hours per day on unpaid work; in Mexico it’s a staggering 4.5 hours per day. Women’s careers are also more likely to be “non-linear” and interrupted to care for family members. These gender norms are everywhere–in the home, at school and in the workplace. And they’re hard to counter–unconscious bias is strong. Studies have shown that while 69% of people explicitly say they believe men and women are equally effective leaders, 55% of people implicitly associate leadership with men only. And the media

OECD Observer No 313 Q1 2018


and social networks are not helping. In our PISA study on the well-being of students, we have found that pressure and cyberbullying is affecting boys and girls, but for girls it is always related to their image and impossible role models. Girls at age 15 rate their life satisfaction 10 points lower than boys do.

Australian Ambassador to France said to me, it’s about men “reaching out”. It’s about making a system that works for both men and women. This calls for sound policies, powerful role models and appropriate capacities and resources. Let’s ask ourselves: how gender-sensitive are the policies that we are putting in place–from education and employment to banking and housing? Are they good for all, or only for certain groups of the population? How do we know? Are our policies equally benefitting men and women?

Of course, we need better policies, parental leave for fathers, flexible working arrangements and good quality childcare to enable both parents to work. We need better education and encouragement of girls at school. We need gender-blind textbooks and teachers that can deal with them. We need quotas in business and support for women entrepreneurs. But countries are doing a lot of this and we still have a gap. We need a culture change, and this is not only about women. It is about men and women who are conscious and respectful of human dignity, and who can build balanced and caring societies. The same way we have stereotypes for women, we have stereotypes for men who have to be warriors, who have to show no mercy in competition and work 18 hours a day. And, they cannot cry. It’s not a fantastic model.

We need to systematically adopt a gender lens across all policymaking and budget processes, and ensure sufficient resources, capacity and political will to see how men and women are impacted differently by our policies and systems. This is why we are launching the OECD Toolkit for Mainstreaming and Implementing Gender Equality today. This toolkit will help governments, parliaments and judiciaries design gendersensitive public policies and services through self-assessment and help them identify what works or what is missing. It’s full of examples of effective practices to support the implementation of policies and initiatives.

Cultural change for gender equality requires system change. It is not only about women “leaning in” but, as the

Women on the docks


I hope this will help countries bridge the implementation gap. We have made progress. I am optimistic and I believe we are reaching the tipping point: the younger generation is more gender-progressive about women’s equal role in society and there is evidence that attitudes are evolving with time. This isn’t just about women, it’s about men, children and building more caring societies. This is why the OECD is pursuing an agenda of well-being and inclusive growth. We are really putting the person–the women, men and children–at the centre of our policies. This article was originally published on International Women’s Day, 8 March 2018 at https://gabrielailianramos. References and links

©REUTERS/Amir Cohen

Liz Azoulay loads cargo at Ashdod, Israel’s largest port, 22 February 2017. “In most of my professional life I did not face any inequality”, says Ms Azoulay, who was 26 when this photo was taken. “In the port of Ashdod we are equal on the docks. I am the first woman who began working at the Ashdod port as a stevedore.” The quote comes from “Women at work around the world”, a photo-story package by Reuters, which looked at women working in male-dominated sectors. From loaders and crane drivers to clerks, more women than ever before are earning their living in this traditionally masculine environment. However, despite Ms Azoulay’s relatively positive testimony, gender discrimination on the docks is a challenge, with one US court case in 2018 arguing that while women have lost pay and seniority when on maternity

It considers that gender issues need to be cross-cutting and that it should be mainstream in all decisions. Five key actions are identified: • Strategy: Gender Equality Strategies must be integrated into overall national priorities or strategies. • Roles and responsibilities: it requires identifying who is in charge of this agenda. • Tools and data: policymakers need to know how to implement a gender lens, including through gender impact assessment. • Accountability: policymakers need to know if what they’re doing is working. • Parity: men and women from diverse backgrounds need to be part of decision-making on an equal basis of 50/50 across the board, spanning all leadership roles.

leave, men on military service received benefits. Now, various trade unions, such as the International Transport Workers’ Federation (, specifically defend female workers’ rights and wellbeing in ports around the world. Ferrant, G. and A. Kolev, (2016), “Does gender discrimination in social institutions matter for long-term growth? Cross-country evidence”, OECD Development Centre Working Papers No. 330, OECD, Paris, http://dx.doi. org/10.1787/5jm2hz8dgls6-en OECD (2017), The Pursuit of Gender Equality: An Uphill Battle, OECD Publishing, Paris, https://doi. org/10.1787/9789264281318-en. Iniciativa NiñaSTEM Pueden, centrodemexico/laocde/iniciativaniastempueden/ iniciativa-niastem-pueden.htm


No longer a mancession: Getting Italian women out to work


Alessia Forti, OECD Directorate for Employment, Labour and Social Affairs

Unchanging times? Sophia Loren and Giacomo Furia in the film “Gold of Naples”, 1954 When the global economic crisis bit deep after 2008, so many men fell out of work in the OECD area that the data pointed to a so-called mancession. Italy was no exception, and indeed there was even some hope expressed there that the recession might finally push more women into work instead. For those policymakers eager to see more women in employment, it was a false dawn. The global recovery appears to be underway now, and still less than half of all working-age Italian women go to work. This is the worst gender balance among OECD countries, after Korea, Japan, Mexico, Portugal, and Turkey. There are several reasons for this and one of them is the time women spend doing unpaid work. On average, women in Italy spend a little more than five hours a day cleaning, doing laundry, cooking, and taking care of children. Italian men spend an average of just above two hours a day on the same. This gender gap is something the Italian labour market can ill-afford. Saddled as it is with a rapidly ageing population, the absence of women in the workforce is further depressing Italy’s economic growth. In fact, OECD projections show that if as many women as men join the workforce by 2030, GDP per capita will increase by an additional 1% a year.

That Italian women are not joining the workforce is not for lack of education. Not only are their levels of literacy and numeracy skills comparable to those of men, but younger women are more likely to hold a university degree than young men. However, it is possible that gender stereotypes about certain education tracks and jobs have pushed women toward fields of study that are in low demand in the job market. Young women are underrepresented in some vocational education and training tracks (VET) which have good job outcomes. For example, while over 80% of graduates of the newly established Istituti Tecnici Superiori find employment in the year following graduation, only around one in four enrolled students are women. Even when women do manage to get a job, it is not easy for them to reconcile work and family life. As in other countries, childcare can exacerbate existing inequalities at home. Alas, Italian legislation does not do much to help parents equally share these duties. Paternity leave lasts only two days in Italy, the shortest in OECD countries where it can be two weeks or longer. And while it is true that Italian fathers are entitled to several weeks of parental leave, only 1

in 10 takes it. Few children (aged 0-2) are enrolled in formal early education and care. It also falls to women to take care of older relatives. Over a fifth of the Italian population is aged 65 or above, the highest

If as many women as men join the work force by 2030, GDP per capita will increase by an additional 1% a year in the OECD after Japan, but adequate and accessible long-term care services for the elderly are often lacking. Holding a full-time job can be difficult if you have to take care of children and older family members with little help. International experience shows that a good way for women to combine work and family life is to have flexible work arrangements, such as part-time. But in Italy, part-time work is seldom used as a means to reconcile work and family life. In around 60% of cases, it is imposed by employers and often involves working on weekends, afternoons, and evenings. Indeed, Italy has among the highest shares of employed women working on Saturdays and Sundays, according to Eurostat. Italy

Employment rate by gender Selected OECD countries, 2016 10





Iceland Switzerland Sweden Germany Canada UK Latvia Australia Japan US Portugal France Ireland OECD average Belgium Poland Korea Spain Chile Italy Mexico Greece Turkey






















Source: OECD Short-term Labour Market Statistics

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Can women win on the obstacle course of business finance? has recognised these problems and is now working on boosting job opportunities for women.

Clara Young, OECD Observer

The previous government stepped up efforts to increase the availability of childcare facilities and help families meet the cost of childcare through bonuses, vouchers, and other types of subsidies. To stimulate demand and job creation, tax exemptions have been introduced for firms hiring women who have been unemployed for a long time, who live in disadvantaged areas, and who work in economic sectors with large gender occupational gaps. Another welcome step is the recent effort to tackle a long-standing discriminatory practice in the workplace whereby firms ask women to sign an undated letter of resignation (the so-called dimissioni in bianco), which is used in case of pregnancy to justify their dismissal. The reform replaces these paper-based resignations with online procedures for voluntary job leave, making falsification by employers difficult. These family-friendly policies are steps in the right direction. Hopefully, in the longer term they will generate a much-needed shift in people’s mentality and reduce stereotypes about the role women play in the labour market and society at large. References and links OECD National Skills Strategy for Italy: OECD gender data portal: data/ OECD family database: database.htm ISTAT (2015), “Come cambia la vita delle donne”, Istituto Nazionale di Statistica. OECD (2016), Skills Matter: Further Results from the Survey of Adult Skills, OECD Publishing, Paris Thévenon, O. et al. (2012), “Effects of Reducing Gender Gaps in Education and Labour Force Participation on Economic Growth in the OECD”, OECD Social, Employment and Migration Working Papers, No. 138, OECD Publishing, Paris 10.1787/5k8xb722w928-en Share article at


About a decade ago, three academics silently sat in on and recorded 36 hours of closed-room discussion among a group of Swedish governmental venture capitalists made up of two women and five men. The venture capitalists (VC) were going over pitches made by 125 people to obtain financing for their businesses of which 99 were men and 26 women. The conversations were analysed for the way in which women and men applicants were described by the financiers, but even the numbers alone told a story of gender bias in the venture capital world: in the rejection pile were 53% of applications made by women and 38% of applications made by men. Of the applications made by women that were accepted, 25% of the amount requested by women was awarded, and 52% applied for by men. Gender discrimination, whether real or perceived, is just one factor that discourages women from starting and growing businesses. According to a survey, in 2012-16, 4.9% of women in the OECD area were actively trying to start a business, compared to 7.4% of men. Moreover, one in ten working women are self-employed in OECD countries, which is almost half the rate of selfemployed men. Most women who do start their own businesses do so with less

money than men, and rely heavily on personal savings or loans from friends and family. In fact, as many women start businesses in the services sector, they tend to have less earnings available to invest back into their companies. On top of this, women find it hard to obtain bank loans, overdrafts and credit lines, which are the next steps in the range of evermore sophisticated financing mechanisms for businesses. Some women may not have credit histories, for instance, while others may be reluctant to apply for loans because they feel they lack entrepreneurial experience. Others simply come up against gender-biased credit scoring. In OECD countries, only 26% of women believe they would be given access to the necessary finance to start or grow a business, against 34% of men. Now, the newly released 2018 OECD Scoreboard on SME and Entrepreneurship Finance shows that new lending to small and mediumsized enterprises (SMEs) fell from 2.6% in 2014-15 to -5.6% in 2015-16: women entrepreneurs have been trying to secure bank financing in an even tougher-thanusual climate. What’s the policy move? One way governments can help women business-owners is with loan guarantees. The French Fonds de garantie à l’initiative des


femmes (FGIF), for instance, guarantees loans of up to €45,000 for women entrepreneurs. In 2015, this helped 2,075 women start businesses, which created 3,095 jobs. Similarly, governments can direct grants towards women-led businesses. And, incidentally, they can earmark public procurement contracts too, worth about 14% of GDP in the EU, to women. Right now, only 1% of public contracts around the world are awarded to women’s enterprises. While bank loans and credit lines are difficult enough to obtain, the hurdles to other, often more substantial, forms of financing are even more daunting. And

In OECD countries, only 26% of women believe they would be given access to the necessary finance to start or grow a business this is a problem because smaller businesses, whether owned by men or women, are not readily scaling up or making the leap into international trade. Easier access to more diversified sources of finance may make them more appealing to business-owners. In a survey conducted in the EU between October 2016 and March 2017, only 13% of SMEs even considered equity financing for their business, and that is not good news for growth. Not all women entrepreneurs want to expand their businesses, but for those who do, there are increasingly dedicated support programmes available to them. There is growth-oriented training, individual coaching and mentoring, and networking, both face-to-face and online. Often all of this and more, like financial and legal advice, workshops on subjects such as loan applications, pitching, and different options for financing are physically put together in one-stop, government-supported women-only business incubator programmes, accelerators and clusters. Ireland has taken its support of women-led ventures even further by investing in them:

Competitive Start Fund for Female Entrepreneurs invests up to €50,000 in women-led tech or manufacturing ventures in Ireland in exchange for an equity stake of up to 10%. The trend for venture capital is less positive. In the US, it is estimated that only 15% of venture capital investment went to women-owned businesses in 2014, with the number diving to a little over 2% in 2016. And in the Swedish study we began with, women were not only awarded less venture capital, they applied for less too. Says Laurence Mehaighnerie, a woman who co-founded the Paris-based venture capital firm Citizen Capital in 2008, “I sense that women entrepreneurs feel they can do more on their own and need less money, which can mean less growth and success in the end.” Venturing out If traditional venture capital firms are not investing in women, then women-run funds which focus on financing womenowned start-ups are picking up the slack. Springboard Enterprises in the US is an example. Rising Tide Europe, a group of 93 successful business women from 25 countries who have pooled €1 million to invest in early-stage women-owned companies in Europe, is another. Ms Mehaignerie’s Citizen Capital, which specialises in social ventures, has so far funded two women’s businesses out of nine, and is looking to do more. In an experiment run by Wharton School, Harvard Business School and MIT’s Sloan School of Management in 2014, findings showed that men pitching for venture capital did 60% better than women pitching the exact same ideas (and, as an aside, good-looking men were even more successful by 36%). But while women lose out in traditional pitch competitions, they do better than men in the online crowdfunding arena. Crowdfunding stats reveal that women on average get 1.3 more contributors than men and raise an average of 10.8% more money. Womenspecific crowdfunding platforms like Symbid in the Netherlands, which serves

Dutch women entrepreneurs and provides them with financial and legal assistance, may boost those numbers even higher. Small and medium-sized businesses, those with fewer than 250 employees, account for 70% of jobs in OECD countries. They’re the ones with the good, new ideas, generating some 20% of biotech patents in Europe, for instance. Women should start more of these businesses, especially in areas such as technology, engineering or finance. And they should be able to grow their businesses if they want. But expanding internationally, hiring more people, and integrating new technology require copious amounts of capital. Women need to be convinced to take that on. A tailored support system and gender-enlightened investment decisionmaking make the pitch to women entrepreneurs all the more persuasive. References and links Read about the 2018 OECD SME Ministerial Conference at Find out more about the OECD-INADEM workshop on women entrepreneurs at ministerial/programme/oecd-inadem-workshop-onwomen-entrepreneurs.htm OECD/EU (2017), The Missing Entrepreneurs 2017: Policies for Inclusive Entrepreneurship, OECD Publishing, Paris Read the OECD’s policy brief on women’s entrepreneurship at OECD (2017), Entrepreneurship at a Glance 2017, OECD Publishing, Paris Malmström, Malin; Johansson, Jeaneth; Wincent, Joakim, “Gender Stereotypes and Venture Support Decisions: How Governmental Venture Capitalists Socially Construct Entrepreneurs’ Potential”, Entrepeneurship Theory and Practice Farber, Madeline, “Exclusive: Only 1% of Female Founders Have Used VC Money to Fund Their Business”, Fortune “Survey on the Access to Finance of Enterprises in the euro area October 2016 to March 2017”, European Central Bank Read “Study: Attractive men fare best in gaining venture capital” at Share article at

OECD Observer No 313 Q1 2018


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:


Better policies for SMEs to scale up and go global


Lamia Kamal-Chaoui, Director, OECD Centre for Entrepreneurship, SMEs, Regions and Cities Many OECD countries are seeking to scale up the performance of small and medium-sized enterprises (SMEs). They already generate around 70% of total employment. On average, they account for 50-60% of gross value added in the OECD area, and more than 80% in countries such as Italy, Greece and Korea. SMEs range from local microenterprises to “born global” technology leaders and firms whose raison d’être from the moment they are founded is to operate internationally. How can policy better help them scale up and go global? Going global and participating in global value chains (GVCs) is one way to boost productivity and scale up. Research shows that firms experience productivity increases after entering international markets by benefiting from scale economies, knowledge exchange and technical spillovers. In African countries, for example, exporting has been found to raise productivity by more than 25%. However, SMEs export less relative to their share in the national economy, accounting for only 20-40% of exports versus over half of value added. But exporting need not be the be-all and end-all for SMEs. Often, they sell products to exporters who are part of GVCs, and while the SMEs are not themselves exporting, that involvement gives these smaller firms productivity-enhancing access to information and technology. Robust SMEs help workers by creating jobs. In some regions, smaller businesses may be the only source of private sector employment. The share of young SMEs in total job creation is about twice as large as their share in total job destruction. Established medium-sized companies that scale up, which often involves going global, are a driving force for job creation, competitiveness, and better salaries and working conditions. A sound regulatory environment is especially important for smaller businesses. Regulatory uncertainty, complexity, and inconsistencies, including differences in regulations across countries, affect SMEs disproportionately more than large firms. Other elements of the business environment such as contract enforcement, civil justice systems, bankruptcy regimes, and corruption in the public sector also especially hurt smaller companies. OECD work shows that SMEs have experienced better access to international markets in recent years thanks to trade and investment openness, and physical and IT infrastructure. However, obstacles and inefficiencies remain. Measures discriminating against foreign suppliers are still in place in a large number of

countries. Barriers to entry are especially high in services sectors, such as professional services, where there are many SMEs. For cross-border exports of services, an average level of services trade-restrictiveness represents the equivalent of an additional 14% tariff for SMEs relative to large firms. Predictable and efficient

Firms in local clusters are among the most successful in making the leap to international trade customs procedures and logistics services are also especially important for SMEs. Reform of slow or cumbersome border procedures can cut costs of trading for all firms by 12-18%. Despite improving economic conditions, new bank lending to SMEs fell in 15 out of 25 countries in 2016 with SMEs turning increasingly to alternative sources of financing such as venture capital investment, crowdfunding and leasing. Still, the potential of non-bank finance instruments to serve SMEs remains underdeveloped in most countries. The G20/OECD High Level Principles on SME Financing can guide countries in the development of such strategies. Digitalisation can open up new opportunities to participate in the global economy. Digital technologies allow SMEs to improve market intelligence, reach scale without mass, and access distant markets and knowledge networks at relatively low cost. In most countries the gap between large firms and SMEs in adopting simple internet connectivity and web presence is narrow. However, SMEs are only half as likely as large firms to participate in e-commerce or use cloud computing. The adoption lag is mainly due to lack of investment in complementary knowledge-based assets such as research and development (R&D), human resources, organisational changes and process innovation. Lastly, regional and local policies can have an important impact on SME performance. Firms in local clusters are among the most successful in making the leap to international trade. By geographically concentrating skills, innovation projects, and strong social capital links to help knowledge flow on key technologies and market opportunities, local clusters are high productivity environments. Good SME policy should function as an umbrella, cutting across the boundaries of different ministries and government agencies. Continued effort is needed to better understand the combined effects of structural reforms on the SME business environment, as well as the role and impact of policies targeted to these smaller companies. References and links OECD (2018), Financing SMEs and Entrepreneurs 2018: An OECD Scoreboard, OECD Publishing, Paris. OECD (2017), Small, Medium, Strong. Trends in SME Performance and Business Conditions, OECD Publishing, Paris. OECD (2017), SME and Entrepreneurship Policy in Canada, OECD Publishing, Paris. Share article at

OECD Observer No 313 Q1 2018


OECD Observer roundtable on small and medium-sized enterprises Some 99% of firms in the OECD are small and mediumsized enterprises (SMEs) and they generate about 70% of all jobs. But in order to stay vital and competitive in today’s global economy, SMEs need support.

Thriving SMEs are key for inclusive growth Elżbieta Bieńkowska, European Commissioner for Internal Market, Industry, Entrepreneurship and SMEs

We ask our panel of experts this question: Why do SMEs matter for productivity and inclusive growth, and what new policies are needed for their development?

of fast-growing innovative SMEs in the EU. It includes measures to create an IT tool providing information on rules and obligations for firms selling across borders, as well as measures to increase their access to finance.

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The EU’s wider work on the Single Market is also helping SMEs. A proposed E-card would especially help SMEs, streamlining administrative procedures and facilitating the expansion of their activities across borders. A thriving SME sector is indispensable for Europe’s future growth. SMEs are the most important source for employment. In the EU, some two-thirds of all private sector jobs are concentrated in firms with fewer than 250 employees. Micro-firms with fewer than 10 employees account for almost 30% of private sector employment in the EU. In the last years there has been an impressive increase in productivity among SMEs in the EU, going up by 10.3%, with that of medium-sized SMEs close to that of large firms (16.1% compared to 17.1%). SMEs don’t just contribute to jobs: in most EU countries, many of them play a crucial role in providing young people with vocational training through apprenticeship schemes.

The Commission is also taking a strict line on enforcing late payments legislation because of the detrimental effect that disruptions in cash flow can have on SMEs.

However, Europe could do even more: there are still too many SME-specific barriers.

SMEs for decreased inequalities and increased productivity

The European Commission has therefore launched several initiatives to tackle these. The 2016 Start-up and Scale-up initiative, for instance, is a comprehensive package of measures to boost the number


Finally, the EU’s New Skills Agenda is going to help SMEs and start-ups recruit the right skilled employees they need to innovate and grow, addressing the issue of mismatch between education and training, and the skills needs of firms. These are just some examples of EU policies which are there to ensure that the EU continues to benefit from a vibrant and expanding SME sector. Visit

Faruk Özlü, Minister of Science, Industry and Technology, Turkey Many governments grapple with slow productivity growth and rising inequalities in income and opportunity. Constituting

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In addition, there is the Small Business Act for Europe (SBA) which celebrates its 10th anniversary this year. The SBA ensures that before the Commission launches any new legislative initiative, the impact on SMEs is fully considered. Faruk Özlü more than 95% of all companies and providing 60-70% of employment in OECD member countries, small and medium-sized enterprises (SMEs) play an important role in improving efficiency and diminishing inequalities. In Turkey, SMEs account for more than 99% of all businesses, 73% of employment, 53% of added value, 55% of total investments and 55% of exports. SMEs are important sources of technological innovation and new product development. With their high turnover and adaptability, SMEs play a vital role in eliminating regional and sectoral imbalances in a country’s economy. SMEs also tend to employ low-income workers as they are sometimes the only source of employment in poor regions and rural areas. With self-employment as the only source of income for many poor people, SMEs are particularly important in developing countries where poverty is most severe. If the productivity gap between SMEs and larger enterprises could be attenuated in developing countries, there may be substantial opportunities for inclusive economic growth. Increased SME efficiency contributes to GDP growth and

BUSINESS OECD Observer Roundtable

Promoting SME contribution to inclusive growth, productivity growth and reduced inequalities requires technological advances and innovation. In Turkey, we support R&D, innovation and global outreach for SMEs and entrepreneurs. Through support programmes, our main goal is to promote innovation activities in priority technological fields and to support technological product investments which help SMEs create high value-added goods and services. Additionally, our credit interest support programmes help SMEs access financing. This support is greater in less developed regions with priority given to women and disabled entrepreneurs to improve income distribution. And lastly, we aim to strengthen our entrepreneurial ecosystem with entrepreneurship training. Visit

The success of SMEs lies in quality jobs

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Cathy Feingold, Director, International Department, AFL-CIO

Small and medium-sized enterprises (SMEs) that prioritise long-term investments and drive productivity will contribute to inclusive and green growth. Given rapid technological changes, we need new policies to ensure that the gains from increased productivity in SMEs will be shared more equitably among workers and their families. The diverse nature of SMEs means that strategies deployed to support them must be tailored to their specific sectors. We need policy and regulatory frameworks that recognise the diversity of SME models

and organisational structures, the varying degrees of their integration into global value chains (GVCs) and their different levels of financing and digital adaptation. Best practices confirm that businesses that strive to deliver quality production and services generate quality employment. They also tend to be more competitive and innovative. Yet, most SMEs are lagging behind, and in emerging and developing economies, they are still often part of the informal economy. Why is there such poor access to SME employee training and firm financing? Why are sector councils and tripartite insurance programmes for restructuring SMEs ineffective? Why are so many jobs in small and medium-sized firms neither productive nor decent? The answer to many of these questions lies in the lack of bargaining power SMEs have with big enterprises, who are often their contractors in value chains. With limited bargaining power, workers cannot share in any of the gains from productivity. The pressure on business margins for SMEs is enormous, pushing them to lower labour costs. In the Multinational Enterprise (MNE) Guidelines and the upcoming OECD due diligence standard, there are instruments to ensure responsible business conduct and raise labour standards for all firms, no matter the size. The right policy mix is needed for SMEs to thrive. This includes macro-economic policies that promote aggregate demand; labour market policies that ensure employment protection and decent wage levels; fiscal policies that support investment in public infrastructure (including broadband coverage), universal social protection and workers’ training; just transition schemes and an industrial policy that spans sectors and regions. Social dialogue plays a key role: it leads to a higher degree of formalisation of the SME workforce, the establishment of higher standards in the negotiating of collective agreements on wages and working conditions, better compliance with occupational and health standards, and more employee training. Governments, employer organisations and

trade unions all have the responsibility to integrate SMEs better into existing collective frameworks. SMEs and their employees need to have the same access to support services and information. Only by doing that can policy measures on SMEs work effectively. SMEs are an engine of job creation in most OECD countries. The right balance of policies can ensure that these smaller firms have the leverage to provide decent work, appropriate pay and better working standards. AFL-CIO is a member of the Trade Union and Advisory Committee to the OECD (TUAC). For more information, please visit and

Connect SMEs to advanced technology and international trade Jackie King, Chief Operating Officer, Canadian Chamber of Commerce

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it also increases wages in the low-wage segment of economies.

John Oliver, host of US cable show Last Week Tonight, has famously ridiculed politicians for their carbon copy use of the phrase, “Small business is the backbone of our economy.” He has also remarked that it is one of the few things all politicians agree on. The reason they do is because it’s true. According to the OECD, 99.7% of firms in the non-financial business sector are small or medium-sized enterprises (SMEs). Some 60% percent of employment in OECD countries is generated by SMEs. Small businesses are at the heart of communities across OECD countries. However, we know smaller firms face

OECD Observer No 313 Q1 2018


BUSINESS OECD Observer Roundtable

That is why we must seize the opportunity presented by the OECD Ministerial Conference to push the policy agenda further. There are two areas in particular to prioritise. The first is boosting SME participation in international trade by working harder to integrate smaller firms into global value chains (GVCs). Not all SMEs can, or want to be, integrated into GVCs. But for those with the potential, and the ambition, governments can do more. This means a bigger voice for SMEs in the development of trade agreements. It also means programmes to support capacity building in smaller firms. It also means we should get behind Business 20’s (B20) call for a “G20 Business Travel Card” to allow fast-track clearance across borders. The second is supporting SMEs by helping them integrate advanced technologies to improve their efficiency and value propositions, and expand their operations. The first thing to do here is connectivity. We must strengthen digital infrastructure in urban and (especially) rural areas. We need new ways to finance this too. We also need to support international multistakeholder initiatives on the e-commerce Electronic World Trade Platform (eWTP) and the SME Market Link, again to spread awareness about the benefits of advanced technologies for smaller firms. In both of these challenges, we look to governments to spur the innovation and collaboration SMEs need to flourish.

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significant challenges. While many of the cyclical issues that weighed on small business after the financial crisis have abated, such as access to credit or weak domestic demand, longer-term structural issues remain.

Elisa Giuliani failures, and generating collaborative ties between small and mediumsized enterprises (SMEs) and large multinational enterprises (MNEs) has been the mantra of policymakers and practitioners over the past few decades. Governments and donors have focused their policies on connecting SMEs with MNEs, as well as engaging in more local networks in the hopes of generating more “Silicon Valleys” around the globe. One expectation is that these linkages will make these smaller firms more efficient and better able to cope with international competitive pressures. A wealth of economic and sociological theories supports this thinking. What the evidence shows is that linkages between

multinational corporations and small and medium-sized businesses yield variable productivity results. Smaller firms often tend to be crowded out in the scramble for financing and support by stronger foreign investors, and when they are not, they have difficulties in taking advantage of the supposedly superior knowledge and skills of multinational enterprises. Where MNEs seem to make a difference, however, is within industrial clusters. These local networks create more openings for SMEs to take advantage of MNEs, as local connections lower barriers and enhance SMEs’ absorptive capacity. Not surprisingly, studies that look at the impacts of cluster policies reveal a strong link between local networks and heightened SME productivity. The message seems clear: to catch a big fish, you need to have a good local net. Clusters aren’t silver bullets but the leg up they appear to give smaller firms is good news. Clusters also fit neatly into a bigger, overall narrative: with the world on the move, hyper-globalisation, re-shoring, and industry 4.0, urgent socio-environmental sustainability standards are demanding that firms and governments act locally rather than waiting for distant actors to fix their problems. Visit Share article at

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The Canadian Chamber of Commerce is a member of the Business and Industry Advisory Committee (BIAC) to the OECD. For more information please visit www.chamber. ca/ and

Do business linkages boost SME productivity? Elisa Giuliani, Professor at the Department of Economics & Management of the University of Pisa Promoting connections, fixing coordination


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Flood watch on the River Seine: A return to 1910? Charles Baubion, OECD Directorate for Public Governance, and Clara Young, OECD Insights

Paris Metropolitan Authority should work closely with local authorities in the Seine basin to define a global, long-term flood strategy for the region. A flood-resilience framework would give coherence to initiatives such as a charter to design resilient neighbourhoods and a serious rethink of areas within the flood plain that are currently

Individual citizens in what is one of the richest regions in Europe could do their part by paying a flood prevention tax

©Laurent Kalfala/AFP

earmarked for densification. Priority could be given to upgrading protective dykes and quay walls along the river as well as critical infrastructure vulnerable to flooding. It could spur storm preparedness for businesses, even small ones, so that they can keep going even as the waters rise. Examples from the reconstruction of a resilient New Orleans after Hurricane Katrina, or New York after Sandy, could inspire Paris to build up its own resilience before disaster hits. It has been a wet winter in Paris and the River Seine is rising fast: 2 cm, or about an inch, every hour. This will bring the Seine to a little over six metres, as measured by the Austerlitz monitoring station or, as Parisians will tell you, up to the thighs of the Le Zouave statue on the Pont de l’Alma (our photo). That’s how high it got in 2016. Already, several major roadways along the river banks have been flooded over, while the city authorities are issuing warnings, not just in Paris, but in several French cities. How bad can it get? The 2016 flood caused more than €1billion worth of insured damage, two deaths, and severe disruptions to the transport system. Well over 17,000 people were forced to leave their homes. While upper parts of the river catchment suffered significant damage, Paris itself was spared. If the water had gone 25 cm or 10 inches higher, it would have been a large-scale crisis, authorities said. There is no room for complacency, and even if the peak this time is officially expected to be reached in the next few days, everyone is monitoring the rainfall closely. Before 2016, floods in Paris occurred on average every 20 years. The Seine has not significantly overflown since 1955, the highwater mark being the great flood of 1910. At 8.6 m on the Austerlitz scale, the river turned Paris into Venice that winter. In its 2014 Review of Risk Management Policies: Resilience to Major Floods in the Seine Basin, the OECD estimated that a flood of the same magnitude today would cost France between €3 and €30 billion. The OECD made 14 recommendations on how the Paris region could boost flood resilience and emergency preparedness in the review. More than half of these have been put in place says the follow-up report, released this week, but a better integration of flood risks into urban policies is still being held up by governance and financing difficulties. Decentralisation and the consolidation of greater Paris into the Grand Paris Metropolitan Authority can open up co-operation on flood management in new administrative structures. The Grand


All of this requires money of course and this week’s report finds that available flood prevention funding is still not enough. For the past 20 years, there has been talk of developing flood water storage–marshlands and an artificial lake–at La Bassée, upstream from Paris. It would be able to take in 55 million cubic metres of water but costs an estimated €600 million. To fund this and other flood resilience projects, the government needs to develop a more ambitious, long-term and holistic strategy co-ordinated with anybody who benefits from flood protection, whether it be network operators, enterprises or local authorities. Even individual citizens in what is one of the richest regions in Europe could do their part by paying a flood prevention tax. Local authorities could explore cutting-edge financial mechanisms to fund initiatives, such as green bonds. In 2024, Paris will host the Olympic Games. With its ambition to produce 55% less carbon emissions than the 2012 London Olympics, Paris hopes to stage the greenest games in history. If it manages to incorporate flood risk into its planning now, the Olympic Games will be high and dry. References and links For further information, please contact Charles Baubion, Risk Management Policy Analyst at the OECD. Read the report at Read the press release “Further improvements needed to manage major flood risk in Paris and Seine basin” at OECD (2014), Seine Basin, Île-de-France, 2014: Resilience to Major Floods, OECD Publishing, Paris. Read “Small Business Storm Preparedness” at static/50dcbaa5e4b00220dc74e81f/t/523d9e21e4b0019d4f5b07e9/1379769889160/ RedHookStormPreparednessPlan.pdf Read “What if Paris flooded” in the OECD Observer at Share article at

Social trust: An invisible glue for better urban planning

©City of Amsterdam

Tamara Krawchenko, Centre for Entrepreneurship, SMEs, Regions and Cities

The reclaimed industrial waterfront area, Buiksloterham, in Amsterdam. Buiksloterham is an old industrial waterfront area north of central Amsterdam. Gas and oil producer Shell used to be located here, as was an airplane factory, shipbuilder and other assorted manufacturing. But the companies have moved out, leaving an empty site with polluted soil. Amsterdam city planners took a novel approach: they opened Buiksloterham to bidders for temporary use, with the site development criteria of building structures without foundations (due to soil issues) and fixing up the area. Rather than imposing a detailed urban plan for the area, they established “rules of development”, which allowed latitude in terms of construction, but made requirements regarding mixed commercial/residential use, and the height and density of buildings. For one innovative project, De Ceuvel opened small business offices and studio space, as well as a café, in revamped houseboats. Former squatters and artists have established cultural spaces here, attracting creative businesses like MTV, who moved its European headquarters here. The area welcomed its first residents in 2014 and approximately 3,000 homes will be developed over the coming decade, many of them self-built as part of the city’s active “do it yourself” (DIY) approach to housing. Buiksloterham’s rehabilitation benefitted from high social trust in the Netherlands, which makes for collaborative planning and smoother redevelopment processes. It reflects the country’s history of careful water management, which has bred a culture of co-operation and consensual decision-making, involving citizens and other players. This is called the “polder model”, named after the low-lying land reclaimed using dykes and canals, without which large parts of the Netherlands would simply be under the sea. The polder model also helps explain today’s Dutch planning model in which each level of government has near-autonomous oversight of its own area of planning interest, rather than classic “top-down” decision-making. This culture of social trust and collaboration has enabled Amsterdam to adopt more flexible approaches to land-use planning, encouraging temporary, do-it yourself and even experimental land use. The confidence that there will be opportunities along the way to negotiate and develop solutions to problems that might arise allows for inventiveness. The degree of social trust in a society is a major factor in how well, or badly, the system works. The higher the social trust, the

smoother the process is, while places where such trust is lacking have a much bumpier ride. This affects planning culture and impacts everything from day-to-day work practices to the number of appeals (and delays) which planners must deal with. Prague’s state planning legacy The Czech Republic is a country that has much lower levels of social trust than the Netherlands: there, trust in others lies below the OECD European average at 5.3, versus 5.8 out of 10, according to our study. Historical relations also loom large here, though not as beneficially as in the Dutch example: under the old Soviet-led regime, planning was highly intrusive. In the early days of the new parliamentary republic–the so-called “wild 1990s”–there was backlash against this intrusion. Massive privatisation of formerly public lands followed and foreign investment flooded into the city, particularly into Prague’s historic core. Corruption and opaque processes eroded trust between developers, residents and public officials, and has coloured relations between these groups to this day. As a reflection of this, recourse to appeals and litigation in the development process are common. Prague, which is in a period of growth and investment, is trying to rebuild these relationships. At play are large-scale brownfield redevelopments of land not currently in use. Potentially, they can transform entire neighbourhoods. Trust helps How can cities with lower levels of social trust improve the planning process? One answer is to win more trust back. Open, transparent and meaningful public engagement is therefore critical. But as strategic or detailed land-use plans are only adopted every several years, it is important to engage local people on an ongoing basis. This needs to be done at the neighbourhood level, particularly when there are major changes happening in a community. It is also important that planning be made more responsive across the board. One thing that can help with this is for cities to regularly evaluate and report on key indicators and trends–it needs to be open to adjustment and improvement along the way, and residents and businesses should be part of this process. To learn more about our work on the governance of land use, see: governance-of-land-use.htm References and links OECD (2017), The Governance of Land Use in OECD Countries: Policy Analysis and Recommendations, OECD Publishing, Paris OECD (2017), Land-use Planning Systems in the OECD: Country Fact Sheets, OECD Publishing, Paris. OECD (2017), “Land-use trends, challenges and opportunities in Amsterdam”, in The Governance of Land Use in the Netherlands: The Case of Amsterdam, OECD Publishing, Paris OECD (2017), The Governance of Land Use in the Czech Republic: The Case of Prague, OECD Publishing, Paris Share article at

OECD Observer No 313 Q1 2018


The cost of catastrophe: Why putting a price-tag on disaster is our best protection Catherine Gamper, OECD Directorate for Public Governance

When applied however, risk information can be extremely tricky business. Physical risk reduction investments can have a surprisingly opposite effect to what’s intended. In the case of the alpine landslide disaster, extensive investments made to protect the village, such as retention walls, may have contributed to a “false” sense of security, encouraging more house construction, for example, and the expansion of local public infrastructure. In the end, this increased rather than decreased damage. After the landslide, the mayor of the alpine village told a local newspaper, “The good news is that the families who lost their homes won’t be moving away. They’re staying right here.” While this can indeed be taken as happy news, it does present

©Andreas Meier/Reuters

Physical risk reduction investments can have a surprisingly opposite effect to what’s intended

In June 2015, a small village in the Austrian Alps was buried under a massive landslide after days of intense rain. Thanks to accurate weather forecasts and early warning systems, no one was hurt in the landslide but it caused considerable damage to the local economy and people’s livelihoods. OECD countries have gotten much better at preparing for and responding to disasters, and fatality rates have gone down. What we’re not so good at, however, is reducing the economic fallout from natural disasters. Because of budgetary constraints, countries give investment in risk prevention less priority, and the cost of disaster is mounting. Minimising disaster-related costs requires knowledge about the type of hazards that are common in a certain area, the likelihood they will occur, and the intensity their occurrence is expected to be. OECD countries have the technical capacity to understand well-established hazards. Results of such hazard analyses are widely available online thanks to high-resolution mapping tools. Even with a better understanding of a region’s recurring hazards, though, decision-makers lack a systematic understanding of risks; that is, the extent to which identified hazards threaten and expose populations and assets such as homes, and transport and communications infrastructure to potential damage. Risk assessment includes the estimated costs that can ensue from a well-established hazard and the geographical and economic radius of damage. When governments have poor visibility on how much damage a hazard might cause, it is hard for them to make effective policy decisions. Good-quality information about prevailing risks helps local governments make better decisions about land use: they may decide to convert built areas into grasslands that function as flood expansion zones, for instance. It also helps governments make effective investments in physical prevention measures.


a political-economic conundrum. Mayors, who are often in charge of local land use and construction permit decisions, and who depend on local property tax income, have an interest in going back to the way things were before disaster hit. And as risk prevention is co-financed by other levels of government, there is less consideration of the real costs of rebuilding homes and businesses exactly as they were in disaster areas. It is entirely understandable that people want to stay in places they have grown attached to even if there is the constant threat of flood or volcanic eruption. But can we justify that economically? References and links OECD (2014), Boosting Resilience through Innovative Risk Governance, OECD Reviews of Risk Management Policies, OECD Publishing, Paris, OECD (2017), Boosting Disaster Prevention through Innovative Risk Governance: Insights from Austria, France and Switzerland, OECD Reviews of Risk Management Policies, OECD Publishing, Paris, OECD (2015), The Changing Face of Strategic Crisis Management, OECD Reviews of Risk Management Policies, OECD Publishing, Paris, OECD (2018), National Risk Assessments: A Cross Country Perspective, OECD Publishing, Paris, Share article at

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Green budgeting can spur governments to improve our planet’s bottom line Ronnie Downes, OECD Directorate for Public Governance

Planet Summit in Paris in December 2017, along with a call for meaningful carbon pricing. French president Emmanuel Macron welcomed the initiative enthusiastically: “We are launching the “Paris Collaborative on Green Budgeting” within the framework of our zero-emission objective,” he said at the global climate financing summit. “Analysis of the budgets of OECD countries furthers transparency, and I thank Angel Gurría for his contribution to this framework. The work of the OECD will enable budget presentations launched by a group of pilot countries. Obviously, we will be contributing with presentations that show how the budget each year is distributed according to climate objectives.”

©Charlotte Moreau

The OECD has brought together a cross-disciplinary group of environmental, tax, budget and fiscal affairs experts who will partner with countries to help them assess and improve their

Ever hear of triple-bottom line accounting? This is what businesses use to go beyond the usual financial balance sheet to ensure their accounts reflect environmentally and socially responsible profits and loss. Shareholders and clients increasingly want companies to be clean and responsible in their business practices, to such an extent that it can affect their stock value. But what about government? Shouldn’t public finances also follow such quality criteria so that we can hold our politicians to account and ensure our tax money is taking care of the environment? In our view, budgeting is not a “neutral” reporting exercise but one of the most effective ways of making sure that public money is put to work properly and that policies are actually helping governments to achieve important goals, like fighting climate change and cutting pollution, for instance. “Green budgeting” aims to use the budget–taxes, spending and policy coordination–to assess and promote the alignment that is essential to meet environmental goals. For example, green budgeting shows financial outlays that have positive climate change impacts, and highlights tax policy choices that must be confronted as fuel is “decarbonised”, whittling away a major source of government revenues. Many large private corporations employ the triple-line accounting championed by the likes of the Global Reporting Initiative, an independent organisation, to measure overall company performance according to not only traditional profit and loss but social responsibility to people and environmental performance as well. But the public sector has been slow to do the same. This will have to change. The climate change targets we have set in the Paris Agreement, Aichi Biodiversity Targets and the United Nations’ Sustainable Development Goals require that governments know what portion of their budgets is moving their countries towards reaching these targets and what portion is hindering it, and to craft their policies accordingly. With the backing of France and Mexico, OECD Secretary-General Angel Gurría announced the green budgeting initiative at the One

Budgeting is not a “neutral” reporting exercise, but one of the most effective ways of making sure that public money is put to work to fight climate change budgets and fiscal policies for climate resilience. Among other things, green accounting looks at how subsidies that are harmful to biodiversity or which push the planet’s carbon emissions output compare with resources the government puts in these two areas. The Collaborative will analyse how coherent fiscal policies are with developing low-emissions, sustainable strategies. And, taking inspiration from the OECD’s work on “gender budgeting”, which determines how budgets impact gender equality, it will promote environmentally-sensible budgeting. The OECD will work with countries to set a new global agenda for green budgeting with agreed-upon definitions, and common methods, guidelines and tools to bring about sustainable public finance flows. Tools include those that track the impacts of decarbonisation and carbon pricing on fossil fuel use and tax revenues in each country, and voluntary “green budget statements” to show the environmental credentials of the annual budget. Companies adhere to triple-line accounting because it shows the true cost of doing business. Likewise, by knowing the environmental costs and benefits incurred in serving its citizens thanks to green budgeting, governments will be better able to raise the planet’s bottom line. References and links Read Read Massie, Robert Kinloch, “Reporting on sustainability: A global initiative”, OECD Observer No 226/227, Summer 2001, OECD (2017) Investing in Climate, Investing in Growth, OECD (2015) Recommendation of the Council on Budgetary Governance, OECD (2016), Effective Carbon Rates: Pricing CO₂ through Taxes and Emissions Trading Systems, OECD Publishing, Paris, For more on the Global Reporting Initiative today, see Share article at

OECD Observer No 313 Q1 2018


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Geography matters: A territorial approach to food and nutrition security Jennifer Sheahan, OECD Sahel and West Africa Club (SWAC)

food and nutrition security do not sufficiently consider the needs of local people or include them in policymaking processes. In contrast, a territorial approach promotes grassroots interventions and empowers local actors. It also recognises that all regions–not only urban areas–have development potential.

©Finbarr O’Reilly/Reuters

Making a territorial approach a reality on the ground How rural and urban territories are managed has major implications for food and nutrition security policies. People and places need to be at the centre of development strategies that

Purely national analyses can mask pockets of poverty, hunger and malnutrition concentrated in specific geographic areas Empty granaries in Niger Every year, millions of people in the Sahel and West Africa face hunger as levels of food and nutrition insecurity become critical. It is a familiar problem that tends to be dealt with within a top-down, national framework. Yet purely national analyses, rather than territorial and local ones, can mask pockets of poverty, hunger and malnutrition concentrated in specific geographic areas. If we look, for example, at stunting, a chronic state of undernutrition among children under the age of five, the national average in Benin is 34%. Territorial analyses tell us more though. In Borgou, stunting affects 41% of children under five, and in Benin’s largest and northernmost region, Alibori, 40% are affected. In the Plateau region, it is 39%, which is the same for Atacora in northwestern Benin. In Ghana, the national average for stunting is 23% but reaches 37% and 32% in the Northern and Upper East regions respectively. If we are to design and implement policy responses to solve problems like stunting, we must take an approach that understands the specific territorial dynamics of particular areas. Mapping territorial disparities helps. The Cadre harmonisé is an analytical framework that identifies geographical areas and populations in different phases of food insecurity, colour-coded to denote whether it is minimal, stressed, crisis, emergency and famine. There are significant disparities in food and nutrition security across and within countries. Northeastern Nigeria, Mali, and the broader Lake Chad basin, encompassing Chad, Niger and Nigeria, in particular, show high spatial concentrations of critically food insecure populations. Spatial disparities in food and nutrition security Spatial disparities arise because different territories have unique characteristics: demographic and socio-economic profiles, social and cultural norms, natural resources, organisations, different layers of decision-making, as well as exposure to conflict. These unique characteristics are context-specific and vary from one territory to another. Top-down, national-level approaches to

create jobs, especially in remote areas where synergies between rural and urban areas must be harnessed. People and places need to be central to investments in basic social services in health, education, water-sanitation-hygiene, rural finance and family planning. Making a territorial approach a reality on the ground requires several conditions: First, it requires an understanding of how the unique characteristics of a particular area influence its development potential. Second, it needs a multi-level governance system to enable the horizontal and vertical coordination of policies across sectors, and national and sub-national levels of government. Third, it demands a multi-sectoral and multi-actor perspective that responds to the diverse yet interconnected needs and expectations of local populations. It involves connecting actors in urban and rural areas, boosting trade, diversifying rural economies and facilitating growth in employment. Fourth, it is important to equip those local actors with sufficient decisionmaking power, and technical and planning capacity to formulate and implement policies at the local level. Fifth, we must supply better data and tools at the sub-national level so that policymakers can adopt place-based approaches and identify the bottlenecks hampering food security. Last but not least, a territorial approach needs political will and leadership to succeed. The most sustainable means of designing appropriate territorial policies is to do it in concert with those who will benefit from those policies. Local ownership and leadership over policy processes that include all actors is at the heart of a territorial approach. It is also about enhancing opportunities for all, particularly for women and youth, and targeting spending to the most vulnerable places and populations, as advocated by the Global Alliance for Resilience (AGIR) in the Sahel and West Africa. References and links Read more at EN.pdf Visit us at and Share article at

OECD Observer No 313 Q1 2018


Sharing and caring for French

©Association Hermione-La Fayette

Anne-Lise Prigent, OECD Observer

The Hermione

The Francosphere is one of the fastest growing language zones in the world, with over one billion people expected to be living in French-speaking countries by 2065, second only to countries that speak English. What are the challenges for this Francophonie–and for the world? “For liberty to live, men will always have to stand up and fight against indifference and resignation.” In 1776, America was fighting for its freedom. The 21-year old Marquis de La Fayette volunteered to defend this cause and, with the backing of Louis XVI, set sail on the Hermione to provide French assistance to a fledgling America. Since then, the Hermione has become a symbol of solidarity and freedom. Since 1997, a replica of the Hermione has been keeping this solidarity afloat, with the International Organisation of La Francophonie at the helm of an


exciting, harmonious and forward-looking adventure. The Francosphere covers 274 million French speakers over five continents. French is the second most widely learned language after English. In November 2017, Emmanuel Macron said that French could be “the number one language in Africa and maybe even the world”. As he pointed out, the centre of gravity of the French language was “somewhere between Kinshasa and Brazzaville rather than between Paris and Montauban”. The influence of French has now shifted beyond France and is unfolding in Africa. This expansion will naturally depend on further progress in school enrolment and the teaching of French in African countries, but the figures speak for themselves. According to the UN, the Francosphere is forecasted to increase by 143% between 2015 and 2065 (compared

to 62% for English), by which time a billion people are expected to be speaking French. This would make it the second international language, behind English. The challenges facing the global Francosphere are essential for the future of humanity. French can be used to facilitate cultural and economic integration, allowing people to live together and be free together. The International Organisation of La Francophonie wants an open and united Francosphere. It also wants an active Francosphere, working to develop linguistic and cultural diversity, the economy, entrepreneurship, training, sustainable development, and prospects for young people and women, among others. Life together is something that 350 crew members from around the world experienced on this year’s expedition of the Hermione. The origins of these sailors were very diverse, covering 34


member states and governments from La Francophonie, from Haiti and Viet Nam to Mali. The ten-day crossing from Rochefort to Tangier cemented their team spirit. Off the coast of Portugal, the wind rose and the boat rolled more than 40 degrees. The sailors were out all night, working as equals. Secure in their harnesses, they busied themselves furling the sails to prevent the boat from capsizing. On deck,

The challenges facing the global Francosphere are essential for the future of humanity everyone looked out for their neighbour. They pushed themselves, physically and mentally. They overcame their fears and worked as one. I think of Soulo, the unforgettable journalist from Mali, who had never seen the sea before or “even sailed in a canoe on the river Niger”, as he explained with a laugh. But there he was, braving the elements despite constant seasickness. The other crew members helped him keep his spirits up, especially Jimmy, the warm-hearted son of Cambodian refugees from Quebec. Jimmy talked about his fellow travellers, about all the people he had met–in the spirit of philosopher Emmanuel Levinas’ evocations of the encounter with the Other–and what they told him about their lives and their desires. Jimmy expected nothing in return and just listened, unassumingly. Jimmy likened French to sailing, as something which achieved its full potential during moments of exchange. French was the deck of the boat, where everyone stood together. He talked about words carried on the winds. He made me think of Saint-John Perse, who wrote, “These were very great winds over all the faces of this world, Very great winds rejoicing over the world, (…) Having neither care nor caution, and leaving us,

men of straw (…) And my opinion is that we should live! With the torch in the wind, with the flame in the wind, And that all men amongst us should be so mingled and consumed therein, That this growing torch may kindle within us a greater clarity….” Jimmy ferried these words, harbouring the French language which travels across five continents, restlessly roaming and reinventing itself across a spectrum of diversity and liberty, from Kinshasa to Quebec. There are similarities with Amin Maalouf’s idea in In the Name of Identity: Violence and the Need to Belong that the multiple nature of our identities is what makes them so rich. Victor Hugo once said, “Neither language nor the sun will stop nowadays. The day when they become ‘fixed’, they’re dead”. Montaigne would cast a bemused eye over the language for which he bravely eschewed Latin as now, over 5 centuries later, it is as fresh as a daisy. Senegal’s first president, Léopold Sédar Senghor’s “old lady in hat and gloves” is celebrated around the world by the rap group, Free Together. French is a language of desire, according to the award-winning author, Leïla Slimani. You can decide to live it and experience it like Samuel Beckett, Milan Kundera and Andreï Makine, all non-French writers who wrote in French. Or, like the 120,000 Chinese and 500,000 Indians currently learning French. In Tangier, where the Hermione docked not long before the start of spring, French, Arabic and Spanish co-exist. Tangier, a fabled, beautiful and living city feted in all these three languages, and many more, by Tahar Ben Jelloun, Mohamed Choukri and Juan Goytisolo, to name just a very few. Tangier, a city built on the winds and a meeting point between Africa and Europe, the South and the North, the East and the West, the Atlantic and the Mediterranean. A city whose huge port, Tanger-Med, is a window to the world. In Tangier, Jimmy talked about what was right–and wrong–with the world, about

inequalities and life paths. About being born somewhere, as Maxime Le Forestier sang. About giving everyone the same opportunities, whether they are from Tangier, Algiers, Paris or Manila. But how? Jimmy talked about the importance of the economy and development for all countries. He was looking for a wellinformed and concrete approach. He was interested in the OECD’s, with its international dimension and comparative approach. The OECD wants to turn words into actions, fight inequalities, and promote initiatives for better lives. And to do so it uses dialogue, collective thinking, international co-operation and action. In French, in English (the two official languages of the OECD), and in many other languages. But just when we are most in need of international co-operation, it seems that fear, suspicion, and the temptation to turn inwards are gaining ground. In an interdependent world, a multilateral approach is nonetheless essential. Without international co-operation, there is no chance of overcoming the complex issues surrounding the themes of inequality, sustainable development, climate change, digitisation, taxation and migration. We need to work together. Like the crew on a worldwide Hermione. All hands on deck. References and links Read “Macron présente sa vision d’une francophonie ‘décomplexée’”, L’Obs, 20 March 2018 at https://www. macron-presente-sa-vision-d-une-francophoniedecomplexee.html Read “Macron taps author Slimani as French language emissary”, Reuters, 6 November 2017 at https://www. macron-taps-author-slimani-as-french-language-emissaryidUSKBN1D60SV Maalouf, Amin, In the Name of Identity: Violence and the Need to Belong, trans. Barbara Bray, New York: Arcade Publishing Share article at

OECD Observer No 313 Q1 2018


OECD’s global knowledge base


Creative multilateralism: Stronger collaboration for all The international system stands at a critical juncture, facing slow global economic growth, rising inequalities and challenges to the rules-based global order that has underpinned decades of peace and prosperity. Many governments are working to recalibrate their global engagement and do what they can to safeguard an open, progressive world.* Spearheading this are five quite diverse countries–Mexico, Indonesia, Republic of Korea, Turkey and Australia–which have come together to form an innovative partnership, called MIKTA. Though an informal grouping, MIKTA could prove to be a model for the type of dynamic modern diplomacy and international co-operation currently needed to bridge divides and strengthen a multilateral system.

This is more important today than at any point in living memory. The benefits of the global trading system and other multilateral fora and initiatives are being questioned, with a strong backlash

Our unique grouping can serve as a model for countries seeking to work together to uphold global peace and prosperity coming from its founding champions. The global economy is experiencing significant and long-term change, bringing opportunities for many, but difficulty for others. Moreover, a new scepticism has emerged. There are many who feel that globalisation simply does not correspond to them or answer to their needs. The international organisations that nurtured the framework of rules-based order that underpinned our peace and prosperity, including the OECD, now face accusations from some quarters that they are part of the problem rather than the solution. In this uncertain climate, the multilateral system as a whole needs constructive partnerships to bring countries together, and find common approaches to complex and challenging issues. This is the mission that MIKTA countries are crafting for our partnership. As a bridge-builder and consensus-maker, we are working to facilitate dialogue and constructively contribute to debate in a range of forums. Through this, we can make the multilateral system work for many. Take our MIKTA Workshop on Trade and Investment at the World Trade Organisation, for example. There, our dialogue led

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The MIKTA grouping is unique: our five partners represent the diversity of the international community, drawing ideas and perspectives from our different regional, cultural, religious and historical traditions. And yet, the strength of our shared interests– a commitment to a rules-based global order and international institutions that work for all–transcends our diversity. What matters is what unites us. MIKTA foreign ministers (from left to right): Mr Murat Yavuz Ateş , Deputy Undersecretary for Economic Affairs, Turkey; Mr Luis Videgaray Caso, Minister for Foreign Affairs, Mexico; Ms Retno Marsudi, Minister for Foreign Affairs, Indonesia; Ms Julie Bishop, Minister for Foreign Affairs, Australia; Mr Cho Hyun, Second Vice Minister for Foreign Affairs, Republic of Korea

to concrete ideas on where the WTO can add value, particularly on trade and investment policy coherence and investment facilitation. The initiative was a testament to what can be accomplished when developing and developed economies work together. In this forum, and many others, the MIKTA group’s diversity was a source of strength. In working for the multilateral system, we also support efforts to improve the functioning and governance of international organisations. This includes bringing international energy governance up to date by making it more inclusive of the needs of emerging and developing economies. This thinking is reflected in the ambitious two-year modernisation agenda of the International Energy Agency. Diverse, yet like-minded: this is what underpins MIKTA, and can serve as a model for other countries seeking to work together to uphold global peace and prosperity. What makes us different makes what we share all the more worth defending: the rules-based global order that we all depend on. *By the ambassadors of Mexico, Korea, Turkey and Australia to the OECD: Ms Monica Aspe, Mexico; Mr Jong-Won Yoon, Korea; Mr Erdem Basçi, Turkey; Mr Brian Pontifex, Australia; and Indonesia’s Ambassador to France, Mr Hotmangaradja Pandjaitan.


OECD Observer No 313 Q1 2018



OECD, champion of knowledge access Toby Green, Chief Operating Officer, Public Affairs and Communications, at OECD

In 1998, when I came across the OECD, I had been working in scholarly publishing for more than a decade, with–I thought–a good view of the market and its participants. Yet I had no clear idea of what the Organisation was, what it did or that it even had publications. By my reckoning, in 1998, total readership of OECD works was around 250,000, which meant it really only existed for a very small, niche audience. In addition, readership was falling fast because the content was in print only and by the late 1990s, everyone was looking for stuff online. By existing only in print, OECD publications were so hidden people weren’t picking up on the organisation’s first-class work! My next shock came, when I, now a member of the OECD Publishing team, made my first visit to the Frankfurt Book Fair, where I discovered a room full of other IGO publishers with full publishing programmes! So, it wasn’t just the OECD that was “off radar”; there was a whole class of institutions with relevant content that was “off radar”! I felt that I had discovered a hidden gold-mine of valuable content that needed to be brought onto everyone’s screens and that this would be a wonderful professional challenge. I set myself a mental objective to not only get the OECD’s content into the mainstream, but to do the same for all IGOs. Of course, this challenge was tremendous: no money for investment, heavy institutional context, and at a time of “speed-of-light” change because of the arrival of the internet. However, we were lucky: Ingenta (a content services provider) agreed to build SourceOECD, the OECD’s first online library. Clunky and basic as it was, it got us going and it helped us to shift a longstanding publishing paradigm: the division between periodicals and books. Historically, publishing was separated into these two worlds and data didn’t even figure in. Same authors, same readers but everything in between–editors, production processes, supply chains, librarians and budgets–was different, depending on whether the product was a book or a periodical. Always a strong believer that publishing is primarily for the benefit of readers, I wanted to bundle all our stuff–books, journals, grey literature, data–into one single, seamless, content service. This shaped how we built SourceOECD; it shaped our sales strategy, and it even shaped how we managed our editorial and production streams. It meant innovating and that we did: we were the first to sell books as subscription bundles; the first to sell packages comprising books, journals and data; to provide readers with special e-editions for sharing and embedding in their social media channels and websites; the first to publish supplemental data–and not just among IGOs, among any scholarly publisher. We even started experimenting with the concept of “Freemium”, offering 10% of books free to read. Technology moved on and SourceOECD was re-built and re-branded as OECD iLibrary. This new platform taught us that audience


penetration requires a marriage of great content with great technology–let one or the other decline and you lose your readers. With the OECD now “on radar”, conversations started with other IGOs, to help them reach their audiences more effectively and to deliver even more great content. We started small, with The Commonwealth and that led to bringing the Nordic Council on board. Now, we also disseminate the content of the United Nations, the International Telecommunication Union and the World Trade Organization. And we are talking to others as well. What has this experience taught us? We’ve discovered that we have to do more than just share our technology, we need to share our skills as well, in order to ensure that the content is prepared and managed to stringent, but flexible, quality standards. This is essential because with 430,000 content items now managed by the iLibrary system and more than 50,000 new items being added every

Publishing on our own, OECD is too small. We risk our audience drifting away … On our own, we lack the ability to invest and offer scaled solutions. year, efficiency is key. Our consistency and quality were rewarded when, in 2017, OECD Publishing was awarded the coveted Academic and Professional Publisher Award, given by the London Book Fair and the Publishers’ Association. But the internet and things digital create a winner-takes-all environment, where scale matters, where investment cycles are neverending, where network effects are multipliers. Publishing on our own, OECD is too small. We risk our audience drifting away to the huge knowledge stores run by the “big five” science and scholarly publishers. On our own, we lack the ability to invest and offer scaled solutions. Eventually the unyielding economics of digital publishing would force us either to license our content to one of the big commercial players or to drift to the margins of the Internet highway and back to the niche audience we had two decades ago. To generate sufficient scale to win our fair share of audience time, I am now looking to collaborate with IGOs who do not need our iLibrary platform, but who–like us–would benefit from partnerships and scaling. I hope that together we will build a combined search engine for our content, so we can co-create a virtual bundle of trusted, internationally relevant content that meets the needs of a wide range of readers. I firmly believe that if IGOs together build a larger content service, we can pull in more readers to the benefit of everyone–the network effect in action. In 2018, we relaunched iLibrary, enhancing the features and usability of the platform to better engage users. We are determined to make sure that those who want our work can get access to it, at increasingly granular levels, as quickly and as efficiently as possible. The next steps are is to broaden the iLibrary partnership with other IGOs who need a platform and to collaborate around search with those IGOs who don’t. Building a discovery and delivery system for IGO content that means all our content remains firmly “on radar” and winning audience share. The world has changed and so have we. In 1998, I estimated we had 250,000 readings per year; today, we’re delivering 250,000 readings per week. Worth bearing this in mind because if no-one reads us, we cease to exist. Visit OECD iLibrary:


To support the UN mission of international co-operation as reflected in the 1945 Charter of the United Nations, United Nations Publications promotes a myriad of work and knowledge worldwide comprising facts and expertise on international peace and security, human rights, gender issues, economic and social development, international trade, climate change, international law, governance, public health, transportation, and statistics. With the 17 Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development, countries will mobilise efforts to end all forms of poverty, fight inequalities and tackle climate change, while ensuring that no one is left behind.

Our reports provide key time-sensitive information on these issues, capturing the state of the global economy and the welfare of people and planet. Scholars, information specialists, policymakers and influencers are the primary audiences for United Nations publications, making effective dissemination and distribution of information an imperative to support the success of the agenda. We’re proud that the UN iLibrary platform aggregates the United Nations’ knowledge in one place. It has allowed us to grow to its current state of over 5,500 publications, data and working papers pooling key content from the 25 UN Secretariat departments and 25 agencies, funds and programmes. This powerful platform enables anyone with an internet connection to discover, read and share content quickly and seamlessly.

trademark have come to epitomise high productivity, social security, gender equality and a healthy environment.

The Nordic Co-operation is one of the world’s most extensive forms of regional collaboration, involving Denmark, Finland, Iceland, Norway, Sweden, the Faroe Islands, Greenland and Aland. Although the region’s total population represents about 26 million people, its economy is the 12th largest in the world. The Nordic countries have been setting standards on a range of issues for decades in healthcare, gender equality and energy sustainability, and the Nordic brand and

In 2018, The Nordic Co-operation is pushing for further collaboration among our members and other international organisations to raise the profiles globally of countries in the “Team Norden” spirit. Our partnership with the OECD and its digital iLibrary platform allows us to reach a wider audience and inform about our co-operative efforts. Its digital library is one of a kind, and it has allowed us to publish and spread our work more efficiently and effectively. Our partnership will continue to evolve and we look forward to future collaboration.

ITU’s strategic framework for 2016-2019 aims to foster an “information society” empowered by an interconnected world that supports social, economic and environmentally sustainable growth and development for everyone. This includes ICT access for all, towards which the ITU will continue to push for, encouraging SMEs from all over the world to also join the ITU. The International Telecommunication Union (ITU) is the United Nations specialised agency for information and communication technologies. We allocate global radio spectrum and satellite orbits, develop the technical standards that ensure networks and technologies seamlessly interconnect, and strive to improve access to ICTs (information and communication technologies) to underserved communities worldwide. We are an organisation based on public-private partnership since its inception with a membership of 193 countries and almost 800 private-sector entities and academic institutions.

The Commonwealth is made up of 53 independent countries that work together to pursue common goals to promote development, democracy and peace. The Commonwealth spans all continents and represents about 2.4 billion people in total, 60% of which is aged 29 or under. The Commonwealth’s strength lies in its shared values and diversity; 30 of our members are small states, most with populations fewer than 1.5 million, and 24 members are small island developing states. Established in 1965, The Commonwealth Secretariat represents the interests of member countries, especially small and developing states, which can sometimes

Having our content powered by the OECD iLibrary will ensure consistent content outreach to our networks. We are pleased to be partnered with the OECD alongside the Commonwealth Secretariat, Nordic Co-operation and the United Nations. In the future, we hope for increased views and usage of our publications, with the aspiration that we can achieve our goal of connecting the world through this iLibrary collaboration.

be overshadowed by larger, more powerful countries. The Secretariat works with governments to deliver on priorities agreed by Commonwealth Heads of Government. We bring policy-makers together and provide guidance and technical assistance to member countries on a range of issues from democracy, the rule of law, and human rights, to governance, economic and social development, small states and youth development. The Commonwealth Secretariat was the first international organisation to partner with the OECD iLibrary. We are delighted to have been part of this growing digital publishing platform from the start, promoting wider access to our work, and look forward to continuing our partnership to give readers access to fresh perspective on global issues.

OECD Observer No 313 Q1 2018



Of the world’s 7.6 billion people, more than 4 billion are at a disadvantage in terms of health, education or economic opportunities only because they are young, a woman or both. At this year’s Global Forum on Development, whose slogan was “The power of 4 billion”, high-level representatives from governments, businesses, foundations and international organisations discussed creating decent jobs for rural youth, reducing women’s unpaid care and domestic work, and the links between gender inequality and conflict. Find out more at


The power of 4 billion people

Her Royal Highness, Crown Princess of Denmark, with Secretary-General Angel Gurría at the OECD Global Forum on Development, April 2018

A nudge in the right direction

The ongoing March on Gender

To help people become the best version of themselves: that is just one of many promises behavioural science offers. Integrating nudges, indirect suggestions that influence choices, into public policy opens up great opportunities for ethical governance. During the Global Anti-Corruption & Integrity Forum in March, Saugatto Datta, managing director at ideas42, talked with OECD’s Kate Lancaster about how appealing to our deep-rooted sense of service brings us that much closer to integrity. See the Facebook Live interview here: https://

Achieving gender equality, especially in the jobs market, was a key issue at this year’s March on Gender month. Senior decisionmakers from the public and corporate worlds, experts, academics and other stakeholders who attended the conferences focused on how to close the gender gap in the private sector, looking at different policy approaches and implementation tools. See

OECD Secretary-General Angel Gurría was awarded the Hassan II Great World Water Prize by the Government of Morocco and the World Water Council at this year’s World Water Forum. The tribute officially recognised Mr Gurría’s leadership in “working towards greater solidarity and inclusion in order to ensure water security and climate justice.” More at


World Water Day

Andrés Ingi Jónsson, Member of Parliament, Iceland, and Gabriela Ramos, OECD Chief of Staff and G20 Sherpa, at a March on Gender meeting in March 2018; see page 11.

Strength in diversity

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Our economies and societies have become more diverse than ever before, yet progress to ensure that all groups in society are given the same opportunities has lagged behind. At the International Diversity Forum in January, participants from government, the private sector, academia, civil society, and international organisations looked at issues like promoting a diverse workforce and whether big data can reduce unconscious bias and discrimination. Besides the stimulating plenary sessions, there were photo exhibits, documentary screenings and lunch prepared by refugee cooks at Les Cuistots Migrateurs. Reza’s “One World One Tribe” photo exhibition at the International Diversity Forum



Recent speeches by Angel Gurría Opening of the 2018 OECD Mexico Forum and Presentation of the study “Getting it Right–Strategic Priorities for Mexico”

©OECD/Julien Daniel

Remarks delivered in Mexico City, Mexico, 12 March 2018 Competitive Mexico: Challenges and Opportunities Remarks delivered in Mexico City, Mexico, 12 March 2018

For a complete list of the speeches and statements, including those in French and other languages, go to: secretary-general/ 2018 OECD Global Anti-Corruption & Integrity Forum: Planet Integrity: Building a Fairer Society Opening remarks delivered in Paris, France, 27 March 2018 Presentation of the King Hassan II Great World Water Prize Remarks delivered in Brasília, Brazil, 21 March 2018 Development Finance to search SDG 6 – Event on Perspectives from International Development Banks

Oireachtas Committee Remarks delivered in Dublin, Ireland, 8 March 2018 Launch of the 2018 Ireland Economic Survey Remarks delivered in Dublin, Ireland, 8 March 2018

Remarks delivered in Brasília, Brazil, 28 February 2018 Presentation of the 2018 Economic Survey of Brazil Remarks delivered in Brasília, Brazil, 28 February 2018 Launch of the 2018 Economic Survey of Chile Remarks delivered in Santiago de Chile, Chile 26 February 2018

G20 Finance Ministers and Central Bank Governors Meeting: International Tax Challenges

2018 OECD SME Ministerial Conference

G20 Finance Ministers and Central Bank Governors Meeting: Developing Infrastructure as an Asset Class Remarks delivered in Buenos Aires, Argentina, 19 March 2018

Ms Marlies Stubits-Weidinger, Austria Mr Klavs A. Holm, Denmark Mr Noé Van Hulst, Netherlands Ms Annika Markovic, Sweden Ms Claudia Serrano, Chile Ms Elin Østebø Johansen, Norway Mr Ulrich Lehner, Switzerland Mr Carmel Shama-Hacohen, Israel Mr Zoltán Cséfalvay, Hungary Ms Michelle d’Auray, Canada Mr Brian Pontifex, Australia Mr George Krimpas, Greece Mr José Ignacio Wert, Spain

Launch of the Transfer Pricing Work Programme

Opening remarks delivered in Brasília, Brazil, 21 March 2018

Remarks delivered in Buenos Aires, Argentina, 20 March 2018


Remarks delivered in Mexico City, Mexico, 23 February 2018

Mr Jean-Joël Schittecatte, Belgium Mr Jong-Won Yoon, Korea Mr Christopher Sharrock, United Kingdom Mr Erdem Başçi, Turkey Ms Ivita Burmistre, Latvia Mr Aleksander Surdej, Poland Mr Pekka Puustinen, Finland Mr Dermot Nolan, Ireland Mr Kristjan Andri Stéfansson, Iceland Mr Alessandro Busacca, Italy Mr Petr Gandalovič, Czech Republic Ms Irena Sodin, Slovenia Mr Hiroshi Oe, Japan Mr Alar Streimann, Estonia

2018 OECD SME Ministerial Conference

Ms Monica Aspe, Mexico

Opening remarks delivered in Mexico City, Mexico, 22 February 2018

Mr Martin Hanz, Germany

OECD–INADEM Interactive Workshop on Women Entrepreneurs Opening remarks delivered in Mexico City, Mexico, 21 February 2018

Ms Martine Schommer, Luxembourg Ms Jane Coombs, New Zealand Mr Bernardo Lucena, Portugal Ms Catherine Colonna, France Ms Ingrid Brocková, Slovak Republic

The OECD’s 2018 Going for Growth: An opportunity that governments should not miss

Presentation of the 2018 OECD SME Finance Scoreboard

Remarks delivered in Buenos Aires, Argentina, 19 March 2018

Remarks delivered in Mexico City, Mexico, 21 February 2018

G20 Finance Ministers and Central Bank Governors Meeting–Future of Work

“Youth Circle”: Up for the Challenge? Youth and the future of Government

Remarks delivered in Buenos Aires, Argentina, 19 March 2018

Remarks delivered in Dubai, UAE, 11 February 2018

—­— Mr Andrew Haviland, United States Chargé d’Affaires a.i. —­— European Union Mr Rupert Schlegelmilch January 2018

OECD Observer No 313 Q1 2018



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, France unless otherwise stated. For a comprehensive list, see the OECD website at JANUARY




Launch of OECD Competition Assessment Review: Mexico and other launches


6th OECD Parliamentary Days and Meeting of the OECD Global Parliamentary Network


Global Forum on Transparency and Exchange of Information for Tax Purposes, Paris, France


Launch of Mexico’s e-Procurement System, CompraNet


Launch of Growth and Household Income– Statistics


Global Parliamentary Network on the Road



Launch of OECD Skills Strategy Policy Note: Mexico

Launch of DAC Peer Reviews: Korea

Global Forum on Development: Empowering Youth and Gender, Paris, France


SME Ministerial meeting, Mexico City, Mexico



Launch of Public Procurement in Nuevo León, Mexico–Promoting Efficiency through Centralisation and Professionalism


Latin American Economic Outlook, Brussels, Belgium

Launch of Latin America Economic Outlook 2018


Eleventh OECD Rural Development Conference, Edinburgh, United Kingdom


OECD Economic Surveys: Costa Rica 2018


Education for a Brighter Future in Greece


Launch of Getting Skills Right: Spain


Launch of Taxing Wages 2018


OECD Economic Surveys: Greece 2017


BIAC Council Liaison Committee Meeting


Launch of Seine Basin Flood Prevention Progress Report

24 24


European Migration Forum, Paris, France


OECD Tourism Trends and Policies, Berlin, Germany

Multilateralism BEPS Convention (MLI) signing ceremony


Launch of Ageing and Employment Policies: United States


Water World Forum 2018, Brasília, Brazil


Launch of OECD Economic Surveys: Poland 2018

23 26

25-26 High-level conference on Policies for Equal Ageing: a Life-Course Approach, Ljubljana, Slovenia 29


Launch of PISA Report on Resilient Students

30-31 Forum on Due Diligence in the Garment and Footwear Sector, Paris, France

2018 Southeast Asia Ministerial Forum, Tokyo, Japan


Launch of Global Private Philanthropy for Development

BIAC & TUAC Consultation with the MCM Bureau


Launch of OECD DAC Peer Reviews: Australia 2018

Launch of Skills Strategy Implementation Guidance for Portugal


Social Policy Ministerial, Montréal, Canada

26-27 IOM International Dialogue on Migration, New York, United States 27-28

OECD Global Anti-Corruption & Integrity Forum, Paris, France


Launch of OECD Economic Survey: Tunisia 2018

This strip originally appeared in OECD Observer 242, March 2004



29-30 OECD Forum 2018, Paris, France


Giving smaller businesses a leg-up Small and medium-sized enterprises (SMEs) conduct some of the most dynamic and innovative work in the business world. Yet despite a decline in SME bankruptcies, payment delays and non-performing loans, new bank lending to smaller businesses in 2016 decreased in 15 out of 25 countries studied by the OECD. The underlying causes of this trend vary from country to country, ranging from weak investment dynamics and macroeconomic performance to increased risk aversion and tightening credit standards. In the meantime, however, new sources of finance are breaking onto the SME scene.

Crowdfunding and p2p lending are experiencing a rise in popularity. What is the role of policymakers in this complex and shifting landscape? Governments around the world are spearheading initiatives to help SMEs access the resources they need to grow by expanding policies to support bank financing and by mitigating risks through credit guarantees and other schemes. Since SMEs are still heavily dependent on bank credit overall, governments are also trying to expand access to other instruments, like equity. But financing is not the only thing SMEs need. Start-ups, for instance, have a unique mix of financial and non-financial needs, and governments are responding with comprehensive start-up packages. One such example is the Corporación de Fomento de la Producción de Chile (CORFO) in Chile, which oversees the

Start-Up Chile programme. It eases visa restrictions for entrepreneurs, focuses on Chilean postgraduates returning from studies abroad, runs accelerators with funding of up to CLP60 million per project and hosts a pre-accelerator for start-ups led by women. Start-Up Chile also provides incentives for projects in nonmetropolitan areas, where it is harder to start and to grow smaller businesses. Governments are further tackling these geographical disparities through development centres and programmes that support entrepreneurship in disadvantaged regions. OECD (2018), Financing SMEs and Entrepreneurs 2018: An OECD Scoreboard, OECD Publishing, Paris,

Better security, better jobs Korea has one of the lowest unemployment rates in the world. Of developed economies, it also spends among the least money on employment insurance programs. On the outset, this makes a lot of sense. If you don’t have unemployment, why shell out on extensive unemployment benefit programmes?

population of workers is forced to keep accepting unstable jobs rather than transitioning to higher-quality ones.

But a March 2018 OECD report on Korean social security rightly points out that full employment doesn’t mean high-quality employment. And although Korea has few long-term unemployed people, it has an enormous number of workers stuck in low-quality, low-paying and short-term jobs. Without sufficient employment insurance (EI) to fall back on, this

The data confirms the huge coverage disparity between firms of different sizes. Large companies, with more than 300 workers, have nearly 100% employment insurance coverage. Microbusinesses, with fewer than 5 workers, have 40% coverage. And this is no insignificant part of the population. Some 40% of salaried Korean employees work in these

Non-standard workers (part-time, contracted, and daily workers), small business employees and self-employed workers are the most affected by this pernicious cycle. This is partly because Korean EI excludes certain part-time and microbusiness employees, partly because it requires self-employed people to “opt-in” within a short window, and partly because small businesses often evade EI registration without legal consequences.

microbusinesses–the largest proportion of all OECD countries. Demographically, these employees are predominantly women and workers over 50 years of age who face additional, compounded disadvantages in society. Korean policymakers are aware of these welfare blind spots. Even though social spending in Korea is half the OECD average, the government has been drastically expanding its social security programme over the past few decades. But there are still major gaps. In order to make the system more inclusive and effective, especially for non-standard workers, significant additional investment is needed to better enforce current welfare policies and expand insurance coverage. OECD (2018), Towards Better Social and Employment Security in Korea, Connecting People with Jobs, OECD Publishing, Paris.

OECD Observer No 313 Q1 2018



New publications How Immigrants Contribute to Developing Countries’ Economies This report is the result of a project aimed at providing empirical evidence on the ways immigrants affect their host countries. It shows that labour migration has a limited impact on native-born workers’ labour market outcomes, economic growth and public finance. ISBN: 978-92-64-28873-7 January 2018, 199 pages €28.00 $33.00 £22.00 ¥3 600

The Development Dimension: Private Philanthropy for Development This report questions long-held assumptions about the volume, nature and potential of foundations’ engagement in developing countries, and the role they can play to support the SDGs. It presents ground-breaking data and analysis on how foundations support development. ISBN: 978-92-64-08519-0 March 2018, 132 pages €16.00 $20.00 £13.00 ¥2 100

Ageing and Employment Policies: United States 2018: Working Better with Age and Fighting Unequal Ageing Preventing old-age disparities in employment outcomes and retirement income is crucial. This report looks at the various pathways out of the labour market for older workers, and how employers can be supported to retain and hire older workers. ISBN: 978-92-64-19011-5 January 2018, 150 pages €21.00 $25.00 £16.00 ¥2 700


All publications are available to read and share at Global State of National Urban Policy

OECD Tourism Trends and Policies 2018

This work is a joint effort between UN-Habitat and the Organisation for Economic Cooperation and Development. It sets a solid foundation for a common methodology to monitor the progress of National Urban Policies (NUPs) at the global level.

This book analyses tourism performance and policy trends across 49 OECD countries and partner economies. It highlights the need for coherent and comprehensive approaches to tourism policymaking, and the significance of the tourism economy.

ISBN: 978-92-64-29074-7 March 2018, 109 pages Free publication

ISBN: 9789264287396 March 2018, 380 pages DOI: 852018011P1 €75.00 $90.00 £60.00 ¥9700

OECD Labour Force Statistics 2017 This annual edition of Labour Force Statistics provides detailed statistics on labour force, employment and unemployment, broken down by gender, as well as unemployment duration, employment status, employment by sector of activity and part-time employment. ISBN: 9789264287037 February 2018, 160 pages DOI: 012017221P1 €116.00 $140.00 £92.00 ¥15000

Governance Frameworks to Counter Illicit Trade This report examines governance frameworks to counter illicit trade. It looks at the adequacy and effectiveness of applicable sanctions and penalties, and the steps that parties engaged in illicit trade take to lower their risk of detection. ISBN: 9789264291652 March 2018, 244 pages DOI: 422018211P1 €50.00 $60.00 £40.00 ¥6500

Valuing our Teachers and Raising their Status This report shows how education systems can support teachers to meet new demands in an increasingly global, digital, complex, uncertain and volatile world. It describes how education systems can be built to encourage and enable innovation. ISBN: 9789264292697 March 2018, 116 pages DOI: 912018021P1 €24.00 $29.00 £19.00 ¥3100

Making Blended Finance Work for the Sustainable Development Goals Blended finance is an approach that mixes different forms of capital in order to support development. This report presents a comprehensive assessment of the priorities for blended finance in developing countries. ISBN: 9789264288768 January 2018, 176 pages DOI: 432018021P1 €25.00 $30.00 £20.00 ¥3200


Focus on SMEs and Gender Gender Policy Delivery in Kazakhstan This OECD Review of Gender Policy Delivery in Kazakhstan comes at a moment when Kazakhstan is developing a new Gender Equality and Family Policy up to 2030 which seeks to enable equality of rights, benefits, responsibilities, and opportunities for men and women in all areas of social life, and eliminate all forms of gender discrimination.

ISBN: 9789264280359 October 2017, 148 pages €30.00 $36.00 £24.00 ¥3900

The Pursuit of Gender Equality – An Uphill Battle The book presents a range of indicators illustrating gender gaps. It also discusses recent policy initiatives, such as pay transparency measures to reduce gender wage gaps and policy reform aimed at fathers taking parental leave.

ISBN: 9789264281318 October 2017, 304 pages €50.00 $60.00 £40.00 ¥6500

Financing SMEs and Entrepreneurs 2018 The 2018 report covers 43 countries world-wide. In addition to the core indicators on SME financing, it provides additional information on recent developments in capital market finance for SMEs, crowdfunding and related activities, and findings of demand-side surveys.

ISBN: 9789264289574 February 2018, 240 pages €50.00 $60.00 £40.00 ¥6500

Financing SMEs and Entrepreneurs 2016 – An OECD Scoreboard This report monitors SME and entrepreneur access to finance in 37 countries. It includes indicators of debt, equity, asset-based finance and framework conditions for SME and entrepreneurship finance, complemented by an overview of recent developments in public and private initiatives to support SME finance.

ISBN: 9789264249486 April 2016, 580 pages €115.00 $138.00 £92.00 ¥14900

Small, Medium, Strong. Trends in SME Performance and Business Conditions

The Missing Entrepreneurs 2017 – Policies for Inclusive Entrepreneurship

This report presents comparative evidence on SME performance and trends, and on a broad range of policy areas and business environment conditions that are important for small businesses.

The Missing Entrepreneurs 2017 is the fourth edition in a series of publications that examine how public policies at national, regional and local levels can support job creation, economic growth and social inclusion by overcoming obstacles to business start-ups and self-employment by people from disadvantaged or underrepresented groups in entrepreneurship.

ISBN: 9789264275683 May 2017, 120 pages €24.00 $29.00 £19.00 ¥3100

All publications available at Supporting Entrepreneurship and Innovation in Higher Education in Hungary This report presents evidencebased analysis of current strategies and practices in higher education institutions (HEIs) in Hungary towards a value-creating use of knowledge resources for innovation and entrepreneurship.

ISBN: 9789264273344 November 2017, 144 pages €25.00 $30.00 £20.00 ¥3200

Women’s Economic Empowerment in Selected MENA Countries This report examines how current legal provisions in Algeria, Egypt, Jordan, Libya, Morocco and Tunisia are impacting women’s ability to fully participate in economic life, both as employees and entrepreneurs.

ISBN: 9789264279322 October 2017, 152 pages €30.00 $36.00 £24.00 ¥3900

Entrepreneurship at a glance 2017 The publication is produced by the OECD-Eurostat Entrepreneurship Indicators Programme based on official statistics. The 2017 edition features a new trends chapter, which also introduces recent developments related to the emergence of the “gig economy” and the use of digital tools by micro-enterprises.

ISBN: 9789264279933 September 2017, 148 pages €25.00 $30.00 £20.00 ¥3200

ISBN: 9789264283602 December 2017, 240 pages €50.00 $60.00 £40.00 ¥6500 OECD Observer No 313 Q1 2018



Like adult, like child “Children have never been very good at listening to their elders, but they have never failed to imitate them,” said James Baldwin. Indeed, young children pick up most of their social and educational cues from their adult caretakers, as a recent–and unprecedented– OECD meta-analysis of 44 early childcare studies found. Collectively, these studies confirm that the quality of interactions between care staff and children is the key driver of children’s development in early childcare programmes. Children with positive staff interactions exhibited better academic skills, and in some cases, better behavioural and social skills, in their teenage years than children with average or negative interactions.

Positive interactions are emotionally caring and educationally stimulating, and they occur within consistent, organised group routines. Negative interactions are emotionally cold and unresponsive to developmental needs, and happen within inconsistent, chaotic group routines. The effects of positive staff-child interactions are strongest for the youngest babies. Babies reach peak brain sensitivity before the age of three. During this time, areas of the brain that control emotion regulation, social skills and language develop at an incredible rate. It is thus vital that children have consistent, positive interactions with childcare staff early on. Although these findings may seem intuitive, they are surprising in the context of abundant rhetoric that prioritises more structural reforms within childcare programmes. These reports encourage increasing staff educational prerequisites, lowering staff-to-child ratios and choosing safer physical locations for care facilities.

While some structural reforms, like smaller staff-to-child ratios, do improve development outcomes, they do so by creating environments conducive to positive staff-child interactions. Smaller groups create warmer, more responsive and emotionally supportive interpersonal interactions. Other reforms often presumed to improve outcomes don’t actually do so. For example, requiring staff to have 4-year rather than 2-year degrees doesn’t significantly increase their ability to have emotionally supportive interaction with children. Reforms should rather favour initiatives like in-programme training workshops, which demonstrably increase the number of positive interactions between staff and children. OECD (2018), Engaging Young Children: Lessons from Research about Quality in Early Childhood Education and Care, OECD Publishing, Paris.

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Still, Spain’s tourism statistics are not the biggest jump on the chart. That honour goes to Japan and Iceland. Japan, which is in 11th place, enjoyed an average annual increase of over 30% over the same period, while Iceland is second to last, but with


3. 3 7.0

0. 2


Brazil has had its scandals, but as the latest Latin American Economic Outlook 2018 underlines, the country has made advancements over the last decade to promote transparency and fight corruption, with laws against conflict of interest and money laundering, for instance, and such proactive open-government initiatives as a “transparency portal” to help citizens monitor how their money is being spent. Still, public perceptions matter, not least for confidence. Indeed, in many countries around the world, state institutions have allowed specific groups to shape policy decisions in their favour, too often using corrupt means. This has eroded the democratic process and increased

20 05

70 60



50 40

5.0 4. 2 11 .5 6. 7 11 .9 6. 1 6. 0 -6 .8 8. 4 5.0 8. 7 7.6 6. 5 12 .2 -2 .5 2. 1 8. 0 3. 5 8. 9 0. 1 7.3 5.7 27 .8 2. 6

30 20 10


ce U Sp S ain Ge U rm K M any ex ico It Tu aly r Au key s Gr tria ee c Ja e Ca pan na Po da la Ne K nd th ore er a l a H n Cz ung ds ec ar h y De Re nm p. Sw ar k P ed Sw ort en itz uga er l l Ire and Au lan st d No ralia rw a C y Be hile lgi Ne Fi um w nla Ze nd al Es and t Sl oni ov a e Sl Is nia ov ra ak el Re La p. Lu Ic tvia xe ela m nd bo ur g


Note: Arrivals refer to visitor arrivals for Australia, Greece, Japan and Korea (tourists plus same day visitors). Growth rate refers to 2013-16 for Norway and 2012-14 for Sweden. Break in series between 2015 and 2016 for Switzerland. Source: OECD Tourism Trends and Policies 2018

an average annual increase of 27%. If you are looking to spend your holiday money where it’s most needed, consider Turkey, Sweden and Belgium. They suffered a tourist decline with Sweden hardest hit, dropping 6.8% between 2012 and 2016.

tourists, at just over a million for 2016. Yet this is already an average annual increase of 2.6%.

And even more off the beaten tourist track is Luxembourg. Luxembourg has the fewest

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Corruption on show One of the most popular Netflix series in Brazil right now is The Mechanism. Loosely based on real events, the show is about an ongoing investigation of a corruption scheme involving high-ranking Brazilian politicians and companies. No wonder it’s so successful: 79% of the population in Latin American and Caribbean countries think their government is corrupt.

Average annual growth 2012-16, in %

5.2 4. 0 10 .6 2. 1 -4 .0 3. 9 13 .4

Arrivals in 2016, in millions

“Summertime and the living is easy”–  at least for the lucky ones planning a holiday right now. France drew the most tourists in OECD countries in 2016 with over 82.5 million people among les bons vivants. Yet, all is not rosy for the land of Voltaire: though it welcomed nearly 7 million more tourists than the US, ranked number 2, France’s tourist numbers went up a mere 0.2% between 2012 and 2016, no doubt held down by terrorist attacks in 2015-16. Spain comes in third place with just a half million fewer tourists than the US. However, Spain has boosted its tourism by an average annual growth of 7% between 2012 and 2016, handily topping the US’s 3.3%. Provisional data suggest the strong performance continued in 2017.

International tourist arrivals in OECD countries


Tourism trends: Where to next?

DATABANK 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16

20 05 20 06 20 07 20 08 20 09 20 10 20 11 20 12 20 13 20 14 20 15 20 16


OECD (2018), OECD Tourism Trends and Policies 2018, OECD Publishing, Paris.

Perception of corruption in government in Latin America and the Caribbean, Southeast Asia and the OECD % 85

Latin America and the Caribbean


Southeast Asia

80 75 70 65 60 55 50






Source: OECD/ECLAC/CAF based on Gallup (2017), World Poll

inequalities. And not only has this damaged people’s trust in government but it has also undermined the rule of law, a fundament of good governance and inclusive growth. This is a widespread problem in Latin America, as the report shows. Perception of government corruption has not only stayed above the OECD average over the past 10 years, but surpassed that of southeast Asia in 2015. In 2016, Latin Americans’ perception of government corruption was 14 percentage points higher than the OECD average of







65% and 4 percentage points higher than southeast Asia’s 75%. If Latin America is to make any headway against corruption, authorities need to enforce laws curtailing bribery and illegal political lobbying and financing. Stories of corruption can still excite binge-watchers–just let them be a work of fiction rather than real life. OECD/CAF/ECLAC (2018), Latin American Economic Outlook 2018: Rethinking Institutions for Development, OECD Publishing, Paris Share article at

OECD Observer No 313 Q1 2018


DATABANK % change from: previous period



previous year

current period

same period last year


Gross domestic product Industrial production Consumer price index

Q2-2017 0.6 2.8 Q4-2017 0.4 2.4 Q4-2017 0.0 Q2-2017 1.4 4.7 1.7 Q2-2017 0.7 1.9 Q1-2018 0.4

Current balance Unemployment rate Interest rate

Q4-2017 -10.8 -4.5 Q2-2014 -12.8 -12.9 Q1-2018 5.5 Q2-2014 5.9 5.8 5.6 Q1-2018 1.8 2.9 Q2-2014 2.7 1.8


Gross domestic product Industrial production Consumer price index

Q1-2018 0.7 0.9 Q2-2014 0.2 3.1 Q2-2014 -0.9 0.2 Q4-2017 1.6 5.1 Q2-2014 1.0 1.8 Q1-2018 0.0

Current balance Unemployment rate Interest rate

Q4-2017 2.1 Q1-2014 1.5 0.6 3.1 Q1-2018 5.1 Q2-2014 5.0 5.8 4.7 Q1-2018 -0.3 Q2-2014 0.3 -0.3 0.2


Gross domestic product Industrial production Consumer price index

1.6 Q2-2014 0.1 1.0 Q1-2018 0.4 Q2-2014 0.6 Q4-2017 -0.7 3.4 2.5 Q2-2014 -0.3 1.5 Q1-2018 0.6 0.4

Current balance Unemployment rate Interest rate

Q4-2017 0.1 -1.5 Q1-2014 -0.2 -5.0 Q1-2018 6.4 7.6 Q2-2014 8.5 8.4 Q1-2018 -0.3 0.2 Q2-2014 0.3 -0.3


Gross domestic product Industrial production Consumer price index

Q4-2017 0.4 Q2-2014 0.8 2.9 2.5 4.5 Q4-2017 0.5 Q2-2014 0.8 4.0 Q2-2014 1.3 2.2 Q1-2018 1.0 2.1

Current balance Unemployment rate Interest rate

Q4-2017 -12.9 -8.4 Q2-2014 -10.9 -15.0 Q1-2018 5.8 7.1 Q2-2014 7.0 6.6 Q1-2018 1.6 Q2-2014 1.2 0.9 1.2


Gross domestic product Industrial production Consumer price index

Q4-2017 0.6 3.3 Q2-2014 0.2 2.1 Q1-2018 0.9 -1.5 Q2-2014 -3.3 7.7 Q2-2014 1.6 2.0 Q1-2018 0.7 5.1

Current balance Unemployment rate Interest rate

Q4-2017 -0.7 Q1-2014 -2.0 -0.5 -3.1 Q1-2018 6.9 Q2-2014 6.2 6.6 5.9 Q1-2018 2.5 Q2-2014 3.9 5.0..

Czech Republic

Gross domestic product Industrial production Consumer price index

5.5 Q2-2014 0.3 Q4-2017 0.8 2.5 Q4-2017 0.2 Q2-2014 0.2 5.8 7.3 Q2-2014 0.1 Q1-2018 0.6 0.2 1.9

Current balance Unemployment rate Interest rate

Q4-2017 0.9 Q2-2014 -1.9 -0.2 -1.0 Q1-2018 2.3 Q2-2014 6.2 3.3 6.9 Q1-2018 0.9 Q2-2014 0.4 0.3 0.5


Gross domestic product Industrial production Consumer price index

Q4-2017 0.9 Q2-2014 0.2 1.3 1.1 Q4-2017 0.5 Q2-2014 0.6 -2.2 0.8 Q2-2014 0.4 0.6 Q1-2018 -0.1

Current balance Unemployment rate Interest rate

Q4-2017 5.4 Q2-2014 5.3 6.3 5.8 Q1-2018 4.9 6.1 Q2-2014 6.4 6.9 Q1-2018 -0.3 Q2-2014 0.3 -0.2 0.3


Gross domestic product Industrial production Consumer price index

Q4-2017 2.2 2.9 Q2-2014 1.1 5.3 Q2-2014 3.3 6.0 Q1-2018 3.2 2.5 Q1-2018 1.0 Q2-2014 0.3 0.0 3.1

Current balance Unemployment rate Interest rate

Q4-2017 0.3 0.1 Q1-2014 -0.1 0.0 Q4-2017 5.6 Q2-2014 7.5 6.8 8.3 Q1-2018 -0.3 0.2 Q2-2014 0.3 -0.3


Gross domestic product Industrial production Consumer price index

Q2-2014 0.2 -0.1 Q4-2017 0.6 2.4 Q4-2017 0.8 Q2-2014 0.5 -1.9 5.0 Q2-2014 0.2 0.9 Q1-2018 0.0 0.7

Current balance Unemployment rate Interest rate

Q4-2017 1.2 Q1-2014 -0.4 -0.4 -0.5 Q1-2018 8.3 Q2-2014 8.6 8.8 8.1 Q1-2018 -0.3 0.2 Q2-2014 0.3 -0.3


Gross domestic product Industrial production Consumer price index

Q2-2014 0.0 0.1 Q1-2018 0.3 2.1 Q4-2017 2.2 Q2-2014 -0.5 -2.1 4.2 Q2-2014 0.4 0.6 Q1-2018 0.5 1.4

Current balance Unemployment rate Interest rate

Q4-2017 -4.9 -5.5 Q1-2014 -6.7 -13.2 Q1-2018 8.9 9.6 Q2-2014 10.2 10.3 Q1-2018 -0.3 Q2-2014 0.3 -0.3 0.2


Gross domestic product Industrial production Consumer price index

Q2-2014 -0.2 2.9 Q4-2017 0.6 1.3 Q2-2014 -0.9 Q4-2017 1.0 5.6 1.5 Q2-2014 0.2 Q1-2018 0.2 1.5 1.1

Current balance Unemployment rate Interest rate

Q4-2017 76.8 Q1-2014 68.6 66.6 65.0 Q1-2018 3.5 Q2-2014 5.0 3.9 5.3 Q1-2018 -0.3 Q2-2014 0.3 -0.3 0.2


Gross domestic product Industrial production Consumer price index

.. .. 1.9 Q4-2017 0.1 Q4-2017 1.0 Q1-2014 2.4 2.0 0.5 Q2-2014 1.2 -0.1 Q1-2018 -1.1 -1.5

Current balance Unemployment rate Interest rate

Q4-2017 -1.2 0.2 Q2-2014 0.4 -1.1 Q4-2017 21.0 27.6 Q2-2014 27.1 23.3 Q1-2018 -0.3 0.2 Q2-2014 0.3 -0.3


Gross domestic product Industrial production Consumer price index

Q4-2017 1.3 4.9 Q2-2014 0.8 3.7 Q2-2014 3.5 10.3 Q4-2017 2.0 5.8 Q1-2018 0.6 Q2-2014 0.2 -0.2 2.0

Current balance Unemployment rate Interest rate

Q4-2017 1.2 Q4-2013 1.4 2.0 0.3 Q4-2017 3.9 4.5 Q2-2014 8.0 10.4 Q1-2018 0.0 Q2-2014 2.8 0.3 4.6


Gross domestic product Industrial production Consumer price index

Q2-2014 -1.2 2.2 1.3 Q4-2017 0.6 Q4-2017 1.7 10.2 Q2-2014 -5.0 -1.7 Q2-2014 0.9 2.3 Q1-2018 0.6 2.5

Current balance Unemployment rate Interest rate

Q4-2017 0.2 Q1-2014 0.0 0.6 0.1 Q1-2018 2.6 6.1 Q2-2014 5.1 2.7 Q1-2018 4.7 Q2-2014 6.1 5.5 6.2


Gross domestic product Industrial production Consumer price index

7.8 Q2-2014 1.5 Q4-2017 3.2 6.5 Q1-2014 3.8 2.8 1.0 Q4-2017 6.7 Q1-2018 -0.1 Q2-2014 0.8 0.3 0.4

Current balance Unemployment rate Interest rate

Q4-2017 18.3 Q1-2014 3.0 5.0 3.2 Q1-2018 6.1 7.2 Q2-2014 11.7 13.7 Q1-2018 -0.3 Q2-2014 0.3 -0.3 0.2


Gross domestic product Industrial production Consumer price index

Q2-2014 0.4 3.0 Q4-2017 1.0 2.2 Q2-2014 -3.9 Q4-2017 1.5 -0.6 2.6 Q1-2018 -0.4 Q2-2014 0.4 0.8 0.2

Current balance Unemployment rate Interest rate

Q4-2017 2.6 1.7 Q2-2014 2.2 3.3 Q1-2018 3.7 Q2-2014 6.1 4.3 6.7 Q1-2018 0.1 Q2-2014 0.7 0.1 1.5


Gross domestic product Industrial production Consumer price index

Q1-2018 0.3 -0.2 Q2-2014 -0.2 1.4 Q2-2014 -0.5 -0.1 Q4-2017 0.8 3.4 Q2-2014 0.2 0.4 Q1-2018 0.6 0.7

Current balance Unemployment rate Interest rate

Q4-2017 15.1 11.8 Q1-2014 7.9 -0.1 Q1-2018 11.1 11.6 Q2-2014 12.5 12.2 Q1-2018 -0.3 Q2-2014 0.3 -0.3 0.2


Gross domestic product Industrial production Consumer price index

2.1 Q2-2014 -1.8 0.0 Q4-2017 0.4 Q4-2017 1.6 Q2-2014 -3.6 4.0 2.4 Q2-2014 2.5 Q1-2018 0.3 3.6 1.3

Current balance Unemployment rate Interest rate

47.1 Q4-2017 49.8 Q2-2014 6.3 18.7 Q1-2018 2.5 Q2-2014 3.6 2.9 4.0 Q1-2018 0.1 0.1 Q2-2014 0.2 0.2


Gross domestic product Industrial production Consumer price index

Q2-2014 0.5 2.9 Q1-2018 1.1 3.5 Q2-2014 -0.9 -0.6 Q4-2017 -1.4 1.2 Q2-2014 0.3 Q1-2018 0.9 1.6 1.3

Current balance Unemployment rate Interest rate

Q4-2017 15.3 Q2-2014 23.6 20.6 19.4 Q1-2018 3.7 3.1 Q2-2014 3.7 3.7 Q1-2018 1.7 1.5 Q2-2014 2.7 2.7

Luxembourg Latvia

Gross domestic product Industrial production Consumer price index

Q4-2017 0.3 3.8 Q1-2014 0.8 4.7 Q2-2014 -0.1 8.8 Q4-2017 0.3 5.2 Q2-2014 0.5 Q1-2018 0.6 0.9 2.0

Current balance Unemployment rate Interest rate

Q4-2017 0.0 Q2-2017 -0.2 0.0 Q1-2018 8.1 Q2-2017 8.9 9.0 9.5 Q1-2018 -0.3 Q2-2017 -0.3 -0.3

Luxembourg Mexico

Gross domestic product Industrial production Consumer price index

Q2-2014 1.0 2.7 Q4-2017 -0.1 1.6 Q4-2017 1.4 Q2-2014 0.9 5.0.. Q2-2014 -0.1 Q1-2018 0.0 3.6 1.1

Current balance Unemployment rate Interest rate

Q4-2017 1.2 0.4 Q2-2014 -7.1 -5.7 Q1-2018 5.4 Q2-2014 5.0 5.9 5.1 Q1-2018 -0.3 Q2-2014 3.7 -0.3 4.3


Gross domestic product Industrial production Consumer price index

Q1-2018 1.1 2.0 Q4-2017 0.4 .. Q1-2018 1.6 5.3

Current balance Unemployment rate Interest rate

Q4-2017 -6.3 -5.6 Q1-2018 3.3 3.5 Q1-2018 7.8 6.5


% change from: previous period

current period

previous year

same period last year


Gross domestic product Industrial production Consumer price index

1.1 Q2-2014 0.7 Q4-2017 0.8 3.4 Q2-2014 3.7 Q4-2017 2.1 -2.0 1.7 Q2-2014 0.8 1.0 Q1-2018 0.2 1.2

Current balance Unemployment rate Interest rate

Q4-2017 22.9 20.1 Q1-2018 4.1 5.2 Q1-2018 -0.3 -0.3

New Zealand

Gross domestic product Industrial production Consumer price index

Q2-2014 0.5 Q4-2017 0.4 Q2-2014 -1.1 Q4-2017 0.9 Q2-2014 0.3 Q1-2018 0.5

3.3 3.2 2.7 1.7 1.6 1.1

Current balance Unemployment rate Interest rate

Q4-2017 -1.4 Q1-2018 4.4 Q1-2018 1.9


Gross domestic product Industrial production Consumer price index

Q2-2014 0.9 1.8 Q4-2017 -0.3 1.4 0.2 Q2-2014 -1.1 -0.9 Q4-2017 -2.2 Q2-2014 0.7 2.0 1.8 Q1-2018 0.7

Current balance Unemployment rate Interest rate

Q4-2017 4.1 6.9 Q4-2017 4.0 4.5 Q1-2018 0.9 1.0


Gross domestic product Industrial production Consumer price index

Q2-2014 0.6 3.3 Q4-2017 0.9 4.3 Q2-2014 -0.2 6.2 3.4 Q1-2018 1.1 Q2-2014 0.0 0.3 Q1-2018 0.5 1.7

Current balance Unemployment rate Interest rate

Q4-2017 1.4 1.2 Q1-2018 4.4 5.2 Q1-2018 1.7 1.7


Gross domestic product Industrial production Consumer price index

Q2-2014 0.3 0.9 2.4 Q4-2017 0.7 1.5 Q2-2014 1.6 2.0 Q1-2018 1.4 Q2-2014 1.0 0.8 Q1-2018 -1.0 -0.3

Current balance Unemployment rate Interest rate

Q4-2017 0.8 0.6 Q1-2018 7.6 9.9 Q1-2018 -0.3 -0.3

Slovak Republic

Gross domestic product Industrial production Consumer price index

Q2-2014 0.6 2.4 Q4-2017 0.9 3.5 Q2-2014 -0.8 4.9 Q4-2017 2.3 3.6 Q2-2014 0.2 -0.1 Q1-2018 1.1 2.3

Current balance Unemployment rate Interest rate

Q4-2017 -0.2 -0.4 Q1-2018 7.5 8.6 Q1-2018 -0.3 -0.3


Gross domestic product Industrial production Consumer price index

Q2014 1.0 2.8 Q4-2017 2.0 6.2 Q2-2014 1.8 11.3 3.8 Q4-2017 3.5 Q2-2014 1.5 0.6 Q1-2018 -0.2 1.3

Current balance Unemployment rate Interest rate

Q4-2017 0.9 0.6 Q1-2018 5.3 7.3 Q1-2018 -0.3 -0.3


Gross domestic product Industrial production Consumer price index

Q2-2014 0.6 2.9 1.2 Q1-2018 0.7 Q2-2014 0.6 2.3 Q4-2017 2.3 5.1 Q2-2014 1.0 Q1-2018 -0.8 0.2 1.0

Current balance Unemployment rate Interest rate

Q4-2017 7.8 5.9 Q1-2018 16.2 18.2 Q1-2018 -0.3 -0.3


Gross domestic product Industrial production Consumer price index

Q2-2014 0.7 2.6 3.3 Q4-2017 0.9 Q2-2014 -1.4 Q4-2017 3.8 -0.6 6.9 Q2-2014 0.6 Q1-2018 0.1 0.0 1.7

Current balance Unemployment rate Interest rate

Q4-2017 3.9 6.2 Q1-2018 6.2 6.7 Q1-2018 -0.7 -0.7


Gross domestic product Industrial production Consumer price index

Q2-2014 0.0 1.9 1.1 Q4-2017 0.6 Q4-2013 -1.0 8.8 -1.2 Q4-2017 0.3 Q2-2014 0.5 0.7 0.1 Q1-2018 0.2

Current balance Unemployment rate Interest rate

Q4-2017 19.1 20.0 Q4-2017 4.7 4.8 Q1-2018 -0.7 -0.7


Gross domestic product Industrial production Consumer price index

Q2-2014 -0.5 2.5 Q4-2017 1.8 7.4 Q2-2014 -0.9 2.6 Q4-2017 2.3 11.3 Q2-2014 2.6 9.4 Q1-2018 2.8 10.3

Current balance Unemployment rate Interest rate

Q4-2017 -14.8 -7.7 Q4-2017 10.1 11.8 .. ..

United Kingdom

Gross domestic product Industrial production Consumer price index

Q2-2014 0.9 Q1-2018 0.1 Q2-2014 0.3 Q4-2017 0.5 Q2-2014 0.7 Q1-2018 0.2

3.2 1.2 2.1 1.9 1.7 2.7

Current balance Unemployment rate Interest rate

Q4-2017 -24.5 -28.4 Q4-2017 4.2 4.7 Q1-2018 0.5 0.3

United States

Gross domestic product Industrial production Consumer price index

Q2-2014 1.1 2.6 Q1-2018 0.6 2.9 Q2-2014 1.3 3.9 4.2 Q1-2018 1.1 Q2-2014 1.2 2.2 2.1 Q1-2018 0.9

Current balance Unemployment rate Interest rate

Q4-2017 -128.2 -114.0 Q1-2018 4.1 4.7 Q1-2018 1.8 0.9

European Union

Gross domestic product Industrial production Consumer price index

Q2-2014 0.2 2.4 1.2 Q1-2018 0.4 Q2-2014 0.0 3.9 1.3 Q4-2017 1.4 Q2-2014 .. 0.7 Q1-2018 0.1 1.5

Current balance Unemployment rate Interest rate

Q4-2017 74.8 69.4 Q1-2018 7.1 8.0 .. ..

Euro area

Gross domestic product Industrial production Consumer price index

Q2-2014 0.0 0.7 Q1-2018 0.4 2.5 Q2-2014 -0.1 0.8 Q4-2017 1.4 4.0 Q2-2014 .. 0.6 Q1-2018 -0.1 1.3

Current balance Unemployment rate Interest rate

Q4-2017 125.2 101.9 Q1-2018 8.5 9.5 Q1-2018 -0.3 -0.3

11 Brazil Brazil

Gross Gross domestic domestic product product Industrial Industrial production production Consumer Consumer price price index index

Q4-2017 0.1 Q2-2014 -0.6 -0.8 2.2 Q1-2018 0.0 Q2-2014 -1.9 -4.2 3.2 Q1-2018 0.9 Q2-2014 2.0 2.8 6.4

Current balance Unemployment rate Interest rate

Q1-2018 1.8 0.0 Q2-2014 -19.6 -19.9 .. .. .. .. .. .. .. ..

11 China China

Gross Gross domestic domestic product product Industrial Industrial production production Consumer Consumer price price index index

.. .. .. .. Q1-2018 0.2 Q2-2014 -0.4 2.2

Interest rate

Q4-2017 64.4 Q2-2013 54.2 58.1 17.1 .. .. .. .. Q2-2014 4.6 .. .. 4.7

11 India India

Gross Gross domestic domestic product product Industrial Industrial production production Consumer Consumer price price index index

Q4-2017 1.8 Q2-2014 1.2 6.8 5.9 Q4-2017 3.6 Q2-2014 2.0 5.8 4.3 Q1-2018 0.1 Q2-2014 2.5 6.9 4.7

Current balance Unemployment rate Interest rate

Q4-2017 -12.6 .. .. -7.2 .. .. .. .. Q1-2018 6.3 .. .. 6.1

Indonesia 11Indonesia

Gross Gross domestic domestic product product Industrial Industrial production production Consumer Consumer price price index index

Q4-2017 1.3 Q2-2014 1.2 5.1 .. .. Q1-2018 1.3 Q2-2014 0.4 3.3 7.1

Interest rate

Russian Russian Federation Federation

Gross Gross domestic domestic product product Industrial Industrial production production Consumer Consumer price price index index

Q4-2017 -0.4 Q1-2014 -0.3 0.7 1.5 Q1-2018 1.5 Q2-2014 0.9 1.6 Q1-2018 0.9 Q2-2014 2.6 2.3 7.6

Q4-2017 -4.7 Q4-2013 -3.5 -7.3 -1.3 .. .. Q1-2018 6.0 .. .. 6.7 Q2-2014 8.5 5.7 Q4-2017 13.1 10.0

11 South South Africa Africa

Gross Gross domestic domestic product product Industrial Industrial production production Consumer Consumer price price index index

Q4-2017 0.8 Q2-2014 0.2 1.9 1.1 .. .. Q1-2018 1.3 Q2-2014 2.0 6.6 3.9

-1.0 4.9 2.0


balance Current Unemployment rate

balance Current Unemployment rate Current balance Unemployment rate Interest rate

balance Current Unemployment rate Interest rate

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.

Q2-2012 22.7 .. .. 23.4 Q1-2018 7.1 10.6 .. .. Q2-2014 8.8 7.4 Q4-2017 .. -1.5 .. .. .. .. Q1-2018 7.2 .. .. 7.3 ..=not available, 1 Key Partners. Source: Main Economic Indicators.

OECD Observer No 313 Q1 2018



Jewish and other

100% 90% 80% 70%


60% 50% 40% 30% 20% 10% 0%

Area in general

The funding crowd “Every crowd has a silver lining,” said P.T. Barnum, America’s “greatest showman”. For businesses, Barnum’s play on words is especially true: crowds are becoming something of a motherlode of funding for small and medium-sized enterprises (SMEs). With bank lending declining, smaller businesses are looking for alternative ways of financing. Thanks to the world wide web, they can now solicit funds not just from banks and professional investors, but from virtually anyone with internet access. This approach can take different forms. Besides crowdfunding (where many individual contributions– usually sourced online–make up the funding), examples include online invoice financing (where SMEs, for instance, can borrow online against unpaid invoices) and peer-to-peer lending activities (online services that match lenders with SME borrowers). Together, these funding opportunities constitute the online alternative finance market. The volume of alternative financial instruments has generally increased in recent years. Looking at changes between 2013 and 2016, however, it is clear that the development and size of the alternative finance market varies greatly between countries. China is by far the largest market

Cleanliness of the area

Garbage collection service

Amount of parks, public gardens in your area

By region, in US$ billion 40







35 30 25 20 15 10 5 0





Note: The data on Europe includes all EU 28 countries except for Luxembourg and the UK Source: OECD (2018). Financing SMEs and Entrepreneurs 2018: An OECD Scoreboard

for online alternative financial instruments, expanding exponentially from US$5.6 billion in 2013 to US$243.28 billion in 2016. In comparison, the total market volume of the online alternative finance industry in the US amounted to only US$34.5 billion in 2016, despite a steep rise from US$4.4 billion in 2013. The European alternative finance market, on the other hand, has stayed well below the volume of the US and the Chinese markets, having raised US$2.1 billion in 2016 and only US$0.3 billion in 2013. The UK alternative finance industry has volumes well above that of the other EU28 countries combined, having raised over US$5.6 billion in 2016.

traditional sources of financing, and this has called attention to the need for a regulatory framework for crowdfunding. In crafting regulation, however, governments should keep in mind how crucial online alternative finance is to businesses. With bank lending on the decrease, every small business needs its silver lining. OECD (2018), Financing SMEs and Entrepreneurs 2018: An OECD Scoreboard, OECD Publishing, Paris. http://dx.doi. org/10.1787/fin_sme_ent-2018-en Share article at

With rising volumes, alternative instruments increasingly complement

No 1, 2018 Across 1 Subject of an important UN Declaration, 2 words 7 Organisation working with the UN to outlaw chemical weapons, abbr. 8 Provided financing for 9 Small and medium businesses help provide most of them 11 Finance item indicated in red 15 Difference in pay and rights between men and women, 2 words 18 Legal entities that have the right to conduct business on their own 19 Rugby score or attempt 20 Population data collection


State of the roads and sidewalks

Total online alternative finance market volumes

OECD Observer Crossword

© Myles Mellor/OECD Observer

Public transport in area of residence

Down 1 Enticing phrase in marketing 2 Small (prefix) 3 Negative response 4 Debt notes 5 Investor’s insurance 6 Former Egyptian president and Nobel peace prize winner with Menachem Begin 10 Diverse 12 Cry from a ewe 13 Put capital into 14 Mandate 15 Bold and courageous, like many entrepreneurs 16 Rushes of wind 17 Updates on social media

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Asian Development Bank Institute

OECD Observer No 313 Q1 2018  
OECD Observer No 313 Q1 2018