Academic journal article Harvard International Review

Volatility to Global Cooperation: Insights into Current Economic Challenges

Academic journal article Harvard International Review

Volatility to Global Cooperation: Insights into Current Economic Challenges

Article excerpt

In your opinion, what are the most pressing concerns facing the OECD today?


The global crisis, the financial crisis and now the employment crisis of advanced economies, all affect the members of the OECD. We must help these countries to overcome the economic challenges they are facing. This is a very daunting task, in particular because of the strength of regulations, and weak confidence.

As noted in the OECD's 50th Anniversary Vision Statement, dramatic changes in the international economic arena have created a new-set of challenges for emerging markets. In light of this different economic environment, has the OECD revised its domestic policy prescriptions for various developing nations?

The OECD is an organization that has been helping countries reform their economies since World War II. We believe in open markets, but also in effective government. I don't think this paradigm will change. We will continue to promote a dynamic agenda of structural reform, in the context of the G20 discussions (covering advanced and developing countries), because this is where we see the highest growth potential - in areas such as health care, labor markets, and pension systems. In the case of developing countries, there is an additional step that must be taken, because government institutions need to improve their own performance--or, at least, redefine the institutional settings in which policies can be more effectively developed. In that respect, we continue to emphasize the objectives we have upheld for many years: improve your human capital base and the effectiveness of government actions, and reduce the pressures that economic activity places on the environment.

This same report also highlights women as important beneficiaries of targeted policies to improve education, increase employment, and encourage entrerates, preneurship. What sorts of tools can the OECD provide to promote opportunities specifically for women?

The OECD is primarily an economic organization, so the way to address women's issues is to think about them as one essential additional source of growth and development. That is smart economics. I believe economies that are not able to incorporate women are really missing out on a significant contribution to economic growth and development. So, what the OECD is trying to do is explore women's empowerment and women's inclusion in education and employment. The engagement of women in the economy is more complicated than it seems because the action required challenges the ways in which labor markets are organized. Women face clear trade-offs between families and jobs.

A third avenue, along with employment and education, is entrepreneurship. We have evidence that women, when provided financial support and counseling services, really can achieve important outcomes. But, there are still barriers and obstacles in all these areas. Next year, we will launch a Gender Strategy for countries to address these issues, recommending specific policy tool kits that include the development of family-friendly policies, increased support for girls in the math and sciences, and greater financial inclusion. It's a very hands-on initiative, and I hope we will contribute significantly to the debate.

One of the most contentious issues in the United States of the upcoming presidential election is tax code reform. How does OECD research weigh into the debate on US tax policy? What sorts of reforms would OECD analysts recommend, particularly with regard to job-creation?

Advice is very different for different countries. The United States, we believe, has one of the most complex tax systems in the world because there are many different tax rates, "loopholes," and subsidies. So, my first recommendation would be to simplify the system: make it easier both to understand and to pay taxes. A second recommendation we have been considering is "federalism": set a consistent sales tax rate throughout the country. …

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