Browse by: "2017"

Discussions relating to the 2018 Facilitative Dialogue (FD2018), mandated under the Paris Agreement, are on-going. These discussions are on the scope, inputs, and modalities of the FD2018 as well as any outputs or outcomes from the FD2018. While the mandate of the FD2018 does not explicitly call for outputs or outcomes, identifying outcomes and outputs ex ante could be useful in focusing discussions and inputs to the facilitative dialogue, as well as in shaping its modalities. The objective of this paper is to highlight the implications of agreeing and identifying specific outputs and outcomes ex ante, and exploring what type of outputs and outcomes would best serve the interests of the FD2018. This document also identifies key questions that could guide decision-making on what modalities would be appropriate for the FD2018; however, identification of options for specific modalities of FD2018 are out of the scope of this paper.

Government debt has many characteristics and thus cannot be fully captured by one indicator. There are several different ways of defining government debt, and each definition can lead to different interpretations of a government’s financial situation. As a result, international comparisons of government debt statistics must be conducted with care. This working paper will summarise some of the major differences in defining and measuring government debt and, based on available data, will demonstrate the impact of these differences when comparing the level of government debt as a percentage of GDP across various OECD countries. This paper will also look at the challenges in incorporating government-sponsored pension schemes in government debt statistics and the implications for making international comparisons of government debt. It will then attempt to compare government debt statistics by adjusting for some of these challenges. It will also present a complementary approach for analysing and comparing government debt, using projections of old age dependency and economic growth in order to provide additional context. The key findings of this paper are that: (i) international comparisons of government debt should exclude pension liabilities until more data are available from more countries; (ii) comparisons of government debt should be conducted separately for implicit and explicit liabilities as well as for funded and unfunded pension liabilities; (iii) further cooperation is required between the national accounts, actuary and public sector / business accounting communities to enable methodological consistency in the estimation of pension liabilities; and (iv) comparisons of government debt should not rely on one indicator but instead utilise a wide array of statistics in order to provide a more relevant and complete picture of government finances both within and across countries.

Global Value Chains (GVCs) have transformed production across a broad range of goods and services worldwide. Although the development of GVCs has occurred in agro-food sectors alongside other sectors, less is known about the trade that occurs within agro-food GVCs due to limited information on flows of trade in value added. This study develops an approach to calculate disaggregated indicators of GVC participation in agro-food sectors in both developed and developing countries. Specifically, the approach exploits the Global Trade Analysis Project (GTAP) database to construct an inter-country input-output (ICIO) table for the year 2011. The resulting ICIO is used to compute indicators of GVC participation based on the concept of vertical specialisation – forward and backward participation – across 20 agro-food sectors in 70 countries and/or regions. Estimates of domestic value added in exports and final demand or agro-food products, including the contribution of all industries, are also presented.

The development of the visitor economy faces challenges not only from global economic conditions, reduced budgets, fluctuating exchange rates, but also deeper underlying economic and technological shifts which create further market turbulence. In response, new models for linking tourism policy, tourism marketing and product development, including digital strategies are being explored in a number of countries. The report examines some of the current challenges and opportunities for public authorities responsible for the marketing and promotion of tourism, including evolving funding sources, partnership opportunities, promotion strategies, and governance arrangements. The report benefitted from significant contributions from 16 countries: Australia, Denmark, Estonia, Finland, France, Iceland, Israel, Italy, Latvia, Philippines, Poland, Portugal, Slovenia, Sweden, South Africa, and the United Kingdom. Country case studies provide examples of policy and business initiatives to address current and emerging challenges.

The paper describes revisions to the trend labour efficiency component of the production function underpinning long-term economic scenarios. The main goal of the revision is to add more policy and institutional determinants in the equation to enrich the scenarios that can be constructed. In the proposed equation, equilibrium trend labour efficiency depends on a broad measure of the quality of institutions and governance (the World’s Bank rule of law indicator), human capital (based on average years of schooling attainment), product market regulation (PMR), openness to trade adjusted for country size, the stability of the macroeconomic framework (based on inflation and its variance), income inequality (based on GINI coefficients) as well as domestic and global research and development (via accumulated stocks of R&D). Apart from the innovation effects, the sizes of the other effects are jointly estimated in a conditional convergence framework with a sample of about 120 countries, without the use of country fixed effects. Rule of law and openness are also estimated to influence the speed of convergence toward the long-term equilibrium.

The paper describes revisions to the trend employment component of the production function underpinning long-term economic scenarios. Starting with historical age and sex-specific employment rates, a novel approach is developed to correct for cyclical effects using the country-level employment gap while allowing the different sex and age groups to exhibit different sensitivities to the economic cycle. From the resulting cyclically adjusted age/sex-specific employment rates, trend entry and exit rates into/out of employment are computed using the traditional cohort approach. The different employment propensities of existing cohorts are then used to project future employment rates, with entry and exit rates of new cohorts assumed to mimic the most recent ones. To construct scenarios, the model allows a number of policy settings to influence employment rate projections, notably the legal retirement age, tax wedges, family benefits, etc. The sizes of these effects are sourced from recent OECD work on the quantification of structural reforms, and are also specific to sex and age groups. The trend total employment projection is obtained by aggregating age/sex-specific employment rate projections using external demographic projections.

New data sources, commonly referred to as “Big Data”, have attracted growing interest from National Statistical Institutes. They have the potential to complement official and more conventional statistics used, for instance, to determine progress towards the Sustainable Development Goals (SDGs) and other targets. However, it is often assumed that this type of data is readily available, which is not necessarily the case. This paper examines legal requirements and business incentives to obtain agreement on private data access, and more generally ways to facilitate the use of Big Data for statistical purposes. Using practical cases, the paper analyses the suitability of five generic data access models for different data sources and data uses in an emerging new data ecosystem. Concrete recommendations for policy action are presented in the conclusions.

Accounting for Nationally Determined Contributions (NDCs) under the Paris Agreement is needed to allow Parties to track individual progress towards their own mitigation-related NDC targets, understand others’ NDC targets and their progress toward them, and assess collective progress towards the long-term mitigation goal. This paper aims to assist Parties and stakeholders in framing thinking around the nature of accounting for mitigation targets given the diversity of target types in NDCs, and also to discuss how accounting guidance could be applied at various stages in the NDC cycle. It provides a summary and unpacking of the key accounting provisions under the Paris Agreement and Decision text, discusses the implications of the range of NDC target types, then discusses the particular issues of accounting for co-operative approaches and for the land sector. It then explores how accounting guidance may be applied within the NDC cycle.

Productivity growth has slowed across most OECD economies since the mid-2000s. While important aspects of New Zealand’s economic performance have improved over this period, productivity growth is still comparatively low. This continues a long-run trend of poor productivity in New Zealand, which is the key reason why average incomes are still below the OECD average notwithstanding recent strong growth. Given that framework policy settings are often regarded as fit for purpose, this long-run track record has puzzled international and domestic economists for decades. The apparent disconnect between policy and performance naturally raises questions about the broad policy directions and institutions necessary to close New Zealand’s still-substantial productivity and income gaps relative to leading OECD economies. In an effort to provide some answers, this paper outlines the extent and nature of New Zealand’s long-run productivity underperformance and the broad economic reasons why lifting productivity has proven to be so difficult. On the basis of this diagnosis, the paper sketches out broad areas of policy reform that would help improve long-run growth in productivity and incomes. In some respects, this represents a new reform challenge with a focus on investing in the assets necessary to fully benefit from the important changes taking place in the global economy.

While India’s per capita income is converging towards that of the richer countries, inequality has drifted up. Spatial inequality – across states and between urban and rural areas – is pronounced, with large differences in output per capita and in access to core public services, such as electricity, roads, and education. Implementing the GST will contribute to reduce trade barriers across states while recent changes in the federalism model are empowering states and promoting experimentation. Prompting states to modernise product and labour market regulations should allow firms in the organised sector to reach an efficient size, and promote job creation and rising incomes in all states. Raising the living standards in poorer states would also require increasing productivity in the agricultural sector by supporting farm consolidation and improving infrastructure in rural areas, particularly roads that connect villages to market towns, crop storage infrastructure and access to sustainable irrigation technologies. As working population moves out of agriculture, urbanisation will gather pace. However, exploiting cities’ potential for job creation, productivity gains and improvement in the quality of life would require better physical and social urban infrastructure. Local spending and regulatory competences should be clarified. Performance of local bodies should be assessed regularly to make them accountable. Municipalities should also be granted clear revenue-raising power (in particular property taxes and user charges for urban infrastructure) to enable them to fund better public infrastructure and services.

Technological change is increasing the productivity of highly skilled workers but creating more challenging labour-market conditions for their low-skilled counterparts. These pressures are likely to grow, especially in light of progress being made in Artificial Intelligence. The NZ labour force is upskilling to meet these challenges, but more progress will be needed to keep ahead of the race with technology. Young New Zealanders will need to continue their education to higher levels than in the past and acquire skills that are more highly valued in the labour market. To maintain valuable skills, workers of all ages will need to engage more in lifelong learning. Some will need to retrain when their occupation becomes obsolete. Getting the most out of skills will also depend on allocating skills to their most productive uses. Reducing New Zealand’s high rates of qualification and skills mismatches would boost both wages and productivity. With the possibility of more workers being displaced than in the past, greater efforts may need to be considered to help them get back into jobs.
This Working Paper relates to the 2017 OECD Economic Survey of New Zealand (www.oecd.org/eco/surveys/economic-survey-new-zealand.htm).

The set of skills that is required to be a successful citizen in the 21st century is rapidly evolving. New technologies and social systems grow increasingly complex and require individuals to quickly and flexibly adapt to new and changing circumstances. This paper outlines the key features of the domain of adaptive problem solving that is proposed to be assessed in the 2nd cycle of the OECD Survey of Adult Skills (PIAAC) in addition to the domains of numeracy and literacy. Adaptive problem solving is considered to be a crucial 21st century skill that combines cognitive and meta-cognitive processes. The paper develops a definition of adaptive problem solving building on relevant work in cognitive psychology and cognitive science, introduces its covariates and preconditions, discusses relevant assessment principles, and provides insights on the relevance of adaptive problem solving for labour markets and social integration.

The fair and equitable treatment (FET) provision has leapt to prominence in the last 15 years as the principal ground of liability at issue in many if not most investment treaty arbitration claims. In debates about the impact of investment treaties on the right to regulate, FET is second only to investor-state dispute settlement (ISDS) as the most-cited provision.
This paper examines government action to address the balance between investor protection and the right to regulate by limiting fair and equitable treatment provisions to the minimum standard of treatment under customary international law (MST-FET). The paper reviews the distinction between MST-FET clauses and autonomous FET clauses, and notes growing use of an express MST-FET approach in many regions.
NAFTA governments’ views about the nature of the MST-FET standard, how it is identified, and its content are then examined in detail. An initial focus on NAFTA, while limited, is justified due to many singularities in NAFTA, including numerous government interpretations of MST-FET since 1994, their availability to the public and the comparatively higher success rate of NAFTA governments in defending FET claims. The paper concludes with brief comparisons between the government views and the views of ISDS tribunals and commentators.

The present work investigates the relationship between administrative fragmentation and regional per capita GDP growth rate, using a panel of OECD TL2 regions in the period 1996-2011. According to the fiscal decentralisation literature, fragmentation should enhance growth as local governments can implement policies that better match citizens’ needs, thus providing services and public goods in a more efficient way. The presence of many local governments, however, may result in overlapping functions, (dis)economies of scale, and uncoordinated policies.

This paper analyses for 34 OECD countries the extent to which the calculation of aggregate multi-factor productivity (MFP) is sensitive to alternative parameterisations. The starting point is the definition of MFP used in previous work in the OECD’s Economics Department (e.g. Johansson et al. 2013). They include alternative MFP measures, with human capital included or excluded, with different measures of Purchasing Power Parity (PPP) exchange rates, using time-varying capital depreciation rates and different measures of capital stock and labour input (headcount against hours worked). The main result of the paper is that whether or not human capital is included in MFP makes a significant difference for the level and dynamics of MFP. At the same time, MFP measures are less sensitive to other parameters of the calculation.

This paper examines the linkages between Boko Haram activities in northeastern Nigeria and declined activities in regional agricultural markets. Building on data from both the Armed Conflict Location and Event Data Project (ACLED) and the Famine Early Warning Systems Network (FEWS NET), the paper first considers the geographic distribution of Boko Haram events with respect to market towns and discusses whether there is evidence of Boko Haram activities near markets having influence on declined market operations. Next, it examines the temporal character of market operations and the timing of their changes in their operational status, including market closures, with respect to the seasonality of agricultural production and land use in northeastern Nigeria. The paper measures the frequency of changes in regional market activities and considers spatial relationships and temporal correlations with Boko Haram activities in the region over twelve periods from late 2014 through the end of 2016. Finally, the paper formulates policy recommendations for assessing and mitigating coupled challenges of human and environmental security.