Browse by: "2023"

This report presents recent capital flow developments related to green finance and was discussed at the G20 International Financial Architecture (IFA) Working Group meeting on 6-7 June 2023. It was revised to take into account comments made by the IFA Working Group in June. It is now submitted to G20 Financial Ministers and Central Bank Governors for their concurrence in their 3rd meeting in July 2023.

By mapping theories of harm that have been applied in recent digital merger cases and considering the analyses that have already been undertaken, this note explores the question of whether existing theories of harm are well suited or should be further adapted to comprehensively capture competitive harms arising from mergers in these markets. Or alternatively, whether new theories of harms are needed and if so, what they might look like. It was prepared as a background note for discussions on “Theories of Harm for Digital Mergers” taking place at the June 2023 session of the OECD Competition Committee.

Inflation indices – such as the national Consumer Price Indices (CPI) and the EU Harmonised Indices of Consumer Prices (HICP) – measure price changes for the overall economy, which may not reflect the inflation experience of an individual household or group of households. This paper contributes to previous studies of the distributive impact of recent high inflation in EU Member States. Producing more granular and recent results, this paper finds a substantial rise in effective inflation dispersion across households and confirms that lower-income households continue to experience higher inflation. This inflation gap remains even after energy prices have eased and when controlling for other household characteristics. Results also show that the distributive impact of inflation on household groups has varied over time, as changes in relative prices across the inflationary period have influenced the extent of the impact of inflation across population groups. Finally, differences in effective inflation rates have cumulated over time, particularly for households with lower-income and headed by people aged 60 years or more and with lower levels of education.

This working paper presents novel analysis comparing in a consistent way the tax treatment of labour and capital income across OECD countries, through stylised effective tax rates (ETRs). It shows that dividend income and capital gains are generally subject to lower ETRs than wage income at the personal level. In many countries, capital income is also tax-favoured even when considering taxes paid by both firms and individuals, although the gap between labour and capital income taxation tends to be smaller than when considering only personal-level taxes. The gap between ETRs on labour and capital income varies between countries and grows with income levels in some. The paper highlights that differential tax treatment of labour and capital income can affect the efficiency and equity of tax systems.

This paper provides a critical review of public sector innovation measurement approaches and related gaps. It explores alternative approaches to measure public sector innovation measurement which respond to different use cases, and paves the way for operationalising a measurement framework for public sector innovation. The paper proposes creating a continuous stocktake of public sector innovation measurement activities in Member countries, improving existing frameworks or creating new frameworks to guide public sector innovation measurement more systematically at country level, and identifying indicators that would be most useful for cross-country comparability.

In 2019, the OECD Council adopted the Recommendation on Artificial Intelligence (the “OECD AI Principles”). These include five values-based principles and five recommendations for OECD countries and adhering partner economies to promote responsible and trustworthy AI policies. This report takes stock of initiatives launched by countries worldwide to implement the OECD AI Principles which were reported to the OECD.AI Policy Observatory as of May 2023. It provides an overview of national AI strategies, including their oversight and monitoring bodies, expert advisory groups, as well as their monitoring and evaluation frameworks. It also discusses the various regulatory approaches that countries are adopting to ensure AI trustworthiness, such as ethics frameworks, AI-specific regulations, and regulatory sandboxes. Additionally, the report offers policy examples for each of the ten OECD AI Principles to facilitate cross-learning among policymakers.

Produced as part of the OECD Global Action “Promoting Social and Solidarity Economy Ecosystems” funded by the European Union, this paper explores the role of the social and solidarity economy (SSE) in implementing and complementing public systems for refugee protection, reception and integration. In particular, it reviews the different activities SSE entities can deploy in support of forcibly displaced populations, asylum seekers and refugees, along their journey from origin through to destination countries. Finally, it offers some policy considerations on how the SSE can help national and local governments identify win-win solutions for refugee and host communities.

Before the Fukushima Daiichi Nuclear Power Plant accident in Japan in 2011, the nuclear industry had strongly promoted the idea that the time of nuclear renaissance had come after a long, fallow period in the wake of the nuclear accidents at Three Mile Island (1979) and Chernobyl (1986). During the post-Fukushima period, there were few new projects, but growing demand for energy and anxieties raised by climate change have brought us to a turning point. Despite the Fukushima accident, which led to some nuclear projects being delayed or cancelled, there is still a great deal of interest in the use of nuclear power for civil purposes. This is primarily because, as the International Energy Agency’s (IEA) Executive Director Fatih Birol has rightly pointed out: “Without an important contribution from nuclear power, the global energy transition will be that much harder.”1 In this regard, in 2010, 67 reactors were under construction, 120 planned and 441 in operation.2 In 2022, 11 years after the Fukushima Daiichi accident, there were 60 under construction, 104 planned and 338 proposed.3 The International Atomic Energy Agency (IAEA) estimates that nuclear electric power capacity will have increased by as much as 23% by 2030 and more than doubled by 2050.4 In addition to this renewed interest, many projects are now in development, opening up new prospects for the use of the atom for civil purposes. Nuclear fusion, small modular reactors (SMRs), the use of artificial intelligence, floating, underwater and space reactors, and nuclear batteries, to name but a few of the projects on the table, lead us to think that the “nuclear renaissance” is slowly shifting to a “nuclear spring”. In this view, where the concept of a renaissance involves new impetus for nuclear energy, with the construction of new facilities, the concept of “spring” refers to a determination to break with nuclear traditions, in terms of concepts, means and players. Consequently, this phenomenon calls for new legal rules which, in some cases, have already started to be debated.

This paper investigates the potential role and contribution of carbon pricing in transforming emission pathways towards net zero GHG emissions. It reviews carbon pricing’s impacts, overall and in the electricity sector in selected jurisdictions to date. The paper also analyses the current and potential application of emissions pricing (e.g. emissions trading schemes or carbon taxes) in food systems. The analysis finds that carbon pricing could contribute to net zero pathways alongside other policies, yet price levels and coverage to date have been too low to reduce emissions in line with the Paris Agreement’s goals. Carbon pricing’s contribution to net zero pathways could be further strengthened, including by incentivising demand-side shifts, sequencing policies and enhancing international carbon pricing collaboration. Applying emissions pricing in food systems faces significant short-term technical, methodological, and political barriers and could have just transition implications but reducing emissions from food systems could also lead to many co-benefits.

Organising transport of nuclear substances presents a number of challenges, including how to properly qualify the substances from a nuclear liability perspective. The nuclear liability conventions provide a generic definition of “nuclear substances” (referred to as “nuclear material” under certain conventions), which gives wide discretion to national legislation in its interpretation. Moreover, the nuclear liability conventions also exclude certain categories of nuclear substances, subject to specific conditions being met, to ensure that the risk associated with their transport may be dealt with under general tort law. The implementation or application of these exclusions is carried out by each concerned country in accordance with its domestic legislation, which may lead to discrepancies in the qualification of substances to be transported by different stakeholders.

The COVID-19 pandemic has led to a dramatic acceleration in the diffusion of remote work. This paper contributes to understanding the phenomenon by offering the first systematic exploration of the uneven diffusion of remote jobs across Europe. Using a combination of rich individual micro-data from the European Union Labour Force Survey and regional-level characteristics, the analysis makes three contributions. First, it provides a systematic approach to measure remote work across 30 European countries. Second, it shows that cities and capital regions adapted faster to remote work than other areas of the continent. Third, it identifies and tests what factors are associated with telework uptake during the pandemic. Results show that the uneven diffusion of remote work is primarily explained by composition effects, i.e., because cities hosted more workers in occupations and sectors more amenable to working remotely.

Using data on more than 150.000 non-financial companies operating in both manufacturing and services sectors around the world, we analyse the drivers of firm performance throughout the whole COVID cycle (until end 2021). We highlight three key results. First, if anything, larger and older firms did worse than smaller and younger ones in terms of revenues and investment spending, both during COVID-19 and the subsequent recovery. Even in sectors that were under scrutiny from a competition standpoint, such as technology and healthcare, larger firms did not systematically over-perform. Second, ex-ante financial strength attenuated the effects of the shock on revenues during the COVID cycle. Third, there is some evidence of debt overhang: firms that entered the crisis with a higher leverage ratio invested less than others, including on R&D, both in 2020 and in 2021, while firms that became more debt-burdened during the pandemic tended to record weaker investment spending during the recovery. These insights shed light on market power, competition, and more generally on the performance of the corporate sector since the start of COVID-19 pandemic.

Less than two years after the start of the COVID-19 pandemic, Russia’s illegal, unprovoked and unjustifiable war of aggression against Ukraine has triggered the biggest military confrontation in Europe since World War II. Many OECD countries have reacted to Russia’s aggression by providing military and humanitarian aid to Ukraine and by imposing economic sanctions on Russia, which has accentuated supply chain disruptions, especially in the energy sector. A combination of these supply shocks with a demand shock caused by expansionary fiscal and monetary policies to tackle the pandemic has created inflationary pressures on a scale not seen in decades. Central banks around the world are acting to fulfil their price stability mandates by increasing interest rates and by engaging in quantitative tightening (primarily the selling of government bonds to reduce central bank balance sheets), all of which put pressure on borrowing costs at a time when governments are engaging in expansionary fiscal policy to alleviate the impact of inflation. The objective of this policy note is to examine the main consequences of this challenging environment for the fiscal stance of different levels of governments. These include the weakening outlook for government revenues in times of high expenditure pressures from a more rapid energy transition as well as high borrowing costs.