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One of the activities of the Public Governance Committee is the development of comparable data and indicators of good government and efficient public services. An ongoing element is the development of a new methodology to gather comparable data on public employment. Achieving a consistent and acceptable classification of the data first required establishing a terminology and a new definition of what has been called the "public domain". Thus the scope of the project broadened to include a comparison of employment data in government to the costs of production of services of the public domain (Comparison of Employment in the Public Domain, CEPD). The new classification is now consistent with the system of national accounts (SNA).
French
Brazil’s São Paulo Metropolitan Region is conducting a performance evaluation pilot study at three schools serving disadvantaged populations. The objective is first to test methods which can facilitate Post Occupancy Evaluations (POEs) and then to carry out the evaluations. The preliminary results are provided below.
French

The OECD Competition Committee debated energy security and competition policy in February 2007. This document includes a background note by Ms. Sally Van Siclen for the OECD, written submissions from Brazil, the Czech Republic, France, Germany, Italy, Japan, Korea, Lithuania, the Netherlands, Norway, Portugal, the Russian Federation, Spain, Sweden, Switzerland, the United Kingdom, the United States, the European Commission, as well as papers by MM. Ian Cronshaw (IEA) and von Hirschhausen, and summaries of discussions.

The Belgian financial landscape has been transformed over the past two decades and now consists of a relatively large, well-functioning and internationally integrated financial sector contributing directly and indirectly, through its intermediary function, to long-term economic growth. One of the financial system’s key characteristics is the concentration of activity among a small number of financial conglomerates that offer a combination of banking and insurance services. Although this mix of activities may contribute to financial stability, it has led to a widespread commercial practice of crossselling, possibly dampening competitive pressures. Competition may also be hindered by regulatory policies in the markets of mortgage loans and consumer credit; although these policies aim at protecting consumers against the risk of over-indebtedness, they risk having the unintended consequence of increasing entry costs for new providers, thus hindering competition and innovation and hurting consumer interests. Besides regulatory policy, tax policy has also been used to shape the development of the financial system. Tax credits are granted to influence investment and borrowing decisions, notably to stimulate home ownership, encourage saving and stimulate private pension accounts. International experience suggests that such tax expenditures, while influencing the allocation of saving, have no obvious impact on the overall level of saving. However they result in significant tax expenditure and necessitate higher tax rates elsewhere. Reforms recommended in this paper would help to make a well-functioning system perform even better.

Environmental protection and competitive markets are two of the highest policy priorities. In June 2006 the Competition Committee held a roundtable discussion on potential restrictions to competition due to environmental protection. Environmental regulations can constitute substantial barriers to entry in some markets, can provide a basis for predatory behaviour in some markets and can be harmful to competition and welfare through a variety of other channels. Environmental rules can thus raise prices to consumers by reducing competition in the market. Any assessment of the costs and benefits of an existing or proposed environmental rule is incomplete without an analysis of the costs generated by any resulting reduction in competition. On the other hand, there is no firm empirical evidence that environmental policy affects the competitiveness of firms and countries. Ideally, environmental policies should be effective and among equally effective policies, the policy that is least restrictive of competition should be chosen. Environmental policy makers should ensure that environmental benefits continue to outweigh costs, including the indirect costs associated with effects on market structure. Environmental policy is first and foremost about securing public environmental goods which are demanded in their own right and which are fundamental to a well-functioning market.

French
This paper begins by motivating the need for including “wider economic effects” when conducting transport infrastructure appraisal, followed by a discussion of various techniques to do so. The major focus is on studies from the cost function perspective that incorporate spillover benefits from public infrastructure capital, with a presentation of applications on highways, airports, and ports infrastructure stocks. The substantial differences between approaches focusing on “narrow” and “wider” impacts is evaluated, along with discussion of how application of the tools of spatial econometrics has facilitated estimation of models that capture wider economic benefits.
In this paper, we review some of the basic energy balance and climate change impact issues associated with biofuels. For both the basic energy and greenhouse gas balances of producing and using a range of fuels, and for the increasingly debated and important issues of non-greenhouse gas impacts such as a land, fertilizer and water use, we conclude that an improved framework for the analysis and evaluation of biofuels is needed. These new methodologies and data sets are needed on both physical and socioeconomic aspects of life-cycle of biofuels. We detail some of components that could be used to build this methodology and highlight key areas for future research. We look history and potential impacts of building the resource base for biofuel research, as well as at some of the land-use and socioeconomic impacts of different feedstock-to-fuel pathways.
Under the European Union’s Voluntary Agreement with car manufacturers, average light vehicle CO2 emissions in 2004 were 12.4% below 1995 levels but appeared unlikely to achieve the 25% reduction needed to reach the 140 g/km target for “per vehicle” CO2 emissions for 2008. The EU is now considering a regulatory approach to further reduce average vehicle emissions, in the form of CO2 emission or fuel economy standards. Such standards have been used by a number of countries, including the United States (although U.S. standards have been little-altered since their 1975 promulgation), Japan, China, and several others, and those that have been in existence for some time – e.g., those in the United States and Japan –have been successful in achieving their targeted levels of new vehicle fuel economy. The purpose of this paper is to examine various aspects of fuel economy and carbon standards for light vehicles, including their rationale, methods of establishing stringency, regulatory structure, and timing, with the hope of assisting the decision process for new standards. Because the Corporate Average Fuel Economy (CAFE) standards adopted by the U.S. in 1975 are the longest-standing and most studied of the various standards now in existence, much of the focus of this paper will be on the U.S. standards.

The authors would like to thank Chris Heady (OECD Directorate for Financial and Enterprise Affairs) and Dirk Pilat (OECD Directorate for Science, Technology and Industry) for valuable comments on an earlier draft of the paper. In addition, the contributions from all of our colleagues on the OECD Project on “Environmental Policy and Firm-Level Management” are gratefully acknowledged. (See Johnstone 2006 for a full list of contributors and other outputs from the project.) In particular the insights of Toshi Arimura (Department of Economics, Sophia University, Japan) in the area of research and development have been extremely valuable.

French
What difference does education make for young adults' engagement in politics and social issues? This study is part of the OECD's Centre for Educational Research and Innovation (CERI) project on "Measuring the Social Outcomes of Learning" (SOL). It discusses relevant international research, with special attention to studies in the Nordic countries, and analyses survey responses by more than 11 000 Norwegian youths aged 13 to 19. "Engagement" is defined as youth's declared interest in politics and social issues and by their participation in various forms of political activity. Educational performance and especially educational aspirations matter for this type of engagement. Socialisation in family environments with regard to civic related issues, however, matters even more for taking interest in such types of civic engagement. It also seems that young people experience educational benefits from growing up in families who care about the civic domain. Separately, the findings suggest that young people who are politically active do not easily conform to the status quo. Rather, they confront the authority structures of their schools more often than other young people do. The paper concludes with suggestions for policy and research.

The European Union has made it clear on numerous occasions that the future of the Western Balkan nations lies within the Union. After the Balkan wars of the 1990s, accession is seen as a guarantee of peace and stability in the region by both the 27 countries of the Union and by the six Western Balkan countries : Albania, Bosnia and Herzogovina, Croatia, the former Yugoslav Republic of Macedonia, Montenegro and Serbia.This jointly-held belief is, however, an objective, which can only be reached when the six countries meet the conditions set by the Union for accession. Part of this preparation will take place through the implementation of the Stabilisation and Association Agreements (SAAs), which have been or are in the process of being negotiated with these countries. However, the conditions for accession go well beyond the programme of work implied by the SAA...

This article explores how citizens are being engaged in an important area of policy making – the budget – and suggests ways in which budget officials can use the powerful resource of the Internet to further that involvement.

This paper examines crowding-out effects and the labour market match for the tertiary educated in 26 OECD countries, using attainment data and data on labour market outcomes from Education at a Glance 2006. A first-difference approach is applied on a three-period, pooled country-panel to examine the effects of changes in tertiary attainment levels against changes in labour market outcomes over time. The policy questions in this paper focus on the potential negative short-term effects that mismatches between the supply of and demand for higher-educated individuals might bring about. There is no evidence in the current data suggesting any crowding-out effects of lower-educated from higher-educated individuals. On the contrary, there seems to be positive employment effects for individuals with less education in countries expanding their tertiary education. Labour market outcomes for the upper secondary educated appears to be less influenced by the expansion of tertiary education, but there is no indication that tertiary educated individuals, on average, are displacing (crowding out) upper secondary educated individuals from the labour market. Similarly, the job market for the tertiary educated appears to be little influenced by the expansion of tertiary education. There are some indications that relative unemployment (relative to upper secondary) for the tertiary educated has been diluted to some extent, but this appears to be more related to the upper secondary educated, relatively speaking, strengthening their labour market positions vis-à-vis tertiary educated individuals in general. The earnings advantage (premium) for tertiary educated individuals in comparison with upper secondary educated individuals is still on the rise, which suggests that, on the whole, demand outstrips supply in most countries.
The French education system has a mixed record. A generally very successful pre-school and primary school level contrasts with underfunded public universities with high dropout rates which exist alongside very successful higher education institutions for elites. Initial education, especially secondary education and the universities, along with labour market policies themselves, do not always succeed in improving labour market entry for a significant proportion of young people. Parts of the management of education have been decentralised, yet educational institutions themselves generally have a very restricted degree of autonomy. The system of performance measurement and incentives, at all levels of education, needs to be reviewed. This Working Paper relates to the 2007 OECD Economic Survey of France (www.oecd.org/eco/survey/france), and is also available in French under the title “Renforcer les incitations à une meilleure performance du système éducatif en France”.
French
Hungary's counties and municipalities face difficult challenges. Participation in cost-cutting structural reforms initiated by the central government means cutbacks to administrative overheads and tough decisions in public services. At the same time, there are also challenges in modernising local infrastructures and in making full use of the EU funds for development projects. This paper first looks at how meeting these challenges can be helped by better budgeting, in particular regarding the transparency and oversight of accounts. Financing arrangements are also examined and this reveals a general problem of complexity. Assessment of spending responsibilities suggests room for improving the roles of counties and regions and a need for cutbacks in central-government influence on service provision and public-sector wages at the local level.
Offshoring of business process services (BPS) and information technology services (ITS) – whether through international insourcing or international outsourcing – is transforming the way many companies do business. This paper looks at the expansion of international supply chains and the rise of China, the Czech Republic, India and the Philippines as exporters of BPS and ITS. It also analyses the nature of and factors behind this trade and identifies major business- and trade-related challenges arising. In this context it presents some of the labour market implications resulting from increasing trade between OECD and non-OECD economies. The analysis shows that the BPS and ITS sectors in the four emerging economies are very differently structured: Chinese and Czech companies are predominantly supplying their domestic markets while Indian and Philippine companies are focused mainly on supplying foreign markets. In terms of exports, they also supply different geographies: China is mainly exporting to Japan; the Czech Republic to the European Union; the Philippines to the United States; and India to the United States and UK. Several of the larger home-grown companies in the four countries are establishing significant presence in foreign markets, in particular in other emerging markets, to build capacity and leverage local comparative advantage. This highlights the fact that different geographies have different strengths and BPS and ITS-related FDI between emerging economies is likely to expand rapidly in the future. All four countries are facing supply side constraints. The low supply of senior personnel with industry-relevant experience in China, the Czech Republic and the Philippines acts as a break on growth. Many companies are also struggling to manage high levels of staff attrition and salary inflation. Regulatory restrictions are relatively few but still affect some companies. In the ITS sector, temporary movement of personnel can pose a significant challenge for home-grown exporters. The issue is most relevant for the Indian ITS sector that is dependent on sending professionals for longer visits to client premises. Slow and unpredictable procedures for issuing business visas and work permits, and quota limitations for work permits, give rise to operational challenges. In the BPS sector, and to a lesser extent in the ITS sector, data privacy and security legislation can have a negative effect on international outsourcing. But new regulations have also created entirely new business opportunities, including the medical transcription sector.
French
This paper studies export processing zones (EPZs) which have become increasingly popular as a policy tool for development and export-oriented growth, and can be found in 130 countries around the world. The report consists of four parts. Part I provides a broad overview on the current use of EPZs, including the evolution of EPZ policy, their objectives and how these are achieved, and the incentives commonly offered. It presents case studies from China, India and Russia illustrating new trends and policies. Part II then provides a review of the economic costs and benefits of EPZs with particular focus on their trade and employment implications. Part III presents an analysis of how common EPZ policies relate to trade rules. It reviews the relationship between EPZs and the WTO Agreements such as the WTO Agreement on Subsidies and Countervailing Measures (ASCM), followed by a discussion of how EPZs are commonly treated in RTAs. Part IV concludes. EPZs are a sub-optimal policy from an economic point of view since it benefits the few and distorts resource allocation, but may be useful as a stepping stone to trade liberalisation on a national basis. Governments should consider all available policy options, and conduct a thorough cost/benefit analysis before implementation.
French

Health professions are overseen by an array of rules and regulations that are justified by the need to protect consumers from unqualified practitioners. The most common method of ensuring practitioner quality is professional licensure. Because health care expertise is necessary to establish the appropriate program of study, training, and examination for new professionals, a licensed profession often directly or indirectly controls its own licensure rules. In this process of selfregulation, a profession exercises its legitimate interest in maintaining the quality of its members. But a self-regulating profession also has the potential to abuse its control over who can practice and how they practice in order to enhance member income.

French
Recent research at OECD provides new evidence that customs and administrative procedures have substantial effects on trade flows. Although customs and administrative procedures are necessary for the smooth application of trade and other policies, they can ?thicken? the borders between trading partners if the customs and administrative procedures are more stringent than necessary or...
Turkey's business sector has achieved high growth over the past few years and - on average - has coped well with increased competition. However, some labour-intensive sectors lost competitiveness prior to the currency depreciation in mid-2006 and faced employment losses, raising political pressure for interventionist policies. This paper argues that the government should resist such pressure and instead follow a broad-based strategy to improve framework conditions for firms, irrespective of their size, sector and legal status. Overcoming the duality between the formal and informal sectors should be the central point of this strategy. In particular, the cost of labour should be reduced and regulatory hurdles in labour and product markets should be minimised, to help formal firms to remain competitive and increase employment. This would also make it easier for the many small and medium-sized firms to move into the formal sector, thereby raising productivity through economies of scale. This would increase the growth potential of the whole economy, broaden the tax base and level the playing field for doing business in Turkey, not only for the wide variety of domestic firms but also for foreign investors.
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