enhancing the growth potential during the fiscal consolidation ingrid brocková permanent...
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Enhancing the Growth Enhancing the Growth Potential during the Fiscal Potential during the Fiscal
ConsolidationConsolidation
Ingrid Brocková Ingrid Brocková Permanent Representative of the SR to the Permanent Representative of the SR to the
OECDOECD
Economics University in BratislavaEconomics University in BratislavaNovember 15-16,2012November 15-16,2012
Global Challenges – Context Global Challenges – Context for the Slovak Republicfor the Slovak Republic
Historical context - importance of Historical context - importance of public policies (public policies (www.gapminder.org))
Global challenges – key trends Global challenges – key trends Food for thoughts /questions Food for thoughts /questions
relevant to development in relevant to development in SlovakiaSlovakia
Key TrendsKey TrendsPublic policies matter,...Public policies matter,...
www.gapminder.org Living standard Living standard Life expectancy Life expectancy DemographicsDemographics Emerging powers Emerging powers Globalization Globalization
Economic ChallengesEconomic Challenges
Sustainable public financesSustainable public finances (EU context), fair and (EU context), fair and sustainable tax and spending balance, policy mix sustainable tax and spending balance, policy mix
Financial sector Financial sector – balance between savings and – balance between savings and investment into real economy (separation/regulation investment into real economy (separation/regulation of socially demaging investment banking)of socially demaging investment banking)
RegulationRegulation „ „failure to regulate market failure is a failure to regulate market failure is a failurefailure“, good regulation as an integral part of the “, good regulation as an integral part of the system, not an add-onsystem, not an add-on
Open economies Open economies – open markets and trade, whilst – open markets and trade, whilst managing the social, structural and sequencing managing the social, structural and sequencing impatcs of globalization impatcs of globalization
Social and Environmental Social and Environmental ChallengesChallenges
Social:Social: JobsJobs – how to achieve job-rich growth – how to achieve job-rich growth InequalityInequality – OECD: Divided We Stand and the Jobs Study – OECD: Divided We Stand and the Jobs Study Social Security Social Security – financing the health, education and – financing the health, education and
pension system (HOW?)pension system (HOW?) OwnershipOwnership – the role fo all stakeholders (business – the role fo all stakeholders (business
community, unions, etc.)community, unions, etc.)
Environmental:Environmental: Perfect storm Perfect storm – natural resource scarcity is growing – natural resource scarcity is growing
rapidly, accentuated by increasingly extreme and rapidly, accentuated by increasingly extreme and unpredictable weather events and climate change.unpredictable weather events and climate change.
Energy and environmental securityEnergy and environmental security
Institutional ChallengesInstitutional Challenges
Domestically Domestically -- a dramatic decline in trust in politics, a dramatic decline in trust in politics, public services and democratic institutions at the very public services and democratic institutions at the very same time as an increase in the need for same time as an increase in the need for good good governance governance and and smart government smart government
Internationally Internationally –– a „zero-sum“ rather than „win-win“ a „zero-sum“ rather than „win-win“ mentality to most negotiations (trade, climate, etc). mentality to most negotiations (trade, climate, etc).
Need for more holistic approach - Need for more holistic approach - Behavioural Behavioural Economics and Complexity EconomicsEconomics and Complexity Economics
OECD : New Approaches to Economic ThinkingOECD : New Approaches to Economic Thinking
Sophisticated integration, recognition of Sophisticated integration, recognition of complementarities, inconsistencies, trade-offs, complementarities, inconsistencies, trade-offs, spillovers. spillovers.
Slovak Republic Slovak Republic
EU contextEU context (consolidation effort) (consolidation effort) GoalGoal: Balanced and sustainable economic : Balanced and sustainable economic
growth and employment while to achieve the growth and employment while to achieve the competetiveness; competetiveness; What kind of growth? What kind of growth? Environmentally sustainable? Job rich? Environmentally sustainable? Job rich? Socially inclusive? Socially inclusive?
Focusing on Focusing on policy making policy making and and measuringmeasuring – going beyond the GDP; measuring „– going beyond the GDP; measuring „what what matters“ matters“ (not only trends, but stocks – (not only trends, but stocks – natural and human capital). natural and human capital).
Long-term UnemplLong-term Unemployment oyment
Youth UnemploymentYouth Unemployment
Educational AchievementEducational AchievementAverage of PISA scores in reading, mathematics Average of PISA scores in reading, mathematics
and scienceand science
70
80
90
100
110
120
Mex
icoChile
Turkey
Israe
l
Gree
ce
Luxem
bour
gSpain
Italy
Slovak
Rep
ublic
Portuga
l
Czech
Rep
ublic
Sweden
Hun
gary
Unit
ed S
tates
France
Irelan
d
OECD EU
Sloven
ia
Den
mark
United
King
dom
Norway
Icelan
d
Poland
Belgium
Germ
any
Estonia
Switz
erlan
d
Netherl
ands
Austra
lia
New
Zea
land
Canad
aJa
pan
Kore
a
Finlan
d
Austri
a
Indo
nesia
Brazil
Russia
2009 2006
Direct public funding of Direct public funding of business´s research and business´s research and
developmentdevelopment
Direct public funding of business R&DPercentage of GDP
0,00
0,05
0,10
0,15
0,20
0,25
0,30
0,35
0,40
0,45
Chile
Gree
ce
Mex
ico
Slovak
Rep
ublic
Poland
Canad
a
Portuga
l
Neth
erlan
dsJa
pan
Aus
tralia
Switz
erlan
d
Turkey
Italy
New
Zea
land
Den
mark
Luxem
bour
g
Irelan
d
Estonia
Hun
gary
OECD EU
Belgium
Norw
ay
Finlan
d
Icela
nd
Unit
ed K
ingdo
m
Germ
any
Sloven
iaSpain
Czech
Rep
ublic
Swed
en
France
Kore
aIs
rael
Unit
ed S
tates
Aus
tria
China
South A
frica
Russia
2007-2009¹ 2002-2004²
Structural changes in the Slovak Republic Structural changes in the Slovak Republic ((OECD Going for Growth 2012OECD Going for Growth 2012))
Communication (country specific Communication (country specific approach in implementation of approach in implementation of structural reforms)structural reforms)
The optimal policy mix? Growth The optimal policy mix? Growth friendly? Fiscal consolidation with friendly? Fiscal consolidation with human face, choice of instrumentshuman face, choice of instruments
Long-term vs. short-term impact? Long-term vs. short-term impact?
Priorities supported by indicators
Improve funding and effectiveness of the education system (Roma children, vocational training, student tuition);
Reduce regulatory barriers to competition (administrative burdens, privatization process in network industries, compulsory chamber membership); Regulatory Impact Assessment (RIA);
Eliminate barriers to female labour participation (parental leave, remove fiscal disincentives to work for second earners);
Reduce the implicit taxes on continued work at older ages (index the retirement age to life expectancy and make pension adjustment for earlier and later retirement more actuarially neutral);
Priorities supported by indicators
Improve activation policies (capacity of PES, tighten conditionality requirements for jobseekers, target job creatino subsidies more narrowly);
Improve the innovation support framework (reduce administrative burdens on start-ups, access to the VC and ICT, public funding of R&D, R&D framework);
Strengthen the judicial and law enforcement systems (accountability – performance indicators and court statistics).
OECD Economic Survey – Slovak Republic 2012
Improving the fiscal framework to enhance growth in an era of fiscal consolidation
Investing efficiently in education and active labour market policies
Secretary General of the OECD, December 6, 2012 in Slovakia
Thank you for your attention
The Permanent Delegation of the Slovak Republic to the OECD
www.oecdparis.mfa.sk