Structural Reforms and Growth:G20 Framework

Presentation byZia QureshiWorld Bank

G24 and The Growth Dialogue High-Level Seminar onNew Challenges to Growth and Productivity

Washington DC; September 25, 2013

Central role of structural reforms in agenda for strong, sustainable and balanced growth

• Restoring robust growth will require going beyond current focus on short-term macroeconomic and demand management and implementing reforms that remove structural impediments to stronger and sustainable growth

• Essential to stronger growth, structural reforms are also key to addressing the jobs challenge, promoting a balanced pattern of growth, reducing inequality, and supporting environmental sustainability

• The reform agenda spans product market regulation and competition, labor market regulation, financial sector reform, tax and expenditure reform, and investment in infrastructure and human capital

• Priorities vary across countries, but structural reforms are central to the growth agenda in advanced and emerging economies alike

• The G20 has stepped up its work on structural reforms under its Framework for Strong, Sustainable and Balanced Growth but more needs to be done

G20 structural reform commitments: more progress in financial sector reform, less in other areas

21%

10%

4%

7%

24%

34%

St. Petersburg Commitments

Product market regulation

Labor market regulation

Taxation

Human capital

Financial regula-tion

Other areas

10%

9%

8%

4%

43%

26%

Los Cabos Commitments

Source: OECD/World Bank

G20 emerging economies: degree of ambition of St. Petersburg structural reform commitments

Product Markets Labor Markets Financial Sector Taxation Human Capital Other Areas0

2

4

6

8

10

12

14

Low Medium High

Num

ber o

f com

mitm

ents

About half of commitments score high on degree of ambition within their policy domains

Source: OECD/World Bank

Priority Areas for Structural Reform for SSB Growth

Argentina- Remove barriers to private investment and competition- Improve agricultural productivity and diversify exports- Improve quality of public services

Brazil- Expand and improve quality of infrastructure- Improve quality of education at all levels- Extend progress on social inclusion

China- Strengthen the foundations for a market-based economy- Deepen fiscal reforms- Implement land and labor reforms to underpin urbanization

India- Improve infrastructure and labor/business regulations- Manage rural/urban dynamics- Promote inclusive human development

Indonesia- Reallocate fuel subsidies to infrastructure projects- Strengthen programs for productive inclusion of the poor- Expand tertiary/technical education and raise overall quality

Mexico- Implement a thorough tax reform- Move forward with energy sector reform- Implement regulatory reforms to strengthen competition

Russia- Complement labor reform with broader regulatory reform- Implement tax and expenditure reforms- Reduce the state's footprint

South Africa- Implement labor market and competition policy reforms- Address infrastructure gaps- Strengthen public service delivery mechanisms

Turkey- Improve labor market flexibility and business environment- Pursue an inclusive strategy to develop human capital- Further energy sector reform

Saudi Arabia- Implement labor market and education reforms- Improve firm entry/exit, credit, contract enforcement- Improve efficiency in energy consumption

Source: OECD/World Bank

G20 emerging economies: alignment of St. Petersburg structural reform commitments with reform priorities

Argentina Brazil China* India Indonesia Mexico Russian Federation

Saudi Arabia

South Africa

Turkey0

1

2

3

Prio

rity

polic

y ar

eas

cove

red

byre

form

com

mitm

ents

* No new commitments submitted at St. Petersburg.

Two-fifths of reform commitments score high on alignment with reform priorities

Source: OECD/World Bank

Monitoring of implementation of G20 structural reform commitments

Other

Financial regulation

Human capital

Taxation

Labour market regulations

Product market regulation

0 10 20 30 40 50 60 70 80 90 100

Pending Ongoing Completed

%

Source: OECD/World Bank

Implementation status of Los Cabos structural reform commitmentsNeed for more vigor in implementation

Concluding Remarks

• The increased attention to growth-enhancing structural reforms and investment is a welcome refocusing of the G20 agenda

• The call in the St. Petersburg Leaders’ Declaration for G20 members to submit, peer review, and coordinate growth strategies will reinforce this shift of emphasis

• Complementing the G20 framework, the G24 could also consider adopting a more focused and structured process to facilitate peer dialogue and learning on structural reforms for growth and help build momentum for progress

• Long-term financing for investment is another, related area where the G24 could reinforce the current G20 initiative, including the promotion of South-South flows