OECD Supports G20 Efforts To Fix World Economy

OECD – Paris, 17 November 2008

OECD welcomes G20 Declaration and offers support

OECD will support the global concerted effort to re-launch the world economy with analysis and recommendations for more effective regulation and policies for a return to sustainable growth, OECD Secretary-General Angel Gurria said.

Welcoming the outcome of the weekend meeting of G-20 leaders in Washington, Mr Gurria said that it provides a good basis for international cooperation to re-launch the world economy.

“The G-20 meeting last weekend led to what is effectively a major change in global governance, as leaders called on international organisations to support their work on policies to overcome the crisis and lead the global economy back to sustainable growth,” Mr Gurria declared in a major policy speech at the International Labour Organization in Geneva.

“This mandate translates into an urgent call for better collaboration between international organisations.”

In the face of the severe financial and economic crisis that has hit the world economy, Mr Gurria acknowledged the urgent need for short-term measures to shore up confidence and maintain activity.

“The crisis is hitting hardest those groups which were already having trouble finding and keeping jobs, such as youth and older workers,” he added. ”We need urgent action to ensure that the most vulnerable are protected in the short-term while we are putting the global economy back on the path to economically, socially and environmentally sustainable growth.”

But he also emphasised the importance of medium-term action to underpin stable and sustainable growth. As part of “a comprehensive contribution to the G-20’s Action Plan”, he said, OECD will work with governments in a two-strand approach to develop policies for tighter financial market oversight and risk management, and for economic recovery.

The first strand of the OECD contribution to the G-20 Action Plan, will address regulations and incentives in the financial sector, with a view to ensuring that market operators act in a tighter oversight and risk management environment, Mr Gurria explained. “The OECD’s committees will be working together to address the challenges and coherence of financial regulations, competition, investment flows, but also taxes, in particular tax transparency as requested by the G-20, and corporate governance, as corporate governance failures in the boards of directors of financial institutions are one of the factors that led to the crisis. “

The second strand will take a longer-term perspective by focusing on restoring the conditions for sustainable economic growth, he added. “One element to jumpstart the recovery is the fiscal stimulus that some countries have already announced and which the G-20 addressed over the weekend. But we need a comprehensive strategy, keeping markets open and strengthening the implementation of productivity-enhancing reforms. Another element has to be innovation and investment in human capital.”

In this context, OECD will focus on restoring the conditions for sustainable economic growth. This will include cost-effective policy packages to mitigate climate change, which OECD will submit to participants at upcoming U.N. meetings on climate change in Poznan, Poland, in December and in Copenhagen at the end of next year.

In parallel, OECD will develop exit strategies to enable governments to progressively disengage from participation in troubled sectors.

“The current economic crisis demands a lot of our attention, but even in the middle of the storm we must not lose our sense of direction,” he said. “Neglecting other important challenges such as climate change, migration, development aid and the Millennium Development Goals, or the need to successfully conclude the Doha Development Agenda will result in other crises in the future. We must keep the reform momentum going and not let our guard down because of the crisis.”

Last month, Mr Gurria and the Chair of OECD’s Development Assistance Committee, Eckhard Deutscher, issued a call to the world’s main aid donor countries to stand by their development pledges despite the economic slowdown.

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