Uncertain world…

OECD Forum 2003, Paris, 28-29 April

Making sense ©OECD/Hervè Bacquer 2003

Is the world heading on a path of diverging economic destinies? Could these developments undermine global security and stability? How should we respond to such dangers?

These were just some of the issues debated by the more than 1,000 people gathered at the fourth edition of the OECD Forum, on the theme “Grow, develop and prosper”, and as ever held in conjunction with the OECD Ministerial Council.

One key concern throughout was whether the US economy can be relied on to power future growth for the rest of the world. The answer from Clyde Prestowitz, author and president of the US-based Economic Strategic Institute, was definitely not. The US is a “spend and borrow” economy whose expenditure has got out of hand, Mr Prestowitz said. With the current account deficit at US$500 billion, the question is will the rest of the world be willing to lend to the US indefinitely, and continue to allow Americans to live beyond their means.

Francis Mer, French minister for the economy, finance and industry, emphasised the importance of education for economic growth. To encourage individuals and businesses to see education as a form of investment, we have to introduce incentives, such as tax schemes, he said. Even then, there are no guarantees they will work.

Restoring confidence in markets and governments in the wake of recent scandals was rarely far from the centre of debate. Thierry Desmarest, chairman and CEO of TotalFinaElf, argued that bribery is bad for business anywhere, while transparency and integrity enhance competition and help create a stable path to economic growth. Christian Schricke, secretary-general of the Société Générale Group, said corporate scandals had forced business to reappraise objectives in a bid to regain public confidence.

Mind the gaps

Basic challenges remained between rich and poor in many areas; the first is the digital divide, though for Jean-Philippe Courtois, CEO of Microsoft Europe, Middle East and Africa, the information technology economy is still growing, despite the collapse of the dot.com bubble, and the best is yet to come. But for François Roussely, Chairman and CEO of EDF, the main gap was the “electricity divide”. And for W. Brian Healy of Merck, the “gap in health” would have to be closed.

Japan’s minister of economic and fiscal policy, Heizo Takenaka, said that in the case of his country, there would be no growth without reform. But achieving more open and competitive markets may be more difficult in the context of ageing populations, argued Anatole Kaletsky from The Times. As the electorate ages, it is becoming more cautious about change, he said. And Hamish McRae, an economic commentator at another British newspaper, The Independent, pointed out that political divisions “may no longer be between left and right, but between young and old. The latter will want to protect their pensions, and the young might find that a burden, and leave.”

In any case, governments should not be under the illusion that democracy should be equated with elections, said Kumi Naidoo, CEO of Civicus. Political parties are becoming closed to the average person and access to the political process is becoming increasingly dependent on wealth, he said.

Most participants, including NGOs, agreed that successful completion of the WTO negotiations is critical, and that failure could give rise to real dangers to the multilateral system.

WTO director-general Supachai Panitchpakdi argued that any multilateral process is “an unwieldy, messy and frustrating business”. But missing a deadline “doesn’t in fact mean failure. It means that we are still working on it and that we have to redouble our efforts.”

New Zealand’s prime minister, Helen Clark, said OECD countries have benefited greatly from international trade, and must open their markets to freer trade in agriculture to allow the developing world to enjoy these same benefits. For Chilean finance minister Nicolás Eyzaguirre, the issues were straightforward: “The world pays US$300 billion in agricultural subsidies, and this is five times the amount spent in development assistance. Any progress on multilateral trade and investment must involve immediate reforms in agriculture”.

But reforms should not drive away farmers, “because then we would have to recruit officials to maintain the landscape,” said Hervé Gaymard, France’s minister of agriculture, food, fisheries and rural development.

Against this background, OECD secretary-general, Donald Johnston, reminded participants that trade and investment, together with good governance frameworks, have been the basis of prosperity and social progress in OECD countries.

Gareth Evans, president and CEO of the International Crisis Group, was worried about a growing disregard for multilateralism, particularly in the US, though he felt that multilateral cooperation had to be the way forward: “For all the frustrations of working together, it beats living in a world where there are no rules, and might is always right.”

©OECD Observer No 238, July 2003

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

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