News brief – December 2006

OECD Observer

Development aid stalls


Richard Manning, Chair of the OECD Development Assistance Committee (DAC)
Photo ©Jacques Brinon/OECD

Aid flows to the poorest countries in sub-Saharan Africa have stalled. This is the message from finalised data on aid flows for 2005. Official development assistance from members of the OECD’s Development Assistance Committee (DAC), which groups the world’s major donors, reached $106.8 billion in 2005, a record high. But $22.7 billion of this was for debt relief, mostly for Iraq and Nigeria. Official humanitarian aid also rose (to $8.7 billion) in response to the Asian tsunami two years ago.

But removing these exceptional items reveals that the trend in development programmes for other countries is essentially flat. Aid to sub-Saharan Africa, outside Nigeria, actually fell by 2.1% in real terms to $24.9 billion in 2005. Debt relief and humanitarian aid account for all the increase to the region since 2002.

This seems a long way from the Gleneagles and Millennium+5 summits in 2005 which extended earlier promises to scale up aid flows and to devote half the increases to Africa, resulting in a doubling of aid to the continent from 2004 to 2010. “Donors will need to undertake major expansions of their core development programmes for Africa if they are to meet this target”, the DAC chief, Richard Manning, warned on releasing the news.

Separately, on releasing its review of US development assistance programmes, the DAC said that development needs should be accorded the same status as diplomacy and defence and the importance of poverty reduction more explicitly recognised within this mandate. It urged further coherence among all development co-operation actors, and recommended that the US improve public awareness of its development co-operation efforts. The US is the largest donor in the DAC in terms of volume of aid, reaching a record high of $27.6 billion in net official development assistance in 2005.

For more information, see www.oecd.org/dac

Growth eases

Gross domestic product (GDP) in the OECD area rose by 0.5% in real terms (i.e., adjusted for inflation) in the third quarter of 2006, down from 0.8% in the previous quarter, according to preliminary estimates.

In the US, GDP grew by 0.4% in the third quarter of 2006, less than the 0.6% growth recorded in the previous quarter. GDP in the euro area rose by 0.5%, down from the quite high growth rates observed in the two previous quarters. However, Japan’s GDP growth accelerated slightly, by 0.5%, after a 0.4% rise in the previous quarter.

See www.oecd.org/statistics

Inflation drops–


Source: OECD

Consumer prices in the OECD area rose by 1.7 % in the year to October 2006, compared with 2.1% in the year to September 2006. On a monthly basis, the price level eased by 0.2% between September and October 2006, after a decline of 0.1% from August to September. The drop in inflation mainly reflects a year-on-year fall in energy prices of some 3.6% in October, against a rise of 0.3% in September. The US saw a fall of over 11%. Consumer prices for food increased by 3% year-on-year in the OECD area in October, unchanged from the year to September. Excluding food and energy, consumer price inflation also remained stable at 2.2% in the year to October.

–and unemployment falls


Source: www.oecd.org/statistics

Joblessness also edged down as the standardised unemployment rate for the OECD area fell to 5.9% in October 2006, 0.1 percentage point lower than the previous month and 0.6 percentage point lower than a year earlier. For the euro area, the standardised unemployment rate was 7.7% in October 2006, 0.1 percentage point lower than the previous month and 0.8 percentage point lower than a year earlier. The US’s standardised unemployment rate for November 2006 rose to 4.5%, 0.1 percentage point higher than the previous month but 0.5 percentage point lower than a year earlier. For Japan, the rate was 4.1% in October 2006, 0.1 percentage point lower than the previous month and 0.4 percentage point lower than in October 2005.

Chinese Intelligence

This year China will for the first time spend more on research and development (R&D) than Japan and so become the world’s second highest investor in R&D after the US, according to OECD projections based on recent trends. “The rapid rise of China in both money spent and researchers employed is stunning,” said Dirk Pilat, who heads the OECD’s science and technology policy division.

Based on recent trends, China’s spending on R&D as a percentage of GDP, known as R&D intensity, has more than doubled, from 0.6% of GDP in 1995 to just over 1.2% in 2004. The country will spend just over $136 billion on R&D in 2006, just over Japan’s forecast $130 billion. The US is predicted to remain the world’s leading investor in R&D in 2006, spending just over $330 billion. The EU- 15 is predicted to spend just over $230 billion.

“OECD countries need to make their research and innovation systems more efficient and find new ways to stimulate innovation in today’s increasingly competitive global economy,” Mr Pilat said.

See www.oecd.org/sti/outlook for more information on the OECD publication, Science, Technology and Industry Outlook 2006.

Migration benefits

Developed countries must do more to integrate immigrant workers, a new report says. Well-managed immigration flows offer benefits both for host countries and for migrants and their families, but integration into the societies where migrants settle requires commitment and action at national and local level.

Almost three million long-term migrants legally enter OECD countries every year in search of greater economic security. Their skills and energy bring benefits to their host countries, but difficulties over integration also give rise to tensions. Immigration is likely to go on rising as OECD countries grapple with falling birth rates and ageing populations. The OECD argues that lessons from successful integration initiatives can be successfully applied elsewhere if administrations are willing to put necessary policy frameworks in place, including anti-discrimination legislation. The new OECD report, From Immigration to Integration: Local Solutions to a Global Challenge, analyses case studies in five countries: Canada, Italy, Spain, Switzerland and the UK.

See www.oecd.org/migration

Slippery slopes

Après ski could become an epitaph for a whole industry if warm winters continue. Many regions in the Alps have so far had the warmest November on record, a forthcoming OECD report warns, delaying the arrival of snow by several weeks and worrying ski operators. Whether due to climate change or just a one-off slip, warmer winters and a lack of snow threaten the Alpine ski industry and their regional economies.

As many as 80 million tourists ski in France, Austria, Switzerland and Germany each year, which translates into some 160 million skier days. New OECD analysis warns that recent warming in the Alpine region has been roughly three times the global average, with 1994, 2000, 2002, and 2003 already the warmest in 500 years. Greater changes in the coming decades are likely.

Germany is most at risk, the report posits, with the 1°C warming scenario leading to a 60% decrease in the number of natural snow-reliable ski areas. Artificial snow may be cost-effective for ski operators, but has environmental drawbacks: it consumes a lot of water and energy and affects the landscape and ecology, warns the report. French tour operators have already started to see cancellations in the Alps and Pyrenees this year, press reports say. Whether the market adjusts by cutting prices remains to be seen.

The report Climate Change in the European Alps: Adapting Winter Tourism and Natural Hazard Management will be released in February 2007.

For more information, contact Shardul.Agrawala@oecd.org

Plus ça change…

“Solar radiation is a very difficult form of energy to exploit on a large scale owing to its initial dilution and the difficulty of tapping it over large areas. It seems well established that solar energy cannot at present compete in the highly industrialised nations with any of the many other forms of energy now vying with each other.”

A.H. Delsemme, “Pilot experiments in international scientific co-operation”, in No 15, April 1965

©OECD Observer No 258/259, December 2006




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