Long-term care spending to double
Crisis stretches health spending
Multinational guidelines updated
Russia moves towards Anti-Bribery Convention
Internet economy advances
New debt centre for South Africa
OECD and India enhance tax co-operation
Plus ça change
Spending on long-term care in OECD countries could double or triple by 2050, due to ageing. A report, Help wanted? Providing and paying for long-term care, says that half of all people who need long-term care are over 80 years old, and that the share of the population in this age group will reach nearly one in ten (higher in some countries) in the OECD area by 2050, up from one in 25 in 2010.
See book review and www.oecd.org/health/longtermcare
Health spending continues to rise faster than economic growth in most OECD countries, latest data show. Health spending reached 9.5% of GDP on average in 2009, up from 8.8% in 2008. This was particularly marked in countries hit by the global recession, with Ireland’s health spending rising from 7.7% of GDP in 2007 to 9.5% in 2009, for instance. Health spending per capita rose on average across OECD countries by 3.5% in 2008, with public spending on health growing by an even faster 4.1%. OECD Health Data 2011 were released 30 June.
After a significant decrease in the second half of 2008, the number of new enterprises started to recover around the first half of 2009 in most OECD countries. However, by the second quarter of 2010, the number of newly created enterprises was still below its pre-crisis level in most countries. This was particularly true in countries such as Denmark, Germany, Spain and the US. However, entrepreneurship in Australia, France and the UK appears to have firmed up, with the number of new firms created in 2010 being higher than the pre-crisis peak.
The data come from the inaugural edition of Entrepreneurship at a Glance 2011, which also says that some OECD countries are far better than others when it comes to funding young, innovative and growth-oriented companies. Venture capitalists in Israel allocate more financing to young companies than any other country in the OECD, with the equivalent of 0.18% of GDP. The US, Sweden and Finland are not too far behind.
Some 42 countries have committed to new, tougher standards of corporate behaviour in the updated OECD Guidelines for Multinational Enterprises, adopted in May 2011. The new guidelines are the fifth update since 1976, and now include recommendations on human rights abuse and responsibility towards supply chains, making the guidelines the first intergovernmental agreement in this area. See OECD Observer No 285, Q2 2011.
“When I was president, the economy benefited because information technology penetrated every aspect of American life. More than one quarter of our job growth and one third of our income growth came from that. Now the obvious candidate for that role today is changing the way we produce and use energy.”
Former US President Bill Clinton, Newsweek, 27 June 2011
“Europe today is in the same situation America found itself in 1790: at a crossroads. Its situation will not stabilise without a common budget that is capable of financing its debts.”
Jacques Attali, French founding head of the European Bank for Reconstruction and Development, writing in Slate.fr, 4 July 2011
The OECD has invited the Russian Federation to join the OECD’s Working Group on Bribery and to accede to the OECD’s Anti-Bribery Convention. OECD Secretary-General Angel Gurría signed an exchange of letters with first deputy minister of foreign affairs, Andrey Denisov, and Russia’s minister for economic development, Elvira Nabiullina, at a ceremony with the US secretary of state, Hillary Rodham Clinton, during the OECD Ministerial Council Meeting on 25 May.
“This is a significant milestone in Russia’s accession to the OECD,” said Mr Gurría. The Russian parliament is expected to proceed to approve the country’s accession to the OECD Anti-Bribery Convention.
For more, see www.oecd.org/bribery
Slower growth lies ahead for most of the world’s major economies, according to the latest OECD leading indicators. The indicators, which use data from order books, building permits, long-term interest rates and the like in a bid to anticipate turning points in activity, had suggested mixed trends in March, but May indicators released this July point to slowdowns in Canada, France, Germany, Italy and the UK, as well as Brazil, China and India. However, more positive, if tentative, signs were emerging for the US and Russia.
Meanwhile, GDP in the OECD area grew by 0.5% in the first quarter of 2011, the same as in the previous quarter but down from 0.9% a year earlier. Private consumption’s contribution slipped to 0.2 percentage points, half its previous quarterly level, and its lowest since the second quarter of 2009.
Consumer price inflation in the OECD area reached 3.2% in the year to May 2011, up from 2.9% in April. The acceleration in inflation was particularly marked in the US, where consumer prices rose by 3.6%, up from 3.2% in April. Energy prices rose by 14.2%, compared with 13.8% in April. Excluding food and energy, consumer prices rose by 1.7 % in May 2011, the highest rate since July 2009.
The unemployment rate of 8.1% in May 2011 in the OECD area was unchanged for the third consecutive month, with the euro area rate of 9.9% also steady. There were 44 million unemployed people in the OECD area in May 2011, down 2.8 million from a year earlier but 12 million higher than in May 2008.
Merchandise trade grew strongly across major economies in the first quarter of 2011. Total imports of G7 and BRICS countries grew by 11% in the first quarter compared to 8.2% in the previous quarter. Total exports grew by 8.5%, compared to 8.2% in the previous period.
As news broke that wireless broadband subscriptions in OECD countries exceeded half a billion at the end of 2010, OECD governments and other stakeholders met in Paris to lend their support to a framework promoting a more transparent, open Internet. The new principles aim to improve Internet governance, while retaining the light-touch, flexible regulation that has been the kindle of the Internet economy’s success. The free flow of information should be promoted and protected, representatives of governments, business, civil society and the technical community agreed. It was the job of governments to improve their efforts to protect personal data and the freedom of expression, while an international regulatory regime should be resisted: “The development of such a formal regulatory regime could risk undermining its growth,” a communiqué said.
For more detail, including clips from Vint Cerf of Google and Tim Berners-Lee, “founder” of the world wide web:
The OECD and South Africa have opened a centre in Midrand, South Africa to help African governments manage their debt and bond markets. The centre, which started operations on 30 June, will help reduce the cost of managing public debt and encourage the development of financial products, such as mortgage loans, micro-credit and financing for small and medium-sized firms.”With the most advanced financial market on the African continent, we look forward to partnering with the OECD in facilitating and building capacity of our neighbours in the region,” said the South African finance minister, Pravin Gordhan.
The OECD and India have announced plans to strengthen ongoing co-operation on taxrelated issues through the development of a three-year partnership to promote a structured dialogue and information sharing.
“Economic expansion under modern conditions is increasingly dependent on the supply of scientific and technical and other highly qualified personnel, and the development of education to produce such personnel. This dependence is likely to be accentuated in the decade 1960-70.”
By Henning Friis, “Preventing a bottleneck in economic progress”, in issue No 4, June 1963
©OECD Observer No 285, Q2 2011