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BRIDGING DIVIDES Bridging Divides is the theme of OECD Forum 2017. After many years of global interaction, exchange and progress, driven by a potent mixture of reform, economic transition, emerging markets and technological innovation, divisions have again begun to erupt in OECD countries. Some of these income, social, cultural and geographical divides have been lurking for some time, but have deepened since the financial crisis started in 2008. Indeed, lately there has been a backlash against international co-operation and globalism, and a resurgence of protectionist, even nationalist, policies. All of this poses challenges for key global agreements on climate and sustainable development, and risks dashing the hopes for progress of people everywhere. What should policymakers do to help bridge these dangerous divides, and make the global economy work better for everyone? What promise does digitalisation hold for bridging economic, social and geographical divides? What must be done to bring people and institutions closer together? How can facts, knowledge and positive narratives be marshalled to beat back fake news and post-truths, and restore faith and confidence in the value of international co-operation, openness and world progress? In OECD Yearbook 2017, OECD experts are joined by thought leaders from government, business, labour, academia and civil society to examine these and other questions facing our societies today.

OECD Observer Volume 2017 Supplement 1 ISSN 0029-7054 Volume 2017 Supplement 1

This work is published on the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of the Organisation or of the governments of its member countries. This document and any map included herein are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law.

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Editors: Rory Clarke, Janine Treves Assistant editor: Neïla Bachene Forum co-ordination: Denise Green, Jean de la Rochebrochard Editorial assistant: Balázs Gyimesi Data editors: Eileen Capponi, Vincent Finat-Duclos Illustrations: Charlotte Moreau, Sylvie Serprix Production: Marion Desmartin Design and layout: Design Factory Advertising management: Christine Clement, Aleksandra Sawicka, LD Media Development

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Table of contents INTRODUCTION 6 We must bridge divides and make globalisation work for everyone Angel Gurría, Secretary-General of the OECD 8

Making globalisation work: Better lives for all Lars Løkke Rasmussen, Prime Minister, Denmark and Chair of the OECD Ministerial Council Meeting 2017

INCLUSIVE GROWTH 10 Introduction 12 Towards an empowering state: Turning inclusive growth into a global reality Gabriela Ramos, Special Counsellor to the OECD Secretary-General and Sherpa to the G20 14 The challenge of boosting innovation and trade, while achieving inclusiveness Catherine Mann, Chief Economist, OECD 16 A new agenda for inclusive growth Liam Byrne, Founder, UK All-Party Parliamentary Group on Inclusive Growth, and former Chief Secretary to Her Majesty’s Treasury 17 Business brief: Randstad 18 Bridging the generational divide in the UK Nick Clegg, Former Deputy Prime Minister of the United Kingdom 20 Changing the face of start-ups: Why diversity is not a nice-to-have but a must-have Nicola Hazell, SheStarts Director, Head of Diversity & Impact, BlueChilli Group 21 March on gender

31 Business brief: Grupo Energía de Bogotá DIGITALISATION 34 Introduction 36 Re-booting government as a bridge to the digital age Andy Wyckoff, Director, OECD Science, Technology and Innovation Directorate 38 Making the most of the digital world: Changing an end to a means Susan Greenfield, CEO and Founder, Neuro-Bio Ltd and Member of the British House of Lords 39 Business brief: Labster 40 Business brief: Engie 41 US manufacturing’s decline and the rise of new production innovation paradigms William B Bonvillian, Lecturer at MIT and Advisor to MIT’s Industrial Performance Center 43 Why workers matter for a successful new production revolution Lizette Risgaard, President, Danish Confederation of Trade Unions 45 How taxing robots could help bridge future revenue gaps Xavier Oberson, University of Geneva 46 Databank on digitalisation 47 Business brief: Bomare Company 48 Corporate accountability is essential to human rights in the network society Rebecca MacKinnon, Director, Ranking Digital Rights at New America

22 Towards a global market that works for everyone Margrethe Vestager, EU Commissioner for Competition

50 Smartphones are child’s play, but what about the child labour? Roel Nieuwenkamp, Chair of the OECD Working Party on Responsible Business Conduct

23 Will labour remain different from the other factors of production? Branko Milanovic, Graduate Center, City University of New York and Author

52 Policy briefs

24 Business brief: AARP 26 Basic income: An answer to social security problems? Marjukka Turunen, Director of Change Management, Kela, Finland 27 Databank on inclusive growth 28 Bridging food divides in Nigeria is a global challenge Laurent Bossard, Director, OECD Sahel and West Africa Club (SWAC) 29 Eating soup with a knife: Confronting warfare in the Sahara Olivier J Walther, Consultant to the Sahel and West Africa Club (SWAC-OECD) at the OECD and Associate Professor, University of Southern Denmark 30 Could measuring what matters be a bridge to happiness? Meik Wiking, Chief Executive, Happiness Research Institute, Denmark; Author, The Little Book of Hygge

TRUST 54 Introduction 56 Can we save our democracies from hackers? Rolf Alter, Director, OECD Public Governance Directorate 58 We need leaders to act in service of future generations Mary Robinson, President, Mary Robinson Foundation-Climate Justice, former President of Ireland, and former UN High Commissioner for Human Rights 60 We must protect the poorest as the fight of our lives Gayle Smith, President and CEO, The ONE Campaign 61 Business brief: FGV Projetos 62 Participatory democracy: Portugal’s new frontier Maria Manuel Leitão Marques, Minister of the Presidency and Administrative Modernisation, Portugal

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63 We must invest in the transformational power of higher education Colm Harmon, Head of the School of Economics, University of Sydney 64 Protecting human rights and the spirit of justice Salil Shetty, Secretary-General, Amnesty International 65 Business brief: International Food Waste Coalition 66 Responsible business conduct and competition: The OECD Guidelines for Multinational Enterprises and responsible supply chain management Karin Buhmann, Professor, Responsible for Business & Human Rights, Copenhagen Business School (CBS) 69 Business brief: AXA Group POST TRUTH DEBATE

70 Figures and feelings both count, as a matter of fact Martine Durand, OECD Chief Statistician and Director, OECD Statistics Directorate 72 How to make facts matter again Heidi Tworek, Assistant Professor of History, University of British Columbia and Fellow, Transatlantic Academy 73 How to stop the slide from info-storms to post-factual democracy Vincent F Hendricks, Professor, Director, Center for Information and Bubble Studies (CIBS) University of Copenhagen, Denmark 75 Digging up facts about fake news: The Computational Propaganda Project Rory Clarke and Balázs Gyimesi, OECD Yearbook 76 Databank on trust 77 Business brief: Johnson & Johnson

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78 The politics of globalisation circa 1773 Emma Rothschild 80 The OECD iLibrary Yearbook selection 82 Great Danes in OECD history: Anker Randsholt on Thorkil Kristensen 83 Business brief: The City of Newcastle, Australia 84 Don’t Miss

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INTRODUCTION

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We must bridge divides and make globalisation work for everyone Faced with a backlash against globalisation that threatens to trigger a damaging retreat, the OECD has been thinking hard about how to better address the downsides while preserving the benefits of economic openness.

related to deprivation becoming entrenched at a young age. Children are at most risk of poverty, and on average across OECD countries, 17% of 20-24 year-olds are not in employment, education or training.

During OECD Week in June 2017, both at the OECD Forum on 6-7 June and the OECD Ministerial Council Meeting on 7-8 June, we will discuss these questions, we will explore how to bridge challenging divides in our economies and societies, and we will seek practical responses to these problems.

All this has led many people in advanced countries to feel that globalisation is benefitting others, but not them. Moreover, many feel that some of the processes through which globalisation is advanced are insufficiently transparent and democratic. And citizens have been expressing their discontent in the ballot box.

Globalisation, which in a broad sense refers to the growing integration of the flows of goods, services, capital, people and ideas throughout the planet, has brought net benefits worldwide. By facilitating the spread of know-how, encouraging specialisation and a more efficient allocation of resources, it has boosted global growth and helped lift hundreds of millions of people out of poverty. The period of rapid globalisation since the Second World War has yielded the greatest increase in global prosperity in history, despite a near-tripling of the world population, and it has also helped to spread peace and democracy worldwide. Europe is perhaps the most striking example: with its four freedoms–free movement of people, capital, goods and services– the EU is probably the most highly globalised region of all, and this continent, so ravaged by war over the centuries, has experienced more than seven decades of peace.

Is globalisation to blame for the stagnation of middle-class incomes in some advanced economies and the widening disparities of income and wealth? Reality is surely complex, but there are some plausible mechanisms through which it may have contributed.

Nonetheless, there is a growing and widespread feeling of discontent towards globalisation in many segments of our societies, anchored in the perception that those benefits have not been equally shared and may be concentrating in a few hands. One aspect of this is the slowdown in the growth of median incomes, which has been particularly marked since the start of the crisis, though in some OECD countries, real median incomes have failed to grow for 20 years or more. Meanwhile, incomes and wealth at the top end have continued to rise rapidly. Across the OECD, the richest 10% of the population now earn almost 10 times more than the poorest 10%, up from seven times in the 1980s. And wealth is even more concentrated than income: the richest 1% of households in the OECD possess 19% of total wealth, while the bottom 40% own just 3%. This has been accompanied in many cases by a fall in social mobility, which is

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Angel Gurría Secretary-General of the OECD

OECD Yearbook 2017 © OECD 2017

For example, tax systems in the OECD have become less progressive in the past few decades, with a shift of the tax burden onto labour. That has contributed to the slow growth of median incomes and increasing inequality. Also, globalisation has deepened the financialisation of our economies, which appears to be positively associated with higher income inequality across OECD economies. Moreover, financialisation was a key factor leading to the global crisis, and the slowdown in median income growth has been particularly marked since then. In addition, digitalisation–“globalisation on steroids”–is bringing disruption along with opportunity. We estimate that 9% of jobs are at high risk of being automated. Furthermore, many new jobs are non-standard, with unclear implications for the quality of work. Lastly, while globalisation should typically foster competition, there is some evidence that market concentration has been increasing across a range of industries. Possible globalisationrelated reasons include “winner-takes-most” features in some markets. This tendency towards greater market concentration is associated with an observed widening of the divergence of productivity and wages between leading and laggard firms within given sectors. This has also been feeding inequality and yielding stagnant incomes for many workers. While all these mech-

INTRODUCTION

Globalisation is a means to an end, not an end in itself. We must ensure that the growth it fosters is inclusive and sustainable. anisms have some plausibility, it is difficult to disentangle globalisation from other factors, especially technological change. If we don’t respond to the concerns being expressed by our citizens, we risk seeing a damaging retreat from openness. We urgently need to make globalisation work for all. That is what our MCM agenda is all about, shaped by Denmark’s vision as chair of the meeting, and animated by the new ideas coming from our New Approaches to Economic Challenges (NAEC) and Inclusive Growth initiatives; and our Productivity-Inclusiveness Nexus developed at last year’s MCM. Our ministerial discussions, held back-to-back with the OECD Forum, will be nourished by rich debates among decisionmakers and thought leaders from civil society on how to bridge divides, marshal digitalisation and win public trust in a better, more inclusive, future. Indeed, our attempts to “fix” globalisation to make it work for all will only succeed if they are set in the context of inclusive growth. For example, providing people with adequate income support in the case of negative contingencies is vital, but it is not enough. What is needed is an empowering state. Social protection systems must become social enabling systems. Among other things, this means focusing on gender inclusion, the integration of migrants and early childhood education, as well as lifelong learning. Policies have to make it easier for workers to participate in global production networks and adapt to a rapidly changing environment. We also need more and better international co-operation to address problems such as a race to the bottom in standards and market-distorting behaviour, as well as aggressive tax avoidance and irresponsible business conduct. While in some cases new standards may be needed, in others it is a question of broadening the coverage of existing standards and enforcing their compliance. The OECD is already working on many of these issues. Also, countries should go further in building standards in trade and investment agreements. Many modern free trade agreements (FTAs) have started to address such issues by including provisions on labour, social and environmental questions, as well as addressing new issues such as state-owned enterprises.

This is a welcome trend. The OECD is doing its bit to ensure more inclusive globalisation, including through its support for the G20 and G7, and we are supporting new initiatives, such as the Global Deal launched in 2016 with the Swedish government and the International Labour Organization. This is a multistakeholder partnership to encourage social dialogue to create jobs and support more inclusive growth. We also need to listen to people’s concerns and engage more effectively with citizens. The OECD could help governments better communicate the benefits and challenges of globalisation through the establishment of a permanent platform for engagement with civil society, as well as continuing our work on open government. When it comes to making globalisation work for all, we can learn a lot from this year’s MCM chair, Denmark. As one of the world’s most open countries, Denmark has established a robust safety net to protect people from the creative destruction that globalisation brings. Indeed, provisions in Denmark ensure that Danes can re-skill, upskill and adapt to innovation and technological change. Globalisation is a means to an end, not an end in itself. We have to ensure that the growth it fosters is inclusive and sustainable, that globalisation works for all. Openness and multilateralism are worth preserving and enhancing: they bring greater prosperity, peace, innovation, diversity and cultural exchange. But we will only succeed if we ensure that their benefits are widely shared. OECD Week 2017 will provide a space to discuss how we can best preserve openness and multilateralism, bringing to the table our analysis and ideas to ensure that globalisation works for all. Adapted from remarks delivered at Copenhagen, Denmark, 27 April 2017 www.oecd.org/about/secretary-general @A_Gurria

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Making globalisation work: Better lives for all

Lars Løkke Rasmussen Prime Minister, Denmark and Chair of the OECD Ministerial Council Meeting 2017

We are faced with a paradox: never before in the course of human history have we enjoyed better standards of living, working and health as we do in this present period of globalisation–and still many people turn against globalisation. Why?

blind. And they are not stupid either. What they see is the flipside of the coin: the gap has widened between those who benefit from globalisation and possess the energy and the skills to embrace the new developments, and those who do not.

This paradox is what we will dissect and discuss at this year’s OECD Ministerial Council Meeting (MCM). It is my hope that the deliberations at the meeting and the work of the OECD will contribute to enlighten the debate on globalisation and thereby facilitate a work-for-all-approach.

If we want globalisation to work, we must bridge this gap. We cannot neglect the problems of inequality that globalisation has also produced. We cannot ignore the genuine concerns of millions of people.

Let’s start out by reminding ourselves about what globalisation is. It is the process of further integration of our economies and societies regarding the exchange of goods, services, capital, people and ideas. This development has been going on for centuries and has accelerated, mainly due to technological progress. The wave of globalisation since the Second World War has created more opportunities for the people of the world than at any time previously and has lifted more people out of poverty globally than at any other time in history. Life expectancy is rising and literacy levels have never been higher. This is true for both advanced and less advanced economies. There is no doubt that the world today is a much better place than before. Globalisation has provided present generations with more possibilities than that of their parents–my own included. And the future too looks bright for the vast majority of the global population. In addition, many of the problems we are faced with demand global co-operation–on climate change, poverty reduction, security and migration, for instance. Actually, to address these issues we will need more globalisation, not less. Yet, it seems that an increasing number of people do not look upon globalisation as a benefit, but as a threat. They see their jobs being lost, and replaced by machines, or outsourced to other countries or taken over by immigrants. And when they look out their windows, each new day seems to hold fewer possibilities for them than the day before. Are these people blind? Do they not understand how happy they are supposed to be? The answer is simple: they are not

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INTRODUCTION

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We must narrow the gap by widening the possibilities for more people around the world. Clearly, our domestic policies will have to adapt to the rapid transitions that globalisation brings. Ultimately, it is the responsibility for governments how to distribute the benefits of globalisation domestically. It is also a domestic responsibility to put

Globalisation cannot be halted, either internationally or at our borders. Trying to pretend otherwise would prove very costly. programmes in place that alleviate the effects of disruption as demand for skills shifts from one category of labour to another, such as making sure that the people in need of assistance have access to adequate further education, and the social benefits or other types of interventions needed to support them. Like most countries, Denmark continues to seek responses to the challenges brought about by globalisation and rapid technological change. To me, and to most Danes, the premise has always been that globalisation cannot be halted, either internationally or at our borders. Trying to pretend otherwise would prove very costly. In Denmark, as part of our ongoing national dialogue, we have established a Disruption Council where these questions are discussed among concerned parties, including the labour market partners and professional experts. We realise that we have to keep upgrading our skills and respond to change in order to adapt to new circumstances. We are aware that the Danish “flexcurity” model is very instrumental in this regard, but we also recognise that this approach cannot be adopted just anywhere. Instead, each country will have to build on its own trad-

INTRODUCTION

We must bridge the gap between those who benefit from globalisation and those who do not itions and economic structures. However, we have always been open to sharing our experiences to inspire others.

many trade agreements also seek to include provisions on labour, social and environmental issues.

The OECD is in my view uniquely placed to facilitate the search for answers in this very complex debate on globalisation. With its fact-based approach and vast knowledge base, the OECD can inspire member countries and international organisations as we debate the challenges and opportunities of globalisation. The MCM can highlight some of the best policy practices and structural reforms that are necessary to create better lives for the citizens of the OECD area and beyond.

Among other issues, international co-operation has to address market distorting behaviour, aggressive tax avoidance and irresponsible business conduct. Some of these issues are addressed in standards set through frameworks such as the OECD Guidelines on Corporate Governance of State-Owned Enterprises, Multinational Enterprises Guidelines and the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Sharing (BEPS), that will be signed at a separate international event on 7 June 2017 at the OECD.

It is obvious that the answer to the side effects of globalisation is not to reduce international co-operation and competition. The answer is to ensure that international co-operation and competition help reduce extreme inequality and resolve the problems of tomorrow. Climate change is a case in point and the Paris Climate Agreement is a milestone in the international co-operation in that respect. So are the UN Sustainable Development Goals (SDG), that set an agenda for each country to fulfil nationally or in cooperation with others. International trade agreements provide a framework for a level playing field for countries to exchange goods and services. Today,

These are but a few examples. In some cases new initiatives will be needed to help alleviate the effects of the divides brought about by globalisation, while in other cases the standards or treaties need to be broadened in membership. I hope the OECD Forum and MCM will be an important milestone in the international debate on how to make globalisation work for all. Though it will be but a step in a process, it is my conviction that an evidence-based approach such as that taken at the OECD is the best way to address the true problems we face. This will be to the benefit of all. Visit www.stm.dk

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INTRODUCTION

Inclusive growth

Inequalities have widened, affecting growth performance in the OECD area. At the same time, productivity growth has been slowing for many years. In fact, while trends have become more pronounced since the global financial crisis started nearly a decade ago, in three decades productivity growth has never been slower nor income inequality wider than it is today. What can be done to bridge income and social divides and make growth more inclusive? How might policies lift countries out of the low growth trap? What can be done to make the global economy work better for all? For Gabriela Ramos it is time to create an empowering state, and to turn inclusive growth into a global reality. Catherine Mann emphasises that a durable return to healthy growth supported by productivity and trade will require stronger political commitment to implement policy packages to make growth more inclusive. Liam Byrne argues for a new agenda for inclusive growth, based on new, sometimes digital, realities, rather than old assumptions. Jacques van de Broek believes that the traditional employment relationship is being replaced by a diversity of more detached, agile forms of employment under the digital economy. Nick Clegg sees another divide, this time between generations, and is concerned that challenges such as housing will leave “millennials” facing a very difficult future. Nicola Hazell sees a positive future as long as women are not left behind, and encouraged to take up leadership roles in business and technology. For Margrethe Vestager, global divides between countries can be bridged by forging a fair and competitive global market, and that means a multilateral system that tackles the issue of subsidies. Branko Milanovic sees divides in labour and migration that could be bridged through new thinking about citizenship. Jo Ann Jenkins points to a need for innovative approaches in social institutions, public policies and personal behaviours to disrupt ageing. Marjukka Turunen asks if the basic income experiment launched in her native Finland is an answer to social security problems. Laurent Bossard highlights the case of Nigeria and outlines the action that is needed to prevent divisions from deepening and destabilising Africa’s largest economy. Meik Wiking shows how happiness research can contribute to better policy. Astrid Álvarez explains Grupo Energía’s strategy to invest in Latin America.

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INCLUSIVE GROWTH

Towards an empowering state: Turning inclusive growth into a global reality pared for contemporary opportunities and challenges and is set up to empower people.

Gabriela Ramos Special Counsellor to the OECD Secretary-General and Sherpa to the G20

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To begin with, we need a new approach to welfare that goes beyond just mitigating risk. The work of behavioural economists like Amos Tversky and Daniel Kahneman has shown us that people are not “risk averse” so much as “loss averse”. If we are to create entrepreneurial societies that encourage everyone to fulfil their productive potential, we need to deploy this insight via welfare policy to reduce the consequences of failure. To be sure, providing people with a social safety net is vital, but it is not enough. We need to move beyond this approach, to create an empowering state that serves its citizens as a launch pad by furnishing them with capacity enhancing assets.

It is hardly surprising that rising inequality has translated into growing political disaffection, anti-market sentiment and disenchantment with globalisation. In such a context, we desperately need to take action to promote inclusive growth and restore public confidence in the power of policymakers to improve people’s lives.

Such a state would also seek to prevent disadvantage cascading down generations. It would recognise that its role was not simply to remove barriers to opportunities, but also to furnish people with the capacity to seize them. Crucially, it must see redistribution and social expenditure in vital areas like education and healthcare, not as operating costs, but as investment in our most valuable assets: people.

So what can we do to redress this situation and regain trust? To start with, we need to listen to people. It is not enough to talk about a “post-truth” environment. Or to say that people haven’t paid attention to facts and evidence. It is we who have not listened. We have to be honest with ourselves and acknowledge that the “truths” in our economic models have failed to capture much of what matters to people.

In practice, this would mean deploying a coherent approach to intervention throughout life by providing high-quality early education, comprehensive training throughout adult life, income and skills support to help people make the transition between jobs, and perhaps even a universal basic income. But it wouldn’t stop there, because, when all is said and done, there is more to life than money. The key role of the state should be to support people, helping them to have meaningful lives.

In short, we need to put people, and their multidimensional well-being, back at the centre. The OECD’s Inclusive Growth and New Approaches to Economic Challenges (NAEC) initiatives are at the forefront of efforts to put people at the centre, to create social and economic models that provide a more accurate representation of the world around us. Today, advances in computing power are also opening up new tools to support our work, with possibilities for integrating complex systems dynamics and behavioural insights into our approaches with agent-based modelling and network analysis.

However, we also need to face up to the big global challenges of dealing with concentration of wealth, international tax and

Yet, we also must recognise that economics does not have a monopoly on truth. In many countries, we have seen the bottom 40% left behind and their potential wasted. Only by recognising that mistakes have been made can we begin to build a new socioeconomic narrative that goes beyond the old tropes of growth first, redistribution later; and beyond aggregate economic measures like GDP.

If we want to save open markets and globalisation, we need to re-write the rules of the economic system to make them work for everyone. We also need to bring back that much neglected concept, fairness, to the heart of the policy debate. The role of the state is absolutely key to this discussion. We need to redefine and reimagine its role, to ensure that it is pre-

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©Charlotte Moreau

The false certainty provided by an all too literal interpretation of models needs to be balanced by a humbler, more grounded approach to economics that draws on the lessons of other disciplines like physics, biology, psychology, sociology, philosophy and history, to feed a richer, more nuanced policy discussion.

INCLUSIVE GROWTH competition issues, the mobility of tax bases, labour rights and regulatory standards. We need to ensure that globalisation is based on international rules that are respected. We have to create

If we want to save open markets and globalisation, we need to re-write the rules of the economic system to make them work for everyone trade agreements that are comprehensive and, crucially, also inclusive. We must hold global firms to higher standards of responsible business conduct. OECD work on taxes, responsible business conduct, due diligence and anti-corruption will be key to ensuring better functioning global rules. To restore the faith and trust of people in the role of governments, a priority for an empowering state must be to focus on the bottom 40%, who risk being trapped in a cycle of deprivation and lack of opportunity. We need to deploy targeted policies to help these groups access quality education, healthcare and the benefits of innovation, finance, and entrepreneurship.

this will be ensuring that policy recommendations take regional and local effects and circumstances fully into account. Regions and cities have a key role to play by adapting economy-wide policies to the characteristics of local communities, as well as by promoting local policies that enhance access to opportunities. There is also a dire need to overcome traditional “silo-based” approaches to policymaking. This will require a renewed “wholeof-government” push, where different government departments, agencies and ministries work together to deliver joined-up solutions as part of a coherent systemic approach. The challenge before us is clear. Succeeding in our endeavours will demand a new approach, where political parties, and leaders from civil society and business come together to recognise that the long-term prosperity of a society depends on the success of its individual parts. Together we can make inclusive growth a reality. References

Of course, giving people the chance to make the most of these opportunities is reliant on a thriving business sector. The state has a role to play to “crowd in” financing in young and innovative sectors and in investing in basic R&D that will see positive spillovers into countless other domains. We also need policies which support the diffusion of innovation through the economy, ensuring a level playing field for incumbents and challenger firms, enabling small companies to access finance, technology and high-quality skills.

New Approaches to Economic Challenges, at www.oecd.org/naec/

Adopting such an approach will require some changes to the way we design and implement policies, with particular care taken to avoid the entrenchment of vested interests. One aspect of

With thanks to Shaun Reidy, Acting Coordinator of the OECD Inclusive Growth Initiative. This article is part of Inclusive Growth: The state of the debate 2017 published by the UK All-Party Parliamentary Group on Inclusive Growth in February.

Future of productivity, at www.oecd.org/eco/the-future-of-productivity.htm OECD (2015), In It Together: Why Less Inequality Benefits All, OECD Publishing, Paris Ramos, Gabriela (2016), “The productivity and equality nexus” in OECD Yearbook 2016, OECD Publishing This extract is the second half of a 2,200-word article under the same title that appeared on OECDInsights.org, 20 February 2017. For the entire article, see http://oe.cd/1WL

Order now! A hesitant recovery, widening income gaps and high unemployment have raised awareness about the need to foster sustainable growth in which everyone contributes and shares the benefits. All on Board: Making Inclusive Growth Happen puts forth new holistic approaches to economic policy making and goes beyond traditional growth indicators to reflect people’s well-being. Part of the New Approaches to Economic Challenges series. For more reports and information, visit www.oecd.org/naec

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INCLUSIVE GROWTH

The challenge of boosting innovation and trade, while achieving inclusiveness Catherine Mann Chief Economist, OECD

Promoting business dynamism and the diffusion of technology and knowledge is important. To catch up with industry leaders and make the most of new technologies and workers’ skills, lagging firms must be given incentives to make the necessary investment in research and development (R&D), new digital equipment and organisational

Lagging firms must be given incentives to make the necessary investment in R&D, new digital equipment and organisational know-how ©Rights reserved

know-how. Governments can help by improving the level and efficiency of public support for private R&D as well as by facilitating the collaboration between research centres (or universities) and industry. The recent pick-up in global growth is good news, but a durable return to healthy growth supported by productivity and trade will require stronger political commitment to implement policy packages to make growth more inclusive. The support for governments’ pro-growth structural reforms has been undermined by the prolonged period of stagnating living standards that has affected a large share of the population in many countries, hitting some regions particularly hard. Growing political headwinds, particularly around globalisation, are clearly one factor contributing to the steady slowdown in the pace of reforms observed since the immediate post-crisis years. Yet, the reforms are needed, both to escape the low-growth trap and to prepare for rapid technological changes. The increase in the number of actions taken over the past two years to create jobs–as reported in the OECD annual Going for Growth report released in March–is an indication of the greater attention that governments are already paying to promoting inclusiveness, in particular with measures to facilitate the labour market integration of youth and low-skilled workers as well as women. Such measures are important for the well-being of citizens and winning back their trust. However, achieving inclusive growth on a sustained basis requires addressing the productivity slowdown. The experience from the past two decades has shown that rapid technological advances and greater trade openness do not automatically translate into broad-based productivity and income gains, and they create losers as well as winners. Ensuring that progress in technology and knowledge turns into higher and more widespread gains requires that workers, business managers and governments are better equipped to acquire the skills, and adopt the organisational structures and regulatory settings, to keep up with the pace of innovation and benefit from more open economies. While the recipe for reforms varies from country to country, the key ingredients include measures to promote business dynamism and the diffusion of innovation, to help workers cope with the rapid turnover of firms and jobs, and to better prepare youth for the labour market of the future.

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Creating an environment that encourages firms to innovate also implies promoting the market entry of new firms and the redeployment of resources from poorly performing businesses to high-productivity ones. This is how successful ideas and products can be tested and developed. For this to happen, poorly performing firms should either improve or be allowed to exit the market. Since the crisis, the share of non-viable, so called ‘‘zombie’’ firms, has risen from 4% to nearly 6% of total businesses across OECD countries. As they are trapping valuable resources, such firms are lowering productivity by close to 1% in countries where they are most prevalent. Facilitating the entry of new firms is also critical. In most countries, the scope for reducing regulatory barriers to firm entry and competition remains substantial, especially in services. In many countries and regions, regulatory fragmentation continues to hinder cross-border competition in services. Despite the more rapid pace of change, progress in reforming product market regulation has slowed significantly in recent years, contributing to an increasing gap between high- and lowproductivity firms. In fact, the trend decline in business dynamism and the growing survival of low-productivity firms suggest that barriers to firm entry and exit may have risen. Beyond product market regulation, other policy factors influence firm turnover and competition. For instance, a sound legal and judicial infrastructure, and robust financial markets that serve the real economy, play an important role. Continued efforts to strengthen the rule of law and fight against corruption, improve the governance of state-owned enterprises, increase the efficiency of bankruptcy procedures and the financial sector, or speed-up the resolution of non-performing loans in the banking system: these should all feature highly on reform agendas. To ensure that everyone can benefit from renewed business dynamism and open markets, additional measures are needed to help workers cope with jobs turnover. This is one reason why reform packages are so important for growth to be more inclusive. For example, OECD analysis has shown that spending more public money to help laid-off workers find a new job through

INCLUSIVE GROWTH

Impact of a 0.1% of GDP increase in active labour market policies (ALMP) spending on the re-employment probability of workers displaced due to firm exit

Spending more public money to help laid-off workers find a new job through work-search assistance and training is far more effective in countries where regulatory barriers to firm entry are low

Source: Andrews, Dan and Alessandro Saia (2017), “Coping with Creative Destruction: Reducing the Costs of Firm Exit”, OECD Economics Department Working Paper No 1353, February, available on www.oecd-ilibrary.org

Percentage points 2.5

2.0 1.5

1.0

0.5 0.0 Low entry barriers

Average entry barriers

High entry barriers

Notes: The bars show the percentage point impact on the re-employment probability of a 0.1% increase in spending on ALMPs (as % share of GDP) for three levels of entry barriers: i) the level corresponding to the average of the two best performing countries over the sample period (red bar); ii) the average level observed over the sample period (blue bar); and iii) the level corresponding to the average of the two worst performing countries over the sample period (grey bar).

work-search assistance and training–so-called active labour market policies (ALMP)–is far more effective in countries where regulatory barriers to firm entry are low (see chart). This is because job opportunities are more abundant where new firms can enter the market more easily. Future advances in digital technologies and the growing importance of knowledge-based capital underscore the need for reforms in education to ensure that young people are prepared for the dynamic labour market of the future and have the right cognitive and non-cognitive skills to cope with technological change. At the same time, more attention should be devoted to the significant share of workers who are either over- or underskilled for their job. Addressing skills mismatch through better vocational education and training systems, as well as adult or lifelong learning programmes, is a priority for most countries. Closer relationships between business and educational offerings will better anticipate skills most likely to be in demand, help ensure that job market needs are reflected in educational and professional developments, and enable workers to navigate through the more rapid turnover of firms, jobs, and tasks of the future. Reducing barriers to labour mobility, including through

reforms of housing market policies and the decoupling of pension and other rights from specific jobs (pension mobility), will also help improve skills matching. Packaging reforms to exploit complementarities is key to achieving stronger, more inclusive growth. While encouraging innovation and business dynamism, including through greater market openness, is crucial for achieving healthy and sustained growth, it does not necessarily or automatically go hand-in-hand with inclusiveness. Beyond investing in skills development and helping workers cope with turnover of jobs and tasks, the effectiveness of redistribution through tax and transfer policies needs to be strengthened to ensure that the benefits from technological progress and globalisation are broadly shared.

Visit www.oecd.org/eco www.oecd.org/global-forum-productivity Mann, Catherine (2016), “The twin challenges of promoting productivity and inclusive growth”, in OECD Yearbook, see http://oe.cd/1XO

OECD Yearbook 2016 © OECD 2016

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A new agenda for inclusive growth Liam Byrne Founder, UK All-Party Parliamentary Group on Inclusive Growth, and former Chief Secretary to Her Majesty’s Treasury

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Nor is it clear that “big states” do indeed slow down economic growth. In particular, it is now obvious that public spending on science benefits the private sector. Eight countries muster R&D spending of 3% GDP. All but one have enjoyed productivity gains over the last decade well ahead of the UK, which spends much less. A simple truth is now clear in economics. Policymakers and politicians know how to globalise, but we do not know how to make globalisation work for the majority of voters. And today we see the consequences of this in referenda and elections around the world. Inequality in advanced countries is fuelling huge political instability. Since the fall of the Berlin Wall in 1989, we have succeeded in creating a global marketplace of unprecedented depth and breadth. But it is a world of very rich, very remote elites–where

The old skill-based formula is not enough the top 1% now control half of global wealth. In this giant market, how we do share the gains more fairly and restore some of the stability of times gone by? Once upon a time, we thought inequality was driven by “skill-biased technical change”. We thought that what you earn depends on what you learn and policymakers thought they had an answer: the former UK prime minister, Tony Blair, famously labelled it, “education, education, education”. But now it is clear this old formula is not enough. Old assumptions do not seem to work anymore, and the result is stalling wages for millions of workers throughout the OECD area. For instance, it is no longer clear that slashing taxes and regulation drives investment. Global deregulation has not stopped giant global firms pausing investment and creating huge new cash reserves for themselves. But when firms invest less, productivity stalls. And when productivity stalls, wages stall. As OECD research shows, in the new “platform economy” dominated by corporate super-giants like Google, Apple, Alibaba and Facebook, productivity gains do not seem to be diffused through the economy as free market theory would suggest. The result is that productivity gains in most firms are weak; therefore, so is wage growth. New answers are now needed. If the marketplace cannot mobilise the investment society needs to power broadbased economic progress, then governments may need to step in. This cuts against much of the old orthodoxies of the 1980s. But the world is very different today. First, it is clear that large-scale government borrowing is no longer driving up either interest rates or inflation. As Ben Bernanke, Robert Gordon, Paul Krugman and Larry Summers

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have all argued–with different explanations–there are vast global surpluses of savings which today are outstripping investment. Interest rates and inflation expectations are, historically, rock bottom, despite government debt in several OECD countries rising to 80-90% of GDP.

OECD Yearbook 2017 © OECD 2017

Key to progress now is the creation of a new generation of publicprivate institutions that help democratise the opportunities of this new age–and nowhere is this more urgent than on tax. We are at the very limit of monetary policy’s power to fuel global demand and it is clear we need new public-private institutions to mobilise investment. But the money needs to come from somewhere, and that is why tax reform is essential. We have institutions–the legacy of Bretton Woods–that can help reflate growth, but we have not found ways of taxing the new wealth of nations. The result is that, by some estimates, US$7.5 trillion is now stashed in tax havens–some $6 trillion of which has never been taxed. So what needs to change? First, we have to radically strengthen democratic oversight of tax arrangements. Our tax authorities are paranoid about keeping politicians away from individual tax deals–for good anti-corruption reasons–but the result is an unaccountable process of settling giant corporate tax liabilities informally. Second, tax transparency, as the OECD has championed, has to be delivered. The world has got to get a grip on where multinationals are paying tax, while governments should use a new generation of trade deals to insist that multinationals deliver country-by-country reporting of taxes paid. Third, we have to accelerate the new debate about wealth taxes. The years of austerity–and hyper-loose monetary policy– have been good for those who own assets. If you are lucky enough to own a house or shares, you have done well since 2010: the stock market and property prices are up but wealth taxes remain largely unreformed. Fourth, we have to transform the strength of tax authorities and, most important of all, we have to change the narrative around tax, reframing tax not simply as a “revenue raiser”, but the price we all should pay for progress. “The art of taxation,” said the French statesman Jean-Baptiste Colbert, “consists in so plucking the goose as to procure the greatest quantity of feathers with the least possible amount of hissing.” Right now the wrong people are hissing. Not the wealthy, but the poor. It is another truth of recent economics, which we must now change. Visit http://liambyrne.co.uk

Business brief

Towards an inclusive and competitive labour market for the evolving world of work

©Randstad

Jacques van den Broek CEO Randstad Holding nv

The way businesses operate is rapidly changing. A strong online presence and tailored services are crucially important to their global development. Together with the emergence of the ondemand economy the traditional employment relationship is therefore being replaced by a diversity of more detached, agile and adaptable forms of employment. Workplace flexibility–with respect to contracts, time and location–is the name of the game in this new world of autonomous, result-driven and projectoriented work. New capabilities, driven by technological innovation, will create an important number of new job opportunities and new markets, while existing jobs or tasks disappear or are re-designed. Changes in skills needs, organisation of work and employment relations

Our business must always benefit society as a whole will accommodate better work-life balance and provide easier access to income opportunities. Yet they also risk creating skills polarisation and pose serious challenges to the adequacy of current legal, institutional and social protection frameworks. More challenges remain in the form of persistent unemployment, growing inequality and a high incidence of undeclared labour. All these challenges are addressed under the UN Sustainable Development Goals which, for the world of work, envision a world in which every country enjoys inclusive and sustainable economic growth, full and productive employment and decent work for all. For the goals to be reached, everyone needs to do their bit: governments, civil society and the private sector. Decent work refers to people’s aspirations in their working lives: opportunities for productive work that delivers fair income, security in the workplace and social protection. But it also means social integration, freedom of expression and participation in the decisions that touch their lives. Furthermore decent work contributes to empowerment, and provides people with the opportunity to develop their knowledge and skills, enhance their employability and spread equal opportunity for all. Equal opportunity is not a given. Background, gender, income and education all feed into the growing divide and inequality. Faced by a diminishing labour force as the “babyboom” generation will all retire over the next 15 years, it is more important than ever to achieve an inclusive labour market where everybody who wants to

work can work. Solving inequality through decent work will provide those currently considered to be part of the untapped potential labour force with an opportunity to contribute to economic growth, while creating that inclusive and sustainable labour market. A related issue in this context is the positive contribution made by migrants. Forced displacement and irregular migration can present complex challenges, but the benefits of well-managed and skills-based global migration to inclusive and sustainable growth cannot be underestimated. This point is underlined in Randstad’s latest academic report by the IZA Institute of Labour Economics, entitled “People to Jobs, Jobs to People”, which will be presented at the OECD Forum 2017. At the same time, the impact of the informal economy remains a clear obstruction to inclusive and sustainable growth. In 2017, the number of people in vulnerable employment is expected to reach 1.4 billion globally. Undeclared employment lowers the quality of work and working conditions, undermines the business environment through unfair competition and puts the financial sustainability of social protection systems at risk. The challenge is to transform undeclared work into formal work. Successful economies reduce the supply and demand of undeclared work by providing workers and employers with flexible alternatives providing decent and quality work. Randstad, as an industry leader in human resource services seeking to shape the world of work, upholds integrity and human rights. Randstad’s Business Principles are set around and are supportive of our core values: to know, to serve and to trust, simultaneously to serve all interests. From this perspective, Randstad has set out a wide array of initiatives around the globe to fight youth unemployment, empower women on the labour market and provide work opportunities to people with disabilities, migrants and refugees. We see the bigger picture and take our social responsibility seriously. Our business must always benefit society as a whole. Randstad believes everybody should have access to decent work to provide people with security in employment and income. At the same time workers and companies alike need flexibility as to when, where and how to work. This means the inclusive and competitive labour market that we want for our future should be agile and adaptable. By combining a variety of decent employment contracts with modern social security and accessible employability schemes, we can reach that goal and provide sustainable prosperity for as many people as possible. Visit www.randstad.com

Randstad is a sponsor of OECD Forum OECD Yearbook 2017 © OECD 2017

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INCLUSIVE GROWTH

Bridging the generational divide in the UK group to have become better off since 2007/08. From 2010 to 2015, the average British household saw its income fall by about £500 as a result of tax increases and spending cuts, yet the average two-pensioner household took a hit of just £23.

Nick Clegg Former Deputy Prime Minister of the United Kingdom

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Changes to welfare policy have exacerbated the divide. The Resolution Foundation estimates that by 2020, compared with precrisis levels, working-age benefits will be 9% lower per person, child benefits 12% lower and pensioner benefits per pensioner 19% higher. Other perks which are specific to pensioners persist: winter fuel allowance, free bus travel, free TV licences. Intergenerational inequality is aided and abetted by the fact that younger people are much less likely to vote than older people: 43% of 18-24 year olds voted in the UK General Election in 2015, compared to 78% of over-65s. As populations age across the developed world, the “grey vote” can only become more significant.

People of my generation grew up with a set of intuitive assumptions about human progress: hatred and prejudice would give way to reason, democracy would displace authoritarianism, and the economic good times would roll and roll.

I would like to offer some tentative first steps towards restoring balance to this desperately unbalanced state of affairs. Similar

Among those assumptions was the strong sense that we would live to enjoy a better quality of life than our parents. For much of the 20th century, the statistics bore that out. Average incomes rose with each successive generation. No more. For Generation Y–the so-called “millennials” born between 1980 and 2000–the new century has brought a historic reversal of fortunes and a growing sense of pessimism. UK polling conducted in 2016 found that 54% of people think today’s 18-35 year olds will have a worse life than their parents’ generation, which is a dramatic collapse in confidence since 2003, when only 12% of the public held that view. In large part, the differential impact of the financial crisis is to blame. While all ages have experienced wage stagnation since 2008, younger cohorts have been hit particularly hard. For many, the wage squeeze has come early in their careers when pay progression is normally at its most rapid. As a result, the oldest millennials (born 1981-85) are now earning some £40 (about US$50) per week less around the age of 30 than those born 10 years earlier earned at the same age. At the same time, younger people are increasingly struggling to accumulate the two major assets that my generation always took for granted: a pension and a home.

But the real scandal is in housing. Here, the market is fundamentally broken, due to inadequate supply, and first time buyers are paying the price. The proportion of 25-34 year olds in the UK who own their own home was 67% in 1991, but had declined to 36% by 2013-14. The trend was even more striking for those aged 16-24, where home ownership has declined from 36% in 1991 to 9% in 2013-14. No wonder that the under-50s own only 18% of the UK’s property wealth. By contrast, older generations have been very effectively sheltered from the economic headwinds. The over-60s are the only age

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OECD Yearbook 2017 © OECD 2017

©Image Source / Alamy Stock Photo

Private pension schemes are now less generous on average, and the state pension will replace a smaller share of earnings.

INCLUSIVE GROWTH problems exist across the developed world, but the solutions offered here are specific to the UK. First, we need to rebalance the welfare system. Further cuts cannot and should not come exclusively from working-age households. Universal, non means-tested pensioner benefits like universal TV licences and winter fuel payments are impossible to justify, while the “triple lock” (by which pensions are uprated

For Generation Y, the new century has brought a reversal of fortunes and a sense of pessimism annually by inflation, earnings, or 2.5%, whichever is greater) is prohibitively expensive in the long term. The task of finding a sustainable replacement–perhaps a “double lock” linking increases to prices and earnings, but not a guaranteed 2.5% in all circumstances–should fall to a cross-party commission.

Order this now! Keeping you ahead of the policy challenges of our time. Since 1962 Each subscription to the OECD Observer includes the OECD Yearbook. Subscribe at www.oecdobserver.org/subscribe.html or email us at [email protected]

Second, we must correct the chronic undersupply of housing through a massive, publicly-underwritten house-building programme. This will require not only money but innovative political solutions to prevent a stand-off between central government and local authorities opposed to new developments. Finally, I believe it is time to consider giving young people the opportunity to shape the political future by considering compulsory voting (with an option to abstain on the ballot paper). The evidence from Australia suggests this can counter the “grey vote” bias and force politicians to appeal to the whole electorate. As the Resolution Foundation has argued, renewing the intergenerational contract is a shared challenge for our times. It requires bold thinking and political courage from a generation of leaders who have enjoyed the good times, and must now act to prevent a worrying divide from becoming an unbridgeable gulf.

beliefs Central banks: False and unhappy endings Databank Information jobs: Missing entrepreneurs

OECD Economic Outlook

No 305 Q1 2016

www.oecdobserver.org

economy Spotlight: Ireland’s at the cutting edge

The future of work

©Serprix.com

Visit www.openreason.uk References and further reading Corlett, Adam (2017), “As time goes by: shifting incomes and inequality between and within generations”, Resolution Foundation’s fourth report for the Intergenerational Commission, February, see http://www.resolutionfoundation.org Gardiner Laura and Paul Gregg (2017), Study, Work, Progress, Repeat? How and why pay and progression outcomes have differed across cohorts, Resolution Foundation-Intergenerational Commission, February, see www. intergencommission. org IFS (2013), “Elderly see incomes rise, whilst young adults see large falls”, Press release, Institute for Fiscal Studies,14 June, see www.ifs.org.uk Let’s House Britain, UK Housing Crisis report 2014, see http://metrofinance.co.uk/ Mori-Ipsos (2016), “Only a third of Generation Y think their generation will have better quality of life than their parents...”, Poll, March, see www.ipsos-mori.com/ Mori-Ipsos (2015), How Britain voted, August, see www.ipsos-mori.com/ Shelter policy library (2015), Housing affordability for first time buyers, March, see www.shelter.org.uk The Economist (2015), “The granny state: Britain should stop subsidising the old and rich at the expense of the young and poor”, 26 Feb, see www.economist.com

OECD Yearbook 2017 © OECD 2017

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INCLUSIVE GROWTH

Changing the face of start-ups: Why diversity is not a nice-to-have but a must-have Nicola Hazell SheStarts Director, Head of Diversity & Impact, BlueChilli Group

results in terms of innovation and creativity, and quite simply, better bottom lines. In fact, female-led companies have been found to drive three times the returns of companies predominantly led by men. So diversity is not just a nice-to-have, it’s a global economic imperative, particularly in industries that will be growth areas in the years to come.

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So why begin with start-ups? The start-up ecosystems of most countries remain somewhat embryonic, presenting a compelling opportunity to get things right. But with current global female participation in tech and entrepreneurship so low, we’re not off to a good start. How can we build a global economy driven by innovation when half the population is missing out on the action? The short answer is, we can’t. Right around the world, there is a wave of activity directed at building the economies of the future. Governments, businesses and institutions are investing heavily in innovation and technology, as they look to leverage the possibilities of digital transformation. As a result, start-up ecosystems across the globe are undergoing major growth, with new, agile, innovative companies disrupting the industries of the past and offering new approaches to commerce, creativity and connection. But right now, all this investment and activity represents a lost opportunity, as we risk growing so-called innovation-economies that fail to tap into the diversity of the population, and in particular, leave women behind. Women make up around 50% of the world’s population. Yet in the start-up ecosystem–where the most innovative, high potential businesses of the future are being created–women remain grossly under-represented. According to Startup Genome’s 2017 Global Startup Ecosystem report, women make up 16% of start-up founders globally. In my home country of Australia, the 2016 Startup Muster report places local statistics slightly above the global average, with women representing 24% of start-up founders, which is a solid increase from 17% in 2015, but still a long way from equal representation. And when you look at those attracting investment, the stats are as low as 5%. So why does this matter? Innovation is not something that is; it’s something that happens. As is the case for anything that happens, a certain environment is required. Where there is space for new ideas not only to be shared but to be challenged, innovation can happen. When we allow ourselves to feel uncomfortable, to think differently, to colour outside the lines, innovation can flourish. It should come as no surprise then that diversity is the key to unlocking innovation. Indeed, diverse views and ideas are essential to drive the kind of disruptive, creative, critical thinking required to take the global economy forward. Furthermore, there is now unequivocal evidence that shows companies embracing diversity in leadership achieve better

20 OECD Yearbook 2017 © OECD 2017

To improve gender equality in tech and entrepreneurship, we need to design for it. Those who play a role in supporting startups must ensure their programmes are designed to attract, include and support female founders. This means creating spaces for women to learn about the opportunities available, develop key skills, identify in themselves the potential for

Companies embracing diversity in leadership achieve better results in terms of innovation and creativity leading globally scalable companies, and see in others examples of how it can be done. To date, such spaces have been limited. But the community of support is rapidly growing, as the movement for diversity in tech takes hold. In Australia, for example, the pursuit of gender equality in technology and entrepreneurship has shifted from a social side-issue to one receiving serious attention. From grassroots organisations seeking to inspire women and girls in tech, and hackathons providing a launch pad for women entrepreneurs; to corporate and government-backed programmes helping female founders become investment-ready–the effort for equality is building. Last year in my own organisation, BlueChilli, which is Australia’s leading start-up and innovation group, we launched Australia’s first venture backed early-stage start-up accelerator designed specifically for female-led start-ups. The collective backing of the programme by industry leaders such as Google and LinkedIn, as well as ANZ, MYOB, GSK, Sunsuper and UTS, is an indication of the value seen in driving gender equality. What’s more, the associated SheStarts documentary series is showcasing these start-up stories to the world, replacing the dominant image of men in hoodies and sneakers, and changing the face of start-ups in Australia. This is an important step, achieving a significant impact in raising awareness about the value of investing in female founders and the opportunities that exist for other women and girls to follow. But to truly move the needle, we need to attack the problem from every angle. Governments have a key role to play, not only through direct investment in scaling programmes that support women, but also through the design of government policies and initiatives

INCLUSIVE GROWTH

intended to assist the broader innovation economy. There is a real opportunity to make a direct impact on the gender gap by ensuring all programmes funded by government bodies take a

All programmes funded by government bodies should take a proactive approach to gender equality, whether programmes for females or not proactive approach to gender equality, whether they are specific programmes for females or not. By requiring all applicants to demonstrate a “non-negotiable” approach to inclusivity, governments can ensure the significant global investment in innov-

ation results in more diverse (and thriving) start-up ecosystems. Without intentional design for diversity, the future economy will remain an uneven playing field–creating a huge missed opportunity for global prosperity. The ideas and perspectives of female entrepreneurs offer vital opportunities for the development of new products, services and creative solutions to major global problems. As the world looks for ways to create a more inclusive innovation agenda, driving gender equality must be embedded as the central plank of the global strategy. Visit www.bluechilli.com and www.shestarts.com See www.oecd.org/gender and www.oecdobserver.org/gender

March on gender Catch up with the OECD’s initiatives on gender by visiting www.oecd.org/gender Female breadwinners sweep the crumbs, too Valerie Frey and Lucy Hulett, OECD Directorate for Employment, Labour and Social Affairs

It’s 11:00 on Saturday morning. Both you and your partner had exhausting weeks at work, and so far the day has been spent preparing and cleaning up breakfast, wrangling children out of pyjamas and into real clothes, and running to the store for yogurt and bananas. Your kids are finally playing quietly with Lego bricks in the living room. At last, a break! Do you: (a) Relax on the couch with an iPad? (b) Go tidy up the bedrooms? (c) Gather laundry to toss a quick load in the washing machine? (d) Start meal prep for the week ahead? If you answered b, c, or d, odds are good that you’re a woman. But don’t just take the word of two working parents. Survey data tell us so. Read full blog at http://oe.cd/1OK

Statistical insights: Large inequalities in longevity by gender and education in OECD countries OECD Statistics Directorate

©Jeff FIsher

Measures of inequalities in longevity show that, on average, the gap in life expectancy between high and low-educated people is equal to 8 years for men and 5 years for women at the age of 25 years; and 3.5 years for men and 2.5 years for women at the age of 65. Cardiovascular diseases, the primary cause of death for the over 65s, are the primary cause of mortality inequality between the high and low-education elderly. Read full blog at http://oe.cd/1OL

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Towards a global market that works for everyone

©European Commission

Margrethe Vestager EU Commissioner for Competition

Similarly, the positive effects of trade and investment liberalisation globally should not be undermined by undue government support. Companies should be able to compete on equal terms in the global market and have a fair chance to succeed on their merits. This will bring better products at lower prices and new innovations for consumers. And, just as important, it will allow citizens to see globalisation as a factor for a more fair and equitable world. Achieving a worldwide level playing field would require a basic set of rules on the granting of subsidies that affect trade across borders. A common set of rules on subsidies would help minimise distortions of competition in global markets.

A more open world economy brings about new opportunities, stimulates creativity and innovation. It enables poorer countries to catch up and exploits global economies of scale. But globalisation also brings challenges, as it might spread the benefits unequally among people and regions, some of which are less well positioned to seize its potential. These benefits and challenges also apply for competition policy in a globalised world. More open markets should work for all. In the OECD, our work usually focuses on antitrust and merger policies and on how to make those policies converge and adapt to the global context. However, it is equally important also to focus on another aspect of competition policy, namely government support. Such support can have positive effects for companies, workers and consumers, but it can also substantially distort fair competition to the detriment of other companies, workers and consumers. Government support for local industry in markets where there is overcapacity can give rise to serious distortions of competition. If the market is international and other governments think alike, this will only aggravate the problem instead of solving it. The case of the steel industry is a good example. There are also other ways globalisation can produce “subsidy races” between countries. As investment becomes more mobile, several countries may compete for the same investment and try to outbid each other. Companies may be successful in playing governments out against each other in order to win the most lucrative subsidy packages. This might be highly profitable for the companies involved, but it creates a distortion in the market for those who are already established and compete without subsidies. I see a parallel between what has proved necessary to achieve a well-functioning single market in the EU, and what we now need in the global market. Our state aid control system has served us well. It builds on the recognition that, on the one hand, state aid can have positive effects by addressing market failures and preserving equity between regions within the EU. On the other hand, it is important to have disciplines in place

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so that government support does not distort competition to an extent contrary to a proper functioning of the single market.

OECD Yearbook 2017 © OECD 2017

The EU is stepping up its efforts to do more in the area of subsidies in an international context. We are raising these issues in all our bilateral trade agreements. In most cases, our trading partners have acknowledged the importance of the subject by

A multilateral system addressing subsidies more comprehensively would be preferable accepting basic provisions on subsidies, be it on transparency (including on subsidies to services), on facilitating consultations or on restricting the most distortive kinds of subsidies. However, a multilateral system addressing subsidies more comprehensively would be preferable. We should therefore strive for a universal set of rules instead of ad hoc provisions, differentiated per sector or per region. Such a universal system would allow for a common set of rules that could be applied uniformly across all countries, and it would prevent countries “free riding” the efforts of others. The WTO already incorporates some basic elements of such a system. It is built on transparency, consultations and already provides trade defence instruments to address distortive subsidies. We should further develop this system. Building a stronger global rulebook is not going to happen overnight, and will never happen without strong intellectual leadership. In this respect the OECD has an important role to play. I would like to encourage the OECD towards giving more priority to advocacy, research and monitoring of government support, and to bring interested parties together to discuss the multilateral aspects of government support. See full version of this article at www.oecd.org/forum/oecdyearbook Visit http://ec.europa.eu/competition/

INCLUSIVE GROWTH

Will labour remain different from the other factors of production?

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Branko Milanovic Graduate Center, City University of New York and Author

When it comes to labour and migration, global governance of almost any kind is missing. By contrast, global institutions exist that deal with economic development (the World Bank), balance of payments and international debt (the International Monetary Fund), health (the World Health Organization), trade, including in intellectual property rights (the World Trade Organization), central banks (the Bank for International Settlements), and now regional trade (the Atlantic and Pacific trade agreements). When it comes to labour, the International Labour Organization, which is the oldest among the institutions mentioned here, has little power and deals mostly with national labour rules. The International Organization for Migration is a keeper of accounts and statistics, duly following all catastrophes, rather than a policy-setter. The reason for this lack of multilateral institutions regarding labour and migration is obvious: the rich and powerful countries have no interest in raising the issue. But ignoring the problem by following an ostrich policy is becoming more difficult as globalisation makes people more aware of the glaring differences in national standards of living, and physical distance is much less of an obstacle than ever before. Europe, faced by an exodus from Africa, and more recently from the Middle East and the Indian sub-continent, will be perhaps the first to begin defining a multilateral policy on the movement of people. However, unlike what is envisaged now (multilateralism among EU members only), such a policy needs to include the sending countries as well. A world of more orderly migration, and of quotas at the level of both the sending and the recipient countries, should be the goal. In order for such a change to become feasible, we need to change the binary character of the current rules for national citizenship. With some exceptions, citizenship today confers on the

person who obtains it the same rights and duties as are enjoyed by all other citizens. It is that binary nature of citizenship that makes current citizens reluctant to share their “citizenship rent” with migrants: in monetary terms, the citizenships of rich countries are very valuable. Physical walls between jurisdictions are being built, in part, because there is a huge financial wall between being and not being a citizen of a rich country. But citizens of rich countries might be more open to foreign migration if this financial wall could be lowered through the introduction of an intermediate level of citizenship that would be less valuable (because, for example, it might involve higher taxation, lower access to social services, or an obligation to return to work in one’s country of origin at periodic intervals). A policy such as this would bring globalisation to the forgotten factor of production, labour, and through migration would lower global poverty and inequality. For this to happen, two changes are essential: (1) the redefinition of citizenship, and (2) multilateralism involving sending and recipient countries. But even if migration were to become more common than it is today, it is still extremely unlikely that the change would be so momentous as to lead to fully open borders and a situation whereby GDP growth rates of poor countries would become unimportant because people could just leave whenever they wanted to. Thus, the growth of poor nations will remain of crucial importance. Extract with the author’s permission from Branko Milanovic (2016), “Global Inequality: A New Approach for the Age of Globalization”, Belknap Press, pages 230-232.

OECD Yearbook 2017 © OECD 2017

23

Business brief

We can all be innovators in ageing Jo Ann Jenkins CEO, AARP

be headed by someone aged 65 or older, increasing the need for affordable, accessible housing. Many people will spend more time and resources caring for their ageing parents than they did raising their own children. And, the projected number of unpaid caregivers is not nearly enough to keep pace with the increased demand. And businesses and organisations are struggling to find ways of getting the most out of a workforce that may consist of up to five generations of workers, but most certainly has a larger proportion of older workers.

©AARP

As countries and societies throughout the world work to adapt their economies and societies to these new realities, one thing is clear: many countries’ cultures, institutions, social supports

Our ability to live longer, healthier and more productive lives is one of our greatest accomplishments. Here in the US, demographers predict that more than half the children born today will live to at least 100. And, according to some, the first person to live to the age of 150 has already been born. In 2012, there were 810 million people in the world aged 60 and older. That number is projected to reach 1 billion in less than 10 years and more than double to over 2 billion by 2050. Today, Japan is the only country in the world where those aged 60 and older represent 30% or more of the population. By 2050, 62 countries will reach that milestone. Yet, the global ageing story is about much more than demographics. As former UN Secretary-General Ban Ki-moon has observed, “the social and economic implications of this phenomenon are profound, extending far beyond the individual older person and the immediate family, touching broader society and the global community in unprecedented ways.” Here in the US, for example, the 106 million people 50 and older generate US$7.6 trillion in annual economic activity. Expressed in terms of GDP, that’s larger than that of any country besides the US and China. They also account for more than half of all consumer expenditures in the US. The fastest growing age group is people 85 and older; the second fastest is people 100 and older, and the majority of them are women, also more likely to live alone. Over 49 million people in the US live in households with three or more generations. By 2035, one out of three US households will

24

OECD Yearbook 2017 © OECD 2017

Disrupt ageing is about creating social institutions, public policies and personal behaviours that support people throughout their lives and infrastructures have not kept up with the advancements that science, technology and innovation have made possible in the way we age. In fact, if you type “global ageing” into Google, the first phrase Google will suggest you are looking for is “global ageing crisis.” Is global ageing a crisis? Not if we change the conversation and get rid of the outdated beliefs and stereotypes about ageing, and spark new solutions so that more of us can choose how we want to live as we age–what I like to call “disrupt ageing”. Disrupt ageing is not just about re-imagining old age: it’s about designing our lives and creating social institutions, public policies and personal behaviours that support people throughout their lives. We’re beginning to see this happen throughout the world. Entrepreneurs and innovators are creating an incredible array of products and services targeted to older people. Advances in research and technology are driving innovation in virtually every field that affects our ability to live well as we age. But innovation is not just developing new products and services; it’s also about how products are designed, how services are delivered, and how policies are implemented. We recently teamed with FP Analytics to take an in-depth look at how 12 countries* are adapting their economies and societies to an

ageing population. We focused on policy innovations in four key areas: community social infrastructure, productive opportunity, healthcare and wellness, and technological engagement. The resulting Aging Readiness and Competitiveness (ARC) Report, published in 2017, identified six big ideas that include innovative programmes to promote volunteerism and entrepreneurship, lifelong learning in financial and technological literacy, support for caregivers and intergenerational community building. In Israel for example, the “Here We Live” programme is connecting older adults and students in a novel housing model that addresses the needs of both generations by matching college students with older adults living independently with a spare bedroom. China’s “Silver Age Action Initiative” is a volunteer programme that taps into the knowledge and experience of retired professionals to advance the economic and social development of the western and less-developed regions of the country. In Brazil, the “Financial Education to Older Adults” programme offers financial education content tailored to older adults whose financial literacy has not kept pace with the rapid expansion of credit and access to finance in Brazil, to help them improve their quality of life through better financial management. In Canada, the Nova Scotia Community Access Program (NSCAP) is building on the Canadian government’s commitment of recognising internet access as a fundamental right with a new initiative– called “Connecting Older Adults with Mobile Technology”–to ensure that older adults have the skills and confidence necessary to effectively use mobile technologies such as tablets, mobile phones, Skype, Microsoft Office, and Facebook. Turkey’s “Caregiver Service Program,” subsidises caregiving for low-income older adults and their families. Its innovative design compensates family members for the financial loss associated with leaving a job to care for a relative, and creates an incentive for women to enter the labour force as external caregivers.

allowance for up to 26 weeks, and loans for start-up costs. These innovations in ageing demonstrate that we can and must adapt to our ageing societies, and that when we do, all members of society benefit. As policymakers and advocates, we can all be innovators in ageing–change agents who recognise that the concept of ageing is constantly evolving. The challenge for all of us is to take advantage of the information, the research and the knowledge we have about living and ageing well to create public policies and programmes that help our citizens live well every day and empower them to choose how they live as they age. * The countries are the United States, Canada, Mexico, Brazil, Japan, Korea, China, Germany, the United Kingdom, Turkey, Israel, and South Africa.

Visit www.aarp.org References Jenkins, Jo Ann (2016), Disrupt Aging, PublicAffairs Books, New York Love, Patrick (ed.) (2015), Ageing: Debate the Issues, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/9789264242654-en OECD (2016), Japan: Boosting Growth and Well-being in an Ageing Society, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/9789264256507-en OECD (2015), Ageing in Cities, OECD Publishing, Paris. DOI: http://dx.doi. org/10.1787/9789264231160-en

AARP is a Knowledge Partner of OECD Forum

The UK’s “New Enterprise Allowance” programme helps unemployed, low-income, or disabled individuals start their own business. The programme matches eligible applicants with a business mentor who helps them create a business plan. Once the plan is approved, they have access to continued mentoring for six months, a tax-free weekly

OECD Yearbook 2017 © OECD 2017

25

INCLUSIVE GROWTH

Basic income: An answer to social security problems? Marjukka Turunen

©Rights reserved

Director of Change Management Kela, Finland

Finland has taken the decision to test a basic income for unemployed job seekers from the beginning of 2017. The trial will run for two years. The main goal behind the experiment is to see if the mechanism of a basic income (unconditional financial support paid regularly to customers) will increase the incentive for recipients to take up and stay in employment. The trial is also expected to offer perspectives on a wide range of issues to help improve our social security systems. For instance, it can help the social security system respond better to changes in working life, and can gear social security towards finding work. It can also help reduce bureaucracy, and simplify the complexity of the social security system. The basic income experiment is being carried out by Kela (Finnish Social Insurance Institution, which celebrates its 80th anniversary in 2017), which is responsible for the administration of over 40 basic social security programmes in Finland. Why a basic income? The problems of the Finnish unemployment benefit system are varied. First of all, it is quite bureaucratic when it comes to accommodating part-time employment. Claimants must renew their status and provide information about their earnings to Kela every four weeks, because these earnings reduce the full unemployment benefit. It takes time for customers to obtain the information they need to provide in the first place and for Kela to process the amount of the partial unemployment benefit. Customers do not know when to expect their benefit payments or how much they will get. This financial uncertainty and the attendant bureaucracy can cause frustration and stress. The result is that some customers end up staying on the full unemployment benefit, rather than taking on part-time jobs, preferring the security of a guaranteed monthly payment. Another problem is the welfare trap which, as a result of taxation and various supplementary payments, makes someone on a part-time job worse off than they would be on full unemployment benefit. How does the basic income work? Under the Finnish experiment, a partial basic income of €560 per month replaces some of the basic social security benefits, including the basic unemployment benefit, the sickness benefit, as well as some parental benefits and rehabilitation benefits. The idea is that the participants will get a basic income instead, even if their circumstances change. If they find a job, the basic

26

OECD Yearbook 2017 © OECD 2017

income will still be paid on top of the salary. This allows us to see whether the mechanism reduces bureaucracy. With 40 different benefits in the Finnish basic social security system, people are often unaware of the precise benefit they are entitled to, which can lead to confusion. As the legislation on the Basic Income Experiment was passed by the Finnish parliament, it also cleared the parliamentary Constitutional Committee. The legislation guarantees that customers in the target group of 2,000 people between 25 and 58 years old will get the same amount of money as they would outside the experiment, and any shortfall is repaid by Kela. The basic income is a new temporary piece in the puzzle of the Finnish social security system. Lessons so far Even though the experiment has been running since the start of the year, it has already yielded results by cutting bureaucracy, which both customers and Kela appreciate. The experiment is running smoothly with little input from Kela. The basic income

Participants will get a basic income even if they find a job is paid every month at the same time. This gives customers peace of mind and freedom from immediate money concerns, allowing them to focus on finding a job, starting a business, etc. And indeed many have done so, while others have decided to learn a new profession or care for their elderly parents. Some have reported experiencing significantly less stress, too. Naturally, free money is not the perfect solution for every customer. The important thing to remember is that the basic income experiment is only one of several actions to be taken when addressing the problems of working life and social security. Some people need other kinds of support to cope with life’s challenges, such as rehabilitation, or medical and social care, and we must also invest in such programmes. The basic income is a way forward as we further develop our unemployment benefit and other social security systems in order to eliminate excessive bureaucracy for everyone. That frees us up to take better care of the customers who do not benefit from the unconditional basic income, but who also need our support in managing their lives. Visit Kela, the Finnish Social Insurance Institution, at www.kela.fi/web/en Watch 2-minute video at www.youtube.com/watch?v=8xPAlEkT0kk

DATABANK INCLUSIVE GROWTH Gender wage gap % of male median wage, 2015 or latest available year

Unequal pay between men and women continues to pose problems, despite decades of legislation to address it. OECD countries are no exception. Most of them show gender pay gaps between 10% and 20%, with Japan having one of the widest gender pay gaps of over 25%. The pay gap is relatively narrow–around 10%–in Greece, in part because only the most qualified women remain in their jobs, which increases women’s median earnings. Visit www.oecd.org/gender/

30 25 20 15 10 5

ly Ita

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ee

ce De

lan

Gr

ds

d

er Ne

th

st Au

Ire

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lan

lia

ico ex M

Ca

na

da

US

d lan Fin

Jap

Ch

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ile

0

Source: OECD (2017), Gender wage gap (indicator), DOI: 10.1787/7cee77aa-en

Labour productivity in 2015

Employment rates have been rising in several OECD countries, but productivity has not kept up. Indeed, a slowdown of productivity growth in the past years continued to undermine rises in economic output and living standards. Labour productivity among the G7 countries was highest in the US where the level of GDP per hour worked was US$68.3 in 2015, followed by France and Germany, while Canada and Japan had levels below the OECD average of $51.1.

G7 countries, GDP per hour worked, USD dollars, current PPPs US

68.3

France

67.5

Germany

66.6

Italy

53.6

UK

52.4

OECD

51.1

Canada

50.8

Japan

Visit www.oecd.org/global-forum-productivity See the OECD Compendium of Productivity Indicators 2017, DOI: 10.1787/pdtvy-2017-en See also “Productivity’s wave goodbye”, in OECD Observer No 300, 2014, http://oe.cd/wavegoodbyel

45.5

Source: OECD Compendium of Productivity Indicators 2017

Public social expenditures reduce the rate of emigration Share of individuals planning to emigrate and public social expenditures

Can more social spending curb emigration? Possibly yes. In fact, an increase in social protection as a share of GDP is linked to reduced rates of planned emigration (see graph, which shows this negative correlation). Costa Rica spends almost 16% of its GDP on social programmes and has only around 4% of planned migration. Social spending on programmes such as unemployment insurance, disability pay, medical care and child care all decrease vulnerability and can discourage people from emigrating out of necessity.

25

Share of people planning to migrate (%)

20

Philippines

15 Dominican Republic Cambodia

10

Armenia

5

Burkina Faso

Morocco

Georgia

Costa Rica

0 0

2

4

6

8

10

12

14

16

18

Public social protection expenditure as a share of GDP (%)

See OECD Observer No 309 Q1 2017, http://oe.cd/1Ru Source: OECD (2016), Perspectives on Global Development 2017: International Migration in a Shifting World, OECD Publishing, Paris

http://dx.doi.org/10.1787/persp_glob_dev-2017-en

OECD Yearbook 2017 © OECD 2017

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INCLUSIVE GROWTH

Bridging food divides in Nigeria is a global challenge for the Coordination of Humanitarian Affairs (UNOCHA), 1.8 million people have been internally displaced; about 1 million houses were destroyed by Boko Haram; more than 1,200 schools are damaged and 3 million children need educational assistance. The Nigerian government indicates that some 26 million people have been affected by Boko Haram, and the Borno city of Maiduguri alone hosts more displaced people than all European countries put together. Disruption of market supplies, destruction of infrastructure and soaring food prices have severely limited access to food.

Laurent Bossard

©Rights reserved

Director, OECD Sahel and West Africa Club (SWAC)

Nigeria’s food crisis needs structural responses to restore trust and build an inclusive, resilient society throughout the country. Nigeria is afflicted with famine. Of the 9.6 million people in need of food and nutrition assistance in the Sahel and West Africa (March-May 2017), some 7.1 million live in Nigeria: 3.2 million in Borno State, 800,000 in Adamawa State and 600,000 in Yobe State, and the rest in other northern states. Admittedly, this represents less than 5% of the population of Africa’s most populous country of over 180 million people, but is nevertheless an intolerably large number, nearly equal to the entire population of neighbouring Togo.

Several regional organisations and international partners have issued calls for action. However, the crisis has not gained much attention on the international stage, partly due to the hesitant reaction of the Nigerian government. For a long time, Nigerian government representatives denied the depth of the crisis, partly blaming humanitarians for exaggerating the problem or for treating Nigeria as a cash cow. The government of Nigeria officially declared a nutritional emergency in the state of Borno in June 2016 and acknowledged the need for international support. Less than a third (US$78.5 million) of the Humanitarian Response Plan for Nigeria in 2016 has been funded. The UN appeal for 2017 now aims to raise US$1 billion. In February 2017 at the Oslo Humanitarian Conference on Nigeria and the Lake Chad area, donors from 14 countries (mostly in Europe, but also Japan and Korea) pledged US$672 million for the next three years.

Moreover, according to our most recent data, some 44,000 more Nigerians currently face the threat of famine, mostly in Borno State. If urgent humanitarian assistance does not reach the zones that are currently inaccessible, this number is likely to rise to 50,000 people. Eight years of violent conflict across northeastern Nigeria, caused notably by Boko Haram, an Islamic extremist group, have severely weakened the population’s already fragile livelihoods and caused a deep humanitarian crisis. The resulting massive population displacement has left the three northeastern states, Adamawa, Borno and Yobe, with extremely high levels of food insecurity. According to the United Nations Office

Peace in action Today, even more than funding, protection and access to Boko Haram-controlled territories are key challenges. Authorities have a month to two-month window to avert a famine in the nonaccessible areas. Though a massive inflow of humanitarian assist-

Mapping cause and effect: Food insecurity and violent attacks in Nigeria Boko Haram attacks, 2003-15

8.9 million food insecure people 50 000 people at risk of famine

June-August 2017

Lake Chad

Sokoto Katsina Zamfara

Kebbi

Jigawa

Bauchi

Kaduna Niger

Kwara

Abuja

Oyo Osun

Lagos

Ekiti Ondo

Source: National Analysis of the Cadre harmonisé, March 2017 and OECD/SWAC (2017), Cross-border Co-operation and Policy Networks in West Africa, OECD Publishing, Paris.

28 OECD Yearbook 2017 © OECD 2017

Nassarawa

Taraba Benue

Enugu Anambra

Delta

Boko Haram

Gombe

Plateau

Kogi Edo

Borno

Adamawa FCT

Ogun

Yobe

Kano

Ebonyi

Cross Imo Abia River

Bayelsa Rivers

Akwa Ibom

Phases of food insecurity Phase 1: None/minimal Phase 2: Stressed Phase 3: Crisis Phase 4: Emergency Phase 5: Famine not analysed

© 2017. Sahel and West Africa Club Secretariat (SWAC/OECD) and Food Crisis Prevention Network (RPCA), CILSS/Agrhymet and partners.

INCLUSIVE GROWTH ance has improved the situation in many parts of Adamawa and Yobe, it is expected to deteriorate again during the coming lean season from June to August 2017. As long as Boko Haram continues to devastate the Lake Chad area, Nigeria and its neighbours will find themselves in a similar situation each year. Beyond the immediate humanitarian emergency, the Nigerian crisis requires three long-term response strategies: First, focus on bringing peace and security to the Lake Chad area. The fight against food and nutrition insecurity in northeastern Nigeria cannot be won without driving back, if not defeating, Boko Haram. A comparison between the map of food insecurity and the map of Boko Haram-related violence illustrates just how closely civil insecurity and food insecurity are intertwined. There are encouraging signs that security forces such as the Multinational Joint Task Force (MNJTF) have started co-ordinating their actions more efficiently. Since his election in March 2015, President Buhari has made the fight against Boko Haram a top priority. Several prominent Boko Haram leaders have been arrested or killed; civilian authorities have progressively regained access to Boko Haram-controlled areas; and most recently, in early May 2017, 82 of the 276 Chibok schoolgirls captured three years ago were released. But, aside from purely military solutions, lasting peace requires restoring local governments and building trust and resilience among the local population. It is a collective effort that should involve all parts of society. Secondly, think long-term and across borders. In December 2016, the Food Crisis Prevention Network (RPCA), with the support of the Sahel and West Africa Club Secretariat (SWAC/ OECD), urged international partners to shift from emergency assistance to long-term reconstruction and development of the Lake Chad region. One starting point would be to align the priorities of development partners with President Buhari’s North-East Initiative and the government’s economic development strategies. These aim at “gradually shifting the focus to reconstruction, resettlement of Internally-Displaced Persons (IDPs) and support for the re-establishment of livelihoods.” Because of its cross-border nature (impacting Cameroon, Chad

and Niger), this initiative demands regionally co-ordinated collective action. So far, response plans are focused solely on individual countries. This is hampered by competition over

The city of Maiduguri alone hosts more displaced people than all European countries put together financial resources between countries and partners alike. The countries of the region and their partners must co-operate more effectively at the regional level. Thirdly, restore trust and invest time and effort into building inclusive, resilient societies. Local people, rightfully, expect their leaders to deliver basic social services including education, health services, access to water, electricity and other infrastructure. Populations in the far northeast of Nigeria have long been overlooked by public policies, with widespread hostility and a loss of trust in government being essential problems. Regaining public trust is a major task but is of paramount importance and could take years, if not decades, to achieve. Clearly, the Nigerian crisis reflects the importance of inclusion. For a long time, the food and nutrition crisis in the northeast of the country was largely ignored by the south, and Boko Haram was seen as a “northern” problem. It was only when suicide bombings hit the major cities and the capital Abuja that the country as a whole woke up to the threat Boko Haram posed. The idea of Nigeria as “one people, one nation” has marked the country’s history since independence over 50 years ago. Its effects beyond Nigeria cannot be understated: as a senior US official, Nathan Holt, put it: “the future of Nigeria matters not just for Nigeria, but very much for its neighbours and […] for this planet.” (Africa: Briefing on Nigeria, by Nathan Holt, Deputy Director, Office of West African Affairs, Bureau of African Affairs, May 2017). What started as a localised Nigerian crisis may quickly grow into one of the world’s worst humanitarian crises. It is a danger that Africa and the world cannot afford. Visit www.oecd.org/swac Bossard, Laurent (2017), “Borders and Networks: The Forgotten Elements of Development”, on www.oecdinsights.org, 17 January

Eating soup with a knife: Confronting warfare in the Sahara Olivier J Walther, Consultant to the Sahel and West Africa Club (SWAC-OECD) at the OECD and Associate Professor, University of Southern Denmark

©Kobal/The Picture Desk/AFP

shadowy, avoiding direct combat with regular forces. Mobility and speed allow him to strike anywhere, anytime, without apparent logic. Desert insurgents compensate for their small numbers by offering an elusive target. Their strength relies on their ability to control strategic cities and secure roads rather than on holding territory. Regular forces are often ineffective at combating such insurgents, argues Lawrence, because in the desert, “space is greater than the power of armies”.

“Like eating soup with a knife”: Peter O’Toole (right) portrays TE Lawrence, with Omar Sharif, in the 1962 film, “Lawrence of Arabia”

Combating an insurgency is never easy at the best of times, but in a desert, it is slow and messy. Indeed, to quote Thomas Edward Lawrence–known to many as Lawrence of Arabia–it is “like eating soup with a knife”. The enemy is

Almost a century later, the general principles of irregular warfare formulated by Lawrence in the Middle East resonate surprisingly well with today’s security situation in the Sahara, the greatest desert of all. First, mobility and speed also characterise the Sahara situation today. Read more at http://oe.cd/1WM From ©OECD Observer No 303, September 2015

OECD Yearbook 2017 © OECD 2017

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INCLUSIVE GROWTH

Could measuring what matters be a bridge to happiness? Meik Wiking Chief Executive, Happiness Research Institute, Denmark; Author, The Little Book of Hygge

journalist keen to find out what the secret ingredient of Nordic happiness is. What we find is that the Nordic welfare model is the most efficient in turning wealth into well-being. We are not in fact paying taxes, rather, we are investing in our society. We are purchasing a

©Rights reserved

Governments are discovering how happiness research can contribute to public policy At the Happiness Research Institute, we believe that the ultimate goal of public policies should be to improve quality of life. Similarly, we work with measures that complement the conventional ways of measuring progress in society–in terms of growth and GDP per capita. Obviously, human well-being is more than wealth. Robert F Kennedy famously pointed out that GDP “measures everything, in short, except that which makes life worthwhile” and today, GDP is increasingly recognised as an insufficient measure of quality of life. And with good reason. We have become richer–but not necessarily happier. We have far too often failed to convert wealth into well-being. We were encouraged to witness the United Nations pass the resolution on happiness in 2011 and pointing out that “happiness as a universal goal and aspiration embodies the spirit of the Millennium Development Goals.” Since the UN resolution, governments are increasingly discovering how happiness research can contribute to public policy and we are encouraged by the increasing number of institutions, cities and governments which are working with new well-being measures of progress. This is to be welcomed, because we should measure what matters. The OECD is pioneering this field with initiatives such as the OECD Better Life Index. Research into the determinants of happiness can play a major role in shifting policy priorities. For instance, by boosting the quality of life in our societies, we may also accomplish additional goals, such as longevity and increased productivity for our citizens. As the World Happiness Report 2013, commissioned by the United Nations, points out: “Given the tangible benefits to individuals and societies of moderately high well-being, it is ever more urgent that we act to effectively put well-being at the heart of policy and generate the conditions that allow everyone to flourish”. The World Happiness Report has been published five times now, with the Nordic countries having established their position as the world’s “happiness superpowers”. This has led to a widespread interest in the Nordic model and barely a week goes by without my being interviewed by another

30 OECD Yearbook 2017 © OECD 2017

better quality of life. The key to understanding the high levels of happiness in the Nordic countries is the welfare model’s ability to reduce risks, uncertainties and anxieties among its people and prevent extreme unhappiness. Danes (like people from other Nordic countries) simply have less to worry about in daily life than most other people, and that lays a sound basis for enjoying higher levels of happiness. At least that is what we see in the data. Let me give you an example. Bridging the happiness gap PsoHappy (www.psohappy.org) is a study which explores the impact psoriasis, a common skin disorder, has on the subjective well-being of people. It is a collaboration between the Happiness Research Institute and LEO Innovation Lab and to date, we have been able to collect and analyse almost 50,000 responses from over 43 countries. In every country, we find that those living with psoriasis are less happy than the general population. It is no surprise that living with such a condition affects quality of life, but what is more interesting is that the happiness gap varies between countries. For instance, our data shows that in Denmark the happiness gap is 12%, while in the US and the UK it widens to 20% and 24%, respectively. That means that, taking all factors into account, it is harder to live with psoriasis in the UK than in Denmark. The implications of this study for our understanding of happiness and well-being should not be underestimated. By building a comprehensive understanding of well-being inequalities in relation to chronic health conditions across countries, we can start to piece together why these inequalities exist, draw lessons from where the happiness gap might be smaller, and assess the link between healthcare and broader development indicators.

References and further reading Visit the www.happinessresearchinstitute.com Visit PsoHappy website at www.psohappy.org Robert F Kennedy, remarks at the University of Kansas, 18 March 1968, see https:// www.jfklibrary.org/ UN General Assembly Resolution 65/309 of 19 July 2011, entitled “Happiness: towards a holistic approach to development”, see http://www.happinessday.org/ resolutions/ United Nations (2013), World Happiness Report 2013, see http://worldhappiness. report/download/

Business brief

Unleashing Latin America’s energy potential Astrid Álvarez CEO of Grupo Energía de Bogotá (GEB)

egic partners, the best human talent available and corporate governance standards that abide by OECD guidelines.

©Rights reserved

Bogota City Hall approved, in September 2016, EEB’s partial divestment. Can you please provide further details on this operation? In late 2016, the Bogota City Council authorised City Hall to divest up to 20% of its shares in the company, after which the city will hold a 56%, controlling stake in the group. In this regard, this is not a privatisation, but rather a “democratisation” process that will allow the greatest possible number of citizens to become our shareholders. Divestment is expected to start during the second semester of 2017 with the initial offering going to pension funds and former employees. An interview with Astrid Álvarez What is Grupo Energía de Bogotá? Grupo Energía de Bogotá (GEB) is a leading multilatina company in the Latin American electricity and natural gas industry, with over 6 million customers in countries like Brazil, Colombia, Guatemala and Peru. GEB, with over 120 years of experience, is the only group in Latin America to operate in the entire energy chain, including power generation, transmission, distribution and commercialisation, as well as natural gas transportation and distribution. The group works as a platform for large energy companies to grow and develop their markets. We do this across territories where we operate through a solid infrastructure and by having the highest standards of corporate governance, hence, protecting our shareholders. What does the Strategic Corporate Plan include? What are the main medium and long-term goals? By late 2016, GEB formulated its new corporate strategy. We set an ambitious goal: to become the leading Latin American multinational energy company by 2025. This means that by then, Grupo Energía de Bogotá will be the non-mining company with the highest profits in the Colombian market. The aggregated income of the group’s companies is expected to exceed COP$35 trillion (about US$12 billion at current exchange rates), becoming the most valuable holding company on Latin America’s integrated market (MILA). Three Strategic Business Units were defined in our new strategy: Urban Energy Solutions: development and operation of infrastructure to meet strong electrical energy and natural gas demand in large cities. Today, GEB provides natural gas and electricityrelated energy solutions to over 6 million customers. Interconnection for Energy Markets: connecting energy generation sources to mega-centres of consumption. This business unit connects regions through 7,800 miles of electrical energy transmission lines and 2,500 miles of gas pipelines.

The mayor’s office has stated that resources received from this divestment will be used for public infrastructure and transportation projects in the city. Several analysts have forecasted that this

In 2025 Grupo Energía de Bogotá will be the non-mining company with the highest profits in the Colombian market process will be one of the most significant transactions in the stock market as well as, undoubtedly, a very valuable opportunity for the company to improve its corporate governance standards. This process will result in better practices given the new balance on the board of directors, and most importantly, the new shareholder agreement via the majority shareholder declaration. In this regard, we expect the city to provide clear dividend policy guidelines and investment policies, and technical profiles for our board members and other management appointments. GEB holds a very significant presence outside Colombia. Does the group plan to continue to grow outside the country? The group–under its new strategic roadmap–will continue to grow and consolidate its presence through its companies in the four consumption markets where we operate: Central America, Colombia, Pacific South region, and the southeast region of Brazil. For the 2017-2020 period, we have an ambitious investment plan of over US$1.5 billion, with US$545 million designated to investments outside Colombia. GEB will continue its internationalisation process by focusing on countries where we currently operate and where we can competitively develop markets with strategic partners that allow us to optimise resources and expertise, as well as manage risks more effectively. Visit www.grupoenergiadebogota.com

Low Emission Generation: capitalises on renewable energy opportunities in countries transitioning to sustainable energy, with a current significant base of hydropower generation. This is a cost-effective growth strategy that will be executed through investments in leading regional companies, global strat-

OECD Yearbook 2017 © OECD 2017

31

How do you measure

a Better Life? For nearly a decade, the OECD has been working to identify societal progress – ways that move us beyond GDP to examine the issues that impact people’s lives. The OECD’s Better Life Index is an interactive tool that invites the public to share their thoughts on what factors contribute to a better life and to compare well-being across different countries on a range of topics such as clean air, education, income and health. Over 6.5 million visitors from around the world have used the Better Life Index and well over 100 000 people have created and shared their personal Better Life Index with the OECD. This feedback has allowed us to identify life satisfaction, education and health as top well-being priorities. What is most important to you?

Create and share your Better Life Index with us at: www.oecdbetterlifeindex.org

The OECD Better Life Index enables you to rate countries according to the importance you give 11 topics. Each petal of the flower represents one topic and the size of the petal the country’s rating for that topic.

Find out more about how life compares in OECD countries by ordering the book How’s Life? Measuring Well-Being. Available now on the OECD Online Bookshop: http://www.oecd.org/bookshop

GOVERNANCE FOR A BETTER PEOPLE WORLD INTRODUCTION

Digitalisation

Digitalisation has been under way for about half a century, yet it is only now that everyone is talking about a digital revolution. One reason for the attention is the speed of change: internet penetration has increased sevenfold or more in the past 15 years, broadband has brought over 3 billion people online and over 100 billion devices are connected to the web. Another reason is disruption, to habits, jobs and people’s lives. Automation is taking hold, from factory floors and offices to self-driving cars, while robots are becoming more commonplace. Digitalisation has brought great advances, for transport, communications and healthcare for instance, but the reliance of firms, households and government on digital infrastructure poses challenges and raises questions. How can digitalisation be harnessed to bridge divides and deliver the widest possible benefits? Andy Wyckoff sees great potential for productivity, but he insists that having the gear is not enough and urges governments to reboot their policies for digitalisation. Susan Greenfield sees opportunities for new learning, and as long as we harness insights from neuroscience, we can make the most of a culture geared to “serving a machine”. Mads Tvillinggaard Bonde is excited by the potential for learning brought about by laboratory-based EdTech. For Isabelle Kocher digitalisation, from big data and smart metering to the internet of things, will support more efficient energy use and production. William B Bonvillian looks at the future factory and how output will not be organised around single technologies, and reaffirms the importance of skills. Lizette Risgaard explains why workers matter for a successful new production revolution. Xavier Oberson ponders on the possibility of taxing robots. Ali Boumediene introduces his high tech company in Algeria, and explains its international strategy. Rebecca MacKinnon outlines why corporate accountability is essential to human rights in the network society. And Roel Nieuwenkamp looks at the use of the child labour in smartphones, and calls for cleaner, fairer supply chains.

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DIGITALISATION

Re-booting government as a bridge to the digital age

©OECD

Andy Wyckoff Director, OECD Directorate for Science, Technology and Innovation

Digitalisation has already been under way for about half a century, yet it is only now that everyone is talking about a digital revolution. Why? One reason is the spread of faster and better connectivity. In 2013, about 80% of OECD countries had complete broadband coverage, fixed or wireless. Another reason is the global surge of smartphones–today, many millions of people walk around with constantly connected minisupercomputers in their pockets. With these changes, the transformation morphs from being economic to being social as well. Digitalisation does not affect fundamental policy objectives such as the need for good jobs, mobility or clean air but it does affect how we seek to achieve such goals. In transportation for instance, policy must factor in automated vehicles that provide a different set of choices and opportunities, as well as risks. In

Having the gear is not enough; governments must not be held back by legacy policies from the pre-digital world education, digitalisation enables a new learning potential that really is lifelong and accessible to everyone. And with respect to funding of government (taxation), digital tools can help tax administrations broaden the base for tax revenue. It is perhaps inevitable that our policymaking institutions lag behind the technological developments that fuel the digital transformation, but the gap is widening and with it the opportunity to shape the transformation to address long-standing concerns such as low productivity, age dependency and access to healthcare. A key objective of the OECD’s “Going Digital” project is to close the gap by improving awareness and understanding of the issues, helping governments learn from each other and sharing the fruits of the active experimentation presently under way. But it’s a challenge for governments for two reasons. First, the speed at which the transformation is happening fundamentally challenges the existing institutions we have for policymaking. The industrial revolution took place over the course of a century, but the digital revolution, especially the current phase that is transforming society, is taking place over the course of a generation and could accelerate still. Our

36 OECD Yearbook 2017 © OECD 2017

institutions, whether in employment or education for instance, have not adjusted to these changes very well, leading to a loss of confidence among citizens and concerns about not having a roadmap to help them navigate the future. The second big difficulty is the multi-disciplinary nature of digital transformation, which requires policymaking to rise above the ministerial silos we have today and think across government and across boundaries. In a networked environment where torrents of data are generated, every policy has to consider issues of data security, privacy, access and stewardship. Who has access to the data in the “black box” of an automated vehicle involved in an accident? Is it public, or proprietary? This issue will arise in every policy area from science to farming, and we are only at the beginning. It is clear that data are the hallmark of this new phase of digitalisation. From smartphones to the “internet of things”, new devices will increasingly have sensors to store data, which will allow us to engage in big data analytics, as well as enabling more artificial intelligence (AI) and machine learning. It is hard to predict where we are going with all of this, but it is clear that governments need to accept that the times have changed, and that they should use these tools to improve policy design, deployment and evaluation. Governments at all levels are beginning to rise to the challenge. We are starting to see examples across the OECD of how national and local governments are using technology as a tool to do better policy, from Germany with its “Industry 4.0” and Estonia which is beginning to use blockchain for government services, to Mexico, which is beginning to use electronic invoice verification to guard against tax evasion and India with its biometric identification. Cities like New York are using digital technologies to help manage water supply, and in Paris people are using technology to rent electric vehicles for use in the city. In Africa, small firms are connecting with global markets using digital technology and a thriving fintech sector is beginning to emerge as digital payments substitute for cash. There is so much that can be done. Infrastructure, especially broadband connectivity (mobile and backhaul fibre), is fundamental, and governments need to provide access to build the economy on modernised infrastructure. But having the gear is not enough. Governments need to be proactive, and not be held back by legacy policies that pre-date the digital world and hamper progress in the digital era. For example, governments can lower the cost of providing access by allowing operators to use public buildings and infrastructure for the siting of transmission towers. The digital transformation requires that governments do some forward planning. First, it’s about the people themselves, about human capital, and equipping people with the necessary skills and an ability to upgrade quickly, as these skills will be constantly evolving. Change is a fact we have to get used to and people cannot assume that a certain level of educational attainment will be sufficient for their careers. Second, governments need

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DIGITALISATION

to prepare transition policies. There are going to be winners but also losers. This means building support plans that cushion the transition. It is clear that jobs and skills will be directly affected, not just in factories but in sectors that have not yet seen much automation, such as law, education, health and finance. STEM skills will be important, but increasingly it will be the blending of this knowhow with cognitive problem solving capabilities with complementary “soft” social skills–teamwork, collaboration and oral communication skills. This bundle of skills is essential for adaptation and the organisational change that is required to fully harness technology. As an institution that grew out of World War II that saw the early flickers of the digital era with computing used to break secret codes and “big data” used to target submarines, the OECD has been working on digital projects for some 35 years, having set up a committee to focus on the issues back in 1982. What started as a “sectoral” issue has evolved into a transformation that is affecting every part of the economy, and much of society. The breadth of OECD policy contained under one relatively small roof in Paris, provides a unique capability for analysing this issue in a transversal and multidisciplinary manner across 14 different policy domains. Given that we live in an era of hyper-connectivity, this whole-of-government perspective is essential because a policy made in one area can have unintended consequences in another: ban ride-sharing because it violates rules governing taxis and you may make it difficult for poor people to get to work; overly limit data flows because of privacy concerns and you may cut off promising avenues of research on dementia; regulate what constitutes a lawyer to a

person with a law degree and you might deprive the poor of law services based on AI. Businesses want some policy certainty so that they can plan, invest and innovate, and the best way to achieve this is for governments to be proactive with a coordinated strategy that involves the various stakeholders. Getting this right by making it genuine is difficult but will determine success. Most importantly, the digital transformation should not be cast as a challenge or threat. It does pose serious concerns that need to be directly addressed and not minimised such as security and worker displacement, but it also presents a huge opportunity for achieving long-held policy goals. If you think back to the industrial revolution and the rise of automobiles and mass production, we had leading people like Henry Ford and Walter Luther who came together and shortened the work week, institutionalised weekends and made annual paid vacation part of the package, along with other benefits. Could Steve Jobs iPhone be remembered in the same way as a levelling force that empowered individuals and allowed all of us to benefit as opposed to just a handful? In this sense, successfully navigating the digital transformation may be less about technology policy and more about distributional policy. How do we ensure that the opportunities are available to all to benefit from? How do the winners lend a helping hand to the losers, and those struggling? If today’s leaders can make the decisions that allow a promising and inclusive digitalised future to emerge, then everyone will benefit. www.oecd.org/sti/ieconomy www.oecd.org/sti/inno

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DIGITALISATION

Making the most of the digital world: Changing an end to a means

In 1964 the writer Isaac Asimov predicted life 50 years on: “Even so, mankind will suffer badly from the disease of boredom....and I dare say that psychiatry will be far and away the most important medical specialty in 2014. The lucky few who can be involved in creative work of any sort will be the true elite of mankind, for they alone will do more than serve a machine”. In order to make the most of a culture geared to “serving a machine”, we should harness insights from neuroscience to devise commercial and educational strategies where true individuality, and individual insight, can flourish: this goal of creativity shouldn’t be an outcome reserved for an elite, but a realistic expectation for all citizens in the 21st century. Humans occupy more ecological niches than any other species on the planet because of the superlative ability of our brains, compared with those of any other animal, to adapt to the environment. Our brains become highly individualised postnatally by the development of unique configurations of connections between the brain cells that characterise the growth of the human brain after birth, personalising it into a “mind” that is in constant dialogue with the environment. Neuroscience can give valuable insights by offering a perspective at the level of the physical brain of how we might feel and think in unprecedented ways. If we are indeed anticipating more decades of long and healthy life than ever before, we need to understand, for example, the alleged efficacy of mindfulness at the level of the physical brain, the possible threats posed by the digital world to emotions and well-being, such as short attention span, poor interpersonal skills and a fragile sense of identity, and then devise the best ways for optimising fulfilment of each individual’s potential.

©Serprix.com

©Rights reserved

Susan Greenfield CEO and Founder, Neuro-Bio Ltd and Member of the British House of Lords

insurance and risk management, the media, leadership, education, and ultimately most domestic and international policy planning. However, social networking sites could be transforming the way we see our own identity and relations with others. Video games may be having an effect on attention, aggression and even addictive behaviour patterns. Search engines could be impacting on how we learn and differentiate information from knowledge. How will our culture and lifestyle adapt to a premium on the arguable features of a screen-based mentality, such as a craving for sensation, short attention span and diminished frames of reference? My suggestion is that individual adaption will take the form of a more child-like scenario of literal and simplified events/ characters/images where premium is based on direct and immediate experience, for example, the world of Pokemon Go. Then, there’s a complementary question of how culture and a new type of environment could develop a stronger sense of individuality, reflective thought and the ability to make connections, to join up the dots in new ways that today’s more digitally immersed minds might find problematic.

We live in a world in which people seek out a global social networking profile, a world of instant views and thoughts read out in a virtual stream of consciousness. It’s a two-dimensional world of only sight and sound, yet offering instant information, connected identity, diminished privacy and here-and-now experiences so vivid they out-compete the real world of three dimensions and five senses. This new culture and way of life is unprecedented and as such, is inevitably having an unprecedented effect on each individual’s human brain.

The digital world is arguably, for many, an end in itself, presenting a parallel lifestyle that overrides that of the real world, and on which many will choose to spend their money and their time. But how might this powerful digital environment be turned into a means to a much more fulfilling end? In order to make the most of a culture currently geared to “serving a machine”, surely the answer is to foster creativity, novel insights for everyone in both the humanities and the sciences. This vision at the moment might seem an unrealistic dream, and indeed it could take a generation to unfold, but in order to start to realise such a world, we need to start devising an environment and educational strategies for converting the fragments of isolated pieces of information from the screen into an interconnected system of knowledge. Only by joining up the dots into cohesive conceptual frameworks will original thought and individual insight be able to emerge and flourish.

Nowadays, digital technologies impact every sector of our professional and private lives, encompassing goods and services,

Visit Baroness Greenfield’s website at www.susangreenfield.com

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Business brief

Empowering the next generation of scientists to change the world Mads Tvillinggaard Bonde

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Founder, CEO, Labster

Education has transformed over the last 20 years from being a means to an end to becoming a change agent on the battleground to improve the life chances of all individuals, regardless of where they live, their economic status, gender, ability or religious persuasion. Education has been revitalised as the gateway for equal opportunity. Much credit can be attributed to advances in technology. Knowledge sharing and transfer can be invited in, no matter who produces it and where it can be delivered. Education no longer needs to take a physical form to bring about inclusiveness, with virtual learning environments providing the ability to open buildings and facilities, as well as skills and competencies. My own journey into disruptive technology-enhanced education started in 2010 as a biotechnology student in Denmark. Teaching exposed a mismatch between my aspiration, ambition and passion for biotechnology and the subject’s ability to create a positive impact. It ran up against a lack of motivation, weak engagement and poor knowledge sharing and transfer. My inner entrepreneur was awoken, leading me to develop the first prototype of a virtual laboratory simulation. It was an expression of the empowerment that I could see that others would benefit from. From this vision grew a company that now includes a world beating team of technologists and educationalists. Labster’s catalogue of virtual laboratory simulations is used in 25 countries by 120 of the world’s leading higher and secondary education institutions. Our goal is to reach at least one million students by the end of 2017. Labster has joined the wave of educators and learning scientists that focus on the importance of designing motivating, engaging and immersive learning experiences. We act on evidence-based practice to create simulations that prepare students and professionals for real life. Labster has worked with universities such as MIT, Stanford and UC Berkeley to measure how virtual laboratories compare with traditional teaching. Our results from students using Labster show an increase of learning effectiveness of 76% over traditional teaching methods. When traditional teaching was combined with Labster, the effectiveness increased to 101%, as teachers use the virtual laboratories to become freer and more agile in the way that they motivate, mentor and support their students’ development. Our findings show that technology is most effective when it is integrated and used in parallel with physical learning environments, not as a replacement for the real world. Indeed, so-called EdTech should be an enabler and a catalyst for new perspectives and innovation, and allow us to rethink conventions and reimagine how

we plan and organise education and skills development. Labster can generate small or massive virtual learning environments. We can replicate laboratory and learning environments in a technical package that which can be accessed remotely, and even fit in your pocket when on the move. More students can now become inspired and motivated by seeing how science, technology, engineering and maths can help with real-life problem solving. The ultimate impact of our approach will be to leave fewer people behind in the digital world of progress. Technology-enhanced education will give students and employees an opportunity to take control of the new production revolution 4.0 rather than be led by it. Technology provides a fast track that encourages inclusiveness. Equal opportunity, greater impact Labster’s research has shown that virtual laboratory simulations provide the greatest benefits to low knowledge and poor performing students. The comparison of low, medium and high level of

Our results from students using Labster show an increase of learning effectiveness of 76% over traditional teaching methods knowledge students show that the gamified, 3D real life and simulation-based learning enabled the most challenged students to achieve better understanding and motivation together with highest improvement in post-test results. Students feel empowered by using virtual laboratories. It is a tool that that they can take with them seamlessly throughout primary, secondary and higher education, equipping them with a digital literacy that will empower them for life, in the workplace and beyond. We expect many more life-long learning EdTech tools like Labster to emerge in future, as part of a trend that will democratise education and empower equal opportunity among the workforce. Increased access and reduced costs of that access to massive amounts of knowledge and data will bring education into the reach of most communities around the world. A wider application of computational thinking and 21st century skills will bring more adaptive, problem solving, critical thinking and collaborative skills. These will be important ingredients in our collaborative effort to create a more equitable and opportunity-filled world for all. Visit www.labster.com

@labster

Bonde, Mads T et al. (2016), “Simulation Based Virtual Learning Environment in Medical Genetics Counseling: An Example of Bridging the Gap between Theory and Practice in Medical Education.” BMC Medical Education 16

LABSTER OECD Yearbook 2017 © OECD 2017

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Business brief

ENGIE: Enabling the energy transition Isabelle Kocher CEO Engie

the government of India predicted that by 2027 the country’s installed capacity of renewable energies would represent 43% of total installed capacity, up from 14% in 2016.

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The share of renewables is also bound to grow in industrialised nations, which already have solid energy infrastructures. A new law in France, the Energy Transition for Green Growth Act, set a target for 2030 of 32% renewable energy for total energy consumption, up from 14% in 2014. Furthermore, natural gas is expected to replace more carbon-intensive energy sources as a complement to renewable energy sources.

We usually speak of “the energy transition” or “the transition to a low-carbon economy.” But this expression comes short of the actual phenomenon. In fact, we are in the midst of an industrial revolution that is completely shaking up the energy industry and is bound to disrupt others as well, such as transportation. Two interlocking developments are driving the change: public awareness of climate change and maturing technology. The Paris Climate Agreement was the culmination of a shift in mindset on environmental and climate issues. Governments of 195 countries officially endorsed policies and ideas that had once been defended mainly by scientists, agreeing to combat climate change and to set out country-specific plans to curb carbon emissions. Growing public awareness of these issues had another effect: investors not wanting to be sidelined have begun shifting their investments from carbon-intensive to low-carbon energy sources. Major investment banks such as JPMorgan, Bank of America, Citigroup, and Morgan Stanley have publicly pledged to stop or scale back support for coal projects, and bolster financial backing for renewable energies instead.

Next, decentralisation: decentralised generation is in many ways the opposite of the traditional model where one large plant provides energy for an entire region. Instead, energy is generated through small production units. There are a variety of decentralised systems. They can go from own-consumption systems composed of rooftop solar panels, to town or district scale electrical distribution networks capable of operating autonomously from the main electrical grid. Decentralised power generation is in tune with the consumer’s desire to be more engaged when using

We have every reason to be optimistic about the transition to a low-carbon economy and consuming goods. Decentralised electricity also presents an incredible opportunity to provide energy access to the 1.2 billion people who still lack it. Such arrangements are an economically viable alternative to the costly investment required for grid extension. In some countries, they are part of public authorities’ strategy for expanding energy access. For instance, Rwanda expects to provide energy access for as much as 20% of its population with off-grid solar systems by 2018.

The support of public authorities and investors led to the rapid maturing of renewable technologies. In 2008, solar power was delivered at approximately €700 per megawatt-hour (MWh). In August 2016, Chile announced a new record-low contract price to provide solar power for less than €30/MWh. In April 2017, ENGIE was awarded a solar project in India with an offer at a record price for that country of approximately €40/MWh.

Finally digitisation: big data, smart metering, internet of things, blockchain, and so on: all of these innovations will support more efficient energy use and production. They are also critical to the development of own-consumption systems. To manage energy in a building, for example, it is necessary to collect data and to use software that ensures a balance between production and consumption every second, as well as to manage the power grid interface.

Because of these two complementary developments, broad consensus on climate change and technological progress, the revolution is irreversible, although it may have seemed compromised recently when key political figures publicly questioned the need to combat climate change. Indeed, political uncertainties may slow the transition to a low-carbon economy in certain parts of the world. Nonetheless, we are past the point where a single player, however important, can stop the revolution.

We have every reason to be optimistic about the transition to a lowcarbon economy. This tectonic change is already underway, driven by the demands of public opinion and technological innovation. Furthermore, it is fundamentally a positive revolution since it will enable us to meet the challenges of both climate change and energy access. Whatever the obstacles, companies such as ENGIE, committed to making the energy transition happen, can be proud of the role they play in the progress of society.

So, what will a low-carbon economy look like? Its energy industry component will have three main characteristics: decarbonisation, decentralisation and digitisation. First, decarbonisation: the share of renewable technologies in the total energy mix will continue to grow. Developing and emerging nations will drive the change relying on renewable energy sources to satisfy their energy needs. The Chinese National Energy Administration announced its plans to plough €335 billion into renewable power generation by 2020. In December 2016,

40 OECD Yearbook 2017 © OECD 2017

Visit www.ENGIE.com

Engie is a sponsor of OECD Forum

DIGITALISATION

US manufacturing’s decline and the rise of new production innovation paradigms William B Bonvillian Lecturer at MIT and Advisor to MIT’s Industrial Performance Center

Between 2000 and 2010, US manufacturing experienced a nightmare. The number of manufacturing jobs in the United States, which had been relatively stable at 17 million since 1965, declined by one third in that decade, falling by 5.8 million to below 12 million in 2010 (returning to just 12.3 million in 2016). Certainly, the 2007–08 recession accelerated the disruption, but the causes were also structural, not simply financial. There was trouble with capital investment, output, productivity, and trade deficits. Contrary to what many believed, productivity gains due to robotics or automation have not been the cause of manufacturing employment’s decline; the sector has been hollowing out. This economic disruption has resulted in growing social disruption. While most people in the US assumed the nation was becoming one big middle class, instead a working class facing declining incomes came into clear, angry view during the 2016 US

presidential election. The median income of men without a secondary school diploma fell by 20% between 1990 and 2013; for men with secondary school diplomas or some college, median income fell by 13%. The decline of US manufacturing–traditionally a route to the middle class–hit these groups particularly hard. There is now a major income inequality problem. The question is: can the US manufacturing sector spring back? A core idea now being explored in the US is that new production paradigms could transform the sector. We have seen these new paradigms before: application of steam power in the UK, dev-

The future factory will not be organised around single technologies, but will merge and connect a series elopment of interchangeable machine-made parts and then mass production in the US, and the creation of quality manufacturing in Japan. The United States is now competing with low-wage, lowcost producers, particularly in Asia. Could the economy use its still strong innovation system to develop new production paradigms to drive up production efficiency and drive down costs so it can better compete? Innovation also carries its own rewards, as it can enable more innovative–and competitive–products. Scientists and engineers

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41

DIGITALISATION Education affects real earnings % in median real earnings of working-age, 1990-2013

Men aged 30-45 who are employed at the time of the census survey and worked 750 or more hours over the previous year Advanced degree Bachelor’s degree No high school diploma

-20%

High school diploma or some college

+7%

+13%

-13%

Source: Hamilton Project analysis of Census data

are now telling us that there may be break-throughs–new paradigms–available in a series of fields that could significantly change the way we produce complex, high-value technologies and goods, enabling dramatic production efficiencies. Advanced materials, digital production, photonics, light-weight composites, 3D printing, assistive robotics, revolutionary fibres, nano and biofabrication, all offer breakthrough production paradigms. These new technological advances must, in turn, be accompanied by new processes and business models to implement them. While new jobs may not necessarily be created at the production moment, job growth upstream and downstream of production is likely, given manufacturing’s role as the major job multiplier in the connected value chains of firms. Developing such new paradigms is the core idea behind advanced manufacturing in the US. Advanced manufacturing institutes as a means to nurture such paradigms are now being explored in depth across 14 new institutes, each organised around a potential paradigm. Created through collaborations between industry, universities, and state and federal governments–and cost-shared by all–they are undertaking collaborative research on advanced technologies, shared test beds and demonstration facilities, and new approaches in workforce training. They are an attempt to apply Germany’s Fraunhofter Institute model in a US setting, and borrow from the earlier US Sematech collaborative model that in the 1980s and 1990s applied advanced production processes to revive its semiconductor leadership. This is a highly complex model: each institute typically joins over a hundred small and large firms, regional universities and community colleges, and state and regional agencies, with backing from federal R&D organisations. These R&D agencies are used for funding single scientist principal investigators, not a swarm of diverse collaborators. One federal official has compared creating a manufacturing institute to forming a new nation. The institutes must operate at a regional level because manufacturing firms are embedded in regional ecosystems, but must also bring their new production technologies into implementation at a national level, a complex regional-national balancing act.

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The institutes have also become a new delivery mechanism for workforce education, a growing challenge for US manufacturers. If advanced manufacturing is to be implemented, it must have workforce and engineering communities trained for it. The United States has perhaps the most decentralised labour market of any developed economy, which makes such a major “up-skilling” project difficult. The institutes are now pursuing this task, with their ability to bring together manufacturers, community colleges, state programmes, university curricula and online tools, with new technology development and testbed facilities. Perhaps the most interesting feature of the US advanced manufacturing effort is the wide range of diverse technologies aimed at by particular institutes. While some countries are working on single-shot efforts to bring the internet of things into a manufacturing setting, the United States has a shotgun approach, pursuing a wide range of technologies, from materials to digital, to bio, to nano. A big issue in this diverse approach will be pulling the individual institute strands together into a new system. The future factory will not be organised around single technologies; it will merge and connect a series. The institutes are starting to come together to form a network, called ManufacturingUSA. A critical task for this new network will be to turn the institutes’ advanced technology strands into an entirely new production system. Hopefully, the potential of this new innovation model will continue to be tested. References Bonvillian, William and Singer, Peter (forthcoming), Advanced Manufacturing: The New American Innovation Policies, MIT Press, Boston. OECD (2017), The Next Production Revolution: Implications for Governments and Business, OECD Publishing, Paris. DOI: http://dx.doi. org/10.1787/9789264271036-en OECD (2016), OECD Science, Technology and Innovation Outlook 2016, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/sti_in_outlook-2016-en

Order now! Well-timed and targeted innovation boosts productivity, increases economic growth and helps solve societal problems. But how can governments encourage more people to innovate more of the time? And how can government itself be more innovative? The OECD Innovation Strategy provides a set of principles to spur innovation in people, firms and government. It takes an in-depth look at the scope of innovation and how it is changing, as well as where and how it is occurring, based on updated research and data. ISBN 978-92-64-23980-7 November 2015, 268 pages, €70 $84 £56 ¥9 100

Browse and order at www.oecd.org/bookshop

DIGITALISATION

Why workers matter for a successful new production revolution

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Lizette Risgaard President, Danish Confederation of Trade Unions

The talk of the town this year has truly been the so-called fourth industrial revolution–and rightly so. Digitalisation causes an increasing interconnectivity of people, production and processes. Combined with the rapid development in artificial intelligence, self-learning machines and robot technology it heralds a new time of revolutionary technological progress. Let me be clear, new technology is not the enemy of workers. However, the development, diffusion and use of new technology has to be shaped in a way that leads to quality jobs with decent working conditions, backed by a proper level of social protection. Otherwise, short-term progress could inflict longterm damage on the economy and our societies. We must face the challenges head-on and we must dare to speak openly and honestly about the understandable fear that many have regarding job security and the future of their work and incomes. We need to discuss how we embrace the technological achievements and create new jobs while avoiding a deterioration of working conditions and a further polarisation of our societies.

and public sectors. It will affect not only lower skilled workers but also doctors, lawyers, and other highly educated professionals. However, it is undeniable that the first waves of digitalisation and the consequent automation of work affect both unskilled and skilled workers. In Denmark, studies, including one by McKinsey-Denmark, show that up to 40% of all tasks/working hours could be automated by current technologies and, according to Cevea, a Danish think tank, close to 800,000 jobs in total have a high probability of being automated within the next 20 years. That is almost a third of all jobs in Denmark. You do not have to be a trade unionist to see the challenge ahead. It is real, and there is no hiding from it. Many fear a future scenario where robots and artificial intelligence will lead to rising unemployment, while the gains of automation are concentrated in ever fewer and fewer hands. This is in line with OECD’s own view that growing inequality

Technological advancement must not be used to circumvent labour standards and workers’ rights hurts economic performance, and new growth must be more balanced and inclusive. The emerging “platform” economy may become an easy way for displaced workers to find a job, but should not be a way of getting rid of obligations as employers and taxpayers, and so pose a serious threat to our social and public systems. Technology, skills and peace of mind are the way forward This fourth industrial revolution will probably bring about larger and faster disruptions than we have previously witnessed. The impending question is therefore how to ensure a future

In my view, the preconditions for a successful future labour market is a strong social dialogue, a fine-meshed social safety net and a top-tiered education system that ensures that each individual has the possibility of acquiring the skills they will need throughout their working life. The robots are coming There are various challenges. The technological development is promoting an increasing automation of routine jobs in manufacturing, rendering many tasks redundant. This is not a first for workers. We have seen this before with the introduction of automated tasks in agriculture and parts of industry. However, artificial intelligence and self-learning machines can potentially lead to an unprecedented automation of tasks, which have historically necessitated a human set of hands. True, digitalisation brings possibilities for innovation and growth, but it also carries the inherent risks of a fractured labour market and a breakdown of stable employment relationships. This so-called fourth industrial revolution will not only affect industrial workers, but the entire labour market in the private

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First, if new technology is to create new products and quality jobs, we need to ensure that the labour force has the right skills. This is an absolute must and requires massive investments in innovative education and training systems, and on-the-job training. But it also requires workers to take on responsibility for upgrading their skills, and this needs to be underpinned by a framework that offers both an adequate level of social protection and the willingness of employers to invest in their employees, provide educational leave and contribute to quality apprenticeships for young people. Second, the disruption to jobs has major consequences for workers, with many fearing that they will be the next ones to lose theirs. A social safety net offers both peace of mind and promotes a more dynamic labour market. A reliable and universal safety net is an absolute prerequisite if workers are to take chances and change track by acquiring new skills.

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Lastly, we must ensure that technological advancement is not used to circumvent labour standards and workers’ rights. On-

44 OECD Yearbook 2017 © OECD 2017

call workers and crowd workers should have the same rights as others, including social protection, pensions and other benefits. In line with the recommendations by the Trade Union Advisory Committee to the OECD (TUAC) on digitalisation and the digital economy, a stronger social dialogue and agreement-based schemes must constitute a central axis of the labour market. We need to ensure that everyone is ready for the future. No doubt, this is an immense task that requires efforts by governments, employers and workers alike. I believe that together, and only together, we can provide the framework conditions necessary for us all to benefit from the technological progress. Visit www.lo.dk/English References McKinsey (2016), “A future that works: The impact of automation in Denmark”, see http://www.mckinsey.com/denmark/our-insights/a-future-that-works-the-impact-ofautomation-in-denmark Tænketanken Cevea and HK Danmark (2015), Digitale trends og det danske arbejdsmarked, see https://cevea.dk/analyse/10-arbejdsmarked/1749-digitale-trendsog-det-danske-arbejdsmarked TUAC (2017), “Key Recommendations & Outcomes of the Trade Union Forum on Digitalisation and the Future of Work”, see http://www.tuac.org/en/public/edocs/00/00/13/2A/document_news.phtml

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labour market that can meet the challenges ahead and reinforce our societies so that we are all prosperous, equal and safe.

DIGITALISATION

How taxing robots could help bridge future revenue gaps One solution could be to levy an income tax on the hypothetical salary the robots would receive

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Xavier Oberson University of Geneva

The development of artificial intelligence and of robots in particular is very likely to have a tremendous impact on the job market. Robots are not only replacing industrial workers, but also those in the service sector. Today robots become lawyers, doctors, bankers, social workers, nurses and even entertainers. While the effective impact on labour remains controversial among economists, we believe that solutions have to be studied now. Indeed, should mass workplaces for humans disappear in the future, from a tax perspective a double negative effect could occur. On the one hand, significant tax and social security revenues would be lost, while on the other hand, the need would increase for additional state revenue to support the growing number of unemployed human workers. Various studies have started to focus on the legal status of robots. In a report of February 2017, the European Parliament has, for instance, considered granting a legal personality to robots. Given this interest, what about a tax on robots? Our analysis suggests that a tax on the use of robots would make sense, as a potential solution for addressing the development of robots on the labour market. In essence, we believe that granting a legal personality to robots could lead to the emergence of an electronic ability to pay, which should be recognised for tax purposes. After all, we have seen in the past that states, when required, may introduce new forms of legal personality. Consequently, a specific tax personality would have to be granted to robots. However, introducing a tax on robots raises some complex issues, both from a domestic and international standpoint. First, a clear and agreed definition of robots would be required. The EU report already suggests a definition based on various characteristics, focusing notably on autonomy, self-learning and adaptation. In our view, the definition should be “form neutral” (it would include robots, bots and similar types of smart artificial intelligence machines) and focus on the autonomy of robots. Crucially, it would focus on the impact robots have on work exercised by humans. This definition should be justified from economic, technological and constitutional standpoints. Second, various ways of taxing robots should be examined. One possible solution would be to levy an income tax on the “imputed hypothetical salary the robots should receive from equivalent work done by humans”. Under this quite straightforward concept, the imputed income would correspond to the economic advantage obtained using robots over a human workforce. An alternative, and simpler, system would be to impose a lump-sum amount

representing an approximated ability to pay the tax. Initially, this ability to pay would be attributed to the employer or owner of the robots, but as the technology evolves, the robot’s ability to pay could be recognised. Consequently, the imputed income would also become subject to social security levies. Another interesting possibility is the application of a value-added tax on robots’ activities. At first sight, neutrality should prevail. This would tend to apply the VAT to robot activities in a similar way to comparable human activities. But later on, a specific rule would probably have to be introduced as the nature of robots’ activities could evolve in such a way that it would become more and more difficult to compare them with human activities. A VAT on actual robots themselves is also a possibility, though the introduction of an (objective) tax on robots, similar to cars, boats or planes, would not fit a modern perspective on today’s job-replacing robots. Other recent suggestions also focus on the design of a tax neutral system between robots and human workers. Consequently, some scholars have advocated an “automation tax”, for instance, based on the ratio of a company’s revenues (total sales) to their numbers of employees. The higher the ratio of robots to sales, the higher the tax. Taxing robots raises issues that go beyond national borders and should be analysed globally, taking into account the international taxation work at the OECD and the UN. In particular, if we are to recognise a tax capacity to robots, the proper application of tax treaty allocation rules and transfer pricing rules would likely have to be revisited. [email protected] References European Parliament, Committee on Legal Affairs (2017), Report with Recommendations to the Commission on Civil Law Rules on Robotics (A8-0005/2017) Oberson, Xavier (2017), Taxing Robots? From the Emergence of an Electronic Ability to Pay on Robots or the Use of Robots, World Tax Journal, April 4, (volume 9, n. 2) Abbott, Ryan and Bret Bogenschneider (2017), Should Robots Pay Taxes? Tax Policy in the Age of Automation, University of Surrey, March 17 Meisel, William (2017), The Software Society, Trafford, US, p. 220

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DIGITALISATION

Cloud computing The diffusion of internet-based cloud computing among private companies has picked up over recent years, with higher uptake within large firms compared to small businesses. In 2014, 22% of companies in OECD European countries relied on cloud computing services, with shares ranging from 50% in Finland down to 6% in Poland. Cloud computing brings many benefits, such as quick and easy access and deployment, but raises questions concerning its energy needs and environmental footprint.

% 60

Use of cloud computing by enterprises, %, 2014

50 40 30 20 10

See OECD Observer No 307 Q3 2016, http://oe.cd/1X1

F in lan Ic e d la nd It a Sw ly ed De en nm a No r k Ne r w th ay er la nd Ir e s la nd U K Sl ov Be l g a k iu Re m pu b S C z lo lic e c ve h R nia ep ub Es lic to ni a Sp ain Po Lu r t u xe ga m l bo ur Fr g an c Au e st G e r ia rm a Hu ny ng ar Gr y ee c Po e la nd

0

http://dx.doi.org/10.1787/888933224224

Source: Eurostat, Information Society Statistics, January 2015.

Households with internet access at home %, 2015 or latest available year 100

Internet access has become a part of everyday life for the vast majority of people living in OECD countries. Take Denmark or Luxembourg, where over 90% of the households have internet access, or Korea, where almost every household is connected to the internet. On the other hand, in Chile and Turkey, around 70% or less of the households can access the internet. Among the countries in the chart, Mexico had the lowest internet penetration rate in 2015 with about 35%, though this represents a sharp threefold increase compared with 2007.

90 80 70 60 50 40 30 20

See OECD.Stat at http://dotstat.oecd.org/

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Risk of job automation 50%

Are robots going to take over our jobs? No, not yet at least. Many jobs indeed have a high risk of significant change in the countries surveyed in the chart, from an estimated 25% of jobs in Korea up to 45% in the Slovak Republic. However, no more than 10% of jobs are at high risk of automation, and far less in most cases, meaning that robots are not about to take over. Yet. For more on the kinds of jobs at risk of automation, see www.oecd.org/skills/piaac/

Jobs at high risk of automation

Jobs at risk of significant change

45% 40% 35% 30% 25% 20% 15% 10% 5% ic bl

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Source: OECD calculations based on the Survey of Adult Skills (PIAAC); and Arntz, Gregory and Zierahn (2016), “The risk of automation for jobs in OECD countries: A comparative analysis”, OECD Social, Employment and Migration Working Papers, No 189, OECD Publishing, Paris

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Business brief

Bomare: An innovative player Ali Boumediene Founder and Managing Director of Bomare Company

assembly automation, and the University of Bilda, Algeria. This agreement mainly provides for the development and execution of research, training and vocational orientation programmes that are coordinated or shared between the three partners. The first concrete action was to provide the university students and

Our range of electronic products is competitive in the world market researchers with an electronic board production line for all types of industry, with a value of US$1.5 million.

©Rights reserved

Another key to our success lies in the desire to achieve the highest possible standards of production and management systems. In 2011, we obtained the ISO 9001 (version 2008) and RoHS 18001 (version 2007) certifications for our quality management system. Our goal is henceforth to obtain the ISO 14001, version 2004 certification, which is being finalised. We have all the necessary certifications to be able to export to the European Union countries.

An interview with Ali Boumediene Please introduce our readers to your company Bomare Company was founded in 2001. Its current capital is DA 620 million (US$5.6 million) and its production covers two major fields: the manufacture of electronic and telephone apparatus (televisions, smartphones, tablets, satellite receivers and professional display screens) under our own brand Stream System and international brands, and subcontracting for the automobile, aeronautics and renewable energy industries. Our 15,000m2 factory is located at Birtouta, in the province of Algiers. The company employs six hundred people, of which 40% are managerial staff, engineers and masters. You have successfully managed to develop a company in the electronics sector. What are the keys to this success? At the beginning, I started by importing and distributing finished products from abroad. At the end of the 1990s, I decided to stop importing and launch a manufacturing business in Algeria, based on agreements and technological partnerships with international industrial groups, mainly in Asia. The company and the commercial brand Stream System were created side by side. My idea was to target both the Algerian domestic market and exports straightaway. In these conditions, it was essential for us to be competitive, both in terms of costs and product quality. We started by manufacturing satellite receivers, a very significant market in Algeria. For the second product, televisions, after setting up an automatic assembly line between 2001 and 2005, we started to manufacture main boards for digital televisions and other products in 2006. The integration rate is currently more than 40%.

What is your international strategy? We started exporting in 2007 and we achieved a US$6 million export turnover in 2016. I gave priority to the European market from the start given the geographical and the cultural proximity. We sell into two countries–Spain and Portugal–where we have established respectively after-sales service structures. We envisage launching our business in France and Italy in 2017 before expanding to other European countries. We are also interested in Africa and we are in negotiation with distributors in several countries. How do you see the future and what projects do you have? The medium- and long-term strategy is focused on moving our products and processes upmarket. We intend to continue to offer increasingly sophisticated services in both national and international subcontracting. Our 2017 goal is to achieve a 75% integration rate by 2020 and to create a research and development centre. We favour the constitution of a real ecosystem for the electronics industry in Algeria. Lastly, we intend to increase our manufacturing capacity for new products. This is an ambitious challenge, but one which I believe is within our reach. Visit www.bomarecompany.com

Sponsored by

Bomare Company focuses much of its effort on training. In October 2016, the company signed a partnership agreement with Universal Instrument Corporation, the US leader in electronic

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DIGITALISATION

Corporate accountability is essential to human rights in the network society ments and corporations without encountering some form of censorship, or to organise for policy and regulatory change without reprisal.

Rebecca MacKinnon Director, Ranking Digital Rights at New America

The truth is that human rights are not sustainable, or in some places even possible, in today’s networked society unless public and private actors take responsibility. Governments and corporations alike must commit to design, manage, and govern technologies in a manner that is consistent with international human rights standards.

Twelve years ago, governments and other stakeholders converged at the World Summit for the Information Society in Tunis to discuss how the internet should be governed. During a panel of activists and bloggers, a Tunisian journalist argued that freedom of speech is a luxury that only prosperous societies can afford. Zimbabwean journalist Taurai Maduna disagreed bluntly: “If we have no freedom of speech, we can’t talk about who is stealing our food.” As citizens continue the uphill struggle to hold governments and companies accountable for how they manage natural and economic resources, their work increasingly depends on net-

Privacy is not merely a consumer issue but also a human rights issue worked devices and online platforms. Unfortunately, it has become increasingly difficult for people in many parts of the world to access and impart information critical of powerful govern-

Many multinational corporations headquartered in OECD countries have embraced broader responsibility for the environment and public health. As supported by the OECD’s updated Guidelines for Multinational Enterprises, a growing number of companies are signing on to, and starting to implement, the UN Guiding Principles on Business and Human Rights. While the OECD Guidelines emphasise the importance of consumer privacy protections, the reality is that privacy is not merely a consumer issue but also a human rights issue. It is enshrined in the Universal Declaration of Human Rights and related human rights instruments alongside freedom of expression. CEOs, corporate boards and shareholders need to consider corporate accountability for these digital rights in the same way as they think about environmental and social sustainability, or human rights in the context of supply chains and communities. The Ranking Digital Rights project seeks to address this gap by offering practical tools for companies and other stakeholders to evaluate and improve corporate commitments and policies affecting freedom of expression and privacy. We fully agree with the OECD that transparency is a core pillar to corporate

Internet and mobile company collection of user information Companies should clearly disclose what user information they collect and how (first chart), and also what information they share and with whom (second chart), says Ranking Digital Rights. In the first chart, Kakao scored high for transparency about what user information it collects, with 89%, while Apple’s transparency score was much lower at 29%.

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0%

79% 63% 63% 53% 50% 50% 50% 46% 44% 42% 29% 25%

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Source: https://rankingdigitalrights.org/index2017/indicators/#P3

48 OECD Yearbook 2017 © OECD 2017

un

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0%

89% 67% 67% 67% 67% 67% 61% 60% 56% 50% 40% 29%

Ka ka o Fa ce bo ok Te nc en t Tw itte r

100%

DIGITALISATION transparency and accountability, and thus focus on corporate commitment and disclosure as a fundamental element of corporate respect for human rights.

Telecommunications Industry Dialogue, an industry organisation dedicated to similar principles most of whose members joined the GNI in March 2017.

Working with a global network of researchers, technologists and human rights advocates, we have developed a clear set of metrics by which the disclosed commitments and policies of ICT companies affecting users’ digital rights can be evaluated and benchmarked. In March 2017 we published our second Corporate Accountability Index ranking 22 internet, mobile and telecommunications companies on their disclosed commitments and policies affecting users’ freedom of expression and privacy.

On other indicators, a non-GNI company from another OECD country led the pack. Kakao, a South Korean internet services and mobile messaging company, earned high scores on 10

The Index examines company disclosures across 35 indicators divided into three categories. The first category examines corporate governance related to freedom of expression and privacy risks, drawing heavily from the UN Guiding Principles and more industry-specific principles developed by the Global Network Initiative. The Governance section thus includes questions such as: is there board or executive oversight? Does the company carry out human rights impact assessments including freedom of expression and privacy? Does it provide adequate access to grievance and remedy mechanisms? The Freedom of Expression category includes questions like: does the company clearly disclose the conditions under which it may curtail or block users’ access to information, or their ability to publish or transmit information? Does the company have clearly disclosed policies for how it considers government and other third-party requests to delete or restrict content, or deny service? The Privacy category of indicators examines company disclosures around three subsets of issues: how information that may be used to identify or track users is collected, used and shared; transparency about how the company handles government requests for user information; and whether the company discloses credible evidence that it is taking sufficient measures to secure users’ data from breach or theft. The results are disappointing: across the board, companies do not disclose enough information about policies and practices affecting users’ freedom of expression and privacy. As a result, most of the world’s internet users lack the information they need to make informed decisions about what services to use and how to use them. This is especially the case for what we call “mobile ecosystems”: smartphones are chokepoints for freedom of expression and gatekeepers for digital security. Users are not given enough information to understand who is controlling the information they can access or share, or who can track their activities or build profiles of them through their mobile devices and the applications that run on them.

Smartphones are chokepoints for freedom of expression and gatekeepers for digital security of the 35 indicators, including on questions of whether the company clearly discloses what information it collects about its users and how, and what information about the user it shares with whom. On both of those indicators, US-based companies Google and Apple were found to disclose much less information and with less clarity. The Index indicators and results are already being used by some companies to improve their policies and practices. They are also useful for governments: each company report card contains an analysis of how a company’s home regulatory environment affects its score. This information can help policymakers examine what types of regulatory and legal frameworks enable and incentivise ICT companies’ respect for users’ rights. Unfortunately, we found that many country laws and regulations discourage or even prevent corporate transparency and accountability about policies and practices affecting users’ digital rights. The reality is that a growing number of systems for the management of physical resources now depend on the digitally networked equipment, platforms and services of private companies. Weak accountability and lack of respect for human rights in these digital systems upon which we depend will inevitably affect accountability and respect for human rights in all other realms. References Corporate Accountability Index: https://rankingdigitalrights.org/index2017/ Freedom House: https://freedomhouse.org/report/freedom-net/freedom-net-2016 Global Network Initiative: www.globalnetworkinitiative.org OECD (2014), Annual Report on the OECD Guidelines for Multinational Enterprises 2014: Responsible Business Conduct by Sector, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/mne-2014-en Ranking Digital Rights: https://rankingdigitalrights.org/about Rebecca MacKinnon (2012), Consent of the Networked: The Worldwide Struggle for Internet Freedom, Basic Books. Telecommunications Industry Dialogue: www.telecomindustrydialogue.org UN Guiding Principles on Business and Human Rights: https://business-humanrights. org/en/un-guiding-principles

At the same time, one can find encouraging examples and trends when examining specific indicators or groups of indicators representing distinct sets of issues. For example: the highest-scoring companies in the Governance category were all members of the Global Network Initiative (GNI), a multi-stakeholder organisation through which companies commit to core principles of freedom of expression and privacy, and work with NGOs, academics and investors to implement them, or the

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Smartphones are child’s play, but what about the child labour?

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Roel Nieuwenkamp Chair of the OECD Working Party on Responsible Business Conduct

Digital technology depends on energy, and that energy depends on minerals. Take cobalt, for instance. Use of this ferromagnetic metal can be traced back to Ancient Egypt when it was used to taint ceramics. Today cobalt is an integral part of rechargeable lithium-ion batteries that go into smartphones, laptops and electric vehicles. The market for rechargeable lithium-ion batteries is expected to more than double to USD$77 billion by 2024. Hence, for the “fourth industrial revolution” to succeed and to meet our important climate goals, we need cobalt–but at what cost?

If your company operates in this sector, whether making or using cobalt-dependent batteries, or the digital products they go into, and no matter where that cobalt enters in your supply chains, you cannot afford to take these press reports lightly. So, what can you do? The DRC produces more than 60% of the world’s cobalt. Of this, most comes from large scale industrial mines, but around 30% comes from illegal mines where there is a marked risk of child labour being used. Given the DRC’s huge market share, it is likely that some of its cobalt is present in your supply chain. But how can you be sure? It is not easy. True, the OECD Guidelines for Multinational Enterprises call on companies to scrutinise their supply chains for human rights, labour, environmental and corruption impacts, but these supply chains are incredibly complex and long. How to know where the cobalt comes from? After all, the buyer of the Congolese cobalt affected by child labour, may in this case be a Chinese cobalt smelter, which would be several links up the supply chain and completely unknown to your firm: a sub-sub-sub-sub-supplier, if you like. To be fair, the OECD’s due diligence standard acknowledges that companies on the end of long supply chains cannot realistically know the mine of origin for all the metals in their product, but they should at least try to identify the smelters. But even if you

©Issouf Sanogo/AFP

Recent press reports decry children, sometimes as young as five years old, working in cobalt mining under terrible conditions in the Democratic Republic of the Congo (DRC). These mines

operate outside legal frameworks, without formal social, health or worker protection.

50 OECD Yearbook 2017 © OECD 2017

DIGITALISATION manage to identify this smelter, what can you do to reduce your risk? There are several avenues to consider. You could join an industry association that, collectively, as the largest buyers of lithium batteries, has leverage over the cobalt smelters, pushing them to use international standards to source cobalt responsibly

The OECD can help to tackle the risks of child labour in the minerals supply chain and prevent child labour; an example is the Responsible Cobalt Initiative. The industry association may reach out to government officials in China, for instance, to get their support in aligning the cobalt smelters with responsible international standards. However, the main responsibility for due diligence regarding supply chains rests with your firm. The OECD can help, with a set of practical actions due to be published in 2017, which will explain in simple terms how to tackle the risks of the worst forms of child labour in the minerals supply chain. Not all informality is bad per se. Roughly a fifth of the DRC’s population relies on this type of mining, despite the terrible conditions. So walking away from the DRC is not the answer either, even if it were feasible given the DRC’s share of production and the limited control you can hope to have over upstream suppliers. Clearly, the aim of any upstanding digital firm, both for moral and business reasons, is to work towards the prevention of child labour. Achieving this requires a collective effort to formalise and legalise the informal mining sector, remove children from the mines, and develop schools instead. This requires a herculean effort, and while companies can show intolerance to child labour and encouragement to tackle it, they cannot achieve change without working closely with the DRC government, local civil society and communities, as well as donors, to address the root causes of child labour. Only

then can the cobalt supply chains be cleaned up for good. Meanwhile, international organisations like ours can help put in place the conditions for progress. For instance, the China-OECD joint programme of work includes co-operation on responsible mineral supply chains. Indeed, the OECD has helped the China Chamber of Commerce of Metals Minerals and Chemicals Importers and Exporters (CCCMC), a Chinese industry association, set up the Responsible Cobalt Initiative. This includes international technology companies, battery manufacturers and Chinese smelters, working alongside the new Inter-ministerial Commission on Child Labour of the Congolese government, using the OECD Due Diligence Standards for Responsible Mineral Supply Chains. It shows how crucial engagement with governments and players across the spectrum can be to prevent risks, improve welfare and protect integrity and human rights. The digital revolution is so promising in many ways, and is a harbinger of a cleaner world. The onus is on us all to work ever harder together to ensure what goes into our technology respects the highest standards. Our technology will be even smarter, and fairer, as a result. See Don’t Miss, page 84 Links and further reading By the same author: “Corporate leaders: Your supply chain is your responsibility”, in OECD Observer No 299, Q2 2014 Frankel, Todd (2016), “The Cobalt Pipeline: Tracing the path from deadly hand-dug mines in Congo to consumers’ phones and laptops”, in The Washington Post, 30 September See also: Responsible Algorithms in Business: Robots, fake news, spyware, self-driving cars and corporate responsibility, http://oecdinsights.org/2017/01/13/responsiblealgorithms-in-business/ Practical actions for companies to identify and address the worst forms of child labour in the minerals supply chain, https://mneguidelines.oecd.org/child-labour-risks-in-theminerals-supply-chain.htm

New! The African Economic Outlook 2017 examines the continent’s current performance and presents forecasts for the next two years. It highlights the main policy issues facing each of the 54 African countries. With online statistical annex. Order now.

www.oecd.org/bookshop

www.africaneconomicoutlook.org

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Policy briefs combat corruption, and encourage opportunity, innovation and competition. Crucially, for trade to work, it must be supported by domestic policies, which make businesses adhere to high standards, empower workers and communities, and help people adjust rapidly in the case of disruptive but inevitable change. A comprehensive and coherent package of trade, domestic and international policies can generate free and fair global trade that everyone benefits from. http://www.oecd.org/trade/making-trade-work-for-all.pdf

Basic income as a policy option: Can it add up?

International co-operation is more important than ever Angel Gurría, Secretary-General of the OECD We confront a new, difficult political reality, characterised by strong opposition to the very international co-operation and interaction that has driven peace and prosperity for over half a century. We must break this cycle!

Social protection systems today were largely modelled on employeremployee contracts and stable career patterns, but are they up to date? There is a growing interest in such simple and accessible income approaches, thanks to economic trends and social concerns associated with inequality, digitalisation and the rise of new, atypical forms of employment, automation and work-family imbalances. Also, even though most workers are still in traditional forms of employment, in around half of OECD countries, fewer than 50% of active jobseekers receive unemployment support. Could the introduction of a basic income be an answer? What would a basic income mean, and how might it work? http://www.oecd.org/social/soc/Basic-Income-Policy-Option-2017.pdf See also the Income inequality web page at http://www.oecd.org/els/soc/inequality-and-poverty.htm

www.OECDObserver.org, April 2017, see http://oe.cd/1XD

Does growth lead to inequality? It depends For globalisation to work for all, you have to level the playing field first Adrian Blundell-Wignall, Special Advisor to the OECD Secretary-General on Financial and Enterprise Affairs Today the debate rages about whether the decline in living standards is due to the effects of globalisation or to poor domestic policies. Both have surely played a role. But the problems often associated with globalisation (inequality, the hollowing out of the middle class, employment of less-skilled workers in advanced countries, etc.) do not originate from “openness” as such. The problem is that not all countries are open to the same degree and the playing field in the cross-border activities of businesses is not level.

52

Orsetta Causa, Mikkel Hermansen and Nicolas Ruiz Widespread increases in inequality over the past three decades have raised the question of whether growth in itself is a driver of income inequality. Considering that correlation often tells little about causation, this question is less trivial than may appear at first glance. Indeed, the concomitant rise in GDP per capita and income inequality does not, per se, imply any causal relationship from the former to the latter. Research efforts have offered mixed conclusions so far and the growth and inequality question has been at the centre of a long-standing controversy among economists. From OECD Ecoscope. More here: http://oe.cd/1KV

From www.oecdinsights.org, May 2017, http://oe.cd/1Xz

Raising revenues through carbon pricing can help the poor to pay for their energy bills

Making trade work for all

Florens Flues and Kurt Van Dender, OECD Centre for Tax Policy and Administration

Trade is often caught up in the backlash against globalisation, with finger-pointing at major multilateral trade deals, seemingly unbalanced trading relationships, the effects on jobs, investment and the environment, and more. But as this paper points out, trade did not cause the problems that concern so many people today, and trade alone will not solve them either. People trade because it is in their interests. Trade has helped deliver better lives for billions of people, and will continue to do so, as long as it is based on fair and transparent international rules that establish a level playing field,

A widely heard criticism of carbon pricing is that it will simply hurt the poor. But just like other similar schemes with environmental aims, such as water charging, the opposite is true. It all depends on having the right policies in place.

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One very effective policy for reducing air pollution and mitigating risks from climate change, such as storms, floods and sea level rise, is to raise taxes on domestic energy use. www.oecdinsights.org, 11 May 2017, http://oe.cd/1XE

INTRODUCTION

Trust

Trust in government has sunk to historically low levels, and people’s trust in each other has also waned, as witness a growing polarisation and intolerance of other cultures. Too many people feel removed from progress and do not believe the system is working for them. There is a widespread sense that government policies actually serve to reinforce rich and powerful people and places, rather than promoting the wellbeing and prosperity of everyone. This divisive atmosphere has not been helped by the spread of alternative facts and fake news, which poison policy debates and lead to further confusion. What must be done to win back trust in public institutions? How can facts, knowledge and positive narratives be harnessed to beat back doubt, fake news and post-truths, win over hearts and minds, and restore faith and confidence in the value of international co-operation? Rolf Alter worries when fake news comes from the sources of power, but he sees consumers of information as being ultimately responsible, and calls for a reinforcing of civics literacy. For Mary Robinson, more true leadership is needed to combat the likes of climate change and to act in defence of future generations. Gayle Smith believes much more needs to be done to build bridges with poorer countries, particularly younger people, and to keep developing countries engaged with international cooperation. Cesar Cunha Campos explains some confidence-enhancing transformations in Brazil’s business culture. Maria Manuel Leitão Marques shows how participatory democracy has become Portugal’s new frontier. Colm Harmon believes that in today’s border-restrictive world we must invest in the transformational power of higher education to bolster confidence among young people. Protecting human rights and the spirit of justice is primordial for Salil Shetty, and Damien Verdier looks at how to combat food waste and enhance the value of food. Karin Buhmann looks at the key role the OECD plays in promoting responsible business conduct and corporate social responsibility. Thomas Buberl argues that the insurance industry, which sits at the heart of the social, economic and technological revolutions at play, can help bolster confidence. In our post-truth debate, Martine Durand decries the risk that the spread and misuse of false data poses for democracy, and urges statisticians and experts alike to speak out with strong narratives for the sake of robust policymaking. Heidi Tworek also believes we can make facts matter again, and Vincent F Hendricks explains how the info-storms of the digital age helped lead to group thinking, a belief in alternative facts and polarisation of views among young people. We look at the Computational Propaganda Project, with Samantha Bradshaw, and Jane Griffiths outlines Johnson & Johnson’s ambitions for bolstering trust in healthcare. Emma Rothschild explains why globalisation and the protests against it are not new, and casts an eye back to the 18th century and the revolts of the time. Nuatali Nelmes explains how Newcastle in Australia overcame geographical and economic divides to become a smart, liveable and sustainable city.

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Can we save our democracies from hackers?

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Rolf Alter Director, OECD Public Governance Directorate

The first generation of those born into the internet age is already joining the workforce and yet the internet still manages to disrupt. The phenomenon of fake news is one of the by-products of digital transformation and it is worth taking a look at what is new, and not so new, and how it fits in to the rest of what some are calling the “post-truth world”. With the malicious WannaCry virus wreaking havoc throughout the world recently (introducing a new, menacing term– “ransomware”–in the process), and fake news dominating real news headlines, the internet seems more dangerous than ever these days. In fact, the last election cycle, particularly in the US, has revealed new aspects of the relationship between politics and the online world, from the hacked emails of the Democratic National Committee to social media channels filled with fake news stories possibly representing the meddling of foreign states. Add to that presidential tweeting and sagas of private email servers and one begins to see just how much digital issues managed to dominate the campaign cycle. Is this “business as usual” in the new digital paradigm? If you’re feeling overly disrupted, it may help to keep in mind that every transformative technology has had its impact on democracy–not always in expected ways. With the spread of the telephone, the science of polling took a quantum leap, but the telephone failed to usher in the direct, call-in democracy predicted by period visionaries. Some hoped radio would hail a new era of honesty from politicians too embarrassed to lie directly to their constituents. Radio did herald a new, direct relationship between the public and its representatives, but its immediacy and reach were also used by dictators and demagogues. Television has brought live debates into our living rooms as well as live broadcasts of parliamentary proceedings in many countries. Yet, a 20-second sound bite by a keen politician can frame (or distort) an issue more compellingly than hours of parliamentary transparency. Déjà vu? Fake news isn’t new. It has been going on for millennia, first in the form of rumour and coming into its own with the invention of the printing press. It has always had pretty much the same goals, to stir people to action or to make money (or sometimes both, as happened with the press war that helped precipitate the Spanish-American War in the 1890s). The first documented

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example of fake news was an attack ad found on a wall of Pompeii targeting city council candidate Marcus Cerrinius Vatia. “Petty thieves for Vatia!” the message read. Voltaire’s “Traité sur la Tolérance” is one of the first statements against fake news and its consequences. In it, Voltaire lashed out against a tragic case in which rumours, lies and false witnesses caused an innocent man to be tortured and killed in the name of religious justice. Fake news isn’t just a high-tech phenomenon. You can find junk news any day at your local news agent in tabloid format. According to the European Journalism Observatory, tabloid papers enjoy the highest circulation in most European countries, usually beating out the quality press by a wide margin. So, it isn’t surprising then to learn that, in the final three months of the

Our work in open government, campaign finance reform and integrity is designed to enhance transparency and accountability US presidential campaign, top-performing fake election news stories on Facebook generated more engagement than the top stories from major news outlets such as The New York Times and others. Moreover, there is money to be made from fake news, and lots of it. This lesson wasn’t lost on enterprising teens in Veles, Macedonia early in 2016. Over one hundred pro-Trump fake news sites were traced back to the town of Veles, which became a leading centre for the fabrication of fake news stories that flooded social media channels during the US campaign. President Obama himself marvelled at the phenomenon, pointing out how one eighteen-year old earned US$16,000 between August and November–in a place where the average monthly salary is $371. The case of Veles seems to have nothing to do with ideology and election outcomes and everything to do with the profit motive. As Wired reports, behind the gold rush are the automated advertising engines at the very core of social media’s business models. Social media platforms are deceptive because they mix news sources from user-selected sites with external posts from friends and paid content. If you know reputable news sources, it doesn’t take much sleuthing to determine the legitimacy of a story. For those with low media literacy, making the right call can be challenging. A recent Stanford University study concluded that, although young people are fluent in social media, their “ability to reason about the information on the internet can be summed up in one word: bleak.” What happens when fake news comes from the sources of power themselves? Falsehoods bestowed with the legitimacy of power, that use scapegoats, incomplete logic and the denial of established facts to create belief or confusion, are the ageold strategies of demagogues and dictators. When power seeks to delegitimise the sources of accurate information, criticism

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or dissent, democracy is threatened. This is where fake news meets post truth. What are possible responses? The ultimate responsibility lies with consumers of information. It seems obvious that young people must be taught critical thinking when it comes to evaluating the legitimacy of online information. But also, social media platforms must put in place mechanisms to identify fake news. Citizens must be better able to evaluate the statements and promises made to them by those in power or seeking it– hard to do with today’s complex policy issues. Countries might do well to seek inspiration from the Dutch Central Planning Bureau or CPB, a strictly non-partisan body that evaluates candidates’ promises and helps to keep campaigns rooted in reality. Our ongoing work in open government, open data, campaign finance reform, integrity and other areas is designed to enhance transparency and accountability. Recently, there has been much talk about increasing economic literacy. But it might be crucial at this point to focus on reinforcing civics literacy. To paraphrase Jefferson, an educated public is indispensable for a properly functioning government. A strong understanding of our own governments, their institutions and checks and balances will help citizens to better defend their rights and demand accountability. The rock music group U2 projected a message in their recent concert: “The power of the people is stronger than the people in power.” The

internet continues to play an essential role in empowering citizens. We need to become more selective in identifying the quality of information so that the internet can continue to be a potent and democratising force in the world. References and further reading Silverman, Craig (2016), “Viral Fake Election News Outperformed Real News on Facebook”, Buzzfeed, 16 November, accessed 24 May 2017, https://www. buzzfeed.com/craigsilverman/viral-fake-election-news-outperformed-real-news-onfacebook?utm_term=.gvyXBX7jZ#.pnqWQW810 Subramanian, Samanth (2017), “Inside the Macedonian Fake-News Complex”, Wired, 15 February, accessed 24 May 2017, https://www.wired.com/2017/02/velesmacedonia-fake-news/ Stanford History Education Group (2016), “Evaluating Information: The Cornerstone of Civic Online Reasoning”, Stanford University, accessed 24 May 2017, https://sheg. stanford.edu/upload/V3LessonPlans/Executive%20Summary%2011.21.16.pdf Trust in Government www.oecd.org/gov/trust-in-government.htm Trust and Public Policy: How Better Governance Can Help Rebuild Public Trust, www.oecd.org/gov/trust-and-public-policy-9789264268920-en.htm Sustainable Development Goals and Public Governance, www.oecd.org/gov/ sustainable-development-goals-and-public-governance.htm Inclusive Growth and Public Governance, www.oecd.org/gov/inclusive-growth-andpublic-governance.htm Open Government, www.oecd.org/gov/open-government.htm Fighting corruption in the public sector, www.oecd.org/gov/ethics/

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We need leaders to act in service of future generations Mary Robinson President, Mary Robinson Foundation-Climate Justice, former President of Ireland, and former UN High Commissioner for Human Rights

elopment and that the well-being of future generations is not compromised by unchecked climate change. The existential threat of climate change confronts us with the reality of our interdependence. No country alone can protect its citizens from the impacts of climate change just as no country can realise sustainable development in isolation. Further carbon intensive development would ultimately constrain development opportunities in the least developed and most vulnerable countries of the world as climate impacts lead to more poverty and greater inequality. The first step to protecting future generations is to act on climate change with urgency, so that all people can realise their right to development in a sustainable manner. The overriding priority for developing countries is development. Without adequate support and access to low carbon energy, developing countries will, out of necessity, walk the well-worn

©Isaac Kasamani/AFP

The existential threat of climate change confronts us with the reality of our interdependence

More than any other leader in modern history, Nelson Mandela understood that a society must bridge divides and work together to thrive. He also firmly believed that we must strive to leave our children with a safer, more peaceful and more prosperous world than the one we inherited. He said that “there can be no keener revelation of a society’s soul than the way in which it treats its children”. For all of the divides that we must bridge in this time of global uncertainty, the most urgent is the chasm that exists between present and future generations. Today, we are taking decisions that will shape the world in which our children, and their children, will live. A child born in 2017, provided she survives infancy and early childhood, will be 13 years of age when the 2030 Agenda for Sustainable Development reaches its conclusion. By 2050, should that child live to 37, she will share the world with some 9 billion people and the success or shortcomings of action taken under the Paris Climate Agreement and the Sustainable Development Goals will have a direct impact on their day-to-day lives. Future generations cannot voice their concerns. They can neither shape the decisions nor vote for the leaders that will decide their fate. Therefore, it is necessary for decision-makers to ensure that they keep children, and those not yet born, front of mind as they pioneer sustainable development pathways. A climate justice approach to policymaking requires us to look beyond short-term political cycles, or myopic decision-making, to develop plans that ensure all people enjoy the right to dev-

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fossil fuel-based development pathway to ensure their citizens have access to essential services like electricity, healthcare and education. Therefore, developed countries must become servant leaders to ensure that all countries are able to take the action required nationally to tackle climate change robustly while enabling inclusive global co-operation that supports the achievement of the Sustainable Development Goals. By viewing their duty to future generations through a climate justice lens, OECD member countries can play a central role in mobilising a just transition to a safer and more prosperous future for all. To achieve this, we must give voice to those too young to advocate for themselves, and those not yet born, so that our decisions now are taken in full awareness of their impact on future lives. Such representation for future generations would operationalise existing commitments made by OECD members in UN treaties and resolutions, such as the 2030 Agenda for Sustainable Development or the Paris Climate Agreement, recalibrating intergenerational balance and filling the gap between intent and practice. In overcoming the deep divides of apartheid in South Africa, Nelson Mandela personified servant leadership. He moved beyond his own personal pain to serve all the people of his country. To bridge the chasm that exists between our present day actions and the well-being of future generations, we need servant leaders, dedicated to ensuring that all people can live lives underpinned by dignity and rights, today and into the future. Visit Mary Robinson Foundation-Climate Justice at www.mrfcj.org

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We must protect the poorest as the fight of our lives

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Gayle Smith President and CEO, The ONE Campaign

I have always believed in Martin Luther King’s statement that the arc of the moral universe is long but bends towards justice. But as we face a new wave of populism borne by the inequities of globalisation, it appears that the arc may have grown longer. Following two decades during which we saw extreme poverty rates cut in half, our challenge is to once again mobilise behind our belief that where you live shouldn’t determine whether you live. Though some of its manifestations are disturbing, the growing opposition in developing countries to international engagement and integration is not surprising. With all of its potential benefits, globalisation has thus far left millions behind. Confidence in government is on the decline, and demands of government are on the rise. For many, that they should share the national wealth with others at a time of acute need and insecurity is an unrealistic expectation. Tragically, rather than seize the opportunity to shape globalisation to foster the equity that is both right and necessary, too many governments have responded by turning inward, slashing foreign aid budgets, or gradually closing their doors to refugees in search of safety and survival. Despite the stunning gains made in the fight against global poverty, globalisation also threatens to leave behind millions of poor people in the developing world. But rather than rejecting globalisation, a growing number of leaders and citizens in the world’s least developed countries, particularly in Africa, are seizing the opportunities it affords–to expand learning through connectivity, improve health outcomes with new technologies, attract new private investment dollars and unleash the potential of young entrepreneurs. As we face a global challenge, we are also poised to benefit from a massive development opportunity: Africa’s young people will, by 2030, comprise almost a third of the world’s young population. By investing in these young people now, we could reap a demographic dividend that could transform Africa into a leading driver of global growth. This investment strategy should focus on education, employment, and empowerment (the three “E’s”), and should be financed by a tripartite blend of foreign assistance, domestic resources and private capital. An educated workforce is the cornerstone of a thriving economy, but today, 130 million of the world’s girls are not in school. To make education work for every girl, and every boy for that matter, we must break the barriers to their completing secondary school, invest in teachers and connect every class-

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room to the internet. Governments must endorse globally recognised learning metrics and do the actual measuring that can enable mid-course corrections and deeper investments in what is proven to work. Curricula should focus on skills that can increase labour market participation. And to fuel these changes, governments should devote sufficient resources to ensure universal education, and the international community must double its contribution. When it comes to employment, Africa’s young people, just like everywhere else, need jobs that provide income, dignity and purpose. We need new tools to stimulate job creation. The most vulnerable poor live in rural settings, where agriculture

By investing in African young people now, we could transform Africa into a leading driver of global growth makes up the backbone of the economy. National Rural Youth Employment strategies are needed to respond to the realities of young people in rural areas, providing them with the skills, access to financing, and tools they need to become successful agribusiness employees and agripreneurs. Empowerment is about building the tools, political space and freedom to sustain development. The starting point must be the freedom to speak out and hold governments to account. But we must also invest in the underlying tools that empower individuals: addressing the malnutrition that stunts nearly 40% of sub-Saharan Africa’s children, providing immunisation against preventable diseases and the underlying investments that give voice and opportunities to young people such as energy and internet access. This three E’s strategy needs a doubling of external development finance. We must stimulate private sector financing by reducing risk for investors and bolstering the capacity of businesses to attract investment. Donor and African governments must stem the tide of illicit financial flows by publishing government contracts as open data and making information public about who owns companies and trusts. Getting to the last mile, reaching the most vulnerable, especially in the most fragile settings, will require digging deeper on the quality of our interventions. If we invest now, the benefits for Africa and for the world could be dramatic. If we don’t, millions of African young people will be without jobs and opportunities, leading to a destabilising frustration that could affect not only the region, but the world. And the fact is that donor countries can do their part even as they strive to meet growing demands at home, because it is both the smart and the right thing to do. Investing in development today means more and more capable partners tomorrow. Making globalisation work for the many rather than the few offers hope in a future that will allow true global progress to flourish–for all it has thus far left behind. Visit www.one.org

Business brief

Towards renewal in our business culture

Brazil is steadily investing in the creation of rules and regulations to converge to governance standards already consolidated in developed countries. Complying with these international standards is indispensable if Brazilian companies intend to operate on a global scale. Companies that fail to invest in an organisational change that meets compliance practices will remain outside the business scenario and lose their market competitiveness in an increasingly globalised world. The interest dedicated to compliance in Brazil has been growing since the passing of the Anti-Corruption Law in 2013, and the Stateowned Companies Law in 2016. The former proposes prosecution for individuals guilty of acts against the government and provides

Compliance efforts are creating a healthier business atmosphere attenuating circumstances for those who have implemented consistent programmes of compliance. The latter stipulates that companies owned by the federal government, states, municipalities and the federal district must not only implement structures and practices related to risk-management and internal controls, but also draft and publicise codes of conduct and integrity. These concerted efforts are creating a healthier business atmosphere, with companies that are more transparent and apply tighter control mechanisms in conformity with laws and regulations. It used to be more common to talk about corporate compliance in banks and companies operating in highly regulated sectors. Today, this is a transversal topic in companies from all economic sectors. Compliance is no longer seen as a mere public relations diversion to show conformity and good conduct; it is a very well-knit structure with a set of guidelines and processes that drive the company’s operations. Engaging in compliance practices allows more brand protection and reputation, business sustainability, financial protection, efficiency improvements, increased credibility, access to more financial resources and executives’ protection. Although it takes time for these benefits to take form, the investment in such practices is worthwhile. In many cases, it is even just a matter of adjusting the company’s culture towards a new model of governance. Nevertheless, fine-tuning the cultural identity of the organisation demands time, persistence and corporate will.

©Thiago Leite

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Cesar Cunha Campos Director, FGV Projetos

Estaiada Bridge and Sao Paulo business district in Brazil

For compliance to function properly, a minimum structure is necessary, equipped with a clear budget, a team and technical resources. The goal is not only to map out risks, but also to have the capacity to gather and analyse information, detect problems, look into reports, and hold training and communication workshops. Furthermore, it is essential that compliance occupies a strategic position within the organisational structure, fully supported by top management and in accordance with the company’s shortand long-term goals. Concerns related to the implementation of such practices are generally about costs and the fear of added bureaucracy, but these tend to disappear overtime as the compliance process becomes more efficient. Additionally, regulatory agencies have a greater capacity for supervision than in the past, thanks partly to technology, while the international exchange of information makes it difficult to engage in less transparent activities. Corporate news spreads faster than ever before. Companies and their executives are more exposed to social scrutiny, be it individual or collective. The speed of information exchange via the internet, the flow of people and capital, and the demands of society make survival in the long term a question of behaving ethically. Attentive to the scope, challenges and opportunities of compliance, FGV Projetos has developed its own practice and has applied its expertise in helping several companies implement compliance projects. Firms are increasingly aware that this new context calls for more attention to legal aspects, leaving no room for deviations of conduct without jeopardising the image, reputation and sustainability of the company. Compliance is here to stay! Visit: http://fgvprojetos.fgv.br/en/home

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Participatory democracy: Portugal’s new frontier

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Maria Manuel Leitão Marques Minister of the Presidency and Administrative Modernisation Portugal

Portugal is no stranger to participatory democracy Democracy is a living organism; it is made by and for the people. And encouraging more people to participate surely strengthens democracy. To enable citizen participation, Portugal’s government has carried out a variety of initiatives, which we intend to expand upon in the coming years. Portugal is a country with 118 participatory budgets at the local level, and one of the best values at the European level, with a total investment of €91 million in the past 10 years, and €20 million invested last year alone. Portugal’s Participatory Budget, or OPP, is a process of democratic deliberation and decision-making in which citizens can decide how a part of a public budget should be allocated. Recently, we felt that we needed to take a broader approach and do something that has never been done before: create a national level participatory budget. This year, in the pilot phase, our OPP will allow citizens in the Portuguese mainland to decide how to invest €3 million in projects related to culture, science, adult education and training, and agriculture. In Azores and Madeira–Portugal’s Autonomous Regions–areas of proposed investment are justice and internal affairs. But we did not just challenge citizens to participate; we reached out to them to promote encounters for sharing ideas. On the road since 9 January, we have travelled more than 9,500 km to over 50 cities and got over 2,500 people to participate. We spoke with Portuguese citizens, lent them a stage, gave them pens and paper, and the proposals flowed: decorating streets with poetry, creating an itinerant science laboratory, mapping smuggling routes and places, to name just a few. We have already received more than 900 proposals, with an emphasis on cultural projects. In May we plan to analyse the proposals, transform them into projects and, between July and September, invite our citizens to vote via the web or SMS for one national and one regional project. At the end of September, winning projects will be announced and implemented, after which we can evaluate and correct what needs to be corrected, and draw lessons for the future of the programme. Other initiatives worth mentioning stem from our SIMPLEX programme series, which is our flagship initiative for legislative

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and administrative simplification. In one instance, called Startup Simplex, we sent out invitations to all entrepreneurs wanting to develop projects to serve public administration in its relationship with citizens and companies. The aim was to enhance innovation and participation in the operation of public administration. Another instance, called SIMPLEX JAM, captures the valuable contributions of our public servants. Through this venue, we created and promoted meetings in 5

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different cities with 13 public entities and 133 participants, who shared 222 new ideas, all fundamental for allowing us to adopt innovative methodologies. Finally, in order to increase citizen participation, we promoted a SIMPLEX Tour that travelled around the country listening to over 2,000 citizens and business people, where they live, work and develop their economic activity. We gathered a total of 1,427 proposals and suggestions for the programme. And since participation, and therefore democracy, is also about being able to make our public administration more “user friendly”, up to speed and useful for our citizens, we are also implementing measures to improve the life of our citizens and their relation with public administration via other means. We are experimenting new solutions in our LabX–an experimentation lab to innovate the public sector. This way, the government becomes closer to and simpler for all our citizens. Last, but certainly not least, is the issue of digital inclusion, because if the world is going digital so must our citizens. Our National Digital Competency Initiative (also known as INCoDe. 2030), will respond to the challenges of digital literacy and inclusion, employment upskilling and the creation of a valueadded economy, and address some of the main economic challenges facing the country. Even with these processes of digitalisation, we cannot exclude those who are not digitally proficient, so we are extending our network of “Lojas do Cidadão”, physical places where citizens have access to several public services, and “Espaços do Cidadão”, digitally assisted points. Democracy is indeed a living organism, and we must look after it. This means we must innovate and rise up to face society’s new challenges. Our initiatives will no doubt face tests ahead, but are a valuable step in securing our democracy’s future. Visit www.portugal.gov.pt/en/ministries/mpma.aspx For more information on Portuguese initiatives, visit www.opp.gov.pt, www.simplex.gov.pt, www.incode2030.gov.pt and https://labx.gov.pt/

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We must invest in the transformational power of higher education

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Colm Harmon Head of the School of Economics University of Sydney

Despite people’s perceptions of us, we economists are neither futurologists, nor historians. But we do see trends that we try to interpret, by applying objectivity where subjectivity abounds, and using the (rather few) tools we have developed to address (very many) major social problems. Today’s university graduates are entering a highly complex and uncertain world. How can we ensure our students can cope with ambiguity and thrive in diversity?

I entered university in 1988. Ireland, my country of origin, was in deep recession at the time, with unemployment rates nearing 20% and even above that for young people. But we had the release valve of emigration, an all too common pathway for generations of Irish people. The expectation was that we would graduate and then leave the country. We accepted that, but on the basis that it was a world in which a graduate from a good university would find a home and a career, build a life and a way through that life. And sometimes we would return home. Today’s university students face the challenge of ambiguity. They have more options on many fronts, but face a world that is closing in around them. They have accepted that they will perhaps have more than one career, and that they may be training for a type of work that could be jilted out of existence at any point by the forces of globalisation and technology. They do not know what the return on their education will be. In many countries, they will graduate with debt, and face the challenge of home ownership in the cities where the jobs are. They will work longer hours, for more years. And they also face more competition: previously developing education markets, predominantly in Asia, have now matured and are producing graduates of high calibre. In fact the supply of graduates has never been larger. But more than anything else, the world is no longer their oyster. What are the countries with high demand for skills to which they may have looked to build their first career? The United States? Are they as welcome now with the “America First” banner? The United Kingdom? A “Brexit Britain” is unlikely to be as open a labour market as before. My adopted country of Australia? Well, even here a major reform of skilled migrant visas is under way. The children starting university today began school at the turn of the millennium, and those starting school today will reach high school around 2025 and university by

2030. For these generations of students, it is difficult to imagine how things may evolve, even more so for the 2030 university entrants. My feeling is that we are not going to see a strong reversal of trends in geo-political terms. And although the rise of economic nationalism will likely be tempered by the political openness of the last 50 years, this will still leave a world that is smaller, and less receptive, and with more divides and more uncertainty. In this context, as an academic, how can what we teach, how we teach, and how we engage with our students help offset some of these new risks facing our students–now and in the future? Can we ensure that our students will cope with ambiguity and thrive in diversity? A greater appreciation for breadth, for experiential learning, for greater matching of education to the employment world are just some of the means by which institutions the world over are looking to better prepare today’s graduates, and rightly so. But ensuring that students have access to the experiences that will leave them in better shape for their future life is just part of what goes into building better “supply”. In my view, the greatest shift we will see is institutions taking a long-term stake in their students’ futures. If we believe in the transformational power of higher education, we should,

Today’s students have more options on many fronts, but face a world that is closing in around them–the world is no longer their oyster as providers, be willing to invest in that future–graduates supported to understand and navigate the post-graduation trajectories that their developing expertise and capabilities afford. Lifelong learning should not be based on returning to education but rather never quite stopping education. This must begin when a student registers: investing more in their pathways across their time at the institution. And while they are students, embracing a new model of what learning is–for example giving their time as volunteers. And this investment must continue as graduates enter the job market, ensuring that they see their university as being the hub around which their life and career evolve. In what might indeed be a new world order–narrower, closed in–we, as education providers, must ensure that our individual and collective investment in education is as transformative as possible. @colmharmon www.colmharmon.com OECD (2017), OECD Skills Outlook 2017: Skills and Global Value Chains, OECD Publishing, Paris

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Protecting human rights and the spirit of justice

©Amnesty International

Salil Shetty Secretary-General Amnesty International

We live in an era of fear and division. Across the world, toxic “us versus them” narratives are being used to cast collective blame for social and economic grievances onto whole groups of people, demonising them and justifying discrimination or repressive measures against them. Against this background, those who stand up for justice and human rights are coming under attack in more and more places. They are facing an onslaught of harassment, intimidation, smear campaigns, ill-treatment and unlawful detention, even being killed. In 2016, at least 22 countries saw people killed for their peaceful work standing up for human rights. In 63 countries, they faced smear campaigns. In 68 countries, they were arrested or detained. In 94 countries they were threatened or attacked. What

Today the letter and the spirit of the UN Declaration on Human Rights Defenders are being openly flouted this amounts to is a full-frontal assault–by governments, armed groups, corporations and others–to clamp down on the right to defend human rights. People defending human rights come from all walks of life. They include community leaders, lawyers, journalists, students, teachers, health professionals, trade unionists, whistle-blowers, anti-corruption activists, environmental activists, and farmers. They are the people who challenge the abuse of power by governments and corporations, protect the environment, defend minorities, oppose traditional barriers to women and LGBTI rights, and stand up against abusive labour conditions. In the face of injustice, discrimination, demonisation, violence and repression, they get in the way. And for this reason, they are facing a global onslaught on the right to speak out. It is now almost 20 years since the international community gathered at the UN and adopted by consensus its 1998 Declaration to protect human rights defenders and civil society, recognising them as agents of change, crucial for promoting and defending human rights. In backing the Declaration on Human Rights Defenders, governments promised to support human rights defenders and enable them to work free from obstacles and without fear of reprisals. Two decades later, the letter and

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the spirit of this UN declaration are being openly flouted. The nature of the threat is often insidious. It is eating away at the ecosystem of protest and participation in public affairs, and it is becoming riskier and more difficult to hold the powerful to account. The space for standing up for human rights has become increasingly tight, from laws and policies that authorise the use of force against peaceful protesters, to mass surveillance programmes banning access to foreign funding or imposing stringent registration requirements. Meanwhile, human rights defenders are labelled ever more openly as criminals, undesirables, “defenders of demons”. They are called “foreign agents”, “antinationals”, or “terrorists”. They are painted as a threat to security, development or traditional values. By either directly targeting human rights defenders or failing to protect them from harassment, threats or physical attacks, governments are sending a message in direct contrast to the UN Declaration: that they are a nuisance to be suppressed. This is a dangerous path to take. Inequality and unaccountable leadership are major drivers of the growing anger and distrust so many people have towards governments, institutions and corporations. Ultimately, repressing peaceful protests and silencing voices who call for justice and equality is a recipe for a breakdown of trust between governments and people. Despite the global assault on peaceful protest, people will not simply roll over and accept injustice. History has frequently taught us this lesson. Our spirit of justice is strong, and it will not be suppressed. From Frederick Douglass through to Emmeline Pankhurst, Rosa Parks, BR Ambedkar and Nelson Mandela, history is replete with stories of ordinary people who refused to accept the status quo and who stood for what is right. That spirit remains alive today–from Iesha Evans standing serenely at the Baton Rouge protests last summer as riot police rushed towards her, or the popular movements emerging across the African continent to channel people’s demands for justice and human rights. Now more than ever, we need people bravely standing up against injustice and against those who undermine human rights in exchange for a false promise of prosperity and security. We all have the power to challenge poisonous narratives and fight against injustice. A world without human rights would be one moving in the wrong direction, towards greater conflict and repression, and less freedom, justice and equality. It’s vital we hold on to our commitment to human rights–and make it one of the driving narratives for creating a better world. References Amnesty International: www.amnesty.org/en/ UN Declaration on Human Rights Defenders: www.ohchr.org/EN/Issues/ SRHRDefenders/Pages/Declaration.aspx

Business brief

Food, waste and value: Building a coalition for change Damien Verdier President and Chairperson of the Board of Directors International Food Waste Coalition*

increasing food waste. Indeed, what is not valued is most often wasted. With soft global growth and ongoing demands to control costs as a way of generating profit, sourcing and procurement are fundamentally important to optimising value chains. The opportunity to make an impact is considerable.

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We know that forging new types of relationships with partners across the value chain will require new levels of collaboration. It will be at the heart of successful customer-supplier-contractor

Food is not just another item to be jostled by cost and price reductions on global markets World food price volatility, growing populations, higher purchasing power among more people, with more arable land but water and food stocks in decline: no wonder food is often dubbed the “new oil”. Yet in wealthier countries, where food has become a standard commodity throughout the supply chain, consumers are experiencing low food value, while food waste pervades every step of the value chain, within every food industry and sector. This is neither acceptable nor sustainable. Food is not just another item to be jostled by cost and price reductions on global markets. The International Food Waste Coalition has been singularly focused on the global issue of food waste since its creation in April 2015. Our work on waste has both increased our understanding of where efficiencies can be found and confirmed the value that collaborative contributions can make to securing the future of our food. Thanks to the member companies’ commitment to reducing waste, third-party research and dedicated work, our coalition has proven that real, scalable and impactful waste reduction can only come from systemic change involving collective action across the value chain. For example, the coalition’s first programme, the “SKOOL” pilot project, sought to tackle food waste across the value chain in schools where Sodexo operates, engaging children, kitchen and cafeteria staff among others. We developed awareness-raising tools (“Do Good: Save Food!”) in partnership with the UN Food and Agriculture Organization, and started as a pilot project in schools in France, Italy and the UK. The six-month programme directly involved close to 1,400 students from ages 5 to 18 years old, with another 6,000 people indirectly involved. An average 12% global food waste reduction was achieved by the sites: almost two tonnes of food waste avoided. The pilot programme is now being extended and is available for rollout within Europe. The coalition is committed to finding new, innovative and sustainable ways to build value chain systems whereby our food resources are enhanced and our business efforts are not lost. This requires a transformational change in our thinking, our supply management practices and our relationships. It means rethinking how to capture the value created in the product or service each step of way, including investments and actions to minimise waste and improve environmental outcomes.

relationship management in the future. Suppliers, buyers and customers will need to re-invent contractual elements that bring pragmatic solutions to guarantee that value is added and recognised, instead of being lost. Digital technology presents opportunities to rethink key business processes and new ways to enhance collaboration. Leveraging relationships to better co-ordinate processes, in a more organised and informed way, can also help contribute to resource efficiency. Advanced predictive technologies that model future scenarios will provide greater visibility to optimise value chain effectiveness, as well as a greater understanding of the drivers that contribute to inefficiencies and waste. Consumer awareness and education remain an important determinant, with an ever increasing demand by customers for knowledge about the origin of products, how food has been prepared and processed, and the value integrated from local producer to plate. The coalition is dedicated to cutting through the challenges of reinventing collaborative relationships through engagement from our partners across different functions and dimensions of the value chain. It is a challenging and ambitious project that, if successful, can become a model for how 21st century collaborative partnerships should operate. * Founding members are Ardo, McCain, Pepsico, SCA, Sodexo Group, Unilever Food Solutions, WWF, and partners FAO and LeanPath

Visit http://internationalfoodwastecoalition.org And www.sodexo.com References OECD/FAO/UNCDF (2016), Adopting a Territorial Approach to Food Security and Nutrition Policy, OECD Publishing, Paris. DOI: http://dx.doi.org/ 10.1787/9789264257108-en OECD (2016), Alternative Futures for Global Food and Agriculture, OECD Publishing, Paris. DOI: http://dx.doi.org/10.1787/9789264247826-en

Without value transfer between supplier and customer (a critical issue at contract negotiations) and collectively throughout the chain, food commoditisation will continue to contribute to

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Responsible business conduct and competition The OECD Guidelines for Multinational Enterprises and responsible supply chain management

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Karin Buhmann Professor, Responsible for Business & Human Rights Copenhagen Business School (CBS)

Surprised looks with colleagues or students are commonplace when I observe that the OECD plays an important part in the promotion of responsible business conduct (RBC), not just in OECD countries, but also globally. RBC is OECD “speak” for corporate social responsibility, corporate sustainability and other terms indicating an expectation that businesses take responsibility for their impact on society. The OECD’s key normative instrument for RBC, the Guidelines for Multinational Enterprises, and the remedy institution that adhering countries commit to establishing, the National Contact Points (NCPs), are relevant to help offset some of the social costs that competition causes to employees and communities. The guidelines provide norms of conduct for MNEs and for how they should act to avoid harmful impact caused by their supply chains.

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Revised several times since first adopted in 1976, the MNE Guidelines provide normative standards regarding human rights,

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labour, employment and industrial relations, environment, bribery, consumer concerns, science and technology, competition and technology. The MNE Guidelines also apply to institutional investors, including minority shareholders. Jurisprudence–“case law”–emerging through complaints–“specific instances”–handled by NCPs elaborates the practical implications of the MNE Guidelines for companies and investors, within and beyond the sector and country concerned by each case. Similarly to the extraterritorial reach of the guidelines beyond MNE home countries, NCPs may also deal with business conduct arising in non-OECD countries or other countries having adhered to the MNE Guidelines–provided a connection to that state. A case that was recently handled by the Danish NCP, of which I am a part-time member, highlights the pertinence of OECD’s MNE Guidelines at a time when SMEs too have transnational operations, as well as of the evolving guidance developed by NCPs. The case concerned a Danish textile company that sourced from a supplier in the Rana Plaza building at the time of its collapse in 2013. The MNE Guidelines are recommendations from governments to companies operating in or out of countries (whether or not OECD members) adhering to the guidelines. With the 2011 revision, the MNE Guidelines adopted the risk-based due diligence approach. This is a process for companies to identify, prevent, mitigate and account for their impact on society. Whereas corporate legal or financial liability due diligence aims at protecting the company against harm, risk-based due diligence is about protecting society against harm caused by the company

TRUST or its business relations. Of course, if done well, it also protects the company against liability or reputational harm. The case of the Danish textile company concerned the adequacy of the company’s due diligence to prevent harm directly linked to its operations by a business relationship. The NCP found that the company did not apply processes for due diligence in compliance with the OECD’s MNE Guidelines. In particular, the company failed to make demands that its supplier ensure employees’ human and labour rights, including through adequate steps to ensure occupational health and safety. As to whether the company had acted in consistency with what it

A company must think and act for itself and take appropriate measures to ensure health and safety in the workplace argued to be buyer practice concerning building inspection, the NCP observed that practice by itself may be indicative, but not conclusive regarding the scope of risk-based due diligence. In other words, a company must think and act for itself in regard to demands on suppliers and take appropriate measures to ensure health and safety in the workplace. Thus, the NCP statement elaborates on the practical implications of the MNE Guidelines and due diligence for companies in the textile and other sectors for the future, regarding building safety and supply chain management. The collapse of the Rana Plaza building was a wake-up call in many OECD countries concerning the human and social costs that can be the price for the quest for economic gain that drives much competition. Global companies have long taken advantage of wage differentials and weak regulation to keep costs low. Concerns with labour and human rights have been strong if too often ineffective drivers of corporate change

and the conditions for competition. The textile sector is not unique in competition causing adverse social or environmental impacts. The agricultural industry and mining are among the sectors in which adverse social and environmental impacts of business activity are regularly reported. Enhanced knowledge of OECD’s MNE Guidelines may contribute to promoting RBC in such transnational economic activities.

This contribution is written in the author’s academic capacity and does not necessarily reflect the views of CBS’s management or the Danish NCP. References and further reading OECD (2014), “Scope and application of ‘Business Relationships’ in the financial sector under OECD’s Guidelines for Multinational Enterprises”, OECD Global Forum on Responsible Business Conduct, see https://mneguidelines.oecd.org/ globalforumonresponsiblebusinessconduct/GFRBC-2014-financial-sector-document2.pdf Farhana, Khadija (2014), “Ready-made garments in Bangladesh: No longer a forgotten sector”, in OECD Observer, see http://oe.cd/Bj Final Statement on Specific Instance notified by Clean Clothes Campaign Denmark and Active Consumers regarding the activities of PWT Group of 17 October 2016, see http://businessconduct.dk/final-statements Krugman, Paul et al. (2014), International Economics: Theory and Policy, Global Edition, 10th ed. Online: Pearson. Nelson, Jane (2014), “Corporate Social Responsibility: Emerging good practice for a new era”, in OECD Observer, see http://oe.cd/Bi Nieuwenkamp, Roel (2014), “Corporate leaders: Your supply chain is your responsibility”, in OECD Observer, see http://oe.cd/Fw Ruggie, John (2013), Just Business - Multinational Corporations and Human Rights. Boston: W.W. Norton. United Nations Human Rights Council (2011), UN Doc. A/HRC/17/31. entitled “United Nations Guiding Principles on Business and Human Rights (UNGPs)”

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IT’S NOT WHAT YOU KNOW IT’S HOW YOU USE IT

Asian Development Bank Institute adbi.org

Business brief

Insuring well-being in a changing world

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Thomas Buberl Chief Executive Officer AXA Group

Insurance is invisible yet it is everywhere. It is intimately linked to how people live their lives, grow their businesses, save and invest their incomes, anticipate what is essential to them and how they protect themselves against risk. When lifestyle and economic growth patterns change, insurance also needs to change: autonomous cars raise new questions of liability, freelance workers need new social protection, and new expectations require personalised assistance services, seamless claim processes and the like. The insurance industry sits at the heart of the social, economic and technological revolutions at play. And like most of its peers, AXA is undertaking an ambitious and profound transformation to adapt and embrace these multiple revolutions, reframing the nature and scope of our business, from financial protection to risk prevention, from paper to digital, from payment of claims to more frequent interactions with customers. We are also reviewing our ecosystem of providers and business partners. This transformation is not only about us; it is about the innovation we will be able to bring to our sector by building on our own convictions and promoting new ideas, investing in new business models, partnering with start-ups and funding fundamental and applied research. Our ambition cannot happen in a vacuum however, since it raises a number of societal questions and challenges. How can we best address customer expectations towards private companies? In many industries, innovation is currently driven by digitalisation and personalisation of services. While the content, ease-of-use and nature of service offerings improve, companies and policymakers have to work hand in hand to guarantee the protection of customers’ rights and of their privacy in a digital world, and make sure that a sound competition can take place while ensuring that prices remain fair. Striking such a balance with customer protection and transparency will be key to maintain the essential trust between private companies and customers. How can we ensure both stable and flexible regulation? The speed of development and adoption of new technologies seem at odds with the stability of traditional regulatory frameworks. We must avoid

the trap of regulatory frenzy–i.e. constantly changing our regulations for each new technology coming to market. New, flexible methods of action, based on a set of clear and overarching principles and expected outcomes–such as encouraging experiments of innovative regulatory schemes around FinTech–can allow innovation to blossom while also guaranteeing customer protection, financial stability and co-building between regulators and innovators. How can we harness the ability of technology to foster more inclusive protection models? Big Data, algorithms and artificial intelligence are all very promising tools to empower citizens, better respond to their needs in real time, and scale services to new customer segments. While mobile technologies are empowering millions of families in developing countries to gain access to health insurance and prevention, if not properly handled and understood, these new tools could turn into a source of undue discrimination, social fragmentation and exclusion. Transparency, fairness and constructive dialogue surrounding these new tools should form a common horizon between policymakers and companies to ensure the promotion of more inclusive societies. How can we balance our collective relationship to time? Technology gives a new sense of precipitation to the world economy, from high-frequency trading in financial markets to robotisation and 3D printing in manufacturing sectors. In parallel, long-term challenges linked to climate change, ageing and the protection of natural resources call our economic system into question. The

The insurance industry sits at the heart of the social, economic and technological revolutions at play time horizons of corporate and financial decisions force us into a conundrum in which short-term pressures curb the long-term thinking necessary to address new and intricate challenges. The role of policymakers is therefore essential, as they can set the pace of the public debate and keep our focus on essential long-term challenges, to help our societies invest for future generations. As insurers, we are fully aware that change always comes with new opportunities and risks requiring new levers of action. Managing and balancing the risks and opportunities that arise from technologies and new growth patterns is probably the greatest collective endeavour of our time. All actors will need to engage and share their perspectives–policymakers, corporations, citizens. As insurers, we feel compelled to take part in this essential debate. Visit www.axa.com

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Figures and feelings both count, as a matter of fact Martine Durand

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OECD Chief Statistician and Director, OECD Statistics Directorate

In Henrik Ibsen’s play, An Enemy of the People, a town is divided over whether or not to clean up the municipal baths following a water contamination report. But a doctor’s good intentions to save the town come up against special interests. In the end, the facts are rejected, the truth reshaped and the water is not cleansed. As for the doctor, he is cast out as the enemy. Though Ibsen’s play was published in 1882, its moral still applies today. Indeed, we are living in a time of so-called “alternative facts”, in which the truth is vilified and experts are outcasts. The term “post-truth” was even the Oxford Dictionary’s word of the year for 2016. The trouble is that the spread and misuse of false data poison public opinion and undermine proper political debate. Fake news and alternative facts are lies by other names, yet can be used to influence or manipulate opinions. This clearly carries serious risks for democracy. Could this destructive wave be a by-product of our information revolution? Take social media, for instance. Social media has many advantages from a statistician’s point of view. For a start, it can be a valuable new source of data garnered from the internet that provides more granular and timely information about people’s living conditions. But given the plethora of information on social media–90% of all data ever produced emerged in the last few years–differentiating between “hard facts” and the reproduction of somebody else’s non-factual opinions becomes difficult. Social media has largely replaced traditional media as a source of information for people. That means that opinions are now formed in a more direct, immediate and inter-active way than before, within self-defined circles of friends, families and think-alikes. As a result, feelings start to matter more than facts and figures, and, as in Ibsen’s play, lead people to turn against the truth and the right course of action. Take immigration, for instance. OECD data have shown that immigrants bring long-term net fiscal benefits to their countries of destination, since what they contribute in taxes over time outweighs what they receive in benefits. But such facts have not been picked up in most public debates on migration. Where does all of this leave organisations such as the OECD,

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where facts and data are our raw material? How can we respond? The answer is simple: good data and factual evidence are essential for robust policymaking. Governments, businesses and citizens alike need reliable statistics to gauge where we are and plan where we want to go. Countries adhering to international agreements, such as the UN Sustainable Development Goals or the Paris Climate Agreement, need quality statistics to help them measure progress. The OECD plays an important role in contributing to these statistics and will continue to do so because not having them leaves countries flying blind. Consequently, disturbing as it is, national statistical offices and international organisations like the OECD have no choice but to tackle the post-truth wave head on. They need to reassert the “brand” value and authority of official statistics, just as a flight to value has already been detected in the media, with sharp rise recorded in subscriptions in traditional news sources, such as The New York Times, in recent months. Of course, being “official” is not enough, and states have been guilty of manipulating figures too. That is why international cooperation is so important, so that national statistical offices in different countries not only co-operate with each other, but put each other under pressure to develop data that are transparent, comparable and reliable. The OECD Recommendation on Good Statistical Practice in 2015, based on the UN Fundamental Principles of Official Statistics adopted in 1994 and reaffirmed in 2014, underlines the need for data that garner trust, and that are properly explained and transparent. In this post-truth environment, the responsibilities of producers of official statistics are twofold: one, to produce high quality statistical information that people and decision makers can trust, and to disseminate it more clearly, and more widely on all the media platforms that people actually use, to help them form their opinions and take their decisions based on verifiable facts. But they must also ensure that official statistics are relevant and address people’s concerns. Big data and new technologies can help in this regard, by complementing traditional sources to produce data that capture what truly matters in people’s everyday life. This is what the OECD has done, for instance with its ground-breaking work on measuring well-being, under the Better Life Initiative. The OECD has also already made great progress in making its vast data more accessible to the general public with the development of its new data portal and making its data open, accessible and free. And with our various public forums, including the annual OECD Forum, the biennial World Forum on Statistics, Knowledge and Policy, and the online innovations such as the OECD Better Life Index, we are stepping up our interaction with the public, too. We are also now pushing our data to multiple channels and devices, such as smart phones, blogs, and even YouTube, and we are becoming more active on Facebook, too.

POST-TRUTH DEBATE

Official statisticians must not shy away, but speak out with confidence and no longer expect the facts to speak for themselves

Judgement call We must also go beyond issuing cold data, and do better at understanding people’s feelings and judgements. In particular, we must be vigilant in situations where our objective data diverge from people’s own perceptions, and analyse the reasons for these gaps. This is what we are doing as part of our work on analysing the determinants of subjective well-being, on measuring trust or with our interactive Compare Your Income tool, for instance. In short, official statisticians must not shy away. They need to speak out with confidence, and no longer expect the facts to speak for themselves. Under the UN principles, official statistical agencies are entitled to comment on the erroneous interpretation of data. Evidence matters, and many issues, such as climate change for example, are far too important to get the facts wrong. To compete in a world of alternative facts and posttruths, official statisticians must have well-formed and powerful narratives with which to convince people. The OECD has shown its ability to do this on a range of policy issues, from school performance to international tax transparency. It is a skill at which all organisations involved in off-

icial statistics will have to become better and better in the future. By marshalling robust data and presenting compelling arguments with authority on platforms that people use, experts in statistics will not be cast as enemies, but as servants of the people. Note: To address these issues and help national statistical offices and international organisations improve their communications strategies, the OECD is organising a conference on the theme of “Providing facts where opinions are formed: The role of Official Statistics in an evolving communication society”, to be held at the OECD Conference Centre in Paris, on 6-7 October 2017. References and further reading UN (2014), UN Fundamental Principles of Official Statistics, https://unstats.un.org/ unsd/dnss/gp/FP-New-E.pdf, 29 January Recommendation of the OECD Council on Good Statistical Practice, www.oecd.org/ statistics/good-practice-toolkit/Brochure-Good-Stat-Practices.pdf Value of Official Statistics: Convincing our stakeholders, measuring value of statistics, Article by UNECE, CSO Ireland and OECD in the OECD Statistics Newsletter, No 65, November 2016, https://issuu.com/oecd-stat-newsletter/docs/oecd-statisticsnewsletter-11-2016/3 OECD Better Life Initiative, www.oecd.org/statistics/better-life-initiative.htm OECD Better Life Index, www.oecdbetterlifeindex.org OECD Compare Your Income, www.compareyourincome.org

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How to make facts matter again Heidi Tworek Assistant Professor of History University of British Columbia and Fellow, Transatlantic Academy

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One thing we can learn from history is that our predictions of the future almost never come true. But that does not mean we should give up on forecasting. Rather, we should reconsider how we forecast and how we present those forecasts. Philip Tetlock of the University of Pennsylvania has long advocated for a more evidence-based approach to forecasting. We need to It doesn’t feel like a great time to be an expert. Experts rely on facts, evidence and careful analysis to make assessments of the past, present, and future. All those categories–expertise, evidence and logical analysis–seem under attack. Equally importantly, public trust in the institutions that house experts has ebbed at an alarming rate over the last 40 years. How can institutions and experts respond to the broader attack on evidence-based decision-making? A multi-pronged approach tackling representation and reality is the best response. First, we must recognise the importance of metaphors and consider carefully about the metaphors that we use to frame the facts. The world is so complex that human beings reach to metaphors for understanding. Much of our language is metaphorical even when we do not realise it. Experts, intellectuals, and thought leaders play a vital role in providing the range of possible metaphors for the public to use. These metaphors, as George Lakoff and Mark Johnson point out, can create political realities because they provide an ordering framework to our perceptions. This framework then spurs particular actions to fit that metaphor. Calling Brexit a divorce, for example, implies that the EU and the UK can negotiate a clean split and then will have a tetchy, but stable and regulated relationship with each other. The metaphor of divorce conceals many realities of the protracted and contested process of exiting the EU. To mention just a few: Brexit will take far longer than a divorce; it involves many more parties (because the EU is composed of 27 member states and cannot be equated to one spouse); Brexit means renegotiating all trading relationships for the UK, not just one like the metaphor of divorce implies. Another frame for Brexit than divorce can educate the general public about how complicated negotiations will be. For instance, Olivier Campenon, who heads the Franco-British Chamber of Commerce, speaking on French radio recently, preferred to describe Brexit not as a divorce but as setting new legal terms for the marriage, since the UK and EU will in fact still be together, just differently. Facts matter. But so does the framing of facts. Second, we should recognise the problems of predicting the future. Economists and pollsters in particular have come under fire for producing numerical forecasts that often prove incorrect. The precision of the prediction means that the public has

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become increasingly sceptical of expertise when those experts are proven wrong by the real numbers. Similarly, judgments about politics seem less convincing to the public over time because pundits’ confident predictions of outcomes like the US presidential election have proven so spectacularly flawed.

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To produce better forecasts we should provide confidence estimates for our predictions learn from our mistakes and evaluate why predictions in the past were incorrect. Surprisingly few experts conduct forensic post-mortems of why they were wrong. And yet, our forecasts continue to inform policy. More dangerously, any inaccuracies stoke scepticism among a subset of the public that feels vindicated when a prediction does not come to pass. To produce better forecasts, Tetlock suggests for example that we should also provide confidence estimates for our predictions. The US intelligence community now adopts this approach. It makes forecasts seem less certain and thus less eye-catching in headlines; it means experts must be humbler in their predictions. But it can help to restore some trust in experts themselves. It is not surprising that the public loses faith in experts when their predictions so often do not come to pass. We might also consider producing less specific numerical predictions about the future that may not materialise, as these reduce trust. Finally, we should recognise and dig deeper into the problem of how to rebuild trust in institutions. Some institutions are trusted more than others. We might reflect more systematically on why in a Gallup poll 68% of Americans expressed a great deal or quite a lot of confidence in small business in 2016, while only 18% feel the same about big business. We will not solve the problems of our contemporary world just by changing how we present economic, political and social realities. We need to change the realities themselves. References Lakoff, George, and Mark Johnson (1980), The Metaphors We Live By, University of Chicago Press Tetlock, Philip and Dan Gardner (2013), Superforecasting: The Art and Science of Prediction, Broadway Books, New York “On n’arrête pas l’eco”, Weekly Economics Programme, France Inter (Radio France), 6 May 2017 (interview with Olivier Campenon starts at 33 minutes, marriage analogy at about 40 minutes), https://www.franceinter.fr/emissions/on-n-arrete-pas-l-eco/onn-arrete-pas-l-eco-08-avril-2017

POST-TRUTH DEBATE

How to stop the slide from info-storms to post-factual democracy Vincent F Hendricks Professor, Director, Center for Information and Bubble Studies (CIBS) University of Copenhagen, Denmark

“us versus them” narratives of distrust and exclusion, which cherry pick the facts and issues. Narratives may in turn be used as vehicles for political messages of exclusion, distrust and tribalism. In fact, narratives may even be “weaponised”. As Brad Allenby and Joel Garreau point out:

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“Weaponised narratives seek to undermine an opponent’s civilisation, identity and willpower by generating complexity, confus-

Simply telling users and the media that they must not produce fake news would be about as effective as telling teenagers not to drink beer Information is in no short supply these days. Indeed, as comedian Joey Novick has pointedly remarked: “The information in the world doubles every day. What they don’t tell us is that our wisdom is cut in half at the same time.” In the days of old, information depletion among proselytes was a way to gain power and rule. Today, given the abundance of available information, drowning users, citizens and voters with (dis) information via info-storms may likewise be a way to get your way–socially, economically, politically. The World Economic Forum recently declared misinformation and digital wildfires as some of the great challenges of our time: “The global risk of massive digital misinformation sits at the centre of a constellation of technological and geopolitical risks ranging from terrorism to cyber attacks and the failure of global governance.” Similarly, “The Munich Security Report 2017: Post-Truth, PostWest, Post-Order?” recently chimed in with a disconcerting motto to characterise the state of affairs in post-factual times, with “(Dis)Information: Fake It, Leak It, Spread it.”

ion, and political and social schisms. It can be used tactically, as part of explicit military or geopolitical conflict; or strategically, as a way to reduce, neutralise and defeat a civilisation, state, or organisation. Done well, it limits or even removes any need for armed force to achieve political and military aims.” Such strategies include fostering polarisation, echo-chambers, unreflective descent, extreme partisanship, pluralistic ignorance, bystander apathy, cascading effects, spirals of silence or anger, indignation, fear, bias, cognitive dissonance. All of these can potentially mobilise crowds or swing voters one way or the other, depending on how the wind blows. Narratives are borne by information. The information may be truthful, but it may also be framed, or doctored, or even contain “alternative facts”, thus turning the narrative into a carrier–or weapon–of disinformation. For disinformation to succeed it must not be too easily spotted. Issuing a complete falsehood may not make for a winning strategy if the fake news is too

Information is central to deliberation, decision and action. For information to inform decisions, people must pay attention to it. Attention is a scarce, extremely valuable resource, and a prime asset online. Information consumption generates attention, as manifested in online traffic. Online traffic may generate money or political power, or ideological influence. The natural consequence of this is speculation on what sort of political stories potentially may enjoy high social transmission. But, whatever is viral is not necessarily true and whatever is true is not necessarily viral–so truth may just be the first victim of high circulation stories. Loss of truth is the first step towards post-factual democracy. The overarching fear for western democracies is to end up in post-factual states. A democracy is in a post-factual state when opportune political narratives replace facts and evidence as the basis for political debate, opinion formation and policymaking. Post-factuality paves the way of–and is itself fuelled by–a political strategy. The strategy is populism. Populism may be understood as a political strategy for partisan mobilisation based on

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easily exposed as fake. But rolling out a news story based on a mixture of corroborative facts and non-corroborated material can win over minds, particularly if everything else, according to you, turns out to be “fake news”. So often enough, partisan media outlets and other propaganda machines mix truth and falsity in this way, leaving the decisionmaker with some facts for identification, confirmation and objective robustness, while bias, partisanship and sheer power of persuasion will take care of the rest. Uncertainty becomes certainty, and will eventually lead to a coherent, sometimes even conspiratorial, world view that is consistent with one’s prior (probably polarised) political inclination. And on it goes. That’s the story of post-factual democracy. The real info Can anything be done about it? Simply telling users, media outlets and political agents that they must not produce fake news would be patronising and about as effective as telling teenagers not to drink beer. Even if they do not like getting drunk themselves, they may just wrongfully believe that their peers are much more positively inclined towards binging than they are individually. Thus a group may collectively end up doing what each individual privately rejects. This phenomenon is referred to as “pluralistic ignorance” in social psychology. It was recently shown that the same pattern is prevalent when it comes to attitudes towards cyberbullying among teenagers. Privately, teenagers abhor it, but they incorrectly believe that most of their classmates have much more positive attitudes towards cyberbullying. It is an erroneous comparison, which can lead to unfortunate results. Norm-based intervention strat-

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egies, in which teenagers are informed about the structure and dynamics of pluralistic ignorance, have proven to be more effective and preventive. The same should go for fake news and spreading misinformation. Information could be the antidote to misinformation: explaining to the public the nuts and bolts of misinformation, its structure and dynamics, could make a difference. Informing people about the nature and dynamics of misinformation may not prevent it, but it could help stop the rot from spreading too far. It will take time, but with a co-ordinated global effort, including organisations such as the OECD, we can drive fake news back, and the divisions and hate that it generates. References and further reading Allenby, B & Garreau, J (2017), ”Weaponized Narrative is the New Battlespace”, Defense One, verified March 27, 2017: http://www.defenseone.com/ideas/2017/01/ weaponized-narrative-new-battlespace/134284/ Hendricks, VF & Hansen, PG (2016), Infostorms: Why do we ”like”? Explaining Individual Behavior on the Social Net. New York: Copernicus Books/ Springer Nature Hendricks, V. F. & Vestergaard, M. (2017), “Verlorene Wirklichkeit? An der Schwelle zur postfaktischen Demokratie”, Aus Politik und Zeitgeschichte, 13/2017: 4-10 Munich Security Conference 2017: Post-Truth, Post-West, Post-Order, https://www.securityconference.de/en/discussion/munich-security-report/munichsecurity-report-2017/, verified 23 March Rendsvig, RK, Alim, W and Hendricks, V F (2017), “Cyberbullying Youths Exhibit Pluralistic Ignorance of Acceptance Factors,” under review for publication. WEF (2016), “Digital Wildfires in a Hyperconnected World”, WEF Report 2016, http://reports.weforum.org/global-risks-2013/risk-case-1/digital-wildfires-in-ahyperconnected-world/, verified May 16, 2016

POST-TRUTH DEBATE

Digging up facts about fake news: The Computational Propaganda Project Rory Clarke and Balázs Gyimesi, OECD Yearbook

This may come as a surprise to most serious policymakers, but here’s a fact: not all that is “news” is fact-checked information. Worse, non-facts are frequently introduced into stories and passed off as facts. Welcome to the new information world. It is unsettling, and hardly augurs well for robust policymaking. So what can be done about it? The phenomenon of junk news and its dissemination over social media platforms have transformed (some say destroyed) political debates. The combination of automation and propaganda, also called computational propaganda, can shape public opinion. The trouble is, how can we tell the difference between fake facts and real facts, and indeed, real fakes? This is the question Samantha Bradshaw and her colleagues from the Computational Propaganda Project at the University of Oxford set out to answer when they analysed the distribution of junk news, including fake news, computational propaganda and ideologically extreme, hyper-partisan, and conspiratorial content, over the social media platform Twitter during the 2016 US presidential campaign in Michigan. As their findings show, junk news was shared to the very same extent as professional fact-checked news. In this pioneering quantitative research on junk news, Ms Bradshaw and her colleagues studied Twitter conversations happening in Michigan, a swing state in the US presidential elections, between 1-11 November 2016. The research team was interested in finding out what people were sharing as political information and news. They collected tweets with website addresses (URLs), which were classified according to three categories: professional news outlets (both major and minor sites), professional political content (from political parties, experts, think tanks, government), and other political news, which included junk news and further sub-categories such as WikiLeaks and country-related links, notably from Russia. The team found that professional news content and junk news were shared in a one-to-one ratio, meaning that the amount of junk news shared on Twitter was the same as that of professional news.

In comparison, the ratios of junk-to-professional news being shared in Germany and France were considerably lower, with a one-to-four ratio during the German federal presidency election and a one-to-two ratio during the French presidential campaign, both in 2017. But does this mean the Europeans are less gullible to fake news? Probably not. Rather, the machine of producing fake news that started in one country will likely spread to others. Bridging the fact divide According to Ms Bradshaw, “the proliferation of junk news threatens the core of democracy. We need to have a place where we can collect good, truthful information and come to decisions on politics”. With junk news being spread on social media, it is hard for people to actually develop clear opinions, as they are not receiving the correct information to make informed decisions. This confusion was pointed out by several

The proliferation of junk news threatens the core of democracy voters in recent elections. The current situation could create “information inequality” between those accessing fact-checked content and those consuming misinformation about politics and public policies. What can we do to curb the dissemination of junk news? According to Ms Bradshaw, the rising concerns over misinformation have to be tackled by co-operation between international organisations, research centres and the private sector. She argues that there is a real opportunity for organisations like the OECD and research institutions like hers to collaborate with the private sector and social media companies that possess large quantities of information on what people are reading and sharing. However, Ms Bradshaw and her colleagues discovered that most companies keep the relevant data firmly closed. In their research, the Oxford Internet Institute’s team could only use the API (application programming interface) of Twitter, which covers 1% of the tweets. It is even more difficult to work with the API of Facebook. While privacy online is a key concern, accessing data is also crucial for understanding and improving the relationship between online information, voting behaviours and political positions. For Ms Bradshaw, more collaboration between international organisations, research institutions and the private sector is urgently needed to push back fake news with facts.

©Rights reserved

References and further reading

Samantha Bradshaw of the Computational Propaganda Project shows the real trends in fake news

Bradshaw, S. et al. (2017), “Junk News and Bots during the U.S. Election: What Were Michigan Voters Sharing Over Twitter?” Data Memo 2017.1. Oxford, UK: Project on Computational Propaganda, http://comprop.oii.ox.ac.uk/wp-content/ uploads/sites/89/2017/03/What-Were-Michigan-Voters-Sharing-Over-Twitter-v2.pdf . For Data Memos on the German and French elections see http://comprop.oii.ox.ac.uk/

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DATABANK TRUST Urban and rural income per capita 1978-2012 nominal income, CNY

Divides between wealthy metropoles and lagging or declining regions have been blamed in many countries for polarisation in politics and in particular a lurch to the far right. OECD member countries are not the only ones to have an urban-rural divide. Take China, where income inequality has surged in recent years, with income per capita being three times higher in urban than in rural areas in 2012. One explanation for this large gap is China’s hukou system, which restricts the mobility of workers living in poor rural areas to move to more productive urban regions.

30 000 Urban

Rural

25 000 20 000 15 000 10 000 5 000

20 12

20 10

06

08 20

04 20

20

00

02

20

19 9

20

6

8

4

19 9

2

Source: OECD Urban Policy Reviews: China

See OECD Observer No 307 Q3 2016

19 9

0

19 9

19 9

19 88

4 19 8

19 86

19 82

19 7

19 80

8

0

Note: Per capita disposable income for urban households as defined by NBS; per capita net income for rural households as defined by NBS.

Nordic countries tend to report higher levels of trust % people reporting trust in others, 2014 80 Total

70

Surveys indicated that people from Nordic countries, led by Denmark, do not feel the need to exert caution when dealing with other people. To judge by the countries in the chart, a relatively high percentage of people living in Denmark, Finland, the Netherlands, Norway, Sweden and Switzerland are willing to trust other people, whereas in Argentina, Brazil, Chile and Colombia people reported feeling more apprehensive and cautious about relating to other people.

15-29

60 50 40 30 20 10

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Source: OECD (2016), Society at a Glance 2016: OECD Social Indicators, OECD Publishing, Paris

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d lan Sw

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Perceptions of corruption: A geography of discontent?

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Trust in government may be at an all-time low, and this is reflected in in some regions. To judge by the countries in the chart, a relatively low percentage of people believe the governments of the Netherlands, Australia and New Zealand are corrupt, compared with Japan, Mexico, Slovenia and the US for instance. In a few cases, this perception worsens among people living in states and sub-regions, such as Zacatecas and West Virginia.

s

% people who believe the government is corrupt, average 2006-14 100

20

Maximum (region)

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Minimum

National average

L NZ

N SV

L IR

K DN

R KO

D NL

N JP

A FR

S AU

A US

R TU

M

EX

0 Source: OECD (2015), OECD Regional Statistics (database)

Business brief

Taking one giant leap forward for healthcare, together Jane Griffiths Company Group Chairman, Janssen, Europe, Middle East & Africa Healthcare is under a constant obligation to evolve. It must not only react to the emergence of new strains of infectious disease, but it must also account for societal transformations, scientific progress, and technological innovation. Each of these elements, which force healthcare systems to adapt, carries the potential of creating divisions–between the healthy and ill, between wealth and poverty, between analogue and digital, between us and them. Yet it is only through working together and bridging any preexisting divides that unmet medical needs can be successfully met and a holistic approach can be applied for the well-being of people everywhere. Acknowledging the value of co-operation for healthcare is not, however, enough in itself. Co-operation should instead be woven into the fabric of the everyday–into the development of innovation that significantly improves patient experience, into the creation of comprehensive response strategies for outbreak preparedness, into researching the possibility of stopping disease in their tracks. The possibilities offered by a shared approach should serve as motivation for opening a dialogue on change, on coming together, on making a long-lasting impact that will harness the full potential of global business, technology, and society for the creation of a more accessible and sustainable healthcare environment. At Johnson & Johnson, we’re committed to taking a giant leap forward: a leap today towards creating a world where we can all enjoy a healthy mind, body, and environment tomorrow. We have lived this commitment for the past 130 years with our employees, doctors, nurses, patients, and the families of those we serve, but now we want to broaden our scope even more and unite with partners to ignite new ideas for healthcare and society that will profoundly improve the course of human health in our communities and across the world. To harness the full potential of global business, technology, and society for the creation of a more accessible and sustainable healthcare environment, we–industry, governments, advocates, patients–first need to look within ourselves. How do we work together? How collaborative are we? Do we make a genuine effort to bridge the real or imagined divides we encounter? If we fail to work together, to collaborate, to join together, we risk missing opportunities and extracting learnings from one another. In healthcare, for example, the collaborative approach that has arisen between traditional medical companies and technology giants has already provided innovations that were unimaginable even ten years ago as patient-specific pathways were just being rolled out and integrated healthcare models piloted. It is through these collaborations that at Johnson & Johnson we believe we can create a world where illness is not just treated, but one in which diseases can be stopped in their tracks. From science

fiction to reality, the work we can do together surpasses what is possible individually. This is why we look to galvanising partners and mobilising new forms of co-operation that will give hope and provide the tangible results we need to create a healthier future. Whether through Our Credo or our 2030 Promise towards the achievement of Sustainable Development Goals, we are determined to not just talk about collaborative change and being a public health leader, but to make it a reality that we can all benefit from and be proud of. To this end, at J&J, we have made specific commitments in bringing good health to all. We recognise that these commitments must approach health holistically, covering disease-based research, awareness, and innovation. Yet they must also address the factors that make the places we live, work and play healthier. It means contributing to the development of a workforce that has the necessary competences to deliver highquality results. It means investing in holistic solutions that tackle

To harness the full potential of global business, technology, and society, we–industry, governments, advocates, patients–need to look within ourselves. How do we work together? problems in our neighbourhoods, but also globally, in terms of eliminating obstacles to good health. It means enhancing the accessibility to basic needs that can save lives, prevent disability, promote economic growth, and reduce social marginalisation. And finally, it means giving everyone the hope and possibility of a better and healthier future. Bringing these aspirations to an attainable reality is not a feat for the faint-hearted, but in collaborating with old partners and new relationships, we know that the light end of the tunnel is a bright one. By 2030, we will work through an integrated and multi-sector approach to improve not just human health, but societal well-being. When it’s all of us, together, we can make a world without disease a world that we all live in. Visit www.jnj.com and www.janssen.com/emea

a sponsor of OECD Forum

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OECD ARCHIVE

The politics of globalisation circa 1773 Newness in politics has a long and eventful history. Globalisation and the battle for and against are no exception, as the events of the late 18th century show. Emma Rothschild*

There has been a “revolution in commerce, in the power of nations, in the customs, the industry and the government of all peoples.” The industrious peoples of the north “circulate unceasingly around the globe.” Continents are connected as though by “flying bridges of communication.” These are the observations not of 2001, but of the Abbé Raynal, one of the most popular political commentators of the 18th century, writing in 1770. It was because of commerce, Raynal wrote, that countries had lost their “national and individual independence.” They had also lost their ability to tax the revenue from capital. “The proprietor of stock is properly a citizen of the world, and is not necessarily

attached to any particular country,” Adam Smith wrote in 1776. The proprietor of financial capital, in Condorcet’s description of the same year, is someone “who, by a banking operation, within an instant becomes English, Dutch or Russian.” The modern political system was dominated by the “principle of commerce,” Edmund Burke wrote in 1769, and it was “wholly new in the world.” It was pervaded by an extensive and intricate trading interest, “always qualifying, and often controlling, every general idea of constitution and government.” It was associated, above all, with the rise of the great financial and trading companies. The East India Company, for example, collected more than £3.5 million in taxes from its subjects in India, at a time when the total expenditure of the British government was about £7 million. Government gave up power in its relations with the companies, in Burke’s description, and gained credit in exchange. It gave up a part of its sovereignty: “in such a case, to talk of the rights of sovereignty is quite idle.” Globalisation is often depicted as a condition of the present and the future, a

The financial crisis of 1763 “spread terror to every commercial city on the continent”

19th century drawing of Boston Tea Party; © Mary Evans Picture Library

phenomenon without a past. But the exchange of information, commodities, investments, tastes and ideas between distant societies that constitutes globalisation has been a characteristic of many earlier epochs, in Asia as well as in Europe and America. The idea of a global economy is itself a cause of globalisation. The idea of distant influence, of instant communication, of exhilarating or insidious worldwide empire has from time to time exercised a profound effect on the political imagination and on political philosophy. The 1850s and 1860s, for example, were a period of sometimes euphoric activity in inventing the political institutions of economic integration, including the completion of German unification, the English-French treaty of (partially) free trade of 1860, the promotion of international commercial codes and uniform weights and measures and coins. But the phase of innovation came to an end, as Luca Einaudi has shown in a recent study (see references), in bitter domestic and international disputes over the mechanisms of a proposed European monetary unification, and over a new currency, of which prototypes were minted in 1867, and which was to be called the “Europe.”

Boston Tea Party: Americans throwing cargoes of the tea ships into the river, at Boston, 1773

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Old foes The end of globalisation in the 1920s and 1930s was far more catastrophic, as Harold James has shown in a recent book. The backlash against globalisation which began in the late 19th century brought political mobilisation and protectionist

restrictions against consumer goods, against immigration, and against capital movements.

the political corruption of the new global empire, and the powerlessness of individuals in distant provinces.[…]

After the First World War, the ideology of “internationalism” itself became the object of vitriolic political attack, in a destructive sequence of economic crises, failure of the institutions of international co-operation, and nationalist enthusiasm.

The political ideas of the late 18th century in Europe and North America, including ideas of the universal rights of all individuals, and of universal freedom of commerce, are at the heart of the modern ideology of “global market democracy.” These ideas have been associated, at times, with new institutions of international or oceanic political co-operation. English projects of an Atlantic parliament, in which the American colonies would be either “virtually” represented, or would send their own members on the long and perilous journey to Westminster, for example, were discarded in the new ideas of national sovereignty which followed American independence. French projects of a peaceful European federation were discarded in the new national enmities of the Revolutionary and Napoleonic Wars.

The politics of globalisation in the 18th century commercial revolution has been the subject of less recent attention. But the 18th century disputes are in some respects of particular interest to the choices of the early 21st century. One reason is that companies and corporations were at the centre of the global discussions over sovereignty and commerce, to an extent that was far less familiar in the 19th century age of formal

The experience of the reactions against globalisation provide a sobering insight into how swiftly the politics of protest against global influence can deteriorate empire. Another is that the politics of global information, in a period of expansion in long-distance shipping and in largescale printing and publishing, was at the heart of political and philosophical dispute. “The eye of the world is upon her,” one orator said of British policy, in a parliamentary debate about the East India Company in 1772; “The eyes of the world have been blinded by publications,” said another. The global politics of credit, too, was much discussed. The financial crisis of 1763 “spread terror to every commercial city on the continent,” in a contemporary description. The credit crisis of 1772 began with the failure of a London bank with Glasgow connections, and led to the failure of Dutch banks with speculative holdings in East India Company stock, the bankruptcy of the chairman of the English East India Company, and bankruptcies and suicides in Virginia. “One link gave way – the charm was instantly dissolved, leaving behind it consternation in the place of confidence, and imaginary affluence changed to real want and distress,” a Hamburg linen merchant said in the House of Commons in 1774. The politics of global influence was itself a subject of public, popular and even violent protest. The most striking illustration has to do with the American Revolution, and with the global politics of a fashionable beverage. Tea that was shipped from China to England by the East India Company, and from England to North America, was the subject in 1773 of new legislation, designed to extend the Company’s worldwide market, and to reduce the price of English tea in America. It was the East India Company’s tea which arrived off the shores of Massachusetts in November 1773, and which a group of tradesmen, disguised as American “Indians,” threw overboard in Boston harbour. This was the Boston Tea Party. “That worst of plagues, the detested tea, shipped for this port by the East India company, has now arrived,” the Massachusetts patriots announced. The East India company, Thomas Jefferson wrote, “send hither manyship loads of that obnoxious commodity,” and “We view it with Horror.” […]

But the old ideal of the late Enlightenment, in which the respect for individual rights can be combined with ever more dispersed and ever more universal conceptions of political co-operation, is of importance, still, to the new global world of the 21st century. The experience of the reactions against globalisation, in the 1870s and in the 1930s, provides a sobering insight into how swiftly the politics of protest against global influence can deteriorate into economic as well as political destruction. It is time, once more, to imagine new political institutions for our own new world of global commerce. *This article is a slightly shortened version of an article that first appeared in OECD Observer No 228 September 2001; Emma Rothschild was then Director of the Centre for History and Economics, Cambridge University, and is currently Professor of History, Harvard University. See full article at http://oe.cd/1zt References Einaudi, L. (2001), Money and Politics: European Monetary Unification and the International Gold Standard, Oxford University Press James, H. (2001), The End of Globalization: Lessons from the Great Depression, Harvard University Press Rothschild, E. (2001), Economic Sentiments: Adam Smith, Condorcet, and the Enlightenment, Harvard University Press Rothschild, E. (2001), “La mondialisation en perspective historique: l’Amérique hyperpuissance,” in Qu’est-ce que la culture ? ed. Yves Michaud, Université de tous les savoirs/Odile Jacob, pp. 57-68

Forthcoming in 2017 Under the OECD’s New Approaches to Economic Challenges initiative, experts discuss complexity theory as a means to better understand the interconnected nature of our socioeconomic environment, while placing the hopes, values and behaviours of people at the centre. From OECD Publishing. www.oecd-ilibrary.org

Tea was a symbol of foreign luxury. It also came to represent

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BOOKS

The OECD iLibrary Yearbook selection The ProductivityInclusiveness Nexus This report proposes a new approach to boost productivity growth while, at the same time, reducing inequalities of income and opportunities. The analysis aims to shed light on policy insights to address both issues together, creating room for synergies and win-win policies. ISBN 978-92-64-25829-7 June 2017, 102 pages €24 $29 £19 ¥3 100

The Governance of Inclusive Growth: An Overview of Country Initiatives Achieving inclusive growth relates closely to how governments work and how policies are designed, implemented, delivered and evaluated. This publication presents an overview of country initiatives concerning inclusive growth in 39 OECD member and partner countries. ISBN 978-92-64-26515-8 November 2016, 492 pages €99 $118 £79 ¥12 800

Economic Policy Reforms 2017: Going for Growth Going for Growth is the OECD’s regular report on structural reforms in policy areas that have been identified as priorities to boost incomes in OECD and selected non-OECD countries. The 2017 report also includes a special chapter discussing how the Going for Growth framework has been extended to identify reform packages that boost growth while ensuring that the benefits are widely shared. ISBN 978-92-64-27031-2 March 2017, 344 pages €84 $101 £67 ¥10 900

The Next Production Revolution: Implications for Governments and Business

Innovation Policies for Inclusive Growth This publication discusses the impacts of innovation and innovation policies on industrial, territorial and social inclusiveness in the world economy. It looks at a variety of inclusive innovation initiatives and innovative products aimed at improving the welfare of lowerincome and excluded groups, notably in terms of essential public services (education, infrastructure and health). ISBN 978-92-64-22941-9 June 2015, 100 pages €30 $42 £27 ¥3 900

This publication examines the opportunities and challenges for business and government, associated with technologies bringing about the “next production revolution”. These include a variety of digital technologies (such as the Internet of Things and advanced robotics), industrial biotechnology, 3D printing, new materials and nanotechnology. ISBN 978-92-64-27099-2 May 2017, 444 pages €65 $78 £52 ¥8 400

Inclusive Business Creation: Good Practice Compendium This compendium contains 20 case studies of public programmes in European countries that are successfully supporting business creation by people from disadvantaged and under-represented groups in entrepreneurship. ISBN 978-92-64-25129-8 June 2016, 180 pages €35 $42 £28 ¥4 500

The Future of Productivity This book addresses the rising productivity gap between the global frontier and other firms, and identifies a number of structural impediments constraining business start-ups, knowledge diffusion and resource allocation (such as barriers to up-scaling and relatively high rates of skill mismatch). ISBN 978-92-64-24852-6 June 2016, 120 pages €24 $29 £19 ¥3 100

The Innovation Imperative: Contributing to Productivity, Growth and Well-Being The OECD Innovation Strategy provides a set of principles to spur innovation in people, firms and government. It takes an in-depth look at the scope of innovation and how it is changing, as well as where and how it is occurring, based on updated research and data. ISBN 978-92-64-23980-7 November 2015, 268 pages €70 $84 £56 ¥9 100

OECD Science, Technology and Innovation Outlook 2016 Based on the most recent data available, the report provides comparative analysis of new policies and instruments being used in OECD countries and a number of major emerging economies to boost the contribution of science and innovation to growth and to global and societal challenges. ISBN 978-92-64-26305-5 January 2017, 192 pages €78 $94 £62 ¥10 100

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BOOKS OECD iLibrary All publications are available to read and share at www.oecd-ilibrary.org Innovating Education and Educating for Innovation: The Power of Digital Technologies and Skills This report discusses the available evidence on innovation in education, the impact of digital technologies on teaching and learning, the role of digital skills and the role of educational industries in the process of innovation. It argues for smarter policies, involving all stakeholders, for innovation in education. ISBN 978-92-64-26508-0 November 2016, 152 pages €31 $38 £24 ¥4 000

Digital Security Risk Management for Economic and Social Prosperity: OECD Recommendation and Companion Document In an economic context in which the digital environment has become essential to growth and prosperity, well-being and inclusiveness, digital security risk should be considered with respect to the broader economic and social perspective, and its management integrated in stakeholders’ decision making processes. This OECD Recommendation and its Companion Document provide guidance for all stakeholders on the economic and social prosperity dimensions of digital security risk. ISBN 978-92-64-24535-8 October 2015, 72 pages €24 $29 £19 ¥3 100

OECD Digital Economy Outlook 2015 This report assesses how countries can maximise the potential of the digital economy as a driver for innovation and inclusive growth, and discusses the evolutions in the digital economy that policymakers need to consider as well as the emerging challenges they need to address as a part of national digital strategies. ISBN 978-92-64-23227-3 August 2015, 284 pages €90 $126 £81 ¥11 700

Open Government Data Review of Mexico: Data Reuse for Public Sector Impact and Innovation This report provides an analysis of Mexico’s policies as well as recommendations for achieving its national objectives and making the most of Open Government Data. ISBN 978-92-64-25927-0 June 2016, 168 pages €20 $24 £16 ¥2 500

Digital Government in Chile: Strengthening the Institutional and Governance Framework This review analyses the governance and institutional framework of digital government in Chile. It is based on the OECD Recommendation on Digital Government Strategies. ISBN 978-92-64-25776-4 June 2016, 100 pages €24 $29 £19 ¥3 100

Fostering Innovation in the Public Sector Public sector innovation does not happen by itself: problems need to be identified, and ideas translated into projects that can be tested, implemented and shared. This report looks at how governments can create an environment that fosters innovation. ISBN 978-92-64-27086-2 May 2017, 252 pages €40 $48 £32 ¥5 200

Trust and Public Policy: How Better Governance Can Help Rebuild Public Trust Trust plays a very tangible role in the effectiveness of government. Few perceptions are more palpable than

that of trust or its absence. Governments ignore this at their peril. Yet, public trust has been eroding just when policymakers need it most, given persistent unemployment, rising inequality and a variety of global pressures. This report examines the influence of trust on policymaking and explores some of the steps governments can take to strengthen public trust. ISBN 978-92-64-26891-3 April 2017, 160 pages €24 $29 £19 ¥3 100

Preventing Policy Capture: Integrity in Public Decision Making This report exposes how “policy capture”, where public decisions over policies are consistently or repeatedly directed away from the public interest towards a specific interest, can exacerbate inequalities and undermine democratic values, economic growth and trust in government. ISBN 978-92-64-06522-2 April 2017, 84 pages €24 $29 £19 ¥3 100

Financing Democracy: Funding of Political Parties and Election Campaigns and the Risk of Policy Capture The recent debate on the role of money in politics has shed the light on the challenges of political finance regulations. What are the risks associated with the funding of political parties and election campaigns? Why are existing regulatory models still insufficient to tackle those risks? What are the links between money in politics and broader frameworks for integrity in the public sector? This report addresses these three questions and provides a Framework on Financing Democracy, designed to shape the global debate and provide policy options as well as a mapping of risks. ISBN 978-92-64-24944-8 February 2016, 208 pages €40 $48 £32 ¥5 200

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OBSERVER ARCHIVE

Thorkil Kristensen ©OECD Archives

Anker Randsholt (1916-2004) ©OECD/Leo Jouan, 1966

Great Danes in OECD history: Anker Randsholt on Thorkil Kristensen

The OECD Observer, the organisation’s public policy magazine, was launched in November 1962, and this interview with its first editor, Anker Randsholt, was originally published as “Anchor man” in the 40th anniversary edition, two years before he died in 2004.

What would strike you as being a good idea for a 40th anniversary edition of a magazine? Get in touch with the first-ever editor of course. Well, I didn’t. I mean, where to begin? Luckily, just before deadline, the first-ever editor got in touch with us. “This is Anker Randsholt,” boomed a voice. “I remember everything, how it all happened, and do you know, it was the secretary-general himself, Thorkil Kristensen, who had the idea to set it up and he appointed me to do it.” I had not yet even recovered from my good fortune in getting this call, nor had I asked a question. Mr Randsholt’s enthusiasm was impressive, so was his memory and astute sense with which he filled the next hour and a half of fascinating conversation. Anker Randsholt was a political reporter during the Second World War in his native Denmark. After the Liberation, he joined Information, a former underground resistance newspaper whose new legal offspring he helped rebuild. He got to know (and criticise) Thorkil Kristensen, who was then a member of parliament and finance minister, and who some 15 years later would become the OECD’s first secretary-general. One of Mr Kristensen’s first ambitions was to improve the OECD information service by creating “a periodical”. In June 1962 he hauled in Mr Randsholt, who in turn was joined by a Briton, Peter Tewson. Mr Tewson had worked for the OECD’s predecessor, the OEEC. “Without him I could never have done it!” The OECD Observer magazine was born, with a mission to influence policies by bringing the organisation’s work to the attention of busy parliamentarians. “It was not an original idea, as other organisations had excellent magazines too, in particular UNESCO’s Courier”, Mr Randsholt recalls. But with all the serious technical and organisational

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difficulties, the fact that the first edition came out at all was “a wonder”. Still, he and his team got it out just in time for the ministerial council that November. However, the magazine was initially not distributed at the meeting because a director stopped it out of “a fear of critical voices”. But the secretarygeneral quickly unblocked the situation and the OECD Observer has not looked back since. Indeed, the very next day The Times of London carried a highly complimentary review of the new edition. What kind of person was Mr Kristensen? “He could see above and below the horizon of most other people. Sharp and diplomatic, he got his way without being hated.” A book Mr Kristensen had

The OECD was something new, Europe was beginning to breathe again, seeing what co-operation did. There were standing ovations! written before taking up his post, The Economic World Balance, is still on sale today. Mr Randsholt remembers that before writing an obituary on John F. Kennedy, the secretary-general remarked: “I am not going to do this every time, but this man had so much to do with the creation of OECD, that I have a reason for doing it. Nobody else did so much.” What kind of reputation did the OECD have at the time? “Allow me to smile at that question, for the OECD had the highest reputation you could imagine. The OECD was something new, Europe was beginning to breathe again, seeing what co-operation did.” Mr Randsholt remembers giving an information lecture on the OECD to senior students in Denmark: “There were standing ovations!” Mr Randsholt wondered about the role of the OECD today. “What you produce is good, but the OECD is being squeezed aside by other organisations. What is its role?” But he remembers: “Of course in the past, the OECD had a natural resource to help it and that was the Marshall Plan. It was new, it was captivating.” What did people think of the Americans then? “We loved them!” But Mr Randsholt was worried about attitudes now, and feared that powerful interests were starting to take over again, to the detriment of balanced co-operation. “The OECD is a free trade organisation, and for that you need co-operation, not least with the poorer majority of our planet. The OECD also stands for development.” Mr Randsholt edited the OECD Observer for 12 years and left the OECD in December 1976. He was born in 1916 and now lives in Les Landes in south-west France with his Danish wife. One question I forgot to ask him was why he got in touch when he did? But I like to think it was just one of those editorial hunches, four decades on. Thank you, Mr Randsholt! Rory Clarke See original article at http://oe.cd/observerAR

Business brief

BRIDGING GEOGRAPHICAL DIVIDES

Newcastle in Australia: An emerging smart city Nuatali Nelmes

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Lord Mayor

The city of Newcastle is fast emerging as a smart, liveable and sustainable city. As Lord Mayor of Newcastle, it is indeed an honour as a local government leader to explain in the OECD Yearbook how, as a fledgling “smart city”, we’re harnessing the digital and knowledge economies to tackle the challenges of modern urban life. Collaborations here, just north of Sydney, between government, education and private sectors see an era of post-industrial decline rapidly giving way to a future of technological innovation for a regional population of 750,000. As a council committed to sustainable development and open and collaborative leadership, we are helping transform a former steelworks town into a smart city brimming with opportunities in the technology, health, education, aerospace and defence, and renewable energy sectors. From building a “tech” hub in our city’s

A global outlook is key to our smart city strategy and for generating new investment civic heart and promoting science, technology, engineering and mathematics (STEM) subjects through libraries and grants, to installing safe, separated cycle ways and photovoltaic arrays with battery storages the sustainability imperative is foremost in mind. Since a successful trial of sensor technology to help diners find parking and provide business insights on a popular restaurant strip two years ago, our smart city vision is quickly taking shape. The above partnerships and support from Australia’s Commonwealth Science & Industrial Research Organisation (CSIRO) and Cisco and IBM have positioned us for success. Meanwhile, strategic planning and a light rail project are breathing new life into the city’s central business district to attract record investment in housing. What’s to come will eclipse even these successes. An innovation partnership between Newcastle City Council, the University of Newcastle (UON) and local business improvement groups is a promising development. The Hunter Innovation Project (HIP) features construction of an innovation hub for researchers, industry and entrepreneurs to commercialise ideas and promote economic development. The AUS$18 million HIP (US$13.5 million) includes technology to help council run the city more efficiently, whether through energy efficiencies like smart lighting, targeted bin collections or parking space allocations. This hardware, including the use of sensor technology, promises business and tech developers valuable insights and, when the free wi-fi component

rolls out, will be available to the 2,000 students soon moving into UON’s new inner-city campus. For the tech savvy, the HIP will also see the deployment of Australia’s most sophisticated “internet of things” platform across the city centre as we create a data-rich urban environment for tech prototyping and civic innovation. A network of innovation hubs will help connect our region’s competitive advantages, while a memorandum of understanding we recently signed with the leading network of smart cities GSC3, which includes Amsterdam, will help us create a smart city. A global outlook is key to our smart city strategy and for generating new investment. Progress to date has been recognised in national and international press and by international agencies, such as the UN and indeed the OECD. A commitment to sustainable development saw Newcastle officially recognised as a UN City in 2016, while the UON was made a training centre to mitigate the impacts of natural disasters and social and industrial upheaval in the Pacific. Natural assets in our city and region helped grab the attention of National Geographic Traveler Magazine, which declared us one of the world’s top “smart cities to watch” for meeting the challenges of 21st century urban life. Sparkling surf beaches and renowned vineyards in our hinterland complement our smart city vision and help attract some 10 million tourists a year. As the Australian exemplar of post-industrial transition, Newcastle has been acknowledged by Austrade and the Australian Smart Communities Association as a leading smart city actively cultivating a knowledge-based services economy. The kudos is based on our firm commitment to open and collaborative leadership and rapid progress in becoming a smart, sustainable and liveable city. Visit www.newcastle.nsw.gov.au

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With Policymakers’ Roundtable, 28 June (by invitation only)

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BRIDGING DIVIDES Bridging Divides is the theme of OECD Forum 2017. After many years of global interaction, exchange and progress, driven by a potent mixture of reform, economic transition, emerging markets and technological innovation, divisions have again begun to erupt in OECD countries. Some of these income, social, cultural and geographical divides have been lurking for some time, but have deepened since the financial crisis started in 2008. Indeed, lately there has been a backlash against international co-operation and globalism, and a resurgence of protectionist, even nationalist, policies. All of this poses challenges for key global agreements on climate and sustainable development, and risks dashing the hopes for progress of people everywhere. What should policymakers do to help bridge these dangerous divides, and make the global economy work better for everyone? What promise does digitalisation hold for bridging economic, social and geographical divides? What must be done to bring people and institutions closer together? How can facts, knowledge and positive narratives be marshalled to beat back fake news and post-truths, and restore faith and confidence in the value of international co-operation, openness and world progress? In OECD Yearbook 2017, OECD experts are joined by thought leaders from government, business, labour, academia and civil society to examine these and other questions facing our societies today.

OECD Observer Volume 2017 Supplement 1 ISSN 0029-7054 Volume 2017 Supplement 1