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Productivity test

Finland may be top of the class for education, but it shines less brightly when it comes to productivity, even if output per hour worked is 15% above the OECD average. In fact, productivity growth has slipped back since the financial crisis a decade ago.

Economic slowdown? Chief Economist Laurence Boone looks ahead

OECD Chief Economist Laurence Boone reflects on the risks facing the world economy and the need for international co-operation. 

Finland 50th anniversary video
From forestry and heavy industry to a vibrant knowledge-based economy

On a cold, dark Helsinki winter’s day in 2014, I was waiting for OECD Secretary-General Angel Gurría and my other colleagues in a black limousine in front of the austere parliament building. The scene could have come out of a John le Carré thriller. It was late in the day. The OECD delegation I was waiting for was meeting Alexander Stubb, then the minister for European affairs and foreign trade. One of Finland’s most europhile and tech-savvy statesmen, Mr Stubb soon became prime minister. How things had changed in 50 years.

Who really pays for protectionism?

“Trade which, without force or constraint, is naturally and regularly carried on between any two places is always advantageous,” wrote Adam Smith in The Wealth of Nations.

The last (plastic) straw?

“I just want to say one word to you. Are you listening? Plastics.” This infamous advice, delivered to Ben, played by Dustin Hoffman in the 1967 film, The Graduate, foresaw a great career in plastics. 

Why Finland’s running circles around us

What do toothpaste and ice-cream have to do with a circular economy? If you live in Finland, quite a lot. CP Kelco, a multinational company with facilities in Äänekoski, Finland, recycles waste pulp from the city’s pulp and paper mill into carboxymethyl cellulose, a natural polymer used to thicken ice-cream and toothpaste.

OECD Observer Roundtable on Finland

To mark Finland’s 50th anniversary as a member of the OECD, we have invited a range of representatives to answer the following question: What Finnish achievement would you most celebrate from the last 50 years, and what would you see as the main policy challenge for the next 50?

Bubbles in our future? Certainly!

Have we learned the lessons of the 2008 crisis? Could a new bubble form and burst? This chapter from Donald Johnston’s 2017 book, Missing the Tide: Global Governments in Retreat, provides food for thought.

The funding crowd

“Every crowd has a silver lining,” said P.T. Barnum, America’s “greatest showman”. For businesses, Barnum’s play on words is especially true: crowds are becoming something of a motherlode of funding for small and medium-sized enterprises (SMEs). With bank lending declining, smaller businesses are looking for alternative ways of financing. Thanks to the world wide web, they can now solicit funds not just from banks and professional investors, but from virtually anyone with internet access. This approach can take different forms. Besides crowdfunding (where many individual contributions–usually sourced online–make up the funding), examples include online invoice financing (where SMEs, for instance, can borrow online against unpaid invoices) and peer-to-peer lending activities (online services that match lenders with SME borrowers). Together, these funding opportunities constitute the online alternative finance market. Read the full article here.

No more “9 to 5”

“Workin' 9 to 5; What a way to make a living”, Dolly Parton sang in her classic hit. The year was 1980, and Parton’s character in the eponymous film, 9 to 5, already pioneered numerous policies of the new world of work to come, such as flexible work hours and a job-sharing programme. Some of these changes have since become widespread in certain countries and industries. And they affect social protection policies, too, as the OECD report The Future of Social Protection: What Works for Non-standard Workers? shows.

Country snapshots 2019-20: Finland

Output growth is projected to remain healthy, albeit moderating after the vigorous 2016-18 upturn. Exports will continue to benefit from expanding external demand and regained competitiveness. Private consumption will be supported by rising wages and improved employment. Inflation will pick up gradually as the economy nears full capacity.

OECD Observer Roundtable on local firms and automation

Roughly 14% of jobs in OECD countries are highly automatable, while another 32% will be transformed by automation. By 2019, it is estimated that 1.4 million new industrial robots will be installed in factories around the world. How can local firms and their workers adapt to this? How can policy help?  As policymakers and experts gather to discuss such issues at the 14th OECD Forum for Local Development Practitioners, Entrepreneurs, and Social Innovators in Porto, Portugal 18-19 September, we ask our panel:

No longer burning down the house

In the early 1600s in North America, colonists ruined by a bad crop would often move on to new territory. In order to save on costs, they would burn down their homes to collect the nails, which would be used to build their next house. The image is one of restlessness and ingenuity, and mobility, contributing to a myth that many people there still cherish.

Better security, better jobs

Korea has one of the lowest unemployment rates in the world. Of developed economies, it also spends among the least money on employment insurance programs. On the outset, this makes a lot of sense. If you don’t have unemployment, why shell out on extensive unemployment benefit programmes?

Going up?

“All human beings are born equal. But on the following day, they no longer are,” said French author Jean Renard in 1907. This is because sticky floors and ceilings–or rags to rags and riches to riches–define the bottom and top income distributions. Today, it takes four to five generations, on average, for children from the poorest 10% of the population to reach median income levels. Meanwhile, about 50% of children of wealthy parents will themselves remain rich in countries like Germany and the US.

Yanis Varoufakis on austerity and the Democracy in Europe Movement (DiEM): OECD Podcast

One country that symbolised the crisis of the last 10 years was Greece. Its insolvency embarked the country on a long regime of bail-outs and austerity. This August, Greece officially emerged from the crisis, with the OECD forecasting GDP growth again. So, did the austerity work? The former Greek finance minister and co-founder of the Democracy in Europe Movement (DiEM) remains unconvinced. Mr Varoufakis was a guest at the OECD’s “10 years after the crisis” conference.

SMEs are key for more inclusive growth

The role played by small and medium-sized enterprises (SMEs) in our economies and societies is very significant. In most cases crucial. In OECD countries, SMEs represent approximately 99% of all firms. They provide the main source of employment, accounting for about 60% of jobs in the manufacturing sector and 75% in services, and generating between 50% and 60% of value added on average. In emerging economies, SMEs contribute up to 45% of total employment and 33% of GDP.

A best case trade scenario…

Given current trade tensions, this question might seem fanciful, but what would happen if tariffs were reduced, rather than raised? 

…And worst case trade scenario

Following our “fantasy global trade” scenario posted here, let’s look at another trade hypothetical: what would happen if the US, China and Europe all raised trade costs on all goods, but not services, by 10 percentage points for all trading partners?

Mexico telecom reform: into the “last mile”

Since Mexico embarked on reform of its telecommunication and broadcast market in 2013, the results can be roundly summarised in a single phrase: price drop, revenue up. With the exception of the price index for pay TV, which has gone up 5%, the cost of roaming, and domestic and international phone calls has dropped steeply, with Mexicans now enjoying some of the lowest-cost mobile services in the OECD area. 

Simpler, clearer, faster, easier: Lower trade costs by cutting red tape

Several years ago at an informal gathering, a colleague of mine asked a senior representative of a major tractor manufacturer why she valued a particular OECD testing standard so much. Her response cut to the point: “Heck, your OECD standard stamped on our tractors gets our product through customs faster, and saves us weeks and dollars.”

book cover
Don’t cry for me

Argentina’s economy has survived recurring states of crises, alternating between periods of recession and high economic growth. The economy, and its people, need to be better equipped to be more resilient to shocks. 

Improving life in France’s lower-income neighbourhoods

While overall poverty is relatively low in France, it can be highly concentrated at the neighbourhood level. In some cases, 40% of households in such neighbourhoods are below the relative poverty line. Unemployment is high, children struggle in school, housing and urban infrastructure is run down, and there is a lack of local employers, public and private services, and amenities. The French government deploys special education, employment, business and safety measures in these areas. 

Can women win on the obstacle course of business finance?

About a decade ago, three academics silently sat in on and recorded 36 hours of closed-room discussion among a group of Swedish governmental venture capitalists made up of two women and five men. The venture capitalists (VC) were going over pitches made by 125 people to obtain financing for their businesses of which 99 were men and 26 women.

Will the inflation genie stay in the bottle?

While the evidence shows that global integration has pushed down inflation, a stalling in globalisation could cause that trend to slip into reverse. Here is why.

World Cups and Olympic Games: How to stop three weeks of fete from turning into 30 years of debt

The 2018 football World Cup has kicked off in Russia, and people around the globe are by now glued to their radios, televisions, and laptops, living each save, each goal, every triumph, every loss. Excitement reigns, but at the same time, some are also turning their thoughts to the future, to 2022 and beyond. Organising and hosting an event on the scale of the World Cup is a massive undertaking, as FIFA, the governing body of world soccer, the OECD, and even the voters of the Swiss canton of Valais, know well.

Investment in renewable energy: What policymakers must do to make it happen

There is enough capital out there and renewable energy technologies have become more cost-competitive, so why is investment still wanting? Policymakers hold the key.

Globalisation: Don’t patch it up, shake it up

In Giuseppe Tomasi di Lampedusa’s novel Il Gattopardo (The Leopard)character Tancredi Falconeri famously says: “If we want things to stay as they are, things will have to change.” The Sicilian aristocracy he represents has only one way to preserve its privileges against Garibaldi’s “Risorgimento”: change things on the surface so that in practice nothing changes at all.

gdp,digital,economy,airbnb,blablacar,internet,sharing economy,digitalisation,web,productivity
Measuring the economy in the age of digitalisation

Recent years have seen a rapid rise in digital transactions, notably through web-based “sharing economy” platforms that have bridged, and indeed blurred, the gap between consumers and producers. But this upsurge has also created new challenges for measuring GDP, and, against a backdrop of slowing rates of productivity growth, has led some to question whether the slowdown reflects these new transactions.

Phase them out!

Fossil fuel subsidies keep fuel prices artificially low, and weigh heavily on government budgets and on the climate too. Phasing out these subsidies will help reduce CO2 emissions and possibly raise public revenues as well.