Building productive capacities can avert a lost decade in the poorest countries

By Dr. Perks Master Ligoya, Ambassador and Permanent Representative of Malawi to the United Nations and Mr. Paul Akiwumi, Director, Division for Africa, Least Developed Countries and Special Programmes, UNCTAD

The COVID-19 crisis shook the very foundations of the international system, triggering an abrupt and severe global recession, which threatens to heighten economic contagion.While no country is spared, the coronavirus has hit the world’s poorest nations disproportionately.

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What can governments do to harness the potential of new technologies?

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By Eduardo Bitran, CEO and Deputy Chairman of the Chilean Economic Development Agency (CORFO).

To learn more about countries’ strategies for economic transformation, learn about the 9th Plenary Meeting of the OECD Initiative for Global Value Chains, Production Transformation and Development hosted by the Economic and Social Commission for Asia and the Pacific (ESCAP) in Bangkok, Thailand on November 2017.

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Facilities to refine the copper from the mine in Chuquicamata, Chile

Chile is considered a success case, and Chileans today are much better off than a decade ago. However, inequality is persistent and the knowledge base of the country is still limited. What the country also faces is a productivity challenge. Chile’s total factor productivity growth has decreased from 2.3% per year in the 1990s, to a yearly rate of 0.3% from 2000 to 2009, and then to -0.2% after 2010. These trends lasted through several government terms. So, what needs to be done to sustain the country on its path towards development?
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Policy pathways for addressing informality

By Juan R. de Laiglesia, Senior Economist, OECD Development Centre

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Vendor selling fresh vegetables in Galle, Sri Lanka

The prevailing international discourse on informality has shifted. The conceptual “discovery” of the informal sector by the ILO’s Kenya mission in 1972 noted not only its scale but also that it was “…economically efficient and profit-making…” Today, the view that informality is a drag on productivity growth and progress has gained ground in the international community and is consistent with the recommendation that the informal economy should be formalised.

One contention is that balanced development and policy action that lifts the financial, technological, institutional and human capital constraints to productivity will also enable higher productivity in informal firms and thereby formalisation. A growth-inducing productivity agenda is a necessity, but growth alone is not enough to reduce informality.
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Excessive informal sector: a drag on productivity



By Aleksander Surdej, Poland’s Ambassador to the OECD

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Photos by Victor Jiang / Shutterstock

The informal economy remains a problem when we discuss the prospects of economic development. It is perceived as a hindrance to economic progress because the informal sector does not pay taxes, does not include its employees in social insurance schemes and does little to offer labour law protections. Increasingly, various researchers (La Porta1, Shleifer2, 2014) and international organisations, like the OECD, converge in seeing the informal economy as an obstacle to economic development due to its imminent low productivity. Indeed, informal businesses are concentrated in low productivity sectors. They are, on average, smaller and hence less productive. They generate lower value added. They pay lower wages to their employees and do not train them. And the owners of informal businesses manage their firms less efficiently than their better educated formal sector counterparts.

The informal sector is hence both a symptom of economic backwardness and a drag on economic development. But, can this apparent vicious circle be broken, or is it an economic policy donquichottean task?

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How to continue the shifting wealth momentum

By Carl Dahlman, Head of the Thematic Division and Head of Global Development Research at the OECD Development Centre and Martin Wermelinger, Economist at the OECD Development Centre Strong growth over much of the past decade has substantially boosted developing countries’ share of the global economy and accelerated per capita income convergence with richer countries. We call this process “shifting wealth.” However, productivity is still lagging … Continue reading How to continue the shifting wealth momentum

Getting ready for the next wave: Towards a more dynamic and inclusive Latin America

By Mario Pezzini, former Director of the OECD Development Centre, and Angel Melguizo, former Head of the Latin America and Caribbean Unit at the OECD Development Centre.

Latin America and the Caribbean enjoyed a decade of strong growth between 2004 and 2013. Growth averaged 3.8% and in some years over 5%. They were helped along by growth in China and other emerging economies that raised demand and prices for exported commodities such as food, metals and fuels.

This led to an extraordinary easing of financial conditions, especially after the global financial crisis. Latin America was riding good times. However, the extraordinary external conditions blurred the true state of the region’s domestic supply and demand situation. Now the good times are over – at least for a while – and it is easier to check out the true shape of the regional economy. Continue reading “Getting ready for the next wave: Towards a more dynamic and inclusive Latin America”