News Brief - November 2011

G20 agrees on tax; Making more aid better; Economy; "How's Life" launched; Soundbites; Rethink fossil fuel subsidies; Country roundup; Plus ça change...

G20 agrees on tax
Making more aid better
Economy

“How’s Life?” launched
Soundbites
Rethink fossil fuel subsidies

Country roundup
Plus ça change...


G20 agrees on tax

Participants at the G20 summit in Cannes agreed to a new international convention to tackle tax evasion more effectively. The Multilateral Convention on Mutual Administrative Assistance in Tax Matters offers a wide range of tools for cross-border tax co-operation. It includes automatic exchange of information, multilateral simultaneous tax examinations and international assistance in the collection of tax due. The agreement comes after the delivery of the OECD-based Global Forum’s Progress Report to the G20 Summit, which includes some 370 recommendations for improved international tax co-operation.

It also comes after another report by the OECD on the dangers of corporate tax avoidance. Global corporate losses have increased significantly because of the financial and economic crisis, with loss carry-forwards as high as 25% of GDP in some countries. Though most of these claims are justified, some corporations find loopholes and use “aggressive tax planning” to avoid taxes in ways that bend , if not break, the law, according to Corporate Loss Utilisation through Aggressive Tax Planning. To address this concern many countries have developed various strategies. Working together, countries can deter, detect and respond to aggressive tax planning while at the same time ensuring certainty and predictability for compliant taxpayers. 

For more, see our book review and www.oecd.org/tax/transparency

Making more aid better

Development aid has more than trebled in the past 50 years from $37 billion in 1960 to $128 billion last year. But how effective is it? Poor co-ordination and unpredictable aid flows can waste efforts to eradicate poverty. A new survey of 78 countries and territories gives both donor and recipient countries scores based on their management of aid. Rwanda and Tanzania, for instance, are given A ratings for their own national development strategies, while Chad and Nepal have backtracked to D ratings. The survey applauds Canada, the UK, Norway and Ireland for eliminating tied aid, which can increase assistance project costs by 20-30%. Efficiency is key, the survey says, pointing to the US, France and Japan which made several hundred missions in 2010, spending money that could have been targeted on real development projects.

See www.oecd.org/dac/effectiveness

Economy

The OECD’s latest leading indicators continue to point to a slowdown in economic activity in most OECD countries and major non-member economies. The indicators, which include order books, building permits and long term interest rates, fell by 0.5 points in August, the fifth consecutive monthly decline.

Meanwhile, GDP in the OECD area slowed to 0.2% in the second quarter of 2011, from 0.3% in the previous quarter. This is the fourth consecutive quarter of slower growth, and was particularly marked in the euro area and the EU, where growth came to 0.2% down from 0.8% in the previous quarter. Gross fixed investment added 0.2 percentage points to overall growth, while the contribution from private consumption continued to slow. In fact, in France, Germany and the UK, the slowdown in consumer spending removed 0.4% from overall GDP growth.

Consumer price inflation in the OECD area rose by 3.3% in the year to September 2011, compared with 3.2% in the year to August, the highest rate since October 2008. Energy prices increased by 14.2% while food prices rose by 4.2%, down from 4.6% in the year to August. Excluding food and energy, the annual inflation rate stood at 1.9%, compared with 1.8% in August.  In the UK, inflation surged to 5.2%, up from 4.5% the previous month.

The OECD area unemployment rate was steady at 8.2% in July 2011, unchanged for the fifth consecutive month. The euro area unemployment rate was also unchanged at 10% for the second consecutive month and has hovered around this level since December 2010. Around 44.5 million people were unemployed across the OECD area in July 2011, down 2.0 million from July 2010 but still 11.4 million higher than in July 2008.

Trade growth slowed across major economies in the second quarter of 2011. Total goods imports of G7 and BRICS countries grew by only 1.1% in the second quarter compared to 10.1% in the previous quarter. Total goods exports slowed to 1.9%, down from 7.7% in the previous quarter.

See www.oecd.org/statistics

“How’s Life?” launched

A new OECD report, How's Life?, offering a comprehensive picture of what makes up people’s lives in 40 countries worldwide, was launched in October. It is part of the OECD’s ongoing effort to devise new measures for assessing well-being that go beyond GDP. For more, see our book review.

Soundbites

Under control…not.

“Frankly, banks have done a very poor job of explaining how we contribute to society.” Bob Diamond, chief of Barclays PLC, quoted in The Times, 4 November 2011

“The world isn’t up to global coordination”. Defiant headline, Wall Street Journal, 13 September 2011

 “It [the financial market] does know what to do, it knows to go up for three days and go down for three days….we’re probably due a bit of bearishness by about Friday of this week.”

Alpesh Patel, founder of Praefinium Partners, on BBC Today Business news, 28 September 2011

“What we need is a really strong steer from policymakers that they have got a strategy. But there is a feeling that none of our policymakers seem to have control of the situation.” Karen Ward, Senior Global Economist, HSBC, 11 August 2011, BBC news.


©Reuters/Shannon Stapleton

Rethink fossil fuel subsidies

In Cannes, G20 leaders reaffirmed their commitment to phasing out inneficient fossil fuel subsidies in the medium term. Around half a trillion dollars of public money was spent last year subsidising the use of fossil fuels, a sum of money which effectively props up harmful greenhouse gas emissions. Moreover, it is a sum that could be spent on areas such as R&D. The OECD and IEA, following up a 2009 commitment by the G20 to phase out wasteful and harmful energy subsidies, note that fossil fuel support often fails to meet its intended objectives: alleviating energy poverty or promoting economic development, and instead encourages inefficiency and creates energy price volatility by blurring market signals. Furthermore, reforming these subsidies will encourage investment in renewable energies and improve their competitiveness. 

See www.oecd.org/iea-oecd-ffss

Country roundup

Argentina has joined the OECD system for the Mutual Acceptance of Data (MAD) in the Assessment of Chemicals. Through MAD, Argentina’s non-clinical safety data related to the protection of human health and the environment must be accepted by OECD and other adhering countries. Other non-OECD countries which take part in MAD include Brazil, India and South Africa, while Malaysia and Thailand are provisional adherents. See www.oecd.org/ehs


©Reuters/Ueslei Marcelino

The Brazilian economy has weathered the global economic crisis, but needs to introduce further reforms to boost its long-term growth, spur investment and further reduce poverty, the OECD’s latest Economic Survey of Brazil says. Unprecedented progress has been made on social goals including poverty reduction and inequality, the report notes, but warned about slowing growth and high inflation in the years to come.

A separate report, The OECD Integrity Review of Brazil, praises the progress made in recent years to stamp out misconduct among public workers, but underlines the need to keep up the work. In particular, co-ordination among public bodies must be improved to prevent waste, fraud and corruption in the public administration. See www.oecd.org/brazil and www.oecd.org/gov/ethics

Korea is making good progress on tackling foreign bribery, notably in intelligence gathering, the OECD Working Group on Bribery has reported.  The report emphasised, however, that more work needs to be done in investigating cases and ensuring that sanctions are effective. See www.oecd.org/korea

Tough challenges remain for the economy in Ireland following a deep recession and banking crisis, but its long-term prospects now appear better than many of the other hard hit European countries, according to the OECD’s latest Economic Survey.

Switzerland’s health system is one of the best in the world, but it faces a difficult task of keeping costs manageable while dealing with rising rates of cancer, heart disease and diabetes, says a report from the OECD and World Health Organization.

Visit the newsroom at www.oecd.org/media


©OECD Observer No 286 Q3 2011



Bookmark this


Economic data

E-Newsletter

Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Editor's choice

  • Composite leading indicators
  • 2015, a year full of dangers? Laurent Bossard, director of the Sahel and West Africa Club, acknowledges that the situation in the region is complex and unstable but refuses to give in to fatalism.
  • The 5th Anti-corruption conference for G20 governments and business in Istanbul on 6 March will address how all businesses can play their part in contributing to growth and investment, and can operate with clean hands in a safe environment.
  • Success story. Discover the story of this young Ethiopian woman who launched a successful business in the footwear industry and became a UN Goodwill Ambassador for Entrepreneurship.
  • Transports in Asia. The Asian Development Bank advocates sustainable transport in a continent where vehicle ownership is perceived as a sign of social success.
  • Vote for your favourite photograph! This World Bank #EachDayISee photo contest aims to display visual stories from all over the world through which people express what they would like to see changed and improved.
  • Why is investment so low in the euro area? This short IMF blog post gives you an insight into the causes of the euro-zone's drastic decline in investment.
  • Have your say! The UN wants to know what matters most to you: pick six global issues in the list and send it to the United Nations.
  • Clear air and healthy lungs: how to better tackle air pollution. From New Delhi to Accra, millions of people breathe polluted air. A new report examines the World Bank’s experience working to improve air quality.
  • The boring secret of great cities. Plenty of things make a city great but what really makes a difference originates in the structure of municipal government according to the OECD's report "The Metropolitan Century".
  • Guinea gets $37.7 million in extra IMF financing to help combat Ebola
  • Towards an international carbon pricing framework? Designing a unified international carbon pricing system could help to move towards a fully functional low-carbon global economy.
  • Putting the global economy on a more virtuous path. Current potential growth rates are well below pre-crisis levels. To avoid stagnation, governments have to put in place robust structural reforms.
  • World Water Day: 22 March 2015 For World Water Day, UN-Water identifies upcoming challenges and sets the theme for the years to come. In 2015, the theme for World Water Day is Water and Sustainable Development.
  • What drives street-based child labour?The ILO, UNICEF, Save the Children and the Lebanese Ministry of Labour launch a first-ever study assessing the scope and characteristics of the increasingly visible phenomenon of one of the worst forms of child labour.
  • No “Grexit”. Speaking to CNBC, OECD Secretary-General Angel Gurría says he would do everything to make sure Greece does not leave the euro. "Everybody wants Greece to stay in, everybody wants Greece to prosper and to get out of its short-term morass," he told CNBC. Watch the video.
  • engaging citizens
  • Interested in citizen engagement? The World Bank Group offers a four-week online course which aims to teach how citizens can engage in both policymaking and public service delivery.
  • 2.1 million jobs could be created in Europe by 2018 under the three-year investment plan put forward by European Commission President Jean-Claude Juncker, according to the ILO.
  • Become involved in urban flood risk management. This World Bank two-week online forum gives you the opportunity to discuss how to preserve cities from these natural disasters with experts and development leaders.
  • Promoting decent work for migrant workers.This ILO report highlights the need to ensure decent work for migrants, which is part of the global agenda on sustainable development.

Most Popular Articles

Subscribe Now

<b>Subscribe now!</b>

To receive your exclusive print editions delivered to you directly


Online edition
Previous editions

Poll

What issue are you most concerned about in 2015?

Euro crisis
Unemployment
Global warming
International conflict
Other

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2015