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14/10/2021
Regulation is one of the key tools governments can use to respond to the COVID-19 pandemic and move towards recovery. While the pandemic underscores the need for well-designed, evidence-based regulatory policies, the extraordinary pressures it imposed often forced governments to shorten procedures and launch new forms of co-ordination to urgently pass regulatory measures. This can make regulatory policy making more challenging, but also provides opportunities to innovate. This policy brief analyses how Southeast Asian (SEA) countries approached these challenges and opportunities, and shares lessons learned and practices among the SEA and OECD communities.
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06/10/2021
Laws and regulations govern the everyday life of businesses and citizens, and are essential tools of public policy. The COVID-19 pandemic has highlighted the crucial role regulation plays in the economy and society, but has also exposed gaps in domestic and international rule-making that have cost lives and money. The 2021 Regulatory Policy Outlook, the third in the series, maps country efforts to improve regulatory quality in line with the 2012 OECD Recommendation on Regulatory Policy and Governance, and shares good regulatory practices that can help close the gaps. It provides unique insights into how countries approach the design, enforcement and revision of regulations, and suggests where countries can best focus their efforts to ensure that laws and regulations work as intended. Finally, it discusses some agile and innovative approaches to rule making such as regulatory sandboxes, behavioural insights, and outcome-based, data-driven and risk-based regulation.
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24/09/2021
The OECD Business and Finance Outlook is an annual publication that presents unique data and analysis on the trends, both positive and negative, that are shaping tomorrow’s world of business, finance and investment. Artificial Intelligence (AI) has progressed rapidly in recent years and is being applied in settings ranging from health care, to scientific research, to financial markets. It offers opportunities, amongst others, to reinforce financial stability, enhance market efficiency and support the implementation of public policy goals. These potential benefits need to be accompanied by appropriate governance frameworks and best practices to mitigate risks that may accompany the deployment of AI systems in both the public and private sphere.Using analysis from a wide range of perspectives, this year’s edition examines the implications arising from the growing importance of AI-powered applications in finance, responsible business conduct, competition, foreign direct investment and regulatory oversight and supervision. It offers guidelines and a number of policy solutions to help policy makers achieve a balance between harvesting the opportunities offered by AI while also mitigating its risks.
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21/09/2021
The global economic recovery from the COVID-19 pandemic remains strong, yet too uneven. Uneven progress is increasing economic tensions that could undermine the recovery if not well managed by policymakers. Rising commodity and shipping prices and stretched supply chains as economies re-open rapidly are pushing up inflation everywhere but this is expected to be temporary.This Interim Report provides updates for G20 country projections made in the May 2021 issue of the OECD Economic Outlook (Number 109).
21/09/2021
The COVID-19 crisis created a sudden need for businesses and their employees to start or increase working from home. By facilitating teleworking from home, information and communication technologies (ICTs) have been crucial in allowing economic activities to endure and enabling a significant portion of individuals to continue earning incomes. This brief presents key information on how teleworking evolved during the first year of the COVID-19 pandemic (2020), with a particular focus on timely and high frequency data published by national statistical organisations, as well as evidence on how telework may evolve in the future.
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20/09/2021
2020 marked some of the largest reductions in trade and output volumes since WWII. Focusing on the COVID-19 pandemic and using the latest monthly and quarterly data on international trade of selected countries and products, this paper documents key shifts in geographical direction and product composition of international trade in 2020. Trade in services declined by more than twice as much as trade in goods and its recovery has also been slower. While the size of the drop in global trade relative to the drop in output in 2020 was smaller than during the Global Financial Crisis (GFC), this was not related to the overall size of the trade impacts in 2020, but rather reflects the significant heterogeneity of trade and production impacts across specific goods, services and trade partners from COVID-19. Trade in several types of goods plummeted, while that in others increased markedly. As a result, the variation in trade impacts across the different product categories in 2020 was not only larger than during the GFC, but also larger than in any other year during the past two decades. The product structure of countries’ goods trade also changed significantly in 2020, indicating large adjustments. While some international supply chains came under pressure in early months of the pandemic, the data also show that supply chains were instrumental in the resumption of economic activity. The distance travelled by imported products actually continued to increase in 2020, largely as a result of China and other Asian countries filling supply gaps resulting from lockdowns and demand changes in other regions. These shifts occurred in the context of significant perturbations in the international transport sector. While it is not known which of the changes in 2020 will be only short-lived, some seem to show signs of longer-term shifts or are likely to result in long-term adjustments. Above all, the unprecedented heterogeneity of changes in trade flows across products, sources and destinations seen in 2020 suggests high uncertainty and adjustment costs, and implies an increased need ‒ and incentives ‒ for consumers, firms and governments to adopt new or intensify existing risk mitigation strategies.
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14/09/2021
The pandemic recession in 2020 was milder than in most other OECD countries, but recent outbreaks have prompted the country to begin transitioning from a zero tolerance to a containment approach to the virus. As the recovery becomes more firmly entrenched, public policy must focus on setting the conditions for another prolonged period of strong and well-distributed growth in living standards. Recent efforts to reduce regulatory, administrative and financial barriers for young high potential firms should continue. At the same time, the resilience of the economy to future economic shocks can be supported by rethinking institutional frameworks related to fiscal and monetary policy, ensuring the social safety net is adequate and that the financial sector supports household financial resilience. Australia is uniquely vulnerable to climate change, but it is also uniquely placed to benefit economically from global decarbonisation due to its natural endowments (e.g. wind, sun, ocean access) and strong human capital to form the basis of innovation in carbon abatement technologies. A coherent and coordinated national strategy that defines clear goals and corresponding policy settings for achieving the government’s emission reduction objectives will be critical.SPECIAL FEATURE: THE ROLE OF THE FINANCIAL SECTOR IN SUPPORTING A SUSTAINABLE AND INCLUSIVE RECOVERY
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10/09/2021
The COVID-19 pandemic forced most euro area economies into repeated lockdowns in 2020 and early 2021 that lead the euro area into its deepest recession on record. The policy reaction to the crisis was large and rapid. It included, among others, significant monetary and fiscal stimuli, but also an ambitious European plan (“Next Generation EU”) to promote economic recovery financed by joint borrowing. However, a durable recovery will require the completion of an ambitious reform agenda, including to the economic architecture of the currency union. This Survey has three main messages. Firstly, monetary and fiscal policy accommodation should continue as long as necessary for the recovery to become firmly established and inflation to return to the central bank objective. Secondly, the planned discussion of the European fiscal framework is key to buttress macro-economic policy in Europe. Fiscal rules need to be evaluated with the aim to better ensure sustainable government finances, sufficient counter-cyclicality and greater ownership. Thirdly, the risk of divergence among euro area members following the COVID-19 crisis needs to be addressed by considering the establishment of a common fiscal capacity, completing the Banking Union, deepening the Capital Markets Union (CMU), and encouraging reforms of domestic labour markets.SPECIAL FEATURE: CYCLICAL CONVERGENCE
10/09/2021
The COVID-19 pandemic plunged the EU into its worst-ever recession and risks increasing inequalities, notably between regions. Thanks to a bold and innovative policy response, including a common instrument to finance national recovery plans (Next Generation EU), growth is rebounding, but ambitious reforms will be essential to heal the scars of the pandemic and succeed in the green and digital transitions. This Survey has three main messages. Firstly, increasing public and private investment is key to speed up the recovery. Improving European interconnections and fostering cross-country collaboration in innovative industrial projects should be priorities. Secondly, the transition towards climate neutrality and a circular economy will enhance well-being while improving European industrial strengths. Better pricing of carbon emissions, new regulatory tools and more R&D funding will all help reinforcing the transition towards a greener economy. Finally, to avoid the rise in regional inequalities, poorer regions need to improve their productive specialisation. For that purpose, cohesion and rural development policies need to be revamped to gain in efficiency, notably by supporting more effectively innovation.SPECIAL FEATURE: REGIONAL CONVERGENCE
07/09/2021
The G20 Rome guidelines for the future of tourism identifies key issues and opportunities to rethink and reshape tourism policy in response to the impacts of the COVID-19 pandemic. It presents guidelines for action that are informed by the need to a) restore confidence and enable recovery, b) learn from the experience of the pandemic, and c) prioritise a sustainable development agenda in guiding future tourism. They are based around seven interrelated policy areas: i) safe mobility, ii) crisis management; iii) resilience; iv) inclusiveness; v) green transformation; vi) digital transition; and vii) investment and infrastructure. The G20 Rome guidelines were endorsed in the Rome Communiqué of the 2021 G20 Tourism Ministers’ meeting.
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06/09/2021
Italy’s economy is recovering steadily from the COVID crisis, thanks to the vaccination campaign and generous fiscal support to households and firms. Risks to the outlook are large, including virus variants and the path of global interest rates. To raise growth and employment above pre-pandemic levels, the composition of public spending and taxes must improve. Together with implementation of the National Recovery and Resilience Plan, which includes critical structural reforms and investments, this can help support a faster transition towards a greener, more digitised economy. Realising this will require a demanding set of legislative and administrative reforms. Improving civil justice, tax administration and public investment will be essential to raise income growth. Making more effective use of performance information and spending reviews can help reallocate public spending to the most growth-enhancing activities. Reviewing the existing stock of regulations and how they are enforced would improve the business environment. Agile recruitment and better assessing, rewarding and supporting the performance of public servants would fill growing skill gaps in the public workforce. Improving collaboration across Italy’s multiple layers of government would improve delivery of public services such as childcare and active labour market policies.SPECIAL FEATURE: STRENGTHENING PUBLIC SECTOR EFFECTIVENESS
06/09/2021
The COVID-19 health crisis has put unprecedented strains on the ability of both governments and taxpayers to carry out normal activities. Cross-border withholding tax relief procedures, frequently reliant on paper-based processes, are one area that has been particularly affected, creating challenges for taxpayers, financial institutions and tax administrations alike. This document contains administrative measures that source and residence jurisdictions may consider adopting to manage withholding tax relief procedures in a coordinated manner.
13/08/2021
COVID-19 related travel restrictions, including complete border closures, have been one of the first containment measures to be implemented by many countries and have been continuously adjusted according to the epidemiological situation in departure and destination countries. Despite some easing since mid-2020, the level of such restrictions remain high, especially in Europe and North America. The economic costs of restrictions on international travel are apparent in those sectors most directly impacted, as documented here. However, given their important interlinkages, a uniquely sectoral focus is likely to underestimate the broader macroeconomic costs, which are also assessed, albeit with less precision. The importance of these linkages is borne out by the fact that those OECD countries with the largest travel and tourism sectors -- such as Greece, Iceland, Portugal, Mexico and Spain -- are among those that have experienced the largest falls in GDP in 2020 . Indeed, the pre-crisis size of the travel and tourism sector is found to better explain cross-country differences in GDP growth in 2020, than exposure to any of the other sectors considered most vulnerable to COVID-19, or the average stringency of wider country lockdown measures during 2020. These estimates serve as a means to gauge the potential economic benefits of a rapid return to more normal travel arrangements facilitated by the implementation and agreements around testing and vaccination protocols.
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13/08/2021
This paper sheds light on inter-regional migration, housing and the role of policies, drawing on a new comparative cross-country approach. The results show that OECD countries exhibit stark variation in both levels and trends in inter-regional migration, which is found to be highly responsive to local housing and economic conditions. In turn, a large number of policies in the area of housing, labour markets, social protection and product markets influence the responsiveness of inter-regional migration to local economic conditions. For instance, more flexible housing supply makes inter-regional migration more responsive to local economic conditions while higher regulatory barriers to business start-ups and entry in professions significantly reduce the responsiveness of inter-regional mobility to local economic conditions. The capacity of workers to move regions in response to local economic shocks is one key dimension of labour market dynamism which could, at the current juncture, contribute to the recovery from the COVID-19 crisis. In this context, the paper proposes articulating structural with place-based policies to help prospective movers as well as stayers.
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12/08/2021
Like many other countries, Malaysia was hit hard by the COVID-19 pandemic starting in early 2020. Its past policy prudence has allowed Malaysia to react swiftly and boldly to the public health and economic crisis. Nevertheless, the crisis revealed the necessity of further reforms that Malaysia needs to pursue in order to achieve more inclusive and high growth after the pandemic. Vulnerable workers have been more affected during the pandemic and many firms have been urged to use digital tools, such as e-commerce and teleworking, for the first time. Going forward, strengthening social protection is of utmost important to improve the well-being of the Malaysian people, including self-employed workers, and prepare for the ageing society. Easing government regulations further is crucial to stimulate business dynamism and restore vigorous growth. Accelerating digitalisation will be key for Malaysian firms to become more productive in the post-pandemic era. Along with its further economic development, Malaysia needs to transform itself into a greener economy.SPECIAL FEATURES: PRODUCT MARKET REGULATION; DIGITALISATION; TELEWORKING
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30/07/2021
The COVID-19 pandemic interrupted the strong economic growth performance in 2016-19, which entailed large increases in employment and real incomes, and the lowest unemployment rate in thirty years. The swift vaccination rollout allows a faster recovery from the pandemic from mid-2021 onwards. However, the strength of the recovery is uncertain, reflecting the potential scarring of the economy arising from the prolonged crisis. Looking further ahead, population ageing will lead to a smaller and older workforce, reinforcing the need for improving the productivity performance of the economy to restore the impressive employment and income gains achieved before the pandemic. In the near‑term, underutilised labour resources, such as low‑skilled workers, need to be mobilised through higher labour mobility and skills upgrading. Thereafter, maintaining productivity growth requires improved vocational and tertiary education, more competitive markets, and faster adoption of new technologies, particularly to accelerate the digital transformation of the economy. These policies should be implemented alongside measures to promote green growth and prepare public finances for the long-term fiscal challenges associated with population ageing.SPECIAL FEATURE: FOSTERING PRODUCTIVITY FOR A STONGER AND SUSTAINED RECOVERY
27/07/2021
The COVID-19 pandemic placed unprecedented short-term stresses on food supply chains around the world. However, rapid responses by both private-sector actors and policy makers mostly managed to prevent severe disruptions. Yet, even before the outbreak of COVID-19, food systems were faced with a formidable “triple challenge” of simultaneously providing food security and nutrition to a growing global population, ensuring the livelihoods of millions of people working along the food chain from farm to fork, and ensuring the environmental sustainability of the sector. This paper discusses the stresses COVID-19 created in food supply chains and the remarkable resilience these supply chains have demonstrated in high-income countries, as well as specific impacts in the fisheries and aquaculture sectors and the importance of transparency in avoiding a COVID-19 induced food crisis. The paper concludes by discussing the long-term challenges for food systems, arguing that the unanticipated shock of COVID-19 strengthens the case for shifting from ‘business as usual’ policies to a more forward looking policy package for food systems.
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22/07/2021
The longer run consequences of the pandemic will partly hinge on its impact on high productivity firms, and the ongoing process of labour reallocation from low to high productivity firms. While Schumpeter (1939) proposed that recessions can accelerate this process, the nature of the COVID-19 shock coupled with a policy response that prioritised preservation (over reallocation) raises questions about whether job reallocation remained productivity-enhancing. Using novel, near-real-time data for Australia, New Zealand and the United Kingdom, this paper shows that while labour turnover fell in response to the pandemic, job reallocation remained connected to firm productivity – that is, high productivity firms were more likely to expand and low productivity firms were more likely to contract. The pandemic coincided with a temporary strengthening of the reallocation-productivity link in Australia – but a weakening in New Zealand – which appears related to the design of job retention schemes. Finally, firms that intensively used Apps to manage their business were more resilient, even after controlling for productivity. Thus, while policy partly suppressed creative destruction, the nature of the shock – i.e. one where being online and able to operate remotely were key – favoured high productivity and tech-savvy firms, resulting in a reallocation of labour to such firms. The use of timely, novel data to investigate the allocative effects of the pandemic marks a significant advance, given that the seminal paper on productivity-enhancing reallocation during the Great Recession arrived some six years after Lehman Brothers collapsed.
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21/07/2021
Revenue Statistics in Asia and the Pacific is jointly produced by the Organisation for Economic Co-operation and Development (OECD)’s Centre for Tax Policy and Administration (CTP) and the OECD Development Centre (DEV) with the co-operation of the Asian Development Bank (ADB), the Pacific Island Tax Administrators Association (PITAA), and the Pacific Community (SPC) and financial support from the governments of Ireland, Japan, Luxembourg, Norway, Sweden, Switzerland and the United Kingdom. This edition includes a special feature on the emerging challenges for the Asia-Pacific region in the COVID-19 era and ways to address them. It compiles comparable tax revenue statistics for Australia, Bhutan, People’s Republic of China, Cook Islands, Fiji, Indonesia, Japan, Kazakhstan, Korea, Lao People’s Democratic Republic, Malaysia, the Maldives, Mongolia, Nauru, New Zealand, Papua New Guinea, Philippines, Samoa, Singapore, Solomon Islands, Thailand, Tokelau, Vanuatu and Viet Nam ; and comparable non tax revenue statistics for Bhutan, the Cook Islands, Fiji, Kazakhstan, Lao People’s Democratic Republic, the Maldives, Mongolia, Nauru, Philippines, Papua New Guinea, Samoa, Singapore, Thailand, Tokelau, Vanuatu and Viet Nam. The model is the OECD Revenue Statistics database which is a fundamental reference, backed by a well established methodology, for OECD member countries. Extending the OECD methodology to Asian and Pacific economies enables comparisons about tax levels and tax structures on a consistent basis, both among Asian and Pacific economies and with OECD, Latin American and Caribbean and African averages.
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21/07/2021
The COVID-19 crisis created a sudden need for businesses and their employees to take up or increase working from home. By facilitating teleworking, digital technologies have been crucial in allowing economic activities to endure and in enabling a significant portion of individuals to continue earning income. This paper brings together information on how teleworking has evolved during the COVID-19 pandemic. In particular, it looks at which businesses and individuals have been able to leverage it to keep working. It also presents the definitions and survey vehicles underlying the statistics presented.
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