The OECD Economic Survey of the United States for 2012

The Program on America and the Global Economy hosted the Deputy-Secretary General of the Organization for Economic Cooperation and Development along with the US Ambassador to the organization yesterday to discuss the newly released OECD Economic Survey of the United States, 2012.  The organization compiles a comprehensive economic report for each member country as well as major non-member countries (i.e. the BRIC’s) every two years.  The focus of the surveys is on the macroeconomic and structural policies and key challenges that could boost economic performance on a sustainable basis in each country.

The 2012 report on the U.S. finds that the economic recovery is gaining momentum, but other key conclusions warn that legislative decisions are needed to avoid the “fiscal cliff” at the end of 2012; unemployment duration is still painfully high, income inequality and relative poverty are among the highest in the OECD, and that innovation performance has weakened.

The gains the U.S. economy has made are noted and moderate growth is expected for the next two years but a further deterioration of the European crisis or the potential for U.S. policymakers to allow for immediate sharp cuts in government spending could jeopardize the outlook, the report said. Specifically, the organization warned that U.S. lawmakers must avoid the so-called fiscal cliff of expiring tax cuts and automatic spending cuts.  A fiscal plan must be put in place to address deficits, but it should be adopted gradually as opposed to the immediate spending cuts sought by some Washington policy makers, according to the report.

To promote job creation and increase wages, the report recommended implementation of various training and re-employment programs outlined in the Administration’s FY 2013 budget and stressed the improvement of education and training overall to reduce labor-force mismatches and reduced wages.  Specifically it suggested “reducing financial and other barriers to tertiary education and providing vocational training opportunities in secondary school”.

The report was perhaps most critical of the high rate of income inequality in the U.S. economy which remains well above the OECD average, and that the level of relative poverty is one of the highest in the organization. The report said the U.S. had the fourth-worst measure of income inequality ahead of only Turkey, Mexico and Chile at the end of the last decade. Among the recommendations offered by the report, tax breaks that mainly benefit the wealthiest should be phased out over time.

“Although the middle class have seen their taxes remain roughly constant, or slightly increase, average income taxes have significantly declined for the most wealthy, especially the 1% top earners,” the report said.

Additionally, the report said the U.S. should do more to fix the educational system, including moving away from the local property-tax based funding process that is prevalent throughout the country. The OECD found that the U.S. is one of only three countries in the organization that spends less on students from disadvantaged backgrounds than on other students, and that the best teachers rarely work with students in the schools that most need their abilities. “The U.S. education system is less effective than those of other countries in helping children realize their potential,” the report concluded.

Also, the report highlighted the importance of research and development for innovation and economic growth and recommended that cuts to R&D funding be as limited as possible.  Patent reform and the increase in students graduating with degrees in STEM fields are growing needs as well.

Look for the video of the event hosted at the Wilson Center later in the week.

 

Posted by: Sean Norris

Sources: Bloomberg, The Wall Street Journal, The Organization for Economic Cooperation and Development

Photo Credit: OECD Conference Centre Entrance courtesy of flickr user OECD

You Are Invited: OECD Economic Survey of the United States, 2012

 

 

The Program on America and the Global Economy (PAGE) and Organization for Economic Cooperation and Development (OECD) present:

OECD Economic Survey of the United States, 2012

 Tuesday, June 26, 2012

3:00 – 4:30pm

5th Floor Conference

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 Ambassador Richard Boucher, Deputy Secretary-General, OECD

Ambassador Karen Kornbluh, US Mission to the OECD

 Moderator:

 Kent Hughes, Director, Program on America and the Global Economy

 Discussants:

Patrick Lenain, Division Head, Economics Department, OECD

Wendy Dunn, Economist, Economics Department, OECD

________________________________________________________________________

The OECD’s 2012 Economic Survey of the United States is an in-depth analysis of the U.S. economy and offers policy recommendations to promote sustainable economic growth and employment. The Survey also explores policy options to reduce income inequality and poverty. A special chapter in this year’s report is focused on fostering innovation.

We invite you to join us at the Woodrow Wilson Center for a presentation and discussion on the findings of the report with OECD Deputy Secretary-General Ambassador Richard Boucher, US Ambassador to the OECD Karen Kornbluh, and members of the OECD Economic Survey team.

The 34-nation Organization for Economic Cooperation and Development (OECD) regularly assesses economic policies of its member countries and key emerging economies. OECD Economic Surveys are prepared as part of a peer review process and its recommendations are endorsed by all OECD member counties. They  provide timely analysis, guidance and options for policymakers to shape “better policies for better lives” and have proven to be essential reading in assessing global economic challenges and opportunities.

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Please RSVP acceptances only to page@wilsoncenter.org

Directions to the Wilson Center: www.wilsoncenter.org/directions

Development aid falls during global recession

The Organisation for Economic Co-operation and Development released a news report outlining several trends and statistics in developmental aid flows from OECD countries to developing nations. Aid flows have been steadily increasing since 1997 until it dipped by 2.7% in 2011 compared to the previous year in real terms. OECD Development Assistance Committee (DAC) Chairman Brian Atwood stated that the decrease in aid, which resulted from the economic crisis, reflected the “growing awareness that global challenges… cannot be resolved without development progress.”

The largest donor in 2011 was the United States, followed by Germany, the United Kingdom, France, and Japan. Sweden, Norway, and Luxembourg topped the ranking in net official development assistance as a percentage of GNI; they, along with Denmark and the Netherlands, were the only states to “exceed the United Nations’ ODA target of 0.7% of GNI.  The United States sits at fifth from last at 0.2%, a 0.01% decrease from 2010. However, U.S. bilateral ODA to Africa rose 17.4% and ODA to Least Developed Countries increased 6.9%.

The OECD’s predictions for the years 2012 to 2015 give a conservative outlook, suggesting relatively few changes in current aid trends. The report explains that it may take “several years from the onset of a recession for the full impact to be felt on aid flows,” partly because some aid flows through international organizations and thus is not immediately received. In the upcoming years of tight budgets, DAC countries may focus more on the Recommendation on Good Pledging Practice, which seeks to improve aid “accountability and transparency.”

 

Posted by: Pokyee Yu

Sources: The Organisation for Economic Co-operation and Development

Photo Credit: The Organisation for Economic Co-operation and Development

Divided We Stand: Tackling Growing Inequality Now

Kent Hughes, Director of the Program on America and the Global Economy, will be moderating a discussion on inequality.  The details are below.

Divided We Stand:

Tackling growing inequality now

Wednesday, December 14, 2011

9:30am Registration ~ 10:00am-12:00pm Presentation & Discussion

AFL-CIO, Gompers Room ~ 815 16th Street NW ~ Washington, DC 20006

Register online here.  

Presentation: John Martin, Director for Employment, Labor and Social Affairs, Organization for Economic Cooperation and Development (OECD)

Discussants: Richard Trumka, Chairman, Trade Union Advisory Committee (TUAC); Charles Heeter, Chairman, Business Industry Advisory Committee (BIAC)

Moderator: Kent Hughes, Director, Program on America and the Global Economy, Woodrow Wilson International Center for Scholars

Rising income inequality creates economic, social and political challenges around the globe. It can jeopardize social mobility, as seen in countries where inequality is high and intergenerational earnings mobility is low. The resulting inequality of opportunity will impact economic performance as a whole, including the likely fueling of protectionist sentiments and decreasing support for open trade and free markets.

A new OECD report shows that growing inequalities are not “inevitable.” Globalization and technological changes offer opportunities but also raise challenges that can be tackled with effective and well-targeted policies. Any policy strategy to reduce the growing divide between rich and poor should rest on three main pillars: more intensive human capital investment; inclusive employment promotion; and well-designed tax/transfer redistribution policies.

This gathering will tackle the global questions of: What is the impact of high levels of inequality on policymaking? What can be done to reduce inequality? What is driving the increase in income inequality and, more importantly, how to buck this trend?

 Posted by: PAGE Staff