Multilateralism, key to
solving economic tensions
Angel Gurria speaks on global economic challenges and possible responses
By Jean-Luc Burlone
On Monday, May 14, the OECD’s Secretary-General, Mr. Angel Gurria, delivered a speech at the CORIM’s breakfast conference. He clearly demonstrated the effectiveness of the OECD in tackling current challenges to the economy: tensions in trade and inequality.
For the first time since the 2008 crisis, as stated by Mr. Gurria, “GDP growth, trade and investment have rebounded in 2017 and OECD employment rates are finally back above their pre-crisis levels”.
A few months ago, the IMF had indicated that global economic growth was synchronized and robust. Both organisations are now worried that protectionism – not mentioning Donald Trump trade tweets – could derail the long sought-after global growth. Business and consumer confidence is undermined by the uncertainty raised by protectionist policies.
In the mean time, inequality remains. Wage growth for the low and middle-income classes is stagnant, hindered by globalisation and technology, particularly digitalisation. The richest 10% have an income 10 times higher than the poorest 10%.
Both organisations (the OECD and the IMF) are now worried that protectionism… could derail the long sought-after global growth.
Popular movements are fed by inequality. Regardless of its real cause (lagging response from the elite with respect to education and other social policies), inequality creates discontent that damages environmental and health issues from which the poorest will be the first to suffer.
Mr. Gurria mentioned that the OECD would address all these issues by reinforcing international cooperation. The agenda of the upcoming Ministerial Council Meeting, to be chaired by President Macron, has for its theme, La Refondation du multilateralisme (The Refoundation of Multilateralism).
According to a recent OECD analysis, over 25% of jobs in member countries are sustained by demand outside the organisation and over 14% of their population is foreign born. Clearly, multilateralism must adapt to the new reality, whether it is linked to technologies, climate change, migration or geopolitics.
‘Regardless of its real cause… inequality creates discontent that damages environmental and health issues from which the poorest will be the first to suffer.’
One major objective for the OECD is to take measures so that countries and companies can compete on a level playing field. Governments are inclined to favour their own suppliers as well as to defer labour environmental standards to serve their goals. Agricultural markets, as well as steel, are heavily distorted.
The OECD’s Global Forum on Steel Excess Capacity is an example where the OECD applies a multilateralism solution to tackle an issue. The organisation also helps state-owned enterprises with guidelines on Corporate Governance to make them more competitive, transparent and efficient.
The OECD offers tools that allow governments and business leaders to coordinate views and solutions to foster inclusive economies. To name a few: Guidelines for Multinational Enterprises, the OECD/G20 Principles of Corporate Governance, OECD Due Diligence Guidance and the recent Business for Inclusive Growth.
‘One major objective for the OECD is to take measures so that countries and companies can compete on a level playing field.’
It is reassuring that organisations like the OECD are trying to adapt to a rapidly changing world. Good luck to its efforts in applying multilateralism to today’s challenges. Adapting or building new institutions demands more time and effort than it takes for populist policies to destroy them.
Jean-Luc Burlone, Ms. Sc. Economy, FCSI (1996)
Economic Analysis – Financial Strategies
The article above summarises my view and understanding of the speech given at the CORIM breakfast last May 14, 2018. – JLB
Fellow of the Canadian Securities Institute (FCSI), Jean-Luc Burlone has an excellent knowledge of financial product management and holds a Master’s degree in economics from the Université de Montréal with a dual specialization in development economics and International economy – finance and trade.