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Making reforms happen in a shifting wealth world

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  • 1. Making Reforms Happen in a Shifting Wealth WorldMario PEZZINIDirectorOECD Development CentreBUSAN, 30 November 2011
  • 2. Outline1 Shifting Wealth: changing external conditions2 Challenges for domestic reform3 Key messages and the research agenda going forward
  • 3. A success story?• A lower-middle income country• Average 5% annual growth rate since 1990• Improving rankings in the ease of doing business• ‘Prudent public debt management’ (42.8% of GDP in 2009)• 3% fiscal deficit• Inflation at approx. 3% in the 2000s• 60% of budget dedicated to social sectors• Nearly 100% primary enrolment in 2008• 80% health care coverage
  • 4. TunisiaSource: OECD/AfDB/UNECA (2010), African Economic Outlook
  • 5. Main messages1. As economic uncertainty deepens, now is the time for developing countries to channel their recent prosperity into an reform agenda, with emphasis on social cohesion2. But OECD countries are also in deep need of structural and social reforms.3. It’s not only about what you do but also about how you do it  relevance of the Making Reform Happen project and sharing lessons / knowledge.
  • 6. Outline1 Shifting Wealth: changing external conditions2 Challenges for domestic reform3 Key messages and the research agenda going forward
  • 7. The four-speed world in the 1990sSource: OECD Development Centre, Perspectives on Global Development 2010 - Shifting Wealth
  • 8. The four-speed world in the 2000sSource: OECD Development Centre, Perspectives on Global Development 2011 – Social Cohesion in a Shifting World
  • 9. Shifting Wealth: New resources for development Fiscal revenue to GDP ratio (%)Source: Authors’ calculations based on World Bank (2011)
  • 10. Outline1 Shifting Wealth: changing external conditions2 Challenges for domestic reform3 Key messages and the research agenda going forward
  • 11. The aspirations of the emerging middle class Billion OECD countries non-OECD economies 6 5 4 3 80% 68% 2 46% 50% 30% 1 70% 54% 50% 32% 20% 0 2000 2010 2012 2020 2030Source: Author’s calculation based on Kharas (2010)
  • 12. A new “geography” of poverty: From global to national redistribution? LIC: low-income country MIC: middle-income country FCAS: by fragile and conflict-affected states Source: A. Sumner (2010) Global poverty and the new bottom billion (IDS)
  • 13. Growth in life satisfaction and income do not necessarily coincide Annualized growth rates of life satisfaction and income 2006- 2010 Life satisfaction GDP per capita8%6%4%2%0%-2%-4%-6%-8% Tunisia Thailand India Brazil South Africa Morocco Sources: Authors‘ calculation based on Gallup World Poll (2010) and World Bank (2010)
  • 14. Social mobility: correlation of parent/child educationSource: OECD (2010) based on Hertz et al. (2007)
  • 15. Outline1 Shifting Wealth: changing external conditions2 Challenges for domestic reform3 Key messages and the research agenda going forward
  • 16. Key messages and the research agenda going forward1. The evolving international landscape matters: shifting wealth & growing policy spillovers   national reform strategies must take into account the international dimension2. Changing domestic conditions: emergence of a middle-class while persisting pockets of poverty and rising inequality   Effective governments needed: taxation, fiscal legitimacy and quality of public services  Compensation measures for losers – but carefully identify who stands to win and loose (voice and representation)3. The social cohesion dimension is increasingly relevant  Social cohesion as a means and an end  Civic participation to reinforce the sense of belonging and responsibility towards a social contract  Leadership and commitment
  • 17. What is Social Cohesion?
  • 18. Thank youOECD Development CentreMore information:www.oecd.org/dev/pgdwebnet.oecd.org/pgdexplorerwww.oecd.org