G20 Growth Agenda: Framework for Strong, Sustainable, and Balanced Growth

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G20 Growth Agenda: Framework for Strong, Sustainable, and Balanced Growth

  1. 1. G20 Growth Agenda: Framework for Strong, Sustainable, and Balanced Growth Lecture Slides Zia Qureshi KDI, Seoul: July 2-3, 2014
  2. 2. Part I: Context and Overview
  3. 3. G20: overview of structure and work G20: 0rganization of work • G20 processes are country led • Work is typically organized in working groups • Working groups are co-chaired by G20 members • International institutions serve in an advisory and technical role • The World Bank is working with several international institutions (IMF, OECD, BIS, others) in supporting G20 Leaders Sherpas Finance Ministers & Central Bank Governors Working Group Working Group Working Group International Institutions
  4. 4. “We designated the G20 to be the premier forum for our international economic cooperation.” “We agreed to launch a framework that lays out the policies and the way we act together to generate strong, sustainable and balanced growth.” “Our Framework for Strong, Sustainable and Balanced Growth is a compact that commits us to work together to assess how our policies fit together, to evaluate whether they are collectively consistent with more sustainable and balanced growth, and to act as necessary to meet our common objectives.” …………Leaders’ Statement, The Pittsburgh Summit, September 2009
  5. 5. Framework for Strong, Sustainable, and Balanced Growth Mutual Assessment Process (MAP) • The Framework for Strong, Sustainable, and Balanced Growth forms the core of the G20 process for economic policy coordination • The Framework incorporates a Mutual Assessment Process for assessing the consistency of G20 national policies and collective actions with the shared objectives of strong, sustainable, and balanced growth • Spanning the agenda for growth, the Framework plays an integrative role in the G20 process, bringing together the work of different G20 work streams for a unified discussion of macroeconomic, financial, and structural policies • Establishment of the Framework reflected G20 resolve to work together not only on immediate crisis response but also on medium-term policy challenges • The Framework Working Group is assisted by technical inputs from IMF, OECD, World Bank, and other IOs (WTO, UNCTAD, ILO)
  6. 6. Framework/MAP: building blocks and progress Summit Key Steps Pittsburgh, September 2009 Establishment of Framework for Strong, Sustainable, and Balanced Growth and the Mutual Assessment Process (MAP) Toronto, June 2010 Fiscal consolidation plans Financial sector reform Seoul, November 2010 Indicative guidelines to identify and assess imbalances MAP policy commitments Seoul Development Consensus for Shared Growth Cannes, November 2011 Near-term actions to respond to Euro area crisis Sustainability Reports on countries with large imbalances MAP policy commitments Los Cabos, June 2012 Growth and Jobs Action Plan Accountability Assessment Framework St. Petersburg, September 2013 Medium-term fiscal strategies to enhance fiscal sustainability Call for preparation of comprehensive growth strategies Brisbane, November 2014 Assessment and adoption of growth strategies: four areas of focus – investment and infrastructure, employment, competition, and trade
  7. 7. G20 structural reform commitments: more progress in financial sector reform, less in other areas 21% 10% 4% 7% 24% 34% St. Petersburg Commitments Product market regulation Labor market regulation Taxation Human capital Financial regulation Other areas 10% 9% 8% 4% 43% 26% Los Cabos Commitments Source: OECD/World Bank
  8. 8. Need for more vigor in implementation of structural reform commitments 0 10 20 30 40 50 60 70 80 90 100 Other Financial regulation Human capital Taxation Labour market regulations Product market regulation % Pending Ongoing Completed Source: OECD/World Bank Implementation status of Los Cabos structural reform commitments
  9. 9. G20: from crisis management to promotion of growth and development • G20 has done relatively well in its crisis-response role, taking early concerted action to restore market confidence and providing a forum for coordination of macro-financial policies to restore economic stability • Less attention has been paid to the policy agenda for growth and job creation, but the current effort on growth strategies is helping to shift the focus to the medium-term agenda of structural reforms and investment • Development issues are addressed through various initiatives but this effort needs better focus and closer integration with mainstream G20 work • There is a need to improve coordination across G20 workstreams, especially between Development Working Group and Framework Working Group • Successfully addressing this agenda will be essential to G20’s ability to act as a premier global forum not just for crisis response but for the promotion of longer-term growth and development
  10. 10. Part II: Challenges
  11. 11. Framework for Strong, Sustainable, and Balanced Growth Challenges • Restoring strong growth – and job creation • Fostering sustainable growth • Promoting balanced growth
  12. 12. -6 -4 -2 0 2 4 6 8 10 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 World Low-income Middle-income High-income Real GDP growth (% p.a.) Source: WDI; World Bank staff projections Global growth outlook: weak recovery and slower medium-term growth prospects than pre-crisis
  13. 13. Recovery in advanced economies is weak―even by the standards of past crises Source: OECD, Haver Analytics, Rogoff and Reinhart (2008), and staff calculations. * Big Five financial crises include Spain (1977), Norway (1987), Finland (1991), Sweden (1991) and Japan (1992). ** Recessions (i.e., two straight quarters of contraction) in G20 advanced economies since 1960. *** Range limits are average of best/worst three AE recessions 1960-2006. Recovery from financial crisis (100 = First quarter of real GDP contraction)
  14. 14. Growth has slowed also in emerging economies that have been the driver of global growth Source: World Bank -10 -5 0 5 10 15 20 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Brazil Russia India China South Africa BRICS Growth rate (%)
  15. 15. Sustainability of strong growth in emerging economies is important for global growth 15 0 10 20 30 40 50 60 70 80 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Percent DCs' contribution to world GDP growth DCs' constant US$ share of world GDP DCs' PPP share of world GDP Note: 5-year moving average used for calculation of developing countries' (DCs') contribution to world GDP growth. Source: World Bank WDI and staff calculations Developing countries' rising share in global growth 0 10 20 30 40 50 60 70 80 90 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Exports(%ofexportinggroup'stotalexports) Advanced to Advanced Advanced to Developing Developing to Advanced Developing to Developing ... and rising role as markets for exports Source: International Monetary Fund DOTS.
  16. 16. … and for their own development 16 0 10,000 20,000 30,000 40,000 50,000 60,000 United States Russia Brazil South Africa China India CurrentUSDollars,2012 Source: World Bank WDI Gross national income per capita BRICS
  17. 17. Emerging economies need to sustain structural reforms to avoid “middle-income traps” Few countries have escaped middle- income trap in past half century … and none in Latin America Hong Kong SAR Singapore Ireland JapanEq. Guinea Taiwan, China Spain Rep. of Korea Israel Greece 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1 1.2 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1.1 2008percapitaGDPrelativetoUS(ratio) 1960 per capita GDP relative to US (ratio) Source: Staff calculations based on Maddison data. 17 0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1 1900 1906 1912 1918 1924 1930 1936 1942 1948 1954 1960 1966 1972 1978 1984 1990 1996 2002 2008 Argentina Brazil Chile Mexico Peru LAC Ratio of per capita GDP relative to US (1990 US$)
  18. 18. Countries that have successfully transitioned from middle- to high- income status typically show stronger performance on: • Structural transformation―more rapid transformation from agriculture to industry • Higher total factor productivity growth―three times faster than others at upper middle-income levels • Human capital and innovation―higher quality of education, more patents • Openness―greater export orientation; some had more undervalued exchange rates at lower middle-income levels than others but not at upper middle-income levels • Macroeconomic stability―inflation over 10% rare at middle-income levels • Equity―less likely to experience significant increases in inequality at middle-income levels 18 Source: Bulman, David, Maya Eden, and Ha Nguyen, 2012. Transitioning from Low-Income Growth to High-Income Growth: Is there a Middle-Income Trap?” World Bank.
  19. 19. The jobs challenge: persistently high unemployment reflects both weak growth and structural factors Source: OECD 0 2 4 6 8 10 12 14 2007 2008 2009 2010 2011 2012 2013 Unemployment Rates United States United Kingdom OECD Total Euro Area Percent
  20. 20. Framework for Strong, Sustainable, and Balanced Growth Challenges • Restoring strong growth – and job creation • Fostering sustainable growth • Promoting balanced growth
  21. 21. Fiscal imbalances and public debt: the challenge of restoring fiscal sustainability, especially in advanced economies 21 - 50 100 150 200 250 Euro Area USA Japan Middle-income countries Low-income countries 2007 2009 2012 Government debt/GDP (%) Much of the fiscal reform agenda is structural, with reform of tax systems and entitlement programs being central in many countries Source: IMF GFS; World Bank WDI
  22. 22. Need to integrate environmental sustainability in the growth agenda Aggregate Fossil fuel Agriculture Water 0 200 400 600 800 1000 1200 1400 Costofsubsidies,$billion Source: World Bank, 2012: Inclusive Green Growth: The Pathways to Sustainable Development. Fossil fuel and other environmentally harmful subsides Post-tax Pre-tax 0 200 400 600 800 1000 1200 1400 1600 1800 2000 Costofsubsidies,$billion Energy Subsidies Source: IMF. Large win-win potential from removal of environmentally harmful subsides
  23. 23. Combating climate change: a challenge, but also a spur to innovation and investment 1ST WAVE Industrial (1770-1830) 2ND WAVE Steam & Railways (1830-1870) 3RD WAVE Steel, Electricity & Heavy Engineering (1875-1920) 4TH WAVE Oil, Automobiles & Mass Production (1910-1975) 5TH WAVE Information & Telecom (1971-) INNOVATION 1800 1850 1900 1950 2000 Cleantech & Biotech (2009-) 6TH WAVE Source: Nicholas Stern (2014): Fostering the Transition to the New Climate Economy – Policies, Political Economy, Innovation, and Growth
  24. 24. Framework for Strong, Sustainable, and Balanced Growth Challenges • Restoring strong growth – and job creation • Fostering sustainable growth • Promoting balanced growth
  25. 25. Global imbalances and the challenge of rebalancing growth -3 -2 -1 0 1 2 3 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 G-20 Large Oil Exporters ROW Deficit ROW Surplus G-20 Deficit Emg G-20 Deficit Adv G-20 Surplus Emg G-20 Surplus Adv WORLD SUM G-20 Current Account Balances (2000-15; percent of World GDP) Source: IMF data and projections After narrowing during the recession, external imbalances could widen again as growth recovers
  26. 26. Emerging and developing economies’ balance of payments A decade of “capital flowing uphill” -10 -8 -6 -4 -2 0 2 4 6 8 10 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 Current account balance Net private inflows Net private outflows Change in reserves (- = increase) % of GDP Source: IMF BOP Statistics; World Bank staff estimates In the decade to 2010, average current account surplus of 2.6% of GDP and cumulative surplus of $3.8 trillion, implying a sizable net outflow of capital to advanced economies
  27. 27. Emerging economies now hold two-thirds of total international reserves Source: IMF International Financial Statistics. 0 2 4 6 8 10 12 14 TrillionUS$ Advanced Economies Emerging Economies excl. China China International Reserves
  28. 28. Rising inequality: the challenge of inclusive growth Source: World Bank All the Ginis dataset Note: Data on Saudi Arabia are not available. 0 10 20 30 40 50 60 70 Germany Japan Australia France Canada Korea Italy India Russia United Kingdom Indonesia Turkey Argentina United States China Mexico Brazil South Africa Gini coefficient 1980 or earliest 2012 or latest Income Inequality has been rising in most countries
  29. 29. Inclusive Growth • For growth to be strong, sustainable, and balanced in the longer run, it needs to be inclusive • Increased inequality can hurt growth also in the short run by lowering aggregate demand • Recent research links increased inequality to economic instability • There are important synergies between the policy agenda for strong and inclusive growth • Recent research also finds that well-designed redistributive policies to reduce inequality may not harm growth • Promoting inclusive growth―shared prosperity―needs to be an integral part of the agenda and strategies for strong, sustainable, and balanced growth
  30. 30. Part III: Growth Strategies
  31. 31. Framework for Strong, Sustainable, and Balanced Growth G20 Growth Strategies
  32. 32. Development of G20 Growth Strategies • Growing concerns in the G20 about prospects for medium-term growth and job creation • The St. Petersburg Leaders’ Declaration called for development of comprehensive growth strategies for presentation to the Brisbane summit • At their meeting in Sydney in February 2014, G20 Finance Ministers and Central Bank Governors adopted the objective to lift G20’s collective GDP by more that 2% in the next five years (by 2018) above the trajectory implied by current policies • G20 members submitted draft growth strategies in May and these were peer reviewed in June, supported by assessments provided by international organizations (IMF, OECD, World Bank) • Initial assessment showed that the new policies set out in the draft strategies add up only to about half of the 2% target • G20 members asked to submit stronger, final growth strategies in July- August. These will be subject to further discussion and eventually feed into the Brisbane Action Plan to be adopted by G20 Leaders at the summit • Work on the growth strategies being coordinated by the Framework Working Group
  33. 33. Four key reform areas • There are four key areas of focus in the growth strategies being prepared by G20 members: ̶ Investment and infrastructure ̶ Competition and business environment ̶ Trade policies ̶ Employment policies • Presentation that follows focuses on these four areas of reform
  34. 34. Output gaps are largely closed in most emerging economies; higher future growth will depend on raising potential growth 0 1 2 3 4 5 6 7 8 9 2003–07 2007–10 2010–13 2013–16 Actual growth Potential growth (Percent) Actual GDP Growth vs. Potential Growth in Emerging Economies Source: World Bank, Global Economic Prospects, January 2014.
  35. 35. Declining potential growth in emerging economies mainly reflects lower TFP growth 0 1 2 3 4 5 6 7 2003–07 2007–10 2010–13 2013–16 TFP growth Capital growth Labor growth (Percent) Contributions to Potential Growth in Emerging Economies Source: World Bank, Global Economic Prospects, January 2014.
  36. 36. Declining investment in advanced economies 17 19 21 23 25 27 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 Source: World Bank Group: World Development Indicators Advanced economies’ investment-to-GDP ratio (%)
  37. 37. A mixed picture on investment in emerging and developing economies 0 5 10 15 20 25 30 35 40 45 50 1980 1985 1990 1995 2000 2005 2010 China East Asia ex. China Europe & C. Asia L. America & Car. South Asia Sub-Saharan Africa Source: World Bank Group: Global Economic Prospects. Investment as % of GDP
  38. 38. Central to raising potential growth are TFP-enhancing structural reforms -0.35 -0.3 -0.25 -0.2 -0.15 -0.1 -0.05 0 0.05 0.1 0.15 Barriers to competition and market entry Barriers to trade and FDI Labor market rigidities Countries with higher TFP growth Countries with Lower TFP growth Note: Analysis covers 38 upper middle-income emerging economies, including all G20 emerging economies. Source: Penn World Tables, World Economic Forum Global Competitiveness Report, World Bank Doing Business Database. (Change in TFP growth and structural barriers measured between pre-crisis (pre-2007) and post-crisis (post-2010) multi-year averages) TFP growth recovered beyond pre-crisis levels in emerging economies that reduced product and labor market barriers but not in those where the barriers increased
  39. 39. Infrastructure investment is a key part of G20 agenda for strong, sustainable, and balanced growth: an illustration GDP: % deviation Trade balance: % GDP deviation -5 0 5 10 15 20 25 30 35 2010 2012 2014 2016 2018 2020 2022 World High Income Developing -6 -4 -2 0 2 4 6 8 2010 2012 2014 2016 2018 2020 2022 United States China Source: Simulations with G-cubed model. All results are expressed as percent deviations from baseline. Scenario showing gains from fiscal consolidation in advanced economies and redirection of global savings to investment in infrastructure in developing countries Channeling more global savings to infrastructure investment in developing countries would raise global growth and reduce imbalances. Infrastructure modernization is important for longer-term growth in advanced economies as well.
  40. 40. Infrastructure investment needs are large $36 trillion $57 trillion 0 10 20 30 40 50 60 70 Actual Requirements $ trillion, 2010 prices 1994–2011 2013–2030 Source: McKinsey Global Institute: Infrastructure Productivity: How to Save $1 Trillion a Year, 2013. Global Infrastructure Investment • Infrastructure investment needs of $57 trillion over 2013-2030 ($3.2 trillion p.a.). This is 60% higher than over preceding 18 years. • These are very conservative estimates of needed investment.
  41. 41. Infrastructure investment needs are especially large in emerging and developing economies Current investment and financing Future investment requirements 2008 South-South financing ($10–$20) MDB financing ($20–$30) Concessional ODA ($20–$30) Private sector ($150–$250) Govt. budgets ($500–$600) $0.8–$0.9 2020 EAP (35–50%) ECA (5–15%) LAC (10–15%) MENA (5–10%) SA (20–25%) SSA (5–15%) $1.8–$2.3 By region 2020 Water (15–30%) Electricity (45–60%) Telecom (10–15%) Transport (15–25%) $1.8–$2.3 By sector Source: World Bank Group staff estimates; “Infrastructure for Development: Meeting the Challenge”, G-24 and London School of Economics and Political Science, 2012. Incremental infrastructure investment needs of $1-1.5 trillion p.a. in medium term ($ trillion per year, 2008 constant prices – financing figures in $ billion)
  42. 42. -0.5 0.0 0.5 1.0 1.5 2.0 2.5 -1 0 1 2 3 4 5 6 7 8 9 10 Baseline 1/ Optimistic scenario 2/ Pessimistic scenario 3/ -5 -4 -3 -2 -1 0 1 2 3 4 5 6 -1 0 1 2 3 4 5 6 7 8 9 10 Debt-to-GDP Ratio (percentage point deviation from baseline) GDP (percent deviation from baseline) 1/ Output elasticity of public capital = 0.10. 2/ Output elasticity of public capital = 0.19. 3/ Output elasticity of public capital = 0. It’s not just the quantity; quality matters greatly • Raising the quality of infrastructure investment reduces costs and increases productivity • Greater efficiency can reduce infrastructure investment requirements by as much as 40 percent Raising public infrastructure capital stock by 5 percent over 5 years: an illustration
  43. 43. Tighter and costlier capital will make the financing of needed infrastructure investment a challenge Source: World Bank Group staff estimates. Net private capital flows to emerging and developing economies 0 1 2 3 4 5 6 7 8 -0.2 0 0.2 0.4 0.6 0.8 1 1.2 1.4 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013e 2014f 2015f 2016f FDI Inflows Portfolio Equity Bond Flows Bank Lending ST Debt $ trillion As share of GDP (RHS) Percent
  44. 44. Access to long-term finance for infrastructure has become especially tighter since the global financial crisis 0 10 20 30 40 50 60 70 80 90 2000 2002 2004 2006 2008 2010 2012 Resource Related Finance Infrastructure Government Other $ billion (gross) Source: World Bank Group staff estimates; Dealogic. Long-term cross-border bank lending to emerging and developing economies
  45. 45. Infrastructure agenda: a summing-up • Large infrastructure investment needs in emerging economies. Infrastructure modernization also important in advanced economies. • Increased investment must be accompanied by efficiency improvements―better planning & implementation, effective O&M. • Improvements needed in regulatory and institutional framework for private investment. Promoting competition in network industries. • Mobilization of long-term financing: capital market development, institutional investors, innovative finance, MDBs. • Development of policies and financing tools to encourage investment in “climate smart” infrastructure. • G20 country-specific actions to be identified and discussed by the Investment and Infrastructure Working Group and integrated into growth strategies being prepared by the Framework Working Group. • Need to better integrate the work of the G20 Development Working Group, with a focus on lower income countries, into this agenda.
  46. 46. There is progress on competition and business environment reforms but much remains to be done UnitedKingdom UnitedStates Korea,Rep. Canada Australia Germany Japan SouthAfrica Mexico France SaudiArabia Italy Turkey RussianFederation China Indonesia Argentina India Brazil 40 50 60 70 80 90 100 DistancetoFrontier(percentagepoints) 2013 2008 2005 Source: World Bank Group: Doing Business 2014 database. Distance to Frontier on Overall Doing Business Index
  47. 47. Specific priorities differ, but all G20 economies can improve competition and business environment 0 100 200 300 400 500 600 700 800 Brazil India Argentina Indonesia China Russian Federation Turkey Italy Saudi Arabia France Mexico South Africa Japan Germany Australia Canada Korea, Rep. United States United Kingdom Starting a business Dealing with construction permits Registering property Paying taxes Trading across borders Getting credit Protecting investors Enforcing contracts Resolving insolvency Source: World Bank Group: Doing Business 2014 database. Distance to Frontier on Key Dimensions of Business Environment Percentage points
  48. 48. Reforms to improve the business environment should be guided by an assessment of underlying policy gaps 0 10 20 30 40 50 60 70 80 90 100 Turkey South Africa Russian Federation Mexico Indonesia India China Brazil Argentina Tax rates Access to Finance Labor regulations Political instability Practices of the informal sector Inadequately educated workforce Electricity Corruption Customs and trade regulations Tax administration Crime, theft and disorder Transportation Access to land Courts Business licenses and permits Other Percent of firms Source: World Bank Enterprise Surveys (latest years). Top ten business constraints reported by firms in G20 emerging economies
  49. 49. Lack of G20 leadership on trade reform • G20 trade reform agenda characterized by low ambition • Minimalist approach: a focus on avoidance of new protectionist measures post-crisis rather than a proactive agenda to further trade reform • Even this minimalist objective not fully met • Lack of will to push through the Doha Agenda or take on new issues in trade • Trade reform holds much untapped potential to boost global growth • Renewed focus on trade reform under Australia’s G20 presidency presents an opportunity
  50. 50. G20 has not adhered to its commitment to a standstill on new protectionist measures 2009 2010 2011 2012 2013 0 100 200 300 400 500 600 World G20 Advanced G20 Emerging Source: Global Trade Alert database. Trade distorting measures implemented since the onset of the global financial crisis Number of measures
  51. 51. All G20 members have taken trade distorting measures since the crisis―some more than others Note: Individual measures may have large or small trade coverage. These data on number of trade measures, therefore, are not necessarily reflective of trade coverage. Figures for the European Commission include only EC-level measures and those for France, Germany, Italy, and UK only national-level measures. Source: Global Trade Alert database. Number of trade measures implemented by G20 between November 2008 and December 2013 0 50 100 150 200 250 300 350 Trade liberalizing measures Measures that may discriminate Measures that are discriminatory
  52. 52. G20 use of antidumping actions, countervailing duties, and safeguards 0 0.5 1 1.5 2 2.5 3 3.5 2005 2006 2007 2008 2009 2010 2011 2012 Percentofnon-oilimportedproductscoveredby antidumpingactions,countervailingduties,andsafeguards G20 emerging economies (stock) G20 advanced economies (stock) G20 emerging economies (new actions) G20 advanced economies (new actions) Source: World Bank Temporary Trade Barriers Database. Increase in use of opaque, less transparent measures
  53. 53. Sizable coverage of imports by antidumping actions, countervailing duties, and safeguards in some G20 economies 0 1 2 3 4 5 6 7 8 IND (12.6) TUR (9.6) USA (3.5) ARG (13.6) EUN (5.3) BRA (13.7) IDN (7.0) CHN (9.6) CAN (4.5) MEX (8.3) AUS (2.8) KOR (12.1) ZAF (7.7) JPN (5.3) Product lines Weighted by value of imports Note: In parentheses is the country's simple average applied MFN tariff according to WTO (2012), in percent. Source: World Bank Temporary Trade Barriers Database. Percent of non-oil imports Imports covered by stock of G20 antidumping actions, countervailing duties, and safeguards, 2012
  54. 54. Potential for gain from services trade liberalization is especially large OECD Services Trade Restrictiveness Index (STRI) Note: "G20 figure does not include Saudi Arabia and Argentina. Air transport and road freight currently cover only commercial establishment (with accompanying movement of people). Source: OECD STRI
  55. 55. How can G20 provide stronger leadership on trade reform? • Integrate trade better into the G20 growth agenda. • Restore credibility to G20 commitment to a standstill on new protectionist measures. Institute effective monitoring and accountability. Review and unwind measures already put in place. • Build on Bali Agreement: trade facilitation; agricultural trade. • Encourage and empower WTO to address key elements of the new, “twenty-first century” trade agenda: issues relating to the rise of GVCs― services liberalization, deep integration (regulatory harmonization, competition policies, investment disciplines); intersection of climate change and trade policies. • Ensure that plurilateral initiatives complement and support an open multilateral trading system. • Lay the ground for WTO reform.
  56. 56. PRIORITIES •Jobs challenges vary across countries •Know your job challenge •Remove or offset the constraints LABOR POLICIES •Stay on the “efficiency plateau” •Avoid misguided interventions •Build inclusive and sustainable social protection FUNDAMENTALS •Macroeconomic stability •Supportive investment climate •Human capital Source: World Bank. World Development Report 2013: Jobs Growth-enhancing structural reforms are central to job creation A three-layered policy approach to job creation
  57. 57. Labor policies off the “efficiency plateau” The “missing middle” in the distribution of manufacturing firms in India Source: World Bank. World Development Report 2013: Jobs 0 5 10 15 20 25 30 1-4 5-10 11-20 21-50 51-100 101-200 >200 Jobs(millions) 0 1 2 3 4 5 1-4 5-10 11-20 21-50 51-100 101-200 >200 Jobs(millions) — Employment size —
  58. 58. Meeting the jobs challenge Three layers of an effective jobs strategy: • At the foundation are fundamentals that drive economic growth: sound macroeconomic management; an open and competitive business environment supported by adequate infrastructure that promotes private investment; and skill development aligned with demand. This is a common agenda for all G20 economies. • Balanced labor market policies: an important issue for those G20 economies with more rigid/distorted labor markets―some advanced European economies, some emerging economies such as Brazil, India, South Africa. • Tailoring policies to country-specific challenges: aging societies, economies with high youth unemployment, urbanizing economies, economies with large informal employment, resource-rich economies, economies with low women’s participation.

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