This document summarizes the OECD's analysis of G-20 countries' growth strategies. It discusses the OECD's role in assessing the strategies and quantifying their potential economic impacts. The OECD found over 950 policy commitments in the strategies, spanning areas like investment, employment, competition and trade. Using economic modeling, the OECD estimates these commitments could increase G-20 GDP by 1.8% by 2018, though there is uncertainty in such forecasts. Next steps include finalizing the strategies, monitoring their implementation, and further OECD analysis of fiscal policy impacts.

1. THE OECD’S ANALYSIS OF G-20 GROWTH STRATEGIES
2 October, 2014
Christian Kastrop
Director of Policy Studies
Economics Department

2. 2
I. The role of the OECD’s Economics Department in the G-20 process

3. 3
The G-20 and the finance track
The G-20 is one of the premier bodies for international cooperation
Members: 19 countries + EU
•Spain is permanent invitee; 5 others invited on year-by-year basis
Supported by 7 IOs: IMF, WB, OECD, WTO, ILO, UN, FSB
Rotating presidency – no set order, aim to achieve regional balance over time
Two “tracks”: finance and sherpas

4. 4
The G-20 and the finance track
G-20 leaders
Finance Ministers
+
Deputies
Framework Working Group (FWG)
Infrastructure and investment
(IIWG)
Sherpas
Employment Taskforce
(ETF)
Trade
Development Work Group
Anti- Corruption Working Group
….

5. 5
OECD involvement in G-20 finance track
Macroeconomic coordination (Economics Department)
Structural reform and growth (Economics Department)
Investment (Directorate for Financial and Enterprise Affairs)
Financial regulation (Directorate for Financial and Enterprise Affairs)
BEPS and AITC (Centre for Tax Policy, Economics Department)

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2014 G-20 Growth Strategies
Framework Working Group’s mandate: Strong, Sustainable and Balanced Growth
2014 innovation: quantitative target for stronger growth
• Sydney objective: raise G-20 GDP in 2018 by 2% over baseline (October 2013 WEO)Each G-20
member to submit a Growth Strategy as their contribution to the Brisbane Action Plan
Draft Growth Strategies assessed at Framework Working Group in June and September

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Contributions of the OECD Economics Department to the Growth Strategies
1. Assessment of policy gaps (before growth strategies set)
•Gaps vis-à-vis priorities set out in OECD’s Going for Growth
•Gaps vis-à-vis recommendations in OECD Economic Surveys
•Other OECD analysis
2. Assessment of commitments in draft growth strategies
•How many? What sort? How new? How assessable? What contributions to Strong, Sustainable and Balanced Growth?
3. Quantification (with IMF) of growth impacts vis-à-vis 2% target

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II. Assessment of commitments and quantification of growth impacts

9. More than ever -- over 950 commitments
9
Number of structural policy commitments
0
100
200
300
400
500
600
700
800
900
1000
Los Cabos (2012)
St.Petersburg (2013)
Brisbane (2014)

10. Commitments quite evenly spread by “theme”, with employment having the largest share
10
Investment & Infrastructure 27%
Employment 29%
Competition 16%
Trade 14%
Other 14%

11. OECD/IMF approach to quantification
11
Shock
•Impact of measure on OECD indicators or tax structure, R&D, active labour market programme spending, childcare
Impact
•Apply elasticity to productivity/jobs based on existing research
Macro outcome
•Supply-side shocks calculated by OECD applied in IMF macro model (G20MOD) -- general equilibrium model allowing for spillover effects

12. Quantification - disclaimer
12
There are major uncertainties at every stage of the quantification:
•
Distinction between “new” and “old” measures
•
Impact of measures on indicators
•
Effect of change in indicators on GDP
•
Assessing commitments falling outside the areas where indicators help with quantification
•
Full and immediate implementation of commitments is assumed Plus
•
No analytical framework available – one quarter of measures
•
Measures falling out of time horizon 2013-2018

13. Progress towards the G-20 objective
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Current OECD/IMF estimates of the impact of G-20 Growth Strategies suggest that they would raise GDP by approximately 1.8% in 2018 vs the baseline.
Product market reforms account for the largest part of the estimated gains

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III. Next steps

15. Brisbane and beyond
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Countries still finalising growth strategies
OECD/IMF assessment of commitments may still be refined
From 2015, the focus shifts to monitoring implementation
Growth strategies could be modified as circumstances change, creating further demand for quantified growth impact estimates
The G-20 has also asked the OECD to analyse the effects of the composition of taxes and expenditures on growth outcomes