Reports

Predicting future economic trends appropriately is essential to economic policy making. Currently, the DSGE model approach is a benchmark economic forecasting technique widely employed. However, large external shocks, such as large-scale natural disasters and COVID-19, challenge current approaches to economic forecasting. Multiple approaches will be needed in this situation, including reduced-form model and indicator-based approaches. This paper discusses different forecasting approaches, by comparing forecasts during normal times and crisis periods. The Medium-term Projection Framework (MPF), used in the Economic Outlook for Southeast Asia, China and India series, receives particular attention. The paper also examines challenges unique to developing Asia and large external shock periods. The measurement of potential output, difficulties in modelling the credit channel, and the incorporation of Big Data pose challenges regarding developing Asian countries, and large external shocks may force deviation from assumptions of traditional frameworks such as rational expectations. Finally, this paper points out that natural disasters will be a useful proxy for large shocks in Developing Asia.

Informal employment, defined through the lack of employment-based social protection, constitutes the bulk of employment in developing countries, and entails a level of vulnerability to poverty and other risks that are borne by all who are dependent on informal work income. Results from the Key Indicators of Informality based on Individuals and their Households database (KIIbIH) show that a disproportionately large number of middle‑class informal economy workers receive remittances. Such results confirm that risk management strategies, such as migration, play a part in minimising the potential risks of informal work for middle‑class informal households who may not be eligible to social assistance. They further suggest that middle‑class informal workers may have a solvent demand for social insurance so that, if informality-robust social insurance schemes were made available to them, remittances could potentially be channelled to finance the extension of social insurance to the informal economy.

Achieving gender equality and tackling discriminatory laws, social norms and practices set a direct path toward a more inclusive economy and society. The SIGI 2021 Regional Report for Southeast Asia provides new evidence-based analysis on the setbacks and progress in achieving gender equality between 2014 and 2019 in 11 countries. The report uncovers the discrimination women face within social institutions in various dimensions; in the family and household context, in relation to physical integrity and access to productive and financial resources, as well within the political and civil spheres. The SIGI 2021 Regional Report for Southeast Asia explores the interaction between women’s empowerment and discriminatory social institutions by looking specifically at four core areas – health, education, the economic dimension and decision making. It also unveils the cost of discriminatory social institutions for Southeast Asian countries and the socio-economic consequences of the COVID-19 crisis for women and girls. Building on the regional analysis of how discriminatory social institutions continue to hinder efforts toward SDG 5, the report provides a set of policy recommendations to enhance governments’ efforts to deliver on their gender equality commitments by 2030.

The gap between youth aspirations and the reality of the labour markets in Africa is large. Career aspirations of young Africans have little in common with current and projected labour demand in the region, making it unlikely that they will go through a smooth school to work transition. Evidence from ten African countries shows that what youth in these countries value most is job security, such as work in the public sector. Agriculture-related work or medium-skilled jobs in manufacturing are the least attractive for young Africans. Policies can help address the misalignment between youth employment preferences and employment opportunities. A two-pronged approach is recommended: i) helping young people shape career aspirations that are realistic and that can fit with the world they will be entering, and ii) improving the quality of jobs with due regard to the job conditions that matter for young people.

How was life in 1820, and how has it changed since then? This question, which was at the core of How Was Life? Global Well-being since 1820, published by the OECD in 2014, is addressed by this second volume based on a broader perspective. How Was Life? New Perspectives on Well-being and Global Inequality since 1820, presents new estimates of working hours, biodiversity loss, social spending and GDP (accounting for the 2011 round on purchasing power parities) as well as measures of inequalities in wealth, longevity and educational attainment, gender disparities and extreme poverty. A final chapter synthesises the historical evidence included both in the current and previous volume of How Was Life? through composite measures of the average well-being performance of each country, and of different within-country inequality measures. As was the case for the previous volume, this book combines both a historical and a global perspective, presenting estimates since 1820 for 25 major countries and 8 world regions. While this evidence sometimes relies on partial and limited evidence, each chapter in this book assesses the quality of the data used and identifies areas for further historical research. This second volume of How Was Life? is the product of collaboration between the OECD and the OECD Development Centre, on one side, and a group of economic historians gathered around the CLIO-INFRA and Maddison projects, on the other. The historical evidence included in the report is organised around dimensions of well-being that mirror those used by the OECD in its report How’s Life?

Masculinities can either support or hinder women’s empowerment and greater gender equality. However, a lack of consistent and comparable data hinders efforts to understand and assess harmful, restrictive masculinities. This report identifies and describes ten norms of restrictive masculinities to be urgently addressed within the political, economic and private spheres. Alongside these norms the report highlights gender-equitable alternatives, which support women’s empowerment in practice. By mapping available and ideal indicators, the report provides a roadmap for efforts to measure changing norms of masculinities. In doing so, this report aims to support policies to transform masculinities by facilitating the creation of more and better data on masculine norms.

Africa’s Development Dynamics uses lessons learned in the continent’s five regions – Central, East, North, Southern and West Africa – to develop policy recommendations and share good practices. Drawing on the most recent statistics, this analysis of development dynamics attempts to help African leaders reach the targets of the African Union’s Agenda 2063 at all levels: continental, regional, national and local. The 2021 edition, now published at the beginning of the year, explores how digitalisation can create quality jobs and contribute to achieving Agenda 2063, thereby making African economies more resilient to the global recession triggered by the COVID-19 pandemic. The report targets four main policy areas for Africa’s digital transformation: bridging the digital divide; supporting local innovation; empowering own-account workers; and harmonising, implementing and monitoring digital strategies. This edition includes a new chapter examining how to finance Africa’s development despite the 2020 global economic crisis. Africa’s Development Dynamics feeds into a policy debate between the African Union’s governments, citizens, entrepreneurs and researchers. It aims to be part of a new collaboration between countries and regions, which focuses on mutual learning and the preservation of common goods. This report results from a partnership between the African Union Commission and the OECD Development Centre.

Financing from institutional investors will be critical to achieving the sustainable development goals and curbing climate change. However, these large investors have been largely absent from multilateral initiatives to mobilise private capital. Partly as a result, such initiatives have been unable to reach the scale required for development finance to go 'from billions to trillions'. Successful mobilisation of private capital – including from institutional investors – has instead frequently taken place at the local level, by strategic investment funds and some green banks. At the same time, some institutional investors have been changing their modus operandi, from an intermediary to a collaborative model, and are re-localising their operations. The elimination of financial intermediaries with a short-term focus removes a bottleneck between two categories of long-term investors – institutional investors and multilateral finance institutions. That opens new opportunities for collaboration, as discussed in this paper.

The majority of forcibly displaced people worldwide are hosted by developing countries. Alternative routes to sustainable solutions for the forcibly displaced, particularly in developing countries, are drying up, and the path towards and support for local integration and longer-term development is becoming urgent. Based on a questionnaire, this report delves into the question of how donor countries are addressing forced displacement and whether the shift towards a focus incorporating the humanitarian-development-peace nexus in addressing forced displacement is tangible. It highlights lessons learned so far and proposes recommendations on broadening the current approach to addressing forced displacement in developing economies.

The Guiding Principles for Durable Extractive Contracts (the Guiding Principles) provide guidance on how resource projects can be developed to reflect the balance of risks and rewards that underpins durable contracts, while taking into account community interests and concerns since the very beginning. The Guiding Principles offer a blueprint for the content and negotiation of durable extractive contracts that can reduce the drivers of renegotiation and can provide adaptive and flexible provisions that, for example, can automatically adjust to prevailing market conditions. They also aim to assist host governments and investors in explaining the content of the contract to the public, thereby helping to overcome tensions between stakeholders. The Guiding Principles set out eight principles and supporting commentary that host governments and investors, as well as negotiation support providers and legal practitioners, can use as a common reference for future negotiations of enduring, sustainable and mutually beneficial extractive contracts.