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Development

Emerging Markets Forum: The Increasing Convergence of Issues Impacting the Future of both Emerging and Advanced Economies

 

Remarks by Angel Gurría

OECD Secretary-General

OECD, France - 7 March 2019

(As prepared for delivery) 

 

 


Dear Michel, distinguished guests and Ambassadors, Ladies and Gentlemen,


I am delighted to open the 2019 Emerging Markets Forum, which the OECD is hosting for the third year in a row. We really value this annual event because it offers a space to exchange about the challenges and opportunities confronted by the world emerging markets, many of which are shared by OECD economies as this year’s title suggests.


Let me start with a few words that our Co-Chair, Michel Camdessus, wisely said back in 1998, when he was addressing the crisis in Emerging Market economies as Managing Director of the IMF: “In this volatile situation, calm analysis is more important than ever.”


At that time, many emerging market economies were experiencing full-blown crises while most advanced economies were doing relatively well. Ten years later, almost all OECD countries went into recession together, with many facing financial crises as well, while China and India barely missed a step in their rapid growth.


But today, the fates of these groups of countries are tied ever more closely together. Emerging Market Economies are more tightly bound into the global economy than ever before via trade, Global Value Chains, finance and data flows. It is hard to imagine that a crisis in Asia today would have no consequences in Europe, North America or Oceania.


This is why the focus of this year’s forum, “The Increasing Convergence of Issues Impacting the Future of both Emerging and Advanced Economies”, is so important.


As we stressed in our latest Interim Economic Outlook presented yesterday, prospects are now weaker in nearly all G20 countries, with the global economy growing by 3.3% in 2019 and 3.4% in 2020. Vulnerabilities stemming from China and the European economy, combined with a slowdown in trade and global manufacturing, high policy uncertainty and risks in financial markets, including the build-up of debt in the corporate sector, could undermine sustainable medium-term growth worldwide.


Against this background, let me highlight some of the major, longer-term joint challenges that both advanced and emerging economies are facing:


First, globalisation is at a crossroads. The course it takes now, will affect us all. In recent years, advanced economies have seen an unprecedented rise in protectionist and nationalist movements advocating against globalisation. Look at the US, Brexit, Catalan separatism and the strength of populist nationalistic parties in the Netherlands, France, Italy, Germany, Austria, to name but a few. Interestingly enough, we do not see this backlash against globalisation in China, India, Mexico and many other emerging and developing economies.


Objectively, globalisation has yielded the greatest increase in global prosperity in history, helped to spread peace and democracy, and fostered the diffusion of science, medicine, art, culture and sport. The most recent wave, since about 1990, has facilitated rapid productivity gains in China, India and a number of other emerging economies. It has also helped lift hundreds of millions of people out of poverty.


Yet to defend globalisation, we need to reshape it. Its benefits have not been shared evenly: we estimate that in the OECD, the wealthiest 10% of households own 52% of the wealth, whereas 60% hold just 12%. Moreover, the wealthiest 10% earn seven times more than seven years ago. And the picture is worse when we talk about stocks rather than flows: wealth generates more wealth; poverty generates more poverty. We urgently need to reverse this trend.


The OECD has taken this call seriously. We have launched the Inclusive Growth and the New Approaches to Economic Challenges (NAEC) initiatives, in order to ensure that we harness the potential of progress and globalisation, leaving none behind. Our most recent Ministerial meetings have precisely focused on this: fighting the backlash against globalisation and ensuring that multilateralism evolves and adjust to a new reality in order to deliver practical results.


As part of this drive, we are working to give emerging economies a greater space at the OECD. Since 2006, membership has increased from 30 to 37 countries. We launched our Key Partners strategy, country programmes and regional initiatives, enhancing the participation of non-members in our committees and the overall work of the Organisation.


Second, digitalisation will affect the lives of citizens everywhere. Digital technologies have huge potential upsides. They can drive innovation, increase access to information and new markets, or provide new tools to improve public services like health or education.


But they also bring new challenges. We estimate that 14% of jobs in OECD countries are at high risk of automation, and a further 32% at risk of significant change over the next 10 to 20 years. About 9% of 15 year-olds say that they have been cyber-bullied. The average connection speed in Korea is about 29 megabits per second, versus less than 7 megabits in Argentina, Brazil, Colombia and Peru. Growing divides and inequalities are a real risk.


Against this, we need to make digitalisation more inclusive. We need to address these divides, and ensure that everyone is equipped with the necessary skills to succeed in the digital era.


The OECD is committed to help governments navigate through this transition. Next week, we will present the outcomes of the first phase of our flagship ‘Going Digital’ project. We will be presenting an integrated policy framework, new measurement tools, and practical advice on key policy issues in the digital era. At this year’s Ministerial meeting, we will focus on “Harnessing Digital Transition for Sustainable Development: Opportunities and Challenges.”


Third, climate change knows no boundaries. It is the mother of all battles that both developed and developing countries confront in their shared challenges.


No one can hide from the climate threat. In 2018, approximately 5,000 people died and 28.9 million needed emergency assistance or humanitarian aid because of extreme weather. And poorer populations are the most vulnerable. If we fail to act, climate impacts could push 100 million people into poverty by 2030, and over 134 million people from sub-Saharan Africa, South Asia, and Latin America could have to migrate out of their own countries.


National agendas alone are not able to deal with global climate disruption. We have to work together. The OECD has played a very positive role in this regard, through the OECD-IEA Climate Change Expert Group and by providing greater transparency about developed countries' progress in meeting their commitment to mobilise USD 100 billion a year for climate action in developing countries by 2020. We have also led with pioneering work on taxing carbon, green budgeting, and climate and environment development finance.


Dear Friends, 


Reinvigorating globalisation, managing digitalisation, and halting climate change are the most pressing challenges facing us all today. They top the agendas of both OECD and emerging countries, who need to work together to address them.


As I mentioned, the context in which we will be tackling these challenges will not be an easy one. This is why we need to work together. Through fora like this one. With bright voices like the ones here today. I look forward to our exchanges.


And leading the charge, I now leave the floor to the youngest and brightest of all: Michel, Co-Chair of the Emerging Markets Forum, Governor Emeritus of the Banque de France, Former Managing Director of the International Monetary Fund (IMF). And above all, a great friend and an inspiration for us all.


I wish you another successful Emerging Markets Forum here at the OECD. Thank you.

 

See also:

OECD work on Development

 

 

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