Green growth in country policy surveillance

Having the institutional and governance capacity to implement wide-ranging policy reform is an essential condition for greening growth and achieving sustainable development. Governments need to be able to integrate green growth objectives into broader economic policymaking and development planning.

The OECD is mainstreaming green growth in national policy surveillance exercise such as Economic Surveys, Environmental Performance Reviews, Innovation Reviews, Investment Policy Reviews and Multi-dimensional Country Reviews. This approach offers opportunities for an in-depth appraisal of whether and how policies are working to drive green growth. Experience gained through country reviews and general policy assessment also based on cross-country analysis leads to identify good practice, and to the development of better analytical tools to address countryspecific policy priorities.

Environmental Performance Reviews include a chapter on green growth, which looks at the country’s policy mix for mainstreaming environment considerations into economic and fiscal policies, as well as at the employment and distributional implications of the transition towards green growth. All OECD member countries have been reviewed, most of them for the third time. Partner countries, such as South Africa, Colombia, Brazil and Peru have been reviewed recently. A Green Growth Policy Review of Indonesia has been released in 2019.

Economic Surveys have been increasingly focusing on environmental and climate-change issues with the aim of identifying and assessing policy complementarities and tradeoff between environmental policies and other macroeconomic and structural polices while taking into account the specific circumstances each country faces. Surveys assessment of climate policy builds on the Framework to Decarbonise the Economy

The Framework highlights the need for developing decarbonisation strategies based on a wide policy mix consisting of three main components: 1) emission pricing policy instruments; 2) standards and regulations; 3) complementary policies to facilitate the reallocation of capital, labour and innovation towards low-carbon activities and to offset the adverse distributional effects of reducing emissions. However, there is no one-size-fits-all policy mix, as feasible policy choices depend on countries’ industrial structure, social preferences and political constraints. Some recent Economic Surveys that have addressed climate change in depth include the Survey of Denmark, Estonia, France, Greece, Iceland, Luxembourg, and the United Kingdom. Green growth features in every Survey’s key recommendations.

Since 2019, the Going for Growth report includes environmental sustainability as an additional dimension in the framework to identify economy-specific policy priorities.

As countries issued pledges for “building their economics back better” during the COVID-19 pandemic, the OECD Green Recovery Database collected and tracked information on COVID-19 recovery spending across the OECD and large economics with clear positive, mixed or negative environmental impact. The most recent data show that measures with a positive environmental impact amount to 33% of total recovery spending.

Focusing primarily on non-OECD emerging economies, the Multidimensional Country Reviews (MDCRs) address socioeconomic issues of relevance to green growth. For example, the MDCRs of Western Balkans (2022) and Vietnam (2020) include chapters, respectively, on green recovery and environmental management.

The Climate Actions and Policies Measurement Framework (CAPMF) provides a comprehensive internationally harmonised climate-related policy database for 52 countries and the period 2000-2020. In addition, the Inclusive Forum on Carbon Mitigation Approaches (IFCMA) was recently launched to support Paris Agreement goals by improving mutual understanding of the expected impact of a full range of policy approaches to reduce emissions. The IFCMA will collate the full range of mitigation policies (regulatory, incentive-driven, price-based etc.), first by preparing a typology, and then making an assessment of effectiveness in reducing emissions. It will involve the equal footing participation of OECD member and non-member countries.

The OECD Environmental Performance Reviews examine how countries’ environmental policy frameworks can support green growth, including through pricing mechanisms and transition measures. Recent reviews include United Kingdom (2022), Norway (2022), Finland (2021), Lithuania (2021), and Ireland (2021).

The OECD Investment Policy Reviews seek to help countries improve domestic conditions for investment in support of green growth objectives. Review of Thailand (2021), Myanmar (2020), and Vietnam (2018) include a green growth focus.

The OECD Economic Surveys encourage governments to focus on green growth issues, and periodically provide an assessment of how environmental and growth policy recommendations interact, with more and more surveys covering green growth and climate issues in depth, including Luxembourg (2022), the United Kingdom (2022) Estonia (2022), Denmark (2021), France (2021), and Iceland (2021).

The Multi-dimensional Country Reviews aim to design policies and strategies that promote development in a holistic sense, identifying policies to remove constraints to sustainable development. The Western Balkans (2022) and Vietnam (2020) Reveiws focus respectively, on the green recovery and environmental management.

Contact for more information

Websites

• www.oecd.org/eco/surveys

• www.oecd.org/environment/country-reviews

• www.oecd.org/sti/inno/oecdreviewsofinnovationpolicy.htm

• www.oecd.org/investment/countryreviews.htm

• www.oecd.org/development/mdcr/

• www.oecd.org/climate-action/ipac/

• www.oecd.org/coronavirus/en/themes/green-recovery#green-recovery-database

Fatima Talidi

Economics Department

E-mail: Fatima.Talidi@oecd.org

Geraldine Ang

Directorate for Financial and Enterprise Affairs

E-mail: Geraldine.Ang@oecd.org

Nathalie Girouard

Environment Directorate

E-mail: Nathalie.Girouard@oecd.org

Jan Rielaender

Development Centre

E-mail: Jan.Rielaender@oecd.org