OECD Observer No 314 Q2 2018 by OECD

Footwear, clothing and responsible global business p12 Digital privacy in the EU p25 ASEAN and the OECD p31 No 314 Q2 2018

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Protectionism: who really pays? p40 Crossword p44

The winning formula

ÂŠREUTERS/Grigory Dukor

Hosting World Cups and global events p23

WHAT BRINGS US TOGETHER

Paris, 29-30 May Save the date! Come and join us. Relive OECD Forum 2018 at

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CONTENTS No 314 Q2 2018 www.oecdobserver.org

22 Corruption vs integrity: The battle continues Peter Berlin 23 World Cups and Olympic Games: How to stop three weeks of fete from turning into 30 years of debt Peter Berlin

YOUR VIEWS 2

Gender perspectives; GDP should include digital economy; Only human; Twitterings

EDITORIAL 3

What brings us together Angel Gurría, Secretary-General of the OECD

TECHNOLOGY

NEWS BRIEF 4

Stable development aid; Recycling plastic must be more competitive; Taxing wages; Soundbites; Economy; Country roundup; Other stories; Plus ça change

BLOGS 6 BlogServer

ECONOMY 7

Stronger growth but risks loom large Álvaro S Pereira 9 Will the inflation genie stay in the bottle? Dan Andrews, Peter Gal and William Witheridge

FOCUS: RESPONSIBLE BUSINESS CONDUCT 12 A cut above: A guide to improving due diligence in garments and footwear supply chains Juliet Lawal 14 Beyond Bangladesh, OECD countries must act to save lives in the garment industry Christy Hoffman, General Secretary, UNI Global Union, and Jenny Holdcroft, Assistant General Secretary, IndustriAll Global Union 15 Business Brief: H&M

GOVERNANCE 19 Tackling corruption through taxation: The power of co-operation Anne-Lise Prigent 20 The dark side of the digital economy: Bad things come in small packages Michael Morantz

25 Privacy and your digital future Tomer Michelzon 27 Bioeconomy 101: Making rubber tyres from dandelions James Philp

DEVELOPMENT 30 Herders vs farmers: Resolving deadly conflict in the Sahel and West Africa Ousman Tall

31 Here to stay: ASEAN and the OECD Noriaki Abe, Counsellor, Delegation of Japan to the OECD 32 OECD Ministerial Council Meeting 2018: Reshaping the foundations of multilateralism for more responsible, effective and inclusive outcomes 33 OECD Forum 2018: What brings us together 34 Time to rethink plastic recycling; Planet Integrity; 2018 Forum on responsible mineral supply chains; OECD Statistics Day 2018; Social policy for sharing prosperity 35 Recent speeches by Angel Gurría; List of OECD Ambassadors 36 Calendar; Frankie

Bioeconomy 101, p27

BOOKS 37 38 39 40

Reviews: Going up?; Better teachers for all New publications Focus on responsible business conduct Review: Who really pays for protectionism? Farmers and conflict in the Sahel, p30

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French President Emmanuel Macron at OECD Week, p32

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Published in English and French by the OECD EDITOR-IN-CHIEF: Rory J. Clarke EDITORS: Kate Lancaster, Janine Treves EDITOR, WRITER: Clara Young EDITORIAL ASSISTANT: Cara Yakush EDITORIAL ASSISTANT, WRITER: Balázs Gyimesi WRITERS: Robin Allison Davis, Tomer Michelzon, Anne-Lise Prigent EDITORIAL INTERNS: Gabriella Elanbeck, Lena Hu, Sarah Polverelli, Murillo Salvador LAYOUT: Design Factory, Ireland ILLUSTRATIONS: David Rooney ADVERTISING MANAGER: Aleksandra Sawicka

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DATABANK 41 Steering urban sprawl; Small islands, big threats 42 Main economic indicators 44 Dynamic capitals, emerging rural areas; Crossword

All signed articles in the OECD Observer express the opinions of the authors and do not necessarily represent the official views of the OECD or its member countries. Reprinted and translated articles should carry the credit line “Reprinted from the OECD Observer”, plus date of issue. Signed articles reprinted must bear the author’s name. Two voucher copies should be sent to the Editor. All correspondence should be addressed to the Editor. The Organisation cannot be responsible for returning unsolicited manuscripts. The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. This document, as well as any data and map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

Your views We welcome your feedback. Send your letters to observer@oecd.org or post your comments at www.oecdobserver.org or www.oecdinsights.org

Gender perspectives

GDP should include digital economy

I disagree with your perception on “big data”. So long as only males are permitted to dominate the information technology field, law, medicine, and pretty much all employment sectors–what’s the fairness in that? That “big responsibility” you speak of has very little to do with responsible comportment involving any career field. But it has everything to do with people who intentionally obstruct many others from gain by perpetuating ancient beliefs, folklore, or voluntarily implementing abusive practices–instead of taking personal accountability for their evident discriminatory actions. Though I wish for success for my sons and grandsons, I also wish success, opportunity, and actual gain for their sisters, their wives, their grandmothers, their aunts, and their mothers. Don’t you?

Measuring GDP without fully considering the effects of digital economy is like pushing water uphill with a rake. Working in marketing at an online traveling company, I can reassure that the digital economy and especially the growing sharing economy is not fully counted for GDP. Using free digital services such as maps, search engines, news, videos, social networking, cloud storage, should be accounted for GDP because they are not really free. They produce knowledge on customers that generates revenues through advertising or the acquisition of “big data”. The digital age also creates alot of international knowledge assets, that may be free to use, such as Wikipedia or analytics, but has a lot of real value to users or the economy. I believe more work should be done to estimate those economic benefits so that we can make sure that this economy is more inclusive and equal. Digitalisation affects prices but it also effects the productivity and efficiency of our economy and also the quality of service, and all should be valued when measuring it. I suspect that more digitalised societies have better life quality and greater GDP, but more specific measurements are needed.

Please stop blaming “big data”. Time to speak facts of the matter. Take responsibility for your actions. Most women around this globe can validly say to most men: “We’ve been waiting for all of you to confess your role in obstructing our success.”

K Ann Campbell, commenting on “Big data, big responsibilities” at OECDInsights.org, https://oe.cd/2fn ––––– Why does it so often sound like women staying home and taking care of their children, or their elderly parents, are doing something fundamentally wrong?

Per Kurowski, commenting on “No longer a mancession: Getting Italian women out to work” on OECD Insights, March 2018, https://oe.cd/2eM

Patrick Berg, commenting on “Measuring the economy in the age of digitalisation”, from OECD Observer No 307 Q3 2016, see www.oecdobserver.org

Only human I would add that perhaps the role of learning to be human is a “group” endeavour. Too many business and other schools in universities are focused on developing individuals. The future is

collective and human systems are more groupish than solitary. It will be interesting to see more multidisciplinarity at doctorate levels. I recommend everyone to look into group relations as a learning methodology.

Leslie Brissett, Forum Network member (www.oecdforum.org), commenting on “Learning to be Human: Universities in a world of rising inequality and technological change”, at https://oe.cd/2s7

Twitterings OpenLitterMap @OpenLitterMap #OpenData on #Litter #Brands #PlasticPollution can help inform and evaluate policy, educate society and change public and institutional behavior #OpenLitterMap Amelia Andersdotter @teirdes It’s difficult to have no data collection at all (like payment details for wages, etc.). Perhaps for day labourers, but even there I’d guess money laundering rules etc. would oblige to collect their name and legal status. SPACEwatch @realSPACEwatch There seem to be remarkably little preparations to deal with the aging challenge in most of the countries. #Robots and/or #AI wont be the answer, at least not on the gigantic scale needed. DanielKomesch @Dkomesch Great piece from @relentlesseco on #automation numbers from new @OECD study. Good to see that automation alarmism has tempered – but still lots to do to ensure individuals have the #skills they need to succeed in economy of the future Ahmed Rasheed @aaru_thundi Participating in @OECD, @ADBInstitute and ADPC workshop on risk financing discuss the challenges in generating, #storing, #sharing and using #disaster related data at various levels. It is important to consolidate and validate existing data to gain protection against hazards. Omer Tene @omertene Tremenus new tool for science, technology and innovation research from our colleagues at the @OECD #privacy https://stip.oecd.org/ stip.html Follow us on Twitter @OECDObserver Comments and letters may be edited for publishing. Send your letters to observer@oecd. org or post your comments at these portals: www.oecdobserver.org, www.oecdinsights.org, or at the other OECD portals on this page.

EDITORIAL

What brings us together We need to rethink and relaunch international co-operation Angel Gurría Secretary-General of the OECD

We all come from different corners of the world, from different backgrounds, times and professions. We carry different cultures and stories, different concerns and life expectations, different hopes and fears. What brings us together today is a belief, a conviction, a certainty that multilateralism is needed more than ever. We agree that in a globalised, interdependent world, international co-operation is the most enlightened way to improve our well-being, perhaps the only one. We are facing challenges that none of us can solve on our own. Our countries are connected; our destinies interwoven; our solutions entangled. In the words of Dostoyevsky: “We are all responsible to all for all.” But it’s also time to ask ourselves why these pushbacks, why these “antibodies” to our common cause, are emerging. It’s time to recognise that something is not working when the world’s richest 1% accumulate half of the world’s wealth; when more than 60% of the world’s employed work informally; when the richest 10% of the OECD population now earn almost 10 times more than the poorest 10%, up from 7 times in the 1980s; and when trust in governments, institutions, political parties, banks, enterprises and international organisations has decreased to record lows. Why? Because national and global economic systems keep leaving too many behind. Thus, we need to rethink and relaunch international co-operation. Multilateralism has delivered and is delivering in hundreds of fronts: think of hunger, extreme poverty, aids, malaria, child labour, the Sustainable Development Goals (SDGs), the Paris Climate Agreement. Here at the OECD we have reached remarkable agreements on tax transparency, BEPS, anti-bribery, better corporate governance and responsible business conduct, to name just a few. We are also advancing new major multilateral initiatives to make globalisation more humane, such as the Inclusive Growth Framework and the New Jobs Strategy. Our collaboration with the G20 has grown over the years, helping us bring large emerging economies to adopt OECD standards on tax, corporate governance, investment; we have also reached crucial deals on women’s

empowerment and steel over-production, to mention a few. A lot is already being achieved multilaterally! However, more needs to be done to make multilateralism more effective, more transparent, more inclusive and more trustworthy. We also need to ensure effective implementation of our international standards to level the global playing field. The OECD has developed close to 450 multilateral legal instruments since its creation. More than half of these remain in force today. To keep them relevant we launched an OECDwide Standard Setting Review to make sure that the OECD legal instruments continue to respond to the challenges faced by governments. We need to strengthen our commitment to inclusive growth and put it at the heart of the multilateral system. In spite of recent improvements, inequalities continue to increase, blighting people’s lives, wasting their potential contribution, eroding their trust in democracy. This is unfair, politically dangerous, and corrosive for our economies. Our work shows that inequalities reduce aggregate productivity and growth because they reduce the capacity of the poorest 40% to invest in the education and skills of their children. This OECD Forum is an opportunity to discuss the impacts and enormous potential of digitalisation. Digitalisation and its offspring–social networks, artificial intelligence, big data, the “internet of things”–are rapidly changing all facets of our societies and economies. Our Going Digital Project and the new OECD Jobs Strategy are taking a “deep dive” into such questions to advance our understanding of these new technologies and give policymakers evidence and policy options to widen connectivity, strengthen cybersecurity and make the most of the digital economy. In one of his most emblematic and multicultural books, The Enchantress of Florence, Salman Rushdie wrote: “This may be the curse of human race. Not that we are so different from one another, but that we are so alike.” And I say: nice shot Mr Rushdie, but I’m afraid it’s the combination of both, our diversity and similarities, which makes us resilient as a human race. The countries that learn to make the best of both our differences and common traits, celebrating their national specificity and plurality, as much as their coincidences with “the others”, building bridges rather than divides, will lead this world. We are all cultural hybrids and need each other to succeed. It’s time that we turned that into a source of strength! Adapted from the secretary-general’s opening remarks to the OECD Forum, 29 May 2018. For the full original version, see: http://www.oecd.org/about/secretary-general/ sg-opening-remarks-oecd-forum-france-may-2018.htm @A_Gurria www.oecdobserver.org/angelgurria www.oecd.org/about/secretary-general

OECD Observer No 314 Q2 2018

News brief Stable development aid Foreign aid for development from official donors totalled US$146.6 billion in 2017, down by 0.6% from 2016 in real terms, as less money was spent on refugees inside donor countries but with more funds flowing to countries most in need of aid, according to preliminary official data collected by the OECD. After stripping out such

refugee costs, net ODA (official development assistance) was up 1.1% from 2016 in real terms. The amount spent by donor countries on hosting refugees fell by 13.6% to US$14.2 billion as refugee arrivals, mainly in Europe, decreased. See www.oecd.org/development/

Recycling plastic must be more competitive Given rising public concern over plastic pollution, governments should act urgently to encourage more and better recycling, a new report says. Plastic recycling is operating below potential, as plastic waste recovery remains low, and the quality of recycled plastic is poor. This, together with a lack of price incentives, is holding back secondary

plastic markets, according to Improving Markets for Recycled Plastics: Trends, Prospects and Policy Responses. It attributes the lag in plastic recycling to the fact that it is still cheaper to make new plastic than to recycle it. The world produces around eight times as much new plastic as recycled plastic. See www.oecd.org/environment/

Trust is fundamental for the development of democracy. If we don’t fight corruption we risk conflicts, organised crime and extremism. Erna Solberg, Prime Minister of Norway, at the 2018 OECD Global Anti-Corruption & Integrity Forum, 27-28 March 2018

Integrity is an essential component of any democratic system, and the public expects the mandate to be for the common good. Katrín Jakobsdóttir, Prime Minister of Iceland, at the 2018 OECD Global Anti-Corruption & Integrity Forum, 27-28 March 2018

We came up with a report card for the 25 largest mutual fund companies in the United States. The numbers speak for themselves. As far as gender diversity goes, every company gets a failing grade. Jeff Sommer, journalist, in The New York Times, 4 May 2018

Taxing wages

©OECD

Workers in OECD countries paid on average just over a quarter of their gross wages in tax in 2017, with most countries seeing small increases in the personal average tax rate, according to Taxing Wages 2018. Increases in the average personal tax rate in 20 of the OECD’s 35 member countries in 2017 were mainly due to wage increases that reduced the impact of taxfree allowances and credits. See www.oecd.org/tax/

Economy Real GDP growth in the OECD area slowed to 0.5% in the first quarter of 2018, compared with 0.6% in the previous quarter, according to provisional estimates. GDP growth slowed markedly in Japan, contracting by 0.2%, compared with 0.1% in the previous quarter. Growth also slowed in France and Germany, to 0.3%, as well as in the UK, to 0.1%, from 0.4%, and eased in the US, to 0.6%, from 0.7%. GDP growth was stable in Italy at 0.3%. Year-on-year GDP growth for the OECD area eased to 2.6% in the first quarter of

Soundbites

2018, compared with 2.7% in the previous quarter. The OECD’s composite leading indicators (CLIs) continue to anticipate stable growth momentum in the OECD area as a whole. By using data from the likes of order books, building permits and long-term interest rates, these leading indicators help anticipate trends and turning points in the economic cycle. But in the euro area and the UK, the leading indicators confirm the signs of easing growth momentum, and stable growth momentum for the US and most other OECD countries.

OECD area inflation picked up to 2.3% in March 2018, compared with 2.2% in February. Excluding food and energy, the OECD annual inflation rate also increased, to 2.0% in March 2018, compared with 1.9% in February. The OECD unemployment rate remained stable at 5.4% in March 2018. In the OECD area, 34 million people were unemployed, 1.4 million more than in April 2008 (at the start of the crisis), but 15.1 million below the January 2013 peak. Within the euro area, the unemployment rate was stable at 8.5% in March. Outside Europe,

NEWS BRIEF

Country roundup

Costa Rica has made impressive progress in recent years, with robust economic growth facilitating near-universal access to education, healthcare and pensions. Restoring the sustainability of public finances and implementing policies to fight poverty and reduce inequality will be crucial. www.oecd.org/countries/costarica/ Lithuania has made strong progress in reshaping its health system since the 1990s but further reforms are needed to urgently improve the quality of health services and make spending more efficient. www.oecd.org/countries/ lithuania/ England has committed itself to a very ambitious programme to develop apprenticeships, but still faces many challenges to effectively implement current reforms and develop a world-class apprenticeship system. www.oecd.org/ unitedkingdom/ Greece’s recovery from deep economic depression is finally gaining traction. GDP growth is picking up led by exports, remaining above 2% in 2018 and 2019. www.oecd.org/greece/ Norway should step up its efforts to boost the job prospects of young people without upper-secondary qualification to further reduce the share of under-30 year-olds

the unemployment rate was also stable in Canada, at 5.8%, Japan, at 2.5%, and the US, at 4.1%. It decreased by 0.1 percentage point in Mexico, to 3.2%, but increased by 0.4 percentage point in Korea, to 4.0%. International merchandise trade among G20 countries increased for the eighth straight quarter, and at its fastest pace in two years, with exports up 5.3% and imports up 5.8% in the first quarter of 2018.

Katrín Jakobsdóttir, Prime Minister of Iceland, with Angel Gurría, Secretary-General of the OECD, at the OECD Global Anti-Corruption and Integrity Forum, 27-28 March 2018. See page 34.

©OECD Andrew Wheeler

Chile’s economy is strengthening and wage growth picking up. The country should now address the challenge of improving people’s skills, particularly among women and low-skilled workers, in order to boost productivity, innovation and inclusive growth. www.oecd.org/chile/

who are not in employment, education or training (NEETs). www.oecd.org/norway/ Portugal’s investments in education and skills in recent decades are paying off for young people but many adults are falling behind. With a rapidly aging population and a growing skills divide between generations, Portugal needs to further strengthen its adult-learning system. www.oecd.org/portugal/ Spain should boost support for the unemployed and expand vocational education and training as part of a series of reforms to promote better skills utilisation and drive job creation and growth. www.oecd.org/spain/ Thailand has made impressive economic and social progress over the past several decades, but must now take further steps to transform its economy and ensure that prosperity is shared more equally across the country. www.oecd.org/countries/thailand/ The Tunisian economy is recovering, driven by good harvests and strong tourism, but further reforms are needed to ensure sustainable growth and higher living standards. www.oecd.org/countries/tunisia/

Consumer prices, selected areas April 2018, % change on the same month of the previous year % OECD total 7.0

6.1

6.0 5.0 4.0 3.0 2.0 1.0 0.0

All items Food

2.3

1.6

1.9

Energy All items non-food, non-energy

Other stories The family-friendly policies introduced by Nordic countries over the past 50 years and associated increases in women’s employment have boosted growth in GDP per capita by between 10% and 20%, according to Is the Last Mile the Longest? Economic Gains from Gender Equality in Nordic Countries. See www.oecd.org/employment/ Unions and employers, together with governments, can play a major role in making growth more inclusive by helping both workers and businesses meet the challenges of a changing world of work. Good labour relations help reduce inequalities in jobs and wages and better share prosperity, according to a new report by the OECD and the International Labour Organization (ILO). See www.oecd.org/ social/ The taxation of personal savings and wealth varies widely, offering governments significant scope for tax reforms that simultaneously improve both the efficiency and fairness of their tax systems, according to two new OECD reports. The reports recognise that taxes are among he most effective tools governments have for reducing inequalities and bringing about more inclusive growth. See www.oecd.org/tax/

Plus ça change… “The growth of mass production industry led to working conditions that frustrated the human satisfaction to which rising incomes give birth and generated an educational system of which the main function was to supply the manpower necessary for production activities. Both these aspects of the social system are now being challenged.” “ Education, Work and the Quality of Life”, in Issue No 67, December 1963

OECD Observer No 314 Q2 2018

BLOGS

BlogServer The digital revolution is spreading to the non-digital economy Julia Staudt, OECD General Secretariat, and Michael Gestrin, OECD Directorate for Financial and Enterprise Affairs

Digital technologies have had a profound impact on the global business landscape. They are generating new firms and industries, transforming business models in traditional industries, and, as a key factor underpinning global value chains, they have reshaped the organisation of the global economy. From OECD On the Level. More here: https://bit.ly/2RFZmI0

Tax got Al Capone. Could tax now be a way of beating corruption? Anne-Lise Prigent, OECD Observer

Not just a Facebook problem: Ethical data collection must be employed at work Dr Christina J Colclough, Director Platform & Agency Workers, Digitalisation and Trade, UNI Global Union

Data is the new gold. Already in 2014, global data flows accounted for US$2.8 trillion; three years later in 2017, the World Economic Forum estimated that 90% of all data at that time had been produced since 2015. We can only imagine what this explosive growth in data production translates into in monetary terms. Data is mined to give corporations insights into our habits, beliefs, desires and aspirations; it is analysed and fed into algorithms for machine learning; and, as the recent Cambridge AnalyticaFacebook controversy shows, it is also used to manipulate us. From OECD Forum Network. More here: https://oe.cd/2nL

Normatively weak institutions can be functionally strong: A surprising lesson from China Yuen Yuen Ang, Associate Professor of Political Science at the University of Michigan and the author of “How China Escaped the Poverty Trap”

For the past decades, policymakers and development practitioners have clung to the idea that “good governance” is the solution to poverty. This thinking, however, runs into a chicken-and-egg problem: in the first place, it’s hard for poor countries to quickly and meaningfully establish good governance. Indeed, if it were easy to achieve good governance, poor countries would have done it long ago.

From OECD Insights. More here: https://oe.cd/2gG

Neither Mark Zuckerberg nor EU regulators will save us from the digital apocalypse Bhaskar Chakravorti, Dean, Global Business and Founding Executive Director, The Fletcher School, Tufts University

Neither European regulators nor Mark Zuckerberg alone will secure our digital futures around the world: ensuring privacy, transparency, and innovation takes work. There are no shortcuts. Regulators, consumer advocates, and technology policymakers will have to do the hard work of developing an independent vision that offers checks and balances. Governments will need the political will to institute regulations that strike a balance between local realities and global competitiveness. From OECD Forum Network. More here: https://oe.cd/2nO

Big data, big responsibilities Bill Below, OECD Directorate for Public Governance

What skills are in high demand?

Since those early days, the data explosion has radically transformed what we can know about pretty much anyone. And the controversies surrounding Facebook’s handling of personal data as well as the use of big data and microtargeting techniques in political campaigns are raising eyebrows on both sides of the Atlantic. As technologies and social media continue to evolve, are our best interests being looked after?

Priscilla Fialho, OECD Directorate for Employment, Labour and Social Affairs

From OECD On the Level. More here: https://bit.ly/2A3MpB6

From OECD Development Matters. More here: https://oe.cd/2nM

Several trends, such as technological change, population ageing and globalisation, are simultaneously affecting the demand and supply of different types of skills. This can generate skill shortages, particularly in countries where supply is not sufficiently responsive to changes in skill demand. From OECD Skills and Work. More here: https://oe.cd/2nN

Every year, bribes eat up an estimated 1,500 to 2,000 billion dollars, the equivalent of 2% of the global economy. And this is just a tiny fraction of the corruption that infects our world, feeding terrorism, climate change and the refugee crisis. Corruption undermines the public’s trust in government and markets, and holds back development. Corruption can even cost lives, as the likes of building and engineering standards are secretly bypassed to win contracts and line a few pockets, sometimes with tragic consequences.

These extracts from blogs appeared in Q2 2018 and courtesy of OECD Insights, OECD Forum Network, OECD Education & Skills Today, OECD Ecoscope, OECD On the Level, Wikigender, Wikiprogress and other content and social media platforms managed by the OECD.

ECONOMY

Stronger growth but risks loom large Ă lvaro S Pereira, OECD Acting Chief Economist* After a lengthy period of weak growth, the world economy is finally growing around 4%, the historical average of the past few decades. This is good news. And this news is even better knowing that, in part, the stronger growth of the world economy is supported by a welcome rebound in investment and in world trade. The recovery in investment is particularly worth emphasising since the fate of the current expansion will be highly dependent on how investment will perform. Although long anticipated, the pick-up in investment remains weaker than in past expansions. The same is true for global trade, which is expected to grow at a respectable, albeit not spectacular, rate, unless it is derailed by trade tensions. However, contrary to previous periods, 4% world growth is not due to rising productivity gains or sweeping structural change. This time around the stronger economy is largely due to monetary and fiscal policy support. For many years, monetary policy was the only game in town. During the international financial crisis, central banks cut interest rates aggressively, injected funds into the economy and purchased assets at a record pace in an attempt to boost the economy. In contrast, in most countries, fiscal policy remained prudent or even became contractionary. Still, historically low interest rates provided an opportunity for governments to use their available fiscal space to help foster growth, as the OECD argued forcefully in 2016. Many OECD governments are now following this advice. At first, the resources enabled by lower interest payments were used by governments to avoid cutting expenditures or raising taxes. With the improving economic situation, many governments have started to undertake additional fiscal easing. Now that monetary policy is finally

starting to return to normal, governments are stepping in to provide fiscal policy support. We can say that fiscal policy is the new game in town: three quarters of OECD countries are now undertaking fiscal easing. The fiscal stimulus in some countries is very significant, while it is less ambitious in other countries. Still, this fiscal easing will have important repercussions for the world economy. In the short run, it will add to growth. However, countries that have been experiencing longer expansions might find that this fiscal stimulus (where it is large) will also add to inflationary pressures in the medium term. Only time will tell if these short-run gains might be offset by some medium-term pain. What matters is that, in making these choices, governments are fully aware of the medium-term impact of their policies and do not focus only on the short-term benefits from fiscal stimulus. The strong growth we are witnessing is also associated with robust job creation in many economies. In fact, it is particularly satisfying to see that in the OECD area, unemployment is set to reach its lowest level since 1980 even though it remains high in some countries. Thanks to this robust job creation and the related intensifying labour shortages, we are now projecting a rise in real wages in many countries. This increase is still somewhat modest. However, there are clear signs that wages are finally on the way up. This is an important development, since the global crisis had a severe impact on household incomes, particularly for the unskilled and low-income workers. In spite of all this good news, risks loom large for the global outlook. What are these risks? First and foremost, an escalation of trade tensions should be avoided. It is worth remembering that, in part, the rise in trade restrictions is nothing new. After all, more than 1,200 new trade restrictions have been implemented by G20 countries since the outset of the global financial crisis in 2007. Still, with the world economy much more integrated and linked today than

in the past, a further escalation of trade tensions might significantly affect the economic expansion and disrupt vital global value chains. Another important risk going forward is related to the rise in oil prices. Oil prices have risen by close to 50% over the past

Contrary to previous periods, 4% world growth is not due to rising productivity gains or sweeping structural change year. Persistently higher oil prices will push up inflationary pressures and will aggravate external imbalances in many countries. In the past few years, very low interest rates have encouraged borrowing by households and corporations in some countries and led to overvaluation of assets such as houses and equities in many others. In this context, rising interest rates might be challenging for highly indebted countries, families and corporations. Of course, this rise in interest rates has been widely anticipated and should thus not cause any major disruptions. Nevertheless, if inflation rises more than expected and central banks are forced to raise rates at a faster pace, it is likely that market sentiment could shift abruptly, leading to a sudden correction in asset prices. A swifter rise in interest rates in advanced economies might also continue to lead to significant currency depreciation and volatility in some emerging market economies (EMEs) that are highly reliant on external financing and facing internal or external imbalances. Geopolitical tensions might also contribute to sudden market corrections or a further rise in oil prices. Brexit and policy uncertainty in Italy could add pressures to the expansion in the euro area. What does this all mean for policy? Since private and public debt remain high in some countries, improving productivity, decreasing debt levels and building fiscal buffers is key to strengthen the resilience of economies. As monetary

OECD Observer No 314 Q2 2018

Outlook summary

OECD area, % change, unless otherwise indicated

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2017 2018 2019 Real GDP growth, % Keeping you ahead of the policy World 3.7 3.8 3.9 challenges of our time. Since 1962. G20 3.8 4.0 4.1 Return the order form on page 40 OECD 2.5 2.6 2.5 subscribe at US 2.3 2.9 2.8 www.oecdobserver.org/subscribe.html Euro area 2.5 2.2 2.1 Japan 1.7 1.2 1.2 or email us at observer@oecd.org Non-OECD 4.6 4.8 5.1 China 6.9 6.7 6.4 Output gap (% of potential GDP) -0.7 0.1 0.6 Unemployment rate, % of labour force 5.8 5.4 5.1 Inflation 2.0 2.2 2.3 Fiscal balance, % of GDP -2.0 -2.6 -2.7 World real trade growth 5.0 4.7 4.5

Why is this important? Because the only way to sustain the current expansion and to make growth work for all is to undertake productivity-enhancing reforms. As many OECD Education Policy Reviews and OECD National Skills Strategies show, it is crucial to redesign curricula to develop the cognitive, social and emotional skills that enable success at work, and to improve teaching quality and the resources necessary to deliver those skills effectively. In many countries, investment in quality early childhood education and vocational education and apprenticeships are of particular importance. Skills-enhancing labour-

market reforms are also crucial. Reforms to boost competition, improve insolvency regimes, reduce barriers to entry in services and cut red tape are also key for making our economies more dynamic, more inclusive and more entrepreneurial. Investment in digital infrastructure will also be essential in this digital age. In addition, there are significant opportunities to reduce trade costs in both goods and, in particular, services, boosting growth and jobs across the world. In spite of stronger growth, there is no time for complacency. Structural reforms are vital to sustain the current expansion and mitigate risks. Therefore, at this juncture of the world economy, it is truly crucial to give reforms a chance. After monetary and fiscal policies have done their jobs, it is time for reforms to sustain the expansion, to improve well-being, and to make growth work for all.

economy Spotlight on the digital connectivity Building trust, openness, of Things Robots, jobs, Internet the digital age Measuring GDP in Tax and digital disruption No 307 Q3 2016

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OECD (2018), Economic Policy Reforms 2018: Going for Growth Interim Report, OECD Publishing, Paris, https://doi.org/10.1787/growth-2018-en.

: What policies?

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*Editorial of the OECD Economic Outlook, Volume 2018, Issue 1, May 2018, see https://oe.cd/il/2sg References OECD (2018), OECD Economic Outlook, Volume 2018 Issue 1, OECD Publishing, Paris, https://doi.org/10.1787/ eco_outlook-v2018-1-en

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and fiscal policies will not be able to sustain the expansion forever and might even contribute to financial risks, it is absolutely essential that structural reforms become a priority. In the past couple of years, few countries have undertaken substantial structural reforms. Most of the countries that reformed are large EMEs, such as Argentina, Brazil and India. In the advanced economies, important labour reforms were introduced in France and a sweeping tax reform was implemented in the US. However, as the 2018 OECD Going for Growth points out, these important exceptions do not counter the rule that reform efforts have been lagging.

http://dx.doi.org/10.1787/888933729097

p17 for inclusive growth? SMEs: What policies balance sheets p7 The fine art of financial 40% p9 can help the bottom Inequality: How taxes n p24 is good protectio Why pricing disasters p25 Green budgeting Liz Azoulay, a stevedore port p12 at Israel’s largest

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Source: OECD Economic Outlook, May 2018

ECONOMY

Will the inflation genie stay in the bottle? Dan Andrews, Peter Gal and William Witheridge, OECD Economics Department*

inflation by 0.15 percentage points on average, with this effect more than double in some OECD countries.

Global value chains (GVCs) rise as inflation eases, in % 8

Production price inflation – 5-year moving average (LHS)

GVC Backward Participation indicator (RHS)

27 6 24 4 21 2 18

12 20

06 20

03 20

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Note: Unweighted averages across all country-industry cells where data are available. Backward participation in GVCs is the foreign value added share of a sector’s gross exports. Source: Andrews, Gal and Witheridge (2018) based on OECD STructural ANalysis (STAN) database; OECD Trade in Value-Added (TiVA) database; OECD TiVA Nowcast; and authors’ calculations.

While the evidence shows that global integration has pushed down inflation, a stalling in globalisation could cause that trend to slip into reverse. Here is why. Could there be a sustained pick-up in inflation under way in the US after years of subdued price pressures, as market commentators have been speculating? Along with continued solid US jobs growth and low unemployment, there are tentative signs of higher wage growth, while fiscal stimulus is also expected to boost short-term growth. Global growth is also getting stronger. Our new OECD working paper (see references) identifies a robust negative relationship between inflation and globalisation, and offers some novel insights. In particular, globalisation appears to have stalled since the crisis while aggregate demand is growing and output gaps between the amount of goods and services the economy is creating and what it could be creating at full capacity, have closed or are close to zero in most major countries. There is also mounting evidence of rising market power in services sectors. Together, these

trends risk letting the inflation genie out of the bottle. How important is globalisation for domestic inflation? Some have argued that rising integration along global value chains (GVCs) has accentuated the importance of global factors–particularly slack in world demand–for domestic inflation, while other recent research disputes this conjecture. GVC integration expanded significantly from 1995 until the crisis, while inflation remained relatively subdued. In the post-crisis period, GVCs flattened off and remained around the pre-crisis peak while producer price inflation fell dramatically and remained very low on average across industries in OECD countries (see chart). Our analysis using cross-country OECD data on prices and global value chains by industry (rather than at the country level) shows that stronger backward GVC participation–that is, domestic producers relying more on foreign value-added content–is associated with lower producer price inflation at industry level. For example, we estimate that the rise in GVCs from the mid-1990s up to the crisis reduced annual producer price

Our analysis also reveals that greater reliance by domestic producers on foreign value-added content is associated with

Inflation in advanced economies can remain low if the composition of global value chains continues its shift towards low-wage countries lower wages and rising productivity in the importing countries and industries, especially when low-wage countries become an integral part of their supply chains. This has likely contributed to lower inflation in recent years as the composition of source countries in GVCs has increasingly been low-wage ones, as our second chart shows. Therefore, inflation in advanced economies can remain low if the composition of GVCs continues to shift towards low-wage countries. Moreover, a high level of GVC integration can also dampen producer price inflation by accentuating the impact of global economic slack on domestic inflation. This implies that weak global demand has a larger downward impact on domestic inflation when GVC participation is higher. For example, countries operating below capacity with an average global output gap of -1.5% in 2014 had annual producer price inflation that was on average 0.25 percentage points lower in 2014 than for 1996 GVC levels. This inflation figure drops more than 0.5 percentage points lower, however, for those countries that experienced a particularly large rise in GVC participation. But with slowing expansion of global value chains since the crisis, coupled with stronger aggregate demand and output gaps closing in most countries, this could lead to greater inflationary pressures in the medium term. Competition problem The third longer-term trend posing an upside risk to inflation is declining

OECD Observer No 314 Q2 2018

Lastly, if more intense competition in product and labour markets contributed to lower global inflation over recent decades, then it follows that waning structural reform ambition–against a backdrop of strengthening global growth–could lead to inflationary pressures. Given mounting evidence of increasing market power in certain sectors, policy efforts to adapt anti-trust and pro-competitive market regulations

Backward GVC participation by source country groups, % 20

20 with Low-wage countries

with High-wage countries

Note: “High-wage countries” are those that are part of the EU-15 (EU members prior to 2004) plus Australia, Canada, Japan, New Zealand, Norway, Switzerland and the US; “Low-wage countries” are all other countries in the TiVA database. Unweighted average across all country-industry cells where data are available. Backward participation in GVCs is the foreign value added share of a sector’s gross exports. Source: Andrews, Gal and Witheridge (2018) based on OECD Trade in Value-Added (TiVA) database; OECD TiVA Nowcast; and authors’ calculations.

will not only bring benefits to long-run productivity growth, but will also be desirable from a monetary policy perspective. *Dan Andrews is currently at the Australian Treasury and William Witheridge is at New York University

Auer, Raphael, Claudio Borio and Andrew Filardo (2017), “The globalisation of inflation: The growing importance of global value chains”, BIS Working Papers, No. 602, January. Calligaris, Sara, Chiara Criscuolo and Luca Marcolin (2018), “Digital and market transformations”, OECD Science, Technology and Industry Working Papers, forthcoming.

References and further reading

De Loecker, Jan and Jan Eeckhout (2017), “The Rise of Market Power and the Macroeconomic Implications”, NBER Working Papers No. 23687.

Andrews, Dan, Peter Gal and William Witheridge (2018), “A Genie in a Bottle? Globalisation, Competition and Inflation”, OECD Economics Department Working Papers, No. 1462.

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To conclude, our analysis suggests that the expansion of GVCs, facilitated by trade liberalisation and advances in technology, has put downward pressure on producer prices, with potential implications for monetary policy. Looking forward, if globalisation reverses, this may pose an upside risk to future inflation. In addition to the impact through competition that our work has focused on, increasing tariffs can exert more upward pressures on prices in the current context. This provides a further reason to resist the rising threat of trade protectionism in the global economy.

Countries with lower wages have been contributing more and more to GVCs

competition and market contestability. Cross-country firm-level data show an increasing trend in mark-ups, which suggests rising market power in services sectors. This upward trend in mark-ups is consistent with other estimates for the US and other OECD countries. If market power continues to rise, is there an even greater risk of letting the inflation genie out of the bottle?

GENDER

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A cut above: A guide to improving due diligence in garments and footwear supply chains

ÂŠSuvra Kanti Das/ZUMA/REA

Juliet Lawal, OECD Directorate for Financial and Enterprise Affairs

Slim chino clothing tag lies in the rubble of Rana Plaza Supply chain management is a tough challenge for global companies. A new OECD guidance can help them get it right. The collapse of the Rana Plaza, a commercial building and garment factory in Dhaka, Bangladesh, on 24 April 2013, claiming some 1,130 lives and injuring thousands more, brought global attention to the risks of severe adverse impacts in manufacturing and the widespread habit of cutting corners to keep production costs down in what is a tough global garments trade. There were outcries, on all sides, among workers, consumer groups, charities, governments and businesses too, about shoddy construction. Local rules and business practices came under scrutiny, with international brands and their customers in rich countries getting

the brunt of the blame. The disaster was a jarring reminder of the need to strengthen the responsible business practices of such companies across their entire global supply chains. Supply chain management is one of the toughest challenges companies face, particularly those in the garment sector. While government policy and international co-operation can help push for improvements, there is still a reliance on global firms to improve their approaches and act as vectors of higher standards of work and environmental care in the countries they invest in. The OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector is a key tool to help brands

and retailers observe standards of responsible business conduct in garment and footwear supply chains. It sets out practical ways to help businesses avoid potential negative impacts of their activities and their supply chains. It aims to bolster policy efforts to strengthen confidence between enterprises and the societies in which they operate, and complements both the due diligence recommendations contained in the UN Guiding Principles on Business and Human Rights, and the ILOâ&#x20AC;&#x2122;s Declaration on Fundamental Principles and Rights at Work. The fruit of a multi-stakeholder process with representatives from business, trade unions and civil society, as well as building on reports from the national contact

FOCUS: RESPONSIBLE BUSINESS CONDUCT

points on responsible business conduct and feedback from engagement by OECD and non-OECD countries, this guidance seeks to encourage companies to operate and source responsibly in the garment and footwear sector. The commitment to responsible business conduct within a company applies to sourcing and subcontracting, and extends to business partners, consultants, licensees and anyone connected to the company via its supply chain. Collaboration can be an effective way forward, for example, with trade unions or multi-stakeholder initiatives, but companies should ensure that those collaborations are effective and aligned with due diligence expectations. This alignment should also be assured among different internal departments, to ensure

Responsible business conduct is a constant process that requires oversight and commitment

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Crucially, companies should incorporate such due diligence into decision-making, including if it is launching a new product or is expanding to a country with a questionable human rights record. Another recommendation the OECD Due

OECD (2018), Responsible Supply Chains in the Garment and Footwear Sector, OECD Publishing, Paris http://dx.doi.org/10.1787/9789264290587-en, see http://www.oecd.org/industry/inv/mne/responsible-supplychains-textile-garment-sector.htm Nieuwenkamp, Roel (2014), “Corporate leaders: Your supply chain is your responsibility”, in OECD Observer No 299 Q2 2014

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For the garment and footwear sector, the OECD Guidance highlights risks to watch out for, such as child labour and forced labour, corruption, health and safety issues, hazardous chemicals, and greenhouse gas emissions, while calling on companies to focus their efforts where risks are most severe. It devotes sections that look at these in some depth.

References and further reading

In short, responsible business conduct is a constant process that requires oversight

OECD Due Dilig

that the company is singing in unison with regard to their efforts to implement responsible business conduct in their supply chains, particularly those reviewing supplier environmental and labour performance and those placing the orders. This also presupposes good and well-communicated information systems, and probably a clear supply-chain mapping as well.

and commitment. Through our work and our collaboration with stakeholders, the OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector can help ensure that people’s lives, their well-being and their welfare are treated with the utmost priority in all kinds of global investment decisions, and in particular in sectors as exposed and sensitive as garment and footwear.

Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector calls for is that companies know the harmful risks of both their own products and operations. This may seem obvious, but there may be visibility issues–perhaps the enterprise is sourcing from several countries, or with complex components. The OECD Guidance takes readers through some risk factors, classifying them according to scale, scope and the extent to which harm may be remediable. It points out that periodic scoping can help identify such issues and acting hand in hand with stakeholders can help resolve them. In fact, engaging with suppliers more generally, to get to know and understand them, is encouraged, while consolidating suppliers might also be a way forward for some.

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OECD Observer No 314 Q2 2018

FOCUS: RESPONSIBLE BUSINESS CONDUCT

Beyond Bangladesh, OECD countries must act to save lives in the garment industry Christy Hoffman, General Secretary, UNI Global Union, and Jenny Holdcroft, Assistant General Secretary, IndustriAll Global Union

However, the work of the accord, which expired at the end of May 2018, is not complete. Too many life-threatening hazards at supplier factories remain, which is why more than 180 brands (and counting) have signed the new 2018 Transition Accord, which already covers approximately 2 million garment workers in Bangladesh, most of whom are women.

©Suvra Kanti Das/ZUMA-REA

The 2018 accord has greater scope to cover home textiles and footwear and, crucially, gives more power to workers. The new agreement meets OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector, recognising that workers are not peripheral to the due diligence process, but core to it. It upholds the importance of freedom of association in ensuring workers have a genuine say in protecting their own safety. It will also establish a training and complaints protocol to ensure that this right is respected. On 24 April 2013, the world woke up to the reality of garment factory conditions in Bangladesh when more than a thousand workers were killed and over two thousand injured after the Rana Plaza garment factory complex, supplying western brands, collapsed. A bloody line had been crossed. People in countries around the world began caring who made their clothes, and how. Having dismissed warning after warning, global apparel brands could no longer ignore the dangerous working conditions at their supplier factories. Self-regulated safety audits were exposed as shams. Global unions, IndustriALL and UNI, seized the moment and produced the Bangladesh Accord on Fire and Building Safety, an unprecedented, independent, legally binding agreement between trade unions and brands. The goal: that no worker need fear fires, building collapses, or other accidents that could be prevented with reasonable health and safety measures. It meant that brands had to take responsibility for making their supplier factories safe, and pay towards it too. Expert fire and building safety engineers working for the Bangladesh Accord have since inspected more than 1,600 factories making garments for over 200 brands and retailers. Initial inspections identified 118,500 fire, electrical and structural hazards of which 84% have been corrected. The Accord training team has conducted 2,838 safety committee training sessions with workers at over 1,000 factories. The Bangladesh Accord works because it has teeth. Two international brands that failed to meet their legal commitments have been successfully taken to the Permanent Court of Arbitration in The Hague. This has led to millions of dollars in reparations being used to remedy life-threatening hazards at the brands’ supplier factories. A further US$300,000 has been paid into a fund to support IndustriALL and UNI’s work to improve pay and conditions for workers in global supply chains. Five years on, the Bangladesh Accord stands as a model for industrial relations, and shows that brands and unions can work together to solve systemic problems. The Bangladeshi ready-made

garment industry is undoubtedly safer, and lives have been saved.

Without labour rights, the gains made in health and safety will not be maintained. Severe anti-union violence and discrimination continues in Bangladesh making it very often impossible for workers to organise and bargain collectively. OECD countries must use their voice to condemn the attacks on workers and trade unions in Bangladesh. OECD member countries promise to uphold fundamental labour rights and sign up to guidelines to commit multinational enterprises to take responsibility for workers in their global supply chains. This must also include working with trade unions on a national or sector-wide level to achieve wages that, at the very least, meet the basic needs of workers and their families. The EU, as Bangladesh’s biggest trading partner, also has a major role to play. Bangladesh benefits from preferential trade tariffs under the EU’s Generalised System of Preferences. In turn, Bangladesh is expected to put into practice key UN human rights and International Labour Organization conventions. This is clearly not happening and yet Bangladesh is given chance after chance to put matters right. OECD countries, many of which are also members of the EU, cannot turn a blind eye to these violations. They must speak up. The Bangladesh Accord will continue its work until 2021, or until the Bangladesh government is ready to take over its functions. We have the tools to make a better garment industry. We must use them. Public pressure to improve the working conditions of garment workers has never been greater, and now is the time to push for change. The lives of garment workers in Bangladesh and in many places beyond depend on it. References and further reading More on the Accord at http://bangladeshaccord.org/ OECD work on responsible business conduct: http://mneguidelines.oecd.org/ OECD (2018), OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector, OECD Publishing, Paris, https://doi.org/10.1787/9789264290587-en. Share article at https://oe.cd/2kz

Business brief

How responsible is H&M’s supply chain? on Business and Human Rights lay out labour standards that include the right to collective bargaining and a fair living wage. The OECD’s Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector, on the other hand, advises companies on how they can best fulfil their responsibilities. Publicly disclosing where their factories are is a start: it makes it easier to monitor them. So, how is H&M doing on labour and human rights today? We asked them. OECD Observer: How does H&M reconcile greater flexibility and speed in production with the human rights risks this engenders? Often, this requires outsourcing work to indirect suppliers over which you have less control. And that heightens the risk of inadequate employment conditions, such as unpaid overtime.

©Ira Chaplain/SINOPIX-REA

H&M: We work with around 800 suppliers globally. Our commercial relationships with these suppliers are direct and we haven’t been using any agencies or middlemen for many years. A large percentage of these suppliers have been partners with us for over 5, 10 or even 20 years. Also, having dedicated teams working in our production offices gives us the unique position of having daily contact with our suppliers. We constantly visit them and we closely follow how the production takes place, supporting them in making improvements through capacity-building programmes and activities. How does H&M reconcile competitive pricing with a fair living wage?

When an 8-storey building in Rana Plaza in Bangladesh crumbled in 2013, over a thousand garment workers died. For those of us who buy fast fashion, it confirmed something we suspected: that many of the people who make the clothes we wear are, at the least, badly exploited, if not treated as slave labour. They work in fire traps. They receive death threats when they try to organise a trade union. They work long hours without a break so that factories can make their deadline. Hennes & Mauritz, better known as H&M, was not one of the brands at Rana Plaza. But the public outcry following this and other factory tragedies gave this well-known high street store fresh impetus to focus on their supply chains. And they are not the only global brand to do so. For a company that wants to clean up its act, the first thing to do is to find out exactly what they should be upholding. The OECD Guidelines for Multinational Enterprises and UN Guiding Principles

It is important to understand that there is no correlation between garment workers’ wages and the price tag on clothes. This is a common misconception. Wages in production countries are industry issues. The factories producing for us also produce for other retailers and brands at the same time, and workers earn the same wage no matter the price tag of the garment on which they are working. For the H&M group, we reconcile competitive pricing with good working conditions and wages through: the benefits of scale and size, long-term relationships with our suppliers, the fact that we use no middlemen and have direct contact with our suppliers, long-term forecasting, efficient logistics and generally trying to be cost-conscious in the way we operate. Our business idea is about democratising design and making sustainable fashion affordable for everyone. Having said that, wages are a priority in our sustainability agenda. Our vision is that all textile workers should earn a fair living wage. That is the starting point of our fair living wage strategy, which acts at different levels, from our role as buyers to the government’s

OECD Observer No 314 Q2 2018

responsibility in this area. As buyers, we ensure that we maintain good purchasing practices and price structure by being long-term, stable business partners, which helps factory owners pay a fair living wage. Does H&M provide easily accessible information on the whereabouts of its supplier factories?

is that unless stated, franchise operations are not included as they are not considered to be our own operations. But, even if they are not included in the report, due diligence is conducted before entering into any business relationships. This includes the assessment of sustainability risks. In addition to that, all our partners, including our franchise partners, must sign and comply with our Sustainability Commitment and Code of Ethics.

All our suppliers are publicly listed at hm.com/supplierlist Have there been democratic elections of worker representatives in factories other than Bangladesh? In 2017, 458 factories (52% of our product volume) implemented democratically elected worker representation. Besides Bangladesh, the other countries that have also implemented this at factories are

There is no correlation between garment workers’ wages and the price tag on clothes Cambodia, China, Ethiopia, India, Indonesia, Myanmar and Turkey. Other than in Bangladesh, have there been audits of compliance with safety and security standards of factories of direct and indirect suppliers? Health and safety are part of our high standards and strict requirements that all our suppliers must comply with through our Sustainability Commitment. We monitor the compliance of all our suppliers in different sourcing markets through our Sustainability Impact Partnership Programme (SIPP).

Child labour is totally unacceptable and is one of the most serious violations of our standards and requirements. We have been working in this area for many years, and child labour is almost non-existent in the export garment industry. We recognise that child labour still exists in the world today, but it is primarily in the agricultural sector, further upstream in various supply chains and in situations of poverty and vulnerability. We apply due diligence and pro-actively work to reduce the risk of child labour in our supply chain. If we identify cases of child labour, we have a child labour remediation policy that ensures that the best interest of the child is taken into consideration. Interview by Clara Young, OECD Observer References and further reading OECD (2018), OECD Due Diligence Guidance for Responsible Supply Chains in the Garment and Footwear Sector, OECD Publishing, Paris, https://doi. org/10.1787/9789264290587-en. OECD (2018), OECD Due Diligence Guidance for Responsible Business Conduct, OECD Publishing, Paris, http://mneguidelines.oecd.org/OECD-Due-Diligence-Guidance-forResponsible-Business-Conduct.pdf

What is the most critical change H&M has made following its many chemical tests of last year?

OECD (2011), OECD Guidelines for Multinational Enterprises, 2011 Edition, OECD Publishing, Paris, https://doi.org/10.1787/9789264115415-en.

H&M group has always been at the forefront of work on protecting against hazardous chemicals. We have one of the strictest chemical restrictions in the industry and they have been continuously updated since 1995. Last year, we strengthened our strategy in this area with the vision to lead the change towards safe products and a toxic-free fashion future. Our long-term goal and ambition is to achieve full traceability of input chemicals by 2030.

Nieuwenkamp, Roel, “Corporate leaders: Your supply chain is your responsibility”, OECD Observer, No 299, Q2 2014. https://oe.cd//2iX

Your report states that it does not include franchised operations. Could you please clarify? Franchising is not part of our expansion strategy generally. Our stores are run only by us with the exception of markets in which we couldn’t open wholly owned subsidiaries. What the sustainability report says

If even only one child labour incident at one of your suppliers was revealed in 2017, can H&M unequivocally say that it does not use any child labour in any part of its supply chain?

OECD (2014), Annual Report on the OECD Guidelines for Multinational Enterprises 2014: Responsible Business Conduct by Sector, OECD Publishing, Paris, https://doi. org/10.1787/mne-2014-en. Share article at https://oe.cd/2jk

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GOVERNANCE

Tackling corruption through taxation: The power of co-operation Anne-Lise Prigent, OECD Observer

is confidential. Mr Kos says that countries need to authorise co-operation on corruption investigations and prod tax authorities and law enforcement officials to work together.

©Mack Sennett Studios

Evidence shows that when different departments work together, they get results. The 2015 FIFA case is a well-known example. What many people forget is that the corruption scandal over the world governing body of football’s awarding of the 2018 and 2022 World Cups began as a tax investigation in 2011. Don Fort, chief of criminal investigation at the US Internal Revenue Service (IRS), recalls that the IRS and the FBI worked the case together from the beginning and shared all the information they had. The result was a textbook example of how to conduct an investigation and a lesson in co-operation.

Operator, did you say co-Operate? “Every dollar that a corrupt official or a corrupt business person puts in their pocket is a dollar stolen from a pregnant woman who needs healthcare, a girl or a boy who deserves an education, and communities that need water, roads, and schools.” (Jim Yong Kim, President of the World Bank Group)

they single out for irregularities. Yet how many international bribery cases did tax authorities uncover between 1999 and 2017 that went to court? The answer, thunders Drago Kos, Chair of the OECD Working Group on Bribery, is… 1%. Only five countries sent cases to court that had been flagged by their tax authorities.

Every year, bribes eat up an estimated US$1,500 to 2,000 billion, the equivalent of 2% of global GDP. And this is just a tiny fraction of the corruption that weighs on local businesses, fuels terrorism, complicates the refugee crisis and slows down progress on climate change reform. Corruption destroys trust, distorts competition and squanders people’s skills. It is a drag on development.

So, we have investigators and prosecutors pursuing corruption cases. And we have tax inspectors who have all the information. But despite the obvious synergies, the two teams rarely co-operate. Meanwhile, in the criminal economy, the bad guys do, and business is booming.

The fight against corruption and bribery is built into the UN’s Sustainable Development Goals. But it will not be won without deploying our strongest weapon: co-operation. Tax inspectors are ideally placed to spot suspicious transactions. And law enforcement officials are ready to investigate and prosecute cases that

Drago Kos used to be a football referee. Now he wants to blow the whistle on bribery. He says it starts with an appropriate legal and institutional framework. But here’s where it gets interesting. While tax authorities are legally required to report suspicious transactions to corruption investigators in many countries, it is optional and even, prohibited, in some countries on the grounds that the relevant information

Don Fort has seen too many cases fail because of the lack of co-operation, and the stakes are high: “Bitcoins in digital portfolios escaping into offshore trusts can run into the billions, yes, billions with a ‘b’,” he says. “The sums are staggering!” The corruptible, corrupted and corrupting elements of society move fast. They are more creative than us: they seize the initiative with a dishonest, but nevertheless very real sense of entrepreneurship. They lurk where we least expect them. In a few minutes, billions can leave one country for another under a veil of secrecy. If our side takes weeks or months to mobilise in response, it will be like the Keystone Cops chasing after the bad guys, and never catching up. Co-operation needs to be fiscal and financial, investigative and punitive. It needs to be creative, innovative, brilliant and preventive. Richard Findl, senior prosecutor at the Public Prosecutor’s Office in Munich, used to be a tax inspector, so he’s familiar with both sides. Among the big cases he has worked on are the 2008 case involving the engineering group Siemens and the 2009 case involving truck manufacturer MAN. Both Munich-based companies were found

OECD Observer No 314 Q2 2018

The dark side of the digital economy: Bad things come in small packages guilty of bribery in order to win substantial contracts. Mr Findl looks back with humility over the progress Germany has made on corruption. In the 80s, bribes were commonplace and even tax deductible. Things started to change in the 90s with the signing of the OECD’s Anti-Bribery Convention, an instrument which now has 43 signatories.

Michael Morantz, OECD Public Governance Directorate

For progress on corruption to continue in Germany and elsewhere, Mr Findl says, five things are key: a robust legal framework; the lifting of barriers preventing tax inspectors from working with investigators and prosecutors; regular meetings to help all parties share information and develop mutual understanding and trust; close cooperation in every investigation from beginning to end; and lastly, regular training to show tax inspectors exactly what evidence to look for. Grace Perez-Navarro, Deputy Director of the OECD Centre for Tax Policy and Administration, calls for greater cooperation between tax authorities and criminal investigators and prosecutors. The OECD continues to present case studies that help member countries detect corruption, and is investigating new technologies, such as blockchain, to help in the fight.

OECD (2017), Effective Inter-Agency Co-operation in Fighting Tax Crimes and Other Financial Crimes – Third Edition, OECD, Paris, http://www.oecd.org/tax/ crime/effective-inter-agency-co-operation-in-fighting-taxcrimes-andother-financial-crimes.htm

In a small town just outside Montreal, Jake [not his real name] struggles with drug addiction. His dependence on numerous substances has brought him in and out of hospital and rehabilitation programmes many times. What is striking about Jake’s addiction is how he acquires the drugs: not from a neighbourhood drug dealer, but through the post and courier companies. “It’s remarkably easy business,” he says. “Just like buying common, everyday items on the surface– as opposed to dark–web. Only there are a few extra steps. After you provide your false personal and delivery information and whatever sum of money is agreed upon, your package arrives at the designated address disguised as something else in order to get through the postal service.”

Share article at https://oe.cd/2h6

That “something else” is any of the

As Jorge Luis Borges once said, “Don’t talk unless you can improve the silence.” National and international tax and law enforcement agencies need to talk to each other if they want to beat back the silent menace of corruption. References OECD’s 2018 Global Anti-Corruption and Integrity Forum , https://bit.ly/2RMbhEa OECD (2017), The Detection of Foreign Bribery, OECD, Paris, http://www.oecd.org/corruption/anti-bribery/ The-Detection-of-Foreign-Bribery.pdf

countless innocent things we buy on the internet and have delivered to the house. Like a pair of shoes. A car part. A smartphone. A handbag. A children’s toy. Thanks to e-commerce, we can purchase these things from nearly

The trouble is that customs agencies are geared to monitor large commercial shipments rather than a continuous flow of small parcels anywhere in the world. This has led to a flood of small, individual packages that transit through international shipping every day. The packages arrive at customs facilities by the truck- or plane-load, often with little or no advance information other than the label affixed to the top of the parcel. And even when the

GOVERNANCE

responsible for many of these deaths, means that an importer can smuggle tens of thousands of potentially fatal doses in a single small parcel.

©David Rooney

Governments now realise the serious effects the small package trade can have. In an OECD report from 2018 on illicit trade, customs agencies reported that small, low-value shipments are a very real threat to national health, safety and security. Small parcels do not just contain illicit narcotics, but weapons, illegal wildlife products, or indeed nearly anything that will fit in a box.

information on the labels is accurate, how can inspectors possibly inspect each box and effectively risk-assess the contents without advance information? Criminal networks throughout the world are exploiting this gap. Small package trade is facilitating the global trade in counterfeits. The total value of fakes shipped globally was $US461 billion in 2013, or 2.5% of global trade, the OECD’s Task Force on Countering Illicit Trade estimates. Of this, over 60% of seizures by volume occurred in the mail stream in small packages. It is also one of the reasons why the current opioid epidemic has reached the proportions it has. The Center for Disease Control in the US reported a 30% increase in opioid overdoses nation-wide in 2016-2017. The high potency of fentanyl, the drug

A small-package delivery system which escapes controls has combined with the democratisation of trade through e-commerce to ignite a boom in illicit trade. Unlike illicit narcotics, customers need only go on the “surface web” to purchase counterfeits from e-stores. Popular social media sites make it even easier to access these marketplaces where you can buy anything from fake shoes and designer watches to deadly fakes like counterfeit medicines. The trouble is that customs agencies are geared to monitor large commercial shipments rather than a continuous flow of small parcels. Can they adjust? Luckily, this change in the nature of trade is not unprecedented. In the 1970s, authorities had to adapt to “containerised trade”, for instance. The global challenge for customs officials then was to examine and risk-assess goods loaded on and off ships in large, locked steel containers. Customs administrations gradually developed a host of measures to deal with this, such as advance commercial information requirements integrated into risk-assessment software and other trade facilitation procedures. International co-operation among law enforcement bodies was also key to ensure the process went smoothly. Today, many customs administrations can target and riskassess containers days before they arrive, and scan entire containers without

opening them. However, now they must adapt to high-volume shipments of small consignments. The speed and agility of criminal networks are such that authorities are almost always playing catch-up. And they are doing so in the dark. The same goes for the customers and victims of the shadow economy. Jake notes, “I have no idea where the drugs come from, I have no idea who makes them and I have no idea of their quality. But that’s the name of the game.” It doesn’t have to be. Though the institutional capacities of individual law enforcements agencies are weak, governments can co-operate with each other, and with courier services, postal administrations, e-commerce vendors and intermediaries, using fora such as the OECD’s Task Force on Countering Illicit Trade. Without these international partnerships pushing for effective regulatory reforms, illicit e-commerce will continue to enrich these criminal networks. People like Jake should not have to pay the price. Links and references OECD (2018), Governance Frameworks to Counter Illicit Trade, OECD Publishing, Paris,http://dx.doi. org/10.1787/9789264291652-en. OECD/EUIPO (2017), Mapping the Real Routes of Trade in Fake Goods, OECD Publishing, Paris, http://dx.doi. org/10.1787/9789264278349-en. OECD/EUIPO (2016), Trade in Counterfeit and Pirated Goods: Mapping the Economic Impact, OECD Publishing, Paris, http://dx.doi. org/10.1787/9789264252653-en. OECD (2016), Illicit Trade: Converging Criminal Networks, OECD Reviews of Risk Management Policies, OECD Publishing, Paris, http://dx.doi. org/10.1787/9789264251847-en. OECD Task Force on Countering Illicit Trade, www.oecd.org/gov/risk/ oecdtaskforceoncounteringillicittrade.htm See “Opioid Overdoses Treated in Emergency Departments” at www.cdc.gov/vitalsigns/opioidoverdoses/index.html Share article at https://oe.cd/2hv

OECD Observer No 314 Q2 2018

Corruption vs integrity: The battle continues Peter Berlin, OECD Observer writer-at-large

of the Thomson Reuters Foundation and founder of TrustLaw and Trust Women. In the session on sport, Ronan O’Laoire, Crime Prevention and Criminal Justice Officer at the United Nations Office on Drugs and Crime (UNODC), talked about the “perfect circle” of betting, money laundering and match fixing, with criminals in one country using the globalised betting markets to profit from sports events in other continents.

©Integrity Action

The cross-border problem is exacerbated by the speed with which the corrupt hop to new honeypots and how fast they adapt to technological and social changes, such as the dark web, e-trade and cryptocurrencies.

Youth community monitoring in the Palestinian Authority. Recently, a group of 15-year-old students from a girls’ secondary school in the Palestinian Authority audited the construction of a swimming pool in their town. Part of a competition organised by Integrity Action, a civil society organisation, the girls chose to do this because the local government had decided to build a male-only pool and they felt it was not meant for the whole community. The girls visited the site and requested and examined all the papers related to the project, including the bills and the blueprints. They found that the lifeguard was unqualified and that the tiles were not of the quality specified in the contract. So they made a fuss. The builder replaced the tiles. The town hired a real lifeguard and said it would think about adding screens for privacy and opening the pool for women on certain days. “Working on this project was one of the most successful things we did in our lives. We were finally able to raise our voices and make them heard by decision-makers. We forced them to fix the problems!” said the students. Fredrik Galtung, the founder and president of Integrity Action, told this story at “The Kids are Alright: Educating for Public Integrity”, a session at the OECD’s Global Anti-Corruption and Integrity Forum at the end of March. Other sessions ranged from meetings of auditors on infrastructure, norms and standards to topics like corruption in sports, business ethics, human slavery and the law of the sea. “Planet Integrity is not a distant dream, it’s an urgent necessity,” OECD Secretary-General Angel Gurría said in his opening remarks. The cross-border reach of corruption and the problems it poses to national agencies was echoed repeatedly at the forum. “Slavery and human trafficking have no borders,” said Monique Villa, CEO

“Corruption is a moving target,” Mr Gurría said. “Corruption is often a faceless and borderless crime. Illicit financial flows, cybercrimes and human trafficking are the ‘dark’ side of globalisation. Tackling this must be a global priority.” John Penrose, a British MP who has been appointed his country’s “anti-corruption champion” was worried: “We are slower than the corrupters at the moment. They are way ahead of us.” Marcos Bonturi, who heads the OECD’s Directorate for Public Governance, said that people are our best weapon against corruption. “We have been too focused on legal implementation but we’re no longer ignoring the human dimension–how individuals see themselves and relate to society and how education can create a culture of integrity.” He added, “But we cannot do that overnight. It takes a generation or two. We need to start now.” That high-school students investigated the accounts of a community swimming pool and found information that led to changes is the kind of grass-roots activism that will beat corruption. But it’s an active vigilance that has to be taught, and taught while people are still young. Mr Galtung summed it up neatly: “Corruption is a skill set. Integrity is a skill set.” NOTE: The statistical data for Israel are supplied by and under the responsibility of the relevant Israeli authorities. The use of such data by the OECD is without prejudice to the status of the Golan Heights, East Jerusalem and Israeli settlements in the West Bank under the terms of international law. References and links OECD Global Anti-Corruption and Integrity Forum, www.oecd.org/corruption/integrityforum/ OECD work on education for public integrity, www.oecd.org/gov/ethics/integrity-education.htm Integrity Action (2017), Can girls use social accountability to challenge social gender norms? Palestinian girls monitoring the construction of a swimming pool in Arraba, https:// integrityaction.org/case-study/can-girls-use-social-accountability-challenge-social-gendernorms-palestinian-girls UNODC (2016), Resource Guide on Good Practices in the Investigation of Match-Fixing, www.unodc.org/documents/corruption/Publications/2016/V1602591RESOURCE_GUIDE_ON_GOOD_PRACTICES_IN_THE_INVESTIGATION_OF_MATCHFIXING.pdf Share article at https://oe.cd/2gQ

GOVERNANCE

World Cups and Olympic Games: How to stop three weeks of fete from turning into 30 years of debt

©REUTERS/Grigory Dukor

Peter Berlin, OECD Observer writer-at-large

A juggler and dancers at the Opening Ceremony of the 2018 FIFA World Cup in Russia. Hosting major global events can bring enormous economic and social benefits, but can also leave costly scars. A new OECD initiative could help policymakers find a winning formula more often. The 2018 football World Cup has kicked off in Russia, and people around the globe are by now glued to their radios, televisions, and laptops, living each save, each goal, every triumph, every loss. Excitement reigns, but at the same time, some are also turning their thoughts to the future, to 2022 and beyond. Organising and hosting an event on the scale of the World Cup is a massive undertaking, as FIFA, the governing body of world soccer, the OECD, and even the voters of the Swiss canton of Valais, know well. On 30 May, the OECD Council Recommendation on Global Events and

Local Development was endorsed by ministers at their annual meeting in Paris, just a couple of weeks before the World Cup opening ceremony in Moscow, and as the French capital begins its preparations to host the Olympic Games in 2024. The OECD document offers a blueprint for events of limited duration but global reach, which can include exhibitions and cultural festivals as well as major sports competitions. Hosting a major event can be a catalyst for social and economic betterment, and policymakers have a role to play in making sure such events bring value for money and that their impact on local communities and the environment is properly and openly assessed. The OECD Recommendation, which is the first of its kind, can help. The intention, as Secretary-General Angel Gurría said, is to encourage “sensible and efficient investment” that contributes to job

creation and transparent management. Organisers need to ensure that the benefits are shared “before, during and after the events”. The staging of World Cups and, in particular, the Olympics Games, has been problematic over the years. Potential host countries have felt pressure from their own public, who want to be allowed to participate in deciding whether or not to host such events. A lack of public support led Boston to withdraw its bid to host the 2024 Olympics. And in June 2018, the canton of Valais rejected, once again, a proposal to bid to host the Winter Olympics. Switzerland might be the home of the International Olympic Committee, but its citizens–or at least those in Valais–want no part of the games. The slogan of those opposing the bid

OECD Observer No 314 Q2 2018

GOVERNANCE

was “three weeks of fete, 30 years of debt.” The trend could continue, for as Chak Hee Anh, director of global affairs at the Korean newspaper JoongAng Ilbo, noted during OECD Forum 2018, an international public policy debate which takes place alongside the ministerial meeting, “more and more, we are seeing countries reconsidering the notion of having these big, sometimes disruptive events.” Why? Firstly, cost. The Olympics and the World Cup do not come cheap–and their budgets have a tendency to inflate along the way. “It’s quite easy to spend more money than you are supposed to use,” explained Cesar Cunha Campos, director of FGV Projetos, speaking at the OECD Forum. For the 2016 Brazil Paralympics and Olympic Games, for instance, “the bidding process in the Paralympics was US$400 million and we spent US$2 billion; for the Olympics US$17 billion and we spent US$29 billion. So, you have to be careful.”

is not used by any elite soccer clubs today and its parking lot has become a garage for city buses. For the 2012 London Olympic Games, the city promised to build a new, dedicated athletics stadium, despite the likelihood of limited demand for one afterwards. The legacy committee

By improving on the design of such events and managing their legacies thoughtfully, we can focus on what brings us together in sport now rents the London Stadium to West Ham, a Premier League club, which is demanding conversion of the athletic facilities into a more footballfriendly arena.

The official price tag going into the 2018 World Cup in Russia is US$11.8 billion, already over budget, though some estimates put the figure as high as US$14.2 billion, which would make it the most expensive World Cup ever. But these numbers are dwarfed by the costs of the 2014 Winter Olympics in Sochi and the Beijing Summer Games, which both exceeded US$50 billion. The 2022 Qatar World Cup could smash all records.

Local government heads worry that they will not be able to afford the upkeep on the shiny new arenas. Russia has spent between $3.5 billion and $4.7 billion on stadiums for its 32-team competition. This includes $500 million to convert the Fisht Stadium in Sochi, built at a cost of US$770 million for the 2014 Winter Olympics. What will the return be? In his annual televised phone conversation with heads of regional governments at the start of June, President Vladimir Putin said the stadiums should be “self-sufficient”, though he explicitly ruled out using them as flea markets, a repurposing that happened after the collapse of the Soviet Union.

Then there’s the return on investment. The histories of both competitions are filled with stories of projects gone awry. The 1976 Montreal Olympics checked all the boxes for ill-conceived infrastructure: the unnecessary Mirabel airport, now used only for freight, and an overambitious Olympic Stadium, nicknamed the “Big Owe”, which is hardly used and still soaks up public money. The 72,000seat Mané Garrincha stadium in Brasília, which cost around US$500 million to renovate for the 2014 World Cup and the 2016 Olympic Games football tournament,

Another issue is the increasing size of World Cup–2018 might be the last one with 32 teams participating. FIFA has long planned to expand the competition to 48 teams for 2026, giving more spots in the finals and more money to its member nations. At their pre-World Cup congress in Moscow, FIFA members deferred a decision on whether to expand the 2022 competition to 48-teams. They accepted the recommendation of the inspection team not to go with Morocco’s bid to host such a large World Cup in

2026, voting for a joint Canada-MexicoUnited States ticket instead. If the World Cup is now so big that even the US cannot host it alone, where does it go from here? Nor are cost and size the only problems to address. There is responsible business conduct to uphold too, not least regarding labour standards, which have been seriously questioned in relation to Qatar’s world cup preparations. The OECD recommendation, which calls for labour rights to be respected, is a positive step. The tool can help host countries, regions and cities, as well as international event partners, to better design large-scale events shaped to local needs and with people at the heart, and generate long-term benefits. By improving on the design and implementation of such events, by managing their legacies thoughtfully, we can focus on what brings us together in sport, what is shared when a match kicks off or a race begins. As French Paralympian and OECD Forum participant Michaël Jérémiasz reminds us, these events are “much more than just a few weeks of sport”. They are an opportunity to inspire and be inspired, to “share what humanity can be”. References Visit the OECD Forum at www.oecd.org/forum OECD (2018), “OECD ministers agree new approach to ensure global events benefit local communities”, 30 May, https://oe.cd/2iD OECD (2018), Recommendation of the Council on Global Events and Local Development, OECD/ LEGAL/0444, see the full document at https://oe.cd/ events-rec Amnesty International, “Qatar: Abuse of migrant workers remains widespread as World Cup stadium hosts first match”, 18 May 2017 Boston withdraws bid for 2024 Olympics, “http://www. bostonglobe.com/metro/specials/olympics2024 Perreaux , Les (2017), “The owing never ends at the Big O”, The Globe and Mail, 1 December Share article at https://oe.cd/2jm

TECHNOLOGY

Privacy and your digital future

©Leah Millis/REUTERS

Tomer Michelzon, OECD Observer

Not so private: Facebook chief Mark Zuckerberg in the public lens before a US Senate hearing in April 2018. “We care about your data privacy and security. With this in mind, we’re updating our privacy policy by 25 May 2018 in compliance with the EU’s General Data Protection Regulation (GDPR). Click to learn more.”

To understand how serious all of this is, think back to the Facebook data handling debacle that dominated the news in March and April 2018. The affair led to several questions about privacy in today’s rather open online world.

You’ve probably seen messages like this filling your inbox and social media apps of late. What is it all about, and why should we be concerned?

It exposed some of the unseen ways a person’s data can be mishandled and exchanged across the internet,

Every time you post a photograph or a story on Facebook or Instagram, you leave a trail of personal information online, about you, your family and friends, what you like, where you travel, work, eat, and more. This intelligence is valuable to advertisers, who are the main source of income for companies like Facebook and Google. But as the data is about you, social media firms should seek your consent before sending it to someone else. This has become all the more sensitive since political advertisers have become involved, potentially affecting election and referendum outcomes.

GDPR should improve trust and enable freer data flows without their knowledge or permission. Remarkably, it took as long as three years before some 87 million Facebook users discovered that their own data had been acquired by a consultancy firm, Cambridge Analytica, for use in political campaigns. Unlike in previous cases concerning Uber and Yahoo, in which hackers had reportedly stolen data, this was a normal commercial transaction involving data that had been compiled using an online quiz posted on Facebook called “This is your digital life”.

But it was not a transaction those millions of Facebook users necessarily wanted. This not only rekindled a heated policy debate on personal data protection and privacy online, but touched a nerve that runs through the heart of today’s economy: How trustworthy is our digital world, and how regulated do we need, or want, the internet to be? OECD roots The timing of the Facebook issue could hardly have been more poignant, erupting just weeks before the EU’s new General Data Protection Regulation (GDPR) comes into force on 25 May. The regulation, which replaces a 1995 directive, aims to harmonise data protection laws throughout the EU and bring some coherence to the tangle of different national laws that have grown over the years. The GDPR’s spirit and much of its detail reflect the OECD privacy framework that has been developed three decades ago and revised in 2013, notably upholding the importance of openness

OECD Observer No 314 Q2 2018

TECHNOLOGY

and promoting respect for privacy as a fundamental condition for the free flow of personal data across borders. But the GDPR adds some new teeth too, like ensuring users have the right to transfer their data to other controllers without any hindrance–so-called portability–and making it mandatory that privacy breaches be notified to the local Data Protection Authority within 72 hours of their discovery, unless the breach is of no consequence to the data subjects. Tough fines also feature: €10 million (US$12 million) or 2% of worldwide annual turnover, whichever is higher, for failing to notify a personal data breach, and as high as 4% of turnover or €20 million, depending on which is more, in those cases where the failure amounts to a breach of fundamental data protection principles. Compare it with the Federal Trade Commission (FTC) rules in the US, for instance, which can impose a fine of US$40,000 per proven violation of its 2011 consent decree. Also, the risk of costly lawsuits in the US should normally act as a deterrent. Except that in the case of Cambridge Analytica it didn’t. The OECD framework also recommends adopting appropriate laws, data breach notification and adequate sanctions for failure to uphold privacy, though it also emphasises organisational accountability and education, as well as national strategies and interoperability of systems as ways to go.

Even if views in the US Congress appear divided on what to do next when examining the Facebook case, CEO and co-founder Mark Zuckerberg was less uncertain, for while he apologised for the incident, he also said his company would consider complying with the EU regulation on a worldwide basis. Facebook has since moved to tighten its data management, a point which Mr Zuckerberg emphasised again at a hearing in the European Parliament in late May. But will other firms follow suit? Most people care about privacy, and many firms are coming to recognise that showing they care too is a business opportunity, but not all. In the absence of robust enforcement, it is all too easy for anyone to let their guard down, or behave in contradictory ways. This is one reason why policymakers around the world, and not just in the EU, need to take a hard look at their approaches to raising privacy awareness and enforcing privacy and data protection. Open for (honest) business A key question is how to assure both privacy and an open flow of data? Data, especially big data, has been called the capital of the digital age, and as with all capital, the freer the flow of data, the lower the costs. The internet’s openness has brought enormous benefits by overcoming barriers in the physical world. Breaches of trust jeopardise that progress. But a completely open internet, however aspirational, does not exist in reality, with

Are you prepping for GDPR? % share of executives whose companies have taken following measures in preparation for GDPR 40 30

10 0

Source: Statista

Liaised with vendors who process personal data to update contracts

Implementing / optimising IT security

Reviewed and changed products

Brainstormed new marketing strategies

Educated customers on GDPR and how we will comply

Changing way we sell/market products

None of the above

various controls imposed by different countries. Viewed in this light, the GDPR should, thanks to better data protection, improve trust among users and enable freer data flows throughout the EU’s own significant market. The rest of the world wishing to do business in that space will benefit fully as long as they comply with the GDPR. If they don’t, then a “border” will kick in for those suppliers. But could this approach go too far and create unnecessary borders online? Some countries are concerned it might. It certainly means compliance costs for businesses, albeit for access to a lucrative market. However, some question whether all EU countries have the means and legal tools needed to police the new regulation. The Facebook affair and the new EU data protection rules may have set markers for our digital futures. We must draw the right lessons, and through international co-operation which the OECD will continue to support, set the ground rules for a thriving, trustworthy digital world economy. In the meantime, the rest of us users must get to sorting out those consent notices in our in-trays. References and further reading EU’s General Data Protection Regulation portal: https:// www.eugdpr.org/ For more on the OECD Privacy Framework, including the Revised Guidelines on the Protection of Privacy and Transborder Flows of Personal Data2013, visit www.oecd. org/sti/ieconomy/oecd_privacy_framework.pdf Constine, Josh (2018) “Zuckerberg says Facebook will offer GDPR privacy controls everywhere”, https://techcrunch. com/2018/04/04/zuckerberg-gdpr/ IAPP (2018), “FTC investigating whether Facebook violated 2011 consent decree”, on https://iapp.org, website of International Association of Privacy Professionals, March Mckinsey, “Digital globalization: The new era of global flows”, https://www.mckinsey.com/business-functions/ digital-mckinsey/our-insights/digital-globalization-the-newera-of-global-flows Romm, Tony (2018) “Facebook’s Zuckerberg just survived 10 hours of questioning by Congress” in The Washington Post, April https://www.washingtonpost.com/news/the-switch/ wp/2018/04/11/zuckerberg-facebook-hearing-congresshouse-testimony/?noredirect=on&utm_term=. b40d744f744c Share article at https://oe.cd/obs/2rj

ENVIRONMENT

Bioeconomy 101: Making rubber tyres from dandelions James Philp, OECD Directorate for Science, Technology and Innovation

materials. Such a biotech transition holds promise on several fronts, including local jobs, rural regeneration, smart specialisation, circular economy and reindustrialisation. It also fills in many of the blanks as to how to make progress on at least half of the United Nations’ Sustainable Development Goals by 2030.

©David Rooney

Problems and roadblocks Bio-based manufacturing can become a reality but many hurdles must first be cleared. For instance, increased demand for biomass may put pressure on land used to grow food crops, a concern that arose a few years ago when the production of biofuels accelerated. For the past decade, the OECD has been working on biomass sustainability issues, developing standards for international trade in biomass. In 2013, an OECD Recommendation was issued, encouraging members to develop and implement national Moving beyond a petroleum-based economy is not just about choosing alternative sources of energy. It is about rethinking almost everything around us. The fleece you’re wearing, for example, is made from the same oil-based chemical as antifreeze or engine coolant. This is where green chemistry comes in. Advances in biotechnology are allowing us to manufacture fabrics, plastics, fuels and chemicals from bio-based resources using renewable resources. Instead of oil feedstock, as in conventional manufacturing, plastic can be made from fermentation, rather like brewing beer. Bio-based latex car tyres can be made from dandelions and carpets from sugar. Right now we are still deeply dependent on petroleum products. But the idea of making chemicals in microorganism factories instead of oil refineries is taking off. This will mean a cleaner, more sustainable future for manufacturing. A vision of bio-based manufacturing Industrial biotechnology is starting to change the consumer goods we buy. Water bottles will soon be made partially or completely from bio-based carbon rather than fossil fuel-based plastic, for instance. Graphene is another key material of the future: it conducts electricity better than copper. Right now it is still expensive but a research group has perfected a simple process that turns soybean oil into graphene, which will make it ideal for consumer electronics. Extremely strong spider silk is another biotech invention. Though there are technical barriers to its production from a microorganism, they are now being overcome. Among the newer possible applications of spider silk are high-tech microphones in hearing aids and cell-phones. What would a bio-based production system look like? Biorefineries make fuels, chemicals and electricity from residual organic biomass, and under certain conditions, also from food crops. This can range from expensive purified sugar to waste materials such as scrap lumber, manure, straw, or the organic domestic waste in your waste bin. By-products and side streams from biorefineries could, themselves, generate new industrial ecosystems in a more circular economy. In converting waste of different kinds into usable products, biotechnology would decrease landfill, reduce carbon footprints, and create a more resource-efficient economy. It is likely that biorefineries will be small- to medium-scale facilities in rural or semi-rural areas with ready access to biomass

Biotech could jumpstart a more circular economy frameworks for assessing the sustainability of bio-based products. It lists the considerations OECD member countries should take into account when making such assessments. It also recommends using life cycle analyses whenever possible; that is, the analysis of everything that goes into a biotech process such as fuel and raw materials, everything produced by the process including different wastes, and the environmental impact of both sides of the process. There is also the issue of regulatory and technical barriers to a bioeconomy. While using waste for bio-production is resourceefficient and avoids land-use trade-offs, it requires regulatory changes. Right now, waste is predominantly defined as something that must be discarded rather than something to be re-used. Redefining waste would be an important step. In the technical realm, policies that encourage public research on and development subsidies for bio-based production are key. So would policies that smooth the way for public-private partnerships to build biorefineries, which are, as yet, high-risk investments. Politically, there is still too much support in many parts of the world for market-distorting fossil fuel subsidies. Carbon pricing and the removal of these subsidies would help us move on from fossil fuel dependence and on to cleaner, more effective, technologies instead. The bioeconomy is an alternative to our current “take, make and dispose” way of doing things. Industrial biotechnology can replace petroleum, make use of wastes, and foster cleaner manufacturing. With the right policies in place, biotech could jumpstart a more circular economy and help us face the grand challenges of climate change, soil destruction, water and energy security, and resource scarcity. References OECD (2013), Recommendation of the OECD Council on Assessing the Sustainability of Bio-based Products, OECD Publishing, Paris. https://legalinstruments.oecd.org/Instruments/ ShowInstrumentView.aspx?InstrumentID=283&Lang=en&Book=False OECD (2018), Meeting Policy Challenges for a Sustainable Bioeconomy, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264292345-en. Share article at https://oe.cd/2gc

OECD Observer No 314 Q2 2018

How do you measure

a Better Life? For nearly a decade, the OECD has been working to identify societal progress – ways that move us beyond GDP to examine the issues that impact people’s lives. The OECD’s Better Life Index is an interactive tool that invites the public to share their thoughts on what factors contribute to a better life and to compare well-being across different countries on a range of topics such as clean air, education, income and health. Over five million visitors from around the world have used the Better Life Index and more than 90 000 people have created and shared their personal Better Life Index with the OECD. This feedback has allowed us to identify life satisfaction, education and health as top well-being priorities. What is most important to you?

Create and share your Better Life Index with us at: www.oecdbetterlifeindex.org

The OECD Better Life Index enables you to rate countries according to the importance you give 11 topics. Each petal of the flower represents one topic and the size of the petal the countryâ&#x20AC;&#x2122;s rating for that topic.

Find out more about how life compares in OECD countries by ordering the book Howâ&#x20AC;&#x2122;s Life? Measuring Well-Being. Available now on the OECD Online Bookshop: http://www.oecd.org/bookshop

DEVELOPMENT

Herders vs farmers: Resolving deadly conflict in the Sahel and West Africa

©Obie Oberholzer/LAIF-REA

Ousman Tall, Sahel and West Africa Club (SWAC/OECD)

In the Sahel region of West Africa, herdsmen traditionally head south across the semi-arid strip below the Sahara desert and above the Sudanian Savanna, towards the coasts during the long dry season to graze their animals. The farmers in the host regions used to welcome the herdsmen’s arrival, as the grazing cattle fertilised their cropland. In the last decade, however, economic, environmental and population pressures have turned this mutually benefitting symbiosis into deadly conflict. From 2011 to 2016 more than 2,000 people were killed annually in Nigeria during clashes between herders and farmers, most notably in Benue and Taraba states in Nigeria’s Middle Belt. Now, in the Sahel area, similar violence has erupted, particularly in Mali and Senegal. The need for mediation and resolution strategies is critical. For centuries, pastoralism–the use of extensive grazing on rangelands for livestock production–has sustained both nomadic and sedentary communities throughout the Sahel. Roughly 50 million people, most of them poor, economically depend upon livestock-raising in the region. However, the pastoral way of life is increasingly under threat. Armed conflict, trafficking and terrorism have made vast areas off-limits. Desertification and climate-induced changes have wiped out grazing areas, forcing pastoralists to look elsewhere for fresh pasture and water. Crop farming has increased, and with it a further loss of available rangeland. Meanwhile, livestock density per hectare of grazing

land increased by 41% between 2006 and 2016 while forage and fodder production significantly lowered. This has led to earlier cross-border transhumance–the seasonal movement of cattle from one grazing ground to another–increasing pressure on croplands and the risk of conflicts in host countries. Many of these centuries-old transhumance corridors no longer exist, further impeding the movement of herders. Nomadic pastoralists are key to the region’s stabilisation. The UN’s Economic Commission for Africa reported last year that marginalised herders are involved in most African conflicts, including those in the Central African Republic, Chad, Mali, northeastern Kenya, Somalia and Sudan. A 2016 paper from the Global Center on Conflict, Security and Development makes the point succinctly: “With their superior knowledge of the terrain, they [pastoralists] can become key allies that can help government to monitor and control illicit activities, but that if not included in the different political and social processes can also help criminal groups navigate these challenging areas. Being the only food-producing group in these vast regions, they can sustain or constrain terrorists or other criminal groups. Finally, they are a relatively well-defined target group for development initiatives. Any long-term development effort aimed at stabilising the region would be doomed without the pastoral population’s involvement.” Extract from OECD Insights article, published 16 April 2018. Read rest at https://oe.cd/2r-

OECD.ORG

Here to stay: ASEAN and the OECD Noriaki Abe, Counsellor, Delegation of Japan to the OECD In a witty attempt to explain two new global institutions of his day, renowned economist John Maynard Keynes once famously observed that the World Bank should be called a fund, and the International Monetary Fund called a bank. In short, what mattered was that they both finance global economic development, and indeed both have long played an invaluable role in the ASEAN (Association of Southeast Asian Nations) countries. But what of the OECD? What added value does this organisation bring to the prosperity of the region? One clear answer is policy intelligence, which is needed for any financing project to be effective. With the OECD’s data, analysis, insights and recommendations, ASEAN has benefitted from the “the most influential economic think-tank in the world”, as Japanese Prime Minister Shinzo Abe once described it. Now that some of the ASEAN countries are stepping into the “middleincome trap”, in which inequalities are widening and society is ageing, the OECD’s input has become more pertinent, particularly as our countries work to maintain a competitive foothold in the digitalised world economy. Another unique role of the OECD is “standard setting”. It provides international rules across a whole spectrum of public policies, such as trade and investment, labour, environment, corporate governance and anti-corruption efforts. By instituting these high-quality standards in our own systems, ASEAN has a better chance of forging sustainable and inclusive growth. Such standards can play an instrumental role in facilitating regional integration among both large and small neighbours in a liberalised and harmonious way. But on top of applying standards and norms it receives from others, ASEAN should also take a lead in global rule-making through its active participation–and future membership of its countries–in the OECD. In a nutshell, the OECD is not about money, but results, by creating policies and transforming systems through international co-operation. However, no ASEAN country has yet joined the OECD, and this has not helped either side. On the one hand, the absence of Southeast Asia has underlined a sense of crisis at the OECD, and the ongoing decline of its share in the world’s economy has led this body of advanced nations to engage more with emerging economies, especially in this region. On the other hand, stereotyping it as a “rich man’s club”, as ASEAN and other countries sometimes do, has prevented it from taking any further steps. However, this conventional image is not accurate. First, having started as the apparatus to rebuild Europe after the Second World War, it reorganised itself in 1961 into an international entity, aimed at promoting policy coordination among the world’s economies based on free trade, markets and good governance, with a strong focus on assisting developing countries. Japan joined this Atlantic-centric body in 1964, followed much later by countries of Latin America and the former Soviet bloc. The constant enlargement has increased the membership to 35, whose geographical locations, profiles, and levels of economic and social development are quite diverse. Money cannot buy membership, but aspiration to reform and progress can.

Second, contrary to its brand as an exclusive club, no multilateral body could be more open, inclusive and transparent. It makes its treasure of works widely available to the public, and even non-members are invited to join cutting-edge policy discussions. Third, it is not only men who steer the wheel in the organisation: 11 ambassadors out of 35 are women, as are several directors. The valuable role that the organisation plays was reaffirmed at the ministerial conference of the OECD’s Southeast Asia Regional Programme (SEARP) in Tokyo on 8-9 March, our first since the inception of the programme in 2014. Under the theme of “Inclusive ASEAN”, ministers demonstrated their collective will to leave no one behind, as ASEAN strives forward with domestic reforms and regional integration. At the Tokyo conference, ASEAN renewed its political commitment to work together, and set priority areas, such as enhancing productivity of individuals and firms by assisting them to benefit from globalisation and digital innovation, widening their participation in the economy, and improving connectivity by reinforcing “quality infrastructure”. As connectivity is a key element of the ASEAN Blueprint 2025, ministers welcomed efforts to establish an ASEAN Smart Cities Network to further boost digital innovation, trade and investment. These are just a few concrete examples of where ASEAN’s aspirations and the OECD’s strengths meet. It is high time that our two bodies enhanced such co-operation. Thanks to the Tokyo conference, the OECD and ASEAN are here to stay, and Japan will continue to act as a bridge between them. References and further reading The Ministerial Conference of the OECD’s Southeast Asia Regional Programme, Tokyo, March 2018 http://www.mofa.go.jp/ecm/ie/page22e_000827.html: Joint Communiqué of http://www.mofa.go.jp/mofaj/files/000343344.pdf “On connectivity”: remarks by Japan’s Foreign Minister Taro Kono on 8 March 2018, http://www.mofa.go.jp/mofaj/files/000341334.pdf “Inclusive participation”: remarks by Japan’s Foreign Minister Taro Kono on 8 March 2018, http://www.mofa.go.jp/mofaj/files/000341336.pdf Keynes, John Maynard (1946), quoted in “The IMF and the World Bank: How they differ”, by David Driscoll, 1996: https://www.imf.org/external/pubs/ft/exrp/differ/differ.htm Visit www.oecd.org/southeast-asia/ Share article at https://oe.cd/obs/2rm

Order this now! www.oecd.org/bookshop

OECD Observer No 314 Q2 2018

OECD.ORG OECD Ministerial Council Meeting, 30-31 May 2018

©Victor Tonelli

Reshaping the foundations of multilateralism for more responsible, effective and inclusive outcomes

Emmanuel Macron, President of France

©Victor Tonelli

“[Multilateralism] is the only solution to reconcile sovereignty and co-operation, it is the only solution that can reconcile our responsibility to the citizens and the legitimate ambitions that we may have in an open world,” French President Emmanuel Macron said in his opening speech at the annual Ministerial Council Meeting (MCM) which took place at the OECD headquarters in Paris. The annual meeting is held in conjunction with the OECD Forum, 29-30 May 2018, as part of OECD Week, which is the summit in the OECD calendar. The meeting explored

how the foundations of the multilateral system, in place for over half a century, could be reshaped to become more responsible, effective and inclusive. International co-operation is needed to promote human progress and protect our planet, and participants discussed how the OECD can be most effective in its efforts to advance better policies for better lives. The 2018 meeting was chaired by France, with Latvia and New Zealand as vice-chairs.

References Statement of the French Chair of the 2018 OECD Ministerial Council Meeting: http://www.oecd.org/mcm/ documents/Statement-French-Chair-OECD-MCM-2018.pdf Opening speech of French President Emmanuel Macron at the 2018 OECD Ministerial Council Meeting: https://www.elysee.fr/emmanuel-macron/2018/05/30/ speech-by-the-president-of-the-french-republic-to-openthe-oecds-annual-ministerial-council-meeting.en Meeting of the OECD Council at Ministerial Level 2018, Key Issues Paper: http://www.oecd.org/mcm/ documents/C-MIN-2018-2-EN.pdf

For more key documents, statements and other resources, see www.oecd.org/mcm

From left: Dalia Grybauskaitė, President of Lithuana; Ildefonso Guajardo Villarreal, Minister of Economy of Mexico; Emmanuel Macron, President of France; Karin Kneissl, Austrian Federal Minister for Europe, Integration and Foreign Affairs; Angel Gurría, Secretary-General of the OECD and Juan Manuel Santos, President of Colombia.

OECD.ORG OECD Forum, 29-30 May 2018

What brings us together “Digital rights are really human rights.” “I’m surprised to hear that only option when there are no jobs is to move somewhere else. As a mayor, I cannot just tell people to go elsewhere.” “I do know that what it means to be human in the future will be radically different.” “It’s our job as companies to make sure we guarantee privacy by design.” “It’s not really a plastic problem. It’s a human problem that we created, and that we can solve.”

©Salomé Suarez

These soundbites capture just a flavour of the lively public debates at the 2018 OECD Forum, which took place on 29-30 May. (Watch the highlights at https://bit. ly/2Cdb4Ef) Building on OECD Forum 2017’s theme of “Bridging divides”, this edition brought ministers, officials, businesspeople, trade union and civil society representatives, academics and journalists together from around the world, to explore what it is that brings us together, in a bid to shape ways of building those muchneeded bridges.

Speakers and participants probed global challenges such as anti-corruption, development, digitalisation, climate change, migration, taxation, trade, and the need to rebuild trust in each other and in democratic institutions. From panel discussions to idea factories and book presentations in the bustling conference centre of the OECD, participants engaged with OECD experts as well as guest speakers, including French President Emmanuel Macron; Dutch Minister of Foreign Trade and

©Salomé Suarez

While reflecting on the complexity of shaping policy in a post-truth world and identifying opportunities for civic engagement and co-creation with citizens, Forum participants focused on addressing three interconnected challenges: how to uphold international co-operation, promote inclusive growth and manage the digital transformation of our societies. Engaging with OECD experts and guest speakers

Development Co-operation Sigrid Kaag, Mayor Anne Hidalgo of Paris; Anna Widegren of the European Youth Forum; Geoff Mulgan of Nesta; Sharan Burrow of the International Trade Union Confederation; Jean Tirole, 2014 Nobel Memorial Prize Laureate in Economic Sciences; Minouche Shafik of the London School of Economics and Political Science, and many others. Thousands more people participated online too.

The next annual Forum will be the 20th anniversary edition in May 2019; see website for details. References Visit www.oecd.org/forum Visit www.oecd.org/forum/oecdyearbook/ See video highlights of OECD Week 2018: https://www.youtube.com/watch?v=HxKaUFqD4aY See video highlights of OECD Week 2017: https://www.youtube.com/watch?v=0HWDOhZzfnE

OECD Observer No 314 Q2 2018

OECD.ORG

©OECD

Time to rethink plastic recycling

See video: https://bit.ly/2S5fAdY

Planet Integrity Cultivating a level playing field for business, reducing socioeconomic inequalities and ultimately making public policies work for all: those were the key issues tackled at this year’s OECD Global Anti-corruption & Integrity Forum, 27-28 March. Under the theme “Planet Integrity”, debates focused on the governance of globalisation and its role in curbing corruption and unethical practices in trade, competition, infrastructure, development co-operation and revenue collection. Learn more here: https://oe.cd/2ok

2018 Forum on responsible mineral supply chains How can we achieve responsible mineral production and sourcing? At the conference, held at the OECD on 17-19 April, decision-makers from the public and corporate worlds, experts, academics and other stakeholders reviewed and discussed implementation of the OECD’s Due Diligence Guidance for Minerals framework. Visit https://oe.cd/2oj

©OECD/Andrew Wheeler

OECD Statistics Day 2018

Frans Timmermans, First Vice-President of the European Commission, Gabriela Michetti, Vice President of Argentina, and Erna Solberg, Prime Minister of Norway (from left).

“It is a capital mistake to theorise before one has data”, noted the great detective Sherlock Holmes. The OECD would share this view. On Statistics Day, 6 April, SecretaryGeneral Angel Gurría captured the value of evidence-based policymaking: “Just as a picture can be worth more than a thousand words, a number can distil a thousand challenges.” Visit https://oe.cd/2oi

The world of work is changing and social policies must change with it. But how? How can economic security and social protection adapt to technology? How can governments bridge the growing gap between “haves” and “have nots”, and bring about more inclusive social policies? Experts and stakeholders from a range of backgrounds focused on these issues at the OECD Ministerial Meeting on Social Policy 2018, 14-15 May, in Montreal, Canada. You can catch up here: https://oe.cd/2j5

Angel Gurría, Secretary-General of the OECD, speaking at the OECD Policy Forum and Ministerial Meeting on Social Policy, Montreal, Canada.

©Employment and Social Development Canada

Social policy for sharing prosperity

OECD.ORG

Recent speeches by Angel Gurría OECD Social Policy Ministerial meeting: Social policy for shared prosperity: Embracing the future

©OECD/Julien Daniel

Opening remarks delivered in Montreal, Canada, 15 May 2018 OECD Social Policy Forum: The future of social policy

For a complete list of the speeches and statements, including those in French and other languages, go to: http://www.oecd.org/about/ secretary-general/

Ambassadors Ms Marlies Stubits-Weidinger, Austria Mr Klavs A. Holm, Denmark Mr Noé Van Hulst, Netherlands Ms Annika Markovic, Sweden

Remarks delivered in Montreal, Canada, 14 May 2018

Ms Claudia Serrano, Chile

OECD Social Policy Ministerial Meeting: Is the last mile the longest?–Nordic gender effect at work

Mr Ulrich Lehner, Switzerland

Remarks delivered in Montreal, Canada, 14 May 2018

Ms Elin Østebø Johansen, Norway

Mr Carmel Shama-Hacohen, Israel Mr Zoltán Cséfalvay, Hungary Ms Michelle d’Auray, Canada Mr Brian Pontifex, Australia

Signing ceremony of the OECD accession agreement with Colombia and Lithuania

Challenges for the global economy and possible responses: Multilateralism that delivers

Remarks delivered in Paris, France, 30 May 2018

Remarks delivered in Montreal, Canada, 14 May 2018

Mr Jean-Joël Schittecatte, Belgium

Launch of the May 2018 Economic Outlook

Launch of the Economic Survey of Greece

Mr Christopher Sharrock, United Kingdom

Opening remarks delivered in Paris, France, 30 May 2018

Remarks delivered in Athens, Greece, 30 April 2018

Mr Erdem Başçi, Turkey

2018 Ministerial Council Meeting

Ministerial Conference on the fight against terrorist financing: The other war against Daesh and Al-Qaeda

Mr Aleksander Surdej, Poland

Welcoming remarks delivered in Paris, France, 30 May 2018 OECD Forum 2018 Opening remarks delivered in Paris, France, 29 May 2018 Peru’s accession to the OECD Anti-Bribery Convention and Multilateral Convention on Mutual Administrative Assistance in Tax Matters Remarks delivered in Paris, France, 28 May 2018 Apertura del Foro Económico Internacional para América Latina y el Caribe Remarks delivered in Paris, France, 28 May 2018

Opening remarks delivered in Paris, France, 26 April 2018 A new reform agenda for a more competitive South East Europe Remarks delivered in Paris, France, 24 April 2018 2018 IMF and World Bank Spring meeting Written statement to the IMFC delivered in Washington DC, US, 21 April 2018 2018 IMF and World Bank Spring meeting Written statement to the Development Committee delivered in Washington DC, US, 21 April 2018

Mr George Krimpas, Greece Mr José Ignacio Wert, Spain

Mr Jong-Won Yoon, Korea

Ms Ivita Burmistre, Latvia

Mr Pekka Puustinen, Finland Mr Dermot Nolan, Ireland Mr Kristjan Andri Stéfansson, Iceland Mr Alessandro Busacca, Italy Mr Petr Gandalovič, Czech Republic Ms Irena Sodin, Slovenia Mr Hiroshi Oe, Japan Mr Alar Streimann, Estonia Ms Monica Aspe, Mexico Mr Martin Hanz, Germany Ms Martine Schommer, Luxembourg Ms Jane Coombs, New Zealand Mr Bernardo Lucena, Portugal Ms Catherine Colonna, France

G20 Finance Ministers and Central Bank Governors meeting: Harnessing the future of work for inclusive growth

Ms Ingrid Brocková, Slovak Republic

IV International Rectors’ meeting UNIVERSIA Remarks delivered in Salamanca, Spain, 21 May 2018

Remarks delivered in Washington DC, US, 20 April 2018

Chargé d’Affaires a.i.

High-Level Global Symposium on financial education

G20 Finance Ministers and Central Bank Governors Meeting: Compact with Africa

Remarks delivered in Paris, France, 18 May 2018

Remarks delivered in Washington DC, US, 20 April 2018

—— Mr Andrew Haviland, United States —— European Union Mr Rupert Schlegelmilch May 2018

OECD Observer No 314 Q2 2018

OECD.ORG

Calendar highlights Please note that many of the OECD meetings mentioned are not open to the public or the media and are listed as a guide only. All meetings are in Paris, France, unless otherwise stated. For a comprehensive list, see the OECD website at www.oecd.org/newsroom/upcomingevents

Global Forum on Transparency and Exchange of Information for Tax Purposes, Paris, France

Going Digital in Sweden, Stockhlom, Sweden

2-3

Conférence de Paris, Paris, France

OECD Economic Surveys: European Union & Euro Area, Brussels, Belgium

22-24

Global Forum on the Circular Economy, Yokohama, Japan

International Economic Forum on Africa, Paris, France

Global Parliamentary Network on the Road, Paris, France

Global Forum on Development: Empowering Youth and Gender, Paris, France

Release of International Migration Outlook, Paris, France

20-21

OECD Statistics Day, Paris, France

Global Forum on Responsible Business Conduct, Paris, France

9-12

Eleventh OECD Rural Development Conference, Edinburgh, United Kingdom

Release of Latin American Economic Outlook 2018, Brussels, Belgium

28-29 Skills Summit: Building National Skills Strategies for the Future, Porto, Portugal JULY 6-8

OECD Roundtable on Equal Access to Justice, Riga, Latvia

MAY 13-15

Social Policy Ministerial, Montréal, Canada

9-12

Morocco OECD days, Rabat, Morocco

Compendium of Productivity Indicators, Paris, France

17-19

Open Government Partnership Goal Summit 2018, Tbilisi, Georgia

International Transport Forum, Leipzig, Germany

10th International Economic Forum on Latin America and the Caribbean, Paris, France

Inclusive Growth Framework for Action, Paris, France

29-30 OECD Forum 2018, Paris, France 29-31 Global Forum on Environment: Plastics in a Circular Economy, Copenhagen, Denmark

This strip originally appeared in OECD Observer 284, Q1 2011

OCTOBER

JUNE

APRIL 3

NOVEMBER 11-13

Paris Peace Forum, Paris, France

14-16

Women’s Forum, Paris, France

19-20

Eurasia Week, Paris, France

20-24 Second OECD meeting of Mining Regions and Cities, Darwin, Australia 27-29

Green Growth and Sustainable Development Forum, Paris, France

27-29

OECD World Forum on Statistics, Knowledge and Policy, Incheon, Korea

SEPTEMBER

DECEMBER

4-5

OECD Blockchain Policy Forum, Paris, France

2-14

1st Meeting of the Global Parliamentary Network for Latin America, Santiago, Chile

OECD at the UN Climate Change Conference (COP24), Katowice, Poland

Launch of the OECD Pensions Outlook 2018, Paris, France

6-7

OECD Conference on culture and local development, Venice, Italy

15-16

European Heritage Days, Paris, France

19-21

OECD-IAOS Conference, Better Statistics for Better Lives, Paris, France

BOOKS OECD iLibrary

Going up? “All human beings are born equal. But on the following day, they no longer are,” said French author Jules Renard in 1907. This is because sticky floors and ceilings–or rags to rags and riches to riches–define the bottom and top income distributions. Today, it takes four to five generations, on average, for children from the poorest 10% of the population to reach median income levels. Meanwhile, about 50% of children of wealthy parents will themselves remain rich in countries like Germany and the US. Worse, every four years, a fifth of the middle class’ poorest fall down to the bottom of the income distribution while its upper half enjoys much greater

security, as shown in A Broken Social Elevator? How to Promote Social Mobility. What’s more, in countries like Brazil and South Africa where income inequality is high, there is a state of “permanent inequality”, with an underlying feeling that social mobility is but a broken promise. Indeed, low upward mobility increases people’s sense that their voices do not matter and that the system is neither fair nor meritocratic. Still, mobility is not all about money. It can range from jobs to education and health, and it changes when viewed through each of these lenses. These distortions create unique situations within each country: in places like Japan and Korea, educational mobility is higher than income mobility, but it’s the other way around in Norway and Spain. In the US, job mobility is higher than earnings mobility, while in Finland it’s the reverse, with lower educational mobility on top.

Yet there is nothing inevitable about socio-economic status being passed down between generations. Equal access to quality education is one way to enhance social mobility: countries that spend more on public education tend to achieve higher educational mobility. The same goes for health. Moreover, progressive taxation on wealth, inheritance and combatting tax avoidance leads to less sticky ceilings, while money transfers or benefits to low-income families and improving the school-towork transition unsticks the floors. And as the report shows, policies that address the likes of residential segregation and sudden unemployment, or aim to improve the work-home balance can enhance social mobility across the board. OECD (2018), A Broken Social Elevator? How to Promote Social Mobility, OECD Publishing, Paris, https://doi.org/10.1787/9789264301085-en.

Better teachers for all “One teacher can change the world,” said Nobel laureate Malala Yousafzai, and policymakers should take note–for indeed, high-quality teachers are the main asset of any education system, the OECD finds. What policies can be used to improve teacher quality and the related student outcomes? Effective Teacher Policies: Insights from PISA analyses successful school systems around the world to pinpoint the most effective policies regarding the recruitment, retention, development and placement of teachers. Data from 72 countries show that the highestperforming schools have three key policies in common. First, they mandate extensive pre-career classroom experience. Second,

they provide in-career professional development opportunities that keep teachers updated on the most recent trends and practices. Finally, they evaluate teachers using classroom observation and individual progress, rather than teacher tests. These three policies form a dynamic, lifelong learning process. Not only do they establish more rigorous training for prospective teachers, they also push current teachers to constantly review and improve their practices through professional workshops. Many low-performing schools make the mistake of focusing on decreasing class size to the exclusion of recruiting higher-quality teachers. But even if class sizes are small, the teachers must still be well trained. High-quality teachers should be distributed more equitably between high and low-performing schools, the report argues, but to encourage top

teachers to work in disadvantaged, low-performing schools, they must be paid more, provided with extensive pre-career and in-career training opportunities, and given clear job mobility options. Together, these policies have worked extremely well in countries like Japan and Korea, where teachers are highly respected, well paid and rotated through different schools every few years. As a result, low-income students in Japan and Korea today are equally likely to be taught by high-quality teachers as high-income students. It is a lesson that should be taught elsewhere. OECD (2018), Effective Teacher Policies: Insights from PISA, PISA, OECD Publishing, Paris, https://doi.org/10.1787/9789264301603-en.

OECD Observer No 314 Q2 2018

BOOKS OECD iLibrary

New publications Productivity and Jobs in a Globalised World This report considers in detail the role of the tradable sector as a driver of productivity growth and its relationship with employment. It addresses the possible risks of a growing tradable sector and how diversification is central to strengthening regional economic resilience. ISBN: 9789264293137 April 2018, 188 pages DOI: 852018061P1 €40.00 $48.00 £32.00 ¥5200

Meeting Policy Challenges for a Sustainable Bioeconomy This publication investigates key aspects surrounding the sustainability of bioeconomy development: the use of biomass as feedstock for future production; the design and building of biorefineries for the manufacture of a range of fuels, chemicals and materials, and also for electricity generation; and the use of biotechnologies such as synthetic biology, metabolic engineering and gene editing. ISBN: 9789264292345 April 2018, 196 pages DOI: 922018011P1 €50.00 $60.00 £46.00 ¥6500

Making Development Co-operation Work for Small Island Developing States Economic growth, human development and vulnerability indicators point to specific challenges facing SIDS, and suggest that new development solutions and approaches are needed to chart the course to prosperity for their people and their environments. ISBN: 9789264287648 April 2018, 148 pages DOI: 432017111K1 €25.00 $30.00 £20.00 ¥3200

All publications are available to read and share at www.oecd-ilibrary.org The Future of Rural Youth in Developing Countries

Taxing Wages 2018 This annual flagship publication provides details of taxes paid on wages in OECD countries. It covers personal income taxes and social security contributions paid by employees, social security contributions and payroll taxes paid by employers, and cash benefits received by in-work families. ISBN: 9789264297166 April 2018, 596 pages €192.00 $231.00 £153.00 ¥24900

The Role and Design of Net Wealth Taxes in the OECD This report examines and assesses the current and historical use of net wealth taxes, defined as recurrent taxes on individual net assets, in OECD countries. It provides background on the use of wealth taxes over time in OECD countries as well as on trends in income and wealth inequality. ISBN: 9789264290303 April 2018, 112 pages €24.00 $29.00 £19.00 ¥3100

Divided Cities – Understanding Intra-urban Inequalities This report provides an assessment of spatial inequalities and segregation in cities and metropolitan areas from multiple perspectives. ISBN: 9789264300385 May 2018, 160 pages DOI: 852018111E1 €24.00 $29.00 £19.00 ¥3100

This study looks at local actions and national policies that can promote agro-food value chains and other rural non-farm activities using a youth employment lens. ISBN: 9789264298521 May 2018, 100 pages DOI: 412018161P1 €24.00 $29.00 £19.00 ¥3100

Improving Markets for Recycled Plastics This report looks at why this is the case and what we can do about it, as the pervasiveness of plastics is becoming an urgent public health and planetary problem. ISBN: 9789264301016 May 2018, 164 pages DOI: 972018071P1 €30.00 $36.00 £24.00 ¥3900

Catching Up? Country Studies on Intergenerational Mobility and Children of Immigrants Intergenerational Mobility and Children of Immigrants (OECD 2017), this publication presents seven in-depth country case studies. The countries and regions covered in this publication are Austria, the European Union, France, Germany, the Netherlands, North America and Sweden. ISBN: 9789264301030 May 2018, 204 pages €40.00 $48.00 £32.00 ¥5200

BOOKS OECD iLibrary

Focus on responsible business conduct OECD Budget Transparency Toolkit The OECD Toolkit on Budget Transparency brings together standards and guidelines on budget transparency developed by a broad range of international bodies and networks.

ISBN: 9789264282070 October 2017, 104 pages €24.00 $29.00 £19.00 ¥3100

Global Trade Without Corruption This report provides an analytical framework for studying integrity in trade, combining insights from OECD work on trade facilitation, responsible business conduct and integrity in customs.

ISBN: 9789264279353 October 2017, 60 pages €24.00 $29.00 £19.00 ¥3100

OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas The OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas provides step-by-step management recommendations endorsed by governments for global responsible supply chains of all minerals, in order for companies to respect human rights and avoid contributing to conflict through their mineral or metal purchasing decisions and practices.

ISBN: 9789264252479 April 2016, 120 pages €24.00 $29.00 £19.00 ¥3100

All publications available at www.OECD-iLibrary.org Making Blended Finance Work for the Sustainable Development Goals

This report presents a comprehensive assessment of the state and priorities for blended finance as it is being used to support sustainable development in developing countries.

ISBN: 9789264288768 January 2018, 176 pages €25.00 $30.00 £20.00 ¥3200

Private Philanthropy for Development The report examines philanthropic resource flows for development purposes, as well as foundations’ priorities, practices and partnering behaviours. It presents fresh perspectives and action-oriented recommendations to optimise philanthropy’s role in support of sustainable development.

ISBN: 9789264085190 March 2018, 132 pages €24.00 $29.00 £19.00 ¥3100

Implementing the OECD Principles on Water Governance Three years after the adoption of the OECD Water Governance Principles, this report takes stock of their use and dissemination. It provides a water governance indicator framework and a set of evolving practices for bench-learning, building on lessons learned from different countries and contexts.

ISBN: 9789264292659 March 2018, 148 pages €24.00 $29.00 £19.00 ¥3100

Global Forum on Transparency and Exchange of Information for Tax purposes: France 2018 (Second Round) This report contains the 2018 Peer Review Report on the Exchange of Information on Request of France.

ISBN: 9789264291058 April 2018, 120 pages €36.00 $43.00 £29.00 ¥4600

Strengthening Shardara Multi-Purpose Water Infrastructure in Kazakhstan Focused on the specific case of the Shardara MPWI located in Low Syr-Darya Basin, South Kazakhstan and Kyzyl-Orda oblasts (provinces) of Kazakhstan, this report looks at the choice and design of MPWI investment strategies that ensure a high economic return on investments and potential bankability, based on application of a computer model and lessons learned from 15 international MPWI case studies.

ISBN: 9789264289628 April 2018, 164 pages €30.00 $36.00 £24.00 ¥3900

Environmental Policy Toolkit for SME Greening in EU Eastern Partnership Countries This toolkit, based on existing good practice, aims to help governments in the EU’s Eastern Partnership (EaP) countries (Armenia, Azerbaijan, Belarus, Georgia, Moldova and Ukraine) to design and implement key instruments to promote environmental compliance and green business practices among small and medium-sized enterprises.

ISBN: 9789264293199 April 2018, 163 pages €30.00 $36.00 £24.00 ¥3900

OECD Observer No 314 Q2 2018

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Who really pays for protectionism? “Trade which, without force or constraint, is naturally and regularly carried on between any two places is always advantageous,” wrote Adam Smith in The Wealth of Nations. Smith’s statement is more relevant than ever in the 21st-century debate over economic protectionism. But who really wins and loses when protectionist measures are put in place? In partnerships like those between Switzerland and the EU, and Singapore and the Association of Southeast Asian Nations (ASEAN), agreements that facilitate cross-border co-operation have reduced consumer wait times, simplified company procedures, and standardised trade documentation. In fact, the OECD’s report Trade Facilitation and the Global Economy

finds that trade barriers such as tariffs signficantly reduce international co-operation and hurt developing countries, small businesses, and everyday consumers. Critically, the real cost of tariffs isn’t limited to their prima facie percentage. First, the real cost of tariffs is multiplied many times when goods have to cross several borders to reach their final destination, the report finds. This means more inefficient supply chains for companies and more expensive delivery times for consumers accustomed to free two-day shipping. Second, higher tariffs bite against future welfare and income increases in developing countries. Freer trade boosts welfare by making it cheaper and faster to buy things. Low-income households in countries that adopt trade facilitation measures consume highquality goods more frequently and at lower prices, increasing the quality of life of the world’s poorest individuals. Developed countries benefit too. According to the report, open trade

pushes developed countries to capitalise on their comparative advantages. By ramping up production in their stronger industries, developed countries experience lower input costs and optimal resource allocation. This allows them to compete more successfully with other countries without needing to artificially subsidise certain businesses. In North America and Europe, focusing on comparative advantages is projected to increase production in previously overlooked service industries. So who wins when protectionist policies are put in place? Almost no one. In fact, stakeholders at every level–from exporters and importers, to rich nations and poor ones, to consumers on the ground–stand to gain from trade facilitation in both the short and long-term. OECD (2018), Trade Facilitation and the Global Economy, OECD Publishing, Paris, https://doi. org/10.1787/9789264277571-en

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an ce U Sp S ain Ge U rm K M any ex ico It Tu aly r Au key s Gr tria ee c Ja e Ca pan na d Po a la Ne K nd th ore er a H lan Cz ung ds ec ar h y De Re nm p. Sw ar k P ed Sw ort en itz uga er l l Ire and Au lan st d No ralia rw a C y Be hile lgi u Ne Fi m w nla Ze nd al Es and t Sl oni ov a e Sl Is nia ov ra ak el Re p.

Steering urban sprawl

In fact, such disasters destroyed 17% of small island developing states’ GDP between 2000 and 2015, whereas high income countries lost just 3% of their GDP to natural catastrophes in the same period. According to Making Development Co-operation Work for Small Island Developing States, the relatively poor island states are not equipped to respond to extreme events,

Mexico City

Melilla

Weighted mean

Busan

10000

New York

Vancouver Edmonton

Ljubljana Maribor

Yakima

Wien

Prešov Trnava

Klagenfurt

Luxembourg

Greater Sydney Greater Darwin

Paris

Bruxelles/Brussel Brugge

København

Châlons-en Champagne

Praha Most

Aalborg

Budapest Gyor

Bergen

Porto Coimbra

Kristiansand

Haarlem Dublin

Monclova

Szczecin DessauRoßlau

Linköping

Oulu

Bern

Ferrara

Lugo

Yamaguchi

Arica

Seosan

2000

Waterford Bergen op Zoom

Olsztyn

Oberhausen

Jyväskylä Zurich

4000

Stockholm

Genova

Brighton Aberdeen

Tokyo

Athina

6000

Ioannina

Talca

8000

Source: OECD (2018), Rethinking Urban Sprawl: Moving Towards Sustainable Cities 100% 90% costs. 80% What can policymakers do? Finding sustainable solutions to reduce 70% 60% demands rethinking urban sprawl 50% space and weighing the private benefits 40% of 30% low density living–my house and garden–against social, environmental 20% 10%infrastructure costs. Compact cities, and 0% which balance dense development

Small islands, big threats Last year, actor Sean Penn called on world leaders to help Haiti deal with the “looming existential threat” of climate change. Mr Penn was speaking at the One Planet Summit in Paris in December, where small islands commanded everyone’s attention in the wake of a series of destructive hurricanes that showed how Haiti and similar small island developing states–sometimes referred to as SIDS–are particularly affected by extreme weather events and natural disasters. More than 335 major natural catastrophes have hit them since 2000, resulting in damage estimated at US$22.7 billion.

Low density

re a Ch ile Ja pa Gr n ee ce UK Sp ain Sw It itz aly er la Fin nd la Sw nd ed e Po n Ge land rm an Ne Irel y th an er d lan d M s e Po xico rtu No gal rw Hu ay n Cz gar ec y h De Rep nm . a Fr rk an Be ce lgi um Lu Aus xe tra m lia b Sl ou ov rg ak Re Au p. s Sl tria ov en ia Ca US na da

The US is not alone. While average population density in the urban areas of OECD countries is high in Korea and Japan, it is low in countries such as Austria and Canada. But even in those countries and cities with high average densities, urban sprawl must be confronted. People’s lives may suffer, as this scattered and decentralised city growth can lead to environmental damage, social exclusion, and pressures on transportation and public services, as well as high public and private

High density 12000

The average number of inhabitants per km2 of populated urban space is actually very low in the US, as our chart shows. So while New Yorkers must grapple with the difficulties that accompany larger numbers of people in limited urban space, such as congestion and high rents, people in low density cities face long commutes and costly public service provision.

Average population density in urban areas of 29 OECD countries, 2014

Population density (inhabitamts/km2)

New York City has one of the highest average population densities in the world, and few other US cities share its concentrated hustle and bustle. In fact, most of them face an entirely different challenge: urban sprawl.

patterns, strong public transport linkages, accessibility to local services and jobs, affordable houses and healthy open spaces, can provide an answer. OECD (2018), Rethinking Urban Sprawl: Moving Towards Sustainable Cities, OECD Publishing, Paris, https://doi. org/10.1787/9789264189881-en.

Small island developing states suffer the largest relative losses from natural disasters, 2000-15 Total damage, US$ millions

Damage, in % GDP 1 181 470

17%

453 034 7% 22 621

Small island developing states

156 438

6% 3%

17 647

Low income countries

Lower middle income countries

Source: OECD (2018), Making Development Co-operation Work for Small Island Developing States, OECD Publishing, Paris, https://doi.org/10.1787/9789264287648-en

while climate change has increased the severity and frequency of extreme weather events by an estimated 40-80%, posing additional challenges. Development co-operation can help mitigate the effects of disasters, the report argues, and help make small island states more resilient. Short-term disaster response from humanitarian donors must

Upper middle income countries

High income countries

http://dx.doi.org/10.1787/888933645554/

be linked with long-term financial support and be mainstreamed into development planning and financing. OECD (2018), Making Development Co-operation Work for Small Island Developing States, OECD Publishing, Paris, https://doi. org/10.1787/9789264287648-en

OECD Observer No 314 Q2 2018

DATABANK % change from: previous period

level:

previous year

current period

same period last year

Australia

Gross domestic product Industrial production Consumer price index

Q1-2018 1.0 2.8 Q2-2017 0.6 3.1 Q2-2017 1.4 4.3 Q1-2018 2.2 4.7 Q2-2017 0.7 1.9 Q2-2018 0.4 2.1

Current balance Unemployment rate Interest rate

Q1-2018 -8.2 -5.5 Q2-2014 -12.8 -12.9 Q2-2018 5.5 Q2-2014 5.9 5.6 5.6 Q2-2018 2.0 1.7 Q2-2014 2.7 2.9

Austria

Gross domestic product Industrial production Consumer price index

Q2-2018 0.5 0.9 Q2-2014 0.2 3.0 Q2-2014 -0.9 0.2 Q1-2018 0.6 6.2 Q2-2014 1.0 1.8 Q2-2018 0.9 1.9

Current balance Unemployment rate Interest rate

Q1-2018 3.1 Q1-2014 1.5 1.3 3.1 Q2-2018 4.7 Q2-2014 5.0 5.5 4.7 Q2-2018 -0.3 Q2-2014 0.3 -0.3 0.2

Belgium

Gross domestic product Industrial production Consumer price index

Q2-2018 0.3 1.0 Q2-2014 0.1 1.3 Q2-2014 0.6 2.8 Q1-2018 0.3 3.4 Q2-2014 -0.3 0.4 Q2-2018 0.6 1.8

Current balance Unemployment rate Interest rate

Q1-2018 1.0 Q1-2014 -0.2 -0.6 -5.0 Q2-2018 6.0 7.3 Q2-2014 8.5 8.4 Q2-2018 -0.3 Q2-2014 0.3 -0.3 0.2

Canada

Gross domestic product Industrial production Consumer price index

Q1-2018 0.3 2.3 Q2-2014 0.8 2.5 Q2-2014 0.8 4.5 Q1-2018 0.3 3.5 Q2-2014 1.3 2.3 Q2-2018 0.8 2.2

Current balance Unemployment rate Interest rate

Q1-2018 -15.4 Q2-2014 -10.9 -10.6 -15.0 Q2-2018 5.9 Q2-2014 7.0 6.5 7.1 Q2-2018 1.6 Q2-2014 1.2 0.8 1.2

Chile

Gross domestic product Industrial production Consumer price index

Q1-2018 1.2 2.1 Q2-2014 0.2 5.1 Q2-2014 -3.3 -1.5 Q2-2018 0.5 5.1 Q2-2014 1.6 2.2 Q2-2018 0.7 5.1

Current balance Unemployment rate Interest rate

Q1-2018 -0.5 Q1-2014 -2.0 -1.4 -3.1 Q2-2018 6.8 Q2-2014 6.2 6.7 5.9 Q2-2018 2.6 Q2-2014 3.9 2.6 5.0

Czech Republic

Gross domestic product Industrial production Consumer price index

Q1-2018 0.5 4.2 Q2-2014 0.3 2.5 Q2-2014 0.2 5.8 Q2-2018 1.5 2.7 Q2-2014 0.1 0.2 Q2-2018 0.7 2.3

Current balance Unemployment rate Interest rate

Q1-2018 -2.0 Q2-2014 -1.9 0.6 -1.0 Q2-2018 2.3 3.1 Q2-2014 6.2 6.9 Q2-2018 0.9 Q2-2014 0.4 0.3 0.5

Denmark

Gross domestic product Industrial production Consumer price index

Q1-2018 0.4 -0.5 Q2-2014 0.2 1.1 Q2-2014 0.6 0.8 Q1-2018 1.2 1.4 Q2-2014 0.4 0.6 Q2-2018 0.8 1.0

Current balance Unemployment rate Interest rate

Q1-2018 4.4 7.1 Q2-2014 5.3 5.8 Q2-2018 5.1 5.7 Q2-2014 6.4 6.9 Q2-2018 -0.3 Q2-2014 0.3 -0.2 0.3

Estonia

Gross domestic product Industrial production Consumer price index

Q1-2018 -0.1 3.8 Q2-2014 1.1 2.9 Q2-2014 3.3 2.5 Q2-2018 -0.3 2.7 Q2-2014 0.3 0.0 Q2-2018 1.2 3.3

Current balance Unemployment rate Interest rate

Q1-2018 0.2 Q1-2014 -0.1 0.3 0.0 Q1-2018 6.0 Q2-2014 7.5 5.3 8.3 Q2-2018 -0.3 Q2-2014 0.3 -0.3 0.2

Finland

Gross domestic product Industrial production Consumer price index

Q1-2018 1.3 -0.1 Q2-2014 0.2 2.9 Q2-2014 0.5 -1.9 Q1-2018 1.2 4.7 Q2-2014 0.2 0.9 Q2-2018 0.6 1.0

Current balance Unemployment rate Interest rate

Q1-2018 0.4 0.2 Q1-2014 -0.4 -0.5 Q2-2018 7.6 Q2-2014 8.6 8.7 8.1 Q2-2018 -0.3 Q2-2014 0.3 -0.3 0.2

France

Gross domestic product Industrial production Consumer price index

Q2-2018 0.2 0.1 Q2-2014 0.0 1.7 Q2-2014 -0.5 -2.1 Q1-2018 -1.3 2.3 Q2-2014 0.4 0.6 Q2-2018 1.1 1.9

Current balance Unemployment rate Interest rate

Q1-2018 -5.6 -7.2 Q1-2014 -6.7 -13.2 Q2-2018 9.2 9.5 Q2-2014 10.2 10.3 Q2-2018 -0.3 Q2-2014 0.3 -0.3 0.2

Germany

Gross domestic product Industrial production Consumer price index

Q1-2018 0.3 2.3 Q2-2014 -0.2 1.3 Q2-2014 -0.9 4.2 Q1-2018 0.1 1.5 Q2-2014 0.2 2.0 Q2-2018 0.7 1.1

Current balance Unemployment rate Interest rate

Q1-2018 81.8 74.3 Q1-2014 68.6 65.0 Q2-2018 3.5 Q2-2014 5.0 3.8 5.3 Q2-2018 -0.3 Q2-2014 0.3 -0.3 0.2

Greece

Gross domestic product Industrial production Consumer price index

Q1-2018 0.8 .. .. 2.3 Q1-2014 2.4 -0.2 Q1-2018 0.7 0.5 Q2-2014 1.2 -1.5 Q2-2018 2.0 0.5

Current balance Unemployment rate Interest rate

Q1-2018 0.0 Q2-2014 0.4 -0.2 0.2 Q1-2018 20.5 Q2-2014 27.1 22.7 27.6 Q2-2018 -0.3 Q2-2014 0.3 -0.3 0.2

Hungary

Gross domestic product Industrial production Consumer price index

Q1-2018 1.2 4.7 Q2-2014 0.8 3.7 Q2-2014 3.5 10.3 Q1-2018 1.7 4.1 Q2-2014 0.2 -0.2 Q2-2018 1.3 2.7

Current balance Unemployment rate Interest rate

Q1-2018 1.1 Q4-2013 1.4 0.9 0.3 Q1-2018 3.7 4.3 Q2-2014 8.0 10.4 Q2-2018 0.1 Q2-2014 2.8 0.2 4.6

Iceland

Gross domestic product Industrial production Consumer price index

Q1-2018 1.1 2.2 Q2-2014 -1.2 5.2 Q2-2014 -5.0 -1.7 Q4-2017 1.7 10.2 Q2-2014 0.9 2.3 Q2-2018 0.8

Current balance Unemployment rate Interest rate

Q1-2018 0.1 Q1-2014 0.0 0.2 0.1 Q1-2018 2.8 Q2-2014 5.1 2.7 6.1 Q2-2018 4.7 Q2-2014 6.1 5.3 6.2

Ireland

Gross domestic product Industrial production Consumer price index

Current balance Unemployment rate Interest rate

Q1-2018 .. 7.2 Q1-2014 3.0 3.2 Q2-2018 5.2 6.7 Q2-2014 11.7 13.7 Q2-2018 -0.3 Q2-2014 0.3 -0.3 0.2

Israel

Gross domestic product Industrial production Consumer price index

Current balance Unemployment rate Interest rate

Q1-2018 1.9 Q2-2014 2.2 2.6 1.7 Q2-2018 3.9 Q2-2014 6.1 4.4 6.7 Q2-2018 0.1 Q2-2014 0.7 0.1 1.5

Italy

Gross domestic product Industrial production Consumer price index

Current balance Unemployment rate Interest rate

Q1-2018 14.3 13.2 Q1-2014 7.9 -0.1 Q2-2018 10.9 11.2 Q2-2014 12.5 12.2 Q2-2018 -0.3 Q2-2014 0.3 -0.3 0.2

Japan

Gross domestic product Industrial production Consumer price index

Current balance Unemployment rate Interest rate

Q1-2018 42.6 47.1 Q2-2014 6.3 18.7 Q2-2018 2.4 Q2-2014 3.6 2.9 4.0 Q2-2018 0.1 0.1 Q2-2014 0.2 0.2

Korea

Gross domestic product Industrial production Consumer price index

Current balance Unemployment rate Interest rate

Luxembourg Latvia

Gross domestic product Industrial production Consumer price index

Current balance Unemployment rate Interest rate

Q2-2018 18.4 Q2-2014 23.6 16.8 19.4 Q2-2018 3.8 Q2-2014 3.7 3.8 3.1 Q2-2018 1.7 1.4 Q2-2014 2.7 2.7 Q2-2017 -0.2 0.0 Q1-2018 0.2 0.2 Q2-2017 8.9 8.9 9.5 Q2-2018 7.4 Q2-2017 -0.3 -0.3 -0.3 Q2-2018 -0.3

Luxembourg Mexico

Gross domestic product Industrial production Consumer price index

Q1-2018 -0.6 10.0 Q2-2014Q1-2014 3.8 2.8 Q2-2014 0.8 0.4 Q2-2018 0.6 4.2 Q2-2018 0.7 0.1 Q2-2014 0.4 2.2 Q2-2014 -3.9 -0.6 Q1-2018 1.2 4.1 Q2-2014 0.4 0.8 Q1-2018 5.7 8.7 Q2-2018 1.0 0.7 Q2-2014 -0.2 -0.2 Q2-2014 -0.5 -0.1 Q1-2018 0.3 1.4 Q2-2014 0.2 0.4 Q2-2018 0.0 2.2 Q2-2018 0.6 0.9 Q2-2014 -1.8 0.0 Q2-2014 -3.6 2.4 Q1-2018 -0.2 1.1 Q2-2014 2.5 3.6 Q1-2018 -1.2 2.5 Q2-2018 -0.3 0.6 Q2-2014 0.5 3.5 Q2-2014 -0.9 2.9 Q2-2018 0.7 1.2 Q2-2014 0.3 1.6 Q2-2018 2.7 1.3 Q2-2018 0.3 1.5 Q1-2014 0.8 3.8 Q2-2014 -0.1 8.8 Q1-2018 1.6 5.1 Q2-2014 0.5 0.9 Q2-2018 -1.0 0.5 Q2-2018 1.5 2.4 Q2-2014 1.0 2.7 Q2-2014 0.9 5.1.. Q1-2018 2.0 Q2-2014 -0.1 3.6 Q2-2018 -0.3 3.5 Q2-2014 0.7 1.3 Q2-2018 1.0 1.1

Current balance Unemployment rate Interest rate

Q2-2014 -7.1 -5.7 Q1-2018 1.6 0.4 Q2-2014 5.0 5.6 5.1 Q2-2018 5.2 Q2-2014 3.7 4.3 Q2-2018 -0.3 -0.3

Mexico

Gross domestic product Industrial production Consumer price index

Current balance Q2-2018 -0.1 1.9 Unemployment rate Q4-2017 0.4 .. Interest rate Q2-2018 0.0 4.6

Q1-2018 -4.8 -6.7 Q2-2018 3.4 3.5 Q2-2018 7.9 7.1

DATABANK level:

% change from: previous period Netherlands

Gross domestic product Industrial production Consumer price index

New Zealand

Gross domestic product Industrial production Consumer price index

Norway

Gross domestic product Industrial production Consumer price index

Poland

Gross domestic product Industrial production Consumer price index

Portugal

Gross domestic product Industrial production Consumer price index

Slovak Republic

Gross domestic product Industrial production Consumer price index

Slovenia

Gross domestic product Industrial production Consumer price index

Spain

Gross domestic product Industrial production Consumer price index

Sweden

Gross domestic product Industrial production Consumer price index

Switzerland

Gross domestic product Industrial production Consumer price index

Turkey

Gross domestic product Industrial production Consumer price index

United Kingdom

Gross domestic product Industrial production Consumer price index

United States

Gross domestic product Industrial production Consumer price index

European Union

Gross domestic product Industrial production Consumer price index

Euro area

current period

previous year

same period last year

Current balance Unemployment rate Interest rate

Q4-2017 22.9 20.1 Q1-2018 .. 19.3 Q1-2018 4.1 5.0 5.2 Q2-2018 3.9 Q1-2018 -0.3 -0.3 Q2-2018 -0.3

Current balance Unemployment rate Interest rate

Q4-2017 -1.4 Q1-2018 -2.2 Q1-2018 4.4 Q2-2018 4.5 Q1-2018 1.9 Q2-2018 2.0

Current balance Unemployment rate Interest rate

Q4-2017 4.1 6.9 Q1-2018 6.3 4.5 Q4-2017 4.0 4.3 4.5 Q1-2018 3.9 Q1-2018 0.9 0.9 1.0 Q2-2018 1.1

Current balance Unemployment rate Interest rate

Q4-2017 1.4 0.5 1.2 Q1-2018 -1.4 Q1-2018 4.4 5.2 Q2-2018 3.8 5.1 Q1-2018 1.7 1.7 Q2-2018 1.7

Current balance Unemployment rate Interest rate

Q4-2017 0.8 -0.1 0.6 Q1-2018 0.2 Q1-2018 7.6 9.9 Q2-2018 6.9 9.3 Q1-2018 -0.3 -0.3 Q2-2018 -0.3

Current balance Unemployment rate Interest rate

Q4-2017 -0.2 -0.8 -0.4 Q1-2018 -0.9 Q1-2018 7.5 8.6 Q2-2018 6.9 8.3 Q1-2018 -0.3 -0.3 Q2-2018 -0.3

Current balance Unemployment rate Interest rate

Q4-2017 0.9 0.6 Q1-2018 1.1 0.7 Q1-2018 5.3 7.3 Q2-2018 5.6 6.6 Q1-2018 -0.3 -0.3 Q2-2018 -0.3

Current balance Unemployment rate Interest rate

Q4-2017 7.8 5.9 Q1-2018 5.9 5.5 Q1-2018 16.2 18.2 Q2-2018 15.4 17.3 Q1-2018 -0.3 -0.3 Q2-2018 -0.3

Current balance Unemployment rate Interest rate

Q4-2017 3.9 3.8 6.2 Q1-2018 3.2 Q1-2018 6.2 6.7 Q2-2018 6.2 Q1-2018 -0.7 -0.6 -0.7 Q2-2018 -0.7

Current balance Unemployment rate Interest rate

Q4-2017 19.1 20.0 Q1-2018 19.1 16.1 Q4-2017 4.7 4.8 Q1-2018 4.9 4.9 Q1-2018 -0.7 -0.7 Q2-2018 -0.7

Current balance Unemployment rate Interest rate

Q4-2017 -14.8 -8.8 -7.7 Q1-2018 -16.5 Q4-2017 10.1 11.8 Q1-2018 9.9 11.7 .. ..

Current balance Unemployment rate Interest rate

Q4-2017 -24.5 Q1-2018 -24.7 -28.4 -20.3 Q4-2017 4.2 4.7 Q1-2018 4.2 4.5 Q1-2018 0.5 0.3 Q2-2018 0.7 0.4

Current balance Unemployment rate Interest rate

Q4-2017 -128.2 -114.0 Q1-2018 -124.1 -107.7 Q1-2018 4.1 4.3 4.7 Q2-2018 3.9 Q1-2018 1.8 0.9 Q2-2018 2.2 1.1

Current balance Unemployment rate Interest rate

Q4-2017 74.8 46.8 69.4 Q1-2018 78.5 Q1-2018 7.1 8.0 Q2-2018 6.9 7.7 .. ..

Gross domestic product Industrial production Consumer price index

Q2-2014 3.7 Q1-2018 0.5 -2.0 3.0 Q2-2014 0.8 3.7 1.0 Q1-2018 0.6 Q2-2018 1.0 1.5 Q2-2014 0.5 3.3 Q2-2014 -1.1 3.0 2.7 Q1-2018 0.3 Q2-2014 0.3 Q1-2018 0.3 1.6 1.3 Q2-2018 0.4 1.5 Q2-2014 0.9 1.8 Q2-2014 -1.1 0.2 Q1-2018 0.6 2.1 Q2-2014 0.7 -0.4 1.8 Q2-2018 -1.1 Q2-2018 1.2 2.4 Q2-2014 0.6 3.3 Q2-2014 -0.2 5.0 3.4 Q1-2018 1.6 Q2-2014 0.0 0.3 Q2-2018 2.1 6.7 Q2-2018 0.5 1.9 Q2-2014 0.3 0.9 Q2-2014 1.6 2.1 1.5 Q1-2018 0.4 Q2-2014 1.0 -0.3 Q2-2018 -1.8 0.2 Q2-2018 2.0 1.0 Q2-2014 0.6 2.4 Q2-2014 -0.8 4.9 Q1-2018 0.9 3.6 Q2-2014 0.2 -0.1 Q1-2018 -1.1 0.4 Q2-2018 0.8 2.8 Q2014 1.0 2.8 Q2-2014 1.8 3.8 Q1-2018 0.6 5.0 Q2-2014 1.5 Q1-2018 -0.1 0.6 8.2 Q2-2018 1.9 1.9 Q2-2014 0.6 1.2 Q2-2014 0.6 2.3 Q2-2018 0.6 2.7 Q2-2014 1.0 0.2 Q1-2018 -0.7 2.7 Q2-2018 1.6 1.8 Q2-2014 0.7 2.6 Q2-2014 -1.4 -0.6 Q2-2018 1.0 3.3 Q2-2014 0.6 0.0 Q2-2018 0.2 4.2 Q2-2018 1.1 1.9 Q2-2014 0.0 1.1 Q4-2013 -1.0 -1.2 Q1-2018 0.6 2.4 Q2-2014 0.5 8.8 0.1 Q4-2017 0.3 Q2-2018 0.8 1.0 Q2-2014 -0.5 2.5 Q2-2014 -0.9 2.6 Q1-2018 2.0 7.3 Q2-2014 2.6 9.6 9.4 Q1-2018 0.8 Q2-2018 4.8 12.8 Q2-2014 0.9 3.2 Q2-2014 0.3 Q1-2018 0.2 2.1 1.2 Q2-2014 0.7 1.7 Q1-2018 0.4 2.4 Q2-2018 1.0 2.2 Q2-2014 1.1 2.6 Q2-2014 1.3 2.8 4.2 Q2-2018 1.0 Q2-2014 1.2 3.6 2.1 Q2-2018 1.5 Q2-2018 1.0 2.7 Q2-2014 0.2 1.2 Q2-2014 0.0 2.2 1.3 Q2-2018 0.4 Q2-2014 .. 0.7 Q1-2018 -0.3 3.3 Q2-2018 0.3 1.8 Q2-2014 0.0 0.7 Q2-2014 -0.1 0.8 Q2-2018 0.3 2.1 Q2-2014 .. 0.6 Q1-2018 -0.6 3.3 Q2-2018 1.4 1.7

Current balance Unemployment rate Interest rate

Q4-2017 125.2 101.9 Q1-2018 136.5 93.4 Q1-2018 8.5 9.5 Q2-2018 8.3 9.1 Q1-2018 -0.3 -0.3 Q2-2018 -0.3

11 Brazil Brazil

Gross Gross domestic domestic product product Industrial Industrial production production Consumer Consumer price price index index

Q1-2018 0.4 Q2-2014 -0.6 -0.8 1.6 Q1-2018 0.1 Q2-2014 -1.9 -4.2 3.2 Q2-2018 1.1 Q2-2014 2.0 6.4 3.3

Current balance Unemployment rate Interest rate

Q2-2018 -3.4 Q2-2014 -19.6 -19.9 0.3 .. .. .. .. .. .. .. ..

11 China China

Gross Gross domestic domestic product product Industrial Industrial production production Consumer Consumer price price index index

.. .. .. .. Q2-2018 -0.2 Q2-2014 -0.4 2.2 1.8

Interest rate

Q1-2018 -15.0 Q2-2013 54.2 58.1 33.3 .. .. .. .. Q2-2014 4.6 .. .. 4.7

11 India India

Gross Gross domestic domestic product product Industrial Industrial production production Consumer Consumer price price index index

Q1-2018 1.9 Q2-2014 1.2 5.9 7.4 Q1-2018 0.8 Q2-2014 2.0 6.3 4.3 Q2-2018 0.7 Q2-2014 2.5 4.0 6.9

Current balance Unemployment rate Interest rate

Q1-2018 -15.6 .. .. -5.8 .. .. .. .. Q2-2018 6.3 .. .. 6.2

Indonesia 11Indonesia

Gross Gross domestic domestic product product Industrial Industrial production production Consumer Consumer price price index index

Q2-2018 1.3 Q2-2014 1.2 5.2 5.1 .. .. Q2-2018 0.6 Q2-2014 0.4 3.3 7.1

Interest rate

Russian Russian Federation Federation

Gross Gross domestic domestic product product Industrial Industrial production production Consumer Consumer price price index index

Q1-2018 0.9 Q1-2014 -0.3 0.7 1.3 Q2-2018 0.9 Q2-2014 0.9 2.6 1.6 Q2-2018 1.1 Q2-2014 2.6 2.4 7.6

Q1-2018 -6.0 Q4-2013 -3.5 -7.3 -3.3 .. .. Q2-2018 5.8 .. .. 6.6 Q2-2014 8.5 5.7 Q1-2018 18.3 11.0

11 South South Africa Africa

Gross Gross domestic domestic product product Industrial Industrial production production Consumer Consumer price price index index

Q1-2018 -0.5 Q2-2014 0.2 1.5 1.1 .. .. Q2-2018 1.4 Q2-2014 2.0 6.6 4.3

-1.0 -1.8 4.9 4.8 2.0

Non-members

balance Current Unemployment rate

balance Current Unemployment rate Current balance Unemployment rate Interest rate

balance Current Unemployment rate Interest rate

Gross domestic product: Volume series; seasonally adjusted. Leading indicators: A composite indicator based on other indicators of economic activity, which signals cyclical movements in industrial production from six to nine months in advance. Consumer price index: Measures changes in average retail prices of a fixed basket of goods and services. Current balance: Billion US$; seasonally adjusted. Unemployment rate: % of civilian labour force, standardised unemployment rate; national definitions for Iceland, Mexico and Turkey; seasonally adjusted apart from Turkey. Interest rate: Three months.

Current balance data are reported according to the BPM6 classification.

Q2-2012 22.7 .. .. 23.4 Q2-2018 7.1 .. .. 9.1 Q2-2014 8.8 7.4 Q1-2018 -5.3 -2.2

.. .. .. .. Q2-2018 7.0 .. .. 7.4 ..=not available, 1 Key Partners. Source: Main Economic Indicators. June 2018.

OECD Observer No 314 Q2 2018

DATABANK 2013

2014

2015

2016

120

234

35 30 25 20

Dynamic capitals, emerging rural areas 15

10 5

Europe

What some regions lack in transport infrastructure, for instance, they can make up for through targeted tax exemptions, financial incentives and more flexible

China

SVK NOR

POL

AUS

NLD

OECD Observer Crossword

BEL

FIN

T HUN AU

Lazio Aosta Valley

Burgenland Tyrol

Central Hungary

Western Slovenia Eastern Slovenia

SVN

Southern Transdanubia

Helsinki-Uusimaa Southern Finland

Brussels Capital Region Flemish Region

Capital

CZE DNK

Maximum

ITA

http://dx.doi.org/10.1787/888933707988

Source: OECD data

business laws and regulations. Some rural settings may be more conducive than cities to collective research or team-building, or be an advantage for certain types of technology firms, in developing renewable energy, for instance.

Northern Jutland

Flevoland

FRA

Prague

Guyane

Friesland

ESP

Regional average

Central Moravia

GBR

Burgundy

Tasmania

Capital

Melilla

Lublin Province

London

Lodzkie

Algarve

Capital

T KOR PR

Basque Country

ISR

N. Ireland

Central Portugal

Hedmark og Oppland

Minimum

Gyeonbuk Region

East Slovakia

Northern

Bratislava Region

Oslo og Akershus

Birth rates of new businesses, in %

For enterprises to develop, the city in which they are located must tick some boxes, including innovation, physical and digital interconnections , investment and infrastructure. Urban regions attract more than 60% of firms that are active in education, health, finance, insurance, telecommunications and business services–so-called knowledge-intensive sectors.

Capital regions are the most dynamic business environments

Tel Aviv

London provides the most dynamic business environment in the UK; indeed in many countries, it is often the case that the capital city region concentrates the majority of the country’s new firms. Capitals provide an energetic and healthy environment for people to take risks, and succeed (or fail better) in. But as our chart shows, other regions can also do well, such as eastern Slovakia rather than Bratislavia, or the Algarve in southern Portugal rather than Lisbon.

OECD (2018), Productivity and Jobs in a Globalised World: (How) Can All Regions Benefit?, OECD Publishing, Paris, https://doi.org/10.1787/9789264293137-en

No 2, 2018

Try it online at www.oecdobserver.org/crossword Across 1 The G in GVCs 4 It covers about 30% of the earth’s land area 7 Growth achieved by a company by its internal efforts 9 For each person, goes with 26 across 10 Jungfrau or the Eiger 11 Working together 13 The ___ of the land 14 Labyrinths 17 ___ and trade 19 Barcode symbology used to track trade items, abbr. 20 Agenda items 23 Moderate 24 Popular 25 Expression of surprise 26 See 9 across 27 Negative votes © Myles Mellor/OECD Observer

Down 1 Merchandise 2 Structures to achieve a social purpose 3 “Barbara ___” (Beach Boys classic) 5 Sequence of processes involved in the production and distribution of a commodity, 2 words 6 Be in accord 8 Low-lying island 12 Green light 14 8th largest country in Africa 15 Japanese dish 16 Capital of Ghana 18 Location of the OECD Forum 2018 21 Company name ending 22 Highest point

Myles Mellor is one of the top crossword writers in the world and has been producing them for the OECD Observer since 2013. You can try them online and on your mobile phone at www.oecdobserver.org/crossword. Subscribe to Myles’ crosswords at www.ilovecrosswords.com

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