In April 2021, the Organization for Economic Co-operation and Development (OECD) released its Going for Growth 2021 report, highlighting country-specific guidance for policymakers. The outcomes suggest an urgent need for policy reforms to support post-pandemic recovery and to improve long-term development prospects. When presenting the report, the Secretary-General of the OECD, Angel Gurría, said that the pandemic was a “painful reminder” of the unsustainable character of economic growth and that many people had been “left behind”. “The recovery is an opportunity to set our policies right, to achieve growth that is stronger, equitable, sustainable, and more resilient. And for this to happen, governments have to act now,” he added.
The OECD warns policymakers that longstanding fundamental economic weaknesses further exposed by the pandemic have widened the gaps in living standards between and within countries. These structural challenges have actually increased the cost of the crisis and at the same time risk impacting growth, job prospects, and sustainability, according to the report.
The OECD Chief Economist, Laurence Boone, noted in the report that “After a devastating 2020, prospects are improving. The rollout of vaccines is giving us hope while extraordinary monetary and fiscal buffers continue to support firms, jobs, and incomes, limiting the social and economic fallout of the pandemic. Importantly, COVID-19 has exposed how structural weaknesses can weigh on economic resilience.”
Post-pandemic recovery brings new opportunities in those countries willing to install fundamental basics necessary for rapid recovery. The Going for Growth 2021 report, based on studies of pre-existing and pandemic-related weaknesses, sets up country-specific strategic advice for the partly overlapping pillars of building resilience and sustainability, facilitating reallocation and supporting people through transitions.
By strengthening healthcare and social safety nets, as well as critical infrastructure, governments can advance the first line of defense against future shocks. At the same time, structural policies, by improving governance and strengthening businesses, will encourage long-term sustainability. Inclusive and resilient growth itself requires structural policy actions, encouraging labor mobility and a green, innovative business environment. However, policy implementation should take into account that people should not be left behind, particularly paying attention to the vulnerable. Finally, international cooperation in sectors such as healthcare, climate change, trade, and the taxation of multinational enterprises may increase policy effectiveness and accelerate sustainable and equitable globalization.
Regarding international collaboration on health, the OECD recommends that policymakers enhance cooperation by preserving and strengthening supply chains for vital medical products. Furthermore, governments should advance cross-border pandemic alert systems to detect people at risk and to manage affected patients. Furthermore, the OECD recommends the use of mechanisms such as Advance Market Commitments (AMC) to supplement the tools that fund research and development. The organization advises that advanced procurement systems should be defined for vaccines and medical kits allowing the allocation of products to emerging countries based on identified criteria. Governments, among other entities, should also guarantee that intellectual property rights do not impose obstacles for the transmission of know-how. Finally, public organizations should cooperate internationally to ensure clinical trials are properly designed, are in line with methodological standards, and sufficiently empowered to yield conclusive results.
In terms of climate change, the OECD advises policymakers to implement or update national short-term and long-term low-carbon action plans prior to COP26 in 2021. Based on the best international experiences and cost-benefit evaluation mechanisms, governments should set out reliable decarburization action plans and should coordinate these planned actions with other countries in order to minimize the costs and leakages.
Regarding international trade, the OECD recommends policymakers implement the WTO Trade Facilitation Agreement, strengthen commitments to rule-based trade, and tackle gaps in already existing rulebooks, using the entire spectrum of available international co-operation tools.
In relation to digital taxation, in order to reach international agreement, the OECD recommends that policymakers continue multilateral discussions.
