New a pproaches to e conomic c hallenges
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NAEC. New a pproaches to e conomic c hallenges. Shardul Agrawala Coordinator, NAEC Senior Advisor to the Secretary-General. The NAEC initiative. At the 2012 MCM, “New Approaches to Economic Challenges (NAEC)” was launched.

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NAEC

New approaches to economic challenges

Shardul Agrawala

Coordinator, NAEC

Senior Advisor to the Secretary-General


The NAEC initiative

At the 2012 MCM, “New Approaches to Economic Challenges (NAEC)” was launched.

NAEC is an organisation-wide reflection process on the roots and lessons from the crisis with the aim of catalysing a process of continuous improvement of the OECD analytical framework and policy advice.


What we mean by New Approaches

  • Within a broad context, new approachesinvolve:

    • Revisiting some of the fundamental assumptions about the functioning of the economy

    • Looking at the limitations and extending the capabilities of existing tools for structural analysis

    • Investigating new economic thinking to find more effective tools

    • New approaches encompass the idea that growth is an important means but not an end of policy making.


Timeline so far

May 2012: New Approaches to Economic Challenges (NAEC) was launched at the 2012 MCM

Oct 2012: First meeting of the NAEC Group

Jan 2013: Scoping Paper circulated to the NAEC Group

Feb 2013: Second meeting of the NAEC Group

Apr 2013: Revised Scoping Paper/ Interim Report circulated to Council


Reflection

and

Horizon Scanning

Policy Trade-offs

and

Complementarities

Institutions

and

Governance

  • Draw lessons from the crisis and economic history

  • Examine the role of the financial sector in the crisis and reforms required to promote sustainable growth

  • Revisit policy instruments for achieving growth- and equity-friendly fiscal consolidation

  • Explore new economic tools and approaches (such as behavioural economics, complexity science, micro-data)

  • Improve the understanding of interlinkages between policy drivers and wellbeing outcomes

  • Examine interlinkages between:

    • Inequality and growth

    • Environment, growth and inequality

    • Growth and stability

  • Analyse the implications of long-term global trends and the resulting policy tensions

  • Explore the impact of the crisis on trust in government and identify policy levers to regain trust

  • Design policies for more resilient social institutions in view of the crisis and long-term trends

  • Address new challenges in governance to respond to increasing interconnectedness and complexity, e.g. in competition and taxation

Organising structure for NAEC


The NAEC Interim Report

Reflection and Horizon Scanning

  • We need to draw lessons from the crisis and economic history and revisit analytical frameworks.

  • There is also a need for horizon scanning for new tools and approaches - such as behavioural economics, complexity science, data use, etc.

    Policy Trade-offs and Complementarities

  • We need to analyse trade-offs and complementarities between policy drivers and wellbeing outcomes, e.g. between:

    • Inequality and growth

    • Environment, inequality and growth

    • Growth and stability

  • Long-term trends may also have important policy implications.


The NAEC Interim Report (ctd.)

Institutions and Governance

  • There is a need to develop new approaches to improve public institutions and governance.

  • This is important to better manage near-term challenges that emerged in the wake of the crisis and to cope with additional pressures arising from long-term trends.


The NAEC Interim Report (ctd.)

However, the report has changed in a number of ways. For example:

  • The report streamlines the number of project proposals, as was requested by several delegations.

  • The report tries to better show the cross-directorate aspects of particular issues, by merging projects with a common issue. Such as:

    • In the work on long-term investment, we pulled together projects separately addressing the asset and liability sides of the balance sheets of long-term institutional investors,

    • The toolkit for implementing multi-dimensional policy frameworks has been combined with new approaches to analyzing multi-dimensional wellbeing.


The NAEC Interim Report (ctd.)

  • We have also consulted internally to take better account of the cross-directorate aspects of particular issues. In this context, we have also begun to hold internal seminars to facilitate this process.

  • We have re-defined many projects in a way that is more consistent with the NAEC philosophy. For example, we have made clearer what is “new” in the proposed work and methodology.


  • NAEC goals

    • Improve our understanding of the complex and interconnected nature of the global economy and associated policy challenges

    • Recognise the importance of economic growth as a means but not as an end of policy-making

    • Identify areas where OECD analytical frameworks need to be adjusted

    • Enable governments to identify, prioritise and combine reforms to support inclusive growth


    Next steps

    A revised Interim Report will be delivered to the 2013 MCM.

    Lines of work under NAEC will continue to advance following the 2013 MCM.

    A comprehensive Synthesis is envisaged after the 2014 MCM.


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