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Symposium 2013

New Approaches to Economic Challenges

The Challenge

This workshop involves its participants in developing new approaches to economic challenges with the ultimate goal of providing a basis to develop a strategic policy agenda for inclusive growth.

The workshop will deal with two main issues and work on these challenges in two groups:

Growth and inequality

The growing income inequality observed in most advanced and emerging economies over the two decades prior to the global financial and economic crisis underscores the fact that the benefits of economic growth did not trickle down automatically to all population groups. The OECD publication Divided We Stand (OECD, 2011) provides evidence on the complex linkages between structural policies to promote competition, economic growth and job creation on the one hand and distributional outcomes on the other hand. Stimulated by the reflections on the New Approaches on Economic Challenges (NAEC) that are presently being carried out at the OECD, this Workshop will address the following questions: What are the distributional impacts of growth-enhancing structural policies in the short, medium and long term? How does inequality affect social mobility and also via this channel long term economic growth? How could a fairer distribution of the benefits of growth be achieved in the most effective way? What new determinants of growth and inequality have emerged?

There is increasing recognition that GDP per capita falls short of accurately measuring living standards of a typical individual or household. In particular, median household income has evolved quite differently from GDP in a number of countries. Which structural policies that increase economic growth also improve median households’ disposable income? How should the reallocation effects induced by structural policies be dealt with?

The reverse perspective is equally important: What are the effects that inequality and the associated lack of social mobility could have on longterm growth? Which policies can affect the impact of inequality on the pace of growth and sustainability of growth spells? What policy approaches are expected to benefit from possible feedbacks and policy interactions and move beyond tradeoffs implied by reforms?

Knowledge-based capital

Innovation-based growth, underpinned by investments in a broad range of knowledge-based capital (KBC), is central to raising long-term living standards. This is especially the case in advanced economies that are relatively close to the technological frontier where future growth will increasingly need to come from improvements in multi-factor productivity. Investment in knowledgebased capital (KBC) – assets that lack physical embodiment, such as computerized information, innovative property and economic competencies – has been rising significantly. KBC is particularly important in the context of growing international competition. OECD analysis finds, for example, that an important factor affecting the competitiveness of industries in global value chains is their investment in KBC, as such investments allow firms to differentiate their products and add value. The analysis shows that the returns to investing in KBC differ significantly across countries and are partly shaped by structural policies, which influence the ability of economies to reallocate scarce resources to firms that invest in KBC.

How can governments encourage investment in some forms of knowledge-based capital (i.e. economic competencies) in a non-prescriptive manner?

In the context of global value chains and international tax competition how can governments ensure that returns on investment on KBC are taxed at an optimal level? What is the potential role of international coordination of tax regimes in this regard?

This workshop is part of the issue cluster "Achieving Sustainable and Inclusive Growth" and organized in cooperation with OECD.

    Proposals

    Proposal
    Symposium 2013

    Maximising Growth From Knowledge-based Capital

    Governments must ensure that policy and measurement frameworks are apt for an economic environment in which, in many OECD countries, businesses now invest as much or more in intangible (knowledge-base ...

    Governments must ensure that policy and measurement frameworks are apt for an economic environment in which, in many OECD countries, businesses now invest as much or more in intangible (knowledge-based) capital as they do in traditional physical capital (machinery, equipment, buildings, etc). At the start of 2011 the OECD began a two-year project entitled New Sources of Growth: Knowledge-based Capital. This work amed to provide evidence of the economic value of knowledge-based capital (KBC) as a source of growth and to improve understanding of current and emerging policy challenges. The work was inspired in part by a finding highlighted in

    Polity, Academia, Business, Civil Society