The global economy is fragile. Continued trade policy tensions and increasing uncertainties are undermining confidence, trade and investment. The consequences can be long lasting, with a real risk of the global economy being locked into a period of structurally low growth. As a result, it will be more difficult to deliver broad gains in productivity, wages and living standards making people’s lives better, for all.
The global economic slowdown comes on top of increasing pressures from global “mega-trends”. Globalisation, digitalisation, population ageing and environmental degradation are shaping tomorrow’s living standards and well-being. Inequality and poverty remain major concerns, both in advanced and emerging-market G20 economies. In the absence of renewed reform dynamism, economies are poorly prepared to address these challenges.
Faced with these pressing challenges, governments must take action. Structural reforms are an important driver of growth and a key element of achieving the G20’s objective of strong, sustainable, balanced and inclusive growth. The OECD’s Report on Progress on Structural Reform under the G20 Enhanced Structural Reform Agenda (ESRA) tracks structural policy achievements and the need for further actions in G20 economies across priority areas selected by the G20 members. The report also highlights examples of good practice reforms by G20 countries in the different areas. Read the Full ESRA report
Reducing inequality and poverty as well as improving equality of opportunity are important objectives for the well-being of citizens. Inclusiveness is necessary to safeguard social cohesion, restore trust and sustain growth in the longer run.
Lifting barriers and disincentives to formal employment and addressing labour market segmentation can promote growth and ensure more equal access to quality jobs. Effective active labour market policies coupled with social policies can give more people access to the labour market and to good jobs.
Access to good quality education is crucial to ensure equality of opportunities and enable current and future generations to lead more productive careers.
Trade and market openness creates new opportunities for workers, consumers and firms. Trade openness gives firms access to larger markets, encouraging competition, and innovation. It gives consumers greater access to goods and services at a lower price. Increased openness to FDI can boost productivity through technology transfer and the provision of sophisticated inputs within multinational networks.
Innovation and investment in knowledge-based capital are important drivers of growth and living standards, especially in the long term. Reforms in this area can help advance the technology frontier and encourage faster diffusion of technologies.
A well-designed tax system is crucial to raise revenues to pay for key public services, support inclusion and redistribution, and maintain incentives for economic growth. Improving the efficiency of public spending and administration is also a key element of fiscal reform.
Competition and the entry of new firms encourage investment, innovation and reallocation among firms to boost productivity. Pro-competition product market regulations help boost the speed at which new sectors and businesses grow, the incentives for innovative efforts and the adoption of new technologies.
High quality, accessible infrastructure is the backbone of economic growth and inclusiveness. Public investment contributes to the economy-wide capital stock, including through its role as a catalyst for private investment.
A healthy financial system plays a critical role in funding investment, smoothing consumption and ensuring that capital is allocated where it is most productive. Financial systems need to contribute to economic resilience as a poorly regulated financial sector may have unintended effects of allocating capital to low return projects and creating boom-and-bust cycles.
Climate change is a major systemic risk to future growth and well-being. Outdoor air pollution, with an estimated global death toll of over four million annually, affects both growth and well-being. Other significant risks, such as waste management, ocean health and biodiversity loss, would be most efficiently addressed through multilateral approaches.