Economic Policy Reforms

1813-2723 (online)
1813-2715 (print)
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OECD’s annual report highlighting developments in structural policies in OECD countries. Closely related to the OECD Economic Outlook and OECD Economic Surveys, each issue of Economic Policy Reforms gives an overview of structural policy developments in OECD countries followed by a set of indicators that reflect structural policy evolution. A set of Country Notes summarises priorities suggested by the indicators with actions taken and recommendations suggested. The Country Notes section also includes a set of indicators tables and graphs for each country. Each issue also has several thematic studies.

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Economic Policy Reforms 2017

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Economic Policy Reforms 2017

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17 Mar 2017
9789264270398 (PDF) ; 9789264270404 (EPUB) ;9789264270312(print)

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Going for Growth is the OECD’s regular report on structural reforms in policy areas that have been identified as priorities to boost incomes in OECD and selected non-OECD countries (Argentina, Brazil, the People's Republic of China, Colombia, Costa Rica, India, Indonesia, Lithuania, the Russian Federation and South Africa). Policy priorities are updated every two years and presented in a full report, which includes individual country notes with detailed policy recommendations to address the priorities, as well as a follow-up on actions taken. The selection of priorities and the monitoring of reform actions are supported by internationally comparable indicators that enable countries to assess their economic performance and structural policies in a wide range of areas.

In addition to the new set of policy priorities and country notes, the 2017 report also includes a special chapter discussing how the Going for Growth framework has been extended to identify reform packages that boost growth while ensuring that the benefits are widely shared.

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  • Editorial: A policy agenda for growth to benefit all

    The prolonged period of stagnating living standards that has affected a large share of the population in many countries is undermining confidence in governments’ reform agenda and raising stiff political resistance to continued efforts. Many reforms take time to bear fruit, in particular in an environment of persistently weak demand and uncertain growth prospects, and they often create winners and losers. Growing political headwinds is clearly one factor contributing to the steady slowdown in the pace of reforms observed since the post-crisis peak of 2011-12. Yet, governments in most countries need reforms of structural and macro policies both to escape the low-growth trap and prepare for rapid technological changes. So, to let down on the pace of reforms is not the appropriate response as this carries a bigger risk to both short and medium-term growth prospects.

  • ISO codes

    The codes for country names and currencies used in this volume are those attributed to them by the International Organization for Standardization (ISO).

  • Executive summary

    Governments cannot afford to let up on reform if they want to escape the low-growth trap many of them are facing and to ensure that the gains of economic growth benefit the vast majority of citizens. Over the past two years, global growth has remained flat at around 3%, well below the average growth rate of nearly 4% over the previous 10 years. The slowdown in the People’s Republic of China and other emerging-market economies accounts for much of the difference, but growth rates of 2% or less have been the norm on average across OECD countries during post-crisis years, with the prospect of persistently weak demand and investment dragging down potential growth.

  • Overview of structural reform progress and identifying priorities in 2017

    This chapter assesses the progress in structural reforms that countries have achieved in areas related to Going for Growth policy recommendations over the period 2015-16. Against this background, it identifies OECD and selected non-OECD countries’ new priority areas where structural reforms are needed to lift growth and make it more inclusive.

  • Integrating inclusiveness in the Going for Growth framework

    This chapter discusses how the Going for Growth framework is extended to fully take into consideration inclusiveness as a policy objective, alongside employment and productivity growth. It first provides a broad picture of inclusiveness trends across OECD and selected non-OECD countries, focusing on income distribution and inequality outcomes. The chapter then offers a comprehensive assessment of policy challenges related to inclusiveness and potential remedies reflected in the formulation of Going for Growth reform priorities.

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  • Expand / Collapse Hide / Show all Abstracts Reform agenda for 2017: Overview and country notes

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    • Introduction

      This chapter presents the Going for Growth policy priorities and underlying recommendations to achieve high and inclusive growth. In doing so, it summarises the information laid-out in the individual country notes reported at the end of the chapter. The cross-country dimension of Going for Growth reflected in this chapter facilitates the transfer of knowledge about domestic policy reforms, allowing for lessons to be drawn from successes and failures. At the same time, the selection of country-specific policy priorities and recommendations detailed in individual country notes allows for domestic considerations, such as differences in income levels, institutional capacities and the stance of macro policies, to be taken into account, avoiding thereby “one-size-fits-all” policy prescriptions.

    • Argentina

      Since this country is covered for the first time in Going for Growth, structural reform priorities are all new by definition, which implies that there is no follow-up on actions taken on those priorities.

    • Australia

      Catch-up in income per capita relative to the most advanced OECD countries has paused as the economy rebalances in the face of diminishing resource-sector investments and weak global commodity prices. Labour productivity growth has picked up following the global financial crisis but total factor productivity growth remains low.

    • Austria

      The GDP per capita gap with respect to the upper half of OECD countries has been widening again from 3.5% in 2011 to 7% in 2015. Sluggish growth and rising unemployment have weighed on labour utilisation. Labour productivity has remained buoyant in manufacturing but has declined in services and construction reducing other sectors’ prospects of benefitting from cost-efficient intermediate inputs.

    • Belgium

      Income per capita gap relative to the upper half of OECD is widening due to a decline of both labour productivity and labour force participation growth rates. However, labour productivity level is still one of the highest among OECD countries.

    • Brazil

      The narrowing of the significant GDP per capita gap with advanced OECD countries has stalled in recent years, mainly due to comparatively weak labour productivity performance.

    • Canada

      GDP per capita is 8% below the average of the advanced OECD countries, similar to the gap over the past quarter century. However, the gap in hourly labour productivity is much greater, having widened markedly until 2010. Average trend GDP per capita growth since the crisis has been less than hourly labour productivity growth, reflecting a declining labour force participation rate.

    • Chile

      The income gap related to the advanced OECD countries has narrowed, reflecting strong growth in labour force participation and physical capital, but the gap remains significant as a result of slow growth in productivity.

    • China

      GDP per capita continued to catch up with that of the upper half of OECD, though the New Normal – which puts more emphasis on the quality of growth – implies a slower catch-up. The income gap reflects lower output per worker as participation rates are above those in OECD countries.

    • Colombia

      The large income gap related to advanced OECD countries has been narrowing, reflecting strong growth in labour productivity.

    • Costa Rica

      Since this country is covered for the first time in Going for Growth, structural reform priorities are all new by definition, which implies that there is no follow-up on actions taken on those priorities.

    • Czech Republic

      Convergence in incomes and productivity has slowed down since the 2008 crisis, reflecting mainly a deceleration in total factor productivity. GDP per capita remains 36% below the average of the most advanced OECD countries.

    • Denmark

      The small income gap relative to the most advanced OECD countries has steadily widened over the past decade, reflecting a drop in labour utilisation. The employment rate is falling from a high level and hours worked remain below the OECD average, while labour productivity growth has improved recently.

    • Estonia

      The gap in GDP per capita related to the most advanced OECD remains large and convergence has been slow in the aftermath of the crisis. Declining investment has constrained productivity growth.

    • European Union

      Since the onset of the global financial crisis, GDP per capita relative to the most advanced OECD countries has declined to its lowest level in two decades. This has mainly been due to higher structural unemployment. Though sluggish, labour productivity has recently evolved broadly in line with that of the OECD best performers, leaving the gap relative to them essentially unchanged.

    • Finland

      Finland’s GDP per capita has been losing ground related to the OECD’s best performers since 2008, as a result of weak labour productivity and declining employment. The gap in GDP per capita has almost doubled since 2008 to close to 20 percentage points in 2015, even though the gap in GDP per hour worked is somewhat narrower. Labour force participation has been driven down by population ageing and dismal job prospects, as the economy struggled with falls in demand for electronic and forestry products, a collapse in demand from the Russian Federation and eroding competitiveness.

    • France

      The widened gap in GDP per capita related to most advanced OECD countries has proven persistent. Potential GDP per capita growth has fallen since the recession, owing to a lower employment rate and weak labour productivity growth.

    • Germany

      GDP per capita has remained close to the average of leading OECD countries in recent years. High labour market participation and low unemployment have reduced scope for employment gains. However hours worked remain low, reflecting the low incidence of full-time female employment. Immigration has been strong and the large number of refugees arrived recently need to be integrated in the labour market. Labour productivity growth has somewhat improved recently despite weak investment.

    • Greece

      GDP per capita stands at around 50% below the best performing OECD countries, following a continuous decline since 2009 due to a drop in both employment and labour productivity.

    • Hungary

      GDP per capita is today is about half of the average of the most advanced OECD countries, reflecting substantial income convergence prior to the financial crisis. Since then, income growth has been subdued, reflecting weak productivity growth offset by higher labour force participation and employment.

    • Iceland

      The income gap relative to the most advanced OECD countries, after having widened in the aftermath of the crisis, has stabilised. This pattern is explained by essentially flat labour productivity while labour force participation and employment have recently picked up.

    • India

      Income per capita is growing faster than in most other countries. Labour productivity has been the key driving force. The decline in labour force participation rates, mostly of women, has resulted in a negative contribution of labour utilisation. Overall, gaps in GDP per capita to most advanced OECD countries remain large.

    • Indonesia

      Indonesia’s GDP per capita gap relative to the most advanced OECD countries remains large, but gradually narrows as the economy is shifting away from low-productivity primary sectors to services and manufacturing. While labour utilisation is already relatively high, it is also continuing to contribute to lifting GDP per capita.

    • Ireland

      GDP per capita was among the highest in the OECD in 2015, due to the unusually strong activities of multinational enterprises. Excluding these activities, GDP per capita was still above the average of the advanced OECD countries in 2015. Strong labour productivity growth has more than offset weak labour utilisation which remains below the pre-crisis level.

    • Israel

      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.

    • Italy

      GDP per capita is about 75% the average of the most advanced OECD countries, after having fallen in relative terms for more than 20 years. Following the crisis, annual potential GDP per capita growth has turned negative due to declining trends in employment and total factor productivity. Also, severe retrenchment in investment spending has reduced the productive capital stock, further hindering labour productivity growth.

    • Japan

      Per capita income remains about a quarter below the most advanced OECD countries, reflecting somewhat weak labour productivity, which is held back by a marked slowdown in capital accumulation. Despite significant declines in the working-age population, a rising participation rate, notably among women, is boosting labour inputs.

    • Korea

      Sustained rapid growth has boosted GDP per capita to within a quarter of the average of the most advanced OECD countries. However, productivity in Korea is only about half as high, while working hours are among the longest in the OECD.

    • Latvia

      The gap in GDP per capita with respect to most advanced OECD countries remains large, reflecting a large productivity gap. Convergence in productivity is progressing but is slower than before the global economic crisis. Growth in labour utilisation has improved recently despite the emigration of youth, who tend to have a high labour participation rate.

    • Lithuania

      Since this country is covered for the first time in Going for Growth, structural reform priorities are all new by definition, which implies that there is no follow-up on actions taken on those priorities

    • Luxembourg

      GDP per capita still exceeds that of advanced OECD countries by almost 50%, but the gap has been narrowing in the wake of the global financial crisis. This has been mainly due to a smaller positive gap in labour productivity. In absolute terms, labour utilisation remained flat and labour productivity weak since 2009, reflecting, in the former case, higher structural unemployment.

    • Mexico

      The persistently wide gap in GDP per capita relative to the most advanced OECD countries is driven primarily by the low level and growth rate of labour productivity. Total factor productivity growth was negative for some years after the financial crisis, but is showing signs of a pick-up following the recent reforms.

    • Netherlands

      Since 2009, hourly productivity has grown less than in the most advanced OECD countries, causing GDP per capita to fall behind.

    • New Zealand

      GDP per capita is 27% below the average of the most advanced OECD countries, reflecting an even larger shortfall in labour productivity. The GDP per capita gap has declined somewhat over the past quarter century while the labour productivity gap has continued to widen.

    • Norway

      GDP per capita remains high relative to other advanced OECD countries, both in terms of total and mainland GDP. However, growth in GDP per capita has decelerated in recent years due to declining labour utilisation and weaker labour productivity growth.

    • Poland

      GDP per capita has been converging steadily towards leading OECD countries due to strong labour efficiency growth and rising labour utilisation. However, the labour productivity gap remains substantial, and the employment rate of older workers, especially women, is low.

    • Portugal

      After widening during the crisis, the gap in GDP per capita relative to the average of the most advanced OECD countries has stabilised. It remains nonetheless very large and is explained mostly by low productivity.

    • Russian Federation

      While the GDP per capita gap relative to the most advanced OECD countries narrowed rapidly until the 2009 crisis, the convergence process slowed down afterwards, due both to a decline in potential growth and cyclical factors. GDP per capita fell further behind after 2014 when declining oil prices and sanctions affected revenues from external trade, although depreciation of the rouble helped partially smooth these shocks. The per capita GDP gap is mainly driven by the productivity gap while the employment rate remains above the OECD average.

    • Slovak Republic

      GDP per capita convergence towards leading OECD countries has continued, albeit at a significantly slower pace since the crisis. The shortfall related to the best performing countries remains substantial, notably because of low employment rates and weaker investment compared to the pre-crisis trend.

    • Slovenia

      The GDP per capita gap relative to most advanced OECD countries started closing for the first time in 2014, after 5 years of widening. The gap is still significant and GDP per capita is 6% below the 2008 peak. This drop largely reflects reduced labour utilisation.

    • South Africa

      Growth in incomes has stalled since the 2008 crisis. GDP per capita remains at around 30% of the average level of the most advanced OECD countries. Total factor productivity has been the main drag on growth compared to the pre-crisis years. However, labour utilisation has also weighed on growth since the crisis.

    • Spain

      The gap in GDP per capita relative to the most advanced OECD countries is large. Potential GDP per capita growth has fallen since the crisis owing to a lower trend employment rate and sluggish total factor productivity growth.

    • Sweden

      Relatively strong GDP growth has been accompanied by high migration and population growth. GDP per capita is therefore just slightly above its 2008 level, and has stayed fairly constant compared to most advanced OECD countries. Productivity in Sweden has fallen compared to the best-performing countries since the mid-2000s, but has levelled out for the past half-decade. Labour force participation continued to grow, and employment losses were relatively limited during the downturn.

    • Switzerland

      While GDP per capita is relatively high in Switzerland, growth in potential output is being held back by low productivity growth, reflecting weak investment. Higher average hours worked puts GDP per capita more than 10% above the average of the advanced OECD countries while productivity per hour worked is lagging.

    • Turkey

      Based on the revised National Accounts series as of 31/01/17.

    • United Kingdom

      The gap in GDP per capita relative to most advanced OECD countries has narrowed in recent years, driven by greater labour utilisation. Labour productivity growth remains however weak.

    • United States

      Output per capita has exceeded the average of most advanced OECD countries by 10% or more over the past few decades. Per capita output has slowed during the recovery compared to the pre-crisis trend, reflecting demographic pressures on labour force participation as well as the drag on productivity growth from diminished capital deepening.

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  • Structural policy indicators

    This chapter contains a comprehensive set of quantitative indicators that allow for a comparison of policy settings across countries (both OECD and selected non-OECD as per data availability). The indicators cover areas of tax and transfer systems and how they affect work incentives, as well as product and labour market regulations, education and training, trade and investment rules and innovation policies. The indicators are presented in the form of figures showing for all countries the most recent available observation and the change relative to the previous observation. In addition to individual country scores, most figures show the average result across all countries (horizontal line), as well as across OECD countries and the European Union countries.

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