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This report covers the budget process in Lithuania. It discusses the four phases in separate sections: budget preparation, legislative approval, budget execution, and accounting and audit. Each section ends with a list of recommendations. The new strategic planning process should strengthen the policy focus of the budget at the level of the line ministries and could be accompanied by a more robust medium.term fiscal framework. All public.private partnerships (PPPs) should be subject to approval by the Ministry of Finance, and municipal use of PPPs should be closely monitored. Parliament operates a well.designed and orderly review process but parliamentary involvement can be further developed. Budget execution is based on sound rules and procedures, and the full development of the programme structure could be accompanied by more flexibility. The shift towards accruals in accounting and financial reporting will enhance transparency and should strengthen fiscal discipline. JEL classification: H610.

  • 08 Dec 2010
  • Dirk-Jan Kraan, Valentina Kostyleva, Colin Forthun, Jutta Albrecht, Ragnar Olofsson
  • Pages: 53
  • in OECD Journal on Budgeting

The institutional features of the budget process in Moldova are in a permanent flux, because of ambitious reform programmes that have been adopted in recent years and that are planned for the future. This article examines the Moldovan budget formulation process, the role of parliament, budget execution and budget discipline, the supply side of the budget process (public administration and service delivery), and accounting and audit. JEL classification: H610.

The Japanese labour market is characterised by high employment rates for men and older workers, and a low unemployment rate. Over the past two decades, female participation has risen, while disparities in the labour market conditions of workers have grown. Further efforts are needed to promote increases in female and older-worker employment rates so as to combat the trend decline in the working-age population, and to reduce dualism in the labour market.
Although Canada remains in an advantageous fiscal position relative to many other OECD countries as the global economy recovers from the 2008/09 recession, the deterioration in the country’s public finances has been substantial. Years of spending increases above trend economic growth have led to high structural levels of expenditure, and some Canadian governments are now on unsustainable fiscal paths, a diagnosis made starker when taking an even longer-term view that considers the fiscal implications of demographic change. Evidence shows that successful fiscal consolidations tend to rely on spending restraint rather than tax increases. When focused on restraining less productive expenditure, they can also boost economic growth. Fiscal rules can be useful tools in achieving budgetary consolidation, but also as part of the general fiscal framework to limit deficit bias and counteract the tendency shown by some Canadian governments over the past two decades to run pro-cyclical fiscal policies. Canadian governments with large deficits should announce deficit targets on the way to fiscal balance and should consider supporting these targets with spending growth limits. Other governments should also limit spending growth and target reductions in debt-to-GDP ratios, perhaps supported by budget surplus targets. Temporary fiscal stimulus measures should be allowed to expire as planned. To date, the federal and almost all provincial/territorial governments have committed to return to budget balance over the medium term and outlined plans to do so that focus primarily on expenditure restraint. These plans are broadly in line with the recommendations set forth in this paper and should allow Canada to return to budget balance over the medium term. Of crucial importance for the long-term success of fiscal-consolidation and debt-reduction strategies are public backing and transparency. The federal government should continue to support the Parliamentary Budget Office, and provinces should consider establishing similar independent fiscal agencies that can assess compliance relative to objectives and reinforce accountability. This Working Paper relates to the 2010 OECD Economic Review of Canada (www.oecd.org/eco/surveys/Canada).
In the 2000s, Turkey has enjoyed rapid catching–up. This was possible despite the adverse business environment, as the semi–formal and informal economy had a significant contribution to the expansion of the private sector. Productivity growth was strong, but labour utilisation remained very low. Looking forward, higher employment and productivity growth will not be possible without profound regulatory reforms of minimum wages, severance payments, social security contributions and flexible job contracts. These reforms have been discussed for a long time, but political obstacles prevented implementing them. Resolving this deadlock calls for advancing an integrated strategy of labour reforms and formalisation via experimenting with new regulation on the voluntary basis to identify the most successful solutions that can be later rolled out to the whole economy. Moreover, Turkey has to ease further anti–competitive product market regulations by reducing barriers to entrepreneurship and foreign direct investment, and by limiting government involvement in business. A successful implementation of these reforms would allow Turkey to enjoy golden decades. This paper relates to the 2010 OECD Economic Review of Turkey (www.oecd.org/eco/surveys/turkey).
Despite large differences across countries, Latin America’s average investment-to-GDP ratio and the overall quality of infrastructure in the region are relatively low by international comparison. Empirical evidence on the effects of fiscal decentralisation on investment based on a panel of Latin American countries since the late 1990 suggests that fiscal decentralisation discourages Latin American subnational governments from investing (acquiring fixed assets) and that lower subnational spending on investment is associated with lower economy-wide gross fixed capital formation. Latin American countries will therefore need to face a double challenge of revisiting the current arrangements for decentralised provision that discourage subnational governments from investing, while making the most of decentralisation as a policy lever to raise private investment.
This paper tests the hypothesis that, by giving people more voice in the government decision-making process, fiscal decentralisation fosters social capital, measured in terms of interpersonal trust. Empirical evidence based on World Values Survey data and seemingly unrelated probit estimations for a cross-section of countries suggests that people living in federal/decentralised countries find it more important to have voice in government decisions than their counterparts living in unitary/centralised countries. Pro-voice attitudes are, in turn, associated with greater social capital. The cross-country estimations are complemented by country-specific regressions for Brazil and Indonesia on account of these countries. experiences with fiscal decentralisation. The results show that the cohorts of individuals that have been exposed to decentralisation are in general more pro-voice (and trustful of strangers in the case of Brazil) than their counterparts that have not been exposed to decentralisation. These findings are not driven by the effects of political liberalisation on people.s attitudes towards the importance of having voice in government decisions and interpersonal trust.
Turkey is recovering from a severe recession. Once growth gains full speed, the authorities will likely face the challenge of widening external imbalances and of ensuring a smooth functioning of the financial markets. The former will require improving competitiveness, raising domestic saving, attracting more FDI inflows and reducing energy import dependency. Improvements in many of these areas will depend on structural reforms in the labour and product markets. Financial market stability calls for adopting international standards of prudential regulations and reacting pre-emptively to new developments in the financial markets. Mitigating risks of macroeconomic instability will be crucial for embarking on a stable and strong growth path to generate sustainable convergence with the OECD average income level. This paper relates to the 2010 OECD Economic Review of Turkey (www.oecd.org/eco/surveys/turkey).
This report examines services schedules of commitments in 56 regional trade agreements (RTAs) where an OECD country is a party. The preferential content of RTAs is assessed through an analysis of market access and national treatment commitments at the level of the 155 sub-sectors of the General Agreement on Trade in Services (GATS) Sectoral Classification List. Partial commitments are broken down according to nine categories of non-conforming measures. The report confirms that on average RTAs in services go beyond GATS with commitments in about 72% of sub-sectors, among which 42% correspond to preferential bindings (GATS-plus commitments). In addition, the report provides an overview of rules of origin for services providers and MFN clauses in services chapters in order to see whether commitments granted might be extended to non-parties to minimise discrimination among foreign services suppliers. Despite the heterogeneity found in schedules of commitments, there is a certain degree of commonality in new and improved commitments that suggests that multilateralising RTAs is achievable. The multilateralisation of services commitments would however imply a more symmetric and systematic liberalisation than what is seen in the schedules of RTAs. In the end, this is a matter of political will and negotiations.

A coincident business cycle indicator for the Milan area is built on the basis of a monthly industrial survey carried out by Assolombarda, the largest territorial entrepreneurial association in Italy. The indicator is extracted from three time series concerning the production level and the domestic and foreign order book as declared by some 250 Assolombarda associates.

This paper explores the impact of structural policies on saving, investment, and current accounts in OECD and non-OECD economies. Since the current account effects of structural reforms are often complex and ambiguous from a theoretical perspective, new OECD empirical analysis is carried out. Reduced-form equations are estimated for a panel of 30 OECD countries as well as for a panel/cross-section of 117 OECD and non-OECD countries that relate saving, investment and current accounts to policy indicators and a set of macroeconomic control variables. This work suggests that structural reforms may influence saving, investment and current accounts through their impact on macroeconomic conditions such as productivity growth or public revenues and expenditures, but also more directly: i) higher social spending (in particular on health care) is found to lower the saving rate and thereby to weaken the current account, most likely reflecting lower precautionary saving; ii) product market liberalisation temporarily boosts investment and thus also weakens the current account; iii) financial market deregulation may lower the saving rate, though only in less developed countries; iv) stricter employment protection may be associated with lower saving rates if unemployment benefits are low, as well as with higher investment rates possibly due to greater substitution of capital for labour. A scenario analysis indicates that fiscal consolidation and structural reforms in the main world economies could significantly reduce current global imbalances, possibly by about a third.

Aggregated times series variables can be forecasted in different ways. For example, they may be forecasted on the basis of the aggregate series or forecasts of disaggregated variables may be obtained fi rst and then these forecasts may be aggregated. A number of forecasts are presented and compared. Classical theoretical results on the relative effi ciencies of different forecasts are reviewed and some complications are discussed which invalidate the theoretical results. Contemporaneous as well as temporal aggregation are considered. JEL classifi cation : C22, C32 Key Words : Autoregressive moving-average process, contemporaneous aggregation, temporal aggregation, vector autoregressive moving-average process

Le présent exposé examine trois aspects interdépendants de la régulation : 1) ce qui rend une autorité de régulation efficace ; 2) le rôle légitime d’une autorité de régulation en matière d’élaboration et de mise en oeuvre d’une politique ; comment ce rôle est perçu par d’autres acteurs ; 3) la question de l’indépendance de la régulation vis-à-vis d’interventions politiques intempestives. Il avance que les autorités de régulation sont en général créées pour effectuer des tâches techniques complexes que le Gouvernement est incapable ou peu désireux de réaliser, notamment parce qu’il ne souhaite pas être responsable de certaines décisions, mais, une fois les autorités de régulation investies de pouvoirs parfois considérables et plus détaillés et plus inquisiteurs que n’en ont jamais disposé les Gouvernements vis-à-vis d’entités ou de secteurs détenus par l’État, l’impatience ou l’intolérance des responsables politiques ou des bureaucrates prend parfois le dessus, ce qui entraîne alors des pressions ou des interventions Gouvernementales intempestives. Ces interventions surviennent soit en raison de défaillances du système de régulation, soit parce que les responsables politiques souhaitent exercer eux-mêmes les compétences réglementaires qu’ils regrettent d’avoir transféré aux autorités de régulation. Au plan international, l’indépendance de ces autorités vis-à-vis des interventions et des considérations politiques est considérée comme une caractéristique importante d’une régulation économique efficace mais, malgré cela, cette indépendance peut être soumise à une telle pression que le système se fissure, ce qui conduit à une sérieuse perte de confiance dans le système de régulation et porte atteinte à la réputation du Gouvernement hôte quant à son impartialité et au respect de l’intégrité des mécanismes de contrôle qui ont été institués pour protéger les investissements. Le présent exposé soutient également que l’indépendance des autorités de régulation tient autant à leur comportement qu’à leur statut juridique.
English
Human resources and skills are becoming increasingly important to economic development. In the context of the economic downturn, challenges such as high youth unemployment call for a collaborative approach between local employment officials, educational institutions and wider social and economic partners. But do local labour market offices have sufficient flexibility in the implementation of their policies and programmes to contribute effectively to local strategies? If local labour market offices are to be given more flexibility, how can this be reconciled with the need for accountability and the achievement of national policy goals?

The Canada case study for the Building Flexibility and Accountability into Local Employment Services project explores the level of local accountability and flexibility within labour market policy in Canada, focusing in particular on the provinces of Alberta and New Brunswick. This report is one of four country reports, with the other participating countries being Belgium, Denmark and the Netherlands.

This paper suggests avenues for strengthening the governance and management of the Japanese Government Pension Investment Fund (GPIF), the largest single pool of pension assets in the world. The GPIF earned its name in 2006 as part of a major governance reform that aimed at increasing the transparency and autonomy of the fund. While much improved, the new governance structure still falls short of international best practices and in some aspects does not meet some of the basic criteria contained in OECD recommendations, in particular the OECD Guidelines for Pension Fund Governance.
This report has been prepared as part of the Improving Social Inclusion at the Local Level through the Social Economy (CFE/LEED (2008) 9/REV1) project in the framework of the Forum on Social Innovations. A team comprising members of the OECD LEED Secretariat and external experts visited Slovenia in January 2010 and in April 2010 for two study visits, to examine the role, both real and potential, of the social economy, and the support which could be given to the social economy to allow it to fulfill that potential. This report is based significantly on the available statistics and on material gathered from the study visit, as well as research conducted both prior to, and after, the study visit. The report provides an outline of the social economy in Slovenia, before going on to make broad and specific proposals to improve policy effectiveness for Slovenian social economy organisations and social enterprises. The project has been undertaken in the framework of the OECD LEED Forum on Social Innovations.

Recent economics literature on offshoring highlights the trend towards the relocation of high-skill jobs to emerging economies. This evolution presents a challenge to the established knowledge economy discourse on which the relationship between higher education, higher skills, higher productivity and higher incomes has been based. This paper identifies some tentative impacts of offshoring for employment and education patterns in OECD countries and argues that the assumptions of the knowledge economy discourse need to be revised. The implications for higher education institutions are considered and three potential strategic responses are presented.

The South African Higher Education Funding Framework uses funding as a lever to achieve equitable student access, quality teaching and research, and improved student retention and success. Maximising a university subsidy from the national Department of Education necessitates innovative strategies at the pre- and post-student admission stages. This paper describes how the resource base of the Faculty of Health Sciences at the University of KwaZulu-Natal was increased by the Academic Development and Student Support project which enabled the Faculty to meet enrolment targets and increase graduation rates.

Some governments hit by recession have chosen to invest in higher education as part of long-term economic and social development and international competitiveness agendas; others have opted for a route of cuts, financial stringency and contraction of their higher education systems. This article explores challenges to leadership in the latter context. Different types of institutional responses are examined in terms of three categories: reactive, adaptive and generative, first in terms of the nature of responses and second in relation to three institutional case studies. The higher education responses are then compared with the responses – and associated leadership lessons – that have been compiled from other sectors. Different forms of leadership development are also helping leaders to meet the challenges at individual, team and organisational levels, within and across countries and sectors.

The effective and efficient use of public resources has vital importance for Turkey. To serve this purpose, public financial management was reformed and a performance budgeting system was launched in Turkey. This article assesses the current situation of the implementation of the performance budgeting system in Turkey from the perspective of public administrations under the general budget. It examines all stages of the performance budgeting process (strategic planning, performance programming, budgeting, accountability reporting and auditing) as well as all elements of the system (legislation, methodology, co.ordination, guidance, ownership, implementation, and factors affecting the process). It identifies the strengths of the system and the problems faced. JEL classification: H110, H610.

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