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Like previous contributions, this paper relies on a very simple growth model to relate development financing — private or public — to growth in order to estimate how much it would cost to halve poverty across developing countries. The virtue of this model is precisely its simplicity but the trade-off is that it does not claim to take account of the effects of increases in development financing, tax revenues, public expenditure and transfers on the general equilibrium of the economy to which it is applied. For instance, increasing the supply of schooling does not necessarily guarantee that it will be met with an equivalent increase in the demand for education. The model used in this paper simply provides orders of magnitude that are helpful to size up the challenges that meeting MDGs entails for low- and middle-income countries.
Similarly, when measuring the amount of transfers or government expenditure that it would take to achieve the poverty, education and health MDGs across countries, this paper acknowledges that the link between inputs and outcomes is often weak and that absorption and delivery issues can represent significant challenges in developing countries. From this perspective, the orders of magnitude presented cannot be taken to be precise estimates, especially at the country level, of how much public expenditure would be needed to increase in order to achieve specific MDGs. The importance of framing the corresponding debate in the larger framework of the quality of public policy and institutions is, indeed, a key take-away from the MDG costing exercise undertaken in this paper.
The ongoing fiscal consolidation, spending pressures and an already relatively high average tax burden necessitate public sector efficiency improvements. There is scope for improvement in the management of government spending, mainly by enhancing transparency, introducing performance-oriented budget indicators at both central and local levels, improving the management of state-owned enterprises and developing the procurement practices of the public sector.
Legislated increases in the retirement age will improve pension system sustainability. A new defined contribution tier is being introduced which should help to diversify future retirement income. At the same time, there is uncertainty about the number of participants who will decide to divert their contribution to the new tier and hence about the implications for revenues in the existing defined benefit pension tier. Also, attention should be taken regarding administrative costs of the new tier, since these can have a significant impact on future replacement rates and therefore public support for it. With more emphasis on private savings, the financial literacy of the population also needs to be stepped up.
In healthcare the authorities plan to continue improving the multi-insurer model through incremental reforms such as limiting pharmaceutical costs and improving provider-payment system. The potential for efficiency improvement in healthcare network planning and better care management should be explored, while ensuring that insurers and health providers are given the correct incentives.
This working paper relates to the 2011 Economic Survey of the Czech Republic, www.oecd.org/eco/surveys/czech.
This paper discusses the conceptualisation of territoriality and the different levels of applicability in regional development approaches. The paper draws on OECD and other organisations research and analysis; particularly the work of the OECD Local Economic and Employment Development Programme (LEED). The paper argues that the local level is emerging as the key spatial dimension where EU development instruments apply and therefore a systemic local approach may be needed when designing national and regional cohesion policies and instruments. The paper is divided into 5 sections discussing: 1) The importance of an integrated spatial approach to development; 2) The success of the local approach to development: complexity, integration and the policy mix; 3) Integrating territorial mechanisms for job creation, employability and inclusive growth; 4) Fostering education policies for qualification and skills rich ecosystems; and 5) The way forward.