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Improving school-to-work transitions and ensuring better career opportunities for youth after labour market entrance are common goals in emerging and advanced economies as they can contribute to raising the productive potential of the economy and to increasing social cohesion. However, the challenges faced in achieving these objectives and the policies required vary between emerging and advanced economies. This paper analyses youth labour market outcomes in 16 countries: eight emerging countries and eight advanced economies. In light of this analysis, it also discusses differences and similarities in the policy measures countries have at their disposal to tackle the key emerging challenges.
This paper reviews the state of the banking sector in Europe. At the aggregate level, the empirical data suggest that the Baltics, Cyprus, Greece and Ireland, in particular, are hit by a strong decline in lending in the wake of the financial crisis. This deleveraging is mainly caused by a reduction in cross-border supply of credit. We also examine the capital position of the European banking system, using November 2013 stock market data. In the basic scenario to restore capital to a market based leverage ratio of 3%, EUR 84 billion of extra capital would be needed for the largest 60 banks.

At the bank level, the top tertile of well-capitalised banks (with a market based leverage ratio well above 4%) continues lending. By contrast, the 2nd tertile of medium-capitalised banks (between 3 and 4%) and the 3rd tertile of weakly capitalised banks (well below 3%) show a strong decline in lending. Moreover, the market-to-book ratio is below one for these banks. The market thus gives a lower value to these banks.

Our findings provide prima facie evidence of a credit crunch in Europe. Another fallout of the financial crisis is an increase, though very modest, of concentration in banking in the distressed countries (Greece, Ireland, Portugal, Spain and Italy). The enhancement of financial stability through (forced) M&As seems to come at the expense of reduced competition.

The increase in the human life span is a testament to the economic, social and medical progress made over the course of the last century. However, an ageing population brings some new challenges both to healthcare systems and to medicine in terms of the increased manifestation of specific diseases primarily seen in the elderly. Biomedical innovation, and in particular research into “omics technologies”, offers the promise of new means of detection, prevention and treatment of age-related disabilities and diseases. But the development of these new technologies will not be without challenges, in particular with respect to the difficulty of translating technological advances into innovation in the clinical setting. This report provides a synthesis of a March 2013 workshop organised by the OECD and the Human Genome Organisation (HGO) which focused on latest advances in omics technologies for healthy ageing and the policies and practices needed to facilitate their responsible development and integration in medical research, innovation and health policy.

The main hallmarks of the global financial crisis were too-big-to-fail institutions taking on too much risk with other people’s money while gains were privatised and losses socialised. It is shown that banks need little capital in calm periods, but in a crisis they need too much – there is no reasonable ex-ante capital rule for large systemically important financial institutions that will make them safe. The bank regulators paradox is that large complex and interconnected banks need very little capital in the good times, but they can never have enough in an extreme crisis. Separation is required to deal with this problem, which derives mainly from counterparty risk. The study suggests banks should be considered for separation into a ring-fenced non-operating holding company (NOHC) structure with ring-fencing when they pass a key allowable threshold for the gross market value (GMV) of derivatives, a case which is reinforced if the bank has high wholesale funding and low levels of liquid trading assets. The pricing of derivatives and repos would become more commensurate with the risks if the NOHC proposal were to be pursued as a unifying strategy for the different national approaches. Most of the objections to this structure are summarised and rebutted. Other national proposals for separation in Switzerland, the Volcker rule, the Vickers rule, and the Liikanen proposal are argued to be inferior to the ring-fenced NOHC proposal, on the grounds that empirical evidence about what matters for a safe business model is not taken properly into account.
JEL classification: G01, G15, G18, G20, G21, G24, G28
Keywords: Financial crisis, derivatives, bank business models, distance-to-default, structural bank separation, banking reform, GSIFI banks

The main hallmarks of the global financial crisis were too-big-to-fail institutions taking on too much risk with other people’s money: excess leverage and default pressure resulting from contagion and counterparty risk. This paper looks at whether the Basel III agreement addresses these issues effectively. Basel III has some very useful elements, notably a (much too light “back-up”) leverage ratio, a capital buffer, a proposal to deal with pro-cyclicality through dynamic provisioning based on expected losses and liquidity and stable funding ratios. However, the paper shows that Basel risk weighting and the use of internal bank models for determining them leads to systematic regulatory arbitrage that undermines its effectiveness. Empirical evidence about the determinants of the riskiness of a bank (measured in this study by the Distance-to-Default) shows that a simple leverage ratio vastly outperforms the Basel Tier 1 ratio. Furthermore, business model features (after controlling for macro factors) have a huge impact. Derivatives origination, prime broking, etc., carry vastly different risks to core deposit banking. Where such differences are present, it makes little sense to have a one-size-fits-all approach to capital rules. Capital rules make more sense when fundamentally different businesses are separated.
JEL classification: G01, G15, G18, G20, G21, G24, G28
Keywords: Financial crisis, Basel III, derivatives, bank business models, distance-todefault, structural bank separation, banking reform, GSIFI banks

The results of an IMF study on controls on capital inflows in emerging economies, using a probit regression approach, are first replicated and tested for stability. The IMF results, downplayed by the authors, have been used by others to suggest controls can be helpful in a crisis situation. However, the stability findings suggest the results are not sufficiently robust to make strong claims in this regard. The same 37 countries and the IMF capital control measures are then used in a panel regression study to examine the impact of capital inflows on annual real GDP growth around the Global Financial Crisis. The results between the pre-crisis and the crisis periods are inconsistent with the IMF study – finding that capital restrictions on inflows (particularly debt liabilities) are most useful in good times when inflows to emerging markets are strong and upward pressure on managed exchange rates and reserves accumulation is greatest. However, lower controls on bonds and on FDI inflows seem to be associated with better growth outcomes during the crisis period studied. These findings are more consistent with studies that see capital controls as part of exchange rate targeting policies and concerns about excess reserves accumulation.
JEL Classification: C23, C25, F21, F43, G01
Keywords: Capital controls, economic growth, emerging economies, financial crisis

The paper explores the issue of macro-prudential policies in the light of empirical evidence on the determinants of bank systemic risk, and the effectiveness of capital controls. In many ways this reflects a step back in time towards sector approaches to monetary policy that were so prevalent in the 1960s, 1970s and early 1980s. Complexity and interdependence is such that proposals on these issues should be treated with care until much more is understood about the issue.
JEL Classification: C23, C25, F21, F43, G01.
Keywords: Macro-prudential policies, capital controls, economic growth, emerging economies, financial crisis.

Higher education plays an important role in providing people with skills for innovation, but a number of important questions remain as to what kind of higher education teaching can be conducive to the strengthening of skills for innovation. This report aims to shed light on this issue by reviewing the current evidence on the effectiveness of problem-based learning compared with more traditional approaches in higher education teaching. It explores the extent to which problem-based learning can be an effective way to develop different discipline-specific and transferable skills for innovation. Research, primarily from the field of medicine, shows that problem-based learning appears to be beneficial in fostering certain aspects of skills for innovation. In addition, the report explores the literature on direct teaching behaviours that may help foster student learning in more traditional teaching settings. Despite the promising evidence linking problem-based learning and effective teaching in higher education to certain aspects of skills for innovation, more work is needed in this area. There is strong potential for further research to provide additional important insights into the development of skills for innovation.
  • 15 Jan 2014
  • Evdokia Moïsé, Silvia Sorescu
  • Pages: 102
Ce rapport présente les résultats mis en évidence par les indicateurs de l'OCDE destinés à évaluer l'incidence de certaines mesures de facilitation sur les échanges des pays en développement. Seize indicateurs sur la facilitation des échanges (IFE) ont été construits, correspondant aux principaux domaines qui font l’objet de négociations à l'OMC. L’objectif était d'estimer les effets des mesures prises face aux obstacles particuliers créés par les procédures applicables au commerce et au passage des frontières dans un pays donné. Les domaines qui semblent influer le plus sur les volumes et les coûts du commerce, aussi bien à l'importation qu’à l'exportation, sont la disponibilité des renseignements relatifs au commerce, la simplification et l'harmonisation des documents, la rationalisation des procédures et l'utilisation de processus automatisés. L'effet combiné des améliorations apportées dans ces domaines est supérieure à la simple addition des effets de chacune ; il en résulte une réduction de 14.5 % du coût total du commerce pour les pays à faible revenu, de 15.5 % pour les pays à revenu moyen inférieur et de 13.2 % pour les pays à revenu moyen supérieur.
English
Demand for non-renewable natural resources is forecast to rise steadily over the coming decades. Underlying trends of long-term rising demand and falling supply of mineral resources will inevitably increase pressure on prices and intensify competition for scarce resources. This can create a substantial opportunity for development for minerals-rich countries. However, as suggested by the “resource curse” debate, broad-based economic development based on the extractive industries is far from assured. History suggests that not all countries, in particular many of those outside the OECD area, have benefitted economy-wide from their mineral resources: good governance and good policies are essential to benefit from their huge potential growth.

Some countries have successfully regulated their mining sectors without resorting to highly distortive policies such as export restrictions. One such country is Botswana. This paper examines some of the policies in place in Botswana that have contributed to the governance and management of its substantial minerals sector. Lessons are drawn for minerals-rich countries keen to manage their raw materials sectors for increased economy-wide growth.

Poverty and income inequality have worsened since the onset of the crisis. While the design of fiscal measures has mitigated the burden sharing of fiscal adjustment, as the recession has deepened unemployment has risen, earnings have declined and social tensions have increased. Getting people back to work and supporting the most vulnerable remain priorities for inclusive growth and distributing the costs of adjustment equitably. Within the limited fiscal space this calls for continued reforms in targeting social support, especially housing benefits, extending unemployment insurance and introducing a means-tested minimum income. Sustaining universal access to good health care is also essential. Well-designed activation policies are important to bring the unemployed, especially the young, to work. At the same time, it is important to strengthen the effectiveness of the labour inspection to ensure full enforcement of the labour code. Decisive steps to contain tax evasion are also critical to social fairness. Reforms by the government in many of these areas are welcome and need to continue.
Brazil has made remarkable progress in reducing poverty and inequality. This reduction is explained by strong growth but also by effective social policies. Besides growth, public services and cash transfers have played the biggest role, the latter notably through the successful “Bolsa Familia” programme. Among public services, improved access to education has played a major role, allowing more Brazilians to move into better-paid jobs. However, shortages in physical school infrastructure are limiting the hours of instruction that students receive. The high drop-out rate needs to be reduced through early interventions such as expanding early-childhood education, by reducing grade-repetition and through more tailored support for those at risk. The quality of teaching could also be raised through more in-service teacher training and stronger performance incentives for teachers. Performance of public services devoted to health and transports has been mixed. Public health services are widely available but suffer from underfunding and training places for medical staff need to be expanded. The public urban transport system suffers from a shortage of investment which is urgently needed to upgrade capacity. Regarding cash transfers, the success of “Bolsa Familia” and new programmes put in place under the umbrella of the “Brasil sem Miseria” programme is remarkable but transfer payments remain too heavily focused on pension benefits. Giving more priority to “Bolsa Familia” and “Brasil sem Miseria” while limiting the real growth of pension expenditures in the future would improve the effectiveness of social expenditures for reducing poverty and inequality. This Working Paper relates to the 2013 OECD Economic Survey of Brazil (www.oecd.org/eco/surveys/brazil).
The question of whether migration can be an equilibrating force in the labour market is an important criterion for an optimal currency area. It is of particular interest currently in the context of high and rising levels of labour market disparities, in particular within the Eurozone where there is no exchange-rate mechanism available to play this role. We shed some new light on this question by comparing pre- and post-crisis migration movements at the regional level in both Europe and the United States, and their association with asymmetric labour market shocks. We find that recent migration flows have reacted quite significantly to the EU enlargements in 2004 and 2007 and to changes in labour market conditions, particularly in Europe. Indeed, in contrast to the pre-crisis situation and the findings of previous empirical studies, there is tentative evidence that the migration response to the crisis has been considerable in Europe, in contrast to the United States where the crisis and subsequent sluggish recovery were not accompanied by greater interregional labour mobility in reaction to labour market shocks. Our estimates suggest that, if all measured population changes in Europe were due to migration for employment purposes – i.e. an upper-bound estimate – up to about a quarter of the asymmetric labour market shock would be absorbed by migration within a year. However, in the Eurozone the reaction mainly stems from migration of third-country nationals. Even within the group of Eurozone nationals, a significant part of the free mobility stems from immigrants from third countries who have taken on the nationality of their Eurozone host country.
This report analyzes the specific factors that affect the competitiveness of developing countries in global value chains (GVCs), and how these factors differ across four major economic sectors: agriculture, extractive industries, manufacturing and offshore services. Although integration into GVCs allows firms in developing countries to participate in international trade without developing the full range of capabilities required to produce a product or service, it will not automatically translate into positive development gains from trade without the appropriate policies to build productive capacity and ensure inclusive growth and upgrading capabilities. In order to inform these policies, it is necessary to identify the various local factors that affected the capacity of developing countries to meet GVC and RVC requirements, including their productive capacity, infrastructure and services, the business environment, trade and investment policies and industry institutionalization. The report identifies the need for further data and analysis in many areas, in particular the trade-related policy implications of TiVA-GVCs for developing countries, including emerging economies. This would provide a starting point for the discussion of the domestic policies and actions needed to promote and support developing countries’ beneficial participation in value chains and inform aid for trade interventions promoting effective integration into markets via GVCs.
This short paper analyses the decline of France’s trade balance over the past 15 years. While the loss in export market shares is comparable to that of the major OECD countries except Germany, it is one of the largest among the countries of the euro area. The determinants of this outcome seem to be general (rather than concentrated in the industrial sector) and related to overall supply-side weaknesses.
Many international comparisons of education over the past 50 years have included some measure of students’ opportunity to learn (OTL) in their schooling. Results have typically confirmed the common sense notion that a student’s exposure in school to the assessed concepts, operationalized in some sort of time metric, is related to what the student has learned as measured by the assessment. What has not been demonstrated is a connection between the specifics of what students have encountered through schooling and their performance on any sort of applied knowledge assessment such as PISA. This paper explores this issue in 2012 PISA which, for the first time, included several OTL items on the student survey. OTL demonstrated a significant relationship with student performance on both the main paper-and-pencil literacy assessment as well as the optional computer-based assessment at all three levels – country, school and student. In every country at least one if not all three of the constructed OTL indices – exposure to word problems, formal mathematics topics, and applied mathematics problems – demonstrated a significant relationship to the overall PISA measure of mathematics literacy as well as the four sub areas of change and relationships, shapes and space, quantity, and uncertainty and data. Additionally, results indicated that variability in OTL was related to student performance having implications for equality of opportunity.
  • Across OECD countries, 18% of students skipped classes at least once in the two weeks prior to the PISA test, and 15% of students skipped a day of school or more over the same period.
  • Few students in high-performing school systems skip classes or days of school.
  • For students in OECD countries, skipping classes is associated with a 32-point lower score in mathematics, while skipping days of school is associated with a 52-point lower score.
  • Truancy is observed among all students, whether advantaged or disadvantaged.
French
  • Dans les pays de l’OCDE, durant les deux semaines précédant les épreuves PISA, 18 % des élèves ont séché au moins un cours, et 15 % des élèves au moins une journée entière de classe.
  • Dans les systèmes d’éducation très performants, rares sont les élèves qui sèchent des cours ou des journées entières de classe.
  • Dans les pays de l’OCDE, les élèves qui sèchent des cours ou des journées entières de classe obtiennent un score en mathématiques inférieur de respectivement 32 et 52 points.
  • L’absentéisme touche tous les élèves, qu’ils soient issus de milieux socio economiques favorisés ou défavorisés.
English
  • Au lendemain de la crise financière de 2008, un nombre significatif de pays ont réduit leurs dépenses publiques d’éducation. Malgré l’augmentation du PIB dans la plupart des pays de l’OCDE entre 2009 et 2010, les dépenses publiques au titre des établissements d’enseignement ont chuté dans un tiers d’entre eux.
  • Entre 2009 et 2011, les salaires des enseignants ont été soit gelés, soit réduits dans 12 des 25 pays de l’OCDE qui disposent de données, ce qui pourrait avoir pour effet de décourager les étudiants très performants qui souhaitaient embrasser cette carrière.
  • La demande d’enseignement et de formation est en constante augmentation alors même que les mesures d’austérité font pression sur les ressources allouées à l’éducation. Dans les années à venir, les établissements d’enseignement devront obtenir davantage de résultats, mais avec des moyens plus restreints.
English
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