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The OECD Secretariat has developed a multi-region, multi-sector, dynamic applied general equilibrium (AGE) model to quantify the economy-wide and global costs of policies to curb emissions of carbon dioxide (CO2). The project is called the GeneRal Equilibrium ENvironments model, hereafter referred to as GREEN. The purpose of this paper is to provide a full technical description of the GREEN model, its data base and parametrisation as of May 1991. Work is continuing to extend GREEN in several different directions to make the model more policy relevant, and a revised version of the technical manual will be issued in due course ...

The aim of this paper is to analyse the implications of the European Commission proposal of a mixed energy cum carbon tax to curb CO2 emissions from a global perspective. The paper deals with the effects of this proposal on emissions and welfare in both the EC and the rest of the world by concentrating on three main issues: i) the effectiveness of the proposed tax measures in terms of curbing EC and global CO2 emissions; ii) the implied costs for the EC and the other countries/regions of the world; and iii) the implications of the EC proposal for the world distribution of emissions and the competitiveness of the EC economy. In this connection, the relevance of the so-called "carbon leakages" -- i.e. the displacement of polluting activities from countries participating in an emission reduction agreement to countries not concerned by the agreement -- is examined. The paper provides quantitative answers to these issues using simulations with GREEN, the global dynamic applied general ...

The OECD Secretariat has developed a multi-region, multi-sector, dynamic applied general equilibrium (AGE) model to quantify the economy-wide and global costs of policies to curb emissions of carbon dioxide (CO2). The project is called the GeneRal Equilibrium ENvironment model, hereafter referred to as GREEN. The purpose of this paper is to provide a full technical description of the GREEN model, its data base and parametrisation as of April 1992. It replaces the previous version of the GREEN Technical Manual which was issued in June 1991 as Working Paper No. 104 ...

This paper forms part of an OECD project which addresses the issue of the cost of reducing CO2 emissions by comparing the results from six global models of a set of standardised reduction scenarios. The project provides evidence on: i)projected carbon dioxide emissions through the next century, and ii) the carbon taxes and output costs entailed in reducing these emissions ...

This document provides a full description of the GREEN model. It is intended to accompany the GREEN code, i.e. the implementation of the model, and to enable the user to understand the links between the theoretical framework of the model and its practical implementation.

The document lists all the model equations, provides a data dictionary to link the equation variables with the variables in the code, explains details which are traditionally bypassed in technical papers, and provides an explanation of the data base and the data management part of the code.

The document is organised as follows. Following a non-technical overview of the model in Part I, Part II presents the structure of the model with a complete description of the equations, the variables, and parameters which are part of the GREEN model. Part III explains the data management in GREEN ...

The economy’s entry into its globalisation phase has radically altered the nature of competition. Now, numerous new actors from every market in the world (see section 1 and summary table) are simultaneously in competition on every market. This new competition has accentuated the interdependence of the different levels of globalisation (trade in goods and services, direct investment, technology transfers, capital movements), with direct investment becoming a central factor in the process of industrial restructuring and the development of genuine world industries.

To contend with the challenges of globalisation, firms have altered their strategies, strengthening the activities in which they were in a dominant position (refocusing), seeking to achieve critical size and attaching priority to external growth (mergers and acquisitions). At the same time, they have multiplied the number of co-operation agreements and alliances and changed their internal organisation. Globalisation has ...

This paper is a contribution to the ongoing debate on the relationship between economic growth and the environment. Through a contrast of the experiences of two regional groupings of countries — East Asia and Eastern Europe — that have both experienced rapid industrialisation, it makes clear the importance of sound economic policy in encouraging efficient resource use. At the same, by contrasting the experiences of different East Asian countries, it demonstrates that economic policy is not sufficient. In the absence of reinforcing and enforceable environmental policies, rapid urban and industrial growth can cause severe environmental degradation.

The paper addresses indirectly the question: what are the costs and benefits of delaying environmental expenditures until late in the development process as some of the high performing East Asian economies have done? It finds that those countries which invested early in environmental improvements experienced virtually no tradeoff in ...

The environmental impacts of economic activity have become an increasingly urgent concern in both OECD Member countries, as well as in non-Member countries. Research in this area is still in its infancy, and the data required to buttress analytical studies is still sparse. This paper describes the base model specification for a series of six country case studies undertaken at the OECD Development Centre to analyse the links between growth and emissions, and emissions and trade instruments.

The model attempts to capture some of the key features relating to environmental emissions. These features include: a) linking emissions to the consumption of polluting inputs (as opposed to output); b) including emissions generated by final demand consumption; c) integrating substitutability between polluting and non-polluting inputs (including capital and labour); d) capturing important dynamic effects such as capital accumulation, population growth, productivity and technological ...

This paper was prepared in the OECD Economics Department as a contribution to the Organisation-wide study entitled, “Towards a New Global Age”. It examines macro-structural economic developments in and between OECD and non-OECD economies, the economic linkages and a number of structural factors and policies which have influenced growth performance. It goes on to consider a number of alternative forward-looking macroeconomic scenarios to 2020 for the world economy based on different hypotheses about economic policies and other factors influencing factor productivity developments. A final section provides a model-based evaluation of the potential influence of some of the key factors underlying these scenarios, in particular the influence of demographic changes such as population ageing and alternative fiscal policies ...

A successful reform of public enterprises would improve productivity in key sectors of the Greek economy, and thus provide essential inputs at lower cost to the economy as a whole. Reforms would need to address the factors that are responsible for the poor performance of Greek public enterprises. First, labour costs are high and productivity low in international comparisons. Second, there are wide technology gaps between Greece and other OECD countries. Third, Greece’s public enterprises fulfil heavy public service commitments without matching compensation. As a result, prices are often out of line with prices elsewhere. In recognition of the large drag on the economy, as well as the burden on the budget, the Government has embarked on a programme to revitalise inefficient public enterprises. The objective of this paper is to analyse the main issues concerning the public enterprise sector and assess the current policy framework, as well as planned changes to it. First, the key ...

This Technical Paper reports on a body of research conducted for the OECD Development Centre by Donald J. Robbins. It examines the patterns and determinants of rapidly rising educational attainment in six Latin American countries — Argentina, Chile, Colombia, Costa Rica, Mexico and Uruguay — all of which illustrate the sweeping transformations in growth, demographics and education now occurring in much of the world. It finds that rising per capita output, through a mechanism which induces women to join the labour force and interacts with falling family size, acts as the key factor leading to mounting educational achievement.

This in fact highlights the role of women in basic household microeconomic decisions with powerful economic and social effects — decisions about female labour-force participation and family shifts from notions of “quantity” (large families) to those of “quality” (fewer children, with more investment in health and education). It carries important implications ...

Both the magnitude and the composition of capital flows from rich to poor countries have changed markedly over the past decade. While official flows have stagnated, private flows have mushroomed and portfolio investment and bank lending have grown more rapidly than foreign direct investment (FDI), though with much higher volatility. Given the impact of investment decisions on patterns of resource use (including the environment), what are the implications of these trends?

A bricks–and–mortar investment by a multinational corporation (MNC) requires consideration of environmental impacts in a way that neither a bank loan nor portfolio investment does. The evidence suggests that foreign direct investment (FDI), especially by large MNCs, is not concentrated in “dirty” industries, and where it does go into such sectors environmental performance of MNCs is usually above local standards. For smaller OECD investors, reliance on public–sector investment guarantee and insurance agencies can ...

This paper surveys the empirical literature on the growth effects of education and social capital. The main focus is on the cross-country evidence for the OECD countries, but the paper also briefly reviews evidence from labour economics, to clarify where empirical work on education using macro data may be relatively useful. It is argued that on balance, the recent cross-country evidence points to productivity benefits of education that are at least as large as those identified by labour economists. The paper also discusses the implications of this finding. Finally, the paper reviews the emerging literature on the benefits of social capital. Since this literature is still in its early days, policy conclusions are accordingly harder to find ...

The globalisation of economic relationships and the systemic transformation in post-socialist countries are two interlacing processes and a mark of the turn of the century. Globalisation, that is, the institutional and real integration of national and regional markets into a single worldwide organism, is neither restricted to the last few decades, nor is it, as yet, an irreversible, let alone complete process. Even in its most advanced form it does not absolve nations from adopting sound economic policies, and their quality remains essential for economic efficiency and growth. In contrast, the market transformation of post-socialist economies and their integration with the world economy along capitalist lines is irreversible — precisely because of globalisation. The transformation will soon be complete, unlike globalisation, because the latter, being a dynamic, open-ended process, has no end, just as there is no end to socio-economic development. For this reason, and bearing in ...

1. Economic growth is, ultimately, the result of the myriad of transactions which take place in a market economy. Similarly, the distribution of income depends on who has ownership of factors of production, how much they can sell them for, and whether the resultant income is redistributed or not. It would be surprising were economic growth and income distribution not to be linked. But how exactly they might be linked has been the topic of many competing theories and empirical evaluations. Unfortunately, the studies have not led to a convergence on a common view that there is, or is not, a trade-off between the two goals of an equitable society and a rich one.
2. This lack of enlightenment becomes less surprising once the empirical studies are examined in detail. Many empirical studies have looked at the final distribution of income, when some of the theories make stronger predictions about the links between growth and the distribution of income before taxes and transfers; similar ...

This paper presents a new data set on human capital. It is based upon data released at the OECD for a subgroup of 38 member and non-member countries, and an effort performed at the Development Centre to expand this data set to other developing countries. The key to our methodology is to minimise the extrapolations and keep the data as close as possible to those directly available from national censuses (in the spirit of the work of De la Fuente and Doménech for OECD countries). We then use this new data set to test a neo-classical model in which human capital follows the Log-Linear formulation which is favoured by Mincerian approaches. We find both in levels and in first difference that the model performs extremely well. No externalities seem to manifest themselves, either on physical or on human capital accumulation. Total factor productivity (output net of the contribution of human and physical capital), however, do appear to be smaller, by about 45 per cent in average, in the ...

Efforts to get Sub-Saharan Africa back into the world economy through internationally-backed reforms have largely failed due to lack of institutions, suitable local conditions or ability to negotiate effectively for foreign aid. Powerful interests or dominant communities distorted attempts at reform in some places. Success came when globalisation was made part of boosting social development and where it revived investment and growth, helping governments to start tackling poverty. It also worked best where economic chaos had decimated potential opposition. Democratic governments could probably not have got away with such drastic measures. But globalisation was not entirely to blame for increased poverty and inequality. Social and economic problems, disease, civil war, famine and external shocks played their part and in countries thus weakened, globalisation could not reverse the decline ...