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This chapter provides an overview of the progress achieved by member countries over the past year in taking measures consistent with the policy priorities identified in the 2005 edition. Overall, several important steps have been taken to reform competitionrestraining regulations in product markets and towards improving educational outcomes in most countries where this was seen as a priority. However, less progress has been made in responding to priorities in the area of labour market policies.
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Innovation has long been a key source of progress in material living standards but the outcomes of innovation efforts are generally highly uncertain and the benefits for society as a whole may exceed those for private firms. To encourage innovation, governments have therefore put in place various measures such as financial support for private R&D projects and funding for research in universities. This chapter provides a cross-country comparison of innovation efforts and outcomes as well as of the main policy areas having an influence on those outcomes.
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This chapter sheds some light on the link between financial market regulation and economic growth. Financial systems are found to differ substantially across OECD countries in terms of overall size, structure as well as in the degree of competitive pressures prevailing in the banking and securities markets. To some extent, these variations reflect differences in regulatory underpinnings. In particular, regulatory settings that maintain excessively high barriers to competition in banking, or that provide too little protection for investors in securities markets, hamper the development of financial systems, resulting in weaker economic growth.
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This chapter assesses if GDP per capita can serve as a reasonable proxy of overall well-being. Other national accounts measures are arguably better suited for this purpose but they are not as readily available and are in any case closely correlated with GDP in most OECD countries. Illustrative calculations to “extend” GDP to include leisure time, the sharing of income within households and distributional concerns suggest that cross-country ranking based on these indicators and GDP per capita are generally similar. Across OECD countries, levels of most measures of specific social conditions are positively related to GDP per capita while changes over time are not. However, survey-based data on happiness and life satisfaction across OECD countries are only weakly related to levels of GDP per capita. Overall, GDP per capita remains critical for any assessment of well-being but needs to be complemented with other
measures to get a comprehensive picture of well-being. -