The global recovery has been underway for some time now, but it remains uneven. Emerging market economies are growing strongly, while growth in OECD economies has been insufficient to significantly reduce unemployment from its post-crisis peak with all of the attendant human and social costs. Global payment imbalances are widening again. How sustainable post recession global growth will be? Policy driven recovery has still not been fully replaced by self sustained, job rich growth, especially in advanced economies. At the same time policy space is reaching its limits, in both the fiscal and monetary policy domains. Monetary policies have been stretched to their limits, and public budgets are in need of consolidation – and indeed most OECD governments are tightening fiscal policy in 2011 and beyond. In addition, the recovery takes place against the background of permanent scars from the recession that, while difficult to assess precisely, are associated with output losses in most advanced economies that are likely to persist for several years.

The global recovery from the deepest recession since the Great Depression has been underway for some time now, but it remains overly dependent on macroeconomic policy stimulus and has so far been insufficient to address high and persistent unemployment in many countries. With fiscal stimulus bound to be gradually withdrawn to address unsustainable public debt dynamics and little if any further support to be expected from monetary policy, the main challenge facing OECD governments today is turning a policydriven recovery into self-sustained growth. Speeding up the structural reform process, which outside the financial regulation area has slowed during the global recession, could make a decisive contribution in this regard. In a context of crisis recovery, priority may be given to reforms that are most conducive to short-term growth and help the unemployed and those outside the labour force to remain in contact with the labour market.

This initial chapter of Going for Growth identifies five structural reform priorities for each OECD country, for the European Union as a whole, and for the BRIICS – Brazil, China, India, Indonesia, Russia and South Africa. The recommendations are aimed at addressing variations in labour productivity and labour use across these countries. Moderate and high income (mainly European) OECD countries need to improve their labour use mainly by reforming their benefit and job protection systems and labour taxes. The relatively wealthy Asian member countries face a more balanced set of challenges, with a greater focus on labour productivity. The reform challenges for lower income OECD countries and the BRIICS relate to their education systems and product market regulation, as well as labour informality. The chapter also reports the number of reform priorities that would directly and quickly improve the fiscal balance, and also estimates for most OECD countries the potential cost savings that could be reaped by implementing best practice in their national education and health care systems. It turns out that implementing many of the Going for Growth priorities could not only enhance living standards but also contribute to more balanced fiscal positions, as well as to lower global current account imbalances.

This chapter compares a number of housing policies for a range of OECD countries and concludes that badly-designed policies can have substantial negative effects on the economy, for instance by increasing the level and volatility of real house prices and preventing people from moving easily to follow employment opportunities. Some of these policies played an important role in triggering the recent financial and economic crisis and could also slow down the recovery. The chapter makes some recommendations for efficient and equitable housing policies that can also contribute to macroeconomic stability and growth.

This chapter presents new OECD empirical analysis which points to some potential for structural reforms to reduce global imbalances by influencing saving and investment rates. For example, social welfare and financial market reforms could curb the current account surpluses of several emerging countries including China. Likewise, growth-enhancing product market reform could reduce the surpluses of some advanced economies such as Japan and Germany by boosting capital spending. The OECD scenario analysis outlined here shows that a package of fiscal consolidation and structural reforms in the main world economies could possibly reduce current global imbalances by about a third.

Rising health care spending is putting pressure on government budgets. Governments will have to make their health care systems more efficient if they are to maintain quality of care without putting further stress on public finances. The OECD has assembled new comparative data on health policies and health care system efficiency for its member countries. These show that all countries surveyed can improve the effectiveness of their health care spending. If all countries were to become as efficient as the best performers, life expectancy at birth could be raised by more than two years on average across the OECD, without increasing health care spending. There is no single type of health care system that performs systematically better in delivering cost-effective health care, as both market-based and more centralised command-and-control systems have strengths and weaknesses. It seems to be less the type of system that matters, but rather how it is managed. Policy makers should aim for policy coherence by adopting best practices from other health care systems and tailoring them to their own circumstances. Nevertheless, the international comparison highlights a number of sources of potential efficiency gains, such as from improving to co-ordination of the bodies involved in health care management, strengthening gate-keeping, increasing out-of-pocket payments, enhancing information on quality and prices, reforming provider payment schemes or adjusting regulations concerning hospital workforce and equipment. By improving the efficiency of the health care system, public spending savings would be large, approaching 2% of GDP on average across the OECD.