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OECD Business and Finance Outlook 2017

image of OECD Business and Finance Outlook 2017

The OECD Business and Finance Outlook is an annual publication that presents unique data and analysis that looks at what might affect and change, both favourably and unfavourably, tomorrow’s world of business, finance and investment. Using analysis from a wide range of perspectives, this year’s edition addresses some forces influencing economic developments that have contributed to recent surprises in elections and referendums. A common theme of these surprises has been voter discontent with globalisation and immigration that are perceived to be causes of unemployment and falling living standards for substantial segments of society in a number of OECD countries. This Outlook’s focus is on ways to enhance “fairness”, in the sense of strengthening global governance, to ensure a level playing field in trade, investment and corporate behaviour, through the setting and better enforcement of global standards. A brief review of important developments contributing to post-war globalisation is provided and a number of policy domains are covered. These include exchange rates and capital account management, financial regulation since the global financial crisis, the rising weight of state-owned enterprises in the world economy, competition policy to deal with international cartels, the cost of raising capital, responsible business conduct and bribery and corruption.

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Globalisation and the level playing field

Evidence shows that the increased participation of emerging markets in the world economy has lifted trade for all countries (rather than diverting it). At the same time, the middle class is being hollowed out in advanced countries and living standards have been affected adversely by trends in trade and technology. Insights based on micro data suggest that these two latter factors are linked, as the most productive companies sell more to foreign markets (via trade or investment) to gain scale economies and take advantage of digitalisation and innovation. Productivity growth driven in this way benefits from open access to markets for successful firms and the exit of inefficient ones. Companies that do not innovate and compete well globally see declining returns, average value added and wages for their workers. These pressures occur within industries, rather than between them. The extent of these problems would be reduced if the gains from globalisation were distributed more equally on the basis of a level playing field.

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