OECD Business and Finance Outlook 2017

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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.



The internationalisation of state-owned enterprises

State-owned enterprises (SOEs) have become an important and, by some measures, growing part of the global corporate landscape. One reason for this is that the economic weight is shifting toward regions of the world where a large number of SOEs remain. The question is whether these SOEs operate in the global marketplace on the same terms as private enterprises, or whether their growing presence changes the competitive conditions in international trade and investment. Importantly, enterprises other than SOEs may be linked to the state, or considered to be “national champions”, thereby benefitting from the support of their national authorities. This chapter reviews the changing trends and analyses the challenges that may arise from the renewed importance of SOEs. It concludes that SOEs, on average, have lower rates of return and higher leverage than private competitors and that, by continuing to produce amid falling profitability, they may have contributed to global overcapacity in some sectors. The chapter demonstrates how existing OECD instruments, including the OECD Guidelines on Corporate Governance of State-Owned Enterprises, can contribute to address these concerns.



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