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OECD calls for reforms to wake up growth
[PARIS] With little hope for the world economy picking up pace soon, govermments must tackle reforms at home to kickstart growth, the OECD said on Friday.
Promoting entrepreneurship, labour mobility and higher productivity are all on the menu the Organisation for Economic Cooperation and Development recommended to policymakers at the start of a G20 finance ministers meeting in Shanghai.
"Global growth prospects remain clouded in the near term," it said in its "Going for Growth" interim report.
"The case for structural reforms, combined with supporting demand policies, remains strong," it said.
The OECD chided governments for last year failing to reverse a slowdown in reforms that had already been observed in 2013 and 2014.
Southern European countries have been more pro-active than their northern neighbours in tackling reform, the OECD said. Better-than-average performances were also seen in Japan, China, India and Mexico.
But others had not done enough.
"Governments around the world need to address deep structural weaknesses that the crisis laid bare, but which in many cases originated well before," it said.
Removing barriers that stifle entrepreneurship and limit the capacity of firms to make good use of knowledge and technology is a "reform priority", it said.
Others steps included easier access for businesses to the services sector where there is pent-up demand, reform of health and pension benefits and of housing policy, and promote anything that will help job seekers become geographically more mobile.
Acknowledging that government budgets are tight and that expansionary central bank policies have not been much help, the OECD said many of the recommended reforms could improve growth very quickly along with the employment situation, a major headache for many governments.
This, however, would also require more banking reform to improve the flow of credit to households and to firms who cannot easily tap into financial markets.
"Countries with very limited budgetary room may have to prioritise on high short-term returns or on low-cost measures," it said, recognizing that many reforms would require upfront investment that governments often cannot afford.
But some measures could actually save governments money quickly, while also improving the economy. These included making unemployment benefits conditional on training schemes, something Italy has attempted, or attracting private investment into public infrastructure, the OECD said.