We’ve just learned that a special police unit has busted an Eiffel Tower smuggling ring. Well, more of key ring really, since the raid netted 60 tonnes of souvenirs with a street value of, er, 5 for a euro. I’ve no idea how many you need to make up 60 tonnes, but sources say it’s a lot. (If you read this article to the end, I’ll tell you how much the original weighs). A police inspector told Le Figaro that they’re not after the hundreds of sellers you may have seen around various touristy areas of Paris. They’re after the ringleaders who control what is in fact an international business, or a global value chain (GVC) as we would say, importing the merchandise from China into France for sale by mainly African sellers to tourists from the world over.
The OECD is usually all in favour of GVCs and often asks governments to do more to open up international trade. The OECD Trade Facilitation Indicators for example estimate that comprehensive implementation of all measures currently being negotiated in the World Trade Organization’s Doha Development Round would reduce total trade costs by 10% in advanced economies and by 13-15.5% in developing countries. Reducing global trade costs by 1% would increase worldwide income by more than $40 billion according to the OECD, and most of this would go to developing countries, where the people selling Eiffel Towers come from.
Those gains from the Doha Round may or may not be realised. Progress in the negotiations is slow to non-existent, and in the meantime, selling key rings and other cheap souvenirs allows those who do it to make a living and to help their families. It’s a very precarious living and they can’t send much money home, but at least whatever they send goes directly to those who need it, and those little sums soon add up. According to the 2013 African Economic Outlook, remittances from workers abroad overtook foreign direct investment and aid as the main financial flow into Africa in 2010 (and that’s only for remittances that are recorded).
But the situation of the workers sending the remittances can be terrible. According to a Malian I spoke to, many of the young men selling souvenirs and employed in other dead-end jobs are trapped in France. They expected to do great things here, based on the stories they’d heard and the fact that usually they’re the brightest, most dynamic members of their community. They don’t dare tell their families what it’s really like, and that the money they spent to help them emigrate could have been put to a better use. So they perpetuate the myth with stories of the good life, and live in utter poverty to be able to keep up appearances and send money back. That encourages their younger siblings and friends to try their luck too, and although satellite TV and the amount of information available on Internet are changing perceptions, many still think that the grass is greener on this side.
It’s not just in France that immigrants have a harder time than the others. The 2013 edition of the International Migration Outlook says that “on average in OECD countries, immigrants’ labour market outcomes are below those of the native-born of similar age and education levels. Immigrants also find themselves more often living in sub-standard housing conditions.” You could argue that language difficulties and different work experiences or types of qualification explain the fact that immigrants have a harder time finding a job and keeping it. But that wouldn’t explain why their children face the same problems.
For the Outlook, “Discrimination is a key obstacle to the full integration of immigrants and their offspring into the labour market and the society as a whole” adding that “it is not uncommon for immigrants and their offspring to have to send more than twice as many applications to get invited to a job interview than persons without a migration background who have an otherwise equivalent CV.”
That discrimination is often fuelled by stories of immigrants abusing the welfare system or health services. According to the OECD’s figures however, the effect on public finances “is around zero on average across the OECD countries considered […] It is highest in Switzerland and Luxembourg, where immigrants provide an estimated benefit of about 2% of GDP to the public purse.”
I wonder if the Swiss and Luxembourg papers are full of stories about immigrants coming over here, boosting our economy, reducing our borrowing requirements and helping keep taxes down. Probably not.
And since you’ve read, or skipped, to the end, the Eiffel Tower weighs 10,100 tonnes, 7300 tonnes of which is the metal structure. And it’s not illegal to make souvenirs featuring it since it’s in the public domain. The lighting however isn’t, so you should pay to film or photograph it at night. But we’ll talk about knowledge-based capital another time.
International Migration: The Human Face of Globalisation an OECD Insights book by Brian Keeley
Today we publish the first of a summer series in which Kimberley Botwright of the OECD Public Affairs and Communications Directorate looks at OECD work through a Shakespearean lens.
Given the current heat in Paris, we thought it appropriate to begin with the archetypal summer play, A Midsummer Night’s Dream. Much of the action takes place in a wood, close to Athens. The play unfolds in a comic series of events, for the most part caused by the fairies that rule over the wood. Yes, you read that correctly: fairies. Oberon and Titania, greatest of the fairies, have had a violent disagreement. Titania has custody over an adopted child, “a lovely boy”, and Oberon is jealous. Oberon’s acts of revenge lead to some unfortunate side effects for Hermia and Lysander, young lovers who have eloped to the woods.
But it is not just the human story that is affected by the fairy war. Encountering her jealous husband, Titania describes the cosmic effects of their disagreement:
“But with thy brawls thou hast disturbed our sport.
Therefore the winds, piping to us in vain,
As in revenge, has sucked up from the sea
Contagious fogs, which falling in the land
Hath every petty river made so proud
That they have overborne their continents”
In short, their dispute has led to catastrophic flooding, with “continents” here meaning “container”. Titania goes on to describe a 16th century version of climate change, “The seasons alter”, suggesting that “The spring, the summer, / The childing autumn, angry winter, change” and the planet has become confused, “the mazèd world/ By their increase now knows not which is which.” She makes it clear that the ecological disruption is their responsibility.
“And this same progeny of evils comes
From our debate, from our dissension:
We are their parents and original.”
Climate change probably did not have the same pressing international status in the 16th century as it does today. Rather, Shakespeare’s play uses the fantasy of the woodland to imagine alternative and frightening cosmic powers, the equivalent of today’s action-packed fantasy films. 400 years later however, his fairies’ alternative seems worryingly “real”.
The 2012 OECD Environmental Outlook to 2050: Consequences of Inaction warns that by 2050, under a worst-case scenario, we could see a 10% biodiversity loss; 2.3 billion more people living in water-stressed areas; and a 50% increase in GHG emissions, primarily caused by a 70% growth in CO2 emissions from energy use. By the end of the century, this would put us on track for a 3°C to 6°C average global temperature increase from pre-industrial levels.
That’s three times over the agreed-upon 2°C limit. A 6°C degree global temperature increase really would be catastrophic, and here the OECD’s language begins to sound as worried as Titania: “A temperature increase of more than 2°C would alter precipitation patterns; increase glacier and permafrost melt; drive sea-level rise; worsen the intensity and frequency of extreme weather events such as heat waves, floods and hurricanes; and become the greatest driver of biodiversity loss.”
Fortunately, the international community has decided to take action! No, wait, that’s not quite it. The Environmental Outlook states that the mitigation action pledges at Copenhagen (2009) and Cancun (2010) “are not enough to be on a least-cost pathway to meet the 2°C goal.” 80% of the projected emissions from the power sector in 2020 are inevitable, as they will come from existing power plants or plants being built today.
By now, perhaps you are feeling as helpless as the lovely boy. Titania and Oberon overlook the actual desires and needs of the child, who does not utter a single line throughout the play. Symbolic of future life, he is marginalised by the present argument. But maybe there is hope for today’s boys and girls. UN Secretary-General Ban Ki-Moon has set a “Sustainable Energy for All” objective by 2030. This will require a dramatic increase in annual investment in sustainable energy infrastructure. The OECD is working on a Policy guidance for investment in clean energy infrastructure, wherein you will learn that, “Clean energy technologies have displayed exceptionally favourable learning curves over the last decade.” Let’s just hope the humans show equal learning aptitude.
If you tend to be more like the play’s Duke Theseus and do not believe in climate change or its effects per se, “I never may believe these antic fables, nor these fairy toys”, then we solemnly bow out:
“If we shadows have offended,
Think but this, and all is mended
That you have but slumbered here
Whilst these visions did appear.”
Following the publication of Art for Art’s Sake by the OECD’s Education Directorate, we asked Frances McGarry, PhD, host, producer, and blogger at First Online With Fran to describe her personal experience as a teacher.
The Arts continue to be cut from school curriculums across the nation. Despite arts advocacy groups’ efforts to prevent the decline of arts inclusion, the arts are perceived as extra-curricular and disposable when budgets are decided. Nothing is farther from the truth: the Arts challenge us to not only dare, but also explore the myriad of possibilities of “What if…”.
As a k-12 (primary and secondary school) English and Theater classroom teacher for over 30 years, Educational Theater scholar, and Director of Instruction for Arts Education organizations, I have witnessed firsthand the efficacy of an arts integrated curriculum.
Among the various experiences I’ve had as a theater education practitioner, perhaps the best illustration of how an arts-integrated curriculum works is the nationally acclaimed Theaterworks & Theaterworks Troupe program. Under the aegis of the Northport-East Northport High School English department, a team of innovative teachers created the Theatreworks program, a collaboration of 4 disciplines whose objective was to teach the intersecting terms: line, color, and texture through play production for grades 9-12 (ages 14-17). As the English staff member I introduced them as dramatic literary analysis terms; Home Economics translated them as costume design applications; Visual Arts scenic/lighting applications, and Music/Dance offered interpretations of vocal technique.
Through a hands-on approach students learned not only the skills associated with play production: casting, directing, rehearsing, designing, fabricating, sewing, producing, but also a practical work ethic: being on time, meeting deadlines, balancing responsibilities, working as an ensemble. Did I mention, that as an English teacher it was the best tool to get students to read and study and memorize lines from a piece of literature more than the typical cursory glance? I’ll never forget when Theatreworks students could cite verbatim lines from Oscar Wilde’s The Importance of Being Earnest for the New York State English Regents Exam.
But, perhaps, the most valuable skill was to have the freedom to fail: to understand that risk makes us learn how to be all that we can be. There are endless stories I can share as can so many of my capable colleagues: Tony and Emmy Award-winning actress Edie Falco insists on crediting me for her career path. Hardly.
For me, it was those “closet-kids” like the perky blonde ninth-grade cheerleader Erica who we discovered could not read! She was able to hide behind her beauty until we rotated her into the acting cycle and she refused to read for a part. That was quickly remedied and she was immediately placed in a special program. Or the lone Hispanic student in a 90% white population who found his place as a Stage Manager? I’ll never forget the deaf student J.J who danced in the after-school musical Brigadoon. Or my son, who credits Theatreworks as the source to pursue an engineering career: it was the only high school course where he was given a job (one that he was unfamiliar with like lighting), had research the topic, get a team together to get the job done, by a deadline, under budget (or suffer the wrath of his director/mom).
Incorporating drama strategies across the curriculum also enhances learning. For example, to introduce To Kill A Mockingbird by Harper Lee to my tenth grade English students, I lined up shoes that characters from the story might have worn. Using creative drama techniques students stepped into those shoes, shared, interacted with others thereby allowing them to create a foundation for their journey of understanding. I teamed up with the American History law class program to provide an historical framework.
Selected writing exercises from Young Playwrights Inc.’s Write a Play! curriculum were used with writing classes for high school students who would not even hold a pen, never mind write a one-act play. The popular “match” exercise where students talk for as long as the flame burns was the introductory lesson with Composition classes at Nassau Community College, a requisite entry level writing course. It’s about finding your voice: the Arts encourage students to think for themselves. These are all marketable skills vital for 21st Century employment.
Fast forward twenty years, adjunct stints, student teachers, training teaching artists, working with young playwrights, conducting professional development workshops across the nation, I continue to marvel at the lack of connect to what seems to me the most valuable global treasure we have.
The Arts have impacted the lives of so many people young and old and yet budget cuts continue to be the spiraling trend. Utilizing testimonials, interviews, and videos First Online With Fran, a talk show/blog was created to serve as the sounding board to give sustainable national attention to the Arts by inviting people from all walks of life – ordinary people doing extraordinary things to make our world a richer, deeper, better place to live.
Upset over the slashing of arts programs in schools I decided to do something about it. So, I got a bunch of kids from Brooklyn Theatre High School and asked them to respond to the statement: “The Arts are extra-curricular and disposable”.
Please take 6 minutes and listen to what they have to say…
My goal for episode 2 is to receive as many views as possible to pitch to a network TV station; ultimately, to air it as a public service announcement (PSA) commercial. The message is clear, accurate, and it’s straight from the horse’s mouth: kids! Who better to express the transformative powers of the Arts?
I am asking for any of the following means of support (none of them require money!): your endorsement as a website comment, the click of your finger on the episode link, social media sharing, any kind of professional networking that you feel would benefit from viewing this episode. Or not. This is where my passion lies and this is my way of raising awareness and advocating for an arts inclusion education.
As a dedicated arts advocate I am committed to raising awareness of how the Arts rejuvenate. The arts restore. The Arts are our supernatural gift, the force that unites us as a single, breathing, living entity that connects every human being to be all that is good and pure.
Share your stories of how the Arts transformed lives and why we have a responsibility to ensure the Arts will continue to be a staple of our humanity. Bring it on!!
Arts education in innovation-driven societies by Art for Art’s Sake co-authors Stéphan Vincent-Lancrin and Ellen Winner on the educationtoday blog
The Impact of Arts Education report examines the state of empirical knowledge about the impact of arts education.
The next time somebody asks you take part in a consumer survey or opinion poll, ask them how much they’re prepared to pay for your time and opinion. They’ll probably stop pestering you in case you talk to them for hours about the aliens who stole your chocolate cake. Working for nothing is such an accepted part of the modern economy that it’s the person who calls it into question who is labelled crazy. Millions of us toil away humbly for well-known companies without getting paid. Some airlines won’t even let you board unless you make your own ticket, or else they’ll charge you a fortune for printing it at check-in.
It’s obvious that by doing what a travel agent or airline employee used to, you’re saving the company money and helping to boost its profits. Some of your other contributions to corporate well-being aren’t so easy to define and measure though. If you upload a video, does the site add the same value if 10 people watch it or 1 million? And if the site uses your video to attract advertisers, is the ad money made in your country, the countries where the video is seen, the country where the computer storing it is kept, or none of these?
Increasingly, the last answer is the one favoured by multinationals, and that poses problems for taxation. Some businesses that are worth billions may pay practically no tax in the places where they operate and make profits. Not because they’re defrauding the system, but because tax systems simply haven’t kept up with how firms in the digital economy in particular add value and make profits, on intangible assets such as design and licensing for example, or even by exploiting your personal data.
Other firms also avoid paying what most citizens would consider “fair” taxes through “(tax) base erosion and profit shifting” or BEPS as the OECD calls it. As we discussed in this article, BEPS schemes themselves can be extremely complicated, but the basic idea is simple: shift profits across borders to take advantage of tax rates that are lower than in the country where the profit is made. Three popular mechanisms for doing this are hybrid mismatches, special purpose entities (SPE), and transfer pricing.
Hybrids try to have the same money or transaction treated differently (as debt or equity for instance) by different countries to avoid paying tax, and often feature dual residence – companies that are residents of two countries for tax purposes. An SPE is an entity with no or few employees, little or no physical presence in the host economy and whose assets and liabilities represent investments in or from other countries and whose core business consists of group financing or holding activities.
Transfer prices are the prices various parts of a company pay each other for goods or services. They are used to calculate how profits should be allocated among the different parts of the company in different countries, and are used to decide how much tax the MNE pays and to which tax administration. There is no simple method for calculating a transfer price and the lack of good “comparables” (similar operations carried out at market prices by unrelated entities) often results in profits being artificially shifted to no- or low-tax jurisdictions.
International tax rules are generally efficient in ensuring that companies are not subject to double taxation, but BEPS takes advantage of gaps in the rules to avoid paying tax completely, so-called “double non taxation” or to pay a sum across two or more countries that is less than what they would pay in a single country.
Opportunities for MNEs to pay less tax harm everybody. Governments lose revenue and may have to cut public services and increase taxes on everybody else. But businesses suffer too. Small businesses, businesses working mainly in one national market and new firms can’t compete with MNEs who shift profits across borders to avoid or reduce tax. And an MNE that doesn’t shift profits is at a disadvantage compared to its BEPSing rivals.
What can be done? Today, the OECD launched a 15-point Action Plan that will give governments the domestic and international arms they need to combat BEPS. The Plan recognises that greater transparency and improved data are needed to evaluate and stop the growing disconnect between where money and investments are made and where MNEs report profits for tax purposes.
The Action Plan will for example stop the abuse of transfer pricing by ensuring that taxable profits can’t be artificially shifted through the transfer of patents, copyright or other intangibles away from countries where the value is created, and it will oblige taxpayers to report their aggressive tax planning arrangements.
When we wrote about BEPS in February, we mentioned the sense of urgency surrounding the OECD work, with the proposal that a workable plan be agreed on within six months. The next steps will take a bit longer of course, but not that much longer. The actions outlined in the Plan will be delivered over the next 18 to 24 months by the joint OECD/G20 BEPS Project, regrouping all OECD members and G20 countries on an equal footing. To ensure that the actions can be implemented quickly, a multilateral instrument will also be developed for countries that want to amend their existing networks of bilateral tax treaties.
Some may protest and try to get the plan neutralised, but would they really prefer the alternative if the no action is taken to address the weaknesses that put the present consensus-based multilateral framework at risk and countries apply: “… unilateral measures, which could lead to global tax chaos marked by massive re-emergence of double taxation”?
Maybe it’s just middle-age nostalgia, but it feels like summer was once so simple for kids. The front door opened early in the morning, you ran out into bright sunshine, galloped around safe suburban streets, got hungry, and ran back home for dinner, tired but happy.
Things are different today. For one thing, few parents would dream of leaving children unattended for so long. And, among ambitious and well-off parents, fewer still would look on such aimless days as time well spent. Why waste the day kicking a ball around the park when you could be at algebra boot camp? Or learning Chinese in Shanghai? Or exploring self-expression through origami?
Enrolling kids in summer courses and programmes isn’t just a way of keeping them out of parents’ hair. More and more, it seems, this sort of “enrichment” is part of a year-round arms race aimed at ensuring kids get the best possible start in life. And, increasingly it seems, that race is being won by the well-off.
One sign of this is the difference in how much well-off and poorer families spend on their children. The data comes from the United States, and covers a period (from the early 1970s to the middle of the last decade) that saw rising income inequality. According to researchers Sabino Kornrich and Frank Furstenberg, in the early 70s, the poorest 10% of American families spent around $607 a year per child; by 2006/07, that had risen to $750, an increase of about 23% (the figures are adjusted for inflation). By contrast, the wealthiest 10% of families spent $2,832 in the early 1970s, rising to $6,573, an increase of about 132%.
It’s not as if the poorest families didn’t try to keep up: They more than doubled their spending on children as a share of their income, but that was nowhere near enough to match the investment – and “investment” is probably the right word – of wealthier parents.
Of course, parenting is not just about money. But, here again, better-off families – in the U.S. and, possibly, elsewhere – may have the advantage, as Sabrina Tavernise noted last year: “While wealthy parents invest more time and money than ever before in their children … lower-income families, which are now more likely than ever to be headed by a single parent, are increasingly stretched for time and resources.”
So, what’s the impact of all this on the kids? According to Stanford researcher Sean Reardon (pdf), it’s contributing to a widening social gap in American education. Today, he writes, “the achievement gap between children from high- and low-income families is roughly 30 to 40% larger among children born in 2001 than among those born 25 years earlier.” He also notes that research suggests these patterns are set early in life: “The income achievement gap is large when children enter kindergarten and does not appear to grow (or narrow) appreciably as children progress through school.”
In short, what appears to be happening is that – from children’s earliest years – the income levels of their parents are increasing linked to how well they do in education and that, in turn, determines how well they do in life. Or, as Nicholas Lehman wrote last year, “Opportunity is increasingly tied to education, and educational performance is tied to income and wealth.”
In the face of such research, it’s hard not to feel a little sad, not just for the kids who risk being left behind but also for those who are being “hothoused” for success. As Chrystia Freeland reported in May, some may be paying a price for their parents’ ambitions in terms of increased risk of substance abuse, depression and anxiety. But, as she also noted, you can’t blame families for wanting the best for their kids: “… the truth is that these parents are responding rationally to a hyper-competitive world economy”.
Can the opportunity gap be bridged? Probably not entirely, but many people believe government policies could do more to narrow it. As an OECD paper pointed out earlier this year, the U.S. is “one of only three OECD countries that on average spend less on students from disadvantaged backgrounds than on other students”. It also points out that, unlike in some other countries, the best teachers rarely work in the most disadvantaged schools. “These resource allocations,” says the OECD paper, “reinforce the disadvantages of social segregation, which results in children in poorer schools having lower educational expectations and outcomes.”
OECD Programme for International Student Assessment (PISA)
Making education more equitable Marilyn Achiron on OECD educationtoday blog
Today’s post is from OECD Secretary-General Angel Gurría
Since the Aid-for-Trade Initiative was launched in 2005, much has changed in the trade and development landscape. The Initiative continues to mobilise a range of actors, adapt to new realities, and succeed in building trade capacities for shared prosperity.
Increasingly, the global economy is characterised by geographically fragmented production. This creates networks of interlocking value chains where different stages of production take place in different regions, countries or even continents. The emergence of these value chains creates an enormous growth opportunity for developed and developing countries alike. They allow countries to maximise competitive advantages and optimise resources. They also allow firms and economies to use intermediate goods and services to focus on, and be competitive in, one “link” of the value chain without having to develop a whole industry.
Motivated by the success of a number of emerging-market economies, developing countries are aiming to become more integrated into international production networks, or what we call Global Value Chains (GVCs). But despite their advantages in terms of competitive labour costs and abundance in natural resources, developing countries are disadvantaged in other aspects. High trade and transport costs, excessive red tape, poor infrastructure, credit constraints, skills shortages and challeneging business environments all serve to undermine competitiveness. Firms in developing countries require support and governments need assistance to overcome these supply-side constraints.
Judging by their national development strategies, many developing countries recognise the potential promised by emerging value chains. But they require assistance to train trade negotiators, build trade-related infrastructure, and improve the business environment to take full advantage. Increasingly, this is being recognised, leading partner countries to mainstream trade in their development strategies and give a higher priority to trade-capacity building in their dialogues with donors.
In Aid for Trade at a Glance 2013, the OECD and WTO demonstrate how aid for trade can play an important role in connecting developing countries to value chains. Three quarters of the 700 firms which contributed to the 2013 OECD-WTO monitoring survey were from developing countries. Their responses give us a good picture of the constraints facing companies and are presented in sector studies for agrifood, textiles, transport and logistics, information and communication technology and tourism.. These studies found that development assistance plays a crucial role in facilitating new trading opportunities by helping firms and producers raise the quality of their products to international standards and access market information. Development assistance can also improve firms’ competitiveness by reducing tariff and non-tariff barriers and bringing down the cost of essential services required to export, such as credit, insurance and transport.
Data from the OECD-DAC Creditor Reporting System tells us that $174 billion in aid for trade has been disbursed since 2006, while annual commitments reached $41.5 billion in 2011, 57% above the 2002-05 average baseline. Complementing these efforts, providers of South-South co-operation such as India and China have scaled up their own contributions. Furthermore, aid for private sector development programmes has continued to grow and amounted to $18 billion in 2011.
Through successive rounds of monitoring aid for trade, the OECD and WTO have collected abundant evidence that these sums are well spent and result in lower trade costs and improved trade performance. For instance, our analysis found that $1 in aid-for-trade increases exports from the poorest countries by $20 and $8 for richer developing countries. These findings are even higher for exports of parts and components, underscoring the benefits that value chains offer to developing countries.
These results are substantiated by the 269 aid-for-trade case stories published in Aid for Trade in Action that were submitted in the context of the last Global Review. The stories probe more deeply into the objectives, challenges and processes of trade-related assistance to better understand what works in the provision of aid for trade, what the key ingredients of success were, and what governments and practitioners could learn from experience.
Success was reported for programmes in trade expansion, improved infrastructure, new linkages to value chains, employment creation, mobilisation of foreign and domestic investment, gender empowerment, and poverty reduction. The analysis concludes that aid for trade works best when it is focused on improving infrastructure, facilitating trade, and supporting the private sector. Such programmes are especially effective when developing countries have a supportive business environment, including stable macroeconomic policies and an investment climate that encourages private investments.
While these findings are encouraging, there remains a need to strengthen the management of limited aid resources to ensure that trade objectives are being met. The OECD has produced Aid for Trade and Development Results – A Management Framework based on national monitoring frameworks in Bangladesh, Colombia, Ghana, Rwanda, the Solomon Islands and Vietnam. The Framework provides a tool to help design frameworks for results-based management of aid for trade and is based on a menu of trade-related targets, as well as indicators to measure their performance. This provides a powerful system to ensure that aid for trade contributes to meeting ambitious development objectives, where links between inputs, outputs, outcomes and impacts depend on many factors beyond programme reach.
Aid for trade works. It is making a difference, has mobilised regional and national efforts and has proved to be a good investment. We must maintain momentum, continue to show results, and demonstrate that aid for trade helps to connect developing countries to value chains.
OECD’s Frans Lammersen discusses Aid for Trade with journalist Larry Speer