The OECD has just published How’s Life? 2015: Measuring Well-being. It includes statistics on material well-being (such as income, jobs and housing) and the broader quality of people’s lives (such as their health, education, work-life balance, environment, social connections, civic engagement, subjective well-being and safety), with a special focus on child well-being, and also has a chapter on how volunteering affects well-being.
Do you know as much about life as an OECD bureaucrat? Try the quiz and find out. (You can cheat your way to happiness by looking up the answers in the book.)
Views vary on how much of a difference the Millennium Development Goals (MDGs) actually made to the world. But on one thing people seem more or less united: They were a great communications tool. They took the abstract concept of “development” and turned it into a series of mostly concrete goals – fewer poor people, more kids in school, healthier mothers and babies, and so on.
According to Jan Vandemoortele, an independent researcher and UN veteran, the communications power of the MDGs rested on three pillars – the three Cs: they were clear, concise, computable.
So what about the successors to the MDGs, the Sustainable Development Goals (SDGs): Will the new set of goals adopted at the United Nations in October prove equally effective as a communications tool? You could be forgiven for having doubts. While the MDGs had just eight goals and 18 targets, the SDGs have 17 goals and a whopping 169 targets.
The number of goals is just one issue; there’s also the question of scope. The MDGs were essentially focused on the needs of developing countries. By contrast, the new SDGs are part of a global agenda for the development of the entire planet – they apply to wealthy countries just as much as poorer countries, and they cover a much broader range of issues: Poverty reduction, yes, but also economic sustainability, employment, climate change and much, much more.
“If you apply those three C’s to the SDGs, it’s clear you have a problem,” according to Mr. Vandemoortele.
This “problem” – if that’s what it is – was recently discussed by development communicators at a meeting in Paris of the OECD Development Centre’s DevCom network. The discussions provided fascinating insights into differing approaches on how to communicate around the SDGs.
If you’ve heard of the SDGs at all, it may well be thanks to the Global Goals campaign, brainchild of the British filmmaker Richard Curtis (Four Weddings and a Funeral, Bridget Jones’s Diary). The campaign is operating on many fronts: In September, to coincide with the UN General Assembly, it hosted the Global Citizen festival in New York, featuring performers like Beyoncé and Coldplay; it has produced slick videos featuring famous names like Malala Yousafzai, Stephen Hawking and Meryl Streep; it has created a set of logos that rebrand the SDGs as “The Global Goals” and simplify their messages; and it has helped deliver a classroom lesson on the SDGs to half a billion children worldwide in 160 countries.
“We’re campaigning to make the Global Goals famous,” Piers Bradford of the Global Goals campaign said at the DevCom session. “We set out to tell seven billion people in seven days – patently ridiculous,” he admitted, “but it got people’s attention.” The actual estimated impact of the campaign is still impressive – in the region of three billion worldwide.
But the Global Goals campaign hasn’t pleased everybody. Among a number of complaints, some civil society groups have objected to the language of the campaign. They argue that it is oversimplified and fails to mention some key concepts – most notably the “sustainable development” part of the goals. Some of these criticisms were voiced at the DevCom meeting by Leo Williams of the Beyond2015 Campaign.
“Awareness should not be focused on some edited highlights of the SDGs, renamed as Global Goals and shown in films, adverts and music videos,” Mr. Williams said. “It should be about recognizing the change dynamics of the universal agenda, real meaningful participation, meaningful understanding, not just information.”
One concern of some civil society activists is that the focus on the 17 goals, and on certain goals in particular, risks obscuring the fact that they are actually part of a much broader agenda that has much to say on implementation and accountability. “There needs to be the recognition that this is an indivisible agenda,” according to Mr. Williams.
But is such a sweeping agenda really “communicable” (as they say in development circles)? Comments from a number of other speakers and delegates seemed to support the idea that it’s OK to pick and choose from the SDGs.
“I don’t think that at the local level, everybody in a country is going to associate with all the goals,” said Edith Jibunoh, who works on civil society relations at the World Bank: “I completely buy into the idea that in some countries the focus will be on certain areas, and I think that as development communicators we should be really comfortable with that.”
That view was echoed by Mr. Vandemoortele. “We have 169 targets in the SDGs – which is good – but you cannot have it all as a priority. If you have that many priorities then you have no priorities.” He argued that communication of the SDGs needs to happen at two levels, the local and the global, and that at both levels it needs to convey a strong sense of what’s happening in the real world.
“We have to go beyond global statistics, and coloured maps,” he said. Instead, he said, we need to hear more about the on-the-ground experience of the SDGs – Viet Nam’s successful “VDGs,” for example, or Cambodia’s inclusion of mine-clearing in its development goals. “Have you ever heard about these?,” asked Mr. Vandemoortele. “No, because we only hear about global statistics. Let us avoid the trap.”
Back in May, we asked you a simple question – are you rich or poor? For once, this question wasn’t rhetorical. Thanks to the OECD’s Compare Your Income tool, you could actually check for yourself where you stood on the income scale – rolling around in money or struggling to make ends meet.
Since the launch of Compare Your Income, more than a million people worldwide have completed the survey. And the answer we’ve all given to that question – are you rich or poor? – is absolutely clear: We’ve no idea.
In other words, if we’re rich, we think we’re poorer than we are; if we’re poor, we think we’re richer.
It’s true that these are still early findings and cover just three countries – France, Mexico and the United States. But, they do suggest that many of us have only a dim understanding of whether we’re doing better or worse than our neighbours. In France, only 1 in 6 people correctly guessed if they were high, medium or low earners; in Mexico it was 1 in 8; and in the United States it was just 1 in 10.
The people who were most likely to guess their position on the income scale correctly were middle-earners. By contrast, the people who most often got it wrong were the very highest and lowest earners. Among low earners, most underestimated just how far behind they were compared to everyone else. But the well-off, too, were almost as likely to get it wrong, often dramatically so. More than half of top earners in the U.S. and Mexico actually thought they belonged down in the bottom half of the income distribution.
Presumably, these top earners didn’t comprehend just how well they were doing compared with everyone else. If that’s the case, it seems to echo other research suggesting that a high income may not bring much of a sense of economic security. For example, a few years ago Boston College managed the rare feat of getting some millionaires and a couple of billionaires to talk frankly about the joys and dilemmas of being rich. Amid the findings, perhaps the most surprising aspect of being well off was that people still seemed to worry a lot about money. As Graeme Wood wrote in The Atlantic, despite sitting on assets worth tens of millions of dollars, most said “they would require on average one-quarter more wealth than they currently possess”. One heir to a vast fortune admitted that “he wouldn’t feel financially secure until he had $1 billion in the bank”.
Income perceptions aren’t the only issue under examination in the Compare Your Income survey. Among a number of issues, it also looks at people’s attitudes to how the economic pie is sliced up – what percentage of national income goes to top earners and how much should they earn?
Here, again, people’s understanding of the facts seemed to be at odds with reality. For example, French respondents believed that about 60% of the country’s income goes to the top 10% of earners. The actual figure is rather lower – around 25%. And when respondents were asked how large a share of income should go to top earners, they actually opted for a figure in excess of the reality – about 30%.
Speculating again, it’s possible here that respondents are confusing income and wealth. In extremely basic terms, income is the money you receive at the end of every week or month in your paycheque and wealth is the money that’s – hopefully – building up over time in your bank account (as well as other assets). Wealth is, indeed, spread out much more unequally than income: In OECD countries, the top 10% of wealth owners hold about half of all household income, according to In It Together, a recent OECD report.
Think you can do better than the million-plus people who’ve already taken part in the Compare Your Income survey? There’s still time to have a go – just follow the link below.
David Istance, Senior Analyst, OECD Directorate for Education and Skills
Education has become increasingly important worldwide, including politically. Probably the key driver for this is economic – the fundamental role of knowledge and skills in underpinning and maintaining prosperity. No argument has more political purchase today regarding education’s value than that it enhances competitiveness. These developments create an appetite for reform and innovation, often manifest as favouring “learning” over “education”, and a readiness to disrupt accepted institutional arrangements as too slow to change, too inward-looking, and too detached from the economic shifts taking place globally and locally.
This represents a very different starting point for innovation compared with the longstanding educational ambition to realise more holistic opportunities and promote individual development. From this perspective, the problem is not that the institutions of education are too detached from the economy, but that they are too close, and are pulled to narrow their curricula and instil only superficial knowledge and not deep understanding. The charge is also that education systems are profoundly inequitable, too driven by sorting and selecting and not organised for the optimisation of learning.
There is another constituency with an interest in innovation. Innovating learning environments offer a far more promising route for enhancing the attractiveness of teaching than backward-looking definitions of professionalism seen as the right of the individual teacher to be left undisturbed in his or her own classroom.
The differences of the critiques and constituencies notwithstanding, they coalesce around the urgent need to innovate the fundamentals of schooling: to address the low visibility of teacher work and their isolation in highly fragmented classroom arrangements, the low engagement of too many of the main players (especially students), conformity and highly unequal learning outcomes.
Some 26 school systems (countries, regions, networks) participated in the final part of the OECD Innovative Learning Environments project by submitting their own initiatives for innovating learning beyond single schools or organisations. The synthesis report that emerged from this project, Schooling Redesigned: Towards Innovative Learning Systems, is published today.
The report summarises the strategies that lead to innovation as a series of Cs: culture change; clarifying focus; creating professional capacity; collaboration and co-operation; communication technologies and platforms; and change agents .
The book emphasises the importance of design, and for that read “leadership”. In complex school systems, leadership can include many more actors – such as community players, families and foundations – besides those usually involved in designing curricula and classrooms. Government leadership remains fundamental, however, because of its legitimacy, breadth and capacity to unlock resources. Governments have a privileged role in starting and sustaining change, and in regulating, incentivising and accelerating it. But this does not have to mean “micro-managing”.
For example, New Zealand’s “Learning and Change Networks” is a government-initiated strategy to establish a web of knowledge-sharing networks among schools, families, teachers, leaders, communities, professional providers and the Ministry of Education. Network participants work collaboratively to accelerate student achievement in grades 1 to 8 and address equity issues.
Austria’s “New Secondary School” reform was initiated by the government in 2008 and has since been mandated to be phased in completely by 2018. It is introduced in individual schools through school-based change agents (Lerndesigners) who themselves work collaboratively as networks. The recently established National Center for Learning Schools provides materials and organisation for these change agents.
The report elaborates what an innovative learning environment would look like, not just in individual schools but across a whole system. For example, schools and classrooms would be characterised by the “buzz” of collegial activity and have many students learning outside conventional classrooms; learner voice would be prominent, including in leadership, right across school systems; educators would discuss and practice learning strategies collaboratively, and personalise these strategies for individual learners; learners and educators would use digital resources and social media innovatively for teaching, learning and professional exchanges; there would be a dominant practice of self-review and use of evidence to inform design; and there would be dense networks of collaboration across districts, networks, chains and communities of practice.
How interesting it would be to be able to measure progress towards this vision, to supplement the more conventional education statistics and indicators!
Can cross-border co-operation be a tool for the stabilisation and development of Mali and its northern regions?
This post, by Laurent Bossard, Director of the Sahel and West Africa Club (SWAC) Secretariat, is published to coincide with the International conference for the economic recovery and development of Mali at the OECD today. French President François Hollande, Malian President Ibrahim Boubacar Keïta and OECD Secretary-General Angel Gurría will open the conference at 9:30-10:15 am Paris time. The event is not open to the public but you can watch the live webcast of the opening session.
Mobile populations, transhumance and nomadic herding, a valley at the interface between the desert and the savannah, cultural diversity between Arab-Berber and sub-Saharan worlds, everything in northern Mali reminds you that this area is a transition zone between Mali and Algeria.
This characteristic that for centuries underpinned the prosperity of the Saharan-Sahelian areas has not been perceived as an asset, either under colonisation or since independence. Sahelian and West African countries look “to the south” when thinking of their development (raw material exports, consumer goods imports) while the Maghreb, Algeria in particular, turns to the Mediterranean and Europe.
For over a century, the regions of Gao, Kidal and Timbuktu have no longer been considered integrated parts of this mobile space rich in connections. They are simply “the north of a country”, contained within a border.
Trade continues to thrive however, anchored on a grid of trans-Saharan roads largely inherited from the distant past. But these activities are for the most part illegal, sometimes even serious crime.
Is it imaginable that one day trans-Saharan trade will be revived, restoring to the north the role it has always played; giving it the chance to change status from a marginal area to one of dynamism and linkage? Cross-border co-operation may be the first step towards achieving this goal.
Mali is one of the pioneers of cross-border co-operation in Africa. In the late 1990s Malian President Alpha Oumar Konaré imagined an Africa where “the concept of border would give way to that of ‘border area’, a place of bonding, sharing and exchange, where populations on both sides of the border share common schools, security posts, markets and health centres… In this way, border areas can escape the absurd colonial geometric layout and become areas of movement and solidarity for people who often share the same language and the same culture[i].”
This approach was taken up by Mali’s National Directorate for Borders with even more conviction than the 1992 Constitution, which stipulates in Article 117 that “The Republic of Mali may conclude with any African state agreements of association or community, including partial or total surrender of sovereignty in order to achieve African unity.” On the Algerian side, a December 1994 decree authorises and provides a framework for border barter trade with Niger and Mali in order to “normalise a legitimate practice based on traditional trade links between Algeria and West Africa whose habits and customs predate colonisation.”
Across the great Sahara-Sahelian areas, the concept of trans-border must be adapted. It is not a question, as in densely populated areas, of supporting and strengthening co-operation based on close proximity, but rather based on roads and markets.
On the Malian side, Gao (90 000 inhabitants) is the “metropolis” of the north. Sitting on the “hinge” that is the river, it is located 500 km from the border, as the crow flies. Kidal (30 000 inhabitants) is the last real town before the Algerian border more than 350 km away and itself located 500 km from Tamanrasset (100 000 inhabitants) in southern Algeria. These long distances do not prevent trade that binds these communities as surely as if they were neighbours.
To be useful, cross-border co-operation should, as much as possible, address “real” spaces. That is to say, it must confirm to the dynamics on the ground shaped by social and economic networks. In terms of history, socio-cultural links and trade, Tamanrasset looks as much to Niger as to Mali. Agadez (120 000 inhabitants) is the third apex in a grand triangle of cross-border co-operation. The city is located 400 km as the crow flies from the Algerian border. In between is Arlit (80 000 inhabitants). Another smaller triangle can be drawn with Tamanrasset, Kidal and Arlit as the vertices.
It is for the relevant authorities to define what could be the focus of a cross-border co-operation programme within one or the other of these spaces.
Consider hypothetically the livestock and meat sector, already at the centre of strong informal cross-border dynamics. Southern Algeria largely depends on Mali and Niger for its supplies of sheep and camels. The sale of Sahelian cattle is banned in Algeria, yet illegal importation is common. Pressures on the price of beef in the Tamanrasset market are becoming more frequent. Speaking on the subject, the President of the Tamanrasset Chamber of Agriculture said in July 2010: “Neither Mali nor Niger has slaughterhouses of the standard that could possibly supply Tamanrasset, not to mention the north. Right now, only a few butchers are engaged in live cattle trade between the two friendly countries and Algeria. But the quantities they bring are only enough for the towns of Tamanrasset and In Salah. Yet the cattle potential in these two neighbouring countries is impressive, and if investors get involved in that niche, particularly investing in abattoirs that conform to health standards, fresh beef would sell at a quarter of its current price.”
There is here perhaps is a starting point for reflection among national and local authorities in the three countries concerned, with the knowledge also that very many herders of Algerian nationality live and raise their herds in Mali and Niger.
This article is based on The Malian regions of Gao, Kidal and Timbuktu: National and regional perspectives (in French). Executive summary available in English and French.
International conference for the economic recovery and development of Mali: Northern regions at the heart of reconciliation and peace consolidation OECD, Paris, 22 October 2015. The conference brings together the Mali government and civil society, international partners, investors and diaspora, to discuss together the economic recovery and development of Mali.
[i] Cited by Adame Ba Konaré in his preface to the Jeune Afrique Atlas of Mali
Suzi Tart, OECD Environment Directorate
More than 150 countries have submitted their post-2020 Intended Nationally Determined Contributions (INDCs) to the United Nations Framework Convention on Climate Change (UNFCCC). Such contributions are vital to the #COP21 climate change conference in Paris this December. They are often met with fanfare from UNFCCC Executive Secretary Christiana Figueres, who cheer-leads the much-needed international co-operation in the realm of climate change.
Indeed, significant progress has been made since 1990, when the first assessment report by the Intergovernmental Panel on Climate Change (IPCC) was written. The use of coal has declined in 29 of the 34 OECD member countries, and greenhouse gas emissions per unit of GDP have decreased in nearly all of the 45 countries and regions that are responsible for producing 80% of the world’s greenhouse gases (that is the OECD member countries, the OECD 10 partner economies, and the EU). This decoupling of GDP from GHG emissions proves that it is possible to grow the economy while cutting emissions.
Such developments mark great progress and need to be touted as so. But they do not mean that we can become complacent with the fact that we could be doing much more. Aggregate emissions continue to go up worldwide, and many countries continue to rely on fossil fuels to power their economies. When we look at our incredible capabilities, humans are doing a mediocre job on climate.
A new OECD report, Climate Change Mitigation: Policies and Progress, shows that current emissions trends are NOT in line with countries’ targets. It finds that annual emission reduction rates need to be accelerated—sometimes at unprecedented levels—in order to meet many of the mitigation targets and goals that have been announced, let alone the standards required for a two-degree trajectory.
This is an overwhelming finding for your average citizen. So what can we do? We can start by pushing our governments to implement policies that are in line with a shift to a low-carbon lifestyle. Currently, our economies are hardwired around fossil fuels, and putting a price on carbon is essential for this shift. Emissions trading systems and taxes on energy (such as carbon taxes) are the most cost-effective policy approaches for countries to take in order to reduce their emissions, and they are being implemented the world over. Yet, the current trading schemes in place cover only a small share of emissions, and taxes on carbon are unfortunately too low to alter consumer behavior or spur technological change.
A perhaps more difficult, yet equally important approach is cutting policy support for the production and consumption of fossil fuels altogether. India and Indonesia have proven that this IS feasible. More countries need to follow suit. Fossil fuel subsidies remain widespread, and cutting them is often met with resistance from the public and other groups. It is imperative we let our governments know that we stand behind such changes to improve our system in the long-run.
Huge structural changes are required across more than the energy sector if we are to achieve our goal. Agriculture, forestry, industrial processes, and waste are all significant sources of greenhouse gases in some countries. In such cases, efficiency standards, information programs, and government support for research and development need to be implemented in these sectors as well.
While pomp and circumstance accompany the agreements being made at the international level, follow-up action needs to take place at the local and national levels. Without such action, the International Energy Agency (IEA) predicts that the world will exhaust its carbon budget for the two-degree goal by the year 2040. Time is of the essence, and our current efforts are simply not good enough. We must convince our governments to start restructuring our economies to be sustainable, and we must convince them to do this today.
The OECD’s Revised Benchmark Definition of Foreign Direct Investment: Better data for better policy
Maria Borga, OECD Investment Division
Let’s start with a quiz. Which country is the second biggest direct investor in China? Who are the largest investors in India and Russia? You probably won’t believe it, but the answers are (a) British Virgin Islands, (b) Mauritius and (c) Cyprus. It’s not a sordid tale of hot money but rather a more mundane story of companies investing abroad through a holding company or affiliate located in a third country. They might be driven by the presence of a double taxation or bilateral investment treaty, or it might simply reflect corporate strategy to invest through an existing affiliate rather than by sending cash from the parent company.
Whatever the reason, it’s all perfectly legal. But as a consequence, we sometimes know very little about who owns what. Those Cypriot investors in Russia are almost certainly owned by an investor in another country, sometimes even a Russian investor. As a result, national statistics on flows of foreign direct investment (FDI) tell us less and less about what we want to know. Who is investing in our country and where are our own companies investing? To know the truth about a country’s FDI you need a comprehensive standard for measurement, which is why the OECD produced its standard: the Benchmark Definition of Foreign Direct Investment, 4th Edition (BMD4).
BMD4 makes two key recommendations which address the problems posed by the complex ownership structures of MNEs. The first is to compile FDI statistics separately for resident special purpose entities (SPEs). But what are SPEs? The OECD defines them as “entities 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”. You may have seen images of them in TV reports about tax avoidance, when the camera shows a wall in a grubby building lined with mail boxes representing gigantic multinational firms. SPEs are often used to channel investments through several countries before reaching their final destinations. By separately compiling FDI statistics for SPEs, you can derive FDI into real businesses, giving countries a much better measure of the FDI into their country that is having a real impact on their economy. The second is to compile inward investment positions according to the ultimate investing country (UIC) to identify the country of the investor that ultimately controls the investments in their country.
This boils down to less double counting and more meaningful FDI statistics.
By recommending that countries compile FDI statistics separately for resident SPEs, BMD4 eliminates a layer of complication due to the ownership structures of MNEs.
The figure below shows the percentage of the inward stock of FDI—that is the accumulated value of investment by foreigners in the economy—accounted for by resident SPEs for 13 OECD economies. SPEs are very significant in Luxembourg and the Netherlands, accounting for more than 80% of all inward investment. SPEs are also significant in Hungary, Austria, and Iceland, where they account for more than 40% of inward investment. SPEs play smaller, but still important, roles in investment for Spain, Portugal, Denmark, and Sweden. In contrast, SPEs are not significant in Korea, Chile, Poland, and Norway.
Share of FDI into SPEs and non-SPEs, end of 2014
Source: OECD Foreign Direct Investment statistics (BMD4) database
BMD4 also eliminates the lack of transparency regarding the country of the direct investor who ultimately controls the investment and, thus, bears the risks and reaps the rewards of it by recommending countries compile statistics by ultimate investing country (UIC) in addition to the standard presentation by immediate investing country.
The presentation by UIC can shed light on another important issue: round-tripping. Round-tripping is when funds that have been channelled abroad by resident investors are returned to the domestic economy in the form of direct investment. It is of interest to know how important round-tripping is to the total inward FDI in a country because it can be argued that round-tripping is not genuine FDI. The presentation by UIC identifies round-tripping by showing the amount of inward FDI controlled by investors in the reporting economy.
We can illustrate this by looking in more detail at France and Estonia and comparing the inward stock of FDI of the top ten ultimate investors to the amounts coming from the immediate investing country.
On the UIC basis, the United States is a much more important investor in France than it appears when presented by immediate partner country. Indeed, the inward stock of the United States increases from USD 79.6 billion to USD 142.1 billion. The inward investment stocks from Luxembourg and the Netherlands drop considerably, indicating that US companies may be using affiliates in these countries to handle business done in France. French investors are the 8th largest source of FDI into France. While this indicates there is some round-tripping, it accounts for less than 4% of the inward stock of FDI in France.
Inward direct investment by immediate partner country and by ultimate investing country, France end of 2012 (USD millions)
Source: OECD Foreign Direct Investment statistics (BMD4) database
On the UIC basis, Estonia becomes its own second largest source of investment, indicating that round-tripping is more common than in France. Given that Sweden, Finland, the Netherlands, Russia, and Norway become less important as sources of investment when measured according to the ultimate investor, it appears that some of the round-tripping from Estonia is going through some or all of these countries. In contrast, the United States, Austria, Germany and Denmark are all more important sources of FDI in Estonia than the standard presentation indicates.
Inward direct investment position by immediate partner country and by ultimate investment company (excluding resident SPEs), Estonia end of 2013 (USD millions)
Source: OECD Foreign Direct Investment statistics (BMD4) database
Does removing these layers of complexity matter? Yes. Every country has a strategy to attract investment and high quality statistics must be the empirical basis for any informed policy dialogue. Following the recommendations in BMD4 produces more meaningful FDI statistics that enable us to better understand who is really investing where internationally.
Today’s OECD Technical Workshop on Foreign Direct Investment and Global Value Chains will discuss the first results of OECD work on integrating FDI statistics into the analysis of Global Value Chains to better account for foreign ownership.
For the latest FDI statistics
For information on implementing BMD4
The OECD newsletter, FDI in Figures, discusses recent developments in FDI