The main sector of economic activity in West Africa consists of feeding its population

west african papersLaurent Bossard, Director, OECD Sahel and West Africa Club (SWAC) Secretariat

In launching the new “West African Papers” series produced by the OECD Sahel and West Africa Club Secretariat, T. Allen and P. Heinrigs have reflected on the region’s food economy opportunities, providing us with a useful and necessary occasion to look back and measure the extent of changes that have taken place.

I’m old enough to remember the West African agriculture – and especially that of the Sahel – that existed in the middle of the 1980s. One could (already) witness the power of demographic growth. Between 1960 and 1985, the population of the Sahel had doubled and the urban population had increased fivefold. But farming did not keep pace. Excluding weather variations (people were just emerging from the terrible drought of 1983), this 25-year period revealed an increase in imports to the tune of 8% per year. In his 1987 book, Le sahel face aux futurs (The Sahel: Facing the Future), Jacques Giri was already sounding the alarm: “Overall, the Sahelian food production system has remained very traditional, very vulnerable to drought and not all that productive. It has not adapted in terms of quality, quantity or needs […]. The region is increasingly dependent on outside sources and, in particular, on food aid. The return of more favourable weather conditions has not led to a decrease in this dependence.”

A significant portion of the region’s “imports” were, in reality, related to food aid, which had practically become institutionalised since the middle of the 1970s. While it’s true that Europe – whose grain production had doubled between 1970 and 1985 – was not averse to providing this type of aid, this state of affairs was not sustainable and the prospects were worrisome.

Farmers in the Sahel and in West Africa were clearly divided into two extremely unequal halves. On the one hand, the majority practised subsistence farming, and a large proportion of that majority did so with self-sufficiency in mind. Markets only played a marginal role in producers’ lives, especially as, in a number of countries, prices were set by ministries and commercialisation was – in theory, at least – a state monopoly.

On the other hand, export crops were enjoying a major boom, compelling a minority of small farmers to “modernise”. Stabilisation funds supported by the international community guaranteed purchase prices for producers, irrespective of global prices. This was the case for cotton, the production of which surged from the beginning of the 1970s onwards, or for cocoa and coffee in Côte d’Ivoire and Ghana. Groundnuts, meanwhile, offered great benefits for Senegal, Gambia and Niger, until the northern countries realised that they could produce oilseed crops at home at a lower cost.

But overall, the prospects were poor: demographics and towns would lead to a relentless increase in the food deficit. Revenue from export crops would not be sufficient to fund imports; structural food aid could not last.

More than three decades later, it appears that what we believed to be the cause of the problems (urbanisation) has in fact been the driving force behind spectacular agri-food development. By growing and multiplying, towns polarised a large part of the farming world, dragging it into the market. In doing so, they sparked the emergence and development of a large number of essential professions, all along the increasingly complex food chain,  both upstream and downstream of production: tool manufacturers and repairers, fertiliser and grain sellers, traders (collectors, wholesalers and retailers), labourers, packers, transporters, processors and restaurant owners. And this is not taking into account all the activities that enable the aforementioned to perform their jobs – take for example, those that wait by the side of the road to replace the punctured tyres of passing lorries.

In 2010, this food economy represented USD 178 billion, which equates to 36% of the combined GDP of all the countries in West Africa (likely around USD 240 billion in 2015). It is the top economic sector of the region and is experiencing strong growth. The move to extend the market has opened up new opportunities both upstream and downstream of agricultural production, which now represents just 60% of the food economy.

Today, the great challenge for farming lies less with crop exports and more with the economic opportunities offered by the regional market. Two-thirds of what West Africans consume is commercialised. A significant and fast-growing part of it is processed. The future of the agri-food sector is highly promising in terms of development and jobs. Taking more of an interest in the new activities developing along these value chains will also offer opportunities to women, who are especially prevalent in the processing and food distribution segments.

Public policies must be adapted to match these real-world changes.

Useful links

SWAC work on regional governance of food and nutrition security

West Africa: Security crisis and food crisis Laurent Bossard on OECD Insights

Moving beyond agriculture: It’s food that matters Thomas Allen on OECD Insights

“A temple of growth”: The OECD and economic growth as its organisational ideology

HegemonyToday’s post is from Matthias Schmelzer of the University of Zürich, who has just published The Hegemony of Growth. The OECD and the Making of the Economic Growth Paradigm.

One of the OECD’s major tasks is to “redefine the growth narrative”, as stated repeatedly by Secretary-General Angel Gurría when specifying his mandate at the helm of the Organisation and at many high-level events since. For example, at the Ministerial Meeting in June 2016, the industrialised countries’ think tank lamented that the world economy is stuck in a “low-growth trap”, but faced with growing inequality, decreasing levels of well-being and climate change, Gurría also claimed that the OECD was inventing a new “growth narrative” aimed at overcoming the focus on GDP by promoting qualitative, inclusive, and green growth.

However, is this search for a new growth narrative really new? Taking a close look at the Organisation’s long history since the 1940s reveals that this is an ongoing quest full of arguments, episodes and dynamics well-worth studying if one wants to understand the OECD’s current difficulties in coming to terms with the predicament of growth.

The OECD is the international organisation most closely associated with economic growth: growth is its defining policy goal, it is the first aim in the OECD Convention, which prompts countries “to achieve the highest sustainable economic growth,” and growth has until nowadays been discussed centre-stage at all important meetings. One is thus tempted to interpret the focus on economic growth as the organisational ideology of the OECD, which was described by one of its most influential directors in the 1960s as “a kind of temple of growth for industrialized countries.”

In my new book I analyse the history of the OECD and its predecessor, the Organisation for European Economic Co-operation (OEEC), in order to understand, how economic growth became the primary goal pursued through policymaking in modern societies. I researched the archives of this organisation and of some of its key member countries, read texts by key protagonists on growth theory, growth debates and the critique of economic growth, and discussed my arguments with colleagues around Europe, North America, and Japan.

The book that resulted is both profoundly historical – retelling in detail the making and remaking of the growth paradigm in the second half of the twentieth century – and topical for current discussions. It argues that the pursuit of economic growth is not a self-evident goal of industrialised countries’ policies, but rather the result of a very specific ensemble of discourses, economic theory, and statistical standards that came to dominate policymaking in industrialised countries under certain social and historical conditions in the second half of the twentieth century.

Already at the Organisation’s first Ministerial meeting in November 1961, the OECD set a growth target – to increase the combined GDP of its member countries by 50 percent within a decade. It is important to note, however, that “sustainable growth” in the OECD Convention – even if often otherwise stated – does not refer to “sustainability” in the modern sense. Since the Brundtland Commission’s famous 1987 report, sustainable development is understood as “development that meets the needs of the present without compromising the ability of future generations to meet their own needs” and aims at balancing economic, social and environmental issues. Within the context of the OECD, however, “sustainability” was understood in a strictly economic sense, meaning growth that is non-inflationary and does not destabilise the balance of payments.

Environmental concerns entered the OECD from the late 1960s onwards. In fact, it was a group of scientist and civil servants around the OECD’s science directorate that first launched a global debate about the “problems of modern society” and then founded the Club of Rome, whose 1972 report “Limits to Growth” became a hallmark of growth criticism. The OECD’s history since then can partly be interpreted as a continuous effort to redefine growth to account for the apparent failures of GDP statistics and growth-oriented policies.

However, while in the following almost five decades growth has been reframed as “sustainable”, “qualitative”, “inclusive” and “green”, the OECD’s major advice stayed in the quantitative framework. The OECD still advocates to “make growth the number one priority.” Symptomatic for modern states, this can at least partly be attributed to the Organisation’s silo structure, in which social and environmental concerns are not integrated into the key debates in the economics department. In this vein, a recent study by the London-based Institute for Human Rights and Business (IHRB) and the Heinrich-Böll-Foundation argued that the OECD’s advice on infrastructure investment – all geared towards increasing growth – thwarts the climate goals agreed to in Paris last November.

In fact, recent years, in particular in the context of reflections on the underlying causes of the world economic crisis, have seen an ongoing controversy within the OECD about the status and understanding of economic growth that culminated in the “New Approaches to Economic Challenges” (NAEC) initiative. In March 2016, I was invited to present the book in the context of the OECD’s NAEC seminar, resulting after a comment by former OECD director Ron Gass in an interesting discussion that revolved around what is currently labelled the “triangle” within the OECD – the relationship between the economy, society and nature.

This controversy, a critical analysis of the OECD’s history suggests, is complicated by the fact growth is the organisational ideology that defines not only the OECD’s core tasks but also its identity. Based on its longstanding history of promoting – but also questioning and further developing the growth paradigm – and also due to its functions – a think tank, ideational artist, forum – the OECD is in a particularly privileged position in taking a lead role to really advance towards a post-growth narrative for the early industrialised world. In this vein, the OECD could contribute to developing a societal narrative that leaves the policy focus on growth behind, because growth is a means to other ends – a means that, while arguably advantageous for a certain historical period, might become an obstacle for another.

Useful links

In The Hegemony of Growth. The OECD and the Making of the Economic Growth Paradigm, (Cambridge University Press, 2016) Matthias Schmelzer presents a critical examination of the historical trajectory of the OECD since the 1940s, setting it in the context post-war reconstruction, the Cold War, decolonization, and industrial crisis. The book has received three renowned prizes, including one from the International Economic History Association (IEHA)

OECD History Project at the University of Zürich, Switzerland

NAEC Seminar with Matthias Schmelzer

Hegemony NAEC seminar

Communicating trade and investment responsibly

biacBernhard Welschke, Secretary General, Business and Industry Advisory Committee to the OECD (BIAC)

The OECD offers a wealth of data and analysis illustrating that investment and trade can strongly support the competitiveness of our economies, the efficiency of markets for consumers, the potential for innovation, and—yes—the quality of employment. Of course, open markets raise the stakes for companies and their workers in a competitive environment. But policies that enforce rules for multilateral trade and that encourage governments and social partners to invest in education, training, and skills will ultimately enable our economies to trade up, and not down. In fact, OECD research shows that companies that are involved in international trade offer better working conditions, better salaries, and can reduce informality.

We also know that trade and investment are questioned by some, and unfortunately the arguments are increasingly emotional, if not irrational. And in spite of some modest improvements, barriers to market for trade and “foreign” direct investment exist in abundance, with significant adverse effects on growth and productivity. We often forget that trade and investment have pulled hundreds of millions of people out of poverty and are responsible for much of the convergence we see between living standards globally across countries.

Protectionism remains a real threat, and not many understand the severe consequences for productivity if global value chains are or compromised or even interrupted. In fact, the OECD can exactly show this for individual countries and even sectors.

We are all challenged to communicate responsibly on the opportunities that come with open markets. Clearly, it is counterproductive to vilify trade and to use it for campaigns of all sorts. We need both, a strong and reliable multilateral trade regime, and a drive to reap the benefits of regional integration—including TPP and TTIP. If done right, these goals should be compatible and enforce themselves mutually. And the great potential of trade in services is still to be developed, with important tools such as the OECD Trade in Services Restrictiveness Index pointing to the cost of the many barriers in this sector.

One more word on investment: there is a rambling debate on investor protection, and some question if International Investment Agreements—along with Investor State Dispute Settlement schemes—compromise “the right to regulate”. This is another example how an important debate can be hijacked for populism. Of course, states should have the right to regulate, but not expropriate. It should surprise nobody that high-standards for the protection of investors against measures that contradict earlier agreements are essential for a pro-growth policy environment—and in particular for long term investment in infrastructure. It is important that that these discussions are put back on a factual basis and that misinterpretations are effectively addressed. The OECD is in a unique place to explain why international investment agreements matter, and how they contribute to economic prosperity worldwide. Governments and business, with support and evidence from the OECD, must step up in their efforts to explain the virtues of trade and investment more convincingly to the public.

Useful links

BIAC Policy Group on Trade and Investment

OECD work on trade

OECD Conference on investment treaties: The quest for balance between investor protection and governments’ right to regulate 14 March, 2016, OECD Paris

International trade: Free, fair and open? OECD Insights

BIAC stands for business

Mexico’s future will be decidedly ‘Open’

Mexico open dataBarbara Ubaldi, Head of the Unit, Digital Government, Open Data and Data-driven Public Sector, OECD and Arturo Rivera, Open Data Policy Analyst, OECD

When hurricane Patricia made landfall near Cuixmala, Mexico, on the evening of October 23, 2015, it had already intensified to a Category 5. Over the course of the day, meteorologists had watched with disbelief as the storm grew from a common tropical storm to a monster with winds of up to 320 km/hour and sustained winds of 265 km/hour. Hurricane Patricia would go on to become the strongest hurricane ever recorded in the Western Hemisphere. While scientists were scratching their heads, attempting to understand the storm’s explosive escalation, people on the ground, not just in Mexico but around the world, were piecing together a real-time puzzle that would identify the storm’s path and mobilise all the resources possible to keep populations out of harm’s way. Using openly available data sources, critical information from a myriad of sources were interlinked, including demographics, health facility locations, power infrastructure, road networks, airports, topography—combined with steady updates from international organizations regarding the hurricane’s location, path and speed. Armed with 38 sets of critical databases, some 400 global volunteers mapped 9 thousand kilometres of roads and 90 thousand buildings and hotels and potential mudslide zones, providing over one million people vital information in real time.

This is just one dramatic, real-life example of how open data can improve—and even save—lives, on a potentially massive scale. But, open data is also about bringing a broad range of innovative services to citizens, a goal to which Mexico is firmly committed, backed by high-level political support. What is open government data? It is government data that is made freely available so that it can be repurposed in new, value-added services and products. Towards this end, Mexico has successfully put in place, its central open data portal, and has developed technical and regulatory guidelines based on international open data principles. This has resulted in the gradual publication of data by all levels of government in Mexico. Currently 200 public institutions have published over 12,000 databases generating over 300,000 downloads.

A good start, but Mexico wants to do better

Convinced of the potential of open data, Mexico is ready to take it to the next level, transforming promises into public value and impact. It means strengthening the capacities and skills of the Mexican population and its own public sector.

But this can’t happen in a vacuum. It involves a challenging and complex process that weaves together educational policy (e.g. educational programmes offered to meet the evolution and demand of skills of an innovative digital economy), ICT policy (e.g. increasing home-based internet access and broadband connections – relevant when thinking  about cloud-based services and their relevance for data management and big data), and open data policies themselves (e.g. the publication of government data based on a demand-driven approach contributes to data reuse, a necessary condition for value creation).

For Mexico, the federal government is assuming the role as a catalyst for value creation. Yet the centre of government needs to invest further resources to engage stakeholders and to better understand data demand.

The benefits go beyond value-added services. Open data can also be an enabler of sustainable development. But this requires two preconditions: a growing demand for skills (e.g. data scientists, data analysts, programmers) must evolve as data-oriented businesses, start-ups and entrepreneurs become stronger players, met by a steadily growing pool of data-literate and skilled professionals.

For the government to fulfil its role as catalyst, skills are also needed within public sector institutions. With more than 3,000 civil servants trained in the past year, the Mexican government is pursuing this goal aggressively. These efforts could be reinforced with educational programmes that support the development of skills across specific user groups such as students and entrepreneurs. The government could also collaborate more deeply with data-driven start-ups, and reach out to more local actors to support open data initiatives at the local level. The efforts of stakeholders, both across public institutions and locally, will increasingly have to be aligned with the goals of the National Open Data Policy and the National Development Plan to multiply the impact of open data.

Like Mexico, now more than ever, OECD governments are acknowledging their essential role as a catalyst within their own national open data ecosystems. The OECD Open Government Data Reviews analyse the implementation of such initiatives in countries such as Korea, France, Spain and Brazil. Mexico’s recently-completed review unveils the government’s efforts to coordinate its multiple initiatives as it positions itself as a central force in the transformation towards a data-driven economy. One important step in this direction is the launch of the Open Data Startup Hub “Labora” during the OECD Ministerial for the Digital Economy held in Cancún on 21-23 June.

But Mexico’s efforts are also helping the public sector to be more efficient. The “Datalab” initiative – developed in co-operation with the Center for Research and Teaching in Economics (CIDE) – shows the willingness of the Mexican Government to bring talent from outside the government to improve public sector capacities to use, reuse and exploit data for better public policies.

The Mexican Government will need to feed and understand the data demands of the skilled re-users ready to transform ideas into value-added products and services. Multi-stakeholder collaboration is crucial for this to happen. Universities, public sector institutions, students and businesses will have to work together as partners within an open data ecosystem in order to fully reap the potential of open government data and contribute to business and civic innovation across Mexico.

Useful links

Open Government Data Review of Mexico

OECD & Digital Government

Open Government Data
Directorate for Public Governance and Territorial Development

Mexico’s Open Data Startup Hub ‘Labora’

Mexico’s Datalab

Tackling the productivity paradox: The OECD Global Forum on Productivity

GPF-logoCatherine L. Mann, OECD Chief Economist and Head of the Economics Department, and Andrew W. Wyckoff, Director, OECD Directorate for Science, Technology and Innovation.
Today’s post is also being published on the OECD Ecoscope blog

The nexus of slowing productivity growth and rising inequality is capturing the attention of policymakers and researchers.  The productivity slowdown, its causes, and the link with inclusiveness will be discussed on 7-8 July in Lisbon at the first Annual Conference of the new Global Forum on Productivity, which was created by the OECD in collaboration with a number of Member and non-Member countries.

The fact that productivity growth is slowing in most countries is a puzzle, often referred to as the “productivity paradox”, because you would expect the opposite to happen during a period like the current one where many new technologies are being introduced, more firms and countries are integrated into global value chains, and workers are more highly educated. The crisis may be part of the explanation, but OECD data show that productivity growth has been slowing since the early 2000s in Canada, the United Kingdom and the United States, and even longer, since the 1970s, in France, Germany, Italy and Japan.

A recent OECD study on The Future of Productivity argues that the economic forces shaping productivity developments can be better understood by focusing on three types of firms: the globally most productive (“global frontier” firms); the most advanced firms nationally; and those lagging behind. This suggests a more nuanced picture than simply looking at the overall figures. Labour productivity in global frontier firms increased at an average annual rate of 3.5 per cent in the manufacturing sector over the 2000s, compared to 0.5% for non-frontier firms.

This gap in productivity growth between the global frontier and other firms raises questions about the ability of the most advanced firms nationally to adopt new technologies and knowledge developed by the global leaders, and for the firms trailing them at national level to catch up. Speaking at the China Development Forum in March 2016, the OECD Secretary-General put it like this: “It’s clear that the knowledge and technology diffusion “machine” is broken”, and called on governments to implement structural reforms to promote trade, encourage innovation, and boost competition to fix the machine.  At the same time, a new OECD report, The Productivity-Inclusiveness Nexus, looked into the linkage between these productivity patterns and rising inequality identifying a number of factors that underpin both and thus deserve additional research .

Governments are already thinking about these issues. In the US for instance, the February 2015 Economic Report of the President stated that “The ultimate test of an economy’s performance is the well-being of its middle class. This in turn has been shaped by three factors: how pro­ductivity has grown, how income is distributed, and how many people are participating in the labour force”. Other OECD governments have productivity high on their agendas, too. These include Mexico’s seeking to “democratise productivity” through its new National Productivity Council.  Mexico is not alone: Chile’s president Michelle Bachelet has established a “Productivity, growth and innovation agenda.” Improving productivity is seen as the key to future well-being outside the OECD, too, for instance by the Chinese Academy of Sciences: “the real potential for sustaining Chinese growth is in improving productivity.” And the European Commission has advised countries to establish Competitiveness Councils to deal, among other things, with productivity-enhancing policies.

The OECD proposes a three-pronged approach to boosting productivity: help the firms that are the most innovative at a global level and facilitate the diffusion of new technologies and innovations from the global frontier firms to firms at the national frontier; create a market environment where the most productive firms are allowed to thrive, thereby facilitating the more widespread penetration of available technologies and innovations; and improve the matching of skills to jobs to better use the pool of available talent in the economy.

Some will argue that we don’t know how to ensure that all the factors that contribute to productivity growth will work together, Robert Samuelson for example: “There are always rhetorical solutions: more infrastructure spending; better schools; simpler taxes; more research. Though some policies may be desirable, there’s no guarantee they will improve productivity. Influencing productivity is hard because it depends on so much (management and workers, technology, market behaviour, government policies and more).”

Given the complexity of the issues and their interactions, the Global Forum on Productivity will share analysis, data, experience, and ideas among OECD and non-member countries. The Forum is a practical, interactive tool that will be useful for those inside or outside governments seeking answers to three questions:

  • What factors can explain the productivity slowdown?
  • What can countries do to improve future prospects for productivity growth and innovation?
  • What can countries do to improve the design of institutions seeking to promote higher productivity and inclusiveness

At the 2016 meeting of the Global Forum on Productivity around 200 participants from 43 OECD and non-Member countries will look at the role of public policy in stimulating productivity growth; productivity spillovers, diffusion, and public policies; divergence in productivity and implications for inclusion; the link between trade, global value chains and productivity; getting institutions right for productivity-enhancing policies; public sector productivity; and agglomeration economies and productivity (the benefits for firms of being located near each other).

Useful links

The Future of Productivity

The Productivity-Inclusiveness Nexus

Promoting Productivity & Equality: A Twin Challenge