OECD Forum 2010: Road to Recovery: Innovation, Jobs & Clean Growth

Welcome to the OECD FORUM 2010. The theme this year is “The Road to recovery”, and we’ll be covering the sessions here on the Insights blog.

The opening session on “Innovation, jobs & clean growth” had OECD Secretary-General Angel Gurría and Italy’s Finance Minister Giulio Tremonti on the podium.

The session opened with Angel Gurría revealing that when he was Finance minister in Mexico, he earned himself the nickname Gurría Scissorhands for overseeing six rounds of budget cuts, following the collapse in oil prices. As he pointed out, he’s now in good company, with cuts the order of the day in a number of countries seeking to tackle the legacy of the financial crisis and the Great Recession, not least Italy, which yesterday announced an emergency austerity budget.

Gurría praised the courage of the Italian decision, which includes a public sector wage freeze, a six-month deferment of new state pensions, and raising the retirement age of women to 65. The budget is designed to reassure markets that Italy can support its public debt, which stands at 115.8 percent of GDP.

This desire, or need, to please the markets was the subject of the only intervention from the floor that was applauded. A speaker from Germany echoed the feelings of many, not just in the room, that all the talk last year about taming the markets had come to nothing and that it was back to business as usual. Financial markets were, he said, no longer there to provide a service to actors in the real economy seeking investment capital, but had taken on a life of their own.

Speaking to people after the meeting, none of them were convinced by Giulio Tremonti’s reply about the origins of the problems being accountancy standards and over-reliance on the use of net present value, a measure of cash flows, although there was widespread approval for reforming financial market regulation.

Another theme emerging from the floor was the to give developing countries a greater role in international affairs. One speaker from an unidentified African country said she thought the OECD concentrated too much on South Africa and should be more involved with other nations on the continent.

A speaker from Egypt echoed the concerns that nothing had changed since last year and the same old rules were still being applied despite the promises.

Angel Gurría described how the OECD is engaged with practically every country in Africa through a number of means, not least the African Economic Outlook, and that the Organisation is actively pursuing a programme of enhanced engagement with several emerging economies.

He also pointed out that the World bank had changed the weighting it uses for votes and that the chair of the IMF’s policy steering committee is an Egyptian – Youssef Boutros Ghali.

So, not much about innovation and clean growth so far, but that will no doubt change as the Forum gets in to the sessions on specific aspects such as energy, ethics and what green jobs actually are.

What a tangled web we weave!

If they added a TV screen and electronic stylus, they could sell dozens of these

If it wasn’t for Ed Roberts, who died today aged 68, blogs probably wouldn’t exist. After selling electronics kits to model rocket builders, Ed went on to design and build the Altair 8800 for MITS, a company based in his garage. The 8800 was promoted on the front page of the January 1975 issue of Popular Electronics as the “World’s first minicomputer kit to rival commercial models”.

The young Bill Gates and Paul Allen read the magazine and contacted Roberts with an offer to write software for his machine. When he accepted, they moved to Albuquerque, where MITS was located, and founded a company known as Micro-Soft. Personal computing was born, and Ed Roberts is widely hailed as its father.

It wasn’t supposed to be like that. You may have seen some variant of the forecast attributed to IBM founder Thomas Watson that the global market for computers could reach five or six. And the history of technology is full of stories of predictions that turned out to be hilariously, or tragically, wrong. There are two basic mistakes.

The first is to imagine that the future is simply an extrapolation of the present. OECD Insights: International Trade tells how in the early 1980s, AT&T hired the consultancy firm McKinsey to study cellular telephony. McKinsey estimated that by the year 2000, there could be 900 000 cell phones worldwide. Today, twice that many handsets are sold in a week. McKinsey would have been right if phones and services had stayed much as they were at the time. In 1985, a mobile phone weighed 20kg and in the UK it cost the equivalent of 320 Euros at today’s prices to rent for three months.

The second mistake is to fail to see potential connections. Telephony and computing had been around for a long time before they got together to make the Internet. 

In these cases we’re talking about technology, where companies are actively seeking to transform ideas into profits. In science, the issues are a bit different, but some of the poor thinking underlying technology forecasts is often at work.

Scientific research is routinely accused of being a waste of money. Partly, this is due to media stories like the formula for a perfect wife. At a more fundamental level, though, many people, including politicians who decide on R&D budgets, don’t understand how science works.

Often, we hear that it should be “useful”. But how do you know in advance where research might lead and what its uses could be? Take ornithology. You could make a convincing case that bird watching is a fascinating hobby, but governments shouldn’t be paying people to do it. It doesn’t have much economic value, except as a minor tourist attraction. Then along comes avian influenza, and the possibility that some national poultry industries could be wiped out, or that the virus could even mutate and infect humans. Suddenly, migration patterns, nesting habits and the like become vital pieces of information.

The same is true about another piece of news that hit the headlines this week. Researchers working in Italy discovered that toads may predict earthquakes. The scientists were studying breeding behaviour. They weren’t looking for anything remotely to do with seismology, but the finding could turn out to be a “useful” contribution to predicting Earth tremors.

One of the most positive aspects of globalisation is that connections that once would have been impractical or unimaginable are commonplace. Not just goods, but ideas and knowledge flow quickly around the world and we’re no longer surprised by Japanese whisky or Texan basmati rice or Iranian Lacanians. But we would be surprised if we knew what new combinations the future has in store.

Useful links

OECD science and innovation web site