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Luiz de Mello and Paloma Baena Olabe
Directorate for Public Governance and Territorial
Development, OECD
Oxford, 3 Februar...
Rising inequalities
demand new
approaches to
growth
There has been growing attention to the
links between growth and inequ...
Inclusive growth is
about improving the
growth prospects of
our economies
together with a
fairer distribution of
the benef...
Gap in life expectancy at age 30 by education level, 2010 (or latest year)
Inequality goes far
beyond income and
includes ...
Source: OEC D (2014) How’s life in your region?
5
Life expectancy at birth, 2012
The regional
dimension of
inequality is o...
What is needed to deliver IG
outcomes?
A broader analytical framework that
highlights linkages -- and therefore
trade-offs...
Needed: a broader analytical framework to think about IG
Traditional approach Economics of inclusiveness
• Supply-sided: f...
Also needed: Governance systems to deliver IG outcomes; action is
needed beyond policy design to include implementation an...
Policy Design Policy Implementation Policy Evaluation
• IG challenges are identified
and understood
• A whole-of-governmen...
• Openness and engagement support inclusive problem identification
and decision making
• Transparency and integrity tools ...
What tools can we use to achieve
inclusive growth?
Multidimensional policy frameworks
Consultation and engagement:
underst...
12
qsdfdf
Assess the impact of policy across key living standards
d
HIGHER LIVING
STANDARDS
ECONOMIC CAPITAL
NATURAL CAPIT...
Multidimensional Policy Frameworks
• Request from Parliament to
government: present wealth
and well-being indicators
other...
Consultation: understanding citizen
needs, engaging citizens
14
How can we better listen to citizens and businesses
to imp...
Regulation: When does consultation happen?
Consultation on both primary and subordinate laws and regulations often happens...
Source: Scottish Government, www.gov.scot/About/Performance/scotPerforms.
Outcomes-based (i.e. concerned with good end-sta...
Responsibility for IG outcomes lies across administrative units and ministerial lines
– how do we align incentives horizon...
Mechanisms to inform policy: can ex ante RIA better guide policy-
making for IG? Are other budgetary and regulatory tools ...
Mechanisms to inform policy: few OECD countries have deployed
ex post evaluation systematically
While ex ante analysis is ...
Access and reach of services: breaking cycles
of disadvantaged through opportunity
20
Action Purpose
Improve access to qua...
21
Mitigating the risk of capture
Unregulated lobbying, conflicts of interest of public officials
and opacity in political...
Summing up:
Growing number of countries and governments focusing on wider range
of objectives, including IG; solid methodo...
Comparative data, good practice, policy
discussion and policy guidance
Building blocks for Multidimensional Policy
Framewo...
Thank you.
www.oecd.org/gov
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The Governance of Inclusive Growth - OECD

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In many countries inequality is growing as the benefits of economic growth go to the richest members of society. Inclusive Growth is all about changing the rules so that more people can contribute to and benefit from economic growth. For more information see www.oecd.org/gov/inclusive-growth-and-public-governance.htm

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The Governance of Inclusive Growth - OECD

  1. 1. Luiz de Mello and Paloma Baena Olabe Directorate for Public Governance and Territorial Development, OECD Oxford, 3 February 2016 The Governance of Inclusive Growth 1
  2. 2. Rising inequalities demand new approaches to growth There has been growing attention to the links between growth and inequality • In most OECD countries, productivity growth has slowed, taking its toll on the ability of our economies to grow over the longer term • Unemployment remains high in many countries, especially among youth and the hardest hit by the crisis • Income inequality has been on the rise in most OECD countries and EMEs • Poverty has risen since the crisis, especially among children and youth 2
  3. 3. Inclusive growth is about improving the growth prospects of our economies together with a fairer distribution of the benefits of growth Source: OECD, Economic Outlook database 3 Exhibit 1: GDP growth has slowed while income inequality has increased in many countries since the crisis
  4. 4. Gap in life expectancy at age 30 by education level, 2010 (or latest year) Inequality goes far beyond income and includes other aspects of life that matter for people’s wellbeing, like education and health Source: Eurostat database complemented with national data from Austria, Netherlands and Switzerland. 4 Exhibit 2: Outcomes in education correlate strongly with health conditions
  5. 5. Source: OEC D (2014) How’s life in your region? 5 Life expectancy at birth, 2012 The regional dimension of inequality is often neglected, although “place- based” policies are often key to addressing inequality Exhibit 3: Inequalities are often higher within than between countries
  6. 6. What is needed to deliver IG outcomes? A broader analytical framework that highlights linkages -- and therefore trade-offs and synergies -- among sectoral policy objectives and tools An appropriate governance system throughout the policy cycle (from design to implementation and evaluation) 6
  7. 7. Needed: a broader analytical framework to think about IG Traditional approach Economics of inclusiveness • Supply-sided: focus on GDP as the key measure of performance • Unidimensional: emphasis on material living standards (income) as indicator of well-being • Attention to “representative agent”: focus on averages (“per capita”) • Going beyond GDP: focus on well-being as key measure of performance • Multidimensional in nature: focus on income as well as non-material outcomes (health, education, jobs) • Attention to distributional impacts (different social groups and scales) 7 Source: OEC D
  8. 8. Also needed: Governance systems to deliver IG outcomes; action is needed beyond policy design to include implementation and evaluation 8
  9. 9. Policy Design Policy Implementation Policy Evaluation • IG challenges are identified and understood • A whole-of-government vision for IG that steers, aligns objectives • Policy frameworks tackle multidimensionality and seek policy coherence across sectors and levels of government • Solid evidence (ex ante, ex post) assesses distributional impacts • Spending decisions are aligned with medium and longer term objectives • Co-ordination, whole-of- government and accountability mechanisms enable pursuit of joined-up outcomes • Innovation in service delivery facilitates access across social groups and locations • Assessment of distributional impacts of policies on outcomes that matter for well- being • Responsive changes are made based on beneficiary assessment of services & service providers • Comprehensive evaluation approaches and feedback loops inform new policy packages (including from independent audit and control mechanisms). Each phase of the policy cycle plays a role: 9
  10. 10. • Openness and engagement support inclusive problem identification and decision making • Transparency and integrity tools help avert policy decisions that benefit the few • Participatory mechanisms promote an inclusive policy implementation process • Inclusive public sector workforce reflects society and can better engage in delivering • Access to dispute resolution enables opportunities, particularly of vulnerable groups Inclusive institutions for inclusive policy making Policy levers that promote inclusiveness: 10
  11. 11. What tools can we use to achieve inclusive growth? Multidimensional policy frameworks Consultation and engagement: understanding what citizens need Integrated, outcomes-based performance models Mechanisms to inform policy-making Access and reach of services Mitigating the risk of capture 11
  12. 12. 12 qsdfdf Assess the impact of policy across key living standards d HIGHER LIVING STANDARDS ECONOMIC CAPITAL NATURAL CAPITAL SOCIAL CAPITAL HUMAN CAPITAL Economic Growth Sustainability for the Future Managing Risks Increasing Equity Social Cohesion Multidimensional Policy Frameworks Introduced in mid-2000s Challenging staff to systematically consider how any particular policy advice fits within broader vision Requires economic growth vision to calculate distributional consequences and to other policy objectives Evaluating policies in terms of capacity to increase “opportunities and capabilities for participation in society” The New Zealand Living Standards Framework Source: NZ Treasury
  13. 13. Multidimensional Policy Frameworks • Request from Parliament to government: present wealth and well-being indicators other than GDP when tabling the annual budget • Law of 2015: 10 multidimensional KNIs (include life satisfaction, income inequality, carbon footprint) that speak to 3 societal challenges: economic, social and environmental • The goal: to report progress but also to assess impact of policies in early stages. Source: Direction du Budget Linking key government strategies to a set of well-being indicators in France 12
  14. 14. Consultation: understanding citizen needs, engaging citizens 14 How can we better listen to citizens and businesses to improve public policies and services for inclusive growth? How can we give voice to all and create conditions for greater engagement in policy-making and service delivery throughout the policy cycle? How can we effectively engage with vulnerable groups and the excluded? How can we ensure timely engagement with citizens and business?
  15. 15. Regulation: When does consultation happen? Consultation on both primary and subordinate laws and regulations often happens too late in the regulatory cycle Source: OECD (2015) 15
  16. 16. Source: Scottish Government, www.gov.scot/About/Performance/scotPerforms. Outcomes-based (i.e. concerned with good end-states) rather than output-based (i.e. concerned with measuring the volume of services produced). 16 Integrated, outcomes based performance Purpose – sets out the direction and ambition for Scotland 11 Purpose Targets – high level targets that show progress towards the Purpose 5 Strategic Objectives - describe where the Scottish Government will focus its actions 16 National Outcomes – describe what the Scottish Government wishes to achieve over the years to 2017 50 National Indicators– enable the Government to track its progress towards the Purpose and the National Outcomes The “Scotland Performs” framework:
  17. 17. Responsibility for IG outcomes lies across administrative units and ministerial lines – how do we align incentives horizontally? • In its move towards a national well- being framework, horizontal teams to develop indicators of “well-being, resilience, and sustainability.” • Together with other measures (rotation, horizontal budgets) building space for cooperation. The case of Israel: • Getting departments to work together a major priority. • 20% of remuneration package of deputy ministers (department heads) is based on performance and 75% of this is based on performance on horizontal issues. • Assistant deputy ministers – 50% performance pay. The case of Alberta, Canada: 17 Integrated outcomes-based performance models: performing across silos
  18. 18. Mechanisms to inform policy: can ex ante RIA better guide policy- making for IG? Are other budgetary and regulatory tools needed? Some regulations Major regulations All regulations Number of jurisdictionsSource: OECD Regulatory Outlook (2015) Distributional impacts are not among the most common objectives of RIA
  19. 19. Mechanisms to inform policy: few OECD countries have deployed ex post evaluation systematically While ex ante analysis is widespread, there is much room for increasing the use of ex post evaluation of regulations Source: 2014 Regulatory Indicators Survey results 19
  20. 20. Access and reach of services: breaking cycles of disadvantaged through opportunity 20 Action Purpose Improve access to quality services such as education, healthcare, justice, etc. • Breaks ingrained cycles of disadvantage • Delivers higher-paid jobs, better living standards longer, more fulfilling lives for marginalised groups Accelerate digital transformation, promote innovation, update public sector skills • Reduces fixed costs of service delivery • Improves quality, reach and targeting of services Better understand user needs and experiences • Improves quality, reach and targeting of services Ensure collaboration between service users, providers and professionals • Public services that are better designed and delivered
  21. 21. 21 Mitigating the risk of capture Unregulated lobbying, conflicts of interest of public officials and opacity in political finance may enable policy capture Manage lobbying activities with implementation of a lobbying registry, code of conduct and monitoring pre/post public employment. Ensure the integrity of policy making by implementing asset and private interest disclosure requirements by public officials. Allocate sufficient human and financial resources to electoral and other monitoring and accountability bodies and map potential integrity and compliance risks. Policy capture occurs when the interests of a narrow group dominate those of other stakeholders
  22. 22. Summing up: Growing number of countries and governments focusing on wider range of objectives, including IG; solid methodological work under way (e.g. well-being) This change is requiring fundamental changes to how public sector works and organizes itself (e.g. horizontality, coordination) It also imposes new information needs to inform decisions and requires new efforts to (i) articulate a centralised framework (e.g. in the hand of Treasury or central government) with agency-specific frameworks, and (ii) aligning high-level objectives and instruments with sectoral objectives and policy tools. This must be accompanied by an inclusive policy-making process (e.g. consultation, avoidance of capture, transparency, openness, etc.) 22
  23. 23. Comparative data, good practice, policy discussion and policy guidance Building blocks for Multidimensional Policy Frameworks New approaches for traditional tools to better inform policy-making New forms of service delivery, through the combined potential of data, digitization and innovation Better data on impact of public sector on outcomes that matter for wellbeing Deepen work on inclusive institutions (gender in public life, integrity frameworks)
  24. 24. Thank you. www.oecd.org/gov

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