Setting standards and building confidence

First signs that the worst of the economic crisis may be behind us are bringing relief after months of gloom. When leaders of government, international organisations, business and civil society gather for the OECD’s annual summit meetings in Paris next week, however, one question will dominate the agenda: Is enough being done to restore confidence and long-term growth and break the grip of the worst global crisis of our times?
Our economies no longer appear to be in freefall, which, after a year of ever dimmer forecasts, is good news. Still, governments must remain vigorous in their policy actions and not be distracted by “green shoots” of recovery, whether in the form of confidence surveys, or firmer energy and share prices. Encouraging as these signs are, they may reflect the stimulus from the massive government fiscal packages of recent months, and in the case of oil prices, perhaps some speculation as well. The summer edition of the OECD’s twice-yearly Economic Outlook, due out on 24 June, will point to a protracted recession. Evidence of a real recovery has yet to come through.
Let’s be clear, the crisis has dealt a serious blow to our economic systems, undermining confidence, wealth and the productive potential of entire countries. We face a future of higher unemployment and probably lower investment, which will affect performance everywhere, including in emerging markets.
The social crisis presents a costly challenge and is putting severe upward pressure on taxation. Over 11 million people in OECD countries lost their jobs in the year to April 2009, and the total could exceed 25 million by end-2010. Public resources will be stretched in cushioning the impact, assisting the unemployed, safeguarding existing jobs and creating new ones.
Little wonder governments want those green shoots to grow quickly, so they can begin unwinding their emergency interventions and relieve the debt burden. But getting those “exit strategies” right is vital. As the OECD’s Strategic Response warns, a hasty withdrawal could be counterproductive for markets and confidence.
Consumers and investors must feel that enough is being done to make the world economy stronger, cleaner and fairer than before. They must be reassured that financial markets will not collapse again, that the risk of a catastrophic “double dip” recession is avoided and that their future is relatively secure.
 We can avoid that risk, but the onus is on political leaders to honour their commitments and correct the governance, regulatory and competition failures that gave rise to the crisis in the first place. This means pushing through reforms to improve accountability and risk management and generally bring private incentives more into line with wider public interests. It means working hard to forge a more balanced, smarter and greener global economy based on well-governed, well-regulated open markets.
The mindsets of OECD policymakers must also evolve. Take development, for instance. Aid budgets are under pressure and donor support is needed to get the Millennium Development Goals on track. But efforts must go beyond that. In 2007 developing countries accounted for about a third of world trade, up from a fifth in the early 1990s. What is at stake for development and trade policy today, particularly where the Doha trade talks and efforts to resist protectionism are concerned, is the systemic health of the global economy.
Nor must governments neglect the fight against climate change. With a “green recovery”, governments can hit several targets, including reducing greenhouse gas emissions and spurring innovative long-term growth for all countries.
f there is one way governments really can win back public confidence, it is by making the world economy cleaner. That means improving governance.
The OECD is a global leader in setting the standards for the public and private sectors, thanks to its work on taxation, corporate governance principles, multinational enterprise guidelines, procurement, the anti-bribery convention, and more. Our international standards unblocked an impasse in the fight against tax havens at the G20 summit in London in April. It is time for such international standards to be developed more widely. This would not only help restore public faith, but make it easier to navigate the road to recovery. 
 This crisis is proving to be long and testing. We should feel encouraged by the international efforts made so far, but we must maintain this level of co-operation and determination. Our discussions at the OECD next week will build momentum for the next major international meeting at the G8 in Italy in July. Only by working together will we succeed in breaking the grip of the crisis and moving forward to better times.
Consumers and investors must feel that enough is being done to make the world economy stronger, cleaner and fairer than before. They must be reassured that financial markets will not collapse again, that the risk of a catastrophic “double dip” recession is avoided and that their future is relatively secure.
We can avoid that risk, but the onus is on political leaders to honour their commitments and correct the governance, regulatory and competition failures that gave rise to the crisis in the first place. This means pushing through reforms to improve accountability and risk management and generally bring private incentives more into line with wider public interests. It means working hard to forge a more balanced, smarter and greener global economy based on well-governed, well-regulated open markets.
The mindsets of OECD policymakers must also evolve. Take development, for instance. Aid budgets are under pressure and donor support is needed to get the Millennium Development Goals on track. But efforts must go beyond that. In 2007 developing countries accounted for about a third of world trade, up from a fifth in the early 1990s. What is at stake for development and trade policy today, particularly where the Doha trade talks and efforts to resist protectionism are concerned, is the systemic health of the global economy.
Nor must governments neglect the fight against climate change. With a “green recovery”, governments can hit several targets, including reducing greenhouse gas emissions and spurring innovative long-term growth for all countries.
If there is one way governments really can win back public confidence, it is by making the world economy cleaner. That means improving governance.
The OECD is a global leader in setting the standards for the public and private sectors, thanks to its work on taxation, corporate governance principles, multinational enterprise guidelines, procurement, the anti-bribery convention, and more. Our international standards unblocked an impasse in the fight against tax havens at the G20 summit in London in April. It is time for such international standards to be developed more widely. This would not only help restore public faith, but make it easier to navigate the road to recovery. 
This crisis is proving to be long and testing. We should feel encouraged by the international efforts made so far, but we must maintain this level of co-operation and determination. Our discussions at the OECD next week will build momentum for the next major international meeting at the G8 in Italy in July. Only by working together will we succeed in breaking the grip of the crisis and moving forward to better times.

Angel Gurría is the Secretary-General of the OECD