Weak economic growth prospects and rising risks should push governments to implement reforms designed to boost growth and bolster incomes, says the Organization for Economic Cooperation and Development (OECD) in a new report.
Against a backdrop of softening growth, macro trends such as population aging, environmental degradation, globalization and digitalization are shaping economic development, the OECD said.
To manage the impact of these trends, governments should prioritize structural reforms that “boost long-term growth, improve competitiveness and productivity, create jobs and ensure a cleaner environment and equal opportunities,” it said.
“As growth is slowing down, and new technologies are rapidly transforming our economies, it is urgent to pursue reform efforts to boost inclusive and sustainable growth,” Angel Gurría, secretary-general of the OECD, said in a statement.
While these priorities are different for each country, the OECD said that a common objective should be equalizing opportunities across workers and firms.
In advanced economies, shifting taxation from income to property would boost growth, it said, adding that better public sector efficiency and creating the conditions for business innovation are also critical.
“Opening up markets to entry, competition and foreign trade and investment is essential for innovation, the diffusion of digital technologies and ultimately productivity growth and social inclusion,” it noted.
Additionally, the OECD called for an increased focus on reforms to make growth environmentally sustainable.
“The report suggests countries make better use of environmental taxation, phase out agricultural subsidies and environmentally harmful tax breaks, and take additional steps to reduce emissions from transport, including more investment in better and low-emission public transport,” it said.