This week, the Organization for Economic Co-operation and Development (OECD) released its latest "Going for Growth" report, which argues that, as governments remove or scale back measures put in place to prevent economic collapse, they should transition their policy focus to spurring economic growth for the long-term and raising living standards. OECD Chief Economist Pier Carlo Padoan noted at the release of the report, "Governments should now phase out some of the short-term crisis-management emergency measures. Many of the initiatives that have been taken to sustain activity during the crisis will soon no longer be needed." The report warns that unemployment is likely to remain higher that pre-crisis levels and investments will likely be riskier because of the greater cost of capital. The report identifies five priority areas for each member country, with the following three measures consistently mentioned for immediate action:
- increase spending on training and job-search and the development of correct incentives for the unemployed;
- move the focus of taxation from income to consumption and leave intact tax measures favoring longer term stability, like research and development credits and grants; and
- enhance competition through reduced obstacles to entering new markets and phasing out support for inefficient industries through programs like "cash for clunkers."
The Going for Growth report, for the first time, also recommends reforms for Brazil, China, India, Indonesia and South Africa, the five countries with which OECD has a policy of "enhanced engagement."