G20 Hangzhou Leaders Summit
Session 1: Strengthening Policy Coordination and Breaking a New Path for Growth
Remarks by Angel Gurría,
Hangzhou, China, Sunday 4 September 2016
(As prepared for delivery)
President Xi, Friends,
The world economy is stuck in a low-growth trap. Trade growth is historically low, cross-border investment is very weak, and growth in the emerging economies has slowed considerably.
In addition, we are seeing the convergence of two mega-trends: At no point in the past 30 years has productivity growth been lower, nor income inequality been higher.
Against this background, let me commend the Chinese Presidency for taking up the challenge of harnessing the potential of innovation, technology, and of the digital economy to kickstart productivity while at the same laying the foundations of a more inclusive growth. The G20 Blueprint for Innovative Long-term Growth, constitutes a very welcome outcome of the Hangzhou Summit.
Let me provide a concrete illustration of the magnitude of the technological and digital revolution underway: if an average worker in 1982 had wanted to purchase a computer with the power of an iPad2, it would have cost him more than the 360 years’ of wages!
Thus, innovation is essential: in the last 20 years, it contributed one-third of GDP growth in advanced economies. As President Xi stressed in his opening remarks at the B20 gathering, China, has recognised the imperative of harnessing science, technology, innovation and the digital economy to underpin a new growth model and continue to improve the quality of life of its citizens.
To reap the full benefits of the digital and new industrial revolutions, G20 countries:
But to achieve the benefits of these new sources of growth, we must step up our efforts to implement an ambitious structural agenda, precisely at a time when the pace of reforms is losing momentum.
OECD data show that there is a widening productivity gap between corporations which are at the “technological frontier” and the rest of the firms. This reflects the high concentration of innovation across countries and firms – over 60% of all global R&D is accounted for by 250 corporations – and the fact that innovation is not diffusing well in the economy.
This trend is compounded by the slowing pace of business creation, the “start-ups”that introduce radical, game-changing innovations. In the United States, for example, the share of young firms in total businesses fell from around 22% to about 16% in the last 15 years.
We therefore need to accelerate reforms aimed at enhancing regulation and strengthening competition. Time is running out! Our joint OECD-IMF-World Bank assessment shows that the implementation of our collective goal to lift G20 GDP by an additional 2% by 2018 is only half accomplished.
Distinguished Heads of State and Government,
Policy matters! The G20 must take bold action to escape the low-growth trap, tackle slowing productivity growth and rising inequalities, and make the most of technological progress, while minimizing its disruptive impact.
The OECD stands ready to support this effort to achieve, in the words of our Chinese hosts, an innovative, invigorated, interconnected and inclusive growth.