New economics to support smarter regulation (OECD Forum)

On 28-29 May, the OECD held its Forum, its largest annual open event where economists and policy makers from around the world meet to discuss latest findings and chart the future. The Organisation also uses this high moment to deliver some of its flagship products, such as the Economic Outlook, or the new rankings of its Better Life index, both topics widely reported in the news, or announce diplomatic breakthroughs (for instance the signature at OECD of anti-tax haven instruments). It was expected that an organisation committed to "better policies for better lives" would have a lot to offer smart regulators, whose mission is to ensure more efficient public policies by assisting decision makers with better evidence about economic, social and environmental outcomes. Perhaps the best introduction to the abundant new literature is the 28 May press release "New approach to globalisation and global value chains needed to boost growth and jobs" which provides an entry point to the technical studies on a number of new topics and initiatives. Among the most significant issues is the shift to the "global value chain" approach to international trade, which is based on the fact that "what you do" (the activities of a firm or country) matters more to growth and employment than "what you sell" (the final product). The past decades have witnessed a strong trend towards the international dispersion of value chain activities such as design, production, marketing, distribution, etc. and this challenges how we look at economic globalisation and in particular the policies that we develop around it, such as trade, investment, competitivesss and other policies. A new book on the topic Interconnected Economies: Benefiting from Global Value Chains was also released during the Forum.
Another report released at the same time, New Sources of Growth: Knowledge-based capital (KBC), finds wide differences between countries in the levels of KBC investment, which includes inter alia IT systems, innovative property and economic competencies (including brand equity, firm-specific human capital, networks and organisational know-how). A finer approach to investment is therefore now necessary.
All these new concepts and data series need to be accommodated by smart regulation tools, such as RIA (a new way of calculating economic impacts), ex-post evaluation (which impact to look for), if regulatory policy to keep up with its mission: quite a challenge but an appealing task, so watch this space !