It’s all about people

Minister of Foreign Affairs Espen Barth Eide adresses the OECD Observer No. 296 Q1.

Over the last five years we have lived through the severest economic crisis of our lifetimes. Issues such as crippling debt, struggling currencies, stagnating growth and a painfully slow recovery now dominate the agenda.

But the crisis is about much more than economic numbers and issues. It is about individuals and the real social drama they live through every day. Families struggling, fearing that they may lose their homes; young people losing faith in the future, worried they will never be able to find a job–the list goes on.

When hopes for the future fade, people lose confidence in governments and institutions. The economic crisis may not undermine only social development and welfare. The very foundation of democracy itself is not beyond the reach of corrosive forces. Restoring confidence is essential.

Fortunately, the picture is not all bleak. The Millennium Development Goal of halving extreme poverty was reached five years ahead of the 2015 deadline. The number of people living in extreme poverty has fallen in every developing region.

The world is becoming more interdependent than ever before, in terms of production processes, economic stability, food security, climate security, and even health and political security. This is basically good news.

We see growth and increased wealth, more and better jobs, and less poverty in many parts of the world. This will ultimately help the “old” world recover faster and with less pain from the current crisis. It also brings hope for those who have not yet been lifted out of poverty, and will help to reduce tensions between world powers.

Globalisation, when properly managed, is an important driver of inclusive growth. And economic growth, when spread widely, not just improves living standards, but eases tensions within and between societies, too.

Work by the OECD shows that inequality is on the rise in most developed countries. Also, many countries with fast economic growth have experienced widening inequality. This is a worrying trend. We know that more equality is not only a prerequisite for stable democratic societies over time, but a high degree of equality is also good for economic efficiency.

The conditions that cause extreme poverty still need to be addressed. These range from hunger, poor health, lack of education and depleted resources, to corruption and poor governance, and war and conflict.

Slow recovery and high unemployment in our countries have also fuelled fears among people in Europe and North America that the progress made in emerging economies has been at their expense. On the other hand, people in emerging economies are wary of losing their hard-earned gains. Such concerns are among the reasons why multilateral rule-making on issues ranging from trade to climate change has virtually come to a halt.

Undoubtedly, the world is better off than in the 1930s. We have learned from our past mistakes. We have developed effective global and regional rules and institutions. But we are clearly faced with a paradox: the world is woven together in interconnected value chains. We are struggling to solve common challenges. Trade is more globalised than ever before, while trade rules are increasingly being developed at the bilateral and regional levels.

Part of the challenge is geopolitical. Institutions rooted in the old world order are struggling to adapt to the emerging one. A basic question is: Are emerging countries “advanced countries with many poor people” or “developing countries with many rich people”? Until both sides agree on the answer, consensus in major multilateral negotiations may continue to elude us.

We therefore need foreign policy interests back at the negotiating table. After all, we do have a common interest in a well-functioning international order. We all have a contribution to make. We, the advanced economies, must understand that emerging economies need a transition period before taking on the same level of commitment in addressing global issues as we have. Emerging countries, on the other hand, must accept that they will eventually have to take on that level of commitment.

But addressing the current challenges is not the responsibility of governments and intergovernmental institutions alone. Our own experience has proven the value of developing strong tripartite co-operation between the government and social partners. This co-operation ensures a stable framework for business and workers, reduces the risk of conflict, and helps reforms win broad public support. Over time this model, combined with our openness to trade and investments and strong participation of women in the work force, has laid the foundation for productivity, wages and jobs to grow.

Moreover, civil society, businesses and individual consumers have a key role to play in promoting human rights, basic labour standards, corporate social responsibility and ethical trade. Civil society also has an important part to play in flagging up issues and holding governments and businesses accountable.

Respect for basic human rights and adherence to democratic principles are essential for enabling inclusive growth and job creation, and reducing poverty and inequality. A rights-based approach to development and gender equality are crucial for inclusive growth.

The challenge is a formidable one. Restoring confidence; tackling unemployment, in particular among young people; stimulating growth; and addressing inequalities will be key to unlocking a brighter future.

Addressing these challenges will require concerted and consistent action at national, regional and global levels. This effort demands we acknowledge the following:

First, the crisis is about people–respecting human rights and adherence to democratic principles is fundamental, as is confidence.

Second, common challenges require joint solutions. We need multilateral co-operation and institutions more than ever. All of us–in advanced and emerging economies alike–will have to contribute.

***

Norway chairs the annual OECD Ministerial Council Meeting on 29-30 May 2013.

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