Competitiveness, Economic Performance, and Structural Polices: An OECD Perspective
Competitiveness, Economic Performance, and Structural Polices: An OECD Perspective
This chapter views competitiveness as a gauge of the extent to which policies create the right environment for output maximization. By focusing on output-enhancing policies, it rests on the plausible assumption that gross domestic product remains, so far, the least imperfect and best understood of aggregate welfare indicators. The chapter is organized as follows. Section 2.2 briefly diagnoses the recent interruption of the convergence in material living standards across Organization for Economic Cooperation and Development (OECD) countries. Sections 2.3 and 2.4 survey what recent OECD research, and the empirical literature more broadly, tell us about the policy drivers of labor productivity and labor utilization. Based on these findings, Section 2.5 draws country-specific policy lessons for lagging countries, focusing in particular on Japan and Europe, and emphasizing that there is neither a single European story nor a single way forward. Section 2.6 discusses why it has been so difficult to undertake needed reforms in practice, and builds on recent empirical research to identify possible ways of overcoming existing political economy obstacles. Section 2.7 concludes by drawing some implications for the ongoing academic debate about the drivers of transatlantic divergences in living standards.
Keywords: OECD, labor productivity, labor utilization, living standards, competitiveness
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