Helping SMEs important to improve productivity growth - OECD SG

Helping small and medium-sized enterprises to close the productivity gap is likely to be important to improve overall productivity growth in the economy. To this end, the Organisation for Economic Co-operation and Development (OECD) is signing an agreement with the Hungarian government today, OECD Secretary-General Angel Gurría told the 2017 Global Forum on Productivity in Budapest on Monday.
Helping SMEs important to improve productivity growth - OECD SG

Globalisation and productivity

“Clearly, the aspect of globalisation that concerns us here is productivity," said Gurría in his opening remarks at the 2nd Annual Conference of the Global Forum on Productivity.

He noted that there is already wide-scale knowledge about the link between openness and productivity growth. The Secretary-General mentioned that an OECD paper for this conference uses firm-level data to trace productivity spillovers from global value chains.

“That paper highlights the importance of linkages with suppliers and buyers, and finds that structural policy settings can affect the size of the productivity spillovers from global value chain linkages," he added.

Gurría also warned that there remains much to learn about the relationship of global value chains to firm-level and aggregate productivity and the quantitative impact on productivity of policies that restrict trade and/or investment.

Policies to ensure that globalisation delivers inclusive growth

Gurría said policy-makers should ensure broad access to quality education, training and healthcare, to make sure everyone is able to benefit from the opportunities offered by the cross-border movements of goods, services, capital, people and ideas.

“Also, when people are negatively affected by foreign competition, outsourcing or immigration, adequate social safety nets are needed and activation policies must quickly reintegrate displaced workers into good jobs," he added.

The Secretary-General proudly said OECD has been at the forefront of international efforts to curb base erosion and profit shifting, and to increase transparency and the international exchange of tax information.

He reminded that ministers from 68 countries came to Paris just a few weeks ago to sign the BEPS multilateral convention, a key step forward. “But implementation is just beginning, and more is likely to be needed," he added.

Citing evidence that markets are being distorted by cross-border cartels (240 such cartels were detected between 1990 and 2015, with overcharges of 20% on average), Gurría called for “stronger international co-operation to tackle cross-border anticompetitive conduct".

Signing an agreement with Hungary to assist SMEs

Another aspect of ensuring vigorous competition is addressing factors that hinder the growth of small and medium-sized enterprises. Although there are exceptions, SMEs are generally far from the productivity frontier and pay much lower wages than the leading firms.

As OECD work has shown, the poor productivity growth of laggard firms has likely been a factor in the slowdown in aggregate productivity growth in recent years, and the divergence between frontier firms and others has been an important source of income inequality, Gurría said.

“Helping SMEs to close the productivity gap is thus likely to be important to improve overall productivity growth and make that growth more inclusive."

In that context, the Secretary-General said the OECD today is signing an agreement with the Hungarian government to jointly develop an SME Strategy for Hungary.

“This is our first such country-specific SME project; I hope there will be many others."

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