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What is key for the OECD in 2017? An open economy perspective

January 10, 2017

Noe van Hulst, Ambassador of the Netherlands to the OECD

As we start a year that Ian Bremmer (President Eurasia Group) has coined as entering ‘the geopolitical recession’, it is worth asking what the OECD focus could be in 2017. I see two key issues worth highlighting in this context. First: Escaping the Low-Growth Trap. Escape games are popular nowadays, but this one is of eminent importance to all of us. In the latest Economic Outlook (November 2016) the OECD has aptly demonstrated how we got stuck at 3% per year for the last five years. How can we get out of this low-growth trap? Now that extraordinary accommodative monetary policy has reached its limits, the OECD recommends a more balanced policy set with a much stronger role for collective fiscal action and for more inclusive structural and trade policies.

Although the Economic Outlook makes a passionate case for a more expansionary fiscal stance in many countries, the reality is that this is unlikely to happen. Partly because some countries are cautious in the light of a heavy public debt burden. Partly because they are already growing at or above potential growth, as we heard from Prof. Christoph Schmidt (Chairman of the German Council of Economic Experts) a week after the publication of the Economic Outlook. The reason that potential growth is so low has, of course, everything to do with the productivity slowdown that was – very appropriately – the main topic of the OECD Ministerial Council Meeting in June 2016. Against this background, I think we will find more common OECD ground in 2017 if we focus strongly on boosting smarter structural policies as the main avenue to get out of the low-growth trap.

Let me mention just two concrete examples. The first one is harvesting the great potential of the digital economy, both a priority of the German G20 presidency and a promising new horizontal project within the OECD. The second example is inclusive structural reforms, particularly in product markets potentially delivering short-term benefits in terms of output, investment and employment. Making reforms more inclusive is also about exploiting benefits of complementarities between product and labour market reforms, synergies (growth & equity objectives) and designing policy packages to help vulnerable groups or mitigate trade-offs.The launch of the 2017 OECD Going for Growth publication is an excellent opportunity to highlight this key point. Reinvigorating good-old competition policy will also reinforce stronger and faster diffusion of new (digital) technologies from frontier to laggard firms and hence boost average productivity. Let’s not forget that structural policies are a traditional OECD strength, an area where the OECD holds a strong comparative advantage and rightly enjoys high international credibility.

What about inclusive trade policies? Well, that is my second key issue to focus on in 2017. Global trade growth has been very weak relative to historic norms for five years. The general consensus is that the relationship between trade and GDP growth is undergoing a fundamental shift. In the ‘good old days’ we enjoyed trade growth at a rate of twice global GDP growth and now trade barely makes global output growth. According to OECD analysis this also contributes to the productivity slowdown. So what exactly is going on with trade? Is low trade growth somehow intertwined with the general global growth malaise? To what extent is this due to global value chains contracting, as reflected in OECD analysis? Is the current slowdown in global trade only natural and should not be a major concern? In any case, it is clear that the rise of trade restrictions in G20 countries, still continuing in stunning contradiction to countless G20 communiqués, surely are not helpful. Deeper OECD analysis is required to pin down more precisely how the different factors contribute to the trade slowdown. And how trade impacts labour markets and economic growth in different regions within countries.

Deeper analysis, however, is not enough. We definitely need to ask ourselves some tough questions about where the public backlash against trade and globalisation is coming from and what went wrong. And even more importantly, what we can and should do better. One area is the need to rebalance our trade and investment policies, towards a more fair, sustainable and inclusive system. Making the OECD Guidelines for Multinational Enterprises the centerpiece of trade and investment policies would be a concrete step. Another area is more effective complementary domestic policies to help people deal faster and more successfully with trade-related job losses if and when they occur. Ideally, this entails not only effective ‘safety net’ policies but also so-called “trampoline” policies offering a tangible springboard to new jobs.

In any case, it is obvious that trade and trade policies are politically more under fire now than I can remember – and I am not young.  As Martin Wolf wrote in the Financial Times “The era of globalisation under a US-led order is drawing to a close…the question is whether protectionism and conflict will define the next phase”. For very open economies like the Netherlands it is of critical importance how this ‘next phase’ will shape up in 2017 and beyond. At this juncture, the Dutch economy is growing at a solid 2% per year (in 2016 and 2017) with unemployment coming down rapidly to 5%, but the downside risks are all related to where the global economy is heading. Many other OECD member countries have a similarly high exposure to shifts in the global economy. According to Open Market Index data from the International Chamber of Commerce (ICC), more than two-thirds of OECD countries have an above average openness, as measured by observed openness to trade, trade policy, Foreign Direct Investment openness and infrastructure for trade.

The OECD has a crucial role to play, in cooperation with other international organisations, in clearly demonstrating the adverse impact of rising protectionism, in monitoring what’s happening in trade and stimulating policy dialogue on better alternatives that help global growth.  In this light it is very fitting that the OECD Ministerial Meeting in June 2017 will focus on the theme of making globalization work for all. Let’s try to come up with concrete policy improvements that can help us preserve a well-functioning open global economy.

Useful links

OECD Global Economic Outlook, November 2016

 

 

The Future of Economics: From Complexity to Commons

January 9, 2017

Paul B. Hartzog, Futurist

This article looks at three crucial insights for the future of economics: Complex adaptive systems; how technologies of cooperation enable commons-based peer-to-peer networks; and why we need complex adaptive systems to understand new economies

COMPLEX ADAPTIVE SYSTEMS

The Edge of Chaos

Complex adaptive systems has enjoyed considerable attention in recent decades. Chaos theory reveals that out of turbulence and nonlinear dynamics, complex systems emerge: order from chaos.

We learned that complex systems are poised on the “edge of chaos” and generate “order for free” (Stuart Kauffman). They are composed of many parts connected into a flexible network. As matter and energy flow through, they spontaneously self-organize into increasingly complex structures. These systems, continuously in flux, operate “far from equilibrium” (Ilya Prigogine). Beyond critical thresholds, differences in degree become differences in kind. “More is different.” (Phil Anderson)

Complexity science reveals the difference between prediction and attraction. We can know that a marble in a bowl will reach the bottom even though we cannot predict its exact path because of sensitivity to initial conditions. Deterministic chaos means path dependence, where future states are highly influenced by small changes in previous states. A typical economic example is the lock-in of the now-standard “QWERTY” keyboard.

Networks

We see network effects: adding another node to a network increases the value of all other nodes exponentially, because many new connections are possible, economically “increasing returns to scale” (Brian Arthur). Reed’s Law goes even farther, because new groups can be formed, exhibiting a much greater geometric growth. We know about “small-world,” or “scale-free,” networks, so called because there is no statistic at any scale that is representative of the network as a whole, e.g. no bell-curve average, but instead a “long tail,” mathematically a logarithmic “power law.” Some networks are robust to random failures but vulnerable to selective damage, i.e. network attacks that target nodes with a higher centrality. Furthermore, “centrality” means different things inside different network topologies. Network structure affects the frequency and magnitude of cascades. Like avalanches in sand piles, power laws create “self-organized criticality” (Per Bak).

Information Landscapes

Complex systems constitute “fitness landscapes,” exhibit cycles of growth and decline, are punctuated by explosions of diversity and periods of stasis, and show waves of ebb and flow, seen in traffic patterns. On fitness landscapes, algorithms that pursue merely maximization, without the ability to observe remote information from the landscape, freeze in local optima. Without system diversity, there is no improvement. Swarms escape because they not only read information from the landscape but also write to it, creating shared information environments.

Landscapes and occupants impart selection pressures on each other. Good employees and good jobs both outperform bad ones. Agents and strategies evolve. Adaptation can become maladaptation when selection pressures change.

Dynamics and Time

When we study the spread of disease through a forest we see a slow progression of infected trees. However, when we study the spread of fire, we see the same pattern enacted much faster.

Complex systems and their dynamics are not new. What is new is that human systems have accelerated to the point where political, economic, and social changes now occur rapidly enough to appear within the threshold of human perception. We change from slow social movement to an era of “smart mobs.” Consequently, while it may be true that we did not need the tools of complex systems in the past, because economic change was slow and did not require a dynamical viewpoint, the current speed of economic change demands this new lens.

THE EMERGENCE OF COMMONS-BASED PEER-TO-PEER NETWORKS

A crucial global economic phenomenon is the rise of commons-based peer-to-peer networks. “Technologies of cooperation” (Howard Rheingold) enable people to self-organize in productive ways. Open-source software was one first clue to powerful new ways of organizing labor and capital. “Commons-based peer-production” is radically cost-effective (Yochai Benkler). By “governing the commons” (Elinor Ostrom), shared resources managed by communities with polycentric horizontal rules, without reliance on either the state or the market, escape the “tragedy of the commons.” Our thinking about production, property, and even the state, must evolve to reflect the growing participatory economy of global stewardship and collectively-driven “platform cooperatives” (Michel Bauwens). New commons include food, energy, “making,” health, education, news, and even currency.

The rise of 3D printing and the Internet of Things combined with participatory practices yields new forms of value production, paralleling new forms of value accounting and exchange. We witness a “Cambrian explosion” of new currency species, like BitCoin, and innovative trust technologies to support them: the blockchain and distributed ledgers. Just as 20th century electrical infrastructure remained fragmented until standards enabled a connected network (Thomas Hughes), new infrastructure matures when separate solutions merge and the parts reinforce the stability of the whole.

THE FUTURE FATE OF ECONOMICS

Economics as a discipline can only remain relevant as long as it can provide deep engagement with contemporary reality. Overly-simplified models and problematic axioms cannot guide us forward. The world is an interwoven, heterogeneous, adaptive “panarchy.”

Harnessing complexity requires understanding the frequency, intensity, and “sync” of global connectivity. Analyzing many futures demands better tools. To analyze “big data,” first we need data. Complexity science utilizes multi-agent simulations to investigate many outcomes, sweep parameters, and identify thresholds, attractors, and system dynamics. Complexity methods provide unique metrics and representations, animated visuals rather than static graphs.

This is not just big data; it’s dynamic data. With distributed systems, it becomes peer-to-peer data: shared infrastructure. Just as ants leave trails for others, shared infrastructure bolsters interoperability through a knowledge commons. Restricting connectivity and innovation, e.g. with intellectual property rights, carries extreme costs now. Fitness impedes uncooperative agents and strategies. Fortunately new commons have novel “copyleft” licenses already, promoting fairness and equity.

Complexity science shows us not only what to do, but also how to do it: build shared infrastructure, improve information flow, enable rapid innovation, encourage participation, support diversity and citizen empowerment.

Useful links

Panarchy 101, or How I Learned to Stop Worrying and Love Global Collapse Paul B. Hartzog

The OECD organised a Workshop on Complexity and Policy, 29-30 September, OECD HQ, Paris, along with the European Commission and INET. Watch the webcast: 29/09 morning29/09 afternoon30/09 morning

Don’t be a skinny blue mushroom! Try the Insights quiz!

January 3, 2017
tags:

[WpProQuiz 6]

A Pragmatic Holist: Herbert Simon, Economics and “The Architecture of Complexity”

December 28, 2016

Vela Velupillai, Madras School of Economics

“Herb had it all put together at least 40 years ago – and I’ve known him only for 35.” Alan Newell, 1989.

And so it was, with Hierarchy in 1950, Near-Decomposability from about 1949, and Causality, underpinning the reasonably rapid evolution of dynamical systems into a series of stable complex structures. Almost all of these pioneering articles are reprinted in Simon’s 1977 collection and, moreover, the hierarchy and near-decomposability classics appear in section 4 with the heading “Complexity”. The cybernetic vision became the fully-fledged digital computer basis of boundedly rational human problem solvers implementing heuristic search procedures to prove, for example, axiomatic mathematical theorems (in the monumental Principia Mathematica of Russell & Whitehead) substantiating Alan Newell’s entirely reasonable claim quoted above.

In defining the notion of complexity in The Architecture of Complexity (AoC), Simon eschews formalisms and relies on a rough, working, concept of complex systems that would help identify examples of observable structures – predominantly in the behavioural sciences – that could lead to theories and, hence, theorems, of evolving dynamical systems that exhibit properties that are amenable to design and prediction with the help of hierarchy, near-decomposability and causality. Thus, the almost informal definition is (italics added): “Roughly, by a complex system I mean one made up of a large number of parts that interact in a nonsimple way. In such systems, the whole is more than the sum of the parts … in the … pragmatic sense that, given the properties of the parts and the laws of their interaction, it is not a trivial matter to infer the properties of the whole. In the face of complexity, an in-principle reductionist may be at the same time a pragmatic holist.”

Simon was always a pragmatic holist, even while attempting the reduction of the behaviour of complex entities to parsimonious processes that would exhibit the properties of  “wholes”, based on nonsimply interacting “parts”, that may themselves be simple. He summarised the way this approach could apply to economics in a letter to Professor Axel Leijonhufvud and me after reading my book Computable Economics. (You can see the letter here.) Simon argued that:

“Finally, we get to the empirical boundary … of the level of complexity that humans actually can handle, with and without their computers, and – perhaps more important – what they actually do to solve problems that lie beyond this strict boundary even though they are within some of the broader limits.

The latter is an important point for economics, because we humans spend most of our lives making decisions that are far beyond any of the levels of complexity we can handle exactly; and this is where satisficing, floating aspiration levels, recognition and heuristic search, and similar devices for arriving at good-enough decisions take over. [The term ‘satisfice’, which appears in the Oxford English Dictionary as a Northumbrian synonym for ‘satisfy’, was borrowed by Simon (1956) in ‘Rational Choice and the Structure of the Environment’ to describe a strategy for reaching a decision the decider finds adequate, even if it’s not optimal in theory.] A parsimonious economic theory, and an empirically verifiable one, shows how human beings, using very simple procedures, reach decisions that lie far beyond their capacity for finding exact solutions by the usual maximizing criteria.”

In many ways, AoC summarised Simon’s evolving (sic!) visions of a quantitative behavioural science, which provided the foundations of administering complex, hierarchically structured, causal organisations, by boundedly rational agents implanting – with the help of digital computers – procedures that were, in turn, reflections of human problem solving processes. But it also presaged the increasing precision of predictable reality – not amounting to non-pragmatic, non-empirical phenomena – requiring an operational description of complex systems that were the observable in nature, resulting from the evolutionary dynamics of hierarchical structures. Thus, the final – fourth – section of AoC “examines the relation between complex systems and their descriptions” – for which Simon returned to Solomonoff’s pioneering definition of algorithmic information theory.

AoC was equally expository on the many issues with which we have come to associate Simon’s boundedly rational agents (and Institutions) satisficing – instead of optimising, again for pragmatic, historically observable, realistic reasons – using heuristic search processes in Human Problem Solving contexts of behavioural decisions. The famous distinction between substantive and procedural rationality arose from the dichotomy of a state vs process description of a world “as sensed and … as acted upon”.

Essentially AoC is suffused with pragmatic definitions and human procedures of realistic implementations, even in the utilising of digital computers. Computability theory assumes the Church-Turing Thesis in defining algorithms. The notion of computational complexity is predicated upon the assumption of the validity of the Church-Turing Thesis. Simon’s algorithms for human problem solvers are heuristic search processes, where no such assumption is made. Hence the feeling that engulfed him in his later years is not surprising   (italics added):

“The field of computer science has been much occupied with questions of computational complexity, the obverse of computational simplicity. But in the literature of the field, ‘complexity’ usually means something quite different from my meaning of it in the present context. Largely for reasons of mathematical attainability, and at the expense of relevance, theorems of computational complexity have mainly addressed worst-case behaviour of computational algorithms as the size of the data set grows larger. In the limit, they have even focused on computability in the sense of Gödel, and Turing and the halting problem. I must confess that these concerns produce in me a great feeling of ennui.”

Useful links

A version of this article with added commentary and references is available here.

As mentioned above, Herbert Simon wrote to Professors Axel Leijonhufvud and Kumaraswamy Velupillai after reading Pr Velupillai’s Computable Economics. You can see the letter here.

The OECD organised a Workshop on Complexity and Policy, 29-30 September, OECD HQ, Paris, along with the European Commission and INET. Watch the webcast: 29/09 morning29/09 afternoon30/09 morning

The future of work: a world of new and changing skills

December 21, 2016

Digital native in natural surroundings

Glenda Quintini and Alastair Wood, OECD Directorate for Education, Employment and Social Affairs

What do you want to be when you grow up? As young girls and boys learn about space and the cosmos they may dream about being an astronaut. Building a beautiful Lego construction might lead them to declare their desire to be an architect. These days however, rather than catching a young boy or girl playing with Lego or a toy space rocket, they might be learning how to write computer code, aspiring to change the world through technology. Even 3-year-old children scroll through photos on an iPad with an ease and dexterity that stun many adults. That our children are so comfortable using new technologies is encouraging given where our societies are heading. The Internet of Things, Big Data, artificial intelligence (AI) and other new technologies are expected to create new and different jobs, substantially change many existing jobs, and make others obsolete. Adapting to and benefiting from these profound changes requires new skills, now and in the future.

But how well are countries prepared for the digital economy? OECD evidence paints a disturbing picture. Today, 95% of workers in large businesses and 85% in medium-sized businesses have access to and use the Internet as part of their jobs (OECD, 2013).  Yet over half of the adult population (56%) have no ICT skills or can only fulfil the simplest set of tasks in a technology-rich environment. Even among young adults, those between 25 and 34, only 42% can complete tasks involving multiple steps and requiring the use of specific technology applications, such as downloading music files or looking for a job online (Level 2 or 3); among people aged 55-65, only 10% can do this. And not only the workplace is changing; interactions between citizens and governments, between businesses and clients, and within personal networks also rely more and more on digital, mobile or social-media tools (OECD, 2009, 2011). Obviously, workers who can code and develop applications are in high demand; but digitalisation also means that everyone needs to be quite proficient using ICT, even those in low-skilled jobs: today, a factory worker often has to interact with an entirely automated chain of production and a waiter might be taking orders on an iPad.

Being good at ICT pays off. Workers with strong ICT skills are paid almost 30% more, on average, than those who cannot do much more than type or use a mouse (i.e. with skills at or below Level 1). These pay gaps exceed 50% in England, Singapore and the United States. Like in other sectors, there are also gender gaps in ICT: ICT specialists account for 5.5% of all male workers but only for 1.4% of female workers (OECD, 2016a). And this gap is likely to persist in the future: more than twice as many boys currently expect to work in science and engineering jobs when compared to girls, as stated in the latest OECD PISA survey, despite the fact that ICT jobs are in high demand, well-paid and offer promising careers.

But while tech skills are crucial, more is needed to succeed in the new world of work. In addition to ICT skills, workers also need entrepreneurial and organisational knowhow and the right social skills to work collaboratively. Workers also need the flexibility to adapt as technologies evolve (Spitz-Oener, 2006; Bessen, 2015). As Einstein put it “The measure of intelligence is the ability to change.” Our children will likely have a whole range of different jobs and even a range of careers over their lifetime – an exciting prospect but also a challenging one.

New OECD work on Skills for a Digital World calls on governments to ensure that digitalisation brings good quality jobs and that both employers and workers have the means to benefit from new opportunities that open up. Skills policies should strengthen initial learning; anticipate and respond better to changing skill needs; increase the use of workers’ competences; and improve incentives for further learning along with greater recognition of MOOCs (massive open online courses) and OERs (open educational resources). Our challenge today is that we have to educate people for jobs that don’t exist yet and the only way to do this is to be flexible and adapt education and training continuously. Then there is no reason to be worried if kids have no idea what they want to be later in life. Being open-minded and making sure that one remains open to learning and using new skills is likely the best attitude to adopt.

Useful links

Arntz, M., T. Gregory and U. Zierahn  (2016), “The Risk of Automation for Jobs in OECD Countries: A Comparative Analysis“, OECD Social, Employment and Migration Working Papers, No. 189, OECD Publishing, Paris

Autor, D. (2015), “Why Are there still so many Jobs? The History and Future of Workplace Automation”, Journal of Economic Perspectives, Vol. 29, No. 3, pp. 7-30.

OECD (2016), PISA 2015 Results (Volume I): Excellence and Equity in Education, OECD Publishing, Paris.

OECD (2016a), “Skills for a Digital World: 2016 Ministerial Meeting on the Digital Economy Background Report”, OECD Digital Economy Papers, No. 250, OECD Publishing, Paris.

OECD (2015b), Adults, Computers and Problem Solving: What’s the Problem? OECD Publishing, Paris.

OECD (2013), OECD Skills Outlook 2013: First Results from the Survey of Adult Skills, OECD Publishing, Paris.

Spitz-Oener, A. (2006), “Technical Change, Job Tasks, and Rising Educational Demands: Looking Outside the Wage Structure”, Journal of Labor Economics, Vol. 24, No. 2, pp. 235‑270.

West Africa’s diet transformation: Will the region capitalise on its changing food demand?

December 15, 2016
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Ready-to-eat baby food and other processed food products. Ouagadougou, Burkina Faso

John Staatz, Professor Emeritus in the Department of Agricultural, Food and Resource Economics at Michigan State University, and Frank Hollinger, Economist at the Investment Centre Division (TCIA) of the Food and Agriculture Organization of the United Nations (FAO).

Demand for food in West Africa is changing dramatically, opening great opportunities to create new wealth and jobs. But will most of the wealth and jobs be created in West Africa or in the countries that export food to the region? The decisions made over the next few years by West Africans and their development partners will largely determine who benefits from this massive opportunity and its attendant challenges.

Rapidly evolving demand

Driven by strong population growth, urbanisation, rising incomes and changing consumer preferences, West Africans are not only eating more food each year but are also changing what they eat. As incomes rise and most consumers — including the nearly half of West Africans who now live in cities — become increasingly time-poor, people are demanding a more diverse diet that is easier to prepare and consume. Amongst the rising middle class — now a quarter of West Africa’s population — demand for perishable foods, such as fruits, vegetables, and animal-based products, is rising quickly. Safely and efficiently producing and delivering these to consumers entails tight co-ordination along all stages of the food system — from seed to the consumer’s table — requiring upgraded “hard” and “soft” infrastructure, such as reliable cold chains and improved product grades and standards. The good news is that if such improvements can be made, the production, processing and marketing of these products are much more labour-intensive than those of cereals, offering the opportunity to create many new jobs for West Africa’s burgeoning labour market.

Diet diversification is not just limited to perishables and the middle class, however. Across all income classes and geographic areas, West Africans are consuming a wider range of starchy staples (cereals, roots and tubers) than in the past, including more convenient “fast foods” derived from them, such as garb and attack. Demand for convenience – foods that are quick and easy to prepare and consume – is an overarching trend cutting across all countries and income groups. Increasingly pressed for time, consumers are willing to pay for others in the food system (processors, street-food vendors) to carry out some or all of the food processing and preparation for them, leading to rapidly growing demand for post-harvest activities.

The food system’s response

The response from the different levels of West Africa’s food system – farm-level production, food processing, retailing and policy – to these changes in demand has been mixed. Since 2008, when world prices of cereals spiked to record levels and most West African governments launched special food production initiatives, the ECOWAS region’s output of rice, maize and cassava has increased at between 6.5% and 7.9% per year — a remarkable achievement.  But production of perishables, particularly animal-based products like meat and milk, either stagnated or fell. Public-sector expenditures on agriculture have grown rapidly, but most of the increased spending has focused on farm-level production, with a heavy emphasis on fertiliser and seed subsidies. Relatively few funds have gone to the R&D and extension needed to boost long-term farm productivity, or to improving critical post-harvest activities such as product aggregation, wholesaling, processing, packaging and retailing. As a result, many larger-scale food processors in West Africa face difficulties obtaining locally the raw agricultural products in the quantities and qualities they need to operate their plants near capacity; hence, they often turn to imports. At the same time, small and medium-scale processors frequently have problems meeting the quality and packaging demands of the growing middle class, who then also turn to imports.

What’s needed to capture the new opportunities?

Much of the recent agricultural policy focus has been on understanding farmers’ constraints and helping overcome them. Yet in increasingly buyer-driven agricultural value chains, consumers are the ultimate financiers of the food system. Therefore, an improved understanding of their evolving preferences in terms of quality, convenience, safety and other food attributes is a prerequisite for producers to respond better to demand trends and successfully compete with imports.

At the same time, price still matters a lot to the three-fourths of West African consumers who subsist on less than USD 2 per day. Raising the price of food through higher import barriers designed to protect local farmers undermines these consumers’ real incomes and is probably a political non-starter. The only sustainable way to strengthen their food security while maintaining production incentives is to improve efficiency throughout the food system by improving “hard” and “soft” infrastructure.

Policy needs to focus on six areas to help West Africans capture the opportunities offered by the region’s evolving food demand:

  1. Improve the quality of public investment. More attention should focus on improving the performance of the off-farm elements of the food system (such as marketing, processing, packaging and logistics), which are increasingly under stress. At the farm level, public expenditures need to emphasise investments in infrastructure, technology development and farmer support services, rather than just input subsidies, to boost long-term productivity.
  2. Improve rural-urban linkages and intraregional trade. The strongest growth in demand for food will continue to come from urban areas, especially in coastal countries. Investments in transport, marketing infrastructure and regulatory reforms to improve market access, reduce post-harvest losses and expand input markets and support services in the rural hinterland will be critical in allowing West African farmers to capture a large share of this growing demand.
  3. Deepen regional integration. Free movement of goods and services reduces price volatility and allows the development of cross-border value chains. Moreover, to be competitive in a wide range of products with large global actors such as Brazil, China and India, West African agriculture needs to capture some of the scale economies those countries enjoy in agricultural research, input markets and technology development, among others.
  4. Build the skills base for West Africa’s food system in the 21st century. Transforming West Africa’s food system into a modern driver of economic growth will require a profoundly different set of skills than currently exist in most ECOWAS countries. Needed actions include strengthening basic literacy; linking curricula in primary and secondary schools to applications in farming and agro-industry; expanding vocational education programmes in the large range of technical skills needed by workers in a modern food system; attracting more girls to the sciences, given the important role that women play in West African agriculture; and broadening undergraduate university education in agricultural faculties to include fields such as food science, packaging and logistics.
  5. Improve policy co-ordination. Due to the growing importance of the off-farm segments of the food system and the environmental, nutritional and health implications of agricultural growth, food system policy-making needs to move beyond the traditional confines of agricultural ministries. Addressing many of the key constraints to more rapid and inclusive food system growth requires improved policy co-ordination and harmonisation between sectors, actors and along different levels of government, from supra-national to local levels.
  6. Improve policy implementation. Improving policy implementation means producing better data and a stronger evidence base for policies, investing in the capacities of key agencies and organisations charged with implementation, as well as ensuring the overall coherence of policies and programmes. The existence of robust national and regional private sector and civil-society stakeholder groups and a free press act as counterweights to inefficient policy implementation and rent seeking.

Useful links

Staatz, J. and F. Hollinger (2016), “West African Food Systems and Changing Consumer Demands”, West African Papers, No. 04, OECD Publishing, Paris

Agricultural growth in West Africa: Market and policy drivers. Rome: Food and Agriculture Organization of the United Nations and African Development Bank. French version: Croissance agricole en Afrique de l’Ouest: Facteurs déterminants de marché et de politique

The main sector of economic activity in West Africa consists of feeding its population  Laurent Bossard, Director, OECD Sahel and West Africa Club (SWAC) Secretariat

 

 

 

 

 

 

Are Zero Road Deaths Possible?

December 13, 2016

Hans Michael Kloth, International Transport Forum (ITF). Today’s post is also being published on the ITF’s Transport Policy Matters blog.

Every year around the globe, 1.25 million people are killed in traffic – about the population of a city like Munich, Stockholm or Dallas. Up to 50 million are seriously injured. Road crashes kill more people than malaria or tuberculosis and are steadily working their way up the top ten causes of death worldwide, forecast to rise from currently ninth place to fifth by 2030. Among 15 to 29-year olds, they are already the most common cause of death. The human tragedies behind these stark figures are as dramatic as the economic impacts: Road fatalities and serious injuries cost many countries an estimated 2 to 5% of their GDP.

Clearly, this situation is unsustainable. The United Nations’ “Decade of Action for Road Safety”, launched in 2011 with the aim of stabilising the number of road fatalities and then beginning to bring them down by 2020, was an important step to acknowledging that action is required at a global level to stop the daily carnage on the world’s roads. Then, last year, the UN upped the ante by including an even more ambitious road safety target in the Sustainable Development Goals (SDGs): Goal 3.6 calls on the international community to halve the number of road deaths and injuries by 2020.

But in order to meet this target, more than 400 road deaths would have to be prevented every single day for the next four years, not to speak of injuries. Yet with the number of cars growing rapidly in many emerging economies, so is the death toll there: Powerful, vehicles on inadequate roads, drivers with little training, inadequate rules and weak enforcement form a deadly mix that is not going to disappear easily.

A reboot for road safety policies

In developed economies, meanwhile, the downward trend that marked the past three decades (and saw the death toll in the UK, for instance, fall in 2015 to almost 20% of the 1966 peak) seems to be coming to an end: Fatality rates in many of the best-performing countries are levelling out and in some cases rising again, notably among vulnerable road users such as pedestrians, cyclists or seniors.  A reboot for road safety policy is thus urgently needed, as the approaches that brought success in the past no longer deliver the returns they once did, or are overwhelmed by an avalanche of cars.

Inspiration comes from a group of countries that have broken with the traditional paradigm in road safety, which is to fix crash hotspots and try to make road users behave more responsibly with a lot of stick and a few carrots. Nations like Sweden or the Netherlands, but also metropolises like New York City have made it their official policy to try to eradicate road deaths. This approach, known as “Vision Zero”, starts from the premise that the loss of human life as the price for mobility is unacceptable – and that the mobility system should thus function in a way that poses as few deadly risks as possible.

This approach has been followed for decades in areas like occupational safety, where machinery has long been designed in a “forgiving” way, so that if operators make a mistake it will not kill or maim them – think of a circular saw that stops automatically if a limb gets too close for comfort. This “Safe System” approach is not new to transport, either transport – aviation and rail operations would be unthinkable without it, as we would not want a single person’s mistake make a plane crash or trains collide.

Where humans err

Road traffic has yet to embrace the Safe System. Media stories regularly remind us that “human error” was the involved in this or that horror crash. Subtext: While all systems functioned, unfortunately the human didn’t, so there was nothing that could be done. Based on this view, governments spend billions on enforcement and the education of road users. But what is the price tag to get every single citizen to behave correctly all the time?  Achieving 100% compliance is of course impossible. Humans make mistakes even if they are well-trained, willing to follow rules and capable of doing so. All of us who have turned our head while at the wheel to see what the kids are doing on the back seat know this is true.

The Safe System approach that underpins “Vision Zero” accepts that humans will fail. From that principle, the challenge becomes to organise the traffic ecosystem in such a way that human mistakes do not cause serious harm. Here a second principle of the Safe System comes into play: The human body can only absorb a certain amount of kinetic energy before serious injuries occur. Again, a simple truth, too often disregarded. Taken seriously, it has wide implications for speed management, mixing traffic or designing infrastructure.

The third principle of the Safe System is shared responsibility. If the aim is to avoid serious harm, it’s just not good enough to blame the driver who hit a tree, or the elderly lady who stepped on the pedestrian crossing without looking. In a Safe System, the agency managing forestation understands that its actions can have an impact on road safety, as does the urban planner who will foresee speed bumps that force cars to slow down at crosswalks.

Will self-driving cars solve the road safety problem?

The fourth and final guiding principle for traffic as a Safe System is as straightforward: You cannot address road safety piecemeal. All parts of the system need to interlock to reinforce each other, so that when one part fails to break the chain of events leading to a serious incident, the others will still protect humans from injury or worse.

Technology will go a long way to making road traffic safer. Alco locks, automatic braking, intelligent speed assistance, electronic stability control and the like will make lethal errors less likely no doubt. Self-driving cars, many hope, will solve the road safety problem by making error-prone human drivers superfluous. But autonomous driving is not a silver bullet. Forecasts put sales of self-driving vehicles at 11.8 million or about 2.7% of the global car fleet in 2035. And the vast majority will be sold in developed world, while fully 90% of road fatalities occur in low- and middle income countries. The impact of self-driving cars on road safety will hardly be noticeable for another generation or more.

There are other misconceptions about how Vision Zero works. It does not mean, for instance, that there will be no more crashes. There might even be more, because the Safe System is focused on avoiding serious injuries, not necessarily accidents. Take roundabouts: It is not rare that there are more collisions at roundabouts than at standard intersections. But because they rarely involve impacts at a 90-degree angle and occur at lower speeds, far fewer severe injuries result.

Ultimately, can there really ever be zero road deaths? On a global level, probably not. But looking at individual segments it is already happening: There are at least three European cities with more than 250 000 inhabitants that have not had a single road fatality in over a year, according to German safety specialist Dekra. In Sweden, not a single child was killed in a bicycle accident in 2008. On this level, zero road deaths as a target is not utopian – and then: if it can be done for one group or region or make of car, it can probably also be done for others as well. If governments take the political lead and bring all those together who can and should make it happen, it can work.

Let’s give the Safe System a chance to save lives.

Useful links

Click to download the citation

Today, the ITF is being awarded a Prince Michael of Kent International Road Safety Award for “Zero Road Deaths and Serious Injuries: Leading a Paradigm Shift to a Safe System” and its global road safety work. The report reviews the experiences of countries that have adopted Vision Zero and the Safe System and provides guidance for leaders who seek to drastically reduce road deaths in their communities.