ABCDE: Combine our knowledge and best practices

This post first appeared on OECD Insights.

This week, we’ll be reporting on the Annual Bank Conference on Development Economics (ABCDE) taking place here at the OECD, in co-operation with the World Bank and France. Our first post is from OECD Secretary-general Angel Gurría.

These are momentous days for the OECD and its work on development. Last week, US Secretary of State Hillary Clinton chaired our 50^th Anniversary Ministerial Council Meeting, at which Ministers urged the OECD to adopt a comprehensive new approach to development. They gave us a strong mandate to launch a development strategy in line with our member countries’ aim of promoting development worldwide, and of achieving higher, more inclusive, sustainable growth for the widest number of countries. This effort will entail greater collaboration and knowledge sharing, mutual learning, and deeper partnerships with developing countries and other international organisations.

This week, we are co-hosting the ABCDE, joining forces with the World Bank and France in bringing together some of the best and brightest thinkers on development economics. We’re putting into practice our desire to deepen our understanding of the diverse realities and challenges that developing countries are facing in today´s rapidly changing economic landscape.

It is only natural that we sharpen our focus on development. The epicenter of economic activity is shifting from industrialised countries to the large developing countries and, more than ever, their future growth prospects are closely intertwined. Over the past decade, a group of emerging and developing countries has achieved remarkable advances in terms of growth and development. They have lifted millions of people out of extreme poverty, becoming a vital development source of trade, investment and aid. If current trends continue, we anticipate that developing countries will account for nearly 60% of global GDP by 2030.

These dynamic new poles of growth have useful experiences and knowledge to share. Working closely with them, we can combine our knowledge and best practices in the service of all countries, and particularly the poorest. We will develop new perspectives on how to achieve inclusive growth, identify new ways to address inequality and poverty, and find new pathways towards social and economic well-being.

Here at the OECD, we have begun broadening our sources of knowledge, building on 50 years of gathering evidence, sharing experience and promoting good practice. Four new member countries are enriching our work: Chile, Estonia, Israel and Slovenia. Russia is moving closer to accession, and we are engaging closely with Brazil, China, India, Indonesia and South Africa on a wide range of policies. We are also working hard to support G20 discussions, which represent a major step towards more inclusive and innovative global decision-making.

Looking at the ABCDE conference theme of Broadening Opportunities for Development, I note that emerging economies are both highly familiar with the challenges and highly innovative in finding solutions.

Broadening opportunities is about tackling inequality, about not leaving people behind in our ever-changing world economy. Across OECD countries, the richest 10% of people earn 9 times more than the poorest 10 per cent. In Mexico and Chile, the rich have incomes more than 25 times higher than the poorest. Beyond the OECD, our figures for Brazil suggest a ratio of 50 to 1, and our figures for South Africa suggest a ratio of 147 to 1! This reminds us that despite formidable progress in emerging economies, the battle against poverty is not yet won.

The good news is that many emerging economy governments now have the resources to make smart social investments. Mexico and Brazil, with their successful cash transfer programmes and other innovations, have shown the way.

What can we learn from them? How can we understand better the diverse realities of developing countries and the particular challenges they face?

What is clear is that, in OECD countries and elsewhere, high levels of inequality are economically, politically and ethically untenable. Inequality prevents the most vulnerable from breaking through the vicious cycle of poverty. We need to identify policies that can boost access to education, skills, jobs and social services, promoting upward mobility for talented and hard-working women, men and youths. We need to ensure that growth is participative and inclusive, fostering social cohesion. We need to close gender gaps in education and employment, empowering women to gain entrepreneurial skills and use them to their fullest. And, finally, I think we need to understand that development is not all about income, but about a more general notion of societal progress.

I am looking forward to reading your views and following ABCDE discussions!

Useful links:

Live conference webcast from the World Bank

The week in review

This week was an exceptionally large week in the progress world, with the release of the 2011 Global Peace Index and Your Better Life Index. See a round-up of news items and blog posts on the week that was.

On progress

2011 Global Peace Index (25.05.2011)

The 2011 Global Peace Index (GPI), released on Wednesday by the Institute for Economics and Peace, shows that the world is less peaceful for the third consecutive year. According to the GPI, levels of peacefulness in 2011 were most impacted by the threat of terrorist attack and the likelihood of violent demonstrations.

The GPI uses 23 indicators to rank 153 countries, gauging both domestic and international conflict, safety, security and militarisation.

See the Global Peace Index 2011 for full details and scores.

See the Wikiprogress article for more about the GPI and see the 2011 GPI media review for all news items on the index.

Your Better Life Index (24.05.2011)

The OECD launched Your Better Life Index on Tuesday as part of the Organisation’s 50^th anniversary celebrations. This interactive index allows users to compare well-being across 34 nations based on 11 key dimensions: housing, income, jobs, community, education, environment, governance, health, life satisfaction, safety and work-life balance.

See Your Better Life Index and rate your country according to the elements of well-being you feel are important. See the Wikiprogress Better Life Index media review for all news items on the index.


The Economist Online debate on Happiness (The Economist 27.05.2011)
All week The Economist online has been debating the motion "This house believes that new measures of economic and social progress are needed for the 21st-century economy". Defending the motion: Richard Laylard. Against: Paul Ormerod. Results have just been announced: 83% voted YES, 17% voted NO.

On gender equality

First Woman Speaker of Parliament Changing Politics (IPS 24.05.2011)

At the end of last week, Rebecca Alitwala Kadaga made history by becoming the first female speaker of Uganda’s parliament. One of her first actions as speaker will be to ensure the Parliament enacts the Marriage and Divorce Bill 2009 into law, which has been under consideration for the last 40 years.

See more on access to property 

That's all from us this week. We hope to see you back here this time next week for another round up of highlights in the weekly review. 

Yours in progress,

Philippa Lysaght

Designing Your Better Life Index from a methodological perspective

By Romina Boarini

Many things count in life. This is why measuring these things requires a multidimensional instrument. Your Better Life is a composite index of well-being, piecing together many aspects which shape people’s life and well-being.

Building a composite index requires some steps. These are[1]: identifying the components of well-being that one wants to measure; identifying the indicators that capture best these components; carrying out imputation of missing data; normalising the indicators; deciding how to weigh and aggregate the indicators; assessing the robustness of the index through a sensitivity analysis; reflecting on the visualisation of the results.

Concerning the choice of the components, the main challenge is to come up with dimensions of well-being which are equally relevant for different countries. For doing that, Your Better Life Index relies on the OECD Measuring Progress Framework which assesses current well-being on the basis of two domains (material living conditions and quality of life) and eleven dimensions (income and wealth, jobs and earnings, housing, health status, education and skills, work and life balance, civic engagement and governance, social connections, personal security, environmental quality and life satisfaction). This framework has been chosen following theory (e.g. the Report on The Measurement of Economic Performance and Social Progress by the Stiglitz-Sen-Fitoussi Commission) and practice in many OECD Countries (e.g. Australia ABS framework to measuring progress). Its rationale is discussed in more details in the Compendium of Well-Being Indicators.

This framework and in particular the strong focus that this puts on households, inequalities, outcomes and both objective and subjective features of well-being, inspired the choice of the indicators. In addition, indicators have been identified so as to be relevant (e.g. policy amenable, easy to interpret, etc.), relying on very good data quality (e.g. most of them comes from National Statistical Offices) and comparable across the OECD countries. Finally, indicators have been discussed with National Statistical Offices of the member countries.

Despite considerable effort put in seeking the data, some indicators display missing values. We have thus estimated the missing values through standard imputation techniques. We have also tested the impact of such an imputation on the values of Your Better Life Index and concluded that imputation (which in fact concerns less than 5% of the overall data) does not affect substantially the Index.

The next step has been to normalise the indicators, i.e. expressing them in the same metrics. Normalisation is needed as indicators are originally expressed in different units (dollars, years, percentage points, etc). The normalisation technique, which is a standard one for composite indices, consists of comparing each value to the boundaries of the interval where the indicator ranges. The resulting normalised values vary between zero (the bottom performer) and one (the top performer).

Once values are normalised, they can be aggregated. In Your Better Life Index this happens in two stages. First, within each dimension, indicators are added up with equal weight. Secondly, aggregation across dimensions is done automatically and interactively when the users rate the topics. When rating the topics, users can decide to assign no rate at all (i.e. the topic is not important at all) or go up to 5 rates (i.e. the topic is very important). These rates are automatically converted into weights which vary from zero to 100%, with the constraint that the sum of weights must be 100%.

Before launching Your Better Life Index we have carried out several robustness tests and other checks, to ensure that the Index is statistically sound.[2] In particular we have tested the sensitivity of the index to the weights assigned at various levels (domains, dimensions and indicators) and to a number of other assumptions (imputation and normalisation). Overall, the results show that the Index is robust to these various assumptions.

 

A great deal of work has also been done on the visualisation aspects of the tool, by the external developers of the website and the OECD Communication Directorate. For instance simplicity and user-friendliness of the tool have been balanced with its level of precision. More information on this can be found at http://www.jeromecukier.net/?p=872.

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[1] OECD Handbook of Constructing Composite Indicators.

[2] See “Designing your better life index: methodology and selected results”, by Boarini R., V. Denis, G. Cohen and N. Ruiz, OECD Statistics Directorate Working Paper (forthcoming).

2011 Global Peace Index released today

The world is less peaceful for the third year running. 

The 2011 Global Peace Index (GPI), released today by the Institute for Economics and Peace (IEP), shows a decline in levels of world peace for the third consecutive year. According to the GPI, levels of peacefulness in 2011 were most impacted by the threat of terrorist attack and the likelihood of violent demonstrations.

Steve Killelea, Founder and Executive Chairman of the IEP, said, ‘The fall in this year’s index is strongly tied to conflict between citizens and their governments; nations need to look at new ways of creating security – other than through strong-arm military force.’

The decline in peacefulness has come at a high price; violence cost the global economy $8.12 trillion in 2010. Furthermore, if levels of violence were reduced by 25% internationally then the world economy would have benefited by over US$2 trillion in the last year.

Despite overall levels of peacefulness decreasing, certain areas of the 2011 GPI show a positive increase, particularly in relationships between neighbouring countries.

As the leading international measure of global peacefulness, the GPI uses 23 indicators to rank 153 countries, gauging both domestic and international conflict, safety, security and militarisation.

See the Wikiprogress Global Peace Index article for more information.

Number Crunch – 2011 Global Peace Index

·      Libya dropped 83 places on the global rank - largest ever fall in GPI history

·      Iceland comes in at number 1 as the world’s most peaceful nation, followed by New Zealand, Japan, Denmark and the Czech Republic

·      The likelihood for violent demonstrations increased in 33 nations

·      Somalia displaces Iraq as world’s least peaceful nation, ranking 153^rd

·      40% of the world’s least peaceful countries are now in Sub-Saharan Africa

For full details of the 2011 Global Peace Index, see the Vision of Humanity website.

The Wikiprogress Community Portal will have a special focus on a round up of media coverage given to the GPI.

Philippa Lysaght

OECD launches Your Better Life Index

This post first appeared on OECD Insights.

As we mentioned a few days ago on the Blog, this week marks the launch of the OECD’s brand new Your Better Life Index . A quick reminder: The Index is designed to let you compare and contrast the various factors that determine people’s well-being – not just GDP, but a much wider range of things like education, income, housing, security and so on.

The Index was launched this morning in Paris by OECD Secretary-General Angel Gurría, who quoted Bob Kennedy, who in 1968 said of GNP – a more traditional economic measure – that it “does not allow for the health of our children, the quality of their education, or the joy of their play; it does not include the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials … It measures everything, in short, except that which makes life worthwhile.”

Danilo Türk, president Republic of Slovenia, spoke next and described the Better Life Index as a “very important and very precious present” from the OECD as it marks its 50^th anniversary. He praised the Index’s “imagination and creativity,” and said he hoped it would help drive a rethinking of measuring progress: “I hope the quote from Kennedy will look obsolete in a few years’ time,” he added.

Inevitably, with such a new project, there were plenty of ideas from panellists at the opening sessions of the OECD Forum on how the Index could be improved and, just as importantly, made relevant to people’s lives and to policymaking.

Jacques Attali, Chairman of PlaNet Finance, a non-profit that works on microfinance issues, felt the Index needed to take more account of democracy issues, freedom of speech and corruption. He said it had become clear that these issues were missing in many international indicators, especially the Millennium Development Goals, but that they were essential to social progress.

Pravin Jamnadas Gordhan, South Africa’s Minister of Finance, said a test of the Index’s usefulness would be whether it helped publics to communicate with politicians. He warned that “significant parts of the population feel excluded,” citing groups like young people in Spain and workers in Greece. He said there was an urgent need for “ruling elites hear voices that are marginalised in society.”

Sharan Burrow, General Secretary, International Trade Union Confederation, liked the Index, but warned that its focus on a broader approach to thinking about well-being needed to be reflected in policy: “The Index means little if it remains separate from our dominant economic thinking.” She also was critical of mixed messages from the OECD: The organisation’s policy thinking on structural issues was bad for workers and would foster inequality, she said, which was at odds with that the thinking behind the Index.

Also commenting was Yoshinori Suematsu, a Japanese Senior Vice-Minister, who said the catastrophes that have struck his country this year had focused people’s attentions on what is really necessary for living a good life. One of the most important, he said was social networks, and he noted that since the earthquake and tsunami sales of engagement rings had jumped by 50% in Japan – a mark of people’s little need for engagement in a dark time.

A quick final note: The Index is already getting plenty of media coverage: “Canadians can’t complain,” reports The Globe and Mail which reckons that the Index shows Canada is a pretty good place to be. What do you think? Take a look at the Index and let us know.

OECD Week 2011: Better Policies for Better Lives

The post first appeared on OECD Insights.

 Welcome to OECD Week. We start our coverage with this message from OECD Secretary-General Angel Gurría. The key themes this year include how to measure progress; new sources of growth, notably green growth; and a new paradigm for development; and gender.


The OECD was created to foster international co-operation. Article 1 of our founding Convention states that our role is “to promote policies designed to achieve the highest sustainable economic growth and employment and a rising standard of living” in member countries, partner countries and on a global scale.

The OECD is marking its 50th anniversary at a time when international co-operation is more essential than ever. The list of global challenges requiring co-ordinated policy action is getting longer, and in most cases, this action is becoming more urgent. This means that the inspiring vision of our founding parents is still relevant and will continue to serve as the guiding principle for our work. Much remains to be done to achieve a cleaner, stronger and fairer world.

 Take climate change. We need to make growth greener, to make our economic and environmental policies more compatible and even mutually-reinforcing. This is not just a matter of new technologies or new sources of renewable, safe energy. It is about how we all behave every day of our lives, what we eat, what we drink, what we recycle, re-use, repair, how we produce and how we consume.

There are other common challenges. The world economy is recovering from its worst crisis in modern times, but this recovery remains tentative. With budgets stretched, governments can no longer spend their way into recovery. They need to implement structural reforms and to find new sources of growth. They need to make the public sector more efficient and they need to ensure that the private sector is more competitive. They need to fight corruption, promote ethic behaviour and restore trust in institutions.

Last but not least, the social dimension. The human and social costs of this crisis are still being felt across the globe. Unemployment, especially among the youth, remains high. Poverty, hunger and preventable diseases still affect millions of people in developing countries. Solving these challenges requires well designed social and employment policies, efficient public services and investment in health and education. Promoting development requires international solidarity, effective and well-coordinated assistance, and a cross-cutting, integrated approach to build institutional capacity and mobilise domestic resources.

The OECD can and should play a major role in addressing all of these challenges. It is an institution with one of the most advanced forms of co-operation and engagement. It has expertise in a broad range of economic, social and environmental policies. Its work involves many stakeholders – government, business, trade unions, civil society and academia.  Its working methods help ensure that the necessary “horizontal” exchange of ideas takes place across policy domains.

As a result, the OECD is a major source of cross-cutting, evidence-based advice for governments and a standard setter to facilitate and galvanise action. It is a forum where policy makers can learn from each other, where best practices can be identified and disseminated, and a place where authorities can get the support of peers to help implement domestic reforms.

These assets will continue to serve the international policy community well for years to come, but the Organisation still needs have to adapt and change. We are witnessing a revolution in the way the world is governed and the only way to remain relevant in the next 50 years is to continue to deliver high quality and substantive contributions to global debates, incorporating the perspectives of countries which are key for this new global governance, but which are not yet Members of the OECD.

The OECD 50th Anniversary Week is a unique opportunity to think collectively about how to best achieve the vision of our founding parents. Achieving better policies for better lives is a journey, not a destination.
The OECD is ready to embark with you in that journey, armed with our foundational values: openness, objectivity, boldness, pioneering spirit and sound ethics.

I look forward to working with you to establish the roadmap for this journey.