The reforms matter to the extent they are delivered, they have their price and their prize. The OECD recently has published a renewed structural reform inventory for its members to boost more growth during the global crisis period since its start in 2007. The analysis belongs to OECD annual pear review process, called Going for Growth, which is active since its first edition in 2005.
The study explains, that stabilisation needs resources and for that the effective institutions. Otherwise, while not being ready, one will be tempted to postpone reform, making it even more painful when inevitable comes. The crisis in this way was a good catalysis to change economy for a better outcome and sustain growth in a longer perspective.
The inevitable came with budget austerity and sovereign debt crisis, which left no choice for late-comers, but to develop more efficient institutions and schemes, by which surplus countries could offset macroeconomic shocks while maintaining stimulus to economy and jobs. However, when deficit countries are engaging in the same path with too much enthusiasm, they are becoming pro-cyclical by postponing a returning ‘back to normal’ and by creating worse-off costs to the political elites.
A simple advice – make saving reserve in advance, do not wait until time will come; do not postpone structural measures, especially in labour and tax policies; communicate properly – the outcome will be positive, sooner than later, with less tension in labour markets and with less inequality.
Recent OECD conference in Italy proved this once again. Maintaining fiscal discipline, addressing productivity levels across policies of innovation to education, setting elastic wage bargaining schemes and reducing burden on labour taxation in budget neutral manner could add up to 4 % of Italy’s GDP over the next 10 years.
The winners of crisis will seize the opportunity to take it all.