© OECD, TAKEN AT THECITYUK INTERNATIONAL CONFERENCE

Helping to shape the future we want

Deputy Secretary General of the OECD Yoshiki Takeuchi

JUNE 2022 The Interview / Text by Andrew Howitt / Photos ©︎ OECD

Founded in 1961, the Organisation for Economic Co-operation and Development (OECD) is an intergovernmental body, with 38 member countries, that works to improve economic progress and global trade through international standard-setting and knowledge-sharing.

Yoshiki Takeuchi was appointed deputy secretary general of the OECD in November 2021. Before this, he worked for nearly four decades at Japan’s Ministry of Finance, serving in a number of positions, including as special adviser to the minister of finance, vice minister for international affairs, and director general to the International Bureau. He has also held senior positions at international fora, such as the G7, the G20, and the International Development Association.

What are the current priorities for the OECD?
In early June, we held the OECD Ministerial Council Meeting — our highest-level forum, attended by ministers from our member and partner countries — on the theme “The Future We Want: Better Policies for the Next Generation”. The meeting took place at a challenging moment in our shared history, but we see clear opportunities for the OECD to help contribute solutions to some of the key global challenges we are facing.
OECD Secretary General Mathias Cormann outlined the following five key priorities for the organisation. First, we need to focus on optimising the strength and quality of the ongoing recovery from the Covid-19 pandemic while responding to the economic and social impact of the war in Ukraine. We are continuing to provide leadership on climate action to help secure global net-zero emissions by 2050 in a way that is effective and fair.

We will also advance our work on seizing the opportunities of the digital transformation while better managing some of the associated risks, challenges, and disruptions. The OECD is helping to ensure well-functioning global markets and a level playing field with a rules-based trading system in good working order. Finally, yet equally as important, we are continuing to broaden our global engagement by advancing OECD standards through membership, partnerships, and a sound approach to development.

What are a few examples of new areas of international policy standards that the OECD is working to develop?
We regularly evaluate our existing standards and recommendations to ensure they remain relevant and applicable, and we develop new ones when needed. As the world changes, we must be ready to change with it.

During the OECD Ministerial Council Meeting, we issued several new recommendations, including one on foreign direct investment qualities for sustainable development and another on blockchain and other distributed ledger technology.

The former is the first multilateral instrument that provides guidance to governments on leveraging foreign investment to achieve the UN’s Sustainable Development Goals. Its successful implementation will align market practices with the transition to net zero in areas from international investment to corporate governance and financial markets.

The latter recommendation provides a world-first framework to boost cooperation, market integrity, and good conduct around blockchain technology at the domestic and international levels. This will help policymakers create an environment that allows people to harness the benefits of new technologies while mitigating the risks.

All our standards and recommendations are developed with the guiding principle of facilitating the creation of policies that increase prosperity in a fair and sustainable manner, to the benefit of societies around the world.

How is Japan contributing to the creation of these policies?
Japan, which joined the OECD in 1964, is one of our most longstanding members and contributes to policy development in myriad ways. Most notably, this happens through its activity on OECD committees, where these standards are being developed and discussed, and through its generous contributions to OECD work on a range of topics.

Japan is a truly valued member of the OECD, making substantial contributions to the agenda and mission of the organisation. These include helping to advance our shared values of democracy, human rights, the rule of law, market-based economic principles, and a global level playing field based on a rules-based international order.

Japan has benefitted, as well. The OECD helps the country’s policymakers evaluate, compare, and understand domestic policy options for their constituents. Through the OECD Economic Surveys: Japan, Better Policies series, and other flagship publications, our recommendations have supported Japan’s structural reforms in many ways over the years and have been translated into concrete actions by the Japanese government.

What are a few highlights from the updated economic forecast for Japan released on 8 June?
The omicron shock led to negative growth in the first quarter of this year. Although confinement measures had been lifted, lockdowns in China, geopolitical instability, and high inflation are affecting Japan’s trade, production, and private investment. These factors will also slow its economic recovery.

Under weak wage growth and low core inflation, we assume the current monetary policy stance will remain accommodative, consistent with the Bank of Japan’s longstanding statements that this will continue to be the case until the inflation rate reaches the 2% target.

Investment will accompany the recovery of exports and production, supported by government subsidies, especially in the green and digital areas. As a result, the economy should pick up from its slow start this year. GDP growth rates are expected to be 1.7% in 2022 — 1.7% lower than the previous projection — and 1.8% in 2023.

What are some of the key structural reform priorities, specifically in the areas of the economy and business, that the OECD recommends Japan make?
Japan has been ageing rapidly and struggling with low productivity growth. Despite these headwinds, the economy appeared to be on the cusp of overcoming deflation, and fiscal policy was making steady progress towards ensuring sustainability. However, the Covid-19 pandemic and the war in Ukraine have temporarily derailed further progress.

To avoid scarring effects and offset the consequences of an greying population, it is essential that the government continue workstyle reforms while improving childcare provisions, social security systems, vocational training, and education.

In addition, support for the digital and green transformation should be intensified to improve productivity, resilience, and sustainability. Securing and reallocating employment, global supply chains, and energy sources are current priorities.

Prime Minister Fumio Kishida has proposed his New Capitalism policy initiative, and I think this aligns with many of the OECD’s priorities. I hope that the Japanese government will effectively implement those policies.