By Zhang Junwei, DRC

The release of the New Approaches to Economic Challenges (final report) is an important symbol of the OECD policy transformation.

First, what is the NAEC initiative? The New Approaches to Economic Challenges (NAEC) is an initiative launched by the OECD Ministerial Council Meeting (MCM) in 2012, which consists of three pillars: reflection on existing analytical framework and measures to deal with crisis, study on welfare policy trade-offs and complementarities, and the establishment of “smart countries”.

Second, the NAEC initiative points out that the supportive policies bear the following changes: attention should be paid to people’s sense of happiness and its distribution and efforts should be made to ensure that economic growth could bring progress for all people; the financial sectors and related risks should be integrated into the framework of policy analysis; uncertainty, spillover effects, systemic risks and network effects should all be included into the framework of policy analysis; economic issues should be viewed from a long-term perspective and under the institutional background of history, social norms and political options. To adapt to the above-mentioned changes from the perspective of policy analysis, OECD has fleshed out a series of new policy tools and new policy perspectives.

Third, viewing from the main report and the statement of the OECD Ministerial Council Meeting in 2016, NAEC is no longer a purely theoretical study, as it is rapidly transforming into policy and action.

Fourth, the policy transformation of OECD has brought us some enlightenments. While stimulating the economic vitality, modern market economy has also brought with it a serious challenge stemming from fair competition. At present, an important reason for developed economies to feel difficult to step out of the “subprime crisis” is due to the weak domestic demand caused by the widening income gap. OECD is trying to lead the OECD member countries to focus not only on the economy, but also on income distribution. While promoting economic growth, they should share the growth results with more people; while pursuing the short-term growth, they should also pursue a sustainable growth. OECD experience tells us how to follow the times and better promote the reform.

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