The public perception of the fairness of tax systems, the practical issues of enforceability and the cost arising from compliance are other important considerations. This chapter considers policy approaches to environmental and natural resource issues in OECD countries and their relation to economic activity and policies. In addition, more systematic use of cost-benefit analysis and environmental impact assessments would also improve overall efficiency. Steps should also be taken to eliminate unjustified special treatment, such as that in transport, agriculture or sectors that use energy intensively. This chapter presents evidence on productivity growth and firm dynamics for ten OECD countries over the past decade.
Many firms enter and exit most markets every year.
The competition process that removes the least efficient is most vigorous among young firms, especially if they are small. Growth in the OECD area is now projected to drop more than had been expected to 2 per cent in 2001, half the rate achieved last year, before recovering somewhat next year to 2 to 3 per cent. Slower growth across the OECD area should also, in combination with a fall in the assumed price of oil, help to keep inflation low. The interest rate reductions that have taken place, some shifts toward fiscal ease and lower oil prices should help to spur aggregate demand in the coming months. In addition, the sustained pace of productivity growth in the United States, which was so remarkable in the last half of the 1990s, suggests that these efficiency gains may have some measure of durability, increasing the chances that such gains can be extended elsewhere.