Introduction section 2nd G20 Framework Working Group meeting: making global economy more resilient by financing intangible assets
2nd G20 Framework Working Group meeting: making global economy more resilient by financing intangible assets
Today, Thursday 4 February, officials from the G20 Membership gathered virtually for the second Framework Working Group (FWG) meeting.
In line with the work plan of the Framework Working Group under the Italian G20 Presidency, the Membership agreed that a return to the pre-crisis status quo would be hard to realise and ineffective. G20 Members were united in affirming that it is time to seek new opportunities for a recovery hinged on new, innovative, ambitious and transformative paradigms.
For the international community, this means guiding the ongoing digital transformation towards a path leading to increased productivity and new job opportunities thus fostering inclusive economic growth.
The G20 is called on to steer the international policy debate to reach consensus on the transformative steps needed to tackle climate change, support innovation and reduce poverty and inequality.
At today’s 2nd FWG meeting, discussions focused on the G20 Action Plan implementation and setting a new concrete timeline to support economic recovery in the short-medium term. In this context, G20 members took stock of implementation of local measures supporting the sectors most affected by the Covid-19 crisis. The Members discussion concentrated also on the ongoing developments of the global economic outlook as macro-economic uncertainty remains high thus asking for stronger international cooperation.
Additionally, the Framework Working Group renewed its commitment to monitoring potential risks for the global economy by considering potential future challenges the world may be called to face.
The meeting offered also the opportunity for discussing a key component of the global digital transformation: investments in intangible assets. These assets are classified as investment in innovation that enable knowledge to be commercialised thus becoming a relevant source of economic growth in both advanced economies and emerging markets.
While renowned intangible assets like R&D, patents or software have been key drivers of innovation in recent years, the list of key assets now includes databases, designs, managerial and worker skills, just to mention a few.
Intangibles are particularly relevant in the digital sector and have become a prerequisite for the development of innovative activities, new services, applications and products.
All this has become even clearer with the outbreak of the Covid-19 crisis, as digital technologies have enabled the reorganisation of activities in several economic areas. As employees started working from home, good managerial skills paired with innovative digital solutions, made intangible intensive economies more resilient to the crisis.
Today’s discussion on this matter focused on one of the major challenges related to intangible assets: their financing. The G20 intends to define an efficient policy framework to support investment in intangible asset, as their lack of physical substance makes them much harder to be financed compared to traditional tangible goods, like machinery and equipment. More specifically, the objective is to fill financing gaps and remove obstacles, particularly with regard to small enterprises.
In a dedicated study presented today, the OECD proposed that the G20 identify best practices and agree on how to simplify the funding of intangible investments. As intangible investments are key complementary factors of the digital transformation, reducing their financing gap will be essential to foster the digitalization and speed up economic recovery.
The research developed by the OECD identifies the main policy areas to make G20 countries financial systems more suited to meet the needs of a knowledge-based economy.
The work of the FWG will continue in the coming months with in-depth analyses of the challenges brought about by the crisis, with a particular focus on understanding how investments in digital and green technologies can become the backbone of the global economic recovery.