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Last year, the OECD launched a new initiative with the aim of moving beyond GDP as the key measurement of a nation's economic strength. The Better Life Initiative is designed to come up with new ways of evaluating the overall economic health of a nation and its citizens. OECD Secretary-General Angel Gurría narrates a short video to describe the progress of the initiative over the last 6 months: The OECD now has an interactive chart that allows you to see where member countries rank in various categories: Read more about the Better Life Initiative here .

The OECD 's composite leading indicators (CLIs) are "designed to anticipate turning points in economic activity relative to trend." The CLIs for August, just released today, are now pointing toward a global slowdown: Anything below that 100 marker points to economic activity below the long term trend. The August numbers show most countries in the OECD already below the line. India, Brazil and China are all below the line as well, with India and Brazil well below. The US, Germany, and Russia are looking better, but are also trending toward slowdown. Japan, is an outlier. Its CLI "continues to indicate a potential turning-point in economic activity." See the specific CLIs for OECD countries here .

The South African economy has performed relatively well in the aftermath of the Global Economic Crisis. Ebrahim Rasool , South Africa's ambassador to the United States, tells Knowledge@Wharton 's Steve Sherretta that the country's "robust" banking system deserves much of the credit for the economic growth. Rasool also discussed the somewhat unique position South Africa applies as a vital bridge for global business. South Africa links the developing nations of Sub-Saharan Africa with Europe and the West. It also, as Rasool discusses, carries a great deal of responsibility for the economic good of an entire continent.

In a post at Vox , Ecole Polytechnique Professor of Economics Pierre Cahuc , and Stéphane Carcillo , Associate Professor of Economics University of Paris, argue that short-time work can be effective in "combating unemployment" during global financial crisis, but that it is not without some problems. They say 25 of 33 OECD countries have used the practice of short-term work schemes: Cahuc and Carcillo write: European countries with widespread and generous short-time compensation experienced a smaller rise in unemployment in the recent recession than those without. The leading example is Germany that makes a particularly intensive use of a short-time work programme (the Kurzarbeit). This success has renewed interest in short-time work. But the idea itself is nothing new. The suggestion that it could be more efficient and more equitable to share jobs with short-time compensation rather than destroying jobs during has been repeatedly put forward by advocates of work-sharing. For instance, Abraham and Houseman (1994) argued that short-time work arrangements can be more equitable since they spread the costs of adjustment more evenly across members of the work force instead of concentrating it on a small number of laid-off workers. But short-time compensation programmes are no panacea. They can induce inefficient reductions in working hours. Moreover, workers in permanent jobs have incentives to support such schemes in recessions in order to protect their jobs. Employers also have incentives to support short-time compensation programmes in countries where stringent job protection induces high firing costs. Therefore, there is a risk attached with using these programmes too intensively. The benefits of insiders can be at the expense of the outsiders whose entry into employment is made even more difficult. Read Is short-time work a good method to keep unemployment down? here .

The latest Economic Outlook from the Organisation of Economic Cooperation and Development (OECD) paints a largely positive picture for global economic conditions--but with a considerable warning. GDP is rising across the globe, and the OECD is raising its growth projections for 2010 and 2011. But debt clouds the otherwise sunny picture. From the OECD press office: Trade flows are rising again. Strong growth in China and other emerging markets is helping to pull other countries out of recession. But at the same time, the risk of overheating and inflation is growing in emerging markets. A boom-bust scenario cannot be ruled out, requiring a further tightening in countries such as China and India. The knock-on effect would be slower growth in other regions. Exchange rate flexibility could ease some of the pressure on Chinese monetary policy and provide more scope for addressing domestic inflation, says the OECD. Instability in sovereign debt markets poses another serious risk. It has highlighted the need for the euro area to strengthen its institutional and operational architecture. Bolder measures need to be taken to ensure fiscal discipline, says the Outlook.Several countries are already taking early action to enhance the credibility of their fiscal consolidation plans and this is very welcome. Here's a look at the fiscal balance that has OECD analysts concerned: And here is OECD Chief Economist, Pier Carlo Paduan discussing the risks to global recovery: Read more here .

Harvard Kennedy School professor Jeff Frankel , director of the Program in International Finance and Macroeconomics at the National Bureau of Economic Research , has an interesting look at the popularity of Chile's outgoing president, Michelle Bachelet . Bachelet and her administration were deeply unpopular in the summer of 2008--pulling the lowest approval ratings of and leaders of Chile since "the return of democracy," according to Frankel. But with the global economic crisis came newfound appreciation for Bachelet and her economic policies. Frankel calls those policies--in which the government resisted spending off its commodity (mainly copper) assets during boom times, then spent the savings during the global recession--"a truly countercyclical fiscal policy." And he says Chile, which just joined the OECD, essentially moving out of the "developing nation" category, provides a strong example for other developing nations: Under the Chilean rules, the government can run a deficit larger than the target to the extent that: (1) output falls short of potential, in a recession, or (2) the price of copper is below its medium-term (10-year) equilibrium, with the key institutional innovation that there are two panels of experts whose job it is each mid-year to make the judgments, respectively, what is the output gap and what is the medium term equilibrium price of copper. Thus in the copper boom of 2003-2008 when, as usual, the political pressure was to declare the increase in the price of copper permanent thereby justifying spending on a par with export earnings, the expert panel ruled that most of the price increase was temporary so that most of the earnings had to be saved. This turned out to be right, as the 2008 spike was indeed temporary. Any country, but especially commodity-producers, could usefully apply variants of the Chilean fiscal device. Given that many developing countries are more prone to weak institutions (Greece comes to mind), a useful reinforcement of the Chilean idea would be to give legal independence to the panels. There could a requirement regarding the professional qualifications of the members and laws protecting them from being fired, as there are for governors of independent central banks. The principle of a separation of decision-making powers should be retained: the rules as interpreted by the panels determine the total amount of spending or budget deficits, while the elected political leaders determine how that total is allocated. This may be just the sort of structural reform needed in so many countries where the politicians have repeatedly proven themselves unable to maintain long-term budgetary discipline. Read Achieving Long-Term Fiscal Discipline: A Lesson from Chile here . (Hat tip: Mark Thoma)

China's economy continues to thrive compared to others around the globe. The growth rate for the third quarter was near 9%. Great returns for 2009, and the near future looks even brighter to most economists and investors. But at Fortune/CNNMoney.com , Bill Powell writes of some concerns over China's escalating debt. According to Powell, the Chinese government has issued massive loans to boost infrastructure, manufacturing, and real estate. The loans total $1.27 trillion, "up 136% from the same period last year." According to a recent analysis by Monaco-based hedge fund Pivot Capital Management, China's total lending reached 140% of GDP at midyear. That kind of lending makes China an "outlier" compared with other BRIC (Brazil, Russia, India, and China) countries -- and is already well beyond the levels that "have led to sharp and brief credit crises in the past," the Pivot Capital report contends. Moreover, an increasing number of Chinese loans are being funneled into projects unlikely to generate an attractive economic return. From 2000 to 2008 it took just $1.50 in new credit to generate $1 of GDP growth. Now that ratio is 7 to 1. (In the U.S., just before the financial crisis hit, the ratio was only 4 to 1.) That's because the loans are creating huge amounts of manufacturing capacity -- which is unneeded in the bears' view. China's spare capacity in the cement industry, for example, equals the total annual consumption in the U.S., Japan, and India combined. So where will the growth come from? China's export markets are tapped out. Its domestic consumption, stalled at around a third of GDP, hasn't yet started to rise significantly. Additional manufacturing investment would be crazy, leading arguably to a global deflationary bust of epic proportions. Read the full article here .

The Organisation for Economic Cooperation and Development 's latest Economic Outlook features something the organization's projections haven't shown in two years: projected growth revised upward. The US is among those OECD nations to have better news in the June Outlook. In March, the OECD report projected a 4% decline for the US economy this year. The June Outlook now projects a 2.8% decline. Large emerging economies all get strong projections: A recovery already appears to be taking hold in China, helped by major stimulus measures. Chinese GDP growth is forecast to be 7.7% in 2009 and 9.3% in 2010, an upward revision from the OECD’s March forecasts of 6.3% this year and 8.5% next year. In Brazil, economic activity is forecast to fall by 0.8% in 2009 and rebound to 4.0% growth in 2010 (March forecast -0.3% and +3.8%); in Russia, economic activity is forecast to drop by 6.8% in 2009 and climb by 3.7% in 2010 (March forecast -5.6% and +0.7%); and in India, growth is predicted to slow to 5.9% in 2009 before accelerating to 7.2% in 2010 (March forecast 4.3% and 5.8%). This interactive map shows the OECD Economic Outlook's GDP growth projections for 2009 and 2010: And here's Jorgen Elmeskov , acting chief economist of the OECD, explaining the report: More information on the Economic Outlook is available here .