Organisation for Economic Co-operation and Development explained

Organisation for Economic Co-operation and Development (OECD)
Linking Name:the Organisation for Economic Co-operation and Development
Symbol Type:Logo
Symbol Width:100px
Membership:20 Founder States
10 Participating States
Admin Center Type:Secretariat
Admin Center:Paris, France
Leader Title1:Secretary General
Leader Name1: José Ángel Gurría
Established Event1:as the OEEC
Established Date1:16 April 1948
Established Event4:renamed as the OECD
Established Date4:September 1961
Official Website:
Footnote1:Organisation for European Economic Co-operation.

The Organisation for Economic Co-operation and Development (OECD) (in French: Organisation de coopération et de développement économiques, OCDE) is an international organisation of 30 countries that accept the principles of representative democracy and free-market economy. Most OECD members are high-income economies with a high HDI and are regarded as developed countries.

It originated in 1948 as the Organisation for European Economic Co-operation (OEEC), led by Robert Marjolin of France, to help administer the Marshall Plan for the reconstruction of Europe after World War II. Later, its membership was extended to non-European states. In 1961, it was reformed into the Organisation for Economic Co-operation and Development by the Convention on the Organisation for Economic Co-operation and Development.

The OECD's headquarters are at the Château de la Muette in Paris.


See also: Organisation for European Economic Co-operation.

The Organisation for European Economic Co-operation (OEEC) was founded in 1948 to help administer the Marshall Plan for the reconstruction of Europe after World War II. The headquarters was in the Chateau de la Muette in Paris, France. As the Marshall Plan faded, the OEEC focused on economic questions.[1]

In the 1950s the OEEC provided the framework for negotiations aimed at determining conditions for setting up a European Free Trade Area, to bring the Common Market of the Six and the other OEEC members together on a multilateral basis. In 1958, a European Nuclear Energy Agency was set up under the OEEC.

Following the 1957 Rome Treaties to launch Europe's Common Market, the Convention on the Organisation for Economic Co-operation and Development was drawn up to reform the OEEC. The Convention was signed in December 1960 and the OECD officially superseded the OEEC in September 1961. It consisted of the European founder countries of the OEEC plus the United States and Canada, with Japan joining three years later.

More than just increasing its internal structure, OECD progressively created agencies: the Development Center (1961), International Energy Agency (IEA, 1974), and Financial Action Task Force on Money Laundering.

Objectives and action

A setting in which governments can compare policy experiences, seek answers to common problems, identify good practices, and co-ordinate domestic and international policies. The mandate of the OECD is broad, covering economic, environmental, and social issues. It is a forum where peer pressure can act as a powerful incentive to improve policy and implement "soft law" - non-binding instruments that can occasionally lead to binding treaties.

Exchanges between OECD governments flow from information and analysis provided by a secretariat in Paris. The secretariat collects data, monitors trends, and analyses and forecasts economic developments. It also researches social changes or evolving patterns in trade, environment, agriculture, technology, taxation and other areas. The OECD is also known as a premium statistical agency, as it publishes highly-comparable statistics on a very wide number of subjects.

Over the past several decades, the OECD has tackled a range of economic, social, and environmental issues while further deepening its engagement with business, trade unions and other representatives of civil society. Collaboration at the OECD regarding taxation, for example, have fostered the growth of a global web of bilateral tax treaties.

The Organisation for Economic Co-operation and Development (OECD) promotes policies designed:



The OECD's annual budget, currently around USD $510 million (EUR 342.9 million), is funded by the member countries based on a formula related to the size of each member's gross national product. The largest contributor is the United States, which contributes about one quarter of the budget, followed by Japan with 16%, Germany with 9% and the U.K. and France with 7%. The OECD governing council sets the budget and scope of work on a two-yearly basis.


The OECD's structure revolves around 3 major bodies:


Every year, more than 40,000 delegates visit the OECD to attend committees' and other meetings, principally organised by the OECD Secretariat. Former Deputy-Secretary General Pierre Vinde estimated in 1997[2] that the cost born by the member countries, such as sending their officials to OECD meetings and maintaining permanent delegations, is equivalent to the cost of running the secretariat. This ratio is unique among inter-governmental organisations. In other words, the OECD is more a persistent forum or network of officials and experts than an administration.

Noteworthy meetings include:

In January 2008, the OECD opened a new Conference centre to host these meetings.


The OECD Secretariat is organised in Directorates:

Secretaries General

Special bodies


Representatives of the 30 OECD member countries meet in specialised committees to advance ideas and review progress in specific policy areas, such as economics, trade, science, employment, education or financial markets.

There are about 200 committees, working groups and expert groups. Some 40,000 senior officials from national administrations go to OECD committee meetings each year to request, review and contribute to work undertaken by the OECD secretariat. At home, they have on-line access to documents and can exchange information through a special network.

Member countries

There are currently thirty full members; of these, 27 (marked with *) are described as high-income countries by the World Bank.[3] The remaining members, Poland, Mexico and Turkey, are upper middle-income economies.

colspan=2Founding members (1961):


















United Kingdom

United States

colspan=2Admitted later (listed chronologically with year of admission):


  • (1964)


  • (1969)


  • (1971)

New Zealand

  • (1973)

Mexico (1994)

Czech Republic

  • (1995)
  • (1996)


  • (1996)

Poland (1996)


  • (2000)

Relations with non-members and enlargement

Currently, 25 non-members participate as regular observers or full participants in OECD Committees. About 50 non-members are engaged in OECD working parties, schemes or programmes. The OECD conducts a policy dialogue and capacity building activities with non-members (Country Programmes, Regional Approaches and Global Forums) to share their views on best policy practices and to bear on OECD's policy debate. The Centre for Co-operation with Non-Members (CCNM) develops and oversees the strategic orientations of the OECD's global relations with non-members.

On 16 May 2007, the OECD Ministerial Council decided to open accession discussions with Chile, Estonia, Israel, the Russian Federation and Slovenia. It was also decided to strengthen OECD's co-operation with Brazil, China, India, Indonesia and South Africa, through a process of enhanced engagement or as full members.[5] The OECD will also explore the possibilities for enhanced co-operation with selected countries and regions of strategic interest to the OECD, giving priority to South East Asia with a view to identifying countries for possible membership.


The OECD publishes books, reports, statistics, working papers and reference materials.


The OECD releases between 300 and 500 books each year. Most books are published in English and French. The OECD flagship titles include:

All OECD books are available on SourceOECD and on the OECD online bookshop.


All OECD activities are backed-up by statistics, and given the variety of OECD activities, it is a very good source of comparable statistics.

OECD statistics are available in several forms:

Working papers

There are 15 working papers series published by the various directorates of the OECD Secretariat. They are available on SourceOECD, as well as on many specialised portals.

Reference works

The OECD is responsible for the OECD Guidelines for the Testing of Chemicals, a continually-updated document which is a de facto standard (i.e., soft law).

In addition, the OECD publishes and continually updates a model tax convention which serves as a template for bilateral negotiations regarding tax coordination and cooperation. This model is accompanied by a set of commentaries which reflect OECD-level interpretation of the content of the model convention provisions. This model generally allocates the primary right to tax to the country from which capital investment originates (i.e., the home, or resident country) rather than the country in which the investment is made (the host, or source country). As a result, it is most effective as between two countries with reciprocal investment flows (such as among the OECD member countries), but can be very unbalanced when one of the signatory countries is economically weaker than the other (such as between OECD and non-OECD pairings).

Personnel policy

As an international organisation the terms of employment of OECD staff are not governed by the laws of the country in which their offices are located. Agreements with the host country safeguard the organisation's impartiality with regard to the host and member countries. Hiring and firing practices, working hours and environment, holiday time, pension plans, health insurance and life insurance, salaries, expatriation benefits and general conditions of employment are managed according to rules and regulations associated with the OECD. In order to maintain working conditions which are similar to similarly-structured organisations, the OECD participates as an independent organisation in the system of co-ordinated European organisations, whose other members include NATO, the Western European Union and the European Patent Organisation.

Special programs and actions

Between 1995 and 1997, the OECD designed the much disputed Multilateral Agreement on Investment (MAI), which was rejected. A Swedish journalist discovered the agreement, which was until then clandestinely negotiated. It would have disburdened foreign investments of any claims on the part of the concerned regions and countries (also of social, environmental standards). In 1976, the OECD adopted the Declaration on International Investment and Multinational Enterprises, which was rewritten and annexed by the OECD Guidelines for Multinational Enterprises in 2000.

Among other areas, the OECD has taken a role in co-ordinating international action on corruption and bribery, creating the OECD Anti-Bribery Convention, which came into effect in February 1999. It has been ratified by thirty-seven countries.[6]

The OECD has also constituted an anti-spam task force, which submitted a detailed report, with several quite useful background papers on spam problems in developing countries, best practices for ISPs, e-mail marketers, etc., appended. It works on the information economy[7] and the future of the Internet economy.[8]

It has published the OECD Environmental Outlook to 2030, which shows that tackling the key environmental problems we face today — including climate change, biodiversity loss, water scarcity, and the health impacts of pollution — is both achievable and affordable.


See also: Programme for International Student Assessment.

OECD publish the Programme for International Student Assessment (PISA) which allow to compare education performances between countries.

Action against tax havens

See also: FATF Blacklist.

Since 1998, the OECD has led a charge against what it deems "harmful" tax practices, principally targeting the activities of tax havens (while principally accepting the policies of its member countries which would tend to encourage tax competition). These efforts have been met with mixed reaction: the primary objection is apparently linked to ideas about the sanctity of tax policy as a matter of sovereign entitlement.[9] Liechtenstein's recent skirmish with German and U.S. tax authorities is a vivid illustration of what the OECD is encountering in this area.

Nevertheless, the OECD maintains a 'blacklist' of countries it considers uncooperative in the drive for transparency of tax affairs and the effective exchange of information, officially called "The List of Uncooperative Tax Havens".[10] As of August 2007, OECD has blacklisted Andorra, Liechtenstein and Monaco.[11]

On 22 October 2008, at an OECD meeting in Paris, 17 countries led by France and Germany decided to draw up a new blacklist of tax havens. The OECD has been asked to investigate around 40 new tax havens in the world where undeclared revenue is hidden and which host many of the non-regulated hedge funds that have come under fire during the 2008 financial crisis. Germany, France and other countries called on the OECD to specifically add Switzerland to a blacklist of countries which encourage tax fraud.[12]

See also

External links

Notes and References

  1. Web site: Organisation for European Economic Co-operation. 2008-07-26. OECD.
  2. Web site: The Power of Peer-Learning, chapter 3: OECD's Basic Rules of Conduct - A Sociology of its Institutional Culture. 2007. IRDC. 2008-07-31.
  3. Web site: Country Groups. High-income OECD members. The World Bank. 2009-01-23.
  4.,3351,en_33873108_33844430_1_1_1_1_1,00.html OECD's country websites
  5. Web site: Chair's summary of the OECD Council at Ministerial Level, Paris, 15-16 May 2007 – Innovation: Advancing the OECD Agenda for Growth and Equity. Press release of the OECD. 16 May 2007. 2008-07-26.
  6. Web site: OECD Anti-Bribery Convention. OECD. 2008-07-26.
  7. Information and Communications Policy:Department
  8. The Future of the Internet Economy OECD Ministerial Meeting
  9. Sovereignty, Taxation, and Social Contract. Christians. Allison. Allison Christians. August 29, 2008. Minnesota Journal of International Law. 18.
  10. Web site: Sanctions threat to 'tax havens'. 2000-06-26. 2008-07-26. BBC news.
  11. Web site: OECD removes the Marshall Islands from its List of Unco-operative Tax Havens. 07/08/2007. OECD press release. 2008-07-26.
  12. Web site: 17 countries call for new 'tax haven blacklist'. 2008-10-22. 2008-10-22. EuroNews.