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:230px
Membership:34 states,
20 founder states (1961)
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:reformed as the OECD
Established Date4:30 September 1961
Official Website:www.oecd.org
Footnote1:Organisation for European Economic Co-operation.

The Organisation for Economic Co-operation and Development (OECD, French: Organisation de coopération et de développement économiques, OCDE) is an international economic organisation of 34 countries founded in 1961 to stimulate economic progress and world trade. It is a forum of countries committed to democracy and the market economy, providing a platform to compare policy experiences, seek answers to common problems, identify good practices, and co-ordinate domestic and international policies of its members.

The OECD 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. Most OECD members are high-income economies with a "very high" Human Development Index (HDI) and are regarded as developed countries.

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

History

Organisation for European Economic Co-operation

The Organisation for European Economic Co-operation (OEEC), was formed in 1948 to administer American and Canadian aid in the framework of the Marshall Plan for the reconstruction of Europe after World War II.[1] It started its operations on 16 April 1948. Since 1949, it has been headquartered in the Chateau de la Muette in Paris, France. After the Marshall Plan ended, the OEEC focused on economic questions.[2]

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 European Economic Community 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.

Foundation of the OECD

Following the 1957 Rome Treaties to launch the European Economic Community, 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. The official founding members are the Republic of Austria, the Kingdom of Belgium, the Dominion of Canada, the Kingdom of Denmark, the French Republic, the Federal Republic of Germany, the Kingdom of Greece, the Republic of Iceland, the Republic of Ireland, the Italian Republic, the Grand Duchy of Luxembourg, the Kingdom of the Netherlands, the Kingdom of Norway, the Portuguese Republic, Spain, the Kingdom of Sweden, the Swiss Confederation, the Turkish Republic, the United Kingdom of Great Britain and Northern Ireland, and the United States of America. During the next 12 years Japan, Finland, Australia, and New Zealand also joined the organisation. Yugoslavia had observer status in the organisation starting with the establishment of the OECD until its dissolution.[3]

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

Unlike the organizations of the United Nations system, OECD uses the spelling "organisation" with an "s" in its name rather than "organization" (see -ise/-ize).

Enlargement to Central and Eastern Europe

In 1989, after the political changes in Central and Eastern Europe, the OECD started to assist these countries to prepare market economy reforms. In 1990, the Centre for Co-operation with European Economies in Transition (now succeeded by the Centre for Cooperation with Non-Members) was established, and in 1991, the Programme "Partners in Transition" was launched for the cooperation with Czechoslovakia, Hungary and Poland.[3] This programme also included a membership option for these countries.[4] As a result of this, in 1994–2000 Poland, Hungary, Czech Republic and Slovakia as well as Mexico and the Republic of Korea became members of the organisation.

Reform and further enlargement

In the 1990s, a number of European countries, now members of the European Union, expressed their willingness to join the organisation. In 1995, Cyprus applied for membership, but, according to the Cypriot government, it was vetoed by Turkey.[5] In 1996, Estonia, Latvia, and Lithuania signed a Joint Declaration expressing willingness to become full members of the OECD.[6] Slovenia also applied for membership that same year.[7] In 2005 Malta applied to join the organization.[8]

In 2003, the OECD established a working group headed by Japan's Ambassador to the OECD Seiichiro Noboru to work out a strategy for the enlargement and co-operation with non-members. The working group proposed that the selection of candidate countries to be based on four criteria: "like-mindedness", "significant player", "mutual benefit" and "global considerations". The working group's recommendations were presented at the OECD Ministerial Council Meeting on 13 and 14 May 2004. Based on these recommendations work, the meeting adopted an agreement on operationalisation of the proposed guidelines and on the drafting of a list of countries suitable as potential candidates for membership.[3] As a result of this work, on 16 May 2007, the OECD Ministerial Council decided to open accession discussions with Chile, Estonia, Israel, Russia and Slovenia and to strengthen co-operation with Brazil, China, India, Indonesia and South Africa through a process of enhanced engagement. Chile, Slovenia, Israel and Estonia all became members in 2010.[9] [10] [11]

In 2011 President Juan Manuel Santos of Colombia express the country's willingness to join the organization during a speech at the OECD headquarters.[12]

Objectives and activities

Aim

The OECD defines itself as a forum of countries committed to democracy and the market economy, providing a setting to compare policy experiences, seek answers to common problems, identify good practices, and co-ordinate domestic and international policies.[13] Its mandate covers economic, environmental, and social issues. It acts by peer pressure to improve policy and implement "soft law"—non-binding instruments that can occasionally lead to binding treaties. In this work, the OECD cooperates with businesses, trade unions and other representatives of civil society. Collaboration at the OECD regarding taxation, for example, has fostered the growth of a global web of bilateral tax treaties.

The OECD promotes policies designed:

International investments and multinational enterprises

Between 1995 and 1998, the OECD designed the Multilateral Agreement on Investment, which was abandoned because of a widespread criticism from civil society groups and developing countries. 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-eight countries.[14]

The OECD has also constituted an anti-spam task force, which submitted a detailed report, with several background papers on spam problems in developing countries, best practices for ISPs, e-mail marketers, etc., appended. It works on the information economy[15] and the future of the Internet economy.[16]

PISA

See also: Programme for International Student Assessment.

The OECD publishes the Programme for International Student Assessment (PISA), which is an assessment that allows for a comparison of educational performances between countries.

Taxation

See also: FATF Blacklist. The OECD publishes and updates a model tax convention that serves as a template for bilateral negotiations regarding tax coordination and cooperation. This model is accompanied by a set of commentaries that reflect OECD-level interpretation of the content of the model convention provisions. In general, this model 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).

Since 1998, the OECD has led a charge against 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 the sanctity of tax policy as a matter of sovereign entitlement.[17] 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".[18] In May 2009, all remaining countries were removed from the list.[19]

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 that 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 that encourage tax fraud.[20]

Publishing

The OECD publishes books, reports, statistics, working papers and reference materials. All titles and databases published since 1998 can be accessed via OECD iLibrary.

The OECD Library & Archives collection dates from 1947, including records from the Committee for European Economic Co-operation (CEEC) and the Organisation for European Economic Co-operation (OEEC), predecessors of today's OECD. External researchers can consult OECD publications and archival material on the OECD premises by appointment: www.oecd.org/libraryandarchives.

Books

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 the iLibrary, the online bookshop or OECD Library & Archives.

Statistics

The OECD is known as a statistical agency, as it publishes comparable statistics on a wide number of subjects.

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 iLibrary, as well as on many specialised portals.

Reference works

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

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.

Structure

The OECD's structure consists of three main elements:

Meetings

Delegates from the member countries attend committees' and other meetings. Former Deputy-Secretary General Pierre Vinde estimated in 1997 that the cost borne 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.[21] 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:

Secretariat

Exchanges between OECD governments benefit from the information, analysis, and preparation of the OECD Secretariat. The secretariat collects data, monitors trends, and analyses and forecasts economic developments. Under the direction and guidance of member governments, it also researches social changes or evolving patterns in trade, environment, education, agriculture, technology, taxation, and other areas.

The secretariat is organised in Directorates:

The work of the secretariat is financed from the OECD's annual budget, currently around US$510 million or €342.9 million). The budget is funded by the member countries based on a formula related to the size of each member's gross national product.[22] 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.

As an international organisation the terms of employment of the OECD Secretariat 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 that 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.

Secretaries-General

Committees

Representatives of the 34 OECD member countries and a number of observer countries meet in specialised committees on specific policy areas, such as economics, trade, science, employment, education or financial markets. There are about 200 committees, working groups and expert groups. Committees discuss policies and review progress in the given policy area.[23]

Special bodies

Member countries

Current members

There are currently 34 members of the OECD.

CountryMembership[24] Geographic locationNotes
AustraliaOceania
AustriaEuropeOEEC member.[25]
BelgiumEuropeOEEC member.
CanadaNorth America
ChileSouth America
Czech RepublicEurope
DenmarkEuropeOEEC member.
EstoniaEurope
FinlandEurope
FranceEuropeOEEC member.
GermanyEuropeJoined OEEC in 1949 (West Germany).[26] Previously represented by the Trizone.
GreeceEuropeOEEC member.
HungaryEurope
IcelandEuropeOEEC member.
IrelandEuropeOEEC member.
IsraelAsia
ItalyEuropeOEEC member.
JapanAsia
Asia
LuxembourgEuropeOEEC member.
MexicoNorth America
NetherlandsEuropeOEEC member.
New ZealandOceania
NorwayEuropeOEEC member.
PolandEurope
PortugalEuropeOEEC member.
SlovakiaEurope
SloveniaEurope
SpainEuropeJoined OEEC in 1958.[27]
SwedenEuropeOEEC member.
SwitzerlandEuropeOEEC member.
TurkeyEurasiaOEEC member.
United KingdomEuropeOEEC member.
United StatesNorth America

The European Commission participates in the work of the OECD alongside the EU Member States.[28]

Former members

Invited countries

Relations with non-members

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 OECD's Centre for Co-operation with Non-Members develops and oversees the strategic orientations of the relations with non-members.

On 16 May 2007, the OECD Ministerial Council decided to strengthen OECD's co-operation with Brazil, China, India, Indonesia and South Africa, through a process of enhanced engagement.[29]

The OECD explores 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.

Criticism

See also: OECD controversy. The OECD has been criticised by several civil society groups and developing countries. The main criticism has been the narrowness of the OECD because of its limited membership to a select few rich nations.[30] In 1997–1998, the draft Multilateral Agreement on Investment was heavily criticized by several non-governmental organisations and developing countries. Many critics argued that the agreement would threaten protection of human rights, labor and environmental standards, and the least developed countries. A particular concern was that the MAI would result in a 'race to the bottom' among countries willing to lower their labor and environmental standards to attract foreign investment. Also the OECD's actions against harmful tax practices has raised criticism. The primary objection is the sanctity of tax policy as a matter of sovereign entitlement.[17]

Indicators

Land areas, populations, economic indicators and various indexes of member states
CountryArea[31]
(km²)
Population[32]
2010
GDP (PPP)
(millions, Intl. $)
2010
GDP (PPP)
per capita

(Intl. $)
2010
HDI[33]
2011
FSI[34]
2011
CPI[35]
2011
IEF[36]
2011
GPI[37]
2011
WPFI[38]
2010
DI[39]
2010
Income
inequality
[40]
late-2000s
7,741,22022,342,000916,695.7d40,644d0.92928.18.882.51.4555.389.220.336
83,8718,387,742335,433.539,9910.88527.37.871.91.3370.508.490.261
30,52810,883,050e409,061.237,5870.88634.17.570.21.4134.008.050.259
9,984,67034,108,7501,329,864.238,9890.90827.78.780.81.3557.009.080.324
756,10217,094,280257,460.915,0610.80540.77.277.41.71010.507.670.494
78,86710,517,250273,931.726,0460.86542.44.470.41.3207.508.190.256
43,0945,543,819220,433.339,7460.89523.89.478.61.2892.509.520.248
45,2281,340,16027,244.320,3300.83549.36.475.21.7982.007.680.315
338,1455,363,352196,583.536,6530.88219.79.474.01.3520.009.190.259
643,42764,847,596e2,194,118.433,8350.88434.07.064.61.69713.387.770.293
357,02281,757,529e3,044,241.637,2350.90533.98.071.81.4164.258.380.295
131,95711,305,054e314,721.427,8390.86147.43.460.31.94719.007.920.307
93,0289,999,985200,461.720,0460.81648.74.666.61.4957.507.210.272
103,000318,00611,075.634,8280.89830.18.368.21.1480.009.650.301
70,2734,470,700180,411.040,3090.90825.37.578.71.3702.008.790.293
22,0727,619,120217,764.228,5710.888a5.868.52.90123.257.480.371
301,34060,468,549e1,908,568.831,5630.87445.83.960.31.77515.007.830.337
377,915127,382,997e4,301,851.2d33,771d0.90131.08.072.81.2872.508.080.329
99,72050,515,6601,417,548.929,0040.89738.85.469.81.82913.338.110.315
2,586506,400e43,956.086,8010.86726.18.576.21.341c4.008.880.288
1,964,375108,396,2001,644,477.4d15,186d0.77075.13.067.82.36247.506.930.476
41,54316,612,167e701,947.142,2550.91028.38.974.71.6280.008.990.294
267,7104,368,000130,929.5d29,865d0.90824.89.582.31.2791.509.260.330
323,8024,889,252276,953.856,6480.94320.49.070.31.3560.009.800.250
312,68538,186,860755,472.819,7840.81346.85.564.11.5458.887.050.305
92,09010,637,462e272,563.725,6230.80932.36.164.01.45312.368.020.353
49,0355,431,024127,266.623,4420.83447.14.069.51.57611.507.350.257
20,2732,024,91255,555.527,1160.88435.55.964.61.35813.447.690.236
505,37046,072,8301,477,839.632,0760.87843.16.270.21.64112.258.160.317
450,2959,379,000366,059.839,0340.90422.89.371.91.4010.009.500.259
41,2777,822,299364,506.946,8150.90323.28.881.91.4210.009.090.303
783,56272,846,840e1,114,629.515,301d0.69974.94.264.22.41149.255.730.409
243,61061,349,0002,233,883.235,9170.86334.17.874.51.6316.008.160.345
9,826,675309,050,80014,447,100.046,5880.91034.87.177.82.0636.758.180.378
OECDb36,226,3671,231,838,64541,770,612.533,9090.87136.36.971.71.6079.218.270.314
a The FSI index supplies no figure for Israel, but rather supplies a figure (84.4) for "Israel/West Bank".
b OECD total used for indicators 1 through 3; OECD weighted average used for indicator 4; OECD unweighted average used for indicators 5 through 12.
c Data are for 2010.
d Estimate.
e 2010 figure was not available and was obtained by dividing the GDP (PPP) by the GDP (PPP) per capita.
Note: The colors indicate the country's global position in the respective indicator. For example, a green cell indicates that the country is ranked in the upper 25% of the list (including all countries with available data). The World Factbook was used for indicators 1 through 4. Indicator 12 was not colored due to data unavailability in many countries and because of differences in Gini coefficient calculation between the OECD and other institutions.
Highest fourth
Upper-mid (2nd to 3rd quartile)
Lower-mid (1st to 2nd quartile)
Lowest fourth

See also

External links

Video clips

Notes and References

  1. Book: Christopher. Warren. In the stream of history: shaping foreign policy for a new era. 165. 1998. Stanford University Press. 978-0-8047-3468-4.
  2. Web site: Organisation for European Economic Co-operation. 2008-07-26. OECD.
  3. Web site: Ministry of Foreign Affairs of Slovenia. History of relations between Slovenia and the OECD. 2010-10-31.
  4. Web site: Permanent Delegation of the Czech Republic to the OECD. The Czech Republic in the OECD.
  5. Web site: MINISTRY OF FOREIGN AFFAIRS - International Organisations - Turkey's attempts to exclude Cyprus' membership. . Mfa.gov.cy. 2011-11-04.
  6. Web site: Ministry of Foreign Affairs of Latvia: Co-operation between the OECD and Latvia. Mfa.gov.lv. 2011-11-04.
  7. Web site: Slovenia and the OECD. Oecd.org. 2012-03-31.
  8. Web site: Malta applies to join OECD as full member. Maltamedia.com. 2005-09-24. 2011-11-04.
  9. Web site: Chile's accession to the OECD. OECD.org. 7 May 2010. 2010-05-07.
  10. Web site: Ratification of the Convention on the OECD. OECD.org. 2010-07-22.
  11. Web site: Ratification of the Convention on the OECD. OECD.org. 2010-09-07.
  12. Web site: Demanda de Santos para que Colombia entre en OCDE fue bien recibida : Noticias de Economia. elpais.com.co. 2012-03-31.
  13. Web site: About OECD. 2010-01-16. OECD.
  14. Web site: OECD Anti-Bribery Convention. OECD. 2010-01-16.
  15. Web site: Information and Communications Policy. OECD. 2010-01-16.
  16. Web site: Shaping Policies for a Digital World. OECD. 2010-01-16.
  17. Sovereignty, Taxation, and Social Contract. Christians. Allison. August 29, 2008. Minnesota Journal of International Law. 18.
  18. News: Sanctions threat to 'tax havens'. 2000-06-26. 2008-07-26. BBC News.
  19. Web site: List of Unco-operative Tax Havens. 2009-05-29. OECD.
  20. Web site: 17 countries call for new 'tax haven blacklist'. 2008-10-22. 2008-10-22. EuroNews.
  21. 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. http://web.archive.org/web/20080602214358/http://www.idrc.ca/en/ev-114358-201-1-DO_TOPIC.html . 2008-06-02.
  22. Web site: OECD.org. OECD.org. 2010-10-23.
  23. Web site: On-Line Guide to OECD Intergovernmental Activity. .oecd.org. 2011-11-04.
  24. Web site: List of OECD Member countries - Ratification of the Convention on the OECD. Oecd.org. 2011-11-04.
  25. Web site: Organisation for European Economic Co-operation. Oecd.org. 2011-11-29.
  26. Adenauer und die Hohen Kommissare, Munich 1989, p. 465. Available here.
  27. Julio Crespo MacLennan: Spain and the process of European integration, 1957-85, Basingstoke 2000, p. 31. Available here.
  28. Web site: Member Countries. Oecd.org. 1970-01-01. 2010-10-23.
  29. Chair's summary of the OECD Council at Ministerial Level, Paris, 15–16 May 2007 – Innovation: Advancing the OECD Agenda for Growth and Equity. OECD. 16 May 2007. 2008-07-26.
  30. Jorma Julin. The OECD: Securing the future. OECD. The OECD Observer. 240/241. December 2003. 2010-01-16.
  31. Web site: [https://www.cia.gov/library/publications/the-world-factbook/fields/2147.html CIA.gov]. CIA.gov. 1991-11-26. 2011-11-04.
  32. Web site: OECD. OECD Statistics (GDP, unemployment, income, population, labour, education, trade, finance, prices...). Stats.oecd.org. 2011-12-05.
  33. Web site: Statistics | Human Development Reports (HDR) | United Nations Development Programme (UNDP). Hdr.undp.org. 2011-11-17.
  34. Web site: Failed States Index Scores 2011. The Fund for Peace. 2011-08-28.
  35. Web site: Corruption Perceptions Index: Transparency International. Transparency.org. 2011-12-01. 2011-12-01.
  36. Web site: Country rankings for trade, business, fiscal, monetary, financial, labor and investment freedoms. Heritage.org. 2011-03-04.
  37. Web site: GPI Map - 2011 « Global Peace Index « Vision of Humanity. Visionofhumanity.org. 2011-08-28.
  38. Web site: RSF.org. En.rsf.org. 2011-11-04.
  39. Web site: Democracy Index 2010. PDF. 2011-01-07.
  40. Web site: Income Distribution - Inequality. OECD.StatExtracts. 2011-12-05. Note: Data refer to Gini coefficient for income distribution "after taxes and transfers" using the "current definition" for the "total population".