The OECD at 50
Better Policies for Better Lives The OECD at 50 Better Policies for Better Lives
The OECD at 50
The OECD at 50: Better Policies for Better Lives was edited by Nicholas Bray, at the request of the OECD Chief of Staff and G20 Sherpa, Gabriela Ramos. He received wide support and input from numerous present and former members of the OECD Secretariat. Elena Miteva, Advisor to the Secretary-General, provided constant support. The OECD Public Affairs and Communications Directorate contributed editorial input and assistance with the preparation of this book.
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The OECD at 50
Contents 12
Foreword Angel Gurría Secretary-General, OECD
14
Messages Nicolas Sarkozy President of the French Republic
15
Hillary Rodham Clinton United States Secretary of State
20
The OECD 50 years of economic co-operation
26
The OECD and Development: An imperative from the beginning
30
Working with partners Building a stronger, cleaner, fairer world economy
34
Global economic management and the role of the EDRC William White
37
44
The OECD: A view from the desk of the economics editor
56
The 1960s Economics, trade and statistics: Some early focus points for OECD work
64
Adapting economic policy discussions to evolving challenges Niels Thygesen
William Keegan
68
The origins Economic growth through effective co-operation
The 1970s Shifting the emphasis of economic policy
72
The birth of the International Energy Agency Etienne Davignon
47
The Marshall Plan: Building intergovernmental co-operation
78
John Llewellyn
Openness, fairness and transparency: 50 years of international investment policy at the OECD Manfred Schekulin
49
The OECD’s Nuclear Energy Agency: Promoting safety and preparing for future energy needs
80
The 1980s New challenges for economic co-operation
84
The international co-ordination of macroeconomic policy
Luis Echávarri
52
Transport and the OECD: Responding to the challenges of globalisation Jack Short
Val Koromzay
7
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The OECD at 50
112
Entering the new millennium Enhanced engagement, institutional innovation, measuring progress
116
Promoting a fairer world economy: The OECD and the fight against harmful tax practices Gabriel Makhlouf
120
OECD and education: The power and potential of PISA Arne Duncan
124
MENA-OECD: Helping the countries of the Middle East and North Africa respond to their citizens’ needs Dr Soukeina Bouraoui
130
The OECD today and tomorrow Coping with the challenges of the next 50 years
135
Contributing to a deeper understanding of financial markets and their regulation Charles Dallara
86
WP3: High-level policy making in a stimulating forum Sir Andrew Crockett
90
136
Working with the OECD to create a better global business environment Tadahiro Asami
The OECD seen from the viewpoint of an international banking analyst Richard O’Brien
96
The 1990s A changing global context
103
The rise of globalisation: New challenges for the OECD Jean-Claude Paye
104
The reform years: Building a stronger, more agile OECD Donald Johnston
106
The OECD anti-bribery convention: A trailblazer in the fight against corruption Huguette Labelle
11215
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The OECD at 50
141
The OECD and the IEA: Working together for economic security and green growth Nobuo Tanaka
146
Reinventing the MENA-OECD programme Rainer Geiger
150
Trade unions and the OECD: In the wake of the great recession Sharan Burrow and John Evans
152
The way forward: Streamlining policy discussions for more effective multilateral surveillance Kumiharu Shigehara
154
International partnerships
156
The OECD and the ILO: Intertwined histories Juan Somavia
158
The OECD and the IMF: A complementary partnership
163
Dominique Strauss-Kahn
161
The OECD and the FAO: Working together for food security and agriculture development
The OECD and UNESCO: Together in the service of knowledge Irina Bokova
167
The OECD and the WHO: Partners for more effective health policies Margaret Chan
Jacques Diouf
169
The OECD and the AfDB: Working together for African development Donald Kaberuka
171
The OECD and the ADB: Working together for Asia-Pacific development Haruhiko Kuroda
173
The OECD and IFAD: Working in partnership to eradicate rural poverty Kanayo F Nwanze
175
The OECD and the WTO: Working to advance trade and development Pascal Lamy
176
Congratulations on the 50th anniversary of the OECD
178
Index of advertisers
12
The OECD at 50
Foreword
Angel Gurría Secretary-General, OECD
T
he world has changed greatly since the OECD was created 50 years ago, and the OECD has changed with it. But one thing has remained constant: our objective to help governments design and implement better policies so that people may enjoy better lives. Over the past half-century, the OECD has been a catalyst for change in many aspects of public policy. We encourage debate and a shared understanding of such critical global issues as economic growth, employment, financial markets, innovation, trade and investment, development, the environment, health and social welfare, as well as in the spheres of public and private governance. Our analyses and recommendations are independent and evidence-based, making our work valuable for member and partner countries alike. The OECD’s raison d’être is to be a pathfinder, a policy advisor and a standard setter on a global scale. A ‘do’ tank. We have fulfilled this role by building on our fundamental values: objectivity, openness, integrity and boldness. The Anti-Bribery Convention, the Principles of Corporate Governance, the Guidelines for Multinational Enterprises, the Model Tax Convention, the Principles for Integrity in Public Procurement, the Jobs Strategy, the PISA evaluation of educational performance are telling accomplishments in the interests of a stronger, cleaner and fairer world economy. Anniversaries are not only opportunities to reflect on lessons and achievements. They invite us to look ahead and gauge our ability to understand the trends changing the world economy and our capacity to fulfil our role in the years to come. As the world emerges from the grip of a major financial crisis, the economic, social and environmental challenges that we face are tremendous. Our anniversary takes place at a defining moment, as the global community seeks deeper international co-operation and a new global governance architecture. The G20, as the premier forum for economic discussions and action, facilitated unprecedented measures to stimulate the economy in the aftermath of the crisis. We are honoured that G20 leaders have called on the OECD to provide analysis and policy advice on structural issues, ranging
The OECD at 50
from employment, capital flows, taxation and combating corruption, to trade, investment and development. Our ability to support the G20 in its work is an important test of our relevance. Participating in the task of global governance also presents us with a unique opportunity to increase our impact on a global scale. The integration of developing countries into the world economy, to the point where they now account for more than one-fifth of total trade, is a cause for celebration. But more work is needed to enable them to play a fuller role in building a better world. Their involvement in the substantive activities and standard-setting work of the OECD has become essential. The OECD is adapting to this new reality, pursuing membership negotiations with Russia and enhancing its engagement with key emerging economies – Brazil, China, India, Indonesia and South Africa – while maintaining close relations with more than 100 developing countries. A promising element of our strategy is to invite emerging economies to be a part of the process when we update our instruments, as was recently the case with the revision of our Guidelines for Multinational Enterprises and the Green Growth Strategy. After the dramatic events we have witnessed since 2008, and as we move forward into the next half-century, it will not be sufficient simply to return to growth. Against a backdrop of climate change, entrenched unemployment and large fiscal deficits, we must identify and foster new sources of growth. The OECD Innovation Strategy, the Green Growth Strategy, the Skills Strategy, our gender agenda and our work on new measures of progress beyond GDP provide strong analytical foundations to overcome the effects of the crisis and achieve a more sustainable, balanced and lasting recovery. But we cannot solve any of the big challenges of today without emerging and developing countries and without development. This is why we are working on a new approach to development, which will reinforce collective action for inclusive growth and stability. Our founders, 50 years ago, were convinced of the need for co-operation in order to achieve “peaceful and harmonious relations among the peoples of the world”. Today, the OECD is well equipped to foster a new era of co-operation with a new sense of global responsibility. As we seek to do this, we will remain true to the spirit of our founders and continue to put the well-being of people at the centre of our concerns.
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The OECD at 50
A message from
Nicolas Sarkozy President of the French Republic
F
or the past 50 years, France has hosted in its capital city the headquarters of the OECD. For half a century it has been an honour and a privilege for France to participate in the birth, development and opening up to new horizons of the OECD. I would like to pay tribute to the men and women who work in the Château de la Muette, the Organisation’s historical headquarters: they represent an unparalleled wealth of expertise that contributes to the intellectual stature of Paris. I would also like to pay tribute to the commitment and dynamism of the Secretary-General of the OECD, my friend Angel Gurría, in the service of the Organisation that he leads and of its member countries, who have recently reappointed him for a second term. The OECD can be proud of what it has achieved in the past 50 years. The crisis from which the world economy is gradually emerging gave a striking demonstration of the need for international co-operation in matters financial, economic and social. In so doing, it validated a concept that lies at the heart of the Organisation’s identity and that has driven its action over the past half-century. Let us not forget that it was in response to the need to get the countries of Europe working together after the Second World War, and so to speed up their reconstruction through the policies of co-operation backed by the Marshall Plan, that the OECD’s forerunner, the OEEC, was born in 1948. The Organisation underwent a name change at the start of the 1960s, but there was no change in what still today constitutes its institutional “genome”: the promotion of international co-operation through the championing of “best practices”. The OECD is in a class of its own in the “galaxy” of international organisations, successfully orchestrating lively and fruitful intergovernmental co-operation by means of an institutional mechanism that has the force of a precision tool – the exchange of best practices among its member countries and partners – all the while anchoring this co-operation in a robust and rigorous corpus of doctrines and analyses. To put it another way, the Organisation is that rare amalgam between an intergovernmental forum for co-operation and an outstandingly productive “think tank” in the service of better policies for better lives – its credo. Over the past 50 years the OECD has, nonetheless, radically transformed itself to take account of the emergence of new powers and, above all, new challenges. In 1989, following the fall of the Berlin Wall, the OECD forged new links with the countries recently liberated from the communist yoke. Today, the Organisation is opening its doors to the new economic powerhouses of Brazil, Russia, India, Indonesia, China and South Africa. France encourages this new openness, which will allow the OECD to find its place within a changing architecture of world governance. It will enable the Organisation, in particular, to obtain full recognition, including on the part of the emerging powers that are not (yet) among its members, of its principles, norms and standards, whose role is to provide a framework of rules of the game for a globalisation process that France wishes to be both harmonious and lasting. I am in no doubt that the OECD possesses all the qualities needed to accomplish this ‘metamorphosis’, as is shown by its front-line contribution to the work of the G20 and its steadfast, proactive and greatly appreciated participation in the efforts to build a new system of world governance that lie at the heart of the French Presidency of the G20.
The OECD at 50
A message from
Hillary Rodham Clinton United States Secretary of State, Chair of the OECD’s 2011 Ministerial Council Meeting
T
he United States is honoured to chair the Organisation for Economic Co-operation and Development’s 2011 Ministerial Council Meeting and celebrate the 50th anniversary of one of the world’s most successful post-war institutions. The United States was a driving force behind the establishment of the Organisation for Economic Co-operation and Development. When we ratified the OECD Convention in 1961, President Kennedy expected that it would “become one of the principal institutions through which we pursue the great aim of consolidating the Atlantic Community”. Over the years, the OECD has far exceeded these expectations and become a global institution with members and partners all over the world. The OECD’s initial objectives – to boost employment, raise living standards, maintain financial stability and promote economic development – have withstood the test of time. Today, the OECD’s world-class statistical and economic analysis helps guide policy makers around the world, and the OECD’s unique system of peer reviews and policy forums enables members to compare policy experiences and identify best practices. It is truly indispensible and allows us to have a conversation and find common ground to meet some of today’s most pressing issues. The United States values the important role that the OECD plays in helping create a level international playing field where businesses can flourish and economies can grow. The OECD’s new work on women’s economic empowerment will give countries the tools to increase economic opportunities for women and help remove obstacles to gender equality. And the OECD is innovating new ideas and programmes to generate jobs, grow economies and raise living standards. The global economic environment has changed dramatically since the creation of the OECD. New economic powers have emerged, and the recent economic crisis has underscored the interconnectedness and increased complexity of today’s world. Sustained global growth requires all countries to participate, including the developing world. But the OECD is an enduring institution, finding new ways to participate, new ways to collaborate, and new ways to expand opportunity. From our fellow charter members to the most recent entrants, we can look back on a half-century of achievement and look forward to another 50 years of partnerships and innovation that will help the OECD maintain its place as an effective, influential and essential international organisation.
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The OECD at 50
The OECD at 50
The OECD 50 years of economic co-operation
The United States values the important contributions that the OECD has made to promote economic growth and development around the world. As we celebrate the Organization’s 50th anniversary, we look forward to working with the OECD to help meet the challenges of the 21st century. Barack Obama, President of the United States of America
During the last 50 years, the OECD has been a leading partner in creating a set of international rules and guidelines for a sustainable global economy. The financial crisis and its consequences have once again illustrated the need for market forces to be channelled by effective global rules and strong institutions to allow for sustainable development of trade, employment and growth. I am certain that governments will be happy to continue to draw on the OECD’s analytical and strategic competence. Angela Merkel, Chancellor of the Federal Republic of Germany
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The OECD at 50
The OECD’s mission:
Better policies for better lives The OECD’s vision:
A stronger, cleaner, fairer world The OECD’s values:
Objective – Our analyses and recommendations are independent and evidence-based. Open – We encourage debate and a shared understanding of critical global issues. Bold – We dare to challenge conventional wisdom, starting with our own. Pioneering – We identify and address emerging and long-term challenges. Ethical – Our credibility is built on trust, integrity and transparency. OECD member countries, with year of membership Australia (1971) Austria (1961) Belgium (1961) Canada (1961) Chile (2010) Czech Republic (1995) Denmark (1961) Estonia (2010) Finland (1969) France (1961) Germany (1961) Greece (1961) Hungary (1996) Iceland (1961) Ireland (1961) Israel (2010) Italy (1962)
Japan (1964) Korea (1996) Luxembourg (1961) Mexico (1994) Netherlands (1961) New Zealand (1973) Norway (1961) Poland (1996) Portugal (1961) Slovak Republic (2000) Slovenia (2010) Spain (1961) Sweden (1961) Switzerland (1961) Turkey (1961) United Kingdom (1961) United States (1961)
The OECD at 50
I offer my sincere congratulations to the OECD for 50 years of contributing to global growth, co-operation and stability. The OECD has played a key role in promoting values such as economic best practice, trade liberalisation and sustainable development that are vital to the world’s economic future. I wish the OECD continuing success in the years and decades ahead. Julia Gillard, Prime Minister of Australia
B
ehind these four letters – OECD – lies a powerful concept: in today’s globalised, interdependent world, multilateral co-operation is the only way to deal effectively with global issues. The Organisation for Economic Co-operation and Development provides a forum in which countries work together to share experiences and seek solutions to common problems. It works with both developed countries and emerging and developing countries, providing policy advice and analysis and co-ordinating joint initiatives. Its mission, put simply, is to help governments develop better policies that will ensure better lives for people around the world. Over the past 50 years, it has amply demonstrated the effectiveness of co-operation based on constant reappraisal of policies through peer review among equals. ❱❱
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The OECD at 50
Improve policy making
The OECD is a global organisation. It is a meeting place for countries that believe in co-operation as the most effective way to solve economic problems and raise living standards. It is a ‘do’ tank. Under a structure resembling a sort of permanent intergovernmental conference, member countries direct and supervise the OECD’s work through a governing Council of ambassadors. The SecretaryGeneral acts as Chair of the Council, heading a Secretariat that conducts analytical and policy work under its supervision and in response to the instructions of specialist Committees and working groups. These, in turn, bring together officials and experts from capitals to debate and decide on policy.
Member countries come to the OECD to learn from each other, improve policy making and develop international standards and rules to address global challenges. “The OECD helps our thinking by providing a catalogue of good practices that have worked elsewhere,” says Balázs Hidvéghi, Hungary’s Deputy State Secretary for International and EU Affairs. “It is a knowhow bank that we are part of and can turn to and adapt to our own circumstances and needs.” As Chile’s former President, Michelle Bachelet, put it during a visit to Paris in 2009, shortly before Chile became a member in May 2010, the OECD is “the club of countries that promote and foster best practices.” Being a member of the OECD ❱❱
GDP OECD countries vs. the rest of the world as a percentage of total world GDP
63.1%
36.9%
1960
1990
1980
71.0%
29.0%
60.9%
39.1%
2000
OECD (OECD aggregate is an “evolving” time series
68.5%
31.5%
1970
67.9%
32.1%
68.0%
32.0%
2010*
Rest of the world
* Estimate
and has been constructed taking into account the effective membership date of the member
% of world GDP
countries, according to the official accession
in PPPs, volumes,
dates: 20 countries in 1960, 22 in 1970, 24 in 1980
reference period 2005
and 1990, 30 in 2000 and 34 in 2010.)
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The OECD at 50
Based on 50 years of profound economic experience and co-operation with its member states, I am confident the OECD will be able to continue providing well-grounded analysis and advice for the challenges we will be facing in the years ahead – especially the need to promote global welfare and social balance through economically, socially and ecologically sound and sustainable policies. Werner Faymann, Federal Chancellor of Austria
means “being able to access information and learning from the most advanced countries in the world,” concurs Franc Križanic, the finance minister of Slovenia, which became a member of the OECD in July 2010. Agreements and approaches forged within the Organisation have often been adopted by larger groupings of countries. Indeed, some consider that its intellectual input into policy negotiations in broader multilateral contexts is one of its richest contributions. Between 1986 and 1994, OECD work enabled countries participating in the General Agreement on Tariffs and Trade, or GATT, to negotiate substantive new regimes for agriculture and services under the Uruguay Round, which led to the creation of the World Trade Organization. According to Sir Nicholas Bayne, a former ambassador of the United Kingdom to the OECD, “thanks to the OECD’s contribution, the WTO in force from 1995 has embraced the whole range of international trade, including agriculture and services, which the old GATT was never able to do.”
Implement best practices Because of the pressing nature of the problems that it is mandated to address, the OECD emphasises the need to support governments, not just in the identification of best practices, but also in their implementation. To keep pace with rapid change in today’s global economy, it looks beyond specific sectors to the interactions between science and technology and their impact on society, and for ways to protect consumers while also promoting the benefits of innovation. In 2010, it launched an Innovation Strategy setting out priorities for government action, from
empowering people to innovate and to unleash innovation in firms to improving the governance of policies for innovation. Coinciding with its 50th anniversary, it is working on a Green Growth Strategy to assist governments in devising the policies that will be needed to promote environment-friendly economic growth over coming decades. Both are specific contributions to identifying and building new sources of growth in the wake of the worst economic crisis in more than a generation. Development has been a prime focus for the OECD since its foundation. It provides a home for the Development Assistance Committee, or DAC, in which major aid donors discuss and co-ordinate policies, and it works with developing countries to ensure that they are able to participate fully in the new prosperity that scientific and technological innovations can bring. In 1962, inspired by President John F Kennedy’s call for a place where developed and developing nations could “meet to study in common the problems of economic development”, the OECD Development Centre was set up with an inclusive governance structure allowing nonOECD countries full membership. Over the years, it has brought together OECD members and developing and emerging economies, fostering debate and discussion of “best practices” and seeking creative policy solutions to emerging global issues and development challenges. In 1996, a report by the DAC entitled Shaping the 21st Century: The Contribution of Development Co-operation paved the way for the Millennium Development Goals by calling for quantifiable targets to advance the betterment of people’s lives throughout the world. ❱❱
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The OECD at 50
The OECD and development: An imperative from the beginning
H
elping new states and developing countries to prosper has been a
The OECD Development Centre,
An early topic of discussion in the DAC
founded in 1962, serves as a bridge
was how much governments, as opposed
moral and political imperative from
between OECD member countries
to private donors, should give. In 1969,
the OECD’s earliest days. Its founding
and developing economies. Offering a
the DAC adopted the concept of “Official
Convention clearly stated the scope
platform for dialogue on an equal footing,
Development Assistance”, or ODA. In the
of its mission: to promote economic
its main purpose was and remains to
same year, a World Bank commission
development and well-being, not
share “best practices” to the benefit of
proposed a target for official aid of
only in its member countries but for
all. Several countries that have recently
0.7 per cent of donor countries’ gross
the world at large.
joined the OECD, including Korea and
national product, or GNP.
The Development Assistance
Chile, first joined the Centre before
In 1996, a DAC report spelled out a set
Committee, or DAC, brings together
pursuing full OECD membership. As of
of international objectives for economic
donor governments and multilateral
March 2011, it had 41 member countries:
well-being, social development and
organisations. It was one of the first
25 OECD countries and 16 non-OECD
environmental protection, including
bodies to be incorporated into the
countries. All have an equal say in
reducing child mortality, achieving
newly created OECD in 1961.
guiding and monitoring its work.
universal primary education and
The OECD at 50
halving the proportion of people living
developing country governments can
in extreme poverty. These were to
plan their development programmes
become the basis for the internationally
effectively. It also stresses the need for
adopted Millennium Development Goals
recipient countries to work with donors
(MDGs), reaffirmed by a United Nations
to ensure that aid money is well spent.
summit in September 2010 as targets for
Its inclusive approach to engagement
development by 2015.
in development is evidenced by its
In 2001, an agreement among donor
central role in creating and supporting
countries ended a system whereby much
important international bodies such as
of ODA to the world’s least developed
the Working Party on Aid Effectiveness
countries was “tied” under arrangements
and the International Dialogue on
requiring recipients to buy aid-funded
Peacebuilding and Statebuilding.
The Millennium Development Goals 1. Eradicate extreme poverty and hunger 2. Achieve universal primary education 3. Promote gender equality and empower women 4. Reduce child mortality 5. Improve maternal health
goods and services from specific suppliers,
Building on its multidisciplinary
usually in the donor countries. In parallel,
expertise and accumulated knowledge,
the OECD consistently stressed the need
the OECD is developing more integrated
for strong institutions in developing
and comprehensive approaches to
countries as a basis for the effective use
“development beyond aid”. In line
of aid. In 2005, the Paris Declaration
with its commitment to promote
on Aid Effectiveness committed
the strengthening of public services
countries and organisations to do more
and infrastructures, for example, it
to harmonise their development co-
is helping developing countries to
operation programmes, aligning them
modernise their tax administrations
meet development challenges. The
with recipient country strategies and
and raise revenues to pay for public
Development Centre’s Perspectives on
managing them for effective results.
services such as education, healthcare
Global Development and its Economic
and communications. It is working
Outlooks on Africa, Latin America, and
progress towards the MDGs. In a context
with development agencies and fragile
South-east Asia are a useful source for
of increasing global interdependency,
states to stem conflicts and support
analysis of economic, social and political
policies put in place by any one country
good governance in these nations. And
developments in the world’s developing
in areas ranging from trade, investment
it is looking for ways to help women in
and emerging countries. Through
and agriculture to fisheries, taxation,
developing countries achieve their full
strengthened policy dialogue and
security, innovation, and migration can
potential in parity with men.
knowledge sharing with emerging and
Aid remains critical to ensure
have impacts far beyond that country’s
Over time, the OECD has developed
6. Combat HIV/AIDS, malaria and other diseases 7. Ensure environmental sustainability 8. Develop a global partnership for development
developing economies, the OECD aims to
borders. Multiple crises – financial,
an extensive knowledge base which
make its work accessible and relevant to
economic, food, energy, climate change
helps it to better understand and
countries at all stages of development.
– have increased awareness of policy interlinkages and the need for integrated collective action to stimulate growth and achieve results. Aid efforts need to be reinforced by a multidimensional and more coherent approach to development. With only a few countries consistently meeting the 0.7 per cent target for aid (now measured by most countries as a proportion of gross national income, or GNI), the OECD monitors aid flows and how they are balanced among countries and regions. It urges donor countries to live up to their commitments and to be transparent and predictable so that
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The OECD at 50
OECD Headquarters, 21 May 2008. As part of the Danish government’s MDG3 Global Call to Action, Gunilla Carlsson, Swedish Minister for International Development Co-operation (right), presents the MDG3 champion torch to Angel Gurría, OECD Secretary-General (left), with Ole Christoffersen, Danish Chargé d’Affaires ai.
As a decision-maker, I appreciate the OECD’s bold and elaborated socio-economic policy advice. Its norms and standards have been trendsetting and of high quality and should continue to be so in an ever more globalised economy. The OECD’s 50th anniversary will in no way diminish its early wisdom. All to the contrary, its youthful dynamism is alive and well. Its goals of liberty, prosperity and co-operation are well rooted in today’s world. The OECD has to keep up its reputation of being a reference point, a house of best practices and high quality standards in all fields of socio-economic policy making. Its future mission should concentrate on contributing to a fair, clean and sustainable global development. At a time of flux and global change it should continue to invest in further inspiring strengthened global economic governance. Yves Leterme, Prime Minister of Belgium
The OECD at 50
Emerging issues and new approaches Amid the complex challenges facing governments, the OECD’s role is to alert policy makers to emerging issues and offer new approaches to known challenges. It set up a Committee to examine global and national environmental challenges in 1970, more than a decade before the United Nations convened the World Commission on Environment and Development under Gro Harlem Brundtland in 1983. It began studying the impact of tax havens on public budgets in the 1980s, well before the G20 seized on the issue in 2008. It warned of the unsustainability of many countries’ pension arrangements years before most governments focused on the issue. In 1992, it launched a programme of peer reviews to evaluate the environmental performances of its member countries with respect to domestic laws and international obligations, backing its analyses with a broad range of economic and environmental data and providing targeted recommendations designed to reinforce national policy initiatives. Since 2000, it has been leading international reflection on new ways to measure progress, looking beyond such traditional but restricted measures as GDP. In order to encompass the diverse experiences and living conditions of citizens and support evidence-based policy making, it has designed new and better metrics relating to various aspects of societal progress, ranging from statistics on people’s full economic resources, including services they produce for their own use, to their life-satisfaction and expectations. It has also developed new insights into the statistical needs of developing countries.
Pioneering international agreements Sometimes, policy issues require internationally co-ordinated policy responses – on trade, for example, and on some macroeconomic issues. In other areas, policy goals can be achieved by countries acting singly or in small groups, informed by “best practice” in partner countries – labour market and education reform being two examples. Countries learn from each other, identifying best practices and finding solutions to common problems, while taking account of possible spill-over effects from one country or group of countries to another.
The OECD helps us shape our public policies and provides a forum in which we can learn from each other to ensure that all our citizens prosper. David Johnston, Governor General of Canada
Many international agreements on the environment started out at the OECD, from the “polluter pays” principle in the 1970s to the frameworks used for carbon trading to counter climate change today. The OECD launched a study of the public policy implications of e-commerce in 1995 and elevated the issue at ministerial level in 1998, the year in which Google was incorporated. After the 11 September terrorist attacks on the United States, the OECD worked with governments to draw up new Guidelines for the Security of Information Systems and Networks that now underpin data-protection efforts around the world. Its chemicals safety-testing programme alone, under which governments agree on test methods and data-quality standards and share the workload of safety assessments, saves countries an estimated €150 million per year. A method to quantify harmful subsidies in agriculture that was developed by the OECD is now being extended to address the issues posed by subsidies for fossil fuel production and consumption. The OECD does not give out loans or grants, but it nevertheless has strong disciplinary powers. It achieves results by convincing governments of the value of adopting policies that are in their own self-interest. Its main leverage is exerted through peer review and peer pressure. As experience with this method has grown, so has appreciation of its worth. When international co-operation is required for policies to be effective, the OECD seeks agreement by consensus. This often takes time but it is generally time well spent, as consensus helps to ensure that agreements, once confirmed, are respected. In recent years, the OECD’s focus has been further extended to helping countries implement policies, addressing the challenges inherent in the political economy of reform.
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The OECD at 50
The OECD at 50
Working with partners Building a stronger, cleaner, fairer world economy
Mol, Belgium, 7 July 1966. Thorkil Kristensen, OECD Secretary-General (left), His Majesty King Baudouin of the Belgians (centre right), and the President of the Eurochemic General Assembly Walter Schulte-Meermann (right) inaugurate EUROCHEMIC
Partnerships and co-operation are the DNA of good policy making. Soberonita: the Human Genome, sculpture by the Mexican artist “Sebastián”, Enrique Carbajal, displayed in the courtyard of the Château de la Muette, OECD Headquarters
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The OECD at 50
The OECD at 50
“I
like working with the OECD because you talk about market economy, not capitalism,” a senior Chinese official once observed to an OECD interlocutor. Rather than focusing on a specific analytical framework, the OECD takes an evidence-based approach to economic challenges. Its faith in international co-operation, as set out in the OECD Convention, is based on the idea that, while there is no ‘one-size-fits-all’ model, countries benefit best from an open and fair market-based economic environment. Clearing away the obstacles and restrictions that distort markets has been a constant theme at the OECD. Macroeconomics is at the heart of its work, but its belief in the market economy is underpinned by a clear understanding of the need for sound regulatory frameworks that only well organised and effective governments can provide. As a key promoter of sound public governance, its work covers virtually the whole gamut of economic endeavour, from agriculture and fisheries to nanotechnology and nuclear power. It reaches out across the globe, through its contributions to the G20 process and through country-specific policy analysis and recommendations as well as a host of regional initiatives, ranging from the African Partnership Forum to co-operation with the Organization of American States and the Asia-Pacific Economic Co-operation (APEC) forum.
The OECD is an indispensable source of advice on good practices and an essential support for Chile in this new world where the keys to development are knowledge, information, technology and innovation. Sebastián Piñera, President of Chile
Policy pathfinder Drawing on facts and real-life experience, the OECD works with governments to understand what drives economic, social and environmental change, serving as a ‘path finder’ for key policy issues. It measures productivity and global flows of trade and investment. It compiles, analyses and compares data to provide evidence for policy making and to predict future trends. It contributes to better international standards and practices on all sorts of things, from the safety of nuclear power plants and new chemical compounds to the quality of tomatoes and avocado pears. It produces statistics on all manner of topics, from the quality of children’s lives to the number of people killed in road accidents. ❱❱
Some OECD contributions to a cleaner world economy ●
●
The OECD Council Acts on Mutual
●
The Paris Convention on Third Party
●
The regularly revised OECD
Acceptance of Data are the key
Liability in the Field of Nuclear Energy
Environmental Data Compendium
tools for assessing the safety of
ensures cross-border compensation in
presents data linking pollution and
chemical products.
the event of a nuclear accident.
natural resources with activity in such
The 2007 OECD High Level Forum on
sectors as energy, transport, industry
co-ordinated by the OECD helps
Medicines for Neglected and Emerging
and agriculture. It shows the state of air,
governments assess chemical
Infectious Diseases helped put diseases
inland waters, wildlife, and so on for
products used in agriculture in order
that disproportionately affect developing
OECD countries and describes responses
to reduce health risks.
countries on the international agenda.
by government and enterprises.
A wide-ranging pesticide programme
●
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The OECD at 50
OECD statistics are often based on data provided by countries, harmonised by the OECD to allow meaningful cross-country comparisons. But it also generates new data in the context of specific projects. The Teaching and Learning International Survey, or TALIS, provides internationally comparable data on conditions affecting teachers in schools. The Programme for International Student Assessment, or PISA, produces comparable indicators every three years of 15-year-old school students’ abilities in reading, mathematics and science. Covering more than 70 countries, it serves as a yardstick
for education authorities to check their national systems’ performance and identify areas for improvement. By shifting the emphasis from quantity to quality, it has become a powerful tool for educational reform.
Working with business and unions The OECD works with business, through the Business and Industry Advisory Committee to the OECD, and with labour, through the Trade Union Advisory Committee. It looks at how much people pay in taxes and social security charges, and how pension systems will look after them in old age. ❱❱
Global economic management and the role of the EDRC by William White
T
he Economic and Development Review Committee (EDRC) is the economic policy
Examinations of individual countries by the
the policies ultimately recommended by the
EDRC take place at one-day meetings at the
committee. Experience indicates that national
backbone of the OECD. Over decades, the
OECD in Paris. The agenda for each meeting
‘ownership’ provides the best guarantee that
staff of the OECD Secretariat have accumulated
is based on a draft paper prepared by OECD
policies proposed by the EDRC will actually
enormous expertise on a wide variety of
staff in close association with officials from the
be implemented. Evidently, ‘making reform
economic subjects. The job of the EDRC is to
country being examined. Representatives of
happen’ is every bit as important as having
tap into this knowledge base, along with insights
other countries involved with the OECD then
good policy suggestions in the first place.
provided by members of the committee, and
carry out a form of ‘peer review’, with a view
apply it to individual countries. Hopefully, the end
to guiding how the paper should be redrafted
has evolved materially since the committee
result is a set of policy recommendations tailored
prior to publication. Since the committee has
first met in 1961. Early on, the emphasis
to each country that will help ensure that the
no powers of either monetary or legal coercion,
was almost solely on macroeconomic
living standards of its people grow in a balanced
it is hoped that some combination of other
issues and projections for the country being
and sustainable way. Such a goal would seem
countries’ experiences, agreement on best
examined. There was a strong demand for
fully consistent with the global policy objectives
practice, and sound economic analysis will
such information, and no other organisation
recently agreed upon by the G20.
convince the examined country to sign up to
was publishing work of this kind. However, as
The subject matter of the EDRC reviews
The OECD at 50
The Czech Republic has always appreciated OECD analytical work and its policy recommendations. Most recently, my government has been drawing on it in designing a package of ambitious public finance, structural and institutional reforms. Petr Nečas, Prime Minister of the Czech Republic
other public and private sector institutions also
examined. We are all aware of the growing
that each has a responsibility to ensure that
began to address macroeconomic issues, the
importance of emerging market economies in
international debts do not build up to
EDRC felt able to complement its original work
the global economy, and the EDRC process has
‘unsustainable’ levels. The inevitable crisis –
with chapters dedicated entirely to policies
changed to reflect this. Not only are many more
perhaps associated with increased
of structural reform. Looking ahead, we may
countries now being examined, but efforts are
protectionism – would harm everyone gravely.
conjecture that this shift in the balance of
being made to involve such countries in many
Perhaps, in this regard, the EDRC tradition of
interest between demand-side and supply-side
other aspects of the work of the OECD.
‘gentle peer persuasion’ may prove useful in
issues is likely to accelerate markedly. Today, in many countries, high debt levels
These efforts are absolutely essential if the
convincing all concerned to do the right thing in
work of the EDRC is to retain its relevance, but
their own longer-term interests. At the least, it
mean that the scope for further monetary
they also pose significant challenges. How to
would be a useful complement to suggestions
and fiscal stimulus has now been entirely
get bigger without losing the benefits of being
for altered macroeconomic policies being made
exhausted. For the OECD, this implies not
a small club? How to involve, more intimately,
in forums such as the G20 and the IMF. Together
only a fundamental re-examination of the
countries at different stages of development,
with the efforts made by the EDRC to encourage
macroeconomic theories that led to our
and perhaps with different values, from long-
better structural policies worldwide, such an
economies’ current fragile state, but also of how
standing OECD members? And, not least,
outcome would imply that the committee had
structural reforms may still allow some optimism
how to maintain the traditional co-operative
made a not inconsiderable contribution to the
for the future. In this latter regard, the G20 has
spirit within the committee when global trade
better economic management of the global
now agreed that the OECD, with its unique
imbalances and exchange rate issues are
economy. This seems to be both the hope
knowledge base, has a crucial role to play.
driving a wedge between its members?
and the intention of all those now contributing
The subject matter of the EDRC
Yet, in the same breath as some speak of
to the work of the committee.
examinations is not the only thing to have
challenges, others speak of opportunities. For
evolved over time. Equally important has been
example, the key to resolving global imbalances
William White is Chair of the OECD’s Economic
the number and character of the countries being
is for debtor and creditor countries to realise
and Development Review Committee.
35
The OECD at 50
It interacts with other civil society bodies and parliamentary groups and maintains contacts with specific business sectors, for example with banks on financial markets, with the insurance and tourism industries and with major oil companies. Its annual Going for Growth publication reviews individual countries’ policies on such matters as unemployment benefits, barriers to market entry, public ownership, market structure and price controls, and provides recommendations for structural reforms along with a checklist on how countries have responded to them. Its twice-yearly Economic Outlook analyses the global economic situation and short-term prospects, while regular country surveys go into greater depth at national level. Its annual Employment Outlook analyses labour-market developments in OECD countries and selected other countries and makes policy recommendations for boosting jobs and incomes. ❱❱
The OECD: A view from the desk of the economics editor by William Keegan
O
ne way or another, the OECD has been
as well as the re-entry of Eastern Europe into the
OECD Factbook and that wonderful pocket-
a beneficent part of my professional life
club of market economies. The OECD also
book OECD in Figures. I know that everything
since I became economics correspondent of
played a vital role in transatlantic relations, as
is available ‘online’, but – call me old-fashioned
the Financial Times in 1967 – just in time for
well as in the rise of Asian economies.
– the wonderful thing about ‘hard copies’ is
the November 1967 devaluation of the pound.
My first visit to the OECD was in the early
that they give you context, and the chance of
I have always enjoyed, and benefited from,
1970s, when my mentor, friend and colleague
having access not only to the organisation
Samuel Brittan was on holiday and I was given
itself, but to the cornucopia of invaluable
the privilege of filling his treasured space with
less prone to the vagaries of fashion than
statistical material and analysis it produces.
an article entitled ‘The View from the Château
some other international organisations. If I
de La Muette’. After a period at the Bank of
have a reservation, it is that sometimes, while
information. Its emphasis on spreading the
England in 1976-77, I became Economics Editor
providing important contributions to study of
word about ‘best practice’ is particularly helpful
of The Observer. From that date on, I made
‘the supply side’, it has strayed from its
to policy makers around the world. Its
regular pilgrimages to the OECD for the annual
Keynesian roots. But I am delighted to say that
predecessor, the OEEC, was instrumental, via
ministerial meeting and the twice-yearly unveiling
it usually comes back to base.
the Marshall Plan, in the post-war reconstruction
of the Economic Outlook.
The OECD is a fount of comparative
of Europe. Years later, membership of the
For an economic commentator such as
serendipitous discoveries en route. I think that, on the whole, the OECD is
William Keegan is Senior Economics
organisation was not unimportant in the
myself, there is absolutely no substitute for the
Commentator and a former Economics Editor
emergence from fascism of Spain and Portugal,
Economic Outlook, the country studies, the
of UK newspaper The Observer.
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The OECD at 50
Identifying inequalities Enabling economies to provide more and better jobs, and helping young people make a successful transition from school to work, are at the core of its policy concerns. In the interests of stronger and fairer growth, the OECD is promoting active labour-market policies and effective redeployment services, while highlighting the importance of adequately funded and cost-effective reform programmes. At the same time, it is making a strong case for targeting the most disadvantaged groups, including young people without jobs for whom protracted unemployment can have longlasting effects on career prospects. Innovative OECD analysis has shown that not only have social and economic inequalities been rising in many countries, but that this has resulted in inequalities of opportunities with a serious impact on economic performance as a whole. To improve employment prospects in member and partner countries, the OECD is developing a Skills Strategy that will promote socially inclusive policies in favour of the skills that will be needed
in tomorrow’s economy. It is also making specific policy recommendations to help countries ensure that all citizens can benefit from economic growth. Its biennial review of social indicators, Society at a Glance, provides policy makers with quantitative evidence on social well-being and trends across OECD countries and other major economies.
Global guidelines Because investment, competition, and markets are global, efforts to keep them fair and open have to be global too. The OECD has been working in favour of fair and open markets since it was created. The OECD Code of Liberalisation of Capital Movements, adopted in 1961, established obligations on participating countries to maintain free capital movements. The experience gained in this field is now proving useful in discussions on capital flows in the G20. Other agreements to encourage international investment and promote fair business dealings include the OECD Guidelines for Multinational Enterprises, first published in 1976 as part of an OECD Declaration on International
The OECD at 50
I am proud that Denmark provided the very first Secretary-General to the OECD, former Finance Minister Thorkil Kristensen. While his previous reputation was one of budget-cutting – his Danish nickname was Thorkil Belt-tightener – he set the OECD out on a solid journey of expansion, going from the initial 20 to the present 34 member states. Lars Løkke Rasmussen, Prime Minister of Denmark
Investment and Multinational Enterprises, and regularly reviewed since then, most recently in 2011. Although not legally binding, the Guidelines include a mechanism through which citizens can submit complaints about business misconduct. Drawn up at a time when multinational corporations were under a spotlight for their activities in developing countries, they provide a touchstone for companies’ commitment to ethical management and a global benchmark of corporate social responsibility. The same commitment to fair and open markets underlies the 1997 OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, a legally binding treaty under which 38 governments, including all OECD countries and several emerging economies, have pledged to prosecute companies found guilty of paying bribes to government officials in order to win contracts. Corruption raises serious political and moral concerns in developed and developing countries alike. It distorts competition, raises costs, and wastes public money. Focusing on the ‘supply-side’ of bribery – the person or company that offers, promises or gives a bribe – the Convention aims to limit unfair competition in international business transactions, and to contribute to good governance and economic development efforts. Its unique strength is a rigorous peer review process, which includes a detailed evaluation of each country’s anti-bribery laws and policies, and like many initiatives and instruments of the OECD it is open for adherence by any country interested in the fight against corruption. By criminalising the act of paying a bribe, rather than the taking of bribes, the OECD Convention carries the fight against bribery to all four corners of the world.
Fair taxation Another long-standing OECD priority has been to remove the obstacles created by double taxation to the development of economic relations between countries. The OECD’s Model Tax Convention on Income and on Capital, first published in draft form in 1963 and most recently updated in 2008, provides a uniform means of resolving common problems in cross-border taxation. It serves as the basis for the negotiation, application, and interpretation of an estimated 3,700 bilateral tax treaties in force around the world, and its Commentaries have been cited by courts in virtually every OECD member country, as well as in many non-OECD countries. One of the Model Tax Convention’s main principles is that the prices for tax purposes at which property and services should be transferred between members of a multinational enterprise should be those that would be used by independent firms in comparable transactions – the so-called ‘arm’s-length principle’. The OECD’s Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, first published in 1979 and updated in 1995, have become the accepted standard around the globe for the determination of transfer prices. By minimising disputes between countries over taxing rights, they avoid double taxation that could cripple international trade, or no taxation, which hurts their treasuries. Minimising tax burdens legally is one thing, but evading legal tax obligations is quite another. The OECD is at the forefront of the fight against the misuse of tax havens by companies and individuals avoiding taxes due in their home countries. It also works with the Financial Action Task Force, grouping both OECD and non-OECD countries, to combat money-laundering and the ❱❱
39
The OECD at 50
financing of terrorism, while its Principles of Corporate Governance, first published in 1999 and subject to regular review, set out a comprehensive framework for the improvement and convergence of corporate governance practice. The OECD Forum on Tax Administration, bringing together tax commissioners from 43 countries, recently published a report showing how the Corporate Governance Principles can be applied in the tax area, making plain the responsibility of boards for financial and reputational risks associated with corporate tax strategies.
Stronger, cleaner, fairer The OECD’s main partners are governments, and in parallel with its work on integrity in the private sector it is also working with governments to define standards and practices of ethical integrity in public service and to prevent the conflicts of interest that can arise when an official has links to the private sector, either while still a member of the public service or after leaving such a post. Over the years, the OECD has evolved from looking at government policies to focusing as well on the policy process itself, seeking ways to make governments work better, both in terms of effectiveness in achieving expected outcomes and in transparency in their provision and financing. In support of these objectives, the OECD was a front runner in identifying best practices in fiscal transparency and in developing the notion of budgeting for results. Increasingly, its concern with governance reaches deeper than the national level to the sub-national institutions, where so much of the public activity that affects citizens’ day-to-day lives takes place. In 2008-09, as the world economy found itself embroiled in financial and economic turmoil, the OECD developed a Strategic Response to the Crisis that was a useful basis for its participation in the G20 Summits. Today,
the OECD is one of the few organisations to accompany the G20 process in the preparatory phases of its work, as well as at the highest level. Taking its wide range of activities as a whole, its objective can be summed up as ‘helping governments build a stronger, cleaner and fairer world economy’: ● stronger, in promoting appropriate macroeconomic policies combined with effective regulation to underpin sustainable economic growth and shared prosperity; ● cleaner, in the twin sense of fostering clean environments to protect biodiversity and health, and also integrity in business dealings to combat corruption, tax evasion and fraud; ● fairer, in encouraging the equitable distribution of prosperity through well-functioning labour markets, effective education systems, evenhanded policies on migration and effective action to promote development.
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The OECD at 50
The OECD at 50
The origins Economic growth through effective co-operation
A parade float at the Dutch Flower Festival, 1951
The Marshall Plan Speech, Harvard University, Cambridge, MA, 5 June 1947. General George C Marshall, US Secretary of State, on the occasion of his address to the graduating class
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The OECD at 50
The OECD has, since its creation, played a pivotal role in addressing the challenges faced by the world economy. Developing new skills, fostering innovation, designing ambitious rules of governance – these are some of the many areas where the European Union is proud of working hand in hand with the OECD in a constant search for delivering more and better jobs and growth. José Manuel Barroso, President of the European Commission
The OEEC Charter, 1948
T
he origins of the OECD’s collaborative and consensual approach to economic co-operation date back to the late 1940s, when European leaders set out to rebuild their economies from the ruins of the Second World War. The OECD’s forerunner, the Organisation for European Economic Co-operation (OEEC), was created in 1948 to oversee the US-financed Marshall Plan for the reconstruction of Europe. By making aid contingent upon the European countries’ planning and achieving an internationally compatible economic recovery, the Marshall Plan imposed co-operation on countries that had previously been at war.
By the late 1950s, the Marshall Plan had run its course. A new climate of co-operation in Continental Europe had led to the Treaty of Rome and the launch of the European Economic Community. In the US, however, times were tough. Economic growth was weakening. Bankruptcies were rising to levels not seen since the Great Depression. Foreign trade restrictions and uncompetitive pricing of US goods were hampering US exports, and a dwindling US trade surplus was pushing the current account into deficit. Rather than disbanding the OEEC, Washington favoured building a successor organisation that would continue its policies of co-operation. ❱❱
The OECD at 50
The Marshall Plan: Building intergovernmental co-operation by John Llewellyn
I
n the years after the Second World War,
to the graduating class of Harvard University
The poverty and starvation of the immediate
European countries were in a policy bind.
on 5 June 1947, the European Recovery Plan,
post-war years progressively disappeared. The
Weakened by conflict, their economies could
as it was officially known, set out to modernise
threat of communism sweeping continental
not grow without increasing imports. And rising
European government, industry and business
Europe receded. Thereafter, Western Europe
imports threatened to cause unsustainable
practices along the lines of efficient American
experienced an unprecedented two decades of
deficits in their balance of payments. But when
models and to lower trade barriers, with a view
sustained improvements in living standards and
their authorities responded by tightening policy,
to restoring a sense not only of hope among
social conditions, together with political stability.
a reduction in demand for imports translated into
European nations, but also of self-reliance.
a reduction in partner countries’ exports, thereby
Today, the Marshall Plan is remembered by
As the benefits of economic integration through the free movement of goods, services
spreading the slowdown. Amid a threatened
many primarily for its generosity: at its peak, in
and capital became apparent, Europe’s
failure to sustain economic recovery, Europe as a
1949, the US was transferring annually nearly
policy makers were encouraged to pursue
whole faced the risk of rising political discontent.
2.5 per cent of its GDP to Europe. But its
further easing of trade barriers, including tariff
principal contribution over its four-year life from
reductions, and to create institutions that
were rising. The spectre of Western Europe falling
In Italy and France, communist pressures
1948 to 1952 was to lay the intellectual, and
would co-ordinate the development of Europe’s
under the influence, if not the domination, of the
thereby the policy, foundations for the
economies. The European Commission
Soviet Union haunted leaders on both sides of
sustained future development of Europe, and
provided further impetus through its active
the Atlantic. It was in this environment that the
ultimately of a far wider circle of countries.
and dogged pursuit of the goal of creating a
US – not least to safeguard its own interests
Executed through the Organisation for
single European market. Europe’s Common
– conceived the Marshall Plan. Launched by
European Economic Co-operation (OEEC), the
Agricultural Policy, though criticised by many,
Secretary of State George Marshall in his address
Marshall Plan provided the incentive for a series
helped to prevent income differentials between
of internationally compatible recovery plans
rural and urban areas from widening to socially
based on two fundamental principles:
and politically unacceptable levels.
●●
●●
One country’s imports are another
In 1961, the US vision that gave rise to the
country’s exports, so that a recovery in
Marshall Plan led to the transformation of the
one, provided that it is sustained, induces
OEEC into the OECD, with the US and Canada
recovery in others; and
as members. In 1964, Japan was brought
Guaranteeing free trade among partner
into the OECD, and thereby into the ‘club’ of
countries is the best way to generate the
economies that espoused and practised the
confidence needed for investment on a
free international flow of goods, services and
sufficient scale to sustain growth in partner
capital. By the early 1990s and the demise of
economies collectively.
the Soviet Union, Western Europe had become a rich, prosperous, market-based economy
The policy succeeded. In the words of
approaching the size of the US. For the countries
historian Alan Milward, “…there developed in
of the former Soviet bloc, the European Union
the reconstruction period an institutionalised
was both an example and a powerful magnet.
pattern of economic interdependence in
Mirroring the role of the OEEC in earlier times,
Western Europe which was a better basis
the OECD supported their integration into the
for Western Europe’s economic and political
global economy by providing policy advice and
existence than the comprehensive regulation
examples of good economic practice.
by treaty of major political issues which was ‘All Our Colours to the Mast’, Reijn Ddirksen (The Netherlands), 1950. First prize winner of the European Recovery Programme’s international Marshall Plan Poster Competition
attempted after 1918 and which failed”. The four years of the Marshall Plan saw the fastest period of growth in European history.
John Llewellyn is a London-based economist. Between 1978 and 1994, he held a number of senior positions at the OECD.
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The OECD at 50
OECD membership has equipped Estonia with new, powerful policydesign tools: comparative data and studies, best practices, tailor-made advice. Belonging to the organisation strongly promoting open markets and democracy, the values I strongly believe in, is a great experience for Estonia. Andrus Ansip, Prime Minister of Estonia
From the OEEC to the OECD In December 1959, the Presidents of France and the US, the Chancellor of the Federal Republic of Germany and the Prime Minister of the UK met in Paris to take the first steps towards this objective. In a communiqué, they announced their conviction that “virtually all of the industrialised part of the free world is now in a position to devote its energies in increased measure to new and important tasks of cooperative endeavour with the object of: “(a) furthering the development of the lessdeveloped countries; and “(b) pursuing trade policies directed to the sound use of economic resources and the maintenance of harmonious international relations, thus contributing
to growth and stability in the world economy and to a general improvement in the standard of living.” Further meetings led to a Conference in May 1960 to discuss the reconstitution of the OEEC. Two months later, a full Ministerial meeting set up a Preparatory Committee under former Danish Finance Minister Thorkil Kristensen, as SecretaryGeneral Designate, to draft the Convention that would give birth to the new Organisation. On 14 December 1960, the US and Canada joined 18 European countries – Austria, Belgium, Denmark, France, Germany, Greece, Iceland, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, Turkey and the UK – in signing the Convention on the Organisation for Economic Co-operation and Development. In his State of the Union address on 30 January 1961, little more than a week after taking office, US President John F Kennedy spoke of the economic problems besetting the US and stressed the roles of both the future OECD and NATO in “sharing with our allies all efforts to provide for the common defense of the free world and the hopes for growth of the less-developed lands”. In the months that followed, work continued on remodelling the Organisation, still under its old name of OEEC. Canada was the first to deposit its instrument of ratification of the Convention, ❱❱
The signing of the OECD Convention, Salon de l'Horloge, Quai d’Orsay, Paris, 14 December 1960
The OECD at 50
The OECD’s Nuclear Energy Agency: Promoting safety and preparing for future energy needs by Luis Echávarri
T
he OECD’s involvement with nuclear energy dates back to its origins. The 1950s
As nuclear programmes developed in the
rating nuclear and radiological events to help
1970s, the treatment of radioactive waste
explain their significance to the public. The NEA
had already witnessed rising excitement about
became a pressing issue. A remarkable result
laid the foundations for the Information System
the potential of this emerging source of power.
of NEA work was the 1972 OECD Council
on Occupational Exposure (ISOE), launched in
On 17 December 1957, the Council of the
decision establishing a Multilateral Consultation
1992 as a forum dedicated to improving worker
OEEC – the predecessor of the OECD – created
and Surveillance Mechanism for Sea Dumping
protection at nuclear power plants. In 1993, it
the European Nuclear Energy Agency, with
of Radioactive Waste, which led to a total ban
launched the International Nuclear Emergency
16 member countries. More than half a century
on sea-dumping of waste in 1995. In 1975, the
Exercises (INEX), consisting of exercises based
later, and now with 29 members, the renamed
newly created Radioactive Waste Management
on nuclear accidents involving key decision-
OECD Nuclear Energy Agency (NEA) plays an
Committee initiated a comprehensive effort to
makers from a number of countries.
indispensable role in the international regulation
address the methodological, financial, technical
and governance of civil nuclear energy.
and social dimensions of the subject.
In many ways, the NEA’s history is linked
Monitoring the world’s uranium resources
At the start of the new millennium, NEA member countries began to reconsider the benefits of nuclear energy with an eye to the
to that of civil nuclear power itself. Developing
and levels of production and demand has
future. The Generation IV International Forum
nuclear science was its member countries’ initial
been a major endeavour since 1965. The NEA
(GIF) was launched in 2001 to carry out
goal. One of its early research centres, at Halden
publishes estimates, now in co-operation with
research and development to establish the
in Norway, remains active. The first international
the International Atomic Energy Agency (IAEA)
feasibility and performance capabilities of the
norms for the protection of workers and the
in a key biannual report. In 1983, the NEA
next generation of nuclear energy systems.
public against radiation, adopted in 1958, were
launched a similar series providing data on
The NEA was selected to serve as the GIF’s
based on a proposal by the Agency. In 1964, it
project costs of generating electricity, based on
technical secretariat. In 2007, confronted with
established a Data Bank which collects, tests
available technologies – nuclear, gas and coal.
the prospect of licensing new reactors, 10
and disseminates the basic tools – such as
The series has been updated periodically with
national nuclear regulatory authorities requested
computer codes and nuclear data – used to
the International Energy Agency since 1989.
the Agency to act as technical secretariat for
analyse, control and predict phenomena in the
Another widely recognised achievement has
nuclear field. The Agency’s name was changed
been the development of a body of nuclear law.
(MDEP) which they had set up to reach common
when Japan joined in 1972. Further impetus
The Agency pioneered the first convention on
criteria for design safety issues.
came when the US became a member in 1976.
nuclear civil liability, the Paris Convention, in
From the outset, nuclear safety was a key
the Multinational Design Evaluation Programme
Since March 2011, the drama at the
1960. In 2001, its cumulated knowledge was
Fukushima nuclear power plant in north-east
focus. Under the leadership of the Steering
translated into the creation of the International
Japan, sparked by a massive earthquake that
Committee for Nuclear Energy, which reports to
School of Nuclear Law. Its work has also
was followed by a tsunami, has once again
the OECD Council, the NEA Secretariat serves
evolved in other areas. Since 2009, it has been
prompted governments to reassess the safety
seven specialised technical committees. Two
working on ways to address a threatened
of nuclear installations and plans in some
key bodies are the Committee on the Safety of
shortage of medical radioisotopes.
countries for nuclear expansion. The NEA will
Nuclear Installations, set up in 1975, and the
Two major civil nuclear accidents, in 1979
accompany and support this process, drawing
Committee on Nuclear Regulatory Activities,
and 1986, radically changed the Agency’s
on its network of experts in member countries. As
which dates from 1989. Together with joint
priorities. The NEA reacted to the Three Mile
is demonstrated by the participation of major
projects and information-exchange programmes
Island accident in the US in 1979 by creating
non-OECD countries such as Russia, India and
through which countries pursue research or
the first international Incident Reporting System
China in key NEA activities, its relevance today
data sharing on a cost-sharing basis, these
in 1980. After the Chernobyl accident in 1986,
is as valid as it was five decades ago.
committees facilitate technical co-operation
the NEA and the IAEA instated the International
among national nuclear safety authorities.
Nuclear and Radiological Event Scale (INES),
Luis Echávarri is Director-General of the NEA.
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The OECD at 50
Transport and the OECD: Responding to the challenges of globalisation by Jack Short
T
ransport is too often taken for granted. The dramatic improvements over the
The ECMT was a path-breaker, focusing on issues of key importance for the reconstruction
International Traffic Data and Safety Analysis Group (IRTAD) and associated database.
past 50 years in speeds, volumes moved,
of Europe after the Second World War. Its
service quality, safety and cleanliness often
recommendations and resolutions concerning
the ECMT was the first part of the OECD family
pass unnoticed. But these improvements are
railways, roads and inland waterways laid
to engage with the newly liberated countries
not accidental. They are the consequence of
the foundation for many improvements. Its
of Central and Eastern Europe. Such was the
sustained policy and practical efforts, nationally
economic roundtables, launched in the late
sensitivity that meetings had to be held outside
and internationally.
1960s, provided a unique opportunity for
OECD headquarters. Over the following decade,
academics and economists to examine the
starting with Poland and Hungary, more than 20
valuable contributions over its rich history.
challenges of transport economics. Later
of these countries joined the ECMT, providing a
The principal actor has been the European
on, its work with the OECD on sustainable
home for them as equals and a stepping-stone
Conference of Ministers of Transport (ECMT),
travel in cities contributed to a major rethink
for many to membership of the EU.
originally set up in 1953 as a political body for
on managing traffic in cities. And its work
European Transport Ministers and transformed
on accessibility paved the way for significant
began to be better understood, transport
in 2007 into the International Transport Forum
breakthroughs in this area.
bulked larger in policy debate. Whether in
In these efforts, the OECD family has made
– a global body for governments, industry and
In 1974, the OECD launched its Road
When the Berlin Wall fell in November 1989,
As the global nature of transport challenges
regard to road deaths, urban congestion,
civil society. There have also been significant
Transport Research Programme, or RTR,
security or investment policies, all countries had
contributions in the areas of maritime and road
to facilitate technical exchange on road
shared problems. In 2004, the Joint Transport
transport. And since transport has impacts
issues including building techniques and
Research Centre (JTRC) brought together the
in many other policy areas, there have been
engineering challenges. Over the years,
RTR and ECMT’s economic research under
contributions from other parts of the OECD
the RTR made numerous important
one roof with a common structure and new
family in such fields as the environment,
contributions to thinking and analysis on
synergies. In 2006, at a meeting of transport
energy, regional policy, investment, taxation,
road transport issues, through both its work
ministers in Dublin, governments agreed on the
competition and industrial policy.
on road safety and the creation of the
transformation of the ECMT into a global and strategic thinktank including both European and non-European countries. Today, the International Transport Forum has 52 countries as its members. Together, they aim to shape the transport policy agenda on a global level and ensure that it contributes to economic growth, environmental protection, social inclusion and the preservation of human life and well-being. Without the services that transport delivers, globalisation would be meaningless. Thanks to the ITF, the OECD family now has a consolidated body dealing with the transport issues that are so vital for economic success and social integration. ď Ž Jack Short is the outgoing Secretary General of the International Transport Forum at the OECD.
s
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The OECD at 50
The OECD has in the past been instrumental in increasing prosperity for my country and for the world as a whole. Forty-two years of OECD membership have helped Finland to develop national policies meeting the best international standards and disseminating the results of peer learning for application across all sectors of public policy. I am confident that the Organisation will continue providing a forum for policy consultation and advice of high quality and effectiveness in order to help Finland to adapt to a changing world. Mari Kiviniemi, Prime Minister of Finland
on 10 April 1961, followed by the US two days later. Other countries followed, and on 30 September 1961 the Convention took effect and the OEEC was reborn as the OECD.
From the Atlantic to the Pacific In its early years, the OECD firmly espoused economic growth as a means to improve prosperity. As long as inflation in the US could be kept at bay, experts felt, growth would continue and employment would remain stable. In December 1961, Ministers of the 20 countries meeting for the first time as the Ministerial Council of the OECD announced a 50 per cent growth target for their countries’ combined Gross National Product for the decade to 1970. Freed from the pressures of short-term political bargaining that had beset the OEEC, now that the focus of European political discussion had shifted to Brussels with the creation of the European Community, the newly formed OECD was able to take a longer-term approach to major issues. As the first head of what was then the OECD’s Directorate of Scientific Affairs, Alexander King, was to recall in his memoirs, the new Organisation “had no contentious political goals, nor any ambition to acquire them. It operated without any rigid time constraints and thus could pursue longer-term issues beyond the reach of national parliaments”.
Japan joins the OECD, OECD Headquarters, 26 July 1963. Toru Haguiwara, Ambassador to France (left), and Thorkil Kristensen, OECD Secretary-General
In 1964, Japan was brought into the Organisation and thereby into the ‘Western’ world of international trade, investment and financial flows. Other countries followed: Finland in 1969, Australia in 1971 and New Zealand in 1973. For many years, the OECD was perceived as a club for the wealthy nations of the West, even though its membership included such countries as Turkey, Spain and Portugal, which were not rich at the time. During the Cold War era, it was viewed as the ‘economic arm’ of NATO, its initial membership having broadly coincided with that of the North Atlantic Treaty Organization formed in 1949. Yugoslavia, which had already participated in some OEEC activities, enjoyed a special status as an associate member until its dissolution.
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The OECD at 50
The OECD at 50
The 1960s Economics, trade and statistics: Some early focus points for OECD work
US President John F Kennedy (left); Thorkil Kristensen, OEEC Secretary-General and OECD Secretary-General designate; Washington DC, 20 February 1961
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The OECD at 50
In a rapidly changing world, I am certain that the OECD will continue to promote the distribution of knowledge, innovation and best practices, thus empowering our societies in creating a better and more just world for all. George A Papandreou, Prime Minister of Greece
T
he forecasting of short-term economic trends, the assessment of their implications for policy, and the analysis of individual countries’ economic performance were among the prime functions of the OECD from its early days. The OEEC had carried out regular studies of its member countries’ economies. The OECD
continued, producing regular surveys whose texts were approved by all members, including the country under review. Initially heavily macroeconomic in focus, these filled an important gap. National governments and central banks also issued reports on their own economies, but these were often too detailed for an international readership. No other international organisations or private financial institutions were at that time issuing similar succinct publications. The OECD’s influential Economic Policy Committee, composed of senior officials from capitals, was charged with the co-ordination of member countries’ economic policies. A key demonstration of the OECD’s role as a discussion forum was this Committee’s Working Party No 3 on Policies for the Promotion of Better International Payments Equilibrium. Better known as WP3, one of this group’s early achievements, based on input from what was then the OECD’s Department of Economics and Statistics, was to agree on a uniform method of calculating balance of payments statistics. ❱❱
Some OECD indicators ●
●
Health: the OECD is a world leader in
developments in the migration
generosity of unemployment and
this field with its annual health data
sphere. Its annual International
related welfare benefits, trade-union
and indicators published in Health
Migration Outlook is a reference for
membership, collective bargaining
at a Glance. It is developing a global
all those interested in international
arrangements, minimum wages
standard, jointly with the WHO and
migration trends and policies. It is
and the strictness of employment-
Eurostat, for health accounting.
also helping to develop a database
Pensions: The OECD has developed
covering details of skills levels, age,
models for assessing the sustainability
gender and labour-market outcomes
devoted much effort to building a set of
and adequacy of retirement income
of immigrants in developed, emerging
comparable social indicators whose
provision in OECD countries, whose
and developing countries.
main results are published in Society at
Labour-market policies: Comparable
a Glance. This work has recently been
Glance. It is working with the World
time-series data regarding public
extended to encompass comparable
Bank and regional development banks
spending on so-called ‘active’ and
measures of well-being and life
to develop models that can be applied
‘passive’ measures are available online,
satisfaction in order to complement
to non-OECD country pension systems.
and summary indicators are published
the use of GDP as a measure of
International migration: The OECD’s
in the annual OECD Employment Outlook.
economic performance.
results are published in Pensions at a
●
database on stocks and flows of
●
●
Other labour-market indicators:
protection rules. ●
●
Social indicators: The OECD has
Environment: The OECD was the
international migrants is backed
The OECD has developed a wide range
first international body to assemble,
by its system of monitoring policy
of indicators on such topics as the
harmonise, and publish comprehensive
The OECD at 50
data on environmental conditions
provides an assessment of global
bring into focus the role of legal
and trends in a large grouping
agricultural market prospects in the
and social institutions in shaping
of nations. Its Environmental Data
medium term, covering production,
gender equality, with the aim of
Compendium is a consistent bestseller
consumption, trade, stocks and prices
empowering women to play a full
and helps decision makers with their policy discussions. ●
of agricultural commodities. ●
SMEs and entrepreneurship:
social and economic role. ●
Public governance: The OECD’s
Agriculture: Developed in the run-up
The OECD has played a key role in
Government at a Glance database
to the Uruguay Round of trade
promoting the international
and publication contain
negotiations and subsequently
convergence of statistical concepts
internationally comparative
extended to include key emerging
on SMEs and entrepreneurship in
indicators covering the entire
economies, the OECD’s Producer
order to develop the statistical and
‘production chain’ of government
Support Estimates, or PSEs, are the
empirical basis for informed policy
activities and their results.
only internationally recognised,
making. Its Structural and
comparable and timely indicators of
Demographic Business Statistics
Regional Database provides
government intervention in
database provides information at a
comparable statistics and indicators
agriculture. They are updated and
detailed sectoral level including:
on about 2,000 regions in OECD
published annually in Agricultural
turnover, value-added, production,
member countries and other
Policies in OECD Countries and in
operating surplus, employment, labour
economies. The OECD Metrodatabase
Emerging Economies, or in alternate
costs and investment.
provides more detailed statistics
Gender: As part of the OECD’s
on 90 large metropolitan regions
work supporting and strengthening
in OECD countries, showing how
gender equality in developing
urban regions have evolved over
countries, the SIGI Index has helped
the past decade.
years in Agricultural Policies in OECD Countries: At a Glance. The OECD-FAO Agricultural Outlook, which is also published annually,
●
●
Regional development: The OECD
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The OECD at 50
Social policy has a key role in sustainable economic growth. PISA challenges us to improve education. Restructuring of the civil service improves efficiency. Recommendations from the OECD are evidence-based and governments should use them wisely. Jóhanna Sigurðardóttir, Prime Minister of Iceland
A key monetary forum Originally set up as a parallel body to the Group of 10 leading industrial countries with the task of assessing the economic and external payments situations of G10 members needing IMF balance-of-payments rescue packages, WP3 has developed into a core forum in which policy makers gain insight into each other’s thinking on key monetary issues. It brings together top finance ministry and central bank officials from a limited number of countries to discuss economic policy and balance-of-payments issues, such as growth, inflation, deficits, capital flows and exchange rates. It makes no decisions and controls no expenditure. But it is valued by participants
as a place where they can talk freely because they are not in ‘negotiating mode’ and thus less constrained in what they say. Reflecting transatlantic and intra-European tensions in the period leading up to the OECD’s birth, trade was another early focus of the work of WP3. A Trade Committee was set up as one of more than a dozen such bodies forming its operating framework. The committee’s mandate included a specific call for “confrontation of the general trade policies and practices… having in mind the need for maintaining a system of multilateral trade which would enable Members to exchange goods and services freely with each other and with other countries under
CERI: The OECD’s education vanguard
T
he year 1968 was dominated, in
before policy makers began to focus on
the Future?, inspired both OECD and
many countries, by a search for new
the concept in the 1990s. It called for
non-OECD countries to widen the
approaches and for social and political
the reorganisation of schools to allow
horizons of educational planning. Work
change. Education was at the forefront,
disabled students to study where possible
on the future of universities in 2030 did
as younger generations took ownership
alongside their contemporaries, showing
the same for higher education.
of new horizons of hope. It was in
how this could be done.
this febrile context that the OECD’s
It broke new ground in understanding
In Understanding the Brain, CERI brought together neuroscientists and
Centre for Educational Research and
how information and communications
educators to explore the burgeoning field
Innovation, or CERI, was created, with
technologies might transform the
of brain research and create synergies
a mission to address the bigger picture
teaching of reading, writing, science
between disciplines that normally
through studies bringing in different
and mathematics, well before
remain worlds apart.
disciplines and stakeholders.
governments made ICT a priority for
Taking a transversal approach to complex issues, CERI was soon helping
modernising education. Its six scenarios of what schooling
More recently, it has been analysing learners’ experiences of the digital age and how teachers are trained to
to redefine the educational agenda. It
might look like in 2020, outlined in
address growing cultural diversity
began looking at lifelong learning well
the 2001 publication What Schools for
in OECD countries.
The OECD at 50
OECD’s First Ministerial Council, OECD Headquarters, 16-17 November 1961. The Hon Donald Fleming, Chair, Finance Minister, Canada (left), and Thorkil Kristensen, OECD Secretary-General
conditions of reasonable overall equilibrium in international balance of payments”.
Freeing trade In the early 1960s, when bargaining with developing countries in the framework of the GATT got dragged down by the differing agendas of participants, the Trade Committee emerged as a forum in which member countries could discuss and prepare their positions. A review of government procurement practices in 1964, showing the negative effects on trade of national tendencies to favour domestic suppliers, led to the principle that procurement rules should not discriminate against foreign suppliers. Proposals for liberalisation in a 1976 Draft Instrument on Government Purchasing Policies, Procedures and Practices became a key element in the 1973-79 Tokyo Round of trade negotiations. Later, ❱❱
The OECD can do much to promote recovery. If it can become a catalyst for new global co-operation, and if, through this, economies based on the creation of value and genuine work can regain strength in our countries, then we have good reason for hope. Viktor Orbán, Prime Minister of Hungary
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The OECD at 50
OECD work on services led negotiators to address regulatory barriers to investment as well as to cross-border trade. Concepts developed at the OECD were embodied in the General Agreement on Trade in Services.
Objective data Agriculture is yet another area in which the OECD had an important influence early on. By collecting data on how much government support really costs, and proposing new approaches to deal with emerging problems, the OECD contributed to a shift away from production as the principal measure of policy success. Its work on Producer Support Estimates, or PSEs, showing how much public support goes to farmers, was central to the 1986-94 Uruguay Round of trade negotiations.
Today, it works with governments to devise policies and practices to meet expanding demand for food without destroying the planet’s resources. The OECD also broke new ground in analysing and evaluating the contribution of scientific research to growth. In 1963, the OECD Working Party of National Experts on Science and Technology Indicators met in Frascati, Italy, to discuss and agree on a Proposed Standard Practice for Surveys of Research and Development. Revised several times since and now known as the ‘Frascati Manual’, it provides globally accepted definitions for the measurement of resources devoted to research and development that are of fundamental importance for the understanding of the role of science and technology in economic growth.
Adapting economic policy discussions to evolving challenges by Niels Thygesen
T
he OECD got off to a promising start in
help of outside experts, OECD reports set
the 1960s, not least because the US
The 1970s posed massive challenges for
new standards of methodology in analysing
national authorities and for the international
made intensive use of the new organisation.
stabilisation policies, particularly the so-called
organisations serving them. At the OECD,
The Kennedy Administration was very
Heller Report and its supporting studies of
early efforts to mitigate the impact of the
interested in the European policy experience.
1968-69, which developed the crucial concept
energy crisis led to the establishment in
Was the rapid rate of growth still primarily a
of cyclically adjusted or structural budget
1974 of the International Energy Agency.
catching-up phenomenon, or was there
balances. Even in this early period, the OECD
In 1975, a prestigious working group on
something to be learnt from aspects of
was not solely preoccupied with the problems
macroeconomic policy chaired by Paul
European economic policies? Often chaired
of its members, the industrial countries.
W McCracken, a former chair of the US
by senior US officials, working groups were
Economic development in the rest of the
Council of Economic Advisors under
set up to study labour-market, competition
world was high on the agenda in terms of
President Nixon, extended the horizon in its
and regulatory policies, the efficiency of
enhancing official development assistance, but
recommendations, advocating gradualism in
fiscal and monetary policies, and Europe’s
also in research through the new Development
policy adjustments and stressing international
fragmented capital markets.
Centre, an initiative of Thorkil Kristensen,
interdependencies. Soon afterwards, under
Secretary-General of the first decade and
the leadership of then Special Advisor to the
between national officials, the Economic Policy
himself a development economist. The
Secretary-General Stephen Marris, the
Committee and the EPC’s Working Party No
Economic and Development Review Committee
OECD Secretariat began mobilising expertise
3 on the international balance-of-payments
(EDRC) began to prepare Economic Surveys of
to define ‘positive adjustment policies’
adjustment process came to be seen as
the economic performance and policies in each
to address ‘stagflation’, in recognition of
indispensable forums. Sometimes with the
member country from October 1961.
the importance of the supply side and
To improve the exchange of information
The OECD at 50
Over the past 50 years, Ireland has been transformed into a progressive, outward-looking trading nation. We look forward to continuing on this path in partnership with the OECD. Enda Kenny, Prime Minister of Ireland
the structural reforms needed to raise the
a mission to the capital. The resulting policy
of national circumstances. Both of these
economic growth potential.
recommendations are subject to agreement
characterisations contain an element of
between the authorities of the addressee
truth, but their incompatibility suggests that
analysis of experience in member states with
country and their peers in other countries, with
the OECD practice may represent a good
the many dimensions of structural reform has
whom a draft report is reviewed. The EDRC is
compromise. This judgement is supported
become the hallmark of OECD work on
a prime example of this peer review process.
by the fact that busy national policy officials
Over the past three decades, comparative
economic policy. The prime example remains
The emphasis on comparative analysis and
remain keen to participate in OECD work,
the Jobs Study of 1994, updated and
the use of benchmarking in assessing the
and an important role for the organisation
modified on several occasions since,
impact of structural policies make it difficult for
in monitoring policies from a longer-term
increasingly as a joint effort by the Economics
a country to avoid critical recommendations
perspective has been found in the context of
Department and the Directorate for
when both performance and past efforts to
the G20’s mutual assessment process.
Employment, Labour and Social Affairs. This
improve policies in a particular area are weak.
cross-country study of what works in
This is appreciated by governments, even
relevance should give the OECD confidence
labour-market policies, together with similar
when they do not see early opportunities for
that it has retained its capacity to adapt to
major efforts in such areas as product-market
implementing recommendations – as long as
new challenges at the end of its first half-
regulation and competition policy, has formed
care is taken to formulate them in a way that
century. This should become increasingly
the basis for policy recommendations in
is seen as constructive.
evident as the preoccupation with short-term
country surveys and the annual Going for
Clearly, there are risks as well as virtues
This latest example of recognised
policies fades with the recovery from crisis,
Growth publication, which provides succinct
in a peer process of the type the OECD has
and as the determinants of economic growth
comparative analysis.
developed. Those familiar with the crisper style
once more top the international agenda.
The effectiveness of combining rigorous
of IMF surveillance may find that the messages
empirical analysis on a cross-country basis
in OECD publications are diluted because
Niels Thygesen participated in various OECD
is enhanced by close, yet arm’s-length,
of the perceived need to bring national
working parties on behalf of the Danish
co-operation with member-state governments.
authorities on board. Those familiar with a
government between 1962 and 1968 and
The OECD provides a unique forum for
politically more tightly controlled framework,
was on the staff of the OECD Secretariat
discussion among national policy officials, on
such as that of the European Union, may
from 1971 to 1973. He was Chair of the
the basis of documentation provided by the
see OECD policy recommendations as overly
Economic and Development Review
Secretariat after detailed discussions during
standardised and insufficiently respectful
Committee from 2000 to 2008.
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The OECD at 50
The 1970s Shifting the emphasis of economic policy
OECD's 10th Anniversary, OECD Headquarters, 14 December 1970. French President Georges Pompidou, with Emile Van Lennep, OECD Secretary-General, meets members of the Staff Association
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The OECD at 50
The OECD at 50
I am honoured to congratulate the OECD on its 50th anniversary. Our membership in the OECD is of great pride to Israel. We consider our accession a goal well-achieved, given the Organisation’s contribution to both the world economy and to Israel. We aspire to assist the OECD in improving the well-being of its citizens, specifically with respect to innovation, entrepreneurship and technological development. Benjamin Netanyahu, Prime Minister of Israel
F
or much of the 1960s, both monetary policy and fiscal policy had been considered by economists and policy makers as tools of demand management. A 1968 report by a group of independent experts supported the active use of fiscal policy to maintain the reasonably full levels of employment that had been achieved without inflation in most OECD countries. During this time, however, the Bretton Woods System of fixed exchange rates, supported by the convertibility of the dollar into gold at a fixed price, began to come under pressure. Expansionary fiscal policies associated with the Vietnam War and Great Society initiatives had ignited inflation in the United States. With the fixed peg for the dollar still in place, the result was a growing overvaluation of the dollar against other countries’ currencies, measured in terms of what it could actually buy. It was amid these gathering storm clouds that, in 1969, Emile van Lennep, a former senior Treasury official and central banker from the Netherlands, took over from Thorkil Kristensen as Secretary-General. A fundamental rethink of how to conduct macroeconomic policy soon began. By 1970, inflation had risen to five per cent annually, more than double the average rate in the early 1960s. OECD analytical work provided support for a shift in emphasis on the part of policy makers in capitals from almost total reliance on fiscal policy to a more balanced use of both fiscal and monetary instruments for economic stabilisation. An OECD report issued in 1970, entitled Inflation: the Present Problem, called for cautious demand-management policies, more direct
price-incomes policies, and a more positive policy approach through the whole range of government activities, including trade liberalisation, domestic competition policy, and other measures to ease structural problems and to even out demand pressures. In a speech soon after taking office, Emile van Lennep called for a “horizontal” approach in international economic co-operation, arguing that the OECD should deal with “interconnected and interdependent” problems relating to the overall management of the economies of its member countries.
Floating exchange rates Shocks of one sort or another kept coming. On 15 August 1971, President Richard Nixon, reacting to a severe recession and weakening trade account, devalued the dollar and announced that it would no longer be convertible into gold. The first reaction of the major OECD countries was to try to re-establish a system of fixed parities. The OECD, through its Working Party No 3, was heavily involved, together with the IMF through the G10, in hammering out a new matrix of fixed parities. Embodied in the Smithsonian agreement, this re-established a fixed-rate regime that struggled on for two years, until in 1973 the Bretton Woods arrangements that had steered the world economy for nearly 30 years finally broke down. The system of floating rates that succeeded Bretton Woods was not immediately greeted with enthusiasm. In OECD countries, many people worried that it would lead to chaos. In the event, ❱❱
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The OECD at 50
it worked better than they had feared. There was a lot of volatility in exchange rates and, perhaps more tellingly, floating did not automatically eliminate “global imbalances”, which continued to be a central theme of international policy discussions. In the short term, however, floating exchange rates provided an important safety valve in the economic upheaval set off by higher oil prices. In October 1973, Arab oil-exporting countries raised the price of crude oil and imposed an oil embargo on the US and some other Western countries. By early 1974, the price of a barrel of crude had risen fourfold from its level four months earlier. The US Secretary of State, Henry Kissinger, called for a counterweight to the Arab-led oil cartel. In November 1974, the US and 15 other OECD countries created the International Energy Agency within the framework of the OECD. ❱❱
First solar energy plant, Odeillo Font-Romeu, France, 1977
The birth of the International Energy Agency by Etienne Davignon
I
n 1974, at the height of the first oil
appeared that this would only be efficient if an
return to normality was achieved when, thanks
crisis, members of the OECD decided in
institutional structure was put into place.
to an initiative from the Saudi oil minister,
Washington to set up a permanent mechanism
What emerged was the proposal for the
Sheikh Yamani, I was invited to attend a
for oil sharing. I was appointed to lead the
creation of the International Energy Agency,
Committee of high officials. The French
under a treaty setting up a governing board
Government had decided not to participate,
composed of senior officials from energy
treaty that set up the IEA and then, in the
so the exercise was conducted outside the
ministries of OECD member states, a council
early years of its development, becoming the
framework of the OECD. It was quickly agreed
of energy ministers, and a secretariat headed
first chairman of its governing board, was a
that the objective could only be reached
by a director general. This structure would
particularly rewarding honour that I am glad to
in a credible fashion if it were based on an
function as an agency of the OECD, with the
have been able to share with the remarkable
international treaty making the eventual
Secretary-General of the OECD being an
heads of the various delegations from the
obligations compulsory.
invited participant in both bodies, but it would
Agency’s member states.
Our work concentrated on devising an oil-
session of OPEC ministers in Vienna. My involvement, firstly in preparing the
be funded by a special budget. As France was
sharing agreement that would come into force
not participating, the European Union could not
Viscount Etienne Davignon was chairman of the
if certain criteria were met. At the same time,
be represented, but the European Commission
governing board of the IEA from 1974 to 1977,
a monitoring and analysis system was seen to
would participate as an observer.
when he became a member of the European
be necessary. Based on experience gathered during the preparatory phase, it quickly
During the initial period, tensions with the oil-producing countries ran high. However, a
Commission. He was vice-president of the European Commission from 1981 until 1985.
M_07
The OECD at 50
‘Stagflation’ and structural adjustment The oil crisis aggravated the ‘stagflation’ that would persist throughout the decade, stunning Keynesian-bred economists who had thought inflation and recession mutually exclusive, and raising doubts among OECD countries about the wisdom of further liberalisation. True to its commitment to open markets, however, the OECD dissuaded members from pursuing protectionism, obtaining from them instead an undertaking not to impose new tariffs or quotas on imports – the so-called OECD Trade Pledge later invoked in the Tokyo Round of trade negotiations. Gradually, the OECD shifted its policy emphasis towards structural adjustment in dealing with the economic difficulties that followed the first oil crisis. OECD analysis contributed to a realisation among governments that focusing exclusively on nominal interest rates or real economic variables in the operation of monetary policy could be counterproductive. From the mid 1970s, a growing number of central banks adopted annual numerical targets for the growth of one or more monetary aggregates. The OECD moved away from a ‘demand-side’ philosophy – the conviction that economic growth is fostered by manipulating taxes and interest rates to control demand and keep unemployment low – to a ‘supply-side’
Italy believes in economic freedom as a pillar of democracy and an essential value of an ever-broadening free world. Congratulations to the OECD that, in 50 years, marked the path from poverty to welfare, from the Marshall Plan to today’s global challenges. Silvio Berlusconi, Prime Minister of Italy
approach, in which lower taxes encourage people to invest, rather than spend, their incomes. In 1978, building on work done over the previous few years, leading OECD countries agreed to curb competition for export business based on official subsidies through cheap financing. A “gentlemen’s agreement” between governments set a floor on interest rates on loans to purchasers and imposed limits to the insurance guarantees provided to exporters against the risk of non-payment. Constantly reviewed and updated since then, the Arrangement on Officially Supported Export Credits, as the pact became known, is designed to create a “level playing field” whereby competition between exporters is based on price and quality, rather than on the financial terms. Over the years, it has played an important role in ensuring fair competition in international trade.
Ambitious policy co-ordination In the late 1970s, the re-emergence of persistent current-account deficits in the United States and surpluses in Japan and Germany once again became a subject of widespread concern. A key focus of OECD work, amid the emergence of the G7 as a key forum for economic policy discussion, was to define and agree on appropriate policy mixes among the major economies that would assure growth and price stability across the OECD, while preventing the emergence of large current-account imbalances. Japan and Germany, as current-account surplus countries, were ❱❱
International Energy Conference, Washington DC, 11 February 1974, which led to the creation of the IEA. Henry Kissinger, US Secretary of State (left); Emile Van Lennep, OECD SecretaryGeneral; Masayoshi Oshira, Foreign Affairs Minister, Japan
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The OECD at 50
The OECD is sometimes called the “global think tank”, with its corps of specialists not only on economics but also on development, social affairs, education and the environment. It has made solid contributions to the international agendas of the day. Naoto Kan, Prime Minister of Japan
pressured to contribute to the growth of the world economy as “locomotives”. The United States and other deficit countries were asked to adopt restrictive demand-management policies with a view to moderating economic expansion and, thereby, controlling inflation.
The most ambitious attempt at economic policy co-ordination was the Concerted Reflation Action Programme elaborated between 1977 and 1978 in the OECD’s Economic Policy Committee and taken up and confirmed by G7 leaders at their 1978 Bonn summit. This called for fiscal expansion in Europe, in particular on the part of Germany, and in Japan, matched by tighter monetary policy in the US together with oil-price decontrol. The Bonn agreement was greeted as a triumph of co-ordinated action, providing economic leadership in which countries would undertake policies that were not directly in their own self-interest because all would benefit from the package as a whole. Years later, hindsight suggests that such judgements may have been overly enthusiastic. The US did begin to decontrol oil prices, but only slowly. Not until President Ronald Reagan came into office in 1981 were price controls eliminated completely, by which
Openness, fairness and transparency: 50 years of international investment policy at the oecd by Manfred Schekulin
I
nternational investment supports economic
and of Current Invisible Operations. For 50
a common expression. Another is the National
development, generates jobs, underpins
years, the Codes have been the only legally
Treatment Instrument by which the concept
two-thirds of global trade, and facilitates the
binding multilateral instruments for promoting
of post-establishment national treatment was
creation and diffusion of innovative ideas and
progressive liberalisation, non-discrimination
multilateralised, at a time when just a couple
technologies. Experience has shown that
among parties and transparency.
of bilateral investment treaties (BITs) had been
the best way to attract investment is through
Ever since, the OECD has played a leading
open, fair and transparent policies. Conversely,
role supporting international dialogue and policy
protectionism and discrimination tend to
on international investment issues. One major
discourage investment.
negotiated (using a model that had also been developed, back in 1962, at the OECD). Today, the concepts developed in these
step came in 1976 with the adoption of the
instruments form the basis for a global
When the OECD was established, it
OECD Declaration on International Investment
network of more than 3,000 BITs and regional
was given a mandate to help its members
and Multinational Enterprises. Among the legal
agreements containing investment provisions.
promote the freedom of capital movements.
instruments that constitute it are the OECD
The instruments themselves continue to
From the beginning, this objective found
Guidelines for Multinational Enterprises, the first
be used vigorously, with the help of regular
its expression in two legal instruments, the
international agreement to promote responsible
revisions and updates, testifying to the
Codes of Liberalisation of Capital Movements
business conduct, well before ‘CSR’ became
soundness of their original construction.
The OECD at 50
time the price of a barrel of crude had fallen sharply from its late 1970s peak. The OECD, during this period, was increasingly stressing the need for structural adjustment in industry, employment, agriculture and regional and regulatory policies. In 1979, the OECD established a programme of work on Positive Adjustment Policies. A Special Group of the OECD Economic Policy Committee chaired by Hans Tietmeyer, then a senior official in the German Finance Ministry and later President of the Bundesbank, reviewed the macroeconomic, structural and international implications of industrial, regional, manpower and other microeconomic policies.
First meeting of Environment Ministers, OECD Headquarters, 13-14 November 1974. Gro Harlem Brundtland, Chair, Minister for the Environment, Norway (left), and Emile van Lennep, OECD Secretary-General
50 governments from around the world to
rapidly. New and more complex patterns of
highlighted the critical relationship between
exchange information and experiences on
production and consumption are emerging.
private investment flows and development, and
investment policies. Co-operation requires
Non-OECD countries are attracting a larger
the need for developing countries to attract
common understanding of policy measures
share of world investment. And multinational
and generate more private investment in order
and objectives. The FoI roundtables foster this
enterprises from non-adhering countries have
to reach their development objectives and the
understanding by developing standards that
grown in importance.
Millennium Development Goals. The OECD
reflect partners’ expectations and good-policy
responded by inviting interested governments
practices. These standards – for example,
and the fight against global warming, if they
to participate in the development of a practical
regarding the treatment of sovereign wealth
are to be successful, will depend on
tool to assess their investment policies.
funds – promote openness, transparency and
significant increases in international capital
non-discrimination and responsible conduct by
flows even when compared to pre-crisis
both governments and investors.
levels. As the number of investment
In 2002, the Monterrey Consensus
Some 60 countries followed this invitation. The resulting Policy Framework for Investment
The shift to the low-carbon economy
The financial and economic crisis and
agreements proliferates, concerns are rising
approach for improving investment conditions
the loss in confidence in open markets, the
about the high costs and perceived lack of
ever developed. It focuses less on what
need to address climate change, and
transparency and predictability of arbitral
governments should do and more on ‘how to
reaffirmed international commitments to
procedures based on them.
get there’. Since it was endorsed in 2006, it
development goals have prompted renewed
has come to be seen as the ‘gold standard’ of
calls from governments, the private sector
favour of multilateral investment rules and
international investment policy, used by dozens
and social partners for high standards of
standards. By building on the experience
of countries and regional initiatives around the
business conduct. The latest update of the
gained over the last 50 years and its tradition
world to improve their investment climate and
OECD Guidelines for Multinationals, recently
of constant innovation and ‘staying ahead of
get the most out of investment inflows.
concluded, will ensure the Guidelines’
the curve’, the OECD will be uniquely suited to
continued role as the leading intergovernmental
tackle the challenges ahead of us.
(PFI) is the most comprehensive and systematic
More recently, the Freedom of Investment (FoI) process, an intergovernmental forum hosted by the OECD Investment Committee, has brought together on a regular basis some
This may yet lead to a reassessment in
instrument in this area. The landscape for international investment and multinational enterprises is changing
Manfred Schekulin is Chair of the OECD’s Investment Committee.
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The OECD at 50
The OECD at 50
The 1980s New challenges for economic co-operation
French President François Mitterrand, accompanied by Jean-Claude Paye, OECD Secretary-General (left), receives OECD ministers. ElysÊe Palace, Paris, 17 April 1986
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The OECD at 50
Some important OECD codes and guidelines ●●
The Code of Liberalisation of Capital
adopted in 1972, include the ‘Polluter
Movements, adopted in 1961,
Pays Principle’, a non-subsidisation
of Privacy and Transborder Flows of
established legally binding obligations
approach to assigning the costs of
Personal Data, adopted in 1980 and now
to maintain free capital movements.
pollution control.
undergoing review to take account of
The linked Code of Liberalisation of
●●
●●
The OECD Guidelines on the Protection
The OECD Guidelines for Multinational
changing technologies, markets and user
Current Invisible Operations established
Enterprises, adopted in 1976 and updated
behaviour, are the global reference for
obligations in cross-border trade in
several times since (most recently in
reconciling the protection of personal
services, including financial services.
May 2011), set out a code of good
data with the free flow of information.
The OECD Guiding Principles Concerning
behaviour for multinational
the International Economic Aspects of
companies backed by the moral
Acceptance of Data in the Assessment
Environmental Policies, which were
authority of OECD governments.
of Chemicals (of which the first was
●●
●●
The OECD Council Acts on the Mutual
The OECD at 50
Recognising the OECD’s five decades of valuable contribution to the international community, I commend its efforts to disseminate the Green Growth paradigm initiated by Korea as a new source of growth, a vivid example of the OECD's pursuit of ‘better policies for better lives’. Lee Myung-bak, President of the Republic of Korea
A
major reorientation of fiscal policy under President Reagan resulted in large budget deficits in the US. These, coupled with the restrictive monetary policy followed by the Federal Reserve to control inflation, brought about high interest rates and an appreciation of the dollar. A growing US current-account deficit continued to be matched by persistent surpluses in Japan and Germany. The international consensus was that the US should reduce fiscal deficits, thereby reducing pressure on domestic interest rates and inducing a weakening of the dollar. Such action, together with a shift in domestic savings and investment balances resulting from fiscal consolidation, could be expected to shrink the external deficits of the US. But it was less clear what Japan and Germany should do. Views were divided within the OECD as to whether they should expand fiscal policy
adopted in 1981), save countries
adopted in 1997, groups 38 countries in
and industry almost as much as
a concerted campaign against cross-
members spend each year on all
border business corruption.
of the OECD Part I Budget. ●●
●●
marketplace and serve as a reference to foster mobile commerce. ●●
The OECD Principles of Corporate
The 2005 OECD Guiding Principles for
Governance, first issued in 1999 and
The OECD Transfer Pricing Guidelines
Regulatory Quality and Performance have
revised in 2004, were adopted by the
for Multinational Enterprises and Tax
often been the basis for the design of
World Bank in its work and recognised
Administrations, originally approved in
national policies to improve regulation.
as one of 12 key standards for
1995 and revised and expanded since,
These principles are currently being
international financial stability by the
provide guidance on applying the ‘arm’s-
expanded to take into account lessons
length principle’ to the valuation, for tax
from recent years.
purposes, of cross-border transactions ●●
and tighten monetary policy – the so-called “reverse fiscal/monetary policy mix” – or concentrate on structural reforms to strengthen domestic growth potential and, in the case of Japan, also accelerate domestic market opening. ❱❱
Financial Stability Forum. ●●
The 2009 OECD Guidelines for
The OECD Guidelines for Consumer
Fighting Bid Rigging in Public Procurement
between associated enterprises.
Protection in the Context of Electronic
help procurement officials to detect
The OECD Convention on Combating
Commerce, adopted in 1999 and now
possible bid-rigging conspiracies, and
Bribery of Foreign Public Officials in
undergoing review, have helped
to design procurement processes that
International Business Transactions,
develop a sound e-commerce
reduce the risks of bid-rigging.
●●
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The OECD at 50
More than ever before, the dual objective of improving economic and social well-being demands careful balancing both in policy design and in implementation, given that the market by itself has never produced solidarity.
continued to produce medium-term scenarios and associated policy packages designed to promote international balance. As early as 1983, however, Martin Feldstein, who as Chairman of President Reagan’s Council of Economic Advisors also chaired the OECD’s Economic Policy Committee, was dismissive of “concerted action” scenarios.
Jean-Claude Juncker, Prime Minister of Luxembourg
Global imbalances
Steadily, the idea that the purpose of international policy discussion was to find ways of coordinating macroeconomic settings lost ground to an alternative view that the real priority for economic policy was “getting one’s own house in order”. The OECD Secretariat
It was in this complex environment that Jean-Claude Paye, a senior French civil servant, took over from Emile van Lennep in 1984 at the helm of the OECD. Just over a decade earlier, as a Senior Aide to Raymond Barre, then Vice-President of the European Commission with responsibility for economic and financial affairs (and later French Prime Minister), he had enjoyed a ringside view of the turbulent end of
The international co-ordination of macroeconomic policy by Val Koromzay
F
ollowing the collapse of the Bretton Woods
There thus developed a view that
US was stuck in stagflation and its external
system and the move to floating exchange
macroeconomic policies needed to be
balance of payments was weakening fast,
rates in 1973, it became apparent that one
co-ordinated to ensure balanced growth.
while necessary domestic adjustment to high
of the presumptions of those who favoured
Throughout the 1970s and well into the
and rising oil prices was blocked by oil-price
floating was not being realised. Balance-of-
1980s, there were serious attempts among
controls. Domestic demand in Europe and
payments imbalances, far from disappearing,
the major OECD countries to construct policy
Japan, meanwhile, was being undermined by
were actually intensifying. These imbalances
‘packages’ responding to this intuition. One
high oil prices, although Germany was
were to dominate OECD discussions on
aspect, still generally accepted, was the idea
benefiting from export-led growth, thanks to
economic policy until well into the 1980s.
that foreign-exchange intervention to deal
its strong market position in OPEC countries.
with unwanted turbulence is more likely to
An OECD vision for a co-ordinated policy
was a lack of international co-operation. At
be effective if undertaken in a co-ordinated
package, calling for fiscal expansion in
the time, most OECD countries were using
fashion by a number of central banks,
Germany and Japan, tighter monetary policy
monetary and fiscal policies in complementary
rather than just by that of the country under
and oil-price decontrol in the US, and
ways to promote full employment through
pressure. But deeper issues of co-ordination
complementary adjustments in other G7
demand management. The ‘policy mix’ in each
of monetary, fiscal and other instruments also
countries, was intensively discussed by the
country might be appropriate on purely domestic
ranked high in OECD discussions.
Economic Policy Committee. Thanks to close
The source of the problem, as then analysed,
grounds, but if policy mixes differed significantly
One of the most significant attempts at
links between the Bureau of the EPC and
among the major OECD countries, international
co-ordination was launched in preparation for
the G7 Summit preparatory group, it was
imbalances could arise and intensify.
the 1978 G7 Bonn summit. At the time, the
broadly endorsed by the G7.
The OECD at 50
the Bretton Woods arrangements. Monetary issues and global imbalances in the wake of a second oil crisis in the early 1980s were to dominate his first few years at the OECD. On the monetary front, both the political and the intellectual ground had shifted. With the opening-up of capital accounts in all OECD countries, it had become apparent that the financing of current-account imbalances was easier, at least for major countries, than had previously been supposed. Equally, it was becoming clear that markets focused increasingly on the soundness of domestic policies when ❱❱
OECD Ministerial Council, OECD Headquarters, 17-18 April 1986. Kurt Furgler, Swiss Federal Counsellor, Head of the Federal Department of Public Economy (left); Jermu Laine, Finnish Minister of Foreign Trade; Turgut Ozal, Turkish Prime Minister, Chair of the meeting
the EPC’s Working Party No 3 in 1987,
‘imbalance’ is between a group of ‘emergent
was hailed as a major success for international
At the time, the Bonn summit agreement
assessing the tolerance margins for current
economies’, spearheaded by China and a
co-operation in macroeconomic policy-
account imbalances in a world of free capital
number of other countries that are growing at
setting. History is, perhaps, less kind. A
movements. The group’s then chairman,
rapid rates, and the ‘advanced economies’,
senior German official who participated in
Geoffrey Littler of the UK, summarised
which are mostly stagnating. The forum for
the discussions has suggested privately that
discussion of this paper by saying: “It
discussion is, appropriately, the G20, which
its net effect was to delay a German fiscal
thus seems that there is no brick wall of
includes the major players in a way that no
expansion that was needed on domestic
impossibility as regards the financing
OECD committee does.
grounds, just because Germany needed to
of external imbalances.”
get the US to agree to oil-price decontrol. On the US side, oil-price decontrol was
In parallel, OECD countries were
One lesson from OECD experience may be relevant here: policy co-ordination
fundamentally changing their thinking
is difficult and it requires a high degree of
indeed initiated, but very slowly. It was finally
about macroeconomic policy generally.
mutual trust. While it can be argued that
completed in 1981 by President Reagan, but
Instead of a vague notion of fiscal/monetary
the intensive interactions in key OECD
by then oil prices had fallen from their highs in
co-ordination to stabilise demand, many
committees such as the EPC are essentially
the late 1970s. Tighter monetary policy was
moved to a regime of central bank
about building trust, this process has its
introduced when President Carter appointed
independence subject to clear mandates.
limits. Domestic politics will often overrule
Paul Volcker as chairman of the Federal
Central banks were made responsible for
those who aspire to ‘evidence-based’ policy
Reserve in 1980. But this was a decision that
controlling inflation, while fiscal policy was
outcomes. Given that the G20, as a forum,
had little to do with the Bonn commitment.
above all to be concerned with the long-term
has less experience in concertation than the
sustainability of public finances, with
OECD, nailing down a co-ordinated approach
co-ordination waned during the 1980s and
‘automatic stabilisers’ dealing with demand
to global macroeconomic management is
died altogether over the following two
fluctuations. This paradigm, which makes the
likely to remain a difficult challenge.
decades. Views about ‘imbalances’ had
co-ordination of macroeconomic policies
begun to change, in a process where the
seem fruitless, worked well until the global
Val Koromzay joined the OECD Secretariat
OECD clearly played a role. In association
financial crisis erupted in 2008.
staff in 1981 and was Director of the Country
Enthusiasm for macroeconomic policy
with Andrew Dean and Bixio Barenco of the OECD Secretariat, I prepared a paper for
In the wake of the crisis, there is renewed interest in policy co-ordination. Today’s
Studies Branch of the Economics Department from 1998 to 2008.
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The OECD at 50
OECD Ministerial Council, OECD Headquarters, 18-19 May 1988. Anita Gradin, Minister for Foreign Trade (left) and Kjell-Olof Feldt, Finance Minister, Sweden; with Jean-Claude Paye, OECD Secretary-General
assessing a specific country facing problems, with the current account playing a lesser role. One effect of this shift in policy focus was a closer attention to budgeting as the core of the public management agenda. The OECD began to be recognised during these years as a key international centre for budget research and innovation, backed by its Working Party of Senior Budget Officials, established in 1980 and composed of budget directors and other senior officials from OECD member countries. This group meets annually to address key budgeting concerns and relevant policy options, and today has counterparts in all regions of the globe. ❱❱
WP3: High-level policy making in a stimulating forum by Sir Andrew Crockett
W
P3, or the OECD Economic Policy
second-order. They certainly didn’t seem so at
were undertaken in the much more limited
Committee’s Working Party No 3
the time. Indeed, they resonate with many
group of the G5 finance deputies. Subsequent
issues that remain with us today.
history shows that, sadly, no lasting
on Policies for the Promotion of Better International Payments Equilibrium, was the
In the mid 1980s, a key focus of WP3
consensus was reached on a framework for
first forum, back in the early 1960s, to concern
discussions was the US payments deficit and
itself explicitly with international economic
how it could be corrected. Stephen Marris,
policy coordination – or ‘co-operation” in the
as Special Advisor to the Secretary-General
retrenchment following the ‘great inflation’ of
favoured official terminology. Its focus lay in
of the OECD, had worried about this for quite
the 1970s. A frequent topic of WP3 discussions
concerns about the working of the international
some time. He eventually left Paris for the
in this period was how the monetary policies
adjustment process.
Institute for International Economics, where he
being followed by the major countries to
sensitised a wider audience to the problem in
combat inflation might affect exchange rates
1980s, when I was responsible for the
his Deficits and the Dollar, concerned about a
and the international adjustment process.
World Economic Outlook project at the IMF.
hard landing for the US and world economies.
Similar debates are taking place today, with the
I continued to attend after moving to the Bank
The deficits don’t seem all that large by
primary policy concern being whether and how
of England, and had the honour to be elected
comparison with those of today, but they were
easy monetary policies in the major industrial
Chairman in 1993. Viewed from the optic of
worrying enough to lead to the Plaza and
countries complicate the environment for policy
the recent financial crisis and the subsequent
Louvre accords. Much of the analysis that lay
making elsewhere.
‘great recession’, some of WP3’s concerns in
behind these agreements was hammered out
the 1980s and 1990s may be thought
in WP3, although the negotiations themselves
I first started going to WP3 in the early
dealing with a recurrence of imbalances. The 1980s were also a period of
By the early 1990s, exchange rates had returned to a more justifiable pattern and
The OECD at 50
An unwavering belief in shared values, such as sustainable development, free trade and a profound commitment to human development, will continue to be at the core of Mexico’s membership of the OECD. As the OECD strengthens its relationship with other emerging economies, these countries will benefit from the Organisation’s collective experience, while also enriching our own internal debate and deepening our understanding of the global economy. Felipe Calderón Hinojosa, President of Mexico
central banks had succeeded in restoring
While historic political changes were going
many meetings that I attended in more than
a much more satisfactory measure of price
on in Europe, the world was undergoing the
20 years on the international economic policy
stability. The attention of WP3 shifted to the
recession of 1992-93. I well remember the
circuit. The papers prepared by the OECD
economic consequences of the historic
first WP3 meeting following the election of
Secretariat were brief and pithy. The participants
events unfolding in Eastern Europe. German
the Clinton Administration in the US. The
– deputies of finance ministers and central bank
reunification occurred in 1990 – which,
US delegation comprised Alan Blinder from
governors – were close to the heart of policy-
incidentally, temporarily deprived WP3 of Hans
the Council of Economic Advisers and Larry
making, and could speak authoritatively and
Tietmeyer, recalled to government service
Summers from the Treasury, as well as
spontaneously. Nobody read prepared remarks,
by Helmut Kohl to advise on the process.
the irrepressible, sometimes irascible, but
and few even spoke from detailed notes.
Reunification posed enormous monetary and
ultimately lovable Ted Truman, longtime head
fiscal issues. It was an open secret that many
of the Fed’s international finance division.
hitch with WP3 is not so much the policy issues
in the Bundesbank opposed monetary union
They provided us with an elegant textbook
– after all, these discussions were going on in
between the East and West German marks
outline of the new Administration’s economic
multiple other forums as well. It is the individuals,
at par, but others – including, I believe, Hans
strategy: stimulate now to underpin recovery;
and the sense of camaraderie that builds up
Tietmeyer himself – recognised the political
consolidate later. All very familiar in 2010-11.
as economists responsible for policy issues
imperative of the parity rate. Regardless of the reasons for this choice,
As it happened, Congress didn’t buy the
In the end, what I remember of a two-decade
put their trade at the service of public policy.
stimulus part of the proposal, but everything
With members such as Larry Summers, Hans
reunification had major implications well
worked out more-or-less OK anyway. Later,
Tietmeyer, Tommaso Padoa-Schioppa, Toyoo
beyond Germany. The fiscal pressures it
the Clinton administration cited international
Gyohten, Bill White and Jean-Claude Trichet, a
created required a highly restrictive monetary
pressure and approval to gain Congressional
WP3 discussion was a rewarding intellectual, as
policy by the Bundesbank to hold inflation in
support for its budget-cutting strategy.
well as policy-making, experience.
check. The resulting high interest rates nearly
Unfortunately for me, my tenure as WP3
broke the European Monetary System (EMS)
Chairman was cut short after only one
Sir Andrew Crockett is Special Adviser to the
and led both Britain and Sweden to stand
meeting, when I was asked to take Alexandre
Chairman of JPMorgan Chase and Co. He was
aside from eventual monetary union. As might
Lamfalussy’s place as head of the Bank for
General Manager of the Bank for International
be imagined, WP3 was a forum for intense
International Settlements. Sessions of WP3 were
Settlements from 1994 to 2003 and Chairman of
discussion of these issues.
among the most stimulating and enjoyable of the
the Financial Stability Forum from 1999 to 2003.
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The OECD at 50
The OECD seen from the viewpoint of an international banking analyst by Richard O’Brien
F
rom the mid 1970s until the late 1990s,
developing country debt crises and petrodollar
to the end, when a number of Asian delegates
I was a regular participant in the informal
recycling. The meetings were usually held in one
made clear that they were less keen on rushing
bankers’ meetings hosted by the Financial
of the elegant meeting rooms of the Château de
into as close a relationship as the Secretariat
Markets Committee before it met in formal
la Muette, and they followed a consistent format.
had seemed to hope, especially if it might involve
session the following day to discuss the state
Ahead of time, a briefing paper with some
greater commitment to standard regulations.
of world financial markets. The Committee
key questions was sent to us all. On the day,
was then best known for its excellent Financial
the invited analysts and bankers gave their
called to attend a planned press briefing
Markets Trends publication, a three-times-
reactions. Discussions tended to follow a
were kept waiting for a good half-hour while
a-year little dark-red book available only in
consistent pattern, with the analysts first off
a compromise was thrashed out. I had been
hard copy. For international banking analysts
the block, doubtless keen to show their fine
chairing a breakout group and, to my surprise,
like myself, it was a key source of data and
analytical minds and often invited by the chair
I was asked to face the press, despite my non-
commentary alongside the publications of
to get things going. Then the bankers would
official status. In my mind there was a great story
the Bank for International Settlements and
contribute, either with fairly formal statements
here about the inability to reach agreement, but
individual central banks.
or warming up into lively debate. If things
we were instructed to put as much of a positive
Those were times of rapid change: the
On the evening of the second day, journalists
got dull, a little dig from the floor at the dollar
spin as possible on the very useful and positive
growth of syndicated bank lending, of the
could be guaranteed to get a rise from the
discussions that we had had, without being able
Euromarkets, the Herstatt Bank collapse and
US Treasury delegation.
to say much of substance. There was little in the
Basel I (the Cooke capital ratios), of floating
The value for all was the open and fairly
exchange rates and floating interest rates, of
free debate between central bankers and the
and the journalists could well have been forgiven
private market over the difficult challenges
for thinking that their time had been wasted. Yet
of international financial markets at the time.
behind our blandness were hidden some of the
Why were banks lending at ever lower spreads
trickier issues of the day.
to countries that were getting ever more
press briefing that was of interest to the media,
Today, we have moved on from the old-style
indebted? How long could this go on? When
club approach to a Twitter world where informal
the bubble burst in the early 1980s, debates
channels help both sides to read between the
shifted to how long reschedulings would take,
lines of official statements and formal balance
when markets might recover, and who was
sheets. In those pre-Twitter days, however, these
going to run into trouble next. This was also
informal meetings provided an important link
the era of deregulation: Big Bang in the UK
across the divide between the market regulators
and May Day in New York – though usually
and the regulated, enabling both sides to forge
attendance was from commercial investment
valuable personal contacts that helped them in
bankers rather than the exchanges.
their efforts to work out just what was going on
On the basis of this regular attendance,
in the rapidly globalising world.
some of us were also invited to contribute to other OECD sessions. I recall a two-day Informal
Richard O’Brien is a founding partner of
Workshop with Dynamic Asian Economies
Outsights, a London-based strategic
in February 1990, focused on regulation but
management consultancy. From 1973 to
where the underlying longer-term issue was
1995, he was successively Senior Economist
these countries’ eventual future links with – and
at Rothschild Intercontinental Bank and
possibly even membership of – the OECD. The
Chief Economist and Executive Director
meeting was running along very well until close
at American Express Bank.
The OECD at 50
OECD Environment Ministerial, 18-20 July 1985. Dr Peter Winsemius, Netherlands Minister of Housing, Physical Planning and Environment (left), and Shigeru Ishimoto, Minister of State for the Environment, Japan
For a while, the OECD’s Working Party No 3 continued to worry about current-account imbalances. In 1985, in conjunction with the G10, it orchestrated the ‘Plaza Accord’ which sought to bring down an overvalued dollar by concerted intervention coupled with fiscal expansion in Japan and, to a lesser degree, in Germany. This worked reasonably well for a while – until two years later another ‘package‘ had to be implemented via the Louvre accord to shore up a dollar that was seen as having weakened too much. From then on, reflecting the changed environment, there were no further serious efforts to construct co-ordinated policy packages in OECD countries. Instead, macro-policy discussions in OECD focused, with generally positive results, on the design of frameworks that would deliver, in each country, sensible fiscal policies that were sustainable over time, while building on inflation-targeting to fine-tune the implementation of monetary policy.
Push for deregulation During the 1980s, moves towards the full liberalisation of capital movements in OECD countries gathered pace. In parallel, the OECD started to push for deregulation in major economic areas such as telecommunications, first by calling for increased competition at the level of basic equipment such as telephone handsets, and then by pushing for the privatisation of stateowned telecommunications operators. The sharp falls in calling costs that consumers in many countries have enjoyed in the past few decades are one of the most tangible examples of the benefits to ordinary citizens of work at the OECD. Also at this time, the OECD began to show greater interest in learning from experiences outside its membership, notably the so-called ‘Tigers’ of South-East Asia, whose economies were growing at rates far faster than those of OECD countries. OECD officials travelled to Hong Kong, Malaysia, Singapore and other Asian destinations. Encouraged in particular by Japan, OECD ministers rewarded their cautious
overtures with a mandate to open an informal dialogue with the ‘Dynamic Asian Economies’. The first such meeting, in January 1989, took place “in an extremely favourable atmosphere, and achieved great results”, according to a report from Japan’s Ministry of Foreign Affairs. Months later, however, the fall of the Berlin Wall in November 1989 opened a dramatic new chapter in the history of the world economy – and of the OECD. Though the Asian Tigers were not forgotten, attention at the OECD rapidly switched to the countries of Central and Eastern Europe.
The OECD has served the world and the Netherlands well, setting standards on issues such as fair business practices and corporate governance. We will continue to profit from the OECD’s work on global challenges, such as restoring public finances, employment and multinational entrepreneurship. Mark Rutte, Prime Minister of the Netherlands
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The OECD at 50
The 1990s A changing global context
Poland joins the OECD, OECD Headquarters, 11 July 1996. Donald Johnston, OECD Secretary-General (left); Grzegorz Kolodko, Deputy Prime Minister, Finance Minister
Fall of the Berlin Wall, 1989
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The OECD at 50
Nelson Mandela is released from prison after 27 years. Paarl, South Africa, 11 February 1990
The OECD at 50
The OECD is one of the most influential economic forums to which New Zealand belongs. Participation grants us access to a think tank whose analysis can inform our own policy development, as well as provide us with a voice on the global stage with which to help shape the international economic environment. John Key, Prime Minister of New Zealand
T
he demise of the Soviet Union and the rise of globalisation rendered characterisations in terms of political blocs less pertinent. OECD countries took a strategic decision to engage the Organisation fully in the transition to democracy and a market economy that was under way in the Czech Republic, Hungary, Poland, the Slovak Republic, the Russian Federation, South East Europe, the Baltic countries and the Commonwealth of Independent States (CIS). Through a series of country programmes with ‘Partners in Transition’, the OECD helped to ease their conversion to market economies, paving the way, in some cases, for membership of the OECD and/or the European Union. In a context in which many of these countries were aiming at European integration, the fact that the OECD’s recommendations were based on the comparative analysis of policy experiences, but refrained from the traditional conditionality, helped to encourage implementation and a sense of ownership in the reform process. During this period, the OECD also began drawing the attention of policy makers to the relevance of entrepreneurship and small and medium-sized enterprises (SMEs) as drivers of growth, job creation and social cohesion. In 1993, a working party on SMEs was created as the first high-level international forum for SME policy makers. Later renamed the Working Party on SMEs and Entrepreneurship, to reflect increased recognition of the importance of entrepreneurial behaviour in economies around the world, its work to promote entrepreneurship and advance the performance of small businesses through best-practice policies has proved of particular interest in emerging economies, including those of the former Soviet bloc.
Signature of the OECD Partnership Agreements (Czech Republic, Slovak Republic, Hungary and Poland), OECD Headquarters, 4 July 1991. Jean-Claude Paye, OECD Secretary-General (left); Mihaly Kupa, Finance Minister, Hungary; Leszek Balceroricz, Deputy Prime Minister, Finance Minister, Poland; Wim Kok, Netherlands Deputy Prime Minister and Minister of Finance, OECD Ministerial Council Chair; Béla Kadar, Minister, International Economic Relations, Hungary; Alfred Biec, Under Secretary of State, Poland; Salvatore Zecchini, OECD Assistant Secretary-General
Bridging the knowledge gap In 1994, building on its participation in the North American Free Trade Agreement, or NAFTA, Mexico concluded negotiations to join the OECD and quickly began playing an active role in the Organisation’s affairs. Korea had also made known its interest in membership, as had some other Asian economies. In central and eastern Europe, the OECD organised seminars and sent experts from its member countries to advise officials in these countries. It invited them to send representatives to meetings of its committees in Paris, giving them direct access to OECD counterparts in areas as diverse as trade, financial markets, agriculture, technology, social policy, labour markets and education. ❱❱
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As a small, open economy, Norway has benefited greatly from the sharp, policy-relevant analyses of the OECD. We have often followed the advice, and done quite well. Jens Stoltenberg, Prime Minister of Norway
OECD member, a goal that it achieved in May 1996, shortly after the Czech Republic and just before Poland. A few years later, Hungary was one of the first OECD countries to undergo a fullscale OECD review of its regulatory environment, including an in-depth analysis of its competition policy arrangements. In many ways, the process was a coming of age in terms of Hungary’s OECD membership, says Mr. Kovács. “We took it very seriously,” he recalls. “It was a reputation issue.”
Unemployment on the rise Hungary was one of several countries that took full advantage early on of the learning opportunities that the OECD offered. In 1990, Hungary’s newly elected parliament had passed a Competition Act modelled on the laws of Western countries. But passing a law was one thing, and putting it to effective use was quite another. “We had to learn how to implement it,” recalls Csaba Kovács, head of the Hungarian Competition Authority’s policy section. “If you misunderstood important concepts, enforcement might go in the wrong direction.” To bridge their knowledge gap, he and his colleagues eagerly participated in OECD training sessions and seminars, and later as observers in meetings in Paris of the OECD’s Competition Committee. By dint of hard work, they began to get a grip on the issues, simultaneously pushing forward Hungary’s aspirations to become an
While all this was going on, OECD countries also had other worries. Concerns about high and increasing unemployment were addressed by The OECD Jobs Study: Facts, Analysis, Strategies, published in 1994, and the OECD Jobs Strategy that resulted from it. Focusing on the difficulties of many OECD economies in adapting to technological change and increased competition, the OECD advocated broad and deep structural reforms in product and labour markets, innovation and entrepreneurship, and education, training and strong support systems complemented by appropriate macroeconomic policies. And it warned that any attempt to soften or thwart the pace of change through protectionism, or other measures to restrict competition, would not tackle the underlying causes of unemployment, but rather reduce living standards. The 1994 OECD Jobs Study: Recommendations ●● Set appropriate macroeconomic policy; ●● Enhance the creation and diffusion of technological know-how; ●● Increase working-time flexibility; ●● Nurture an entrepreneurial climate; ●● Increase wage and labour cost flexibility; ●● Reform employment security provisions; ●● Expand and enhance active labourmarket policies; ●● Improve labour-force skills and competences; ●● Reform unemployment and related benefit systems. ❱❱
OECD Ministerial Council, OECD Headquarters, 2-3 June 1993. Senator Hon Peter Cook, Australian Trade Minister (left); Hon Lloyd Bentsen, US Secretary of the Treasury; Hon John S Dawkins, Australian Treasurer, Chair of the meeting; Hon Ronald Brown, US Secretary of Commerce
The OECD at 50
The rise of globalisation: New challenges for the OECD by Jean-Claude Paye
A
quarter of a century ago, addressing a
reforms in most countries. Nothing is fixed in
seminar marking the OECD’s 25th
stone, however, and it is entirely appropriate
on Investment, or MAI, eventually ran
anniversary, I spoke of a world facing rapid
that the Jobs Strategy should now be
foul of widespread fears of globalisation.
and far-reaching change. Events soon proved
re-examined once again in the light of the
But it is significant that moves are now
this an understatement. The stock market
economic crisis of the past few years.
afoot, within the framework of the OECD’s
crash of October 1987 prompted a wave of
Looking back from the vantage point of the
The proposed Multilateral Agreement
Investment Committee, to revisit the idea of
uncertainty and doubt in developed economies.
OECD’s 50th anniversary, I am reminded of the
a global accord on cross-border investment.
By early 1989, when the OECD opened a
words of Toyoo Gyohten – who, as Japan’s
Globalisation is now recognised as here to stay,
dialogue with the dynamic economies of
Vice-Minister of Finance for International Affairs,
and the OECD has a fundamental role to play
Asia – Hong Kong, Malaysia, Singapore,
was chairman of the OECD’s Working Party
in helping to prevent misunderstandings and
South Korea, Chinese Taipei and Thailand –
No 3 from 1988 to 1990 – when I congratulated
tensions and to establish the rules required so
globalisation, though still poorly understood,
him for never having missed a meeting of this
that it operates to the benefit of all.
was well and truly under way.
important body. “There's a good reason for
That means ensuring a place for all major
that,” he responded. "It's the only place where I
world economies around the OECD table. It
in train another wave of change. Germany was
am in reflection mode and not negotiation
also means continuing to adjust its agenda
reunified and the Cold War was over. By the
mode.” ln those words, Toyoo Gyohten summed
and its analytical frameworks to the changing
early 1990s, with OECD assistance, the former
up what for me was and remains the most
realities of today’s world – one where the
Soviet satellite states of central and eastern
important function of the OECD: to serve as a
interests of developed and developing
Europe were working hard to reintegrate
forum in which governments can reflect together
countries are more intertwined than ever, as
themselves into the world economy. Mexico
on common problems and how best to address
shown by the discussions taking place in
had signalled its wish to join the OECD, which it
them, in a win-win situation, without seeking to
the G20. And it means improving its working
did in near-record time, followed by Korea.
extract concessions from their partners.
practices to ensure that discussions are not
Months later, the fall of the Berlin Wall set
True to its vocation, the OECD throughout
In the early 1990s, fears about globalisation
clogged by the demands of every member,
this period played a groundbreaking role in
were already giving rise to protectionist
big or small, to have its say merely to reiterate
helping governments and policy makers
pressures. The OECD addressed these
things that have already been said. My hope,
respond to the challenges posed by
challenges head on – for example, through a
in particular, is that the European Union
globalisation. Faced with rising unemployment
conference in March 1995 on the damaging
members will demonstrate their capacity to
in its member countries, the OECD began to
effects of bribery on trade and investment,
speak with one voice in the variety of
place greater emphasis in its analyses and
which led to the negotiation and adoption of
domains covered by the OECD.
recommendations on microeconomic policies
the OECD Convention banning the corruption
and the need for structural reforms. We looked
of foreign public officials in international
that it will decisively contribute to making
at the impact of government subsidies to
business deals. That same year, OECD
globalisation a win-win process for an
industry. ln 1992, we launched a review of
governments gave the Organisation a mandate
expanded membership and the rest of the
ways to raise employment and improve
to negotiate a level playing field for cross-
world. The tensions, worries and frustrations
worker training, which two years later resulted
border investment, as a potential underpinning
that affect the many people who feel pulled
in the OECD Jobs Study.
for improved prosperity worldwide.
down by globalisation remind me of
My birthday wish for the Organisation is
The rising importance of China and India
Raymond Barre’s words as vice-president
not always welcome. The Jobs Study, to
was not lost on OECD countries either. In July
of the European Commission four decades
name but one example, raised hackles in
1995, I made the first official visit of an OECD
ago: “I am, of course, for liberalising trade,
many OECD countries when it was launched
Secretary-General to Beijing and in January
but in an orderly fashion.”
in 1994. Two years later, the Jobs Strategy
1996 to New Delhi. In May 1996, as Donald
that emerged from this work was highly
Johnston succeeded me, Russia announced its
Jean-Claude Paye was Secretary-General of
praised and triggered a process of important
wish to become a member of the OECD.
the OECD from 1984 to 1996.
To be sure, our recommendations were
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In addition to calling for reform in the wages and labour markets, working time and retirement age and for the reform of employment security provisions and unemployment benefits, the OECD Jobs Strategy urged governments to be more proactive in taking measures to improve workers’ skills and competencies and promote innovation. While there was initially some controversy over some of its policy orientations, an assessment in 1998 of its impact concluded that many of its countryspecific recommendations had been adopted and were useful in reducing unemployment. The pertinence of OECD analysis and policy recommendations was confirmed by the growing list of candidates for OECD membership. In December 1995, the Czech Republic became the first of the former Soviet-bloc countries to join,
followed by Hungary and then Poland. In parallel, the OECD was making overtures to China, first under Jean-Claude Paye and then under his successor, Donald Johnston, a former Canadian government minister and President of the Liberal Party of Canada, who took over in 1996 as the OECD’s first non-European Secretary-General. Korea became the Organisation’s second Asian member in December 1996, and in 1997 Russia formally made known its desire to join.
Economic growth, social stability, good governance Drawing inspiration from what he described as “a triangular paradigm whereby progress is dependent on balancing economic growth and social stability through the exercise of good governance”, Donald Johnston launched the OECD ❱❱
The reform years: Building a stronger, more agile OECD by Donald Johnston
I
n 2001, the OECD was the first international
much of the following decade, the Organisation
shared between two Deputy Secretaries-
organisation to establish its financial
was in a continuing state of reform.
General. Within this new framework, other
statements in accordance with the International
Looking back, I am proud of the way in
changes followed in almost all areas.
Public Sector Accounting Standards (IPSAS)
which staff coped with this period of change
and to have them audited by external
and continued to show their dedication to
overhauled and the substantive work of the
accountants. Seen from today’s perspective,
the Organisation. These were turbulent, even
Secretariat was reviewed and re-prioritised.
such an innovation might seem mundane.
traumatic, times. Severe budget cuts in the first
External communications were streamlined.
But in the context of the time, in which
three years of my first mandate reduced our
In 1996, printing, publications and media
intergovernmental organisations were under
resources by approximately 18 per cent. Over
relations were all dealt with separately, without
critical public review, it was a major step. Today,
the following years, further cuts and repeated
a common sense of direction and without a
transparency and integrity are core values of
job uncertainty at the end of each year, plus the
common logo representing the Organisation.
which the OECD can be proud.
upheaval of adapting to new ways of working,
Today, the OECD has a coherent, integrated,
added to the burden on staff.
across-the-house strategy. During my mandate,
Under the leadership of Angel Gurría, the OECD enjoys well-merited recognition and
The first major administrative change that
The structure of the Secretariat was
we introduced a number of significant flagship
stability. It has become a partner in the work
I introduced was the appointment of an
publications. We also launched the OECD
of the G20, and it benefits from modern
Executive Director in charge of Human
Forum, held in conjunction with the OECD’s
structures and working conditions and a
Resource Management, Budget and
annual Ministerial meeting, and now an
world-class conference facility. Achieving these
Finance, Information and Communication
important annual event where governments,
advances was no easy task, however. From
Technology (ICT) and General Operations –
business and civil society exchange ideas
1996, when I began my first mandate, and for
responsibilities that previously had been
and influence policy makers.
The OECD at 50
Together with the 50th anniversary of the OECD, Poland celebrates the 15th jubilee of our membership of this Organisation. What Poland values most about the OECD is the opportunity it provides to discuss crucial economic problems of the contemporary world, to jointly seek solutions and co-ordinate economic policies for the benefit of member states’ citizens. Were it not for our membership of the OECD, we would not be where we are today. Donald Tusk, Prime Minister of Poland
Education was given its own Directorate,
and continues to be a significant forum for
education, as well as governance. The OECD’s
which now runs the OECD’s very successful
Ministers and policy makers to exchange
Corporate Governance roundtables, organised
and well-known Programme for International
views in an informal context.
in co-operation with the World Bank and
Student Assessment (PISA). Other important
Most important of all, however, in terms of
held on a regular basis in Russia, South East
steps included the creation of a Centre for
the OECD’s contribution to global economic
Europe, Latin America and Asia, won active
Entrepreneurship, to address aspects
governance, has been the decision by OECD
engagement on the part of regulators, business
of entrepreneurship from across the house,
member countries to engage with major non-
and government officials.
and of a Committee on Statistics. The
OECD economies – in the hope that they are on
OECD’s statistics are the raw material upon
a path to membership. Not only Russia, which
the OECD has been transformed from an
which the high-quality analytical work of
is now negotiating to become a member, but
organisation that focused inwardly on its
this and other organisations, governments
China, Brazil, India and other emerging giants
member countries’ policies to one that works
and academia depend.
must sit at the OECD table if this Organisation is
actively with more than 70 countries outside its
to be effective in addressing global issues and
membership across the range of its activities.
helping to shape globalisation.
Today, Chile, Estonia, Israel and Slovenia
We also set up a separate Centre for Tax Policy and Administration. It has been, is, and will continue to be the world’s centre of
Here, too, the change has been dramatic.
As a result of these and other changes,
have all become members, and the hope is
expertise on international taxation matters.
In 1996, the so-called ‘Outreach Programme’
that Russia will join them soon. In parallel, the
The International Futures Programme and
was fragmented into no less than four units.
OECD has established close links under its
the Development Centre were brought into
In response, we created the Centre for Co-
Enhanced Engagement programme with Brazil,
alignment with the core programmes and
operation with Non-Members to play a central
China, India, Indonesia and South Africa. Half
objectives of the Organisation as a whole.
role in co-ordinating programme development.
a century on from its foundation, its role and
Regional programmes, meanwhile, such as
potential have been recognised and validated
areas where the OECD makes a valuable
for South East Europe (SEE) or the Middle
by the G20. Over the next half-century, there
contribution. Sustainable development was
East and North Africa region (MENA), played
will be plenty more new frontiers. The OECD
introduced to the work programme in the
a major part in bringing the OECD closer to
is well placed and well equipped to tackle the
late 1990s and it has evolved as a core
other economies around the world, as did
challenges that they will pose.
activity, with emphasis today on “green
its global forums held in different parts of the
growth”. The Round Table on Sustainable
world, dealing with issues such as investment,
Donald Johnston was Secretary-General of the
Development was created at the same time
taxation, competition, agriculture and
OECD from 1996 to 2006.
Health policy and ICT are other important
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The OECD at 50
The OECD anti-bribery convention: A trailblazer in the fight against corruption by Huguette Labelle
T
he OECD was one of the first international
This problem was caused not just by public
organisations to recognise that corruption
officials extorting bribes, but by the willingness
also ratify the UN Convention against
is a major threat to economic prosperity and
of foreign companies to win business through
Corruption – a natural step forward to
stability. In the past 15 years, it has pushed its
bribery. In the early 1990s, far from punishing
furthering global anti-corruption goals.
members to agree to strong binding rules to
foreign bribery, the tax systems in 14 OECD
criminalise bribery of foreign officials and limit
countries actually counted many bribe
and the OECD has tackled it on many fronts.
financial tax havens. More important still, it has
payments as deductible business expenses.
It has complemented the anti-bribery
followed up to ensure enforcement.
Only the US had criminalised foreign bribery, in
Convention with further recommendations,
a law dating back to 1977.
such as no-bribe rules for export agencies
Today, the OECD provides both leadership and the technical means for its members
Transparency International (TI) argued that
the Convention. All G20 countries should
Corruption comes in different guises,
in 2006, and business guidelines.
to meet these standards. It has established
anti-corruption efforts also had to tackle those
principles of corporate governance,
who offer the bribes. As most multinational
frameworks for action in areas such as
guidelines for public servants and rules for
companies came from OECD countries, the
public procurement or lobbying. It has issued
export credit agencies. In tackling foreign
OECD was well placed to tackle foreign bribery.
practical tools for multinational companies
bribery, it is setting new directions for the
It was also quick to call for co-ordinated action.
and public servants who want to avoid
anti-corruption movement. The argument that good governance
In 1994, the OECD set up its Working Group on Bribery, which over the next three
It has developed several other
corruption and conflicts of interest. The OECD has also promoted its anti-
was a prerequisite for development began
years turned its initial recommendations
corruption values and standards on a
to gain consensus only in the 1990s. By the
into the Convention on Combating Bribery
global stage, through its efforts to promote
end of the decade, the realisation had also
of Foreign Public Officials in International
good governance in the administration
dawned that bribery in international business
Business. The Convention was adopted on 21
of development aid to the promotion of
subverts world trade and investment, denying
November 1997, and now counts 38 countries
transparency in offshore financial centres. Its
companies a level playing field.
as its signatories. Together, they account for
ranking of tax havens, combined with the threat
approximately 65 per cent of world exports.
of “blacklisting”, was a powerful force for
Once the Convention was signed,
have a key role to play in preventing these flows
publishing annual reports on the Convention’s
and in building a system that allows countries
enforcement in 2005, when only four countries
to recover stolen assets. In this and many
had instigated more than one foreign bribery
other areas, the OECD makes an important
prosecution. Since then, enforcement has
contribution to the work of the G20.
increased but there are still too many OECD
The OECD and TI have enjoyed fruitful
countries that have instigated few, if any,
co-operation in raising awareness of, and
cases. Promoting the Convention is one of
promoting solutions to, corruption. In
TI’s highest priorities.
recognising the progress achieved by the
OECD countries should lead by example,
OECD Headquarters, 17 December 1997. Madeleine Albright, US Secretary of State, at the signing of the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions
launching a debate on illicit financial flows. It will
enforcement became key. TI started
OECD in the fight against corruption, it is
and encourage other major players to join
important to keep the momentum going, and
them in fighting bribery. In 2010, one-third
to resist calls in favour of ways of doing
of world exports came from countries that
business that lack integrity.
are not party to the OECD Convention. Major exporters should join the OECD’s efforts
Huguette Labelle is the Chair of
and commit to enforcing the provisions of
Transparency International.
The OECD at 50
on a path of active commitment to a cleaner and fairer global economy. Under his leadership, the OECD revised its Guidelines for Multinational Enterprises, setting out recommendations for companies in the areas of corporate social and environmental responsibility. It initiated work on the harmful effects of tax havens, and drew up the Principles of Corporate Governance that have now won acceptance as the world standard in this area. It championed the international harmonisation of competition policy, and achieved a major breakthrough in the international fight against corruption with the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, as well as Principles for Managing Ethics in the Public Service. It also initiated work on sustainable development, and launched an integrated programme in 1999 on regional development policy that included urban and rural dimensions. Inevitably, there were setbacks. Soon after Korea joined the OECD, it was hit by the 1997 ‘Asian crisis’. A run on the won led to a plunge in Korea’s currency reserves. But the crisis also revealed flaws in Korea’s system of corporate governance and other key structural aspects of its economy. Drawing on OECD analysis and policy recommendations, Korea acted to introduce global standards and best practices in important areas of its economy, thereby laying the basis for recovery. A decade later, in December 2009, Korea’s return to prosperity was symbolically confirmed when it joined the OECD’s Development Assistance Committee, or DAC, as its 24th member. In doing so, it became the first country to graduate from being a receiver of aid to an official donor within the OECD.
Engaging with civil society In 1998, the OECD fell foul of an international campaign by anti-globalisation lobby groups against plans for a multilateral treaty governing conditions for cross-border investment, the proposed Multilateral Agreement on Investment, or MAI. Countries not represented in the debates, as well as several civil society organisations, did not share the approach taken by the MAI negotiations. Plans for the MAI were shelved, but the lessons of the experience were not lost on the OECD. It responded by engaging actively with civil society.
A founding member, Portugal welcomes the achievements made by the OECD since 1960. Its facts-based approach and peer knowledge make the OECD an indispensable player in a global world. José Sócrates, Prime Minister of Portugal
The OECD soon had an opportunity to build on this new commitment by playing an innovative role as honest broker in the controversy over the use in farming of genetically engineered hybrid varieties capable of producing higher crop yields, but accused by critics of having the potential to cause environmental damage. On a Saturday morning in November 1999, Donald Johnston presided over a groundbreaking consultative meeting on the topic at the OECD’s Headquarters. Diplomats and OECD experts listened agog as one activist after another, from organisations ranging from Britain’s Royal Society for the Protection of Birds to the Society of Friends, better known as the Quakers, aired their concerns about the potentially harmful effects of genetically modified organisms, or GMOs. In more ways than one, that meeting heralded the birth of a new, more open OECD.
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The OECD at 50
Entering the new millennium Enhanced engagement, institutional innovation, measuring progress
OECD Conference Centre, 27 May 2010. Public session to invite accession countries to join the OECD
G20 meeting, Pittsburgh, 24 September 2009. US President Barack Obama receives Angel GurrĂa, OECD Secretary-General
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Slovakia joined the OECD just at the Millennium 2000 – as a symbolic milestone of the country’s democratic and economic development after the fall of communism. OECD membership meant international recognition of Slovakia’s transition efforts. It has become a real step towards better policies for the better lives of citizens. Now we would like to share our own experience and knowledge in assisting other countries on their path to democracy, prosperity and stability. Our ‘mantra’ is that economic growth and prosperity have to go in line with deep respect for human rights and ethics. Such an approach, in Slovakia’s view, is the right way to better policies for the better lives of people around the world. Iveta Radičová, Prime Minister of the Slovak Republic
The OECD at 50
T
he new millennium began on a positive note. A full-scale international conference on genetically modified organisms (GMOs) was successfully organised in Edinburgh in early 2000. A follow-up conference in Bangkok the following year earned plaudits from the NGO community for the OECD’s neutral handling of this contentious issue. In between, the OECD launched the first of its annual Forums as an opportunity for public debate on global issues in June 2000, and in December 2000 the Slovak Republic completed its accession negotiations, becoming the Organisation’s 30th member. True, the US was running a large currentaccount deficit, posing the threat of a potential sharp weakening of the dollar. But developments elsewhere in the world, including the rise of China as a supplier of cheap exported goods, were helping to keep the world economy on a steady low-inflation growth track. Despite higher oil prices and a weakening in equity markets, the winter 2000 edition of the OECD’s twiceyearly Economic Outlook concluded that “economic prospects remain relatively bright”.
Redefining the OECD’s role Still, this was no time for complacency. New countries were preparing to join the European Union, prompting parallel requests for their admission to the OECD. At the same time, the OECD was under pressure to redefine its role in
G20 Pittsburgh Summit, 2009
OECD Headquarters, 1 October, 2000. Donald J Johnston, OECD Secretary-General (left), and Vicente Fox, President-elect of Mexico
the era of globalisation. Questions were being raised regarding the future composition of the Organisation’s membership and the shape of its relations with non-member countries. In addition to European countries, dynamic economies in Asia and Latin America were lining up to join. The major OECD countries, meanwhile, were increasingly aware of the need for closer links with emerging giants such as Brazil, China and India. At the level of committees and working groups and through the establishment of OECD bodies with different membership, the Organisation was already giving room to these new players in its work and debates. However, this was not yet reflected at a political level. In 2004, lengthy discussions among representatives of OECD ❱❱
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countries, chaired by Japan’s then Ambassador to the OECD, Seiichiro Noboru, gave birth to a report that condensed long-standing views that the OECD needed to engage more broadly with ‘significant players’ outside its membership, building on its peer-learning and peer-influencing capabilities and its rule-making capacities rooted in evidence-based analysis. These conclusions coincided with SecretaryGeneral Johnston’s views on the need to work more closely with the so-called BRICs. However, drawing up new guidelines for the Organisation’s relations with partner countries proved easier than implementing them. It required the strong leadership of the new Secretary-General, who was elected in 2005, to agree on a clear path for a new wave of accession and to settle a strategic programme on Enhanced Engagement with major emerging economies.
In November 2005, following a finely tuned, merit-based process of selection, Angel Gurría, a veteran of Mexico’s public service who, more than a decade earlier, had actively participated in Mexico’s negotiations for OECD membership, was appointed Secretary-General as of June 2006. Previously Mexico’s Foreign Minister and then Finance Minister, Gurría had a strong reputation in his own country for his role in seeing it through a change in government, exceptionally without a resulting economic crisis. As the first OECD Secretary-General from what in many ways is still a developing nation, his appointment, marked by a focus on impact, openness and political relevance, opened yet another major new chapter in the life of the Organisation. ❱❱ OECD Ministerial Council Meeting, OECD Conference Centre, 27 May 2010
Promoting a fairer world economy: The OECD and the fight against harmful tax practices by Gabriel Makhlouf
T
ax avoidance has worried tax collectors
on investment and financing decisions and
encouraging reform. Underlying its new
since taxes were first invented. For
the consequences for national tax bases”.
approach was a realisation that it would be
most of history, governments responded by
Two years later, the OECD’s Committee on
more fruitful to encourage positive change –
legislating against what they saw as abuses
Fiscal Affairs (CFA) produced a report on tax
and healthy, rather than harmful, tax
of their laws. By the mid 1990s, however, it
havens and preferential tax regimes in both
competition – than spend time and resources
became clear that governments could not rely
OECD and non-OECD countries and territories.
‘counteracting’ harmful practices.
on unilateral action – or even action through
It was approved by the OECD’s governing
bilateral tax treaties – in a new world of frontier-
Council, with abstentions by Luxembourg and
jurisdictions complained that they were being
less finance and tax competition. That’s when
Switzerland, and endorsed by G7 Finance
unfairly pilloried. Others worried that their
the OECD began to focus on a problem that
Ministers as part of a wider programme to
burgeoning financial sectors might suffer
had become one of the more challenging
strengthen the global financial system.
as a result of this tag. Many of the smallest
aspects of globalisation. Governments were losing tax revenues as
Initially, the CFA’s focus was on OECD
The list provoked mixed reactions. Some
jurisdictions complained that they were being
countries’ preferential regimes, but the
bullied by the OECD to adopt principles that
companies and individuals took advantage of
issues posed by tax havens soon became
two OECD countries had not endorsed. The
low- or zero-tax opportunities offered by foreign
a central part of its work. In June 2000, the
CFA embarked on an intensive process of
or offshore jurisdictions seeking to win financial
CFA produced a list of jurisdictions that it
engagement, facilitated in many cases by the
business. In May 1996, OECD countries called
identified as tax havens and, in a change
Commonwealth Secretariat.
on the OECD to “develop measures to counter
to the original plan, made known its wish
the distorting effects of harmful tax competition
to engage with them with a view to
Looking back, I would identify three important developments that helped to ensure
The OECD at 50
the long-term success of the CFA’s work in
into commitments”. The Group was also
fact that this agreement was drawn up by a
this area. The first, and probably the most
charged with examining ways to promote a
group of OECD and non-OECD countries,
significant, came in March 2000, three months
more inclusive global dialogue on tax issues.
some of which had originally been classified
before the June 2000 list was published,
A similar conference was arranged in Tokyo
as tax havens, was a vindication of the change
when the CFA published a report on improving
in February 2001 for the Pacific region,
in approach adopted by the CFA in 2000.
access to bank information for tax purposes,
co-sponsored by the OECD and the Pacific
Constructive engagement and co-operation
which had the unanimous support of all OECD
Islands Forum, and meetings with countries
were producing far better results than
countries. This report noted that “ideally
from other regions were also held at this time.
‘defensive measures’ could have delivered.
all member countries should permit tax
These discussions put in place a platform for
authorities to have access to bank information,
better understanding between OECD and
significant strides over the past 10 years
directly or indirectly, for all tax purposes so
non-OECD countries, leading to the creation
to meet the challenges posed by harmful
that tax authorities can fully discharge their
of a Global Forum for Transparency and
tax competition. The world is a better place
revenue raising responsibilities and engage in
Exchange of Information for Tax Purposes.
for what we have achieved, and we are
effective exchange of information”. The second development came in January
The third important event came with the
The international community has made
now better placed to meet the challenges
development of a model Tax Information
that remain. History will rightly focus on the
2001, when Owen Arthur, Prime Minister of
Exchange Agreement (TIEA). Lack of effective
many Tax Information Exchange Agreements
Barbados, hosted a conference of OECD and
exchange of information had been one of
that were committed to in the run-up to the
non-OECD countries to discuss the harmful
the key criteria in determining harmful tax
G20 summit in London in April 2009. But
tax competition initiative. The conference
practices. The Global Forum set up a working
the seeds for that success were planted
set up a Working Group of jurisdictions
group of OECD and non-OECD jurisdictions
at the start of the millennium, as the OECD
from the Commonwealth and the OECD,
tasked with developing a legal instrument to
faced up to one of the many challenges
under the joint chairmanship of Mr Arthur
enable effective exchange of information. In
posed by globalisation.
and Tony Hinton, Australia’s Ambassador
April 2002, the group published an agreement
to the OECD, to find “a mutually acceptable
setting out two models for bilateral TIEAs,
Gabriel Makhlouf is Deputy Chief Executive
political process by which the principles (of
which formed a basis for bilateral agreements
of the New Zealand Treasury. He was chair
transparency, non-discrimination and effective
now involving more than 50 jurisdictions.
of the OECD’s Committee on Fiscal Affairs
exchange of information) could be turned
Secondly, and perhaps more importantly, the
from 2000 to 2004.
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OECD Forum, 12-13 May 2004. Kim Dae-Jung, former President of Korea, Nobel Peace Prize (left), and Mary Robinson, former President of Ireland, former UN High Commissioner for Human Rights
Revisiting the role of government
T
he economic, financial and social
public expenditures, which in most cases
information. There are signs of this
crisis of 2008-09 shook many
includes streamlining the state. Where
everywhere: citizen engagement in
assumptions. Hard lessons were learnt
and how should government intervene,
service design and delivery; opening
about the limits of regulation, the
and where can it step back?
once-closed meetings to non-government
misalignment of incentives, and the
The OECD, in publications such
participants; publishing databases and
need for better risk management. Some
as Government at a Glance, provides
guaranteeing access to information;
redefinition of the balance between state
information and statistics helping
transferring revenues to sub-national
and market, and a search for new ways
governments to assess not only the
governments; and mandating the
to boost citizens’ trust in both, became
size and composition of their public
provision of services to civil society
imperatives. The crisis offered a window
services, but more importantly their
groups or businesses.
of opportunity to rethink the role of
performance in meeting the rapidly
governments and to reform public sectors.
changing needs of citizens and business.
player, but many others are available
The OECD is identifying innovative
to represent and serve the public.
economies. By most standard measures,
solutions to key challenges such as
Faced with greater competition and
governments have significantly expanded
how to manage public budgets
scrutiny, the public sector must learn
their footprint over the past 50 years.
sustainably; how to make regulations
to act as a mediator, co-coordinator,
In 1960, general government outlays of
to support rather than hamper growth;
policy maker and regulator in concert
member states averaged less than 30 per
how central and local governments
with other centres of power, including
cent of GDP. Today, the average is more than
can work coherently together to increase
international and sub-national levels
40 per cent, boosted recently by massive
the effectiveness of public policies; and
of government, the media, the private
expenditure packages during the crisis.
how to involve civil society to reduce
sector and civil society. OECD work
public spending without adversely
in this area responds to the need for
affecting the quality of services.
the public sector to be more innovative
Governments loom large in national
Decisive action by governments halted financial market freefall and avoided economic catastrophe, underlining
New thinking about the role of the
Central government is an important
and agile in responding to new
the role of governments as the critical
state is more about governance than
challenges. Building strategic capacities
anchor of national economies. Equally,
government. Strong government in
for foresight and risk management is
however, the ensuing fiscal pressures in
complex industrialised societies is
essential for a better balance between
many countries increased the need to cut
based on sharing authority, ideas and
governments and markets.
The OECD at 50
At the centre of globalisation In May 2006, in a speech to OECD Ministers at a handover ceremony in the gilded halls of France’s Foreign Ministry, where decades earlier the founding Conventions of the OEEC and OECD had both been signed, Gurría expounded on his view of the need for a more global OECD, open to broader perspectives, setting out what would be the leitmotif of his leadership: “the pursuit of relevance” in order to put the OECD “at the centre of the globalisation process”. He also proposed health, water and migration as key elements of the OECD policy agenda, and signalled increasing worries about global imbalances. As he spoke, storm clouds were already gathering over the world economy. In July 2006, negotiations in the Doha Round of trade talks were suspended, prompting fears of a possible resurgence of protectionism. Japan was still in the grip of deflation, and signs were emerging of inflationary pressures and labour-market tensions in the US. Interest in international co-operation was waning. When the OECD issued an updated Jobs Strategy taking stock of progress in July 2006, its authors were still able to point to lower average unemployment rates across OECD countries. More women were participants in the labour force, and in many countries older people were staying in work longer. Later in the year, in the autumn edition of its Economic Outlook, the OECD was still cautiously hopeful that the world economy was heading for a rebalancing of growth, rather than a major slowdown. But in signalling once again the need for reforms in social security and health systems and in labour markets, it also warned – with prescience, as it turned out – that house prices might have reached unsustainable highs in a number of countries, including the US and Spain, raising the possibility that overheated housing markets could threaten economic stability. Other warning signs were also beginning to emerge. In 2002, an OECD study of the economic implications of social and economic inequality ❱❱
Wealth of nations is not a final end; it is a means to higher ends – the eradication of poverty and building of good societies. Danilo Türk, President of Slovenia
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had found no evidence that income inequality might, as some had suggested, be conducive to growth. Now, new analysis of conditions in several countries was showing that not only were inequalities rising in many countries, but that this was stifling upward mobility between generations and holding economic performance back.
Enhanced engagement
OECD Development Assistance Committee, OECD Headquarters, 25-26 April 2001. Anita Bay Bundegaard, Minister for Development Co-operation, Denmark (left); Baroness Amos, Minister, Spokesperson, House of Lords on International Development, UK; Heidemarie Wieczorek-Zeul, Minister for Economic Co-operation and Development, Germany; and Eveline Herfkens, Minister for Development Co-operation, Netherlands
In May 2007, ministers from OECD countries met to formalise their strategy for ensuring a central role for the Organisation in the new environment of globalisation. In addition to inviting five countries – Chile, Estonia, Israel, the Russian Federation and Slovenia – to open membership talks, they announced their intention of seeking “enhanced engagement” with the five major emerging economies:
OECD and education: The power and potential of PISA by Arne Duncan
C
omparative international assessments
the major evening news networks, featured the
with educational achievement serving as a
of educational performance have
new findings. And that was just in the US.
new proxy for prosperity in the future. In
been around for nearly half a century. Yet in
What accounts for the newfound
this new knowledge economy, policy makers
the last decade, the results of international
importance of international assessments of
and the public need to know how their
assessments of student achievement have
educational performance? And why has PISA in
nation’s students compare with those in
assumed much greater importance. The
particular garnered so much attention?
other countries. It is no surprise that that
OECD’s Programme for International Student
For starters, the world has changed. A
the OECD’s mammoth – if inaptly named –
Assessment (PISA) has especially helped to
half-century ago, young American workers
compendium of educational data,
expand the role that international assessments
competed with peers down the street, not those
Education at a Glance, is one of its
play in nations across the globe.
halfway across the globe. Young adults could
bestselling publications.
When the US government co-sponsored the
drop out of high school and still land a well-paid
While other international assessments excel
release of the 2009 PISA results in Washington
job in a blue-collar occupation. International
at evaluating student learning of curriculum
DC in December 2010, media attention and
competition in the job market has exploded
and content, PISA specialises in assessing
public interest in the findings was intense – far
because, as New York Times columnist Thomas
mathematic, scientific and reading ‘literacy’ or
surpassing the attention accorded the 2006
Friedman has said, the world has “flattened”.
applied knowledge – namely, the ability not just
PISA results several years earlier. More than
Companies can now digitise, automate and
to reproduce information, but to extrapolate
200 print stories – including the front pages
outsource work to the most competitive
and apply it in unfamiliar settings.
of the New York Times and The Wall Street
individuals, companies, and countries.
Journal – covered the 2009 PISA results. Three hundred broadcast stories, including most of
Education, in short, has now become the universal engine of economic growth,
In several respects, PISA seems uniquely well-suited to assessing the critical thinking skills and higher-order competencies that
The OECD at 50
Brazil, China, India, Indonesia and South Africa. Through a process that was open to eventual future membership, they were henceforth to be associated systematically with OECD policy discussions. “These countries are now the ‘locomotives’ of the world’s growth,” Gurría commented in an editorial in the OECD Observer. “Our members believe that while the policies and activities of these countries have an impact on the OECD, our experience of good policy practices could benefit them.” The OECD’s role in forging stronger links with the major emerging economies was strengthened the following month at the G7/G8 Summit in Heiligendamm, which Secretary-General Gurría attended at the invitation of Chancellor Angela Merkel. Summit participants agreed to establish a dialogue on global issues with the Group of Five
important emerging economies, Brazil, China, India, Mexico and South Africa, the so-called Heiligendamm Process, and asked the OECD to serve as a platform for this dialogue. From then on, the OECD was to be involved in G8 debates, providing analytical support in four areas: innovation; investment; development, focusing specifically on Africa; and joint access to knowhow to improve energy efficiency and technology co-operation, with the aim of contributing to reducing carbon dioxide emissions.
Sub-primes and crises Confidence in at least some of the major OECD economies’ policy practices was soon to take a serious hit. Encouraged by banks taking advantage of a lax monetary and fiscal environment, borrowers in developed countries ❱❱
students need to flourish in the labour market
To cite one example, the OECD’s Strong
of the 21st century – skills such as problem-
Performers study found that socioeconomically
message of optimism to convey: it shows that
solving, adaptability, effective communication,
disadvantaged students in Canada are much
big improvements are possible in education.
creativity and teamwork. Policy makers in
less at risk of poor educational performance
A number of nations, such as Singapore and
many nations are eager to see if students
than their counterparts in the US. In addition,
Poland, have achieved large increases in
are acquiring these higher-order skills. Since
Canadian 15-year-olds outperform their US
student achievement in recent decades.
PISA was first launched in 2000, the number
peers in mathematics, science, and reading
of OECD member countries and partner
– suggesting that it is possible to combine
its international comparisons of student
countries/non-national education systems
equity and excellence.
achievement will continue to fuel healthy
taking the PISA tests has more than doubled, from 32 to around 70.
These data constitute a wake-up call to
Yet above all, PISA has an important
In the years ahead, I hope that PISA and
competition, to improve education and hold
American educators, one that I welcome. PISA
educators accountable. Neither I nor President
shows that high-performing countries not only
Barack Obama is content to have US students
data on student skills and school systems
dramatically boost student achievement, but
perform in the middle of the pack on PISA,
help to identify the characteristics of high-
often do so while closing achievement gaps
compared with their OECD counterparts.
performing education systems – which is one
at the same time. And the practices of high-
reason I asked the OECD to prepare its recent
performing countries show clearly that America
improving education is not a zero-sum game
study, Strong Performers and Successful
in particular, has to do much more to elevate
in which one nation’s gain comes at another
Reformers in Education: Lessons from PISA
the teaching profession, from the recruitment
nation’s expense. In a global economy where
for the United States.
and training of teachers to their evaluation and
innovation is borderless, boosting educational
professional development.
achievement and attainment is ultimately a
At the same time, PISA’s rich comparative
Each nation, of course, has unique characteristics to its education system.
The OECD’s Strong Performers study
Yet it is also worth remembering that
win-win game that raises living standards and
No nation can easily copy wholesale the
highlights the strengths of the US system,
practices of other countries. But the findings
too, including the convergence between the
drives economic growth in all nations.
of PISA suggest that education systems
practices of high-performing countries and
grow the economic pie for all, not carve it up
in high-performing countries share many
many of the reforms that state and local leaders
into finite pieces. PISA can help reinforce that
characteristics, too – helping to point the way
are now undertaking in adopting Common Core
virtuous cycle as the pathway to prosperity.
to how other nations can elevate student
standards, in the Race to the Top programme,
achievement and attainment at home.
and in our new School Turnaround grants.
OECD’s aim, and our aim in the US, is to
Arne Duncan is the US Secretary of Education.
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The OECD at 50
Official visit of the Secretary-General to the Russian Federation, Moscow, 25-26 April 2011. Russian President Dmitry Medvedev (left); Angel Gurría, OECD Secretary-General
‘Fair Overall Conditions for a Social and Open Global Economy’, Berlin, 5 February 2009. Juan Somavia, ILO Director-General (left); Pascal Lamy, WTO Director-General; Chancellor Angela Merkel, Germany; Angel Gurría, OECD Secretary-General; Robert Zoellick, President, World Bank; Dominique Strauss-Kahn, IMF Managing Director
were taking out loans to finance the purchase of ever riskier assets. In September 2007, as the sub-primes problem in the US was beginning to emerge, Britain suffered its first run on a bank in 150 years, with the crisis at Northern Rock. A year later, with the collapse of the Wall Street investment bank Lehman Bros, the full force of the financial crisis broke. With the gravity of the situation now all too clear, the results of the OECD’s study of inequality added fuel to the flames.In October 2008, an OECD publication with the title Growing Unequal? showed not only that on average, in 2005, the richest 10 per cent of the population in OECD countries had nine times more income than the poorest 10 per cent, but that the gap had been growing in many nations. Releasing the results against the backdrop of a global financial crisis, Gurría issued a stark warning of the potential consequences. “Growing inequality raises political challenges because it breeds social resentment, it questions the ultimate role of democracy and generates political instability (and) it also fuels populist, protectionist and anti-globalisation sentiments,” he declared. “People will no longer support open trade and free markets if they feel that they are losing out while a small group of winners is getting richer and richer.” Amid the crisis, the risks of protectionism and populist economic measures were clearly immense. True to its aim of seeking to provide governments ❱❱
The OECD at 50
Spain has been part of the OECD since its creation: this is, therefore, also our 50th anniversary as a member of an organisation whose contribution has been key for Spain's integration in the global economy, as well as for the continued improvement of our public policies. The OECD has played a leading role in combating the crisis and faces the extraordinary challenge of building a global governance for a fairer and more sustainable world economy. José Luis Rodríguez Zapatero, Prime Minister of Spain
Private-sector development: Working with developing economies for economic reform
T
he Republic of Moldova, with an annual gross domestic product per
Other projects, such as the SME
conceptual frameworks and instruments
Policy Index, provide regular reviews of
that it has developed over its 50 years
capita of less than USD 2,000, is the
policies in Moldova and elsewhere in
of existence. In doing so, it replicates the
poorest country in Europe. It is also
South East Europe, based on OECD
powerful use of policy dialogue between
one of the countries targeted by the
instruments and best practices.
OECD countries by setting up regional
OECD’s Private Sector Development
Such exchanges are profitable for
working groups, which play a similar
initiative, which aims to help developing
both sides. Policy makers in emerging
role in these economies to that of the
economies draw on the policy experience
economies can benefit from 50 years
Committees that are the backbone of
of OECD countries.
of policy experiments in the world’s
the work of the OECD.
For countries such as Moldova,
most advanced economies. OECD
In Moldova, the Investment Reform
instruments developed by the OECD
governments, meanwhile, have the
Index helped to identify gaps between
help to identify gaps and set priorities
opportunity to better understand the
the performance of its economy and that
for economic reform. One of these is
impact and relevance of specific policies
of peers in South East Europe. Moldova
the Investment Reform Index, covering
in different contexts. The OECD’s Private
has also benefited from a number of
10 economies in South East Europe.
Sector Development division has similar
projects focusing specifically on national
Drawing on the OECD’s Policy Framework
initiatives in the Middle-East and North
challenges. One such project, launched in
for Investment, it assesses policy in
Africa and the Eurasia region. It is
2009 with support from the Netherlands,
eight areas that are critical for investors:
also developing co-operation with
seeks to assist the development of
investment policy and promotion; human
countries in Latin America.
micro-, small and medium-sized
capital development; trade policy and
In all these economies, the OECD’s
companies. The OECD has established
facilitation; access to finance; regulatory
role is not one of advocating specific
a close partnership with Moldova’s
reform and parliamentary processes;
practices. Instead, it opens the door to a
SME agency to facilitate the transfer of
infrastructure for investment; tax policy
wealth of accumulated knowledge, giving
best practices and implementation of
analysis; and SME policy.
developing economies access to the
the recommendations.
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The OECD at 50
Palacio de La Moncloa, Madrid, 8 September 2008. Angel Gurría, OECD Secretary-General and Spanish Prime Minister José Luis Rodríguez Zapatero (right)
MENA-OECD: Helping the countries of the Middle East and North Africa respond to their citizens’ needs by Dr Soukeina Bouraoui
A
s more and more countries in the
The OECD’s work on gender in the
public institutions is critical in this defining
Middle East and North Africa move to
MENA-OECD Governance Programme is of
moment for the region. This is why we agreed
democratic governance structures, regional
great relevance today, as Arab societies still
to sit in the Steering Group of the Programme
and national policy dialogue on the role of
need to fully include the gender dimension in
as chair of the Gender Focus Group, and to
women is vital. The MENA-OECD Governance
their policy making. We consider gender to
participate in technical events and institutional
Programme and, in particular, its Focus Group
be a cross-cutting theme, as shown by our
meetings. By our presence, we hope to give
on Gender provide policy makers and activists
contribution to the chapter on ‘Addressing
testimony to the important role that civil society
with a valuable forum to network, discuss and
Gender in Public Management’ in the Report
organisations play in the programme, and in
learn from each other.
on Progress in Public Management Reform
the region in general.
The Centre of Arab Women for Training
in MENA Countries. In June 2010, I took part
We at CAWTAR believe that the programme
& Research (CAWTAR) has been involved in
in a fact-finding mission to the United Arab
should continue supporting the MENA
the MENA-OECD Governance Programme
Emirates for the Legal Review and Conformity
region through policy analysis and advice,
since 2008. CAWTAR has participated in
Assessment that constituted the first component
peer dialogue and sharing of good practices
activities on gender governance and regulatory
of the UAE Gender Public Policies Report. This
between practitioners and civil society
reform, and in special meetings on the role
experience, and the drafting of the assessment
representatives from MENA and OECD
of women in the public and private sectors,
that followed, confirmed my strong belief in
countries. In this way, it can assist in the
all within the context of the MENA-OECD
the importance of regional co-operation and
implementation of policy reforms, to empower
Governance Programme. We played an active
exchange of knowledge and good practices.
women in their everyday lives as well as
role in the creation of the Gender Focus
The MENA-OECD Programme plays a crucial
enhancing their role in the public sector.
Group and its launch in Cairo on 18 May
role in helping MENA countries to produce and
2009. We have contributed to data gathering
implement policies that truly respond to the
Dr Soukeina Bouraoui is the Executive Director
and policy analysis on gender issues in many
needs of their citizens and businesses. The work
of The Centre of Arab Women for Training &
areas of public governance.
to support more transparent and accountable
Research (CAWTAR).
The OECD at 50
with the best possible policy advice, the OECD contributed analysis and recommendations to the discussions of G20 leaders meeting in Washington in November 2008 and London in April 2009. Its support was particularly important in helping to avoid trade and investment protectionist measures and in cracking down on tax havens. G20 impetus led to the establishment of a peer-review process, today involving more than 100 countries in the Global Forum for Tax Transparency and Exchange of Information.
Strategic response Finessing the recommendations of its Strategic Response to the Financial and Economic Crisis over succeeding months, the OECD argued in favour of sustainable policies that would balance short-term recovery needs with longerterm priorities including fiscal consolidation, the maintenance by developed countries of their commitments to support development, and measures to tackle climate change. Its Environmental Outlook to 2030, published in 2008, had already identified a range of policy options to help fight global warming, conserve biodiversity, protect water resources and limit health impacts of pollution. Now, as the economic crisis weighed, too, on international climate talks, the OECD stressed the potential benefits of economic instruments such as ‘green’ taxes and pricing mechanisms for carbon emissions, other pollutants and the use of natural resources. Economic recovery proved elusive, however, as did consensus on action to tackle climate change. By 2009, major OECD countries were facing a jobs crisis, with young jobseekers particularly hard hit. Reporting in its 2009 Employment Outlook on the measures that countries were taking in response, the OECD recommended ‘active’ policies that would help the unemployed keep links to the labour market through re-employment measures, job-search requirements and training, in addition to ensuring adequate income support. Simultaneously, it cautioned governments against yielding to popular concerns about the impact of migration on employment by brutally cutting back on migration flows. Instead, the 2009 edition of its annual International Migration Outlook urged countries to adapt their migration
systems so that they “can respond efficiently to labour-market needs, can reduce irregular migration and employment – or redirect it into legal channels – and can ensure better outcomes for new immigrants and for their children”.
Working with the G20 In September 2009, US President Barack Obama invited OECD Secretary-General Gurría to participate in the G20 Pittsburgh Summit, and to appoint a Sherpa to the G20 – his Chief of Staff – for the preparations in this process. At the same time, G20 Finance Ministers’ meetings welcomed the participation of the Chief Economist of the OECD at their deputies’ level. From then on, working with the Chairs of successive Summits, including Canada, Korea, and France, the OECD became a regular player in the G20 process. Its inclusion marked a new stage in its involvement in the international policy response to the crisis. Participation in the G20 consolidates the OECD’s involvement in debates on global issues, and its ability to propose solutions and make its work count at the highest political level. It also leverages the Organisation’s institutional flexibility and ability to incorporate, on an equal footing, countries that are relevant partners in its discussions. While the OECD had been working ❱❱
US President George W Bush visits the OECD, OECD Headquarters, 13 June 2008. US President George W Bush (left) with Angel Gurría, OECD Secretary-General
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The OECD at 50
to develop global standards in the area of tax transparency and exchange of information for more than 10 years, it took a political decision by the G20 leaders to push this work to a higher level. Today, the Global Forum on Transparency and Exchange of Information for Tax Purposes, hosted by the OECD but including a total of more than 100 countries, is working co-operatively to ensure the effective implementation of these standards. The OECD has contributed in many other fields. During the US Presidency of the G20, it contributed through its structural analysis to the launching and ongoing development of the G20 Framework for Strong, Sustainable and Balanced Growth. It also helped to advance the agenda in the fields of employment, trade and investment, anti-corruption and fossil fuels. During the Canadian presidency, the OECD focused on sovereign debt problems and continued to
OECD policy tools relating to SMEs and entrepreneurship ●●
The 2000 Ministerial Declaration,
access to financing for new and small
A 2008 follow-up report identified
Bologna Charter on SME Policies,
firms from creation to all stages of
possible actions based on the findings
provided a coherent approach to
their development, with a particular
of case studies carried out in five
the design of SME policies aimed at
emphasis on innovative firms.
industries – the automotive sector,
The 2006 Athens Action Plan for
scientific and precision instruments,
social development in OECD countries
Removing Barriers to SME Access
software, film production and
and the rest of the world.
to International Markets provided
The 2004 Ministerial Declaration on
recommendations on how public
Fostering the Growth of Innovative
authorities can intervene, efficiently
the Global Crisis on SME and
and Internationally Competitive SMEs
and cost-effectively, to reduce or
Entrepreneurship Financing and
committed Ministers to co-operate
remove the barriers SMEs face in
Policy Responses studied how
in reducing barriers to SME access to
accessing international markets.
governments were responding to
The 2007 OECD Tokyo Statement
the problems facing entrepreneurs
SME needs when formulating new
on Strengthening the Role of SMEs
seeking access to finance.
legislation and regulations; and
in Global Value Chains focused on
to examine issues related to SME
how governments, the business
meeting in Bologna agreed on a plan
financing and support to innovation.
community and international
for developing and implementing good
The 2006 OECD Brasília Action
organisations can facilitate SMEs’
practices and policies over the next 10
Statement for SME and
gainful participation in global value
years, including the development of
Entrepreneurship Financing set out
chains through policies, practices
a global monitoring tool on SME and
recommendations for facilitating
and targeted support programmes.
entrepreneurship financing data.
stimulating economic growth and
●●
international markets; to consider
●●
●●
●●
distribution, and tourism. ●●
●●
A 2009 report on The Impact of
Participants in a 2010 high-level
The OECD at 50
provide support for the anti-protectionism agenda. At the Seoul Summit, it provided policy advice and data to support the elaboration of the Multi-Year Action Plan on Development. During the French Presidency, the agenda of work includes the international monetary system and capital flows, agricultural policies and food security, consumer protection and economic issues. Its contribution in the area of structural policies is particularly important, as structural reform will be a major source of enhanced productivity and growth, going forward. One of the benefits of OECD participation in the G20 process has been enhanced co-operation with other international organisations, one of the key objectives of Secretary-General Gurría.
Stimulating growth while reducing deficits True to its concerns to foster better living conditions for citizens, the OECD focused particularly on employment issues, and notably on rising unemployment among young people, urging governments to make more effort to provide appropriate training arrangements, job-search assistance and apprenticeship opportunities. Building on work under its Programme for the International Assessment of Adult Competencies, or PIAAC, the first results of which are due to be published in 2013, it began to lay the groundwork for a wide-ranging overview of skills demand and supply. At a meeting of Education Ministers in Paris in November 2010, Gurría announced the forthcoming launch of the OECD’s Skills Strategy, based on a wide-ranging review of skills levels in individual countries and areas where gaps need to be closed. Addressing OECD staff the following month, he succinctly summed up the challenges facing both governments and the OECD. Governments, he declared, were being called upon to pull off “an apparently irreconcilable policy trick” of stimulating growth while reducing fiscal deficits. The OECD’s task, in response, was to provide innovative thinking and support for effective multilateralism and bold action. More than ever before, he said, its relevance lay in its ability to help governments respond to globalisation: by helping them, in short, “to improve the well-being of our citizens; to make multilateral co-operation work; to build a better global economy”.
Palacio de La Moneda, Santiago, Chile, 11 January 2010. OECD formally invites Chile to accede to the OECD Convention. Angel Gurría, OECD Secretary-General (left); HE Ms Michelle Bachelet, President of Chile; Andrés Velasco, Finance Minister, Chile.
Sweden has been a member and active partner of the OECD right from the start. In today's changing and increasingly interdependent world, we need these types of global arenas where we can come together and seek common answers. I foresee that the OECD will keep playing an important role in developing policies, establishing best practices and finding the right solutions to challenges ahead. Fredrik Reinfeldt, Prime Minister of Sweden
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The OECD at 50
The OECD today and tomorrow Coping with the challenges of the next 50 years
China Development Forum, Beijing, 21-26 March 2008. Angel GurrĂa, OECD Secretary-General (left) and Chinese Prime Minister Wen Jiabao
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The OECD at 50
The OECD at 50
A
s 2010 came to a close, the OECD’s enlargement strategy had borne its first fruits with the accession of four new members: Chile, Slovenia, Israel and Estonia. Today, its 34 member countries span the globe, from North and South America to Europe and the Asia-Pacific region. Membership negotiations with Russia are advancing and relations with Brazil, China, India, Indonesia and South Africa are gradually, but steadily, strengthening under the ‘enhanced engagement’ programme. Together, these 40 countries account for around 80 per cent of world trade. At a ceremony at the Elysée Palace in December 2010 to mark the 50th anniversary of the signing of the OECD’s founding Convention, French President Nicolas Sarkozy hailed the OECD’s past and future role in helping governments to deliver better lives for citizens. Over the years, he said, the OECD had been in the vanguard of efforts to improve regulation, fight corruption and co-ordinate development efforts. Foreshadowing France’s presidency of the G20 during 2011, the OECD’s anniversary year, he listed a catalogue of areas in which the OECD is working with the G20, from employment and tax policy to financial market regulation and anti-corruption.
Global Handshake, OECD Conference Centre, 27 May 2010. Andrus Ansip, Prime Minister of Estonia (left); Felipe Larrain, Minister of Finance of Chile; Benjamin Netanyahu, Prime Minister of Israel; Silvio Berlusconi, Prime Minister of Italy; Borut Pahor, Prime Minister of Slovenia; and Angel Gurría, OECD Secretary-General
OECD Social Policy Ministerial final press conference, OECD Conference Centre, 3 May 2011. Jenny Macklin, Australian Minister for Families, Housing, Community Services and Indigenous Affairs (left); Angel Gurría, OECD Secretary-General; and Ursula von der Leyen, German Federal Minister of Labour and Social Affairs
Through its contribution to the work of the G20, he emphasised, the OECD has a “major role” to play in bringing new order to the world economy. Its vocation in the 21st century, he declared, must be to serve as a “club of exemplary practices”. ❱❱
Endang Rahayu Sedyaningsih, Health Minister of Indonesia at the OECD, with Angel Gurría, OECD Secretary-General, 7 October 2010
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The OECD at 50
GDP Average growth rate (%) for main OECD countries (G7)
France
Canada 12
12
10
10
8
8
6
4.1
4
3.0
4.1
4
2.4
2 0
5.7
6
5.3
2.1
2.3 2
1970s
1980s
1990s
2000s
1960s
12
10
10
8
8 6
6
1.9
2
2000s
2.6
2.3 0.8
1970s
1980s
1990s
2000s
2
1.4 0.5
0
1960s
1970s
1980s
1990s
2000s
UK
Japan 12
10.1
8 6
1990s
3.8
4
3.1
1960s
1980s
5.8
4.4 4
1970s
Italy
12
10
1.4
0 1960s
Germany
0
1.8
5.2
US
12
12
10
10
8
8
6
6
4
4
4.7
4.4 4 2
2.9
2.4
2.5
2
1.4
2.2
1.7
3.2
3.0
3.2 1.8
2
0.7 0
1960s
1970s
1980s
1990s
2000s
0
1960s
1970s
1980s
1990s
2000s
0
1960s
1970s
1980s
1990s
2000s
The OECD at 50
The 50th anniversary provides an opportunity to reflect on the Organisation’s past contributions, present role and future mission – in short, on how the OECD can build the foundations to continue to promote better policies for better lives over the next 50 years. The pace of change in recent years has been so rapid that today’s global economy bears little resemblance to that of 50 years ago. For many years, OECD countries accounted for around 70 per cent of global GDP. Today, this share has shrunk to around 60 per cent and it is set to fall
further. Against the background of the recent crisis, the emergence of the G20 as a major forum for economic discussions illustrates this trend.
Evidence-based advice The OECD’s 50th anniversary celebration coincides with the start of Secretary-General Angel Gurría’s second mandate. In his acceptance speech, he explained that he believed that the raison d’être of the Organisation was to be a source of evidence-based advice for governments and a standard-setter to address global challenges. ❱❱
Contributing to a deeper understanding of financial markets and their regulation by Charles Dallara
F
or half a century, the OECD has offered
Its country economic surveys included
role of international forums such as the G20
governments guidance on ways to raise
in-depth studies of the financial regulatory
in co-ordinating policy responses across
the productive potential of their economies.
and supervisory landscape in member
major economies. It has also helped to
Fundamental to this has been its work
countries, identifying weaknesses and making
build the case for greater co-ordination and
demonstrating the economic and social
recommendations as to how countries
centralisation of European financial regulatory
benefits of open and competitive markets and
could best manage and resolve the crisis.
and supervisory institutions.
the potential advantages of market-based
It identified pragmatic reforms capable, if
solutions to public policy problems.
implemented, of reducing the impact and
an essential responsibility to safeguard the
likelihood of future crises.
stability of the financial system. But this must
In the early phase of the global financial
Governments and central banks have
crisis, it quickly recognised that disruptions in
Arguably, an important contributor to
be done without unduly stifling innovation or
the housing and credit markets in the US and
the crisis was the disconnect between the
significantly reducing the access to finance
other advanced economies could lead to a
rapid increase in the integration of the global
that firms need to facilitate their growth. Over
deep slump and spread to other economies.
financial system in recent years and the largely
the past two decades, financial innovation
Scaling up its analysis of financial and banking
national focus of financial regulation and
and global integration have broadened the
issues, it issued reports on topics ranging
supervision. Inconsistent frameworks created
options for individuals and businesses in
from sovereign debt exposures in the
arbitrage opportunities in the lead-up to the
managing their financial affairs, while helping
European banking sector to reforms of
crisis. The cross-border activities of some
to widen access to finance at lower cost. The
international capital rules and how countries
large banks were inadequately supervised
OECD has earned a deserved reputation as a
should exit from crisis-related support
and, when the crisis hit, there were inadequate
thought-leader in international economic public
measures for financial institutions.
mechanisms for dealing with the potential
policy, by consistently producing high-quality
failure of large cross-border banks.
analytical and statistical publications. It will do
A particular strength of the OECD is its expertise in cross-country economic
The OECD has strongly and consistently
the world a great service if it can continue in,
analysis. Amid the crisis, it made clear the
pushed the case for reform to the global –
and build, this mission for another 50 years.
interdependence of countries’ financial
as well as regional – financial supervisory
systems and the need for co-ordinated
architecture. Its Secretary-General, Angel
Charles Dallara is Managing Director of the
and mutually consistent policy responses.
Gurría, has been a powerful advocate of the
Institute of International Finance.
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The OECD at 50
He noted that international co-operation was more essential than ever. The list of global challenges requiring co-ordinated policy action was getting longer, and in most cases, this action was becoming more urgent. He also emphasised that the world was undergoing major change in the way it was governed and the only way to remain relevant in the next 50 years would be to continue to deliver high-quality and substantive contributions to global debates, incorporating the perspectives of countries that were key for this new global governance, but which were not yet members of the OECD, as part of an overriding strategy to provide better policies for better lives for citizens worldwide. ❱❱
Working with the OECD to create a better global business environment by Tadahiro Asami
R
epresenting 49 national business and
while maintaining sovereignty over its work,
top priorities to maintain the Organisation’s
employers’ organisations from OECD
more able to produce policy guidance that
policy relevance, particularly given the rise
member and non-member economies, as well
reflects what is happening in the real world,
in prominence of the G20.
as 29 international sector-specific associations,
the real economy. This past half-century of
I congratulate full-heartedly the OECD on 50
experience has proven that this mechanism
increased its global relevance by strengthening
years of remarkable success.
works well, serving effective policy dialogue
ties with business communities from non-
between business and the OECD.
OECD countries, welcoming eight business
BIAC, the Business and Industry Advisory Committee to the OECD, will also turn 50
BIAC has contributed much towards
In line with the OECD’s outreach, BIAC has
organisations as observers from Argentina,
during 2011-12, having been initiated during
the OECD’s work in promoting open and
Brazil, India (two organisations), Latvia,
1961 and officially constituted on 9 March 1962.
competitive markets, level playing fields, and
Morocco, Russia and South Africa. We continue
The working relationship between the OECD
sound regulation and governance; fighting
this outreach as a high priority in our work.
and BIAC was defined in 1962 when the
trade and investment protectionism; and
OECD Council officially recognised BIAC as
enabling businesses to compete and succeed
BIAC congratulates the Organisation for its
being representative of the OECD business
in an increasingly complex global marketplace.
many accomplishments and is proud of being
community. This OECD/BIAC relationship has
BIAC has also developed relations with
a partner and ‘member of the family’ since
served both organisations for their mutual
business communities in non-OECD countries,
the beginning. BIAC stands ready to continue
benefit, and has proven effective and resilient.
thereby promoting the engagement of these
working constructively with the OECD to improve
It has also helped to make the OECD unique
countries in the OECD process.
the policy space for open market activities, and
among international organisations. BIAC provides direct links with the private-
Building on our common history and
As the OECD celebrates its 50th anniversary,
thus stimulate economic growth.
looking ahead to the next 50 years, BIAC
sector employers it represents, thereby
sees an increased role for the OECD in the
Tadahiro Asami is the Secretary General
decisively influencing the quality of services that
global economic architecture. Enlargement
of the Business and Industry Advisory
the OECD provides. This makes the OECD,
and global outreach of the OECD are the
Committee to the OECD.
The OECD at 50
Common global challenges In his 2011 Strategic Orientations paper, SecretaryGeneral Gurría confirmed this focus on common global challenges, outlining a twopronged strategy to respond to the economic, environmental and social realities of our time: ●● First, the OECD needs to continue to provide concrete and well-targeted policy options that can be effectively implemented by governments. This relates to the Organisation’s role as a platform for mutual learning, as advisor, as a ‘hub’ of best practices, as pathfinder and as standardssetter. Its ability to help countries design, formulate and implement policies is the litmus test of its impact and relevance. The MENA-OECD Initiative on Governance and Investment for Development in the Middle East and North Africa, and the SIGMA programme, in which the OECD works with the European Union for the improvement of rules-based governance in EU candidate and neighbourhood countries, are good examples in this respect. The past five years have witnessed a strong effort by the OECD to assist its member countries in advancing specific
reforms. This has included specific support to member countries at their request in the areas of competition and regulation (in Mexico), social policies (Korea), general economic issues (Hungary) and many more. ●● Second, the Organisation will continue to work on behalf of member and partner countries to design and promote the highest standards for the world economy. This requires closer co-operation with partner countries, and in particular with the major emerging economies. Looking ahead, governments face many challenges that call for international cooperation. Some are already the focus of international discussion: climate change, poverty, nuclear safety, jobs, the availability of drinkable water and adequate food supplies, the management of migration flows, trade and the strengthening of effective governance in fragile states. Others, though less clearly discernible, are equally important: the risks posed by mega-terrorism and new infectious diseases, for example, and the social and economic implications of space-based technological applications. ❱❱
BIAC General Assembly in Budapest, 8 March 2011. Tadahiro Asami, BIAC Secretary-General (left); Charles P. Heeter, BIAC Chairman, and Angel Gurría, OECD Secretary-General, at the presentation of the 50th Anniversary BIAC publication
139
The OECD at 50
The OECD and the IEA: Working together for economic security and green growth by Nobuo Tanaka
F
or 50 years, the OECD has worked
have evolved, so has the understanding of
energy poverty, the Agency will continue to
vigorously with governments to resolve
energy security. Risks are no longer seen as
analyse and make recommendations on ways
pressing economic, social and environmental
limited to oil. IEA member countries have
to promote free markets, develop new
issues. An important milestone was the
asked the Agency to focus more work on gas
technologies and identify sources of financing.
founding during the 1974 oil crisis of the
and electricity. The emphasis is now on
Resulting policies, if implemented, can foster
International Energy Agency (IEA). Its
comprehensive security, ensuring global access
economic growth and ensure access to energy
establishment as an autonomous agency
to the reliable, affordable and clean sources of
– thus tackling a key element of poverty.
representing the major energy-consuming
energy that are essential in supporting the
nations within the framework of the OECD
larger economic goals of the OECD.
reflects the dynamism and flexibility of the
Green growth seeks to promote
Despite such efforts, we will achieve these goals only if countries work more closely together. This leads to the fourth joint
OECD structure in responding to global events
economic growth and development through
priority, increased engagement with non-
and economic and political concerns.
environmentally friendly methods. The IEA is
member countries. Economic and energy
As the OECD looks forward to its next 50
active in many aspects of green growth, and
challenges are increasingly global. When
years at the centre of international economic
has supported and contributed to the OECD
the IEA was formed, its member countries
policy, its agenda ranges from regulation and
Green Growth Strategy. Not only will green
accounted for more than half of world energy
governance to public finances, supporting new
growth help countries to mitigate the negative
consumption – this is no longer the case.
sources of growth, and working to ensure that
impacts of climate change, but green growth
Most growth in energy supply and demand
the jobs of tomorrow can be filled by people of
strategies will also strengthen energy security
is taking place outside the OECD – and this
all ages. The IEA mandate is more specific, but
by helping to diversify sources of energy
trend is expected to continue. To implement
the IEA and the OECD share many fundamental
and, in some cases, to reduce reliance on
sustainable energy policies, both OECD and
goals. Four areas of work stand out as offering
imports. The IEA has developed scenarios to
non-OECD countries must be involved. The
significant opportunity for continued close
identify which mix of existing and new energy
IEA has a dedicated team and a number of
co-operation and joint focus:
technologies will enable member countries to
initiatives focused on outreach to non-member
●●
economic security;
attain their greenhouse gas emission targets to
countries all over the world, especially major
●●
green growth;
mitigate climate change. Other recent work has
emerging economies and energy producers.
●●
tackling poverty;
focused on identifying obstacles to financing
Co-operation with China, India, Russia,
●●
increased engagement with
clean energy, promoting best policy practices,
south-east Asia, and the oil-exporting countries
non-member countries.
and developing energy technology roadmaps.
of OPEC – through the consumer-producer
Some of this has fed directly into the OECD’s
dialogue – has been particularly productive.
Economic security is a key area of mutual focus. The IEA’s founding purpose of promoting
green growth efforts, highlighting the synergies between the two organisations.
To remain at the heart of global dialogue in the world economy and, more specifically, in the
These work programmes are important with
energy sector, the OECD and the IEA must work
supply of resources remains its core business.
regard to the third area, tackling poverty. Access
closely with non-OECD countries. Through such
This fits within the broader role of the OECD to
to modern energy services is increasingly
engagement, we can continue to find solutions
encourage economic growth and well-being.
recognised as critical to both social and
to shared concerns and new challenges. In so
economic development. Today, 1.4 billion people
doing, both organisations will have even more
creation of the IEA. Its initial role was to help
have no access to electricity. Based on current
to celebrate when the OECD reaches its 100th
countries co-ordinate a collective response to
trends, 1.2 billion will still lack access in 2030.
anniversary in 50 years’ time.
potential major oil-supply disruptions through
This is simply not good enough, as highlighted
measures including, in particular, the release of
in the IEA’s flagship publication, the World
Nobuo Tanaka is Executive Director of the
emergency oil stocks to the market. As markets
Energy Outlook. To work towards eradicating
International Energy Agency.
energy security through a reliable and affordable
Energy security was the driver behind the
141
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The OECD at 50
Consumer prices Average inflation rates (%) in main OECD countries (G7) France
Canada 14
14
12
12
10
10
7.3
8
6 4
2.7
2 0
1960s
1970s
1980s
2.2
2.1
1990s
2000s
2 0
14
14
12
12
10
10
8
8
6
2.9
2.5
1960s
2.5
1970s
1980s
1990s
4
1.6 2000s
1970s
1980s
1.7
1990s
2000s
12.2 11.1
4.1
3.8
2.3
2 0
1960s
1970s
1980s
1990s
2000s
UK
Japan 14
US
14
14
12.5
12 10
8.9
8 6
1960s
1.9
6
4.9
2 0
3.8
Italy
Germany
4
7.3
6.5
6 4
8.8
8
12
12
10
10
8
8
7.0
6
5.4
4
4
2.5
2
3.8
0
1.8
0 1960s
1970s
1980s
1990s
-0.3
2000s
5.5
4
3.3
2
1.2
7.1
6
2
3.0
2.4
2.6
0 1960s
1970s
1980s
1990s
2000s
1960s
1970s
1980s
1990s
2000s
144
The OECD at 50
Over the past 50 years, our social and economic relations have fundamentally changed: the OECD’s values and methods have not. Respecting and learning from each other is more pertinent than ever. Johann Schneider-Ammann, Economic Affairs Minister of Switzerland
Persistent imbalances At a global level, concerns about persistent trade and current-account imbalances and capital flows, from advanced economies to fast-growing emerging economies, rank high on the G20 agenda. In 2010, a report by the OECD Development Centre entitled Shifting Wealth highlighted the increasing share of emerging economies in global output. As economic recovery advances at different speeds in different
regions, and as the more advanced economies continue to face very high deficits, high unemployment and slow growth, the importance of these countries will continue to increase. For emerging economies, inflationary pressures, equality challenges and building effective social safety nets are high on the economic agenda. These, and other down-to-earth issues that directly affect the lives of citizens, also need to be addressed. In many countries, the cost of paying for pensions and healthcare for rising numbers of old people threatens to strain public finances, while putting downward pressure on growth. Living longer in better health will need to go hand-in-hand with working longer, and this in turn will call for far-reaching changes in both government policies and workplace attitudes. Social inequities and poverty must be tackled, for example by opening up education and training opportunities for all. Gender inequalities and prejudices must likewise be overcome, in order to enable all citizens to fulfil their potential in tomorrow’s global economy. ❱❱
OECD 9th Global Forum on Competition, 18-19 February 2010
Measuring the progress of societies: A challenge for the 21st century
H
ow do you measure progress? In recent years, a growing gap has
The OECD has been leading
Money isn’t everything. In measuring
international reflection on this challenge.
progress, we need to consider people’s
emerged between the image conveyed
In 2004, it held its first World Forum on
satisfaction, feelings and expectations.
by official statistics and ordinary
‘Statistics, Knowledge and Policies’ in
How comfortable is their housing? How
people’s perceptions about the state
Palermo. Two more forums took place in
clean and safe is their local environment?
of their own lives. The financial and
Istanbul in 2007, which led to the launch
Are they able to participate in political
economic crisis has reinforced concerns
of the OECD-hosted Global Project on
and social activities. Do public
that official statistics fail to give a true
Measuring the Progress of Societies,
institutions respond to their demands?
account of what really matters to people.
and in Busan in 2009. Thanks to these
Addressing such concerns is crucial, not
and other efforts, measuring well-being
make an important new contribution to
just for the credibility and accountability
and progress is now at the forefront of
this debate, with the publication of a set
of public policies, but for the very
national and international statistical
of key well-being indicators for developed
functioning of our democracies.
and political agendas.
and emerging economies. Its new report,
In a few months’ time, the OECD will
The OECD at 50
How’s Life?, will look at such issues as
full economic resources. Not only people’s
that can be adapted to different levels
people’s health in different countries,
income, but their assets and spending
of development.
their education and competencies, the
on day-to-day consumption need to be
quality of their daily work activities,
included in the equation. To what extent
efforts is not just measurement per se, but
the state of their environment, their
do people benefit from services provided
to strengthen the evidence base for policy
personal security, the richness of their
by the public sector, such as health and
making. Better measures of well-being
community ties, and whether people are
education? What is the value of services
can improve our understanding of the
satisfied with their lives.
produced by households for their own
factors driving societal progress. Better
use, such as the care that they provide to
assessments of countries’ comparative
children and the elderly?
performance in various fields can lead to
But it will also examine how sustainable such achievements are over time. Today’s well-being, if attained
Such questions aren’t just a matter
The ultimate objective of all these
better strategies to tackle deficiencies.
at the expense of potentially poorer
for rich countries. Improved well-being
living conditions tomorrow, is of only
is a goal for all countries, and improving
has developed a rich set of
temporary value. Achieving sustainable
the measurement of progress should
recommendations on policies that can
progress means preserving a broad range
also help governments to address the
best support economic growth. The
of assets – environmental, human and
challenges facing developing countries.
task that we face today is to develop an
social – and enhancing their returns.
With this in mind, the OECD is working
equally rich menu of recommendations
with other international organisations
on policies to support societal progress:
to develop indicators of well-being
better policies for better lives.
Measuring well-being and progress also requires a clearer view of people’s
Over the past 50 years, the OECD
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The OECD at 50
The OECD brings together the governments of countries committed to democracy and the market economy from around the world to support sustainable economic growth, boost employment, raise living standards, maintain financial stability, assist other countries’ economic development and contribute to growth in world trade. The Organisation provides a setting where governments compare policy experiences, seek answers to common problems, identify good practice and co-ordinate domestic and international policies. Ali Babacan, Deputy Prime Minister of Turkey
Reinventing the MENA-OECD programme by Rainer Geiger
T
he sweeping political changes now under way in the Middle East and North Africa
Despite this vast potential, many MENA
by more open and democratic political
countries still suffer significant weaknesses,
processes. For OECD countries, the benefits
provide an opportunity to step up co-operation
including high unemployment, lack of access
of partnership with a region that is both a
between the countries of the region and OECD
to finance for innovative economic activities,
major source of energy supply and outward
governments. The new leaders that emerge will
poor education systems and, above all,
investment and a significant market for
soon need to address the economic and
significant weaknesses in the institutional
imports are obvious. MENA countries,
political shortcomings that have been causing
environment. The financial sector of most
meanwhile, can draw advantage from OECD
pressure for reform. They will face the same
MENA countries is characterised by a
experience, analysis and advice, including
challenges as their predecessors in improving
relatively low level of integration into
through the development of convergent and
public-sector efficiency and attracting
international financial markets. During the
even joint-policy instruments. Greater policy
investments that deliver real benefits to large
recent financial crisis, some suffered a
convergence on both sides of the
parts of the population.
contraction of credit, a fall of exports and the
Mediterranean will be of great benefit to all.
The MENA region has many strengths. It accounts for 70 per cent of proven global oil
suspension of some infrastructure projects. The MENA-OECD programme of
The Initiative on Governance and Investment for Development, as the programme is officially
reserves and 50 per cent of gas reserves. It
co-operation, launched by the countries of
known, is based on two mutually supportive
also has a high potential for renewable energy,
the region in 2004 with the support of
components: investment and public
in particular solar power generation. Thanks
OECD governments, provides a structure for
governance. Investment is a driving force
to the accumulated assets of sovereign
dialogue, exchange of experience and policy
for growth and employment, while public-
wealth funds, oil producers in the region are
advice. It has already born valuable fruits, and
sector efficiency and integrity are keys to a
significant investors worldwide.
its effectiveness will be strengthened further
favourable business environment.
The OECD at 50
Towards green growth To protect and conserve the ecosystems on which societies depend for their well-being, people will have to learn to work and live differently. Governments, meanwhile, will have to work together in balancing the economic, social, political and ethical imperatives raised by new and complex technologies. Countering climate change, biodiversity loss and other forms of environmental degradation will mean taking a path radically different from that taken by the countries that industrialised in the 19th and 20th centuries. In a process that will affect all sectors of the economy, from manufacturing and urban planning to farming and tourism, innovation will hold the key to environmentally and
socially sustainable ‘green’ growth. Laying the foundations for global macroeconomic stability will require bold structural reforms in advanced and emerging economies alike. Innovation in such areas as renewable energy and improved efficiency in the use ❱❱
Launch of the OECD Economic Survey of France, 11 April 2011. Christine Lagarde, French Minister of Finance, with Angel Gurría, OECD Secretary-General
progress in public-sector efficiency and
of the region’s inhabitants. High-quality
complementary regional and country-specific
integrity, e-government, green growth and
education and training are vital for national
approaches. On the country-specific side,
territorial development. A number of countries
economies to become more productive
it has led to the elaboration of national
have implemented significant reforms of
and globally competitive.
reform agendas and, more recently, to the
investment policies. Egypt and Morocco have
assessment of national business-climate
reached a level of quality in their investment
application of legal rules are essential for
development strategies. On the regional side,
relations that enabled them to adhere to the
economic development, and new momentum
oversight is exercised by a Steering Group,
OECD instruments on international investment
needs to be created for fighting corruption
composed of participating countries and
and multinational enterprises.
as part of a strategy to restore confidence
The MENA-OECD initiative combines
representatives of the private sector and intergovernmental organisations.
Tax reforms have progressed in some
Transparency, predictability and effective
in public institutions and the integrity of
countries, with improvements in tax
business transactions. Continued efforts
administration and the streamlining of
are needed to modernise commercial law
sought co-operation with regional bodies,
tax incentives. In Iraq, a special country
systems throughout the region, provide for
including the Arab League, the Islamic
programme provides institutional support to the
regulatory quality and ensure the integrity of
Development Bank and the Arab Centre for the
national investment promotion agency, as well
public administration.
Development of the Rule of Law and Integrity
as to the national programme for integrity in
The dynamics of change in the MENA
(ACRLI). Joint activities have been developed
public administration and fighting corruption.
region bring great opportunities for progress
As new political forces and institutions
at the economic and social levels as well as
From its beginning, participants have
with the World Bank on the Business Climate Development Strategy and the relevant
emerge, co-operation needs to enter new
for better governance. The MENA-OECD
indicators, UNIDO on matchmaking between
domains. The MENA-OECD programme will
programme of co-operation can help ensure
foreign investors and domestic enterprises
have to rethink and refocus its activities in
that these opportunities are fully realised.
and UNDP on integrity programmes and
order to reach beyond established elites for
a regional network for transparency and
the benefit of large parts of the population.
Rainer Geiger is a former Deputy Director
fighting corruption (ACTINET).
Action is needed to develop business
of Financial and Enterprise Affairs at the
opportunities, and at the same time to focus
OECD and architect of the MENA
on ways to enhance the skills and employability
Investment Programme.
The record so far is positive. On the governance side, achievements include
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The OECD at 50
Unemployment Average unemployment rates (%) in main OECD countries (G7) Canada
France 12
12 10
9.4
9.6
8
7.0
6.7 6
6
5.0
4
2
2
1960s
1970s
1980s
1990s
2000s
Germany
0
3.3 1.5
1960s
1970s
12
10
10
8.5 7.5
6
8.4
2000s
6
5.2
4.7 3.8
4
2
2
1.4 N/A 1960s
1970s
7.9
8
4
1980s
1990s
2000s
Japan
0
1960s
1970s
1980s
1990s
12
10
10
8
8
US 12
9.9
10
8.2
6
6 4
2.5
1960s
1.7
1970s
1990s
2000s
0
5.8
5.5
1990s
2000s
4.8 4
3.1
2
2
1980s
7.3 6.2
6
4.6 4
3.0
8
5.5
4.7
1.3
2000s
UK
12
0
1990s
10.3
8
2
1980s
Italy
12
0
8.4
7.8
8
4
0
9.8
10
1960s
1970s
1980s
1990s
2000s
0
1960s
1970s
1980s
The OECD at 50
MENA-OECD Ministerial Conference in Marrakech, Morocco, 23 November 2009
of energy and materials can be a long-term driver for economic growth. The OECD’s Green Growth Strategy, drawing on the full multidisciplinary skill base of the Organisation and on input from economic, environmental, social, and technological and development agencies within member countries, will shape the way that countries work in the coming years. The Strategy rests on an understanding that green growth is about fostering economic growth and development while ensuring that natural assets continue to provide the ecosystem services on which our well-being relies. Green growth will henceforth become a mainstream element in OECD work, through country reviews designed to enable cross-country assessment of best practices combined with issue-specific and sector-specific studies to provide policy guidance in such areas as development co-operation, innovation, agriculture, energy, water and biodiversity. Going forward, the Organisation has identified green growth as its leitmotif for future thinking and direction. Strategic priorities include ��
OECD welcomes its first class of Student Ambassadors
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OECD Headquarters, 21 October 2010. President of Chile, Sebastián Piñera (left) and OECD Secretary-General Angel Gurría
Trade unions and the OECD: In the wake of the great recession by Sharan Burrow and John Evans
T
he OECD’s 50th anniversary falls at a
the reduction of unemployment as a policy
difficult moment. Member countries
priority. Beyond the OECD, if employment and
In addition to having the potential to be
are struggling to emerge from the worst
social protection are not addressed, social
multi-disciplinary, one of its assets is that it
financial crisis and global recession since
unrest will grow. If financial regulation is not
has advisory structures for business and
the Second World War. For most working
implemented, with real constraints on
labour – BIAC and TUAC. Over recent years,
families, an economic recovery has yet to be
speculative activity in food and other
TUAC has brought around 250 union
felt. OECD unemployment rates remain 50 per
commodities, global inequity, deprivation
representatives each year to debate with
cent higher than in 2008. The shift announced
and poverty will escalate.
the OECD in different Committees. At the
by governments to fiscal consolidation and
To complement the G20, the global
The OECD seeks to fulfil these roles.
2010 Ministerial Council, trade union
austerity policies, before the recovery is self-
economy needs a forum where the interaction
speakers were able to address our concerns
sustaining, risks raising unemployment further.
of economic and social policy issues can be
directly to governments.
Thrust into prominence in the near
addressed, using evidence-based analysis,
Trade unions from the non-OECD G20
financial meltdown of 2008, the G20 has
to guide governments out of the current
countries and beyond have fed into position
emerged as a policy co-ordination forum that in
morass. It also needs a forum to debate the
statements to the G20 meetings. At times,
its first two years was successful in avoiding
best options for confronting challenges such
OECD governments have been able to go
some of the errors of the 1930s. However, it
as ensuring green growth and combating
beyond analysis and define the rules of a
needs to step up co-ordination and to treat
climate change.
stronger and cleaner economy through
The OECD at 50
The OECD is one of the world’s major international economic organisations, and a force for good in building the intellectual and political case for open markets. The UK was one of the founding members of the OECD in 1961. The past 50 years has seen enormous growth in living standards in all regions of the world, and the OECD has played a major role in fostering, supporting and sustaining that growth. I believe the OECD has a vital to role to play in today’s world economy. Through its engagement with the world’s emerging as well as developed economies, the OECD has the experience and the commitment to deliver on its declared aim: to promote ‘better policies for better lives’ in its member states and in the wider world. David Cameron, Prime Minister of the United Kingdom
Guidelines and other instruments. The
especially in deregulated labour markets such
Task Force to define the parameters of a new
OECD Guidelines for Multinational Enterprises
as the US. Even the IMF now accepts that
growth model. Its report, which we hope will
are one such tool whose full potential is yet
this growing inequality contributed to the
be a contribution to the OECD’s work on
to be exploited.
debt-funded bubbles in asset prices and
new sources of growth, concludes that the
thereby, ultimately, to the crisis.
global financial and economic crisis
However, the scale of the recent economic disaster raises questions about the policies
Following the crisis, it has been striking
necessitates a fundamental review of the
that led to the crisis. OECD Secretary-General
that the more regulated labour markets of
Angel Gurría has said that the crisis reflected
the Nordic area and Germany have fared best
massive failures of markets, of governance and
in terms of unemployment, while the more
have been undermined by the collapse of
of regulation. He is right. The crisis should be
‘flexible’ US labour market has been
the banking sector, but it now appears that
provoking a serious rethink in all these areas.
dominated by brutal lay-offs of workers by
policy makers are retreating to the comforting
In the area of financial market regulation and
firms with a reluctance to hire back not
nostrums of economic orthodoxy. This would
green growth, new paradigms are appearing.
seen in any post-war cycle. Despite this,
be a strategic error. Returning to policies that
Across other policy areas, however, the
OECD Economic Surveys continue to call
failed in the boom cannot be expected to return
scenario looks much like ‘business as usual’.
for the weakening of employment protection
the global economy to growth following a very
legislation, decentralisation of collective
deep recession. While wishing the Organisation
2006 recognised that strong labour institutions
bargaining and the encouragement of workers
a happy anniversary, TUAC, the ITUC and our
– notably collective bargaining – can, if
to ‘price themselves into jobs’.
partners will be seeking to ensure that policy
The restated OECD Jobs Strategy of
combined with well-co-ordinated systems of
The lessons of recent experience need to be
prevailing economic policy paradigm. Faith in unconstrained markets should
makers in the OECD take this message to heart
industrial relations, produce positive
learnt, and a new model of labour markets
employment outcomes and fairer distribution of
developed that promotes quality employment
during this year and beyond.
income. In 2008, the OECD published a labour
based on rising productivity, skills and with
Sharan Burrow is General Secretary of the
market report, Growing Unequal, that showed
decent social protection. To provide a forum
International Trade Union Confederation and
a rise in inequality across almost all OECD
for debate, TUAC, working with the ITUC and
John Evans is General Secretary of the Trade
countries over the past two decades, and
the European Trade Union Institute, created a
Union Advisory Committee to the OECD.
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The way forward: Streamlining policy discussions for more effective multilateral surveillance by Kumiharu Shigehara
T
he OECD stands out from other
these recommendations is variable. As the
players in the global economy, and the OECD
international organisations for the
OECD celebrates its 50th anniversary, one of its
needs to take this into account.
variety of its Committees and subsidiary
biggest challenges is to adapt its frameworks
bodies specialised in structural, as well as
to the new reality of the global economy.
macroeconomic, policy areas. These are
For years, compared with the IMF, the OECD
When G20 leaders called at their Seoul Summit in November 2010 for enhanced economic surveillance, they specifically
regularly attended by officials from capitals,
had the advantage of smaller size and relative
urged the IMF “to focus on systemic risks
bringing members of the OECD Secretariat
homogeneity of membership. In recent years, it
and vulnerabilities wherever they may lie”.
and national policy makers and experts into
has become larger and more diverse, but its
Closer co-operation between the IMF and
close contact. Multidisciplinary activities
weight in the world economy has declined. In
the OECD would make enhanced surveillance
involving various OECD Directorates and
1975, OECD countries represented 65 per cent
even more effective – providing that the
Committees help to bridge differences between
of world GDP. By 2015, the OECD share is
OECD can succeed in strengthening its
government departments in capitals. In this
projected to decline to 50 per cent.
surveillance process. To achieve that, it will
way, the OECD contributes positively to the
The G20, by contrast, represents 85 per
need to ensure a higher level of participation
design and implementation of coherent
cent of world GDP, with the same number
in many of its meetings, based on a
macroeconomic and structural policies.
of members as the OECD when it was first
streamlined approach to participation.
Surveillance at the OECD is essentially
created. It includes countries in the Asia-
The OECD’s Working Party No 3
a peer review process based on analytical
Pacific region, the Middle East, Africa and
on Policies for the Promotion of Better
reports and policy recommendations prepared
Latin America, but not many of the European
International Payments Equilibrium, or WP3
by the Secretariat. But the level of national
countries that are members of the OECD.
– traditionally the most important peer review
representation in the meetings that discuss
Emerging economies have become significant
group for international macroeconomic
The OECD at 50
innovation, employment and skills, education, anti-corruption and integrity, social policies, gender equality, measuring the progress of societies, and development. At the OECD’s 50th Anniversary Ministerial meeting, participants are due to define the building blocks for a broad development strategy offering the Organisation’s experience and analysis, its policy advice and its best practices in the form of an open and inclusive knowledge-sharing platform for countries at different stages of development. This strategy will include promoting innovative
OECD Headquarters, 1st March 2011. (Left to right and rear to front) Richard Boucher, Deputy Secretary-General of the OECD; Lesetja Kganyago, former Deputy Finance Minister; Pravin Gordhan, South African Minister of Finance; Gabriela Ramos, OECD Chief of Staff and G20 Sherpa
and sustainable sources of growth, mobilising domestic resources for development, and governance and innovation for development. Half a century of experience in consensusbuilding through fact-based analysis, peer learning and peer review has made the OECD particularly suited for tackling such important issues. In these five decades, the OECD has shown how international co-operation between countries with often differing visions can translate into policy convergence, reducing friction and allowing for more ambitious accomplishments to raise the quality of life worldwide. Multilateral co-operation is more essential than ever in pursuit of this overarching goal: to serve and support countries, governments, parliaments, stakeholders and citizens in the development of better policies for better lives.
co-operation – is a case in point. WP3 was
dinner hosted by Pierre-Paul Schweitzer as the
non-member economies, I wrote to China’s
particularly active in influencing international
IMF managing director (his term was 1963-73)
finance minister and central bank governor
policy making during the first quarter-century
in honour of Van Lennep on his first working
inviting them to send their deputies from time to
of its existence. During this period, there were
visit to the IMF as OECD Secretary-General,
time to WP3 meetings. Since then, China has
four chairmen – Emile van Lennep (1961-69),
Schweitzer gave a speech in which he said the
attended WP3 meetings on several occasions.
Otmar Emminger (1969-77), Michiya
OECD “had done for years the work that the IMF
Now the time has come to open these
Matsukawa (1977-79) and Kit McMahon
should have done, particularly in Working Party
meetings to other key non-OECD countries.
(1980-85) – and their strong leadership
3”. Van Lennep added that “to the majority of
contributed greatly to the WP3’s activities.
(Schweitzer's) staff, this was the bitter truth”.
Policy issues relating to sterling crises under
Today, WP3 continues to operate as an
The OECD has a strong Secretariat equipped with professional staff of high quality, versed in the interplay of macroeconomic and
the Bretton Woods system; the demise
exclusive club whose meetings are attended
structural forces and policies. It could, if G20
of the system and the start of generalised
by deputy finance ministers and deputy
leaders so desire, perform a similar function
floating of major currencies; the first oil crisis
central governors involved in macroeconomic
for the G20. But only the strong political will
and recycling of oil money; the emergence
policy making in capitals. But its membership
of key players at global leadership levels
of persistent current account imbalances
remains essentially G10-based, with heavy
will succeed in carrying through the radical
between the US as a deficit country and
representation of European countries. To allow
reform of international institutions that is
Japan and Germany as surplus countries
the WP3 to retain its effectiveness, its structure
needed to make them more relevant to
after the second oil shock; and the Latin
should be streamlined to keep the total
new global circumstances.
American debt crisis that occurred in the early
number of participants within single figures.
1980s were subjects of heated debate at the
Similar subsidiary bodies, in which participation
Kumiharu Shigehara was Deputy Secretary-
WP3 under their chairmanship.
is limited to a small number of key players,
General of the OECD from 1997 to 1999.
should be envisaged in other areas. Such an
He served in the OECD’s Economics
when Emile van Lennep was WP3 chairman
Interesting descriptions about the period
approach would contribute to the efficient
Department in various capacities during
are found in his book Working for the World
functioning of plenary Committee meetings and
the 1970s and 1980s before taking up the
Economy, where he wrote: “(T)he American
make the entire process of OECD multilateral
post of Chief Economist of the Bank of Japan
Treasury also felt that Working Party 3 exerted a
surveillance more effective.
in 1989. From 1992 to 1997, he was Chief
much more powerful influence on British policies
In 1998, as deputy secretary-general
than the IMF ever could.” He also wrote that at a
responsible for OECD relationships with
Economist and Head of the Economics Department at the OECD.
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The OECD at 50
International partnerships
155
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The OECD at 50
The OECD and the ILO: Intertwined histories by Juan Somavia
A
s the world emerged from the
setting the objectives for the Organisation in
immediately endorsed by the former trade-
catastrophe of the Second World War,
contributing to securing peace and prosperity.
union leader UK Foreign Secretary Ernest
visionary statesmen and women started to
Likewise the roots of today’s OECD lie in the
Bevin, among others. The Organisation for
design the post-war international architecture.
Marshall Plan launched by the former general,
European Economic Co-operation (OEEC)
For the ILO this led to its 1944 Conference in
US Secretary of State George Marshall, in
followed within months of the famous speech.
Philadelphia which adopted a new Declaration
his famous 5 June 1947 Harvard speech and
Alongside its aims of economic reconstruction
The OECD at 50
and co-operation was the goal of achieving
– features that are once again being shown
of Understanding, we have agreed to
conditions for the better utilisation of labour.
to be invaluable, especially when social,
work together on a wide range of shared
The OEEC evolved and enlarged into the
economic and political tensions run high.
concerns support to the G20; employment
OECD, taking with it the preoccupation of
Further deepening the already extensive
and social protection, including decent
avoiding the mass unemployment of the
co-operation between the ILO and the OECD
work opportunities for all; international
1920s and 1930s.
can make a major contribution to strong,
labour migration; multinational enterprises
sustainable and balanced growth, with
and investment policies in developing and
that the goals of our two organisations, as set
quality jobs at the heart of the recovery.
emerging economies; financial issues
out in the Declaration of Philadelphia, for the
Unemployment is stubbornly high in the
(including inclusion and microfinance);
ILO, and in the OECD’s founding Convention,
‘old world’, with job creation only just
adequacy and sustainability of pension
are very similar. The founding articles of the
beginning to exceed job destruction. And, in
systems; multilateral responses to financial,
IMF and the World Bank, as well as the UN
many countries, employment participation
economic, employment and social crises;
itself, also have very similar commitments
has fallen as discouraged workers give up
development-policy issues, poverty reduction
to more and better jobs as a basic goal of
the fruitless search for non-existent jobs.
and MDGs achievement; local and regional
economic and social policies. They all date
In the emerging and developing world there
development, including support to sustainable
from this era of post-war reconstruction and
is also a continuing jobs crisis, but it is one
enterprise; the effects of a long-term shift
display a degree of integrated policy thinking
of not creating enough decent jobs to keep
towards a low-carbon economy, in particular
With these shared roots it is not surprising
that regrettably was gradually eroded and almost totally lost by the 1980s. But the wheels of history keep turning and now, once again, governments are looking for much greater co-operation and collaboration between international agencies in support of their shared objectives. The realisation that the world economy could again fall into a Great Depression as a result of a massive financial crash focused policy makers’ minds and, as a result, we got a Great Recession
It is the connection between economic and social policies that lies at the heart of the work of our two organisations and on which we can fruitfully intertwine our futures and live up to the legacy of our histories.
instead. Now the challenge is to recapture for a new era the policy coherence that the
up with the growth of the working-age
the impact on the labour market; statistical
founding parents of the international system
population and, at the same time, reduce the
analysis, including by the development of
aimed to create around full employment and
still large numbers living in poverty and the
data and indicators on the measurement
rising standards of living for all.
informal labour market.
of economic performance and social
In the world of multilateralism, the ILO and
We read much about large external
progress; chemical safety and occupational
the OECD have one special feature that
economic imbalances and the threat they
radiation protection; and tourism policy
makes us especially relevant to this task.
pose to recovery. But we hear much less
and statistical issues.
This is the institutionalised participation of
about the underlying internal social imbalances
trade unions and employers organisations
that are an even greater risk to sustainable
pleased to see the depth of international
in our policy making processes. The Trade
growth and development, as we see today in
co-operation 50 years after the foundation
Union and the Business and Industry Advisory
many Arab countries.
of the OECD. The ILO is equally pleased
Committees of the OECD are systematically
It is the connection between economic
I believe that our founders would be
to work with the OECD on the challenging
consulted on a wide range of issues on
and social policies that lies at the heart of the
agendas before us. We have moved on from
which governments are developing policies.
work of our two organisations and on which
statements of ambition to practical action. But
At the ILO, states are represented at our
we can fruitfully intertwine our futures and
it is important to remember how fundamental
annual conference by four delegates – two
live up to the legacy of our histories. For the
achieving those ambitions is to the needs and
for government and one each from workers
ILO, recognition of international labour
aspirations of the world’s citizens.
and employers’ organisations. Our Governing
standards and fundamental principles and
Body is similarly tripartite. I firmly believe this
rights at work is essential.
makes our deliberations more balanced and well-tuned to the realities of the world of work
The list of themes for collaboration is extensive. In a recently updated Memorandum
Juan Somavia is Director-General of the International Labour Organization, which was founded in 1919.
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The OECD at 50
The OECD and the IMF: A complementary partnership by Dominique Strauss-Kahn
I
n this uneven phase of economic recovery, global co-operation remains imperative.
G20 leaders remain committed to “acting
must continue working together, leveraging
together to generate strong, sustainable,
their respective expertise towards shared
The fruits of international co-operation were
balanced growth�. Achieving that objective,
goals of promoting a more stable international
abundant after the first few G20 summits,
however, will require heavy lifting in the
economic and financial system.
providing a model for modern multilateralism.
area of structural reforms. These must be
But the low-hanging fruits are gone and the
accompanied by the right international mix
between our two institutions. The Organisation
hard work, with mostly long-term pay-offs,
of macroeconomic policies to safeguard the
for European Economic Co-operation (OEEC)
is before us.
uneven recovery. The OECD and the IMF
and the Bretton Woods institutions were
There is a long history of co-operation
The OECD at 50
created after the Second World War with a common mandate to prevent the recurrence of instability by promoting international economic co-operation. The reconstruction of post-war Europe was achieved thanks to close collaboration, notably between the OEEC, which was instrumental in the implementation of the Marshall Plan, and the IMF, which provided large loans to European
As it reaches its 50th birthday, the OECD remains one of the pillars of the institutional framework of multilateralism, contributing essential input on structural issues to complement the work of other IFIs in the pursuit of our members’ shared objectives.
countries. These initiatives helped to harness the productive drive of the private sector, with remarkable results. The OECD succeeded the OEEC in
safety nets in surplus countries could reduce
The global economic benefits generated
precautionary savings, raise living standards
in the IMF’s “upside scenario” of the MAP
1961 with a mandate of supporting growth
and contribute to a rebalancing of current-
rest crucially on the expected gains from
and stability, complementing the IMF’s
account balances between surplus and
steady implementation of structural reforms
surveillance and crisis resolution work geared
deficit countries.
informed by extensive OECD analysis.
to promoting sound macro policies and
The G20’s Framework for strong,
Reflecting this, the OECD was asked by
policy co-operation. Since then, the IMF has
sustainable and balanced growth and its
the G20 to prepare a stand-alone report on
maintained continuous interaction with the
Mutual Assessment Process (MAP) present
structural reform policies and their potential
OECD over the years.
an ideal platform for productive collaboration
benefits, to complement the integrated
between the OECD and the IMF. IMF staff
macroeconomic analysis of global rebalancing
provides a unique forum for governments to
analyse whether G20 policy frameworks
developed by the IMF.
discuss domestic policies and their impact
are globally consistent, assess the upside
on other countries, feeding directly into
potential that strengthened collaborative
choices that take strong political leadership,
IMF analysis. The Development Assistance
action could provide, and facilitate the
in part because the gestation period and
Committee (DAC) plays a key role in bringing
G20 peer review process, working in close
pay-off take much longer than most political
together donor governments and multilateral
collaboration with the OECD and other
cycles. The stakes are high, particularly
institutions, including the IMF, to improve
International Financial Institutions (IFIs) in their
for the millions of people around the world
the effectiveness of international aid to poor
areas of comparative advantage.
who are unemployed and for low-income
The OECD’s Economic Policy Committee
countries. More generally, OECD data and
The OECD’s Going for Growth structural
Structural reforms involve tough policy
countries where small differences in the
analysis have been used extensively by
surveillance process, identifying strategic
rate of global growth can mean more or
Fund staff in advanced economy surveillance,
reform priorities for both OECD countries
less food on the table, and even life or
while the same can be said for IMF analysis
and several non-OECD countries, including
death. Global rebalancing of demand while
at the OECD.
most G20 nations, is central to the G20’s
achieving stronger growth will be difficult, if not
Framework. While these priorities vary
impossible, without the right structural reforms
as ever. Renewed financial instability, high
according to the circumstances of individual
and without collaboration.
unemployment in advanced economies, and
countries, the following broader priorities
capital inflow pressures in emerging markets
have been identified:
remind us of the harsh reality: we still face
●●
Today, this collaboration is as important
As it reaches its 50th birthday, the OECD remains one of the pillars of the institutional
implementing pro-competition reforms to
framework of multilateralism, contributing
fundamental weaknesses in the financial
raise labour productivity, including reforming
essential input on structural issues to
sector and structural challenges in the public
education and tax systems;
complement the work of other IFIs in the
removing impediments to labour utilisation,
pursuit of our members’ shared objectives.
rebalancing of global demand remains elusive.
including focusing on the design of benefits,
With multilateralism at a critical juncture,
Fixing these problems will require structural
taxes on labour, labour regulations, and
we can play an important role in galvanising
reforms in virtually every country.
housing policies;
global resolve to address together the major
●●
tackling public infrastructure deficiencies;
challenges ahead.
●●
enhancing government efficiency,
finances of advanced economies, while the
Improving the efficiency of public spending, reviewing public subsidies and implementing
●●
taxes on negative externalities such as pollution can reduce the adverse growth impact of fiscal adjustment. Better social
●●
particularly in healthcare and education;
Dominique Strauss-Kahn is Managing Director
and promoting innovation and
of the International Monetary Fund, which was
financial deepening.
founded in 1944.
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The OECD at 50
The OECD and the FAO: Working together for food security and agriculture development by Jacques Diouf
T
he OECD has an illustrious 50-year
agriculture and food, specifically in economic
statistics and statistical methodologies. The
history, not least in the field of agriculture
policies, trade and environment, and forward-
bastion of OECD’s policy monitoring system,
and food, where its role has been fundamental
looking assessments of emerging issues such
the Producer Support Estimate (PSE), was
in reshaping the policies of its member
as bioenergy policies. The OECD’s growing
first developed at FAO in 1973. While since
countries. Its first 25 years were marked by
membership, now including emerging countries
refined, it remains core to the OECD’s
heated discussions surrounding the growth of
such as Mexico and Chile, and the extension
important policy work.
highly distortive domestic and trade policies
of its work to eastern European countries as
by its member countries, which were blamed
well as to major countries such as Argentina,
recently began working with OECD staff and
for creating havoc in the international trading
Brazil and China, have provided policy
selected African countries on the Monitoring
system in agriculture. Through its monitoring
outreach worldwide.
African Food and Agricultural Policies project,
and policy analysis work, the OECD has
FAO’s collaboration with OECD extends
Building on this shared experience, FAO
sponsored by the Bill and Melinda Gates
provided one of the most effective forums for
back to its beginning, as both organisations
Foundation, to build a monitoring system
wrestling these policies down and for providing
are participants at each other’s meetings
to provide consistent and comparable
frameworks for best policy practice.
and engage in meaningful dialogue on issues
information on food and agricultural policies,
affecting agriculture and food by sharing
market-development gaps and public
work programmes and information including
expenditures in order to help support
Through its committee structure, consensus has been built in a wide range of areas affecting
improved policy dialogue at national, regional and international levels. Since 2005, the OECD-FAO Agricultural Outlook, produced collaboratively by the two organisations, has become a leading publication in the field of forward-looking agricultural commodity market assessments of emerging issues. Recently, the G20 asked both FAO and the OECD to lead in the development of a paper on Price Volatility for its discussion in Paris this year. Growing collaboration between the two organisations is providing leadership in information for more effective governance of global agricultural markets. This is a fundamental contribution to the welfare of the world’s population, and in particular to the improvement of food security and overall agricultural development. Jacques Diouf is Director-General of the Food and Agriculture Organization of the United Nations, which was established in 1945.
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The OECD at 50
The OECD and UNESCO: Together in the service of knowledge by Irina Bokova
C
o-operation between UNESCO and the OECD has grown continuously over the
past 50 years. Our partnership has benefited from geographical proximity – the headquarters of both organisations are in Paris. Above all, both organisations share the conviction that knowledge is vital for development and peace. Understanding and comparing are the first steps to effective action. Education and the sciences, along with statistical analysis, are strategic domains because they lay the foundation for successful future work. This is becoming more and more clear every day, as globalisation brings people and societies ever closer together. For 65 years, education has been the priority of priorities for UNESCO. We help governments to create the conditions for quality education for all by expanding access to education and improving its content. Working with the OECD, we have developed Guidelines for Quality Provision in Cross-border Higher Education valid for the member countries of both our organisations. This work was the subject of a joint publication in 2005 and has become the reference text in this area. We are now proceeding jointly to review its implementation. Given the importance technical and professional
common reference points. We are both driven
support for our joint efforts. Sharing know-how
training for employment, we are strengthening
by the wisdom that informed choices can
is the first step towards mutual understanding
our co-operation in this area as well. We worked
only be made on the basis of reliable and
and development. I look forward to many
together on the PISA survey to extend it to
comparable national indicators.
more years of co-operation to that end. Happy
emerging countries, such as Brazil. The OECD and the UNESCO Institute
We work together every day to demonstrate
birthday, OECD!
the power of knowledge to bring people
for Statistics are long-standing partners. We
together. Institutional relations are all the closer
Irina Bokova is the Director-General of the
collect and share statistical data in the areas
thanks to the shared determination shown by
United Nations Educational, Scientific, and
of education and in science and technology
the men and women who make up our staff.
Cultural Organization, which was founded
for our member countries. We work together
I am most grateful to the Secretary-General
in 1945 and became an agency of the
to improve existing methods and to develop
of the OECD, Angel Gurría, for his unwavering
United Nations in 1946.
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The OECD at 50
The OECD and the WHO: Partners for more effective health policies by Margaret Chan
I
ssues of health and economic development
Effectiveness and the Accra Agenda for Action,
intersect in multiple, often complex ways.
has decisively influenced aid architecture and
addressed by the OECD through the economic
the delivery of development assistance.
analysis of health policies. The importance
Rising income levels, when evenly distributed within a population and supported by measures
All of these difficult issues are being
The WHO has collaborated in many of
of such analysis has greatly increased in the
for social protection, improve a nation’s
these processes and directly benefited from
current climate of austerity, where decision-
health. Improved health contributes to long-
the results of others. In particular, well-
makers are looking for trade-offs among
term economic growth, and health spending
designed comparative studies between
competing policy objectives. As the OECD
contributes to economic stability. A well-
countries have helped to identify policy
notes, and the WHO fully agrees, improving
performing health sector is both a major source
options and define best practices, especially
the efficiency of health systems is a far better
of employment and a force for economic
concerning ways to get the best health
option that cutting budgets and services.
vitality. This intersection of health and economic
outcomes from the money spent.
concerns also has a strong ethical dimension:
The OECD is celebrating its 50th
The OECD’s strong emphasis on more efficient healthcare spending translates into
people should not be denied health care for
anniversary at a time when public health faces
practical advice in areas ranging from smart
unfair reasons, including their inability to pay.
unique challenges. The financial crisis hit the
procurement and reimbursement policies
world with a jolt, illustrating the fragility of
to incentive schemes for improving quality,
rigorous methodology have given economic
recent dramatic gains in health development.
reducing unnecessary procedures and
weight to the formulation of sound public
The big question now is: can these gains be
avoiding mistakes.
health policy. Its economic analyses have
sustained in an era of austerity?
For decades, the OECD’s expertise and
been particularly forceful in encouraging policy
As documented in many OECD studies
Evidence demonstrating the economic value of prevention is especially needed at a time when
change in OECD countries. In the developing
and reports, healthcare costs are increasing
all eyes in the public-health community are on
world, the OECD’s convening power, which
in nearly every country. Public expectations
the soaring costs of chronic non-communicable
brought us the Paris Declaration on Aid
for quality healthcare are rising. So are the
diseases. Equally welcome is the emphasis on
ambitions of health officials as more and
more effective use of information technology to
more governments seek to strengthen
monitor results and meet the growing demand
social safety nets, extending financial
for transparency and accountability.
protection to the sick and poor. Demands are also rising as the
Above all, OECD policy guidance helps to ensure that spending on health brings
prevalence of obesity and lifestyle-related
maximum value in terms of improved
non-communicable diseases, such
health outcomes, especially for poor and
as cardiovascular disease, cancer
disadvantaged groups. This is another objective
and diabetes, continues to increase.
fully shared by the WHO – and another clear
Demographic ageing and a worldwide
sign that the excellent collaboration between
shortage of healthcare workers make
our two organisations will continue, bringing
these demands even more acutely felt.
better health through smarter policies.
Public health now finds itself caught in a cross-current of expectations and ambitions
Margaret Chan is the Director-General of
set against rising demands and costs, at a
the World Health Organization, which
time when funds are stagnant or shrinking.
was established in 1948.
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The OECD at 50
AFRICAN DEVELOPMENT BANK GROUP
The OECD and the AfDB: Working together for African development
by Donald Kaberuka
A
s the OECD celebrates its 50th anniversary, it is pertinent to observe the
Equally, I want to recognise the work we
The African Economic Outlook, jointly
have done together in supporting countries
produced by the AfDB and the OECD, has
critical role that the organisation has played in
coming out of conflict, as well as establishing
been a vehicle for high-quality policy analysis,
thought leadership, and in co-ordinating major
best practices for fragile states. The OECD-
as was the jointly organised International Forum
elements of the increasingly complex global
AfDB joint initiative to support business integrity
on African Perspectives. On behalf of the AfDB,
economy. Highlighting one area key to our work
and anti-bribery efforts in Africa has assisted
I commend the OECD on its 50th anniversary
at the African Development Bank – resource
several African countries in their fight against
and look forward to the further deepening of
mobilisation – whether it is the Paris Declaration
corruption and improved corporate integrity
our collaboration in the years ahead.
on Aid Effectiveness, or the co-ordination of
and accountability. The representation of the
work on domestic resource mobilisation and
AfDB on the OECD GenderNet has contributed
Donald Kaberuka is President of the African
tax administration, the contribution of the
in generating experience for the Bank in its
Development Bank Group, which was
OECD has been key.
work on mainstreaming gender.
established in 1964.
169
The OECD at 50
The OECD and the ADB: Working together for Asia-Pacific development by Haruhiko Kuroda
T
hroughout its 50 years of existence, the OECD has made significant
The OECD has been a valuable partner for the ADB in providing insights, advice
in co-ordinated and systematic actions in the fight against corruption.
contributions to the development and
and analysis to ADB developing member
An agreement signed in March 2005
well-being of Asia and the Pacific. Today,
countries on a vast range of economic issues.
reaffirmed our shared commitment to
the region has gained an eminent role
The ADB’s strategic priorities – inclusive
collaboration in several priority areas, including
in the world economy, and an increasingly
and environmentally sustainable growth and
aid effectiveness and corporate governance,
important voice in international policy
regional integration – complement the OECD’s
as well as anti-corruption policies. The ADB is
discussions. However, despite its rapid
objectives and activities in our region.
an active partner with the OECD in facilitating
growth, the Asia-Pacific region lags far
Partnership between our institutions and
and monitoring the implementation of the Paris
behind the industrial economies in per
harmonisation among development institutions
Declaration of Aid Effectiveness. The ADB has
capita income and remains home to
are critical to achieving relevant, effective
been a full member of the OECD Development
two-thirds of the world’s poor. A recent study
development policies and programmes for Asia
Assistance Committee’s Working Party on
by the Asian Development Bank suggested
and the Pacific. In 1999, we jointly established
Aid Effectiveness since its inception and has
that it will take decades for developing Asia
the ADB/OECD Anti-Corruption Initiative for
engaged over many years in most areas of its
to catch up with the development indicators
Asia-Pacific – a network for officials from ADB
work. We have ramped up our collaboration
already achieved by the OECD.
member countries and jurisdictions to engage
to organise and prepare for the forthcoming Fourth High-Level Forum on Aid Effectiveness, due to take place in Korea later this year. The ADB recognises the vital role that the OECD plays in the development community and in the Asia-Pacific region. Along with being a forum for governments to share experiences and seek solutions to common problems, the OECD offers assistance with measurement methodologies, indicators, best practices, internationally agreed instruments, decisions and recommendations in areas where multilateral agreement is necessary for individual countries to make progress in a globalised economy. On behalf of the ADB, it is a great pleasure to congratulate the OECD on its 50th anniversary. We value our partnership highly and look forward to many more years of fruitful collaboration. Haruhiko Kuroda is the President of the Asian Development Bank, which was established in 1966.
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The OECD at 50
Enabling poor rural people to overcome poverty
The OECD and IFAD: Working in partnership to eradicate rural poverty
by Kanayo F Nwanze
T
he logo of the International Fund for
communities and greater food security to the
Agricultural Development (IFAD)
world in the decades ahead.
features three ears of wheat – one of which
If these women and men had reliable access
represents the OECD countries. This makes
to financial services, markets, technology, land
the OECD a key member of the IFAD family,
and other natural resources – in other words, if
so we take particular pleasure in celebrating
they could run their farms as small businesses
its 50th anniversary.
– they could grow and sell more food, earn
Less than two decades after its
We need to link efforts to increase the food supply with generating work opportunities
more income and determine the direction of
in East Asia, particularly China, account for
founding, the OECD joined in forming IFAD
their own lives. If today’s restless generation of
much of the decline. With sustained efforts and
in collaboration with the nations of the
young people could see such opportunities,
innovation, we can see similar progress spread
Organization of the Petroleum Exporting
many of them would view small-scale farming
to every continent on earth.
Countries (OPEC) and other developing
as a stimulating path to a rewarding life.
countries (the other two ears of wheat in our
Since 1978, IFAD has invested over
IFAD and the OECD also share the goal of making aid more effective, and we have already
logo). IFAD was established in 1977 as a
$12.5 billion in grants and low-interest loans
come a long way towards achieving it. OECD
specialised agency of the United Nations and
to developing countries, empowering more
institutions such as the Working Party on Aid
an international financial institution to fight rural
than 370 million people to break out of poverty.
Effectiveness and the working group on
poverty in developing nations. The OECD, with
Despite the progress, there are still more than
Managing for Development Results are key tools
its mission focused on the economic and social
one billion people living impoverished lives in
in making our aid work harder – which allows it
well-being of people around the world, has
rural areas of developing countries. The moment
to spread further and help more people.
always been a supportive partner.
is ripe for linking efforts to sustainably increase
Co-operation across borders is more urgent
We look forward to continued collaboration
the supply of affordable food in developing
between our two organisations as we work
than ever. Concerns over rising food prices
countries with the need to generate decent
towards our joint objectives. In saluting
and hunger have re-emerged at the top of the
work opportunities for their women, men and
the OECD on its half-centenary, we
international agenda, just as the clock ticks
young people. That is the shortest road to
welcome its support for our efforts to help
down to the 2015 deadline for achievement
eradicating extreme poverty and hunger.
farmers in developing countries feed their
of the Millennium Development Goals. At the
IFAD and the OECD have collaborated in
families, communities and nations. Let us
same time, a huge generation of young people
many forums towards that objective, including
commemorate this milestone by imagining,
is on the brink of adulthood in rural areas of
the DAC Network on Poverty Reduction and
50 years into the future, the observance of the
developing nations, searching for opportunity.
the Global Forum on Agriculture. There has
100th anniversary of the OECD – celebrated
been close co-operation between IFAD, the
with a look back at the successful efforts that
farms. These farms are a vital link in the chain
OECD and other key international organisations
led to the eradication of extreme poverty and
of global food security. Already they feed almost
on price volatility and food security issues in the
hunger around the world.
a third of the world’s population and produce
context of the G20.
Many of them have grown up on smallholder
most of the food consumed in developing
Progress is real: over the past decade,
Kanayo Nwanze is President of the International
nations. Yet smallholder farmers have long
the rate of extreme poverty in rural areas of
Fund for Agricultural Development, a
been seen as the faceless poor, not as skilled
developing countries – people living on less
specialised agency of the United Nations that
individuals whose innovation, dynamism and
than $1.25 a day – has dropped from
was established as an international financial
hard work can bring prosperity to their
48 per cent to 34 per cent. Dramatic gains
institution in 1977.
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The OECD at 50
The OECD at 50
The OECD and the WTO: Working to advance trade and development by Pascal Lamy
D
ifferent agendas, different perceptions and
monitoring of trade-related development funds.
goods crossing borders many times, there is
different ways of doing things sometimes
It was in this respect that the OECD made such
a tendency to double- and even triple-count
an important contribution to this programme.
exports. Working with the OECD and with many
make it hard for international organisations to work together, in spite of their shared
The OECD’s analysis of Aid for Trade flows
other partners worldwide, we at the WTO are
objectives of creating a more prosperous and
provides both qualitative and quantitative
seeking to devise a statistical process which
peaceful planet. And yet, as I reflect on the 50th
information. The qualitative assessment is based
would permit us to calculate trade on a value-
anniversary of the OECD and the many years I
on partner and donor countries’ providing self-
added basis, a far truer indication of trade flows.
have worked with the Organisation, what strikes
assessments of the programme. The quantitative
me most is how responsive it has been to
evaluation comes from close monitoring of
meeting of trade ministers who hold forth on
working with partners in building an international
global Aid for Trade flows. Results to date are
developments in the trading system. Wisely,
infrastructure that delivers for governments and
encouraging: Aid for Trade commitments grew
the organisation has expanded the list of
the people they represent.
by 10 per cent in 2006 and 2007, and by 35 per
invitees beyond OECD members to include
cent in 2008 to $41.7 billion.
ministers from many developing countries that
Our work at the World Trade Organization (WTO) intersects with that of the OECD across
Another important area in which the WTO
Each spring, the OECD holds its annual
are playing an ever wider role in world trade.
a wide array of issues. Whether in trade-related
and the OECD have worked well together is
These meetings are a mandatory occasion for
development assistance, monitoring trade
in monitoring post-crisis trade and investment
WTO Directors-General. They provide a forum
barriers or providing a forum for trade ministers
developments. Governments have been vigilant
for discussion. Over the past decade, they have
to advance the Doha Round negotiations, our
in fighting the implementation of trade-and-
also provided ministers with an opportunity
organisations have worked together to provide
investment restrictive measures since the onset
to try and advance the Doha Round. Meeting
valuable services for our members.
of the crisis. Together with UNCTAD, our two
bilaterally or in groups, ministers and their
organisations have provided G20 countries with
officials have sought to bridge their differences
available to developing countries as they seek to
a series of reports giving a clear picture of the
or propose new solutions to long-entrenched
alleviate poverty and raise living standards. Their
state of play. In these reports, we have been
problems. They have also met collectively, on an
ratio of trade to GDP has more than doubled in
able to inform the G20 that trade restrictions
informal basis, to assess how best to proceed.
the past 40 years, to the point where it is much
imposed to date have covered only a tiny
These meetings have made an important
larger than that of developed countries, and their
fraction of world imports, while restrictions on
contribution to moving the Doha Round forward.
dependence on trade is growing.
investment flows have been negligible. This
Trade is one of the most effective tools
And, yet, many developing countries lack the
In short, the Secretariats of our two
scrutiny has helped to deter governments
organisations work productively together on
capacity to fully engage in trade and the global
from putting in place policies which could have
many matters, from statistics and trade finance
economy. Enhancing that capacity is the central
deepened and widened the economic crisis.
to economic research and communications.
objective of the global Aid for Trade Programme,
Trade today is measured in gross numbers,
Angel Gurría and I have a strong and productive
to which the OECD has been an important
but given the integrated nature of global
working relationship. As the OECD celebrates
contributor. If aid programmes have not always
production and supply chains, many economists
its 50th birthday, I salute the organisation, its
delivered all they could for developing countries,
– including those at the WTO and the OECD –
staff and its members, and wish them the best
one important reason has been a failure to
believe that the gross formula for tabulating
for the next 50 years.
monitor the flow of funds effectively. As we set
imports and exports does not accurately
about crafting the Aid for Trade programme,
reflect the true value of merchandise as it
Pascal Lamy is Director-General of the World
governments rightly insisted on effective
crosses borders. With inputs and semi-finished
Trade Organization, which was founded in 1995.
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The OECD at 50
Congratulations on the 50th anniversary of the OECD The OECD’s involvement in environmental policy coincides with the estabishment of the UN Environment Programme (UNEP) in 1972. Over the years, it has delivered important analysis and policy directions for mainstreaming sustainability. Today, as part of the global interest in green growth and a transition to a low-carbon, resource-efficient Green Economy, it is rapidly evolving its work to a new and transformative level. On the Road to Rio and the UN Conference on Sustainable Development 2012, the OECD and UNEP are allies in the drive to make this the decisive and defining milestone for meeting the challenges, but also delivering the opportunities, for a truly sustainable 21st century.
Achim Steiner, UN Under-Secretary-General and Executive Director, UN Environment Programme Congratulations to the OECD on 50 years of service and dedication to developing effective policies that promote economic development for the improvement and well-being of people around the world! The International Institute for Sustainable Development (IISD) is proud of our close association with the OECD. We forward to our future collaborations in the spirit of co-operation that truly defines the OECD.
Franz Tattenbach, CEO and President of the International Institute for Sustainable Development I commend the OECD for its thought-leadership on economic problems. Its current focus on green growth is a clear example of this commitment. The World Business Council for Sustainable Development is delighted to sponsor the 2011-12 Round Table on Sustainable Development. As a forum outside formal negotiating processes, the Round Table will enable participants to discuss solutions to green growth free of bureaucratic obstacles. In an increasingly resource-constrained and populous world, governments and companies need to tackle green growth challenges together.
BjĂśrn Stigson, President, World Business Council for Sustainable Development Never since the creation of the OECD 50 years ago has the world undergone so deep a crisis. Now, more than ever, to stay on course for sustainable and equitable growth the world needs a centre for reflection that can propose common strategies, and a driving force for new forms of co-operative coordination among the key actors of global development. If the OECD, with its well-tried working methods, its competent staff and its high-quality leadership, did not already exist, it would need to be invented.
Michel Camdessus, former Governor of Banque de France and former Managing Director of the IMF The OECD provides a great example of what can be achieved through international co-operation, and has been a force for peaceful progress and development over its 50 years. In pursuing its mission, it has long supported the move towards global accounting standards. We at the IASB, now completing our first decade of operation, greatly appreciate that support and the encouragement we have received from the OECD, as well as its close co-operation in addressing the many areas of shared interest.
Sir David Tweedie, Chair of the International Accounting Standards Board
The OECD at 50
The OECD has made a stalwart contribution to our understanding of economic policy and how it affects development. In areas as far apart as education, migration and energy policy, it has encouraged co-operation between economies. UNCTAD, which focuses on the developing world, has benefited enormously from collaboration with the OECD. Recently, we were jointly tasked by the G20 to monitor the investment policy environment in light of the 2008-09 financial and economic crisis. We hope that the OECD will maintain its strong research agenda and look forward to building our relationship.
Supachai Panitchpakdi, Secretary-General of the UN Conference on Trade and Development The OECD has been a close and supportive partner of the European Training Foundation since its launch in 1995. OECD reviews of education policy in different countries have inspired and informed our work. We have been proud to contribute our knowledge of vocational education and training (VET) policy to OECD education reviews, especially of ETF partner countries. Our partner countries have also benefited from the OECD’s groundbreaking education policy work, such as PISA. In the framework of the Inter-Agency Co-operation Group, knowledge-sharing has covered many policy areas and regions, but I would particularly mention our fruitful co-operation for entrepreneurship learning in the Western Balkans, Turkey, and the Southern and Eastern Mediterranean. We wish the OECD a happy anniversary and look forward to continuing close co-operation.
Madlen Serban, Director of the European Training Foundation To the OECD, always experimenting with new ideas and transformational innovations for the betterment of the global economy, pressing the world to get rid of old paradigms, but helping it adapt to the new paradigm of growth, development and governance: all the best with your noble endeavours.
Han Seung-soo, Chair of the Board of Directors of Korea’s Global Green Growth Institute and former Prime Minister of the Republic of Korea As the premier multilateral body for global financial issues, the OECD will play a key role in shaping the future of global finance. It is one of the few organisations able to address issues of taxation and development with a global perspective and a global approach. Global Financial Integrity applauds its new focus on tax and development, its strong voice in the G20, and the peer review process involving countries participating in its Global Forum on Transparency and Exchange of Information for Tax Purposes. We look forward to seeing the OECD expand its policy work and engagement with low-income countries during the next 50 years.
Raymond Baker, Director of Global Financial Integrity Worldwide challenges imperil humanity’s prosperity and security. Constructive efforts to confront these challenges have been a hallmark of the OECD in half a century of international collaboration, commitment and accomplishment. The OECD has made countless contributions, establishing guidelines, standards and state-of-the-art peer review processes, as well as providing impartial and articulate policy recommendations. At CIGI, we have appreciated working with the OECD, sharing policy research and analysis with the aim of increasing the effectiveness of the G20 leaders’ summits. We encourage the OECD to continue in its traditions: it is an indispensable institution.
Thomas A Bernes, Executive Director, The Centre for International Governance Innovation
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The OECD at 50
Index of advertisers Accenture................................................................................................................................................................ 50 Allianz Global Investors AG .................................................................................................................................. 92 Amicorp Group....................................................................................................................................................... 42 Andrade Gutierrez ................................................................................................................................................... 4 Arion Bank .............................................................................................................................................................. 91 Bank Hapoalim ...................................................................................................................................................... 94 BASF......................................................................................................................................................................... 66 BBVA ...................................................................................................................................................................... 108 BNP Paribas........................................................................................................................................................... 172 Carrefour ................................................................................................................................................................. 25 Center for Retirement Research at Boston College ......................................................................................... 166 Chevron ..................................................................................................................................................................... 2 China International Capital Corporation Limited ............................................................................................... 6 EDF ........................................................................................................................................................................... 74 ENI ........................................................................................................................................................................... 73 Ernst & Young LLP .................................................................................................................................................. 40 Fidal International ............................................................................................................................................... 168 Göteborg Energi AB ................................................................................................................................................ 76 INSEAD .................................................................................................................................................................... 36 International Bureau of Fiscal Documentation ............................................................................................... 107 Malta Enterprise .................................................................................................................................................. 128 Masisa ................................................................................................................................................................... 143 McGraw-Hill Companies ..................................................................................................................................... 180 Merck Sharp & Dohme .......................................................................................................................................... 60 Moody’s Corporation ........................................................................................................................................... 137 Natura Cosméticos SA ........................................................................................................................................ 140 Novartis ................................................................................................................................................................. 110 PricewaterhouseCoopers .................................................................................................................................... 138 SNR Schouten Training BV ..................................................................................................................................... 9 Standard Chartered Bank ................................................................................................................................... 100 Syngenta ............................................................................................................................................................... 164 TD Bank Financial Group...................................................................................................................................... 16 UIC ........................................................................................................................................................................... 54 United Arab Emirates Securities and Commodities Authority ..................................................................... 160 University of St Gallen, Institute for Economy and the Environment ......................................................... 162 Vale .......................................................................................................................................................................... 88 Valeo Group ............................................................................................................................................................ 53 Vertex Pharmaceuticals Incorporated ................................................................................................................ 11 Wageningen University and Research .............................................................................................................. 170 Westinghouse Electric Company ....................................................................................................................... 179 Zurich Financial Services ..................................................................................................................................... 22
WES