Organisation for Economic Co-operation and Development
Organisation de coopération et de développement économiques
Abbreviation
  • OECD
  • OCDE
Established
  • 16 April 1948 (1948-04-16) (as OEEC)
  • September 1961 (1961-09) (as OECD)
TypeIntergovernmental organisation
HeadquartersChâteau de la Muette
Paris, France
Membership
Official languages
  • English
  • French
Mathias Cormann
Deputy Secretaries-General
Budget
€386 million (2019)[3]
Websitewww.oecd.org

The Organisation for Economic Co-operation and Development (OECD; French: Organisation de coopération et de développement économiques, OCDE) is an intergovernmental organisation with 38 member countries,[1][4] founded in 1961 to stimulate economic progress and world trade. It is a forum and its members are countries which describe themselves as committed to democracy and the market economy, providing a platform to compare policy experiences, seek answers to common problems, identify good practices and coordinate domestic and international policies of its members.

The majority of OECD members are high-income economies with a very high Human Development Index (HDI) and are regarded as developed countries. Their collective population is 1.38 billion.[5] As of 2017, the OECD member countries collectively comprised 62.2% of global nominal GDP (US$49.6 trillion)[6] and 42.8% of global GDP (Int$54.2 trillion) at purchasing power parity.[7] The OECD is an official United Nations observer.[8]

In 1948, the Organisation for European Economic Co-operation (OEEC),[9] was established to help administer the Marshall Plan, which was rejected by both the Soviet Union and its satellite states.[10] This would be achieved by allocating United States financial aid and implementing economic programs for the reconstruction of Europe after World War II.[11] Only Western European states were members of the OEEC. Its Secretary General were the Frenchmen Robert Marjolin (1948–1955) and then René Sergent (1955–1960). In 1961, the OEEC was reformed into the Organisation for Economic Co-operation and Development and the membership was extended to non-European states, the USA and Canada.[12][13]

The OECD's headquarters are at the Château de la Muette in Paris, France.[14] The OECD is funded by contributions from member countries at varying rates and had a total budget of € 386 million in 2019.[3]

The OECD is recognised as a highly influential publisher of mostly economic data through publications as well as annual evaluations and rankings of member countries.[15]

History

Organisation for European Economic Co-operation

The Organisation for European Economic Co-operation (OEEC) was formed in 1948 to administer American and Canadian aid in the framework of the Marshall Plan for the reconstruction of Europe after World War II.[16] Similar reconstruction aid was sent to the war-torn Republic of China and post-war Korea, but not under the name "Marshall Plan".

The organisation started its operations on 16 April 1948, and originated from the work done by the Committee of European Economic Co-operation in 1947 in preparation for the Marshall Plan. Since 1949, it has been headquartered in the Château de la Muette in Paris, France. After the Marshall Plan ended, the OEEC focused on economic issues.[9]

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

By the end of the 1950s, with the job of rebuilding Europe effectively done, some leading countries felt that the OEEC had outlived its purpose, but could be adapted to fulfil a more global mission. It would be a hard-fought task. After several, sometimes fractious, meetings at the Hotel Majestic in Paris, starting in January 1960, a resolution was reached to create a body that would deal not only with European and Atlantic economic issues, but devise policies to assist less developed countries. This reconstituted organisation would bring the US and Canada, who were already OEEC observers, on board as full members. It would also set to work straight away on bringing in Japan.[17]

Founding

Following the 1957 Rome Treaties to launch the European Economic Community, the Convention on the Organisation for Economic Co-operation and Development was drawn up to reform the OEEC. The Convention was signed in December 1960, and the OECD officially superseded the OEEC in September 1961. It consisted of the European founder countries of the OEEC plus the United States and Canada. Three countries, Netherlands, Luxembourg, and Italy—all OEEC members—ratified the OECD Convention after September 1961 but are nevertheless considered founding members. The official founding members are:

During the next 12 years Japan, Finland, Australia, and New Zealand also joined the organisation. Yugoslavia had observer status in the organisation starting with the establishment of the OECD until its dissolution as a country.[18]

The OECD created agencies such as the OECD Development Centre (1961), International Energy Agency (IEA, 1974), and Financial Action Task Force on Money Laundering.

Unlike the organisations of the United Nations system, OECD uses the spelling "organisation" with an "s" in its name rather than "organization".

Enlargement to Central Europe

In 1989, after the Revolutions of 1989, the OECD started to assist countries in Central Europe (especially the Visegrád Group) to prepare market economy reforms. In 1990, the Centre for Co-operation with European Economies in Transition (now succeeded by the Centre for Cooperation with Non-Members) was established, and in 1991, the Programme "Partners in Transition" was launched for the benefit of Czechoslovakia, Hungary, and Poland.[18][19] This programme also included a membership option for these countries.[19] As a result of this, Poland,[20] Hungary, the Czech Republic, and Slovakia, as well as Mexico and South Korea[21] became members of the OECD between 1994 and 2000.

Reform and further enlargement

In the 1990s, a number of European countries, now members of the European Union, expressed their willingness to join the organisation. In 1995, Cyprus applied for membership, but, according to the Cypriot government, it was vetoed by Turkey.[22] In 1996, Estonia, Latvia, and Lithuania signed a Joint Declaration expressing willingness to become members of the OECD.[23] Slovenia also applied for membership that same year.[24] In 2005, Malta applied to join the organisation.[25] The EU is lobbying for the admission of all EU member states.[26] Romania reaffirmed in 2012 its intention to become a member of the organisation through the letter addressed by Romanian Prime Minister Victor Ponta to then-OECD Secretary-General José Ángel Gurría.[27] In September 2012, the government of Bulgaria confirmed it would apply for membership before the OECD Secretariat.[28]

The OECD established a working group headed by ambassador Seiichiro Noboru to work out a plan for the enlargement with non-members. The working group defined four criteria that must be fulfilled: "like-mindedness," "significant player," "mutual benefit" and "global considerations." The working group's recommendations were presented at the OECD Ministerial Council Meeting on 13 May 2004.[18] On 16 May 2007, the OECD Ministerial Council decided to open accession discussions with Chile, Estonia, Israel, Russia and Slovenia and to strengthen co-operation with Brazil, China, India, Indonesia and South Africa through a process of enhanced engagement.[29] Chile, Slovenia, Israel and Estonia all became members in 2010.[30] In March 2014, the OECD halted membership talks with Russia in response to its role in the 2014 Annexation of Crimea.[31][32]

In 2013, the OECD decided to open membership talks with Colombia and Latvia. In 2015, it opened talks with Costa Rica and Lithuania.[33] Latvia became a member on 1 July 2016 and Lithuania on 5 July 2018.[34][35] Colombia signed the accession agreement on 30 May 2018 and became a member on 28 April 2020.[36] On 15 May 2020, the OECD decided to extend a formal invitation for Costa Rica to join the OECD,[37] and it joined as a member on 25 May 2021.[2]

Other countries that have expressed interest in OECD membership are Argentina, Peru,[38] Malaysia,[39] Brazil,[40] and Croatia.[41]

In January 2022, the OECD reported that it had begun talks aiming toward joining Argentina, Brazil, Bulgaria, Croatia, Peru and Romania.[42]

In March 2022, the OECD suspended the participation of Russia and Belarus due to the ongoing 2022 Russian invasion of Ukraine.[43]

In June 2022, during the annual OECD Ministerial Council Meeting, the Roadmaps for the Accession to the OECD Convention for Brazil, Bulgaria, Croatia, Peru and Romania were adopted.[44]

Objectives and issues

Taxation

Payroll and income tax by OECD Country
Payroll and income tax by OECD Country

The OECD publishes and updates a model tax convention that serves as a template for allocating taxation rights between countries. This model is accompanied by a set of commentaries that reflect OECD-level interpretation of the content of the model convention provisions. In general, this model allocates the primary right to tax to the country from which capital investment originates (i.e., the home, or resident country) rather than the country in which the investment is made (the host, or source country). As a result, it is most effective as between two countries with reciprocal investment flows (such as among the OECD member countries), but can be unbalanced when one of the signatory countries is economically weaker than the other (such as between OECD and non-OECD pairings). Additionally, the OECD has published and updated the Transfer Pricing Guidelines since 1995. The Transfer Pricing Guidelines serve as a template for profit allocation of inter-company transactions to countries. The latest version, of July 2017, incorporates the approved Actions developed under the Base Erosion and Profit Shifting (BEPS) project initiated by the G20.[citation needed]

On 1 July 2021 finance officials from 130 countries agreed on plans for a new international taxation policy known as the global minimum corporate tax. All the major economies agreed to pass national laws that would require corporations to pay at least 15% income tax in the countries they operate. This new policy would end the practice of locating world headquarters in small countries with very low taxation rates. Governments hope to recoup some of the lost revenue, estimated at $100 billion to $240 billion each year. The new system was promoted by the Biden Administration in the United States and the OECD. Secretary-General Mathias Cormann of the OECD said, "This historic package will ensure that large multinational companies pay their fair share of tax everywhere."[45]

Multinational corporations

The OECD Guidelines for Multinational Enterprises are a set of legally non-binding guidelines attached as an annex to the OECD Declaration on International Investment and Multinational Enterprises. They are recommendations providing principles and standards for responsible business conduct for multinational corporations operating in or from countries adhering to the Declaration.[citation needed]

Bid rigging

The OECD's work on bid rigging includes the publication of guidelines for fighting this practice in the context of public procurement.[46] In a Policy Brief issued in October 2008, OECD noted that "programmes to systematically educate procurement officials exist in only a few OECD countries".[47] "Guidelines for Fighting Bid Rigging in Public Procurement" were published in 2009,[46] and incorporated into a "Recommendation on Fighting Bid Rigging in Public Procurement" which was adopted on 17 July 2012, calling on member governments "to assess their public procurement laws and practices at all levels of government in order to promote more effective procurement and reduce the risk of bid rigging in public tenders".[48]

Publications

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The OECD publishes books, reports, statistics, working papers, and reference materials. All titles and databases published since 1998 can be accessed via OECD iLibrary. The OECD Library & Archives collection dates from 1947, including records from the Committee for European Economic Co-operation (CEEC) and the Organisation for European Economic Co-operation (OEEC), predecessors of today's OECD. External researchers can consult OECD publications and archival material on the OECD premises by appointment.

Books

Reports on a wide range of topics for sale at the OECD's Conference Centre Bookshop
Reports on a wide range of topics for sale at the OECD's Conference Centre Bookshop

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

All OECD books are available on the OECD iLibrary, the online bookshop or OECD Library & Archives.[n 1]

Magazine

OECD Observer, an award-winning magazine,[n 2] was launched in 1962.[50] The magazine appeared six times a year until 2010, and became quarterly in 2011 with the introduction of the OECD Yearbook, launched for the 50th anniversary of the organisation.[51] The online and mobile[52] editions are updated regularly and contain news, analysis, reviews, commentaries and data on global economic, social and environmental challenges, and listings of the latest OECD books.[53] An OECD Observer Crossword was introduced in Q2 2013.[54]

Statistics

The OECD is known as a statistical agency, as it publishes comparable statistics on numerous subjects. In July 2014, the OECD publicly released its main statistical databases through the OECD Data Portal, an online platform that allows visitors to create custom charts based on official OECD indicators.[55][56]

OECD statistics are available in several forms:

Working papers

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

Reference works

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

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

Structure

The OECD's structure consists of three main elements:

Meetings

The main entrance to the OECD Conference Centre in Paris
The main entrance to the OECD Conference Centre in Paris

Delegates from the member countries attend committee and other meetings. Former Deputy Secretary-General Pierre Vinde [sv] estimated in 1997 that the cost borne by the member countries, such as sending their officials to OECD meetings and maintaining permanent delegations, is equivalent to the cost of running the secretariat.[57] This ratio is unique among inter-governmental organisations.[citation needed] In other words, the OECD is more a persistent forum or network of officials and experts than an administration.

The OECD regularly holds minister-level meetings and forums as platforms for a discussion on a broad spectrum of thematic issues relevant to the OECD charter, member countries, and non-member countries.[58]

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Noteworthy meetings include:

Secretariat

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The exterior of the Château de la Muette and the grounds of the OECD Conference Centre
The exterior of the Château de la Muette and the grounds of the OECD Conference Centre

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

The secretariat is organised in Directorates:

Secretary-General

The head of the OECD Secretariat and chair of the OECD Council is the Secretary-General. Secretary-General selections are made by consensus, meaning all member states must agree on a candidate.[60]

Secretary-General of the OEEC
No. Secretary-General Time served Country of origin
1 Robert Marjolin 1948 – 1955 France France
2 René Sergent 1955 – 1960 France France
3 Thorkil Kristensen 1960 – 30 September 1961 Denmark Denmark
Secretary-General of the OECD[61]
No. Secretary-General Time served Country of origin Notes
1 Thorkil Kristensen 30 September 1961 – 30 September 1969 Denmark Denmark
2 Emiel van Lennep 1 October 1969 – 30 September 1984 Netherlands Netherlands
3 Jean-Claude Paye 1 October 1984 – 30 September 1994 France France
Staffan Sohlman (interim) 1 October 1994 – November 1994 Sweden Sweden [62][63]
3 Jean-Claude Paye November 1994 – 31 May 1996 France France [64]
4 Donald Johnston 1 June 1996 – 31 May 2006 Canada Canada
5 José Ángel Gurría 1 June 2006 – 31 May 2021 Mexico Mexico [65]
6 Mathias Cormann 1 June 2021 – present Australia Australia [66]

Committees

A meeting room in the Château de la Muette
A meeting room in the Château de la Muette

Representatives of member and observer countries meet in specialised committees on specific policy areas, such as economics, trade, science, employment, education, development assistance or financial markets. There are about 200 committees, working groups and expert groups. Committees discuss policies and review progress in the given policy area.[67]

Special bodies

OECD has a number of specialised bodies:[68]

Decision-making process

OECD decisions are made through voting, which requires unanimity among all of those voting. However, dissenting members which do not wish to block a decision but merely to signal their disapproval can abstain from voting.[69]

Member countries

Current members

As of May 2021 there are 38 members of the OECD.[1][2]

Country Application Negotiations Invitation Membership[1] Geographic location Notes
 Australia 7 June 1971 Oceania
 Austria 29 September 1961 Europe OEEC member.[9]
 Belgium 13 September 1961 Europe OEEC member.[9]
 Canada 10 April 1961 North America
 Chile November 2003[70][71] 16 May 2007[29] 15 December 2009[72] 7 May 2010 South America
 Colombia 24 January 2011[73] 30 May 2013[33] 25 May 2018[74] 28 April 2020 South America
 Costa Rica 9 April 2015[2] 15 May 2020[2] 25 May 2021[2] North America
 Czech Republic January 1994[75] 8 June 1994[76] 24 November 1995[75] 21 December 1995 Europe
 Denmark 30 May 1961 Europe OEEC member.[9]
 Estonia 16 May 2007[29] 10 May 2010[77] 9 December 2010 Europe
 Finland 28 January 1969 Europe
 France 7 August 1961 Europe OEEC member.[9]
 Germany 27 September 1961 Europe Joined OEEC in 1949 (West Germany).[78] Previously represented by the Trizone.[9]
 Greece 27 September 1961 Europe OEEC member.[9]
 Hungary December 1993[79] 8 June 1994[76] 7 May 1996 Europe
 Iceland 5 June 1961 Europe OEEC member.[9]
 Ireland 17 August 1961 Europe OEEC member.[9]
 Israel 15 March 2004[80] 16 May 2007[29] 10 May 2010[77] 7 September 2010 Asia
 Italy 29 March 1962 Europe OEEC member.[9]
 Japan November 1962[81] July 1963[81] 28 April 1964 Asia
 South Korea 29 March 1995[82] 25 October 1996[83] 12 December 1996 Asia Officially the Republic of Korea
 Latvia 29 May 2013[84] 11 May 2016[85] 1 July 2016[86] Europe
 Lithuania 9 April 2015[87] 31 May 2018 5 July 2018[88] Europe
 Luxembourg 7 December 1961 Europe OEEC member.[9]
 Mexico 14 April 1994[89] 18 May 1994 North America
 Netherlands 13 November 1961 Europe OEEC member.[9]
 New Zealand 29 May 1973 Oceania
 Norway 4 July 1961 Europe OEEC member.[9]
 Poland 1 February 1994[90] 8 June 1994[76] 11 July 1996[91] 22 November 1996 Europe
 Portugal 4 August 1961 Europe OEEC member.[9]
 Slovakia February 1994[92] 8 June 1994[76] July 2000[92] 14 December 2000 Europe
 Slovenia March 1996[93] 16 May 2007[29] 10 May 2010[77] 21 July 2010 Europe
 Spain 3 August 1961 Europe Joined OEEC in 1958.[94]
 Sweden 28 September 1961 Europe OEEC member.[9]
  Switzerland 28 September 1961 Europe OEEC member.[9]
 Turkey 2 August 1961 Europe OEEC member.[9]
 United Kingdom 2 May 1961 Europe OEEC member.[9]
 United States 12 April 1961 North America

The European Commission participates in the work of the OECD alongside the EU member states.[95] Dependent territories of member states are not members in their own right, but may have membership as part of their controlling state.[96] As of January 2021, the Dutch Caribbean and the British territories of Guernsey, Jersey, the Isle of Man, Gibraltar, and Bermuda are included as part of the OECD memberships of the Netherlands and the U.K., respectively.[97][98] Other dependent territories of OECD member states are not members of the OECD.

Former members

The Free Territory of Trieste (Zone A) was a member of the OEEC until 1954, when it ceased to exist as an independent territorial entity.[9]

Countries whose accession talks were terminated

In May 2007, the OECD decided to open accession negotiations with Russia.[29] In March 2014, the OECD halted membership talks in response to Russia's role in that year's Crimean Annexation and continuous human and civil rights abuses.[31][32] On 25 February 2022, the OECD terminated the accession process with Russia after it invaded Ukraine.[99]

Countries whose membership is under negotiation

Applicants

Budget

As of 2019, the OECD’s budget is composed of Part I and Part II programmes of work. All member countries contribute funding to the Part I budget, representing around two-thirds of OECD Part I expenditure. The contributions (see table below) are based on both a proportion that is shared equally among member countries and a scale that is proportional to the relative size of their economies. The Part I budget for 2019 is EUR 202.5 million. The part II budgets, meanwhile, cover programmes that are of interest to a limited number of members and are funded according to scales of contributions or other agreements among the participating countries. The consolidated Part II budgets for 2019 amount to EUR 105 million.[103]

The overall consolidated OECD budget for 2019 comes to EUR 386 million.[104]

Member countries' percentage shares of Part I budget contributions for 2019
Country % Contribution
 Australia 3,1
 Austria 1,5
 Belgium 1,7
 Canada 3,5
 Chile 1,2
 Czech Republic 1,1
 Denmark 1,4
 Estonia 0,9
 Finland 1,3
 France 5,2
 Germany 7,2
 Greece 1,1
 Hungary 1,0
 Iceland 0,6
 Ireland 1,3
 Israel 1,4
 Italy 4,0
 Japan 9,4
 South Korea 3,3
 Latvia 0,9
 Lithuania 0,9
 Luxembourg 0,8
 Mexico 2,7
 Netherlands 2,2
 New Zealand 1,1
 Norway 1,6
 Poland 1,6
 Portugal 1,2
 Slovakia 1,0
 Slovenia 0,9
 Spain 3,0
 Sweden 1,6
  Switzerland 2,2
 Turkey 2,2
 United Kingdom 5,4
 United States 20,5
TOTAL 100%

See also

Notes

  1. ^ "OECD Archives - OECD". OECD.
  2. ^ Highly Commended certificate in the annual ALPSP/Charlesworth awards from the Association of Learned and Professional Society Publishers 2002; see article [1].

References

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  2. ^ a b c d e f "OECD welcomes Costa Rica as its 38th Member" (Press release). OECD. 25 May 2021. Retrieved 25 May 2021.
  3. ^ a b "Member Countries' Budget Contributions for 2017". OECD. Retrieved 5 July 2018.
  4. ^ Shields, Bevan (13 January 2021). "Mathias Cormann confirmed as a frontrunner for OECD post following candidate cull". The Sydney Morning Herald. Retrieved 11 September 2022. OECD's 38 member countries.
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  6. ^ 3%2C724%2C939%2C576%2C644%2C936%2C819%2C961%2C172%2C813%2C132%2C726%2C646%2C199%2C648%2C733%2C915%2C184%2C134%2C524%2C652%2C361%2C174%2C362%2C328%2C364%2C258%2C732%2C656%2C366%2C654%2C734%2C336%2C144%2C263%2C146%2C268%2C463%2C532%2C528%2C944%2C923%2C176%2C738%2C534%2C578%2C536%2C537%2C429%2C742%2C433%2C866%2C178%2C369%2C436%2C744%2C136%2C186%2C343%2C925%2C158%2C869%2C439%2C746%2C916%2C926%2C664%2C466%2C826%2C112%2C542%2C111%2C967%2C298%2C443%2C927%2C917%2C846%2C544%2C299%2C941%2C582%2C446%2C474%2C666%2C754%2C668%2C698%2C672&s=NGDPD&grp=0&a=&pr.x=45&pr.y=14 "World Economic Outlook Database". International Monetary Fund. 17 April 2018. ((cite web)): Check |url= value (help)
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  37. ^ "OECD countries invite Costa Rica to join as 38th member" (Press release). OECD. 15 May 2020. Retrieved 16 May 2020.
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  42. ^ Ayres, Marcela; Paraguassu, Lisandra (25 January 2022). "UPDATE 2-OECD begins membership talks with Brazil, Argentina, Peru and more". reuters.com.
  43. ^ OECD suspends Russia, Belarus from any participation.
  44. ^ [Bulgaria, Croatia, Romania on track to join OECD].
  45. ^ Paul Hannon and Kate Davidson, "U.S. Wins International Backing for Global Minimum Tax." Wall Street Journal July 1, 2021
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