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 whose member countries 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.
In April 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 the 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 Secretaries-General[12] were the Frenchmen Robert Marjolin (1948–1955) and René Sergent (1955–1960). On 14 December 1960,[13] the OEEC was reformed into the Organisation for Economic Co-operation and Development, which came into force in late September 1961, and the membership was extended to non-European states, the first of which were the United States and Canada.[14][15]
The OECD's headquarters are at the Château de la Muette in Paris, France.[16] The OECD is funded by contributions from Member countries at varying rates and had a total budget of €338.3 million in 2023,[3] and is recognised as a highly influential publisher of mostly economic data through publications as well as annual evaluations and rankings of Member countries.[17]
The Organisation began its operations on 16 April 1948, originating 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. Succeeding the Marshall Plan, the OEEC became focused on economic issues.[9]
By the end of the 1950s, with the job of rebuilding Europe effectively complete, some leading countries felt that the OEEC had outlived its purpose but could be adapted to fulfil a more global mission, which proved to be a cumbersome task. Following several (occasionally unruly) meetings at the Hotel Majestic in Paris, which began in January 1960, a resolution was reached to create a body that would not only solve European and Atlantic economic issues, but also devise policies that could assist less developed countries. This reconstituted organisation would bring the US and Canada, who were already OEEC observers, on board as full members, and the OEEC would set to work straight away on convincing Japan to join the organisation.[20]
Founding
Following the 1957 Rome Treaties to launch the European Economic Community, the Convention on the Organisation for Economic Co-operation and Development was brought together to recreate the OEEC. The Convention was signed in December 1960, and the OECD officially superseded the OEEC in September 1961, consisting of the European founder countries of the OEEC, with the additions of 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 the following:
The aims of the OECD are stated in Article 1 of the Convention[22] as:
to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability
to contribute to sound economic expansion in Member as well as non-member countries
to contribute to the expansion of world trade
Unlike the Organisations of the United Nations system, OECD uses the spelling "Organisation" with an "s" in its name rather than "organization", together with a hyphenated "Co-operation".
Enlargement to Eastern Europe
Following the Revolutions of 1989, the OECD began assisting countries in Central and Eastern 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,[23] including a membership option for these countries.[23] As a result of this, Poland,[24]Hungary, the Czech Republic and Slovakia, as well as South Korea[25] and Mexico, became members of the OECD between 1996 and 2000.
Reform and further enlargement
East Germany joined on 3 October 1990 through reunification with West Germany. In the 1990s, several 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.[26] In 1996, Estonia, Latvia, and Lithuania signed a Joint Declaration expressing willingness to become members of the OECD,[27] and Slovenia also applied for membership that same year.[28] In 2005, Malta applied to join the Organisation.[29] The EU is lobbying for the admission of all EU member states.[30]Romania reaffirmed in 2012 its intention to become a member of the Organisation through the letter addressed by Romanian Prime Minister Victor Ponta to OECD Secretary-General José Ángel Gurría.[31] In September 2012, the government of Bulgaria confirmed it would apply for membership before the OECD Secretariat.[32]
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, and on 16 May 2007, the OECD Ministerial Council decided to open accession discussions with Chile, Estonia, Israel, Russia, and Slovenia, and to strengthen cooperation with Brazil, China, India, Indonesia, and South Africa through a process of enhanced engagement.[33] Chile, Slovenia, Israel, and Estonia all became members in 2010.[34] In March 2014, the OECD halted membership talks with Russia in response to its role in the 2014 Annexation of Crimea.[35][36]
In 2013, the OECD decided to open membership talks with Colombia and Latvia. In 2015, the Organisation opened talks with Costa Rica and Lithuania.[37] Latvia became a member on 1 July 2016, and Lithuania soon followed on 5 July 2018.[38][39] Colombia signed the accession agreement on 30 May 2018 and became a member on 28 April 2020.[40] On 15 May 2020, the OECD decided to extend a formal invitation for Costa Rica to join the OECD,[41] which joined as a member on 25 May 2021.[2]
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.[48]
Objectives and issues
Taxation
The OECD sets the rules governing international taxation for multinationals through the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, a Model Tax Convention and country-by-country reporting rules.
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 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 the 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]
Pillar 1
An OECD proposal to allocate multinational profits (for taxing purposes) to countries where they do business, by a formula, including to markets which multinationals sell into without a physical presence. This is hoped to eliminate the need for Digital Services Tax implemented by several countries, including France. There are exclusions and minimum thresholds, including banking and extractive industries. The proposal involves allocating only residual profit (i.e., profits above what is established through transfer pricing, thus creating a hybrid mechanism). This is essentially no change to what is currently allowed (routine profits allocated using transfer pricing + residual profits allocated through profit split).
Pillar 2
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 (of 15%). If a country taxes a multinational at a lower rate, the multinational's HQ will receive the difference.
It is not certain when the proposals will be implemented.
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."[49]
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.[50]
Publications
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.[51]
Books
Reports on a wide range of topics for sale at the OECD's Conference Centre Bookshop
The OECD releases about 600 books and over 400 papers yearly on topics spanning public policy. The publications are updated to the OECD iLibrary. Most books are published in English and French. The OECD flagship titles include:
The OECD Economic Outlook, published twice a year. It contains forecast and analysis of the economic situation of the OECD member countries. The OECD exceptionally published the 2020 Economic Outlook on 10 June 2020 to adjust economic forecasts greatly impacted by the Coronavirus since the March Interim Economic Outlook. The June Economic Outlook assesses the economic impact of COVID-19 and provides projections for economic impact if a second outbreak were to occur.[52]
The Main Economic Indicators, published monthly. It contains a large selection of timely statistical indicators.
The OECD Factbook is published yearly and available online, as an iPhone app, and in print. The Factbook contains more than 100 economic, environmental and social indicators, each presented with a clear definition, tables, and graphs. The Factbook mainly focuses on the statistics of its member countries and sometimes other major additional countries. It is freely accessible online and delivers all the data in Excel format via StatLinks.
The OECD Communications Outlook and the OECD Internet Economy Outlook (formerly the Information Technology Outlook), which rotate every year. They contain forecasts and analysis of the communications and information technology industries in OECD member countries and non-member economies.
In 2007 the OECD published Human Capital: How what you know shapes your life, the first book in the OECD Insights series. This series uses OECD analysis and data to introduce important social and economic issues to non-specialist readers. Other books in the series cover sustainable development, international trade and international migration. The series was discontinued in 2017.[53]
All OECD books are available on the OECD iLibrary, the online bookshop or OECD Library & Archives.[51]
Magazine
OECD Observer, an award-winning magazine,[n 1] was launched in 1962.[54] 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.[55] The online and mobile[56] 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.[57] An OECD Observer Crossword was introduced in Q2 2013.[58]
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.[59][60]
OECD statistics are available in several forms:
as interactive charts on the OECD Data Portal,
as interactive databases on iLibrary together with key comparative and country tables,
as static files or dynamic database views on the OECD Statistics portal,
as StatLinks (in most OECD books, there is a URL that links to the underlying data).
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.
It published the OECD Environmental Outlook to 2030 in March 2008, which argues that tackling key environmental problems—including climate change, biodiversity loss, water scarcity, and the health impacts of pollution—is both achievable and affordable.[62]
The OECD's structure consists of three main elements:[66]
The OECD member countries, each represented by a delegation led by an ambassador. Together, they form the OECD Council. Member countries act collectively through Council (and its Standing Committees) to provide direction and guidance to the work of Organisation.
The OECD Substantive Committees, one for each work area of the OECD, plus their various subsidiary bodies. Committee members are typically subject-matter experts from member and non-member governments. The Committees oversee all the work on each theme (publications, task forces, conferences, and so on). Committee members then relay the conclusions to their capitals.
The OECD Secretariat, led by the Secretary-General (currently Mathias Cormann), provides support to Standing and Substantive Committees. It is organised into Directorates, which include about 2,500 staff.
Meetings
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.[67] 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.[68]
The yearly Ministerial Council Meeting, with the Ministers of Economy of all member countries and the candidates for enhanced engagement among the countries.
The annual OECD Forum, which brings together leaders from business, government, labour, civil society and international organisations. Held every year since June 2000, the OECD Forum takes the form of conferences and discussions, is open to public participation and is held in conjunction with the MCM.
Thematic Ministerial Meetings, held among Ministers of a given domain (i.e., all Ministers of Labour, all Ministers of Environment, etc.).
The bi-annual World Forum on Statistics, Knowledge and Policies, which does not usually take place in the OECD. This series of meetings has the ambition to measure and foster progress in societies.
OECD Eurasia Week, which includes several high-level policy dialogue discussions to share best practices and experiences in addressing common development and economic challenges in Eurasia.[69]
Secretariat
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.
Directorate for Employment, Labour, and Social Affairs
Directorate for Financial and Enterprise Affairs
Directorate for Science, Technology, and Innovation
Economics Department
Environment Directorate
Public Governance Directorate
Statistics Directorate
Trade and Agriculture Directorate
General Secretariat
Executive Directorate
Public Affairs and Communication Directorate
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.[71]
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.[78]
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.[80]
Member countries
Current members
As of May 2021[update] there are 38 members of the OECD:[1][2]
Dependent territories of member states are not members in their own right, but may have membership as part of their controlling state.[106] As of January 2021, the Dutch Caribbean and the British territories of Guernsey, Jersey, the Isle of Man, Gibraltar, and Bermudaare included as part of the OECD memberships of the Netherlands and the U.K., respectively.[107][108] Other dependent territories of OECD member states are not members of the OECD.
The European Commission participates in the work of the OECD alongside the EU member states.[109] The OECD designates Brazil, China, India, Indonesia, and South Africa as Key Partners, which participate in policy discussions in OECD bodies, and take part in regular OECD surveys.[110][111]
In May 2007, the OECD decided to open accession negotiations with Russia.[33] 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.[35][36] On 25 February 2022, the OECD terminated the accession process with Russia after it invaded Ukraine.[117]
Budget
As of 2023[update], 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 2023 is €219.6 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 2023 amount to €118.7 million.[3]
The overall combined OECD budget for 2023 comes to €338.3 million.[3]
Member countries' percentage shares of Part I budget contributions for 2023
^Highly Commended certificate in the annual ALPSP/Charlesworth awards from the Association of Learned and Professional Society Publishers 2002; see article [1].
^"OECD iLibrary (formerly: Source OECD)". Ontario Council of University Libraries. 28 November 2011. Archived from the original on 5 March 2016. Retrieved 29 January 2017. OECD iLibrary is OECD's Online Library for Books, Papers and Statistics and the gateway to OECD's analysis and data. It has replaced SourceOECD in July 2010.
