What is the OECD (Organization for Economic Cooperation and Development)?
The OECD, or Organization for Economic Cooperation and Development, is an international organisation that promotes policy coordination and economic freedom among developed nations. The OECD was derived from the Organization for European Economic Cooperation (OEEC), established in 1948 to monitor American and Canadian contributions under the Marshall Plan.
Headquartered in Paris, France, the OECD was formed in 1961 and included members from democratic states such as the United States, countries in Western Europe, Japan, Canada, Australia, and New Zealand. The organisation expanded in the 1990s to include Mexico, South Korea, and Eastern European nations. In recent years, India, Brazil, China, and Indonesia also made contributions to the work agenda of the OECD.
The OECD’s Mission
The mission of the OECD is to promote policies that will improve the economic and social welfare of people in developed nations.
The OECD’s Objectives
The main purpose of the OECD is to improve the global economy and promote world trade. It provides an outlet for the governments of different countries to work together to find solutions to common problems. It includes working with democratic nations that share a commitment to improving the economy and well-being of the general population.
- The OECD’s primary focus is to help governments around the world achieve the following:
- Improve confidence in markets and the institutions that help them function.
- Obtain healthy public finances to achieve future sustainable economic growth.
- Achieve growth through innovation, environmentally friendly strategies, and the sustainability of developing economies.
- Provide resources for people to develop the skills they need to be productive.
The OECD’s Organizational Structure
The organisation is structured in three tiers: the Council, the Secretariat, and the Committees.
- The Council
The Council consists of ambassadors from the member nations. They exercise authority over decision-making and establishing goals for the organisation. They are in charge of the strategic direction of the OECD.
- The Secretariat
The second tier is the Secretary-General, the deputy, and the directorates. The current OECD Secretary-General is Jose Angel Gurria, a Mexican economist and diplomat. The Secretariat lists 2,500 members and includes economists, scientists, and lawyers who are in charge of collecting data and research and analysis. The council and the Secretary-General oversee the work of the Secretariat.
- The Committees
The third tier is the committees, which include representatives from different member nations that meet to discuss the environment, education, trade, and investment.
The OECD’s Functions
The OECD uses information on various topics to fight poverty, help governments prosper and prevent financial instability. The organisation monitors the economies of member and non-member nations, and the Secretariat collects and analyses information on different aspects of society.
The committee discusses relevant policies to be implemented using the information, and the council makes the final decisions. The governments of the different states execute the recommended strategies.
- Peer Reviews
There are processes where the other members of the OECD supervise individual member countries’ performance. This is a core function of the organisation and helps them create more effective policies. It can also help governments gain support for implementing complex policies in their home country. An example of a peer review is when the UK was told to keep foreign aid at a commendable 0.7% level. It was done to ensure that the extra money was spent in the most efficient way possible.
- Standards and Recommendations
At the committee level, member countries of the OECD discuss general policies and rules for international cooperation. There are formal agreements on exports, imports, investments, and combating bribery. They also set the standards that all countries need to follow regarding the tax system and treaties and provide recommendations on environmental practices and corporate regulations.
The OECD publishes articles on economic outlooks, statistics, and a general overview.
OECD Economic Outlook – Provides a forecast for member and non-member nations
OECD Factbook – Serves as a guide-book for economies that are implementing new policies
Going for Growth – A comparison of countries, based on national performance
The peer review, standards, agreements, and publications help the OECD achieve economic growth for nations while also providing a base for implementing future policies.
The OECD’s overall goal is to promote economic development in member countries, and they plan to continue and improve on their mission. While they’ve faced competition from forums such as the G20 Summit and the Financial Stability Forum, they remain a powerful driver in increasing economic efficiency and improving living standards worldwide.