Organisation for Economic Co-operation and Development

The OECD (Organisation for Economic Co-operation and Development) is an inter- governmental organisation made up of primarily industrialised market economy countries. It was established in 1962 as a successor to the institutions involved in the Marshall Plan. Some 200 Committees and working groups backed up by a secretariat based in Paris do the main work of the OECD. They bring together government officials and occasionally Ministers from the member countries. In addition to being a research and statistics body for its members, its main function is to act as co-ordinating body for policy formulation between its members. Although focused on economic issues, the OECD covers most areas of government policy with the exception of defence. The OECD Committees therefore span most government ministries. Informally, it helps to create and define an "ideological" centre of gravity for economic and social policy for the industrialised world.

There are relatively few formal powers of the OECD but the process of peer group pressure on members gives a fair amount of leverage. In a few areas the OECD does go beyond the indirect role of policy co-ordination and has negotiated formal legally-binding agreements – the majority of these are in the area of financial markets, capital flows and in the area of the environment. The OECD recently concluded a legally-binding treaty on outlawing the bribery of foreign officials in business transactions.

The membership of the OECD was traditionally made up of countries of broadly similar economic and social systems – "industrialised market economies" and until 1989 was a form of economic NATO. However, since the early 1990s the membership has expanded to thirty – taking in Mexico and Korea and also the four "Visograd" countries in Central and Eastern Europe (Czech Republic, Slovakia, Hungary and Poland). An outreach programme has also established a range of meetings with non-members and a number are signatories of different OECD agreements or are observers on OECD Committees. The OECD also acts as a co-ordinator of overseas development assistance programmes from the side of the donor countries through the Development Assistance Committee (DAC). In addition, the OECD has advisory groups for business (BIAC) and trade unions (TUAC – www.tuac.org) and is developing consultation processes with Non-Governmental Organisations.

Of all the key institutions of economic global governance, the OECD has largely escaped the type of intense criticism and protests experienced by the World Trade Organisation, the International Monetary Fund, the World Bank and the G8. However, in the late 1990s, the OECD initiative to liberalise and deregulate global investment practice through the Multilateral Agreement on Investment (MAI) met with an enormous campaign of grassroots protest. The opposition arose largely because it was felt that widening investors' rights would have undermined important aspects of national sovereignty and governments' rights to regulate their economies.

The protest played a large part in launching the contemporary movement for global change while the resultant ditching of the MAI in 1998 contributed to the OECD adopting revised rules on multinationals in 2000 in the form of the OECD Guidelines on Multinational Enterprises.

John Evans, General Secretary of the Trade Union Advisory Committee of the OECD Adam Lent, Editor, Fabian Global Forum

Placed on Fabian Global Forum, May 2002