The OECD: A Decade of Transformation
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The OECD: A Decade of Transformation

2011–2021

Peter Carroll, Aynsley Kellow

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eBook - ePub

The OECD: A Decade of Transformation

2011–2021

Peter Carroll, Aynsley Kellow

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About This Book

In the last decade, the OECD has undergone a period of transformation under the leadership of Secretary-General Angel Gurría and his senior management – a transformation that has revitalised the organisation's operations and outputs. Now celebrating its 60th anniversary, the OECD provides an increasingly valuable resource for its members and partners worldwide. This, the only book to cover the last ten years of the OECD's work, focuses on the policy-related advice, evidence-based global standards, trusted statistics and analysis, and support for policy reform that it has developed.

The book commences with a brief history of the OECD and its key decision processes and then examines the impact of its leadership in driving a wide range of achievements and in securing an expanding, increasingly global role. It focuses on the organisation's green agenda and the move to measure living conditions in a more detailed fashion, rather than relying largely on GDP, and on the inclusive growth project that aims at making markets work for all. It discusses the OECD's remarkably influential work in education, including PISA and PIAAC, and demonstrates the capacity of the OECD to embrace new areas of work – the importance of innovation and the digital economy in driving economic growth.

Based on access to a wide range of documents and extensive interviews with senior officials and members, this comprehensive book also sheds light on the OECD's partnership with the G20 in the push for stronger international co-operation and transparency in tax matters as well their Inclusive Framework on Base Erosion and Profit shifting (BEPS), aimed at tackling tax avoidance. The OECD's strategic response to the COVID-19 pandemic and the drive to develop 'Smart Data' are also covered.

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Information

Publisher
De Gruyter
Year
2021
ISBN
9783110735888
Edition
1

1Introduction

The Organisation for Economic Co-operation and Development (OECD) occupies a unique place in the global architecture of international economic governance. Its origins lie in the Marshall Plan, an American initiative to help rebuild European economies after the end of the Second World War in the face of a growing Soviet threat. A new organisation, the Organisation for European Economic Co-operation (OEEC), was established in 1948 to administer the Marshall Plan. The OEEC also helped to build a co-operative spirit among Western European economies as they searched for policy solutions to the challenges they faced.
The OECD was formed from the OEEC through its Members’ desire to carry forward its work on a wider stage. A founding convention for the OECD was negotiated and concluded in Paris on 14 December 1960 among the existing 18 OEEC members plus the US and Canada, the latter two becoming full Members of the new organisation. The OECD came formally into being on 30 September 1961, and its Members all had, and still have, a commitment to the core goal of developing policies and agreements that foster sustainable economic growth. The goal of this growth is to improve the lives of OECD Members’ citizens, and the citizens of non-member countries, with a commitment to liberal democratic norms. As a result, there is considerable ‘like-mindedness’ among Members, as well as considerable sharing of policy learning. This often leads to policy transfer, achieved through such processes as subjecting Members’ policies to the discipline of ‘peer review’ by other Members, as well as policy research by the Secretariat, with a strong emphasis on developing evidence-based, comparative policy options.
This core, policy-focused goal has not changed in the 60 years of the OECD’s existence, for two basic reasons. The first is that the overall goal and associated aims in its founding Convention are sufficiently broad to permit OECD Members to undertake almost any activity they wish in relation to economic growth, trade and stability. This, in turn, provides Members with a relatively high degree of flexibility when faced with changing conditions, such as those so dramatically posed by the global financial crisis, COVID-19, and the recent rise in multilateral tensions. The second reason is the relative homogeneity of Members’ fundamental political and economic values. Which is not to assert that they have no differences, for they have many, as is evident in their debates, discussions and arguments on a vast range of topics. The differences, however, are not so great as to conflict in any fundamental way with the OECD’s overall goal. The increasingly rigorous process of accession to the Organisation enables Members to exclude those whose perspectives are too different.
This inherent, organisational adaptability has been brought to the fore in the decade from 2011 to 2021, a period of widespread transformation of the OECD, examined at greater length in the following chapters. During these 10 years:
  • The membership of the OECD has increased from 34 to 37 (and soon, with Costa Rica’s membership, to 38).
  • The number of staff rose sharply, up from 2,500 to approximately 3,700, driven largely by voluntary contributions.
  • The governance of the Organisation was reformed.
  • Global relations were substantially expanded, with an emphasis on disseminating OECD standards throughout the world and, in particular, much wider access to participation in the OECD’s work by non-members.
  • The finances of the Organisation were reformed, prioritising improved efficiency.
  • Human resources policies were reformed and various management initiatives were launched.
  • A wide range of policies, initiatives, agreements and standards were either introduced or substantially modified, making the OECD the hub of an extensive, global policy network and increasing its impact and relevance.
While the number of books and articles about the OECD published in the last decade has grown rapidly, in line with its growing importance in global economic governance, most have focused on one or more periods before 2011–2021. Yet, this latter period has been one in which the OECD experienced the most rapid series of changes since its founding in 1961, amounting to a veritable transformation of the Organisation. It was also a period that saw the last two of three terms in office of Secretary-General Angel Gurría, who has occupied that position for 15 years, matched only by Emile van Lennep’s tenure from 1969 to 1984. Hence, the aim of this book is to provide a description of the life of the OECD, covering the period from 2011, the year of its 50th anniversary, to 2021, its 60th anniversary.
This is a relatively short book, so several of the changes experienced at the OECD are not covered, not because they are unimportant, but simply because of a lack of space. Similarly, most of the major changes that are covered in the book are not covered in any great depth, leaving opportunities for other scholars to provide the depth of analysis they deserve. Moreover, as the book is intended for a general audience, we have not provided what would have been a very extensive set of references to support our description and analysis. Nevertheless, most of the documents and developments noted in the text can be found on the OECD’s website.
In the many interviews conducted by the authors we apologised, in advance, to the interviewees for what we knew would be the omission of many interesting facts and opinions that they would provide, and we take this opportunity to once again apologise. Even where their views and anecdotes are not included, they provided a ‘flavour’ to this work for which we are very grateful.
The book consists of 13 chapters. Chapters 2 and 3 are intended, primarily, for those readers unfamiliar with the OECD and focus on how the Organisation is governed and its remarkable history.
Chapter 4, on leadership, is a topic that has been rather neglected in previous studies of the OECD. It concentrates on the leadership of Secretary-General Gurría, who has led the Organisation through a period of great change, marked by the impact of the global financial crisis (GFC) and COVID-19.
Chapter 5 covers the rapidly growing, and increasingly important, global work of the OECD, especially the development and implementation of a new global relations strategy, the Organisation’s enlargement and, particularly in its relations with the G7/G8 and the G20, its success in positioning itself as a hub of a global policy network.
Chapter 6, ‘Going National’, describes the increased efforts by the Organisation to provide even more relevant policy work for its Members, with a sharpened focus on tailoring policy solutions to national contexts and providing advice on their implementation.
Chapter 7 examines the ‘Green Growth’ initiative that helped fully establish the environmental credentials of the OECD, with its work on the increasingly important issues of the economics of climate change and biodiversity.
Chapter 8 illustrates how the Organisation has led the world by focusing on well-being and inclusive growth, rather than primarily on GDP, developing statistical techniques to measure them.
Chapter 9 looks at innovation and the digital economy, areas of work that have both grown and become more interconnected at the OECD over the last decade, and are likely to continue to grow in the years ahead. It is also work that has taken care to examine the social dimensions of both innovation and the digital economy, in line with the OECD’s work on inclusion.
Chapter 10 looks at the long and very successful experience of the OECD with work on taxation and tax administration, leading to its present position as the pre-eminent international agency in the field, a position that has helped enhance the OECD’s global reputation.
Chapter 11 looks at New Approaches to Economic Challenges (NAEC), Strategic Foresight and Smart Data. NAEC is a unit driving the ongoing attempt to develop new, more sophisticated understandings of socio-economic systems that could better support and, where appropriate, modify and overturn traditional assumptions and the OECD’s economic and social policy analysis and recommendations built upon them. Strategic Foresight, like NAEC, based in the Office of the Secretary-General, provides assistance in using ideas and scenarios about the future that can be used to better anticipate change and policies for dealing with that change. The Smart Data project aims to help meet policy needs with innovative data, technical, organisational, legal and human capabilities, working closely with OECD Member countries and the broader data ecosystem.
Chapter 12 examines OECD work on health, which became a central focus in the last two decades, and then on COVID-19, the subject of rapidly expanding work as regards its impact since its onset in 2020. This will expand as the world recovers from the pandemic.
Chapter 13 is a short conclusion, summarising what the authors regard as the major changes at the OECD in the last decade, a period of transformation.

2 How the Organisation Works

This chapter outlines the major organisational units and decision processes that characterise the OECD for those readers unfamiliar with the Organisation. It should be noted that, over time, modifications to these units and processes have and will continue to take place. The budgetary system, for example, was substantially modified in 1995–2003, more firmly locating it as a key component of the Organisation’s strategic management process.

The OECD Council

The OECD Council is composed of representatives of all OECD Members as well as of the European Union. It is the governing body of the Organisation and is chaired by the OECD Secretary-General. The Council consists of Permanent Representatives, meeting usually on a monthly basis, consisting mostly of senior public servants from Member countries with the rank of Ambassador, who lead their Delegations. Once a year, the Council meets at Ministerial level with Ministers drawn from all Members, a meeting known as the Ministerial Council (MCM). The MCM meets to discuss the Strategic Orientations of the Secretary-General, and to endorse a set of priorities for continuing and future OECD work. The chair of the MCM is drawn annually from one of its Members.
The Council has four major roles. The first is a continuing process whereby it assesses the political and whole of government implications of the issues placed before it by the Secretary-General, and makes a range of substantive decisions. The second is providing strategic direction for the OECD by identifying and agreeing strategic priorities to be taken into consideration in the development of the work plans and budgets prepared for its later approval. The third role of the Council is resource allocation, centred in OECD’s budgetary process. The fourth role is evaluating the Organisation’s overall performance, including the evaluation of Committees.
The Council is supported in its work by three Standing Committees, the Executive, Budget, and the External Relations Committees, which filter and transmit to the Council reports, proposals or documents with comments and suggested amendments when needed, leaving the Council free to focus on major concerns. In addition, the Council is assisted by a number of special bodies, including the following:
  • Audit Committee
  • Evaluation Committee
  • Pension Budget and Reserve Fund Management Board
The Council is also supported once a year by the organisation of the Global Strategy Group. This Group, with high-level participation from capitals, is the current format of a body whose origins go back to the 1970s. It has met since 2012 to discuss major issues and to assess their potential impact on the design and implementation of policy reforms. It also helps shape the MCM agenda and setting the Organisation’s priorities.
Since the creation of the OECD in 1961, around 480 substantive legal instruments have been developed. These include OECD Acts (i.e. the Decisions and Recommendations adopted by the OECD Council in accordance with the OECD Convention) and other legal instruments developed within the OECD framework (e.g. Declarations, international agreements). OECD Decisions are legally binding on all adherents and entail the same kind of legal obligations as international treaties. Adherents are obliged to implement Decisions and must take the necessary measures for their implementation. OECD Recommendations are not legally binding – they represent a political commitment to the principles and policy approaches they contain and entail an expectation that adherents will do their best to implement them.
Council also adopts Resolutions, which are internal decisions concerning the continuation of the work of the Organisation. These usually relate to the renewal of the mandate of a substantive Committee or to procedural, budgetary or administrative issues.
In practice it is rare for Council to reject any proposal for a Decision, Resolution, or Recommendation as proposals likely to be highly sensitive, contentious or divisive are dealt with informally or in earlier discussions as part of the consensus-building process in one of the standing or substantive Committees, with all parties mindful of the requirement for consensus.

The Secretary-General

The Secretary-General is appointed by the Council for a period of five years to assist it in all ‘appropriate ways’, and contributes to the strategic direction of the Organisation and ensures its institutional coherence. The Secretary-General has the right to submit proposals to Council and any other body of the Organisation. The position is responsible for implementing Council decisions, including the Programme of Work and Budget (PWB), and for appointing staff, though subject to Council approval of organisational plans and staff regulations. Article 11(2) of the OECD’s Convention makes it clear that the Secretariat, the OECD’s staff, are to be independent, by specifying that staff:
… shall neither seek nor receive instructions from any of the Members or from any Government or authority external to the Organisation
They are independent of the individual Members and external authorities, but they report to the Secretary-General who, in turn, is responsible to the Council. Most OECD publications are also released under the Secretary-General’s authority (with the exception of the Economic and Development Review Committee -EDRC – Country Surveys), providing for greater independence in analysis and recommendations while still ensuring Members’ review via the Committees.
During the period covered by this book, the Secretary-General was Angel Gurría, first appointed in June 2006 and who completed his third five-year term in office in May 2021. In his 15 years as Secretary-General, he has provided strong, continuing leadership that has established and maintained the OECD as a central actor in global economic governance, working with the G20, G7, IMF, WTO, World Bank, ASEAN, the EU and the Asia-Pacific Economic Cooperation (APEC).
The Cabinet of the Secretary-General consists of the senior management team of currently three Deputy Secretaries-General, each with a range of specific responsibilities, plus a Chief of Staff, currently Mr Juan Yermo, who leads the Office of the Secretary-General. The team is supported by the Deputy Chief of Staff and a varying number of specialist advisors, together with the Heads of the Strategic Foresight Unit, the New Approaches to Economic Challenges (NAEC) Unit, the Speech Writing and Intelligence Unit, the Global Governance and Sherpa Unit, and a Protocol and Resource Management Unit.
Also at the centre of the Organisation are the General Secretariat, the Executive Secretariat and the Public Affairs and Communications Directorate. The General Secretariat consists of the Council and Executive Committee Secretariat, the Directorate for Legal Affairs, the Global Relations Secretariat and Internal Audit. The Council and Executive Committee Secretariat supports the Secretary-General in maintaining strong relations with Member countries and their Delegations in the Council, ensuring the implementation of mandates related to the Organ...

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