What is the OECD?

MANY articles in The Economist cite reports or statistics from the Organisation for Economic Co-operation and Development or OECD. Often we add the description, “a club of rich countries” (something it isn’t that happy about). What is this club, and what does it actually do?

The OECD was founded in 1961 but grew out of the Organisation for European Economic Cooperation which was set up in 1948 to operate the Marshall plan, the American aid programme for war-ravaged Europe. The OECD included non-European countries; the idea behind its formation was to encourage economic interdependence among member nations with the help of evidence-based analysis. Its members fund its work.

Countries have to apply to join and must meet minimum legal and other standards; they benefit from the group’s research and from the prestige of being an OECD member. There are now 35 members, with Latvia the latest to sign up, in 2016. The OECD has produced standards on bribery, consumer protection and the responsible sourcing of minerals, among many others. (These are purely voluntary.)

The club of mostly rich countries is probably best known for three things. The first is its regular economic reports, both on the global outlook and on individual countries; its policy criticisms can generate headlines. The second is its work on tax avoidance or BEPS (Base Erosion and Profit Shifting), aimed at allowing countries to co-ordinate their policies. The third is its analysis of education standards or PISA (Programme for International Student Assessment), which causes nations to fret when they drop down the rankings. Perhaps a more fitting, if more prosaic, description would be “a research and standards body”.

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