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The OECD: more than just a think tank

Misleading portrayals of the OECD understate the importance of this leading international organisation

Richard Woodward, Senior Lecturer, Coventry Business School

Richard WoodwardCompared with the attention lavished on annual meetings of the IMF, World Bank and WTO, those of the Organisation of Economic Cooperation and Development (OECD) normally pass with minimal comment.  Commencing on 5th May, ‘OECD week 2014’ bucked this trend by placing this inconspicuous global institution under the media spotlight.

‘OECD week’ incorporated two of the organisation’s most important yearly gatherings. To begin with, the OECD Forum brought together 1500 representatives from various sectors of civil society to discuss challenges related to the organisation’s work on inclusive growth.  Later, these discussions informed the Ministerial Council Meeting where government representatives, in addition to endorsing commitments on tax transparency and climate change, specified strengthening the multilateral trading system, promoting a better business climate and reinforcing the OECD’s global reach as key priorities. Treatment of these issues was augmented by coverage of the latest iteration of the OECD’s Better Life Index and, in the UK especially, the biannual Economic Outlook which exhorted the Bank of England to implement policies to tame soaring house prices.

That the organisation is in the headlines at all suggests that reforms, including the introduction of OECD week, spearheaded by Secretary-General Angel Gurria, are having the desired effect of raising the OECD’s profile and making it more relevant to members.  Nevertheless, the portrayals of the OECD by journalists, academics and the wider public suggest the organisation remains misunderstood.

For example in their examinations of the Economic Outlook virtually all UK media outlets, including the Guardian, Daily Telegraph and SKY, chose to describe the OECD as a ‘think tank’ (the Independent was one notable exception).  As an organisation whose research  produces knowledge and ideas about the world, advocates related policy positions and generally revels in what the Economist once described as its ‘unashamed nerdishness’, the OECD does of course share some features of a think tank, but only some.

The truth is that this description, and other soubriquets often associated with the OECD such as ‘rich countries club’, are at best incomplete and at worse downright distortions.

In order to comprehend the OECD commentators need to start by acknowledging that it is an international organisation.  Being an international organisation confers the institution with the capacity to undertake activities and achieve influence far beyond even the most well-resourced and politically connected think tanks.

The OECD’s patrons are its 34 member states.  A €357 million annual budget and 2500 strong staff enable the organisation to audit almost every facet of economic policy making.  Does any think tank match the OECD’s simultaneous investigation of multiple areas of policy, including health, education, the environment, taxation, labour, social affairs, science, development, and public and corporate governance?

Whereas the ideas of most think tanks only achieve intermittent influence, those of the OECD are an almost continuous factor in national policy making. Through a 280 strong network of committees populated by officials from national capitals and from the OECD Secretariat, the OECD distils the collective experiences and wisdom of its member (and increasingly non-member) states. The consensual knowledge produced by OECD committees has a particular resonance because of its seemingly objective quality, which derives from the expertise of those involved and the member states’ inclusion in the process. The similarity of OECD countries also tends to mean that what works in one member may well work in another.

Unlike a mere think tank, as an international organisation the OECD also possesses the competence to transform this consensual knowledge into international law.  All but 32 of the 266 OECD legal instruments in force as of March 2014 have taken the form of ‘soft law’ (recommendations, benchmarks and standards), but there is growing empirical evidence that they exert considerable influence over the policies of member states.

The OECD also compels its members to undergo surveillance practices that reveal the extent to which they uphold the organisation’s rules. The OECD has no financial or other sanctions to punish the laggards and the material repercussions of disobedience are limited. But states do generally implement OECD instruments in order to protect their reputation amongst the community of nations of which the organisation is incarnate.

Finally, as an international organisation, the OECD plays a vital role in supporting the work of other global institutions. The OECD often compensates for the lack of analytical muscle in other global institutions especially those, such as the G7/8/20, without dedicated permanent secretariats. For example, between 2009 and 2013, the communiqués of G20 Summit and Ministerial meetings made more than 200 references to the OECD, endorsing or urging it to commence or intensify its work on 142 occasions.

In conjunction with acting as a pre-negotiating forum for agreements that later emerge in other international institutions and a venue where states can quietly resolve their differences away from the glare of publicity, the OECD is thus a lubricant that ensures the wider engine of global economic governance runs smoothly.

Depicting the OECD as a think tank may be a convenient shorthand for those seeking to describe an otherwise amorphous and enigmatic institution. However, it is time this deceptive moniker was shelved in favour of an explicit acknowledgment that the OECD is actually an international organisation.  Only by recognising this can we understand how and why this unassuming organisation exerts its subtle discipline over global policy making.

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