What is the OECD? Purpose, Members, and Global Impact

What Is the Organisation for Economic Co-operation and Development (OECD)?

The Organisation for Economic Co-operation and Development (OECD) is an influential internation organization of 37 member countries that discuss and develop economic and social policy. OECD members are typically democratic countries that support free-market economies. The organization was established in 1960.

Its key objectives are fostering prosperity and promoting economic stability. The OECD has a global reach and impact and issues publications and economic reports.

How the OECD Shapes Global Economic Policy

The OECD is variously referred to as a think tank or a monitoring group. The goal is to create policies that enhance prosperity, equality, opportunity, and well-being for everyone. The OECD addresses issues like improving living standards, expanding world trade, and promoting economic stability.

The OECD was established on Dec. 14, 1960, by 18 European nations, plus the United States and Canada. Over time, it has grown to include members from South America and the Asia-Pacific. It includes most of the world's highly developed economies.

In 1948, in the aftermath of World War II, the Organisation for European Economic Co-operation (OEEC) was established to administer the predominantly U.S.-funded Marshall Plan for post-war reconstruction on the continent. The group stressed the need for collaboration in economic development to avoid more European conflicts. The OEEC was instrumental in helping the European Economic Community (EEC), which has since evolved into the European Union (EU), to establish a European Free Trade Area.

In 1961, the OECD articles from the December 1960 convention went into effect, and the United States and Canada joined the European members of the OEEC, which changed its name to OECD to reflect the broader membership. The organization is headquartered in the Chateau de la Muette in Paris, France.

The OECD releases global reports, databases, analyses, and forecasts on economic growth. Reports are variously global, regional, or national in orientation. The OECD studies how social policies like gender discrimination affect growth and suggests policies that consider environmental issues. It also aims to eradicate bribery and other financial crimes globally.

The OECD keeps a "blacklist" of non-cooperative tax havens, but since 2009, all listed nations have agreed to improve transparency. The OECD is leading an effort with the Group of 20 (G20) nations to encourage tax reform worldwide and eliminate tax avoidance by profitable corporations. The recommendations presented for the project included an estimate that such avoidance costs the world's economies between $100 billion and $240 billion in tax revenue annually. The group also provides consulting assistance and support to nations in central Asia and eastern Europe that implement market-based economic reforms.

The Bottom Line

The OECD serves as a platform for 37 member countries to discuss and develop economic and social policies that have global significance. It's dedicated to shaping policies that enhance prosperity, equality, and well-being worldwide, producing reports and analyses on economic growth and tackling issues like financial crime, gender discrimination, and tax reform.

The organization collaborates with the Group of 20 (G20) to combat tax avoidance and promote transparency, which has had significant impacts on global financial stability.