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Home / IAS Preparation / OECD UPSC

OECD UPSC Notes: History, Objectives, Structure, Members, Functions & More

Last Updated on Jun 26, 2024
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The Organisation for Economic Co-operation and Development (OECD) stands as a cornerstone of international diplomacy and economic policy. It unites 38 member countries in a concerted effort to enhance economic performance and social well-being on a global scale. The OECD was set up in 1961 and is headquartered in Paris. It serves as a crucial forum for governments to collaborate, share experiences, and devise solutions to common challenges. It promotes sustainable economic growth and improves educational standards. It also ensures tax transparency and environmental stewardship. The OECD’s multifaceted initiatives and comprehensive data analysis provide invaluable guidance and benchmarks for both developed and emerging economies.

Source: OECD

In this article on OECD UPSC, let us look into the history, objectives, organizational structure and Functions of OECD. We will also delve into the major reports released by OECD. This will be extremely beneficial in the upcoming UPSC preliminary and Mains examinations.

What is OECD?

The Organisation for Economic Co-operation and Development (OECD) is an international body. It works to promote policies aimed at improving the economic and social well-being of people around the world. Founded in 1961, its primary mission is to stimulate economic progress and world trade. The OECD provides a forum in which governments can work together. They share experiences and seek solutions to common problems, particularly in areas like economic policy, taxation, education, and environment. Headquartered in Paris, it has 38 member countries. These are primarily from Europe and North America, though some members are from Asia and Latin America.

History of OECD

The OECD's origins date back to the post-World War II period. It was initially set up as the Organisation for European Economic Co-operation (OEEC) in 1948. It aimed to help administer the Marshall Plan for the economic reconstruction of Europe. With the success of the Marshall Plan, the OEEC's role evolved, and by 1961, it was reconstituted as the OECD. The transformation marked a shift from a focus on post-war recovery to broader concerns about global economic stability and growth. Over the years, the OECD has expanded its membership and scope of work. It has incorporated diverse economic challenges and advocated for sustainable development.

Read the article on the Shanghai Cooperation Organization!

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Objectives of OECD

The objectives of the OECD encompass a broad spectrum of economic and social policies:

  • Promote Policies: Encourage economic growth, employment, and improved living standards globally.
  • Stable Financial Environment: Support financial stability and sustainable economic development.
  • Global Trade: Promote the liberalization of international trade and capital movements.
  • Innovation and Productivity: Facilitate the exchange of information on best practices in innovation and productivity.
  • Improve Global Cooperation: Foster global cooperation on issues like tax evasion, climate change, and education.
  • Member Support: Provide members with evaluations and policy recommendations.
  • Address Efficiencies: Advise on policies to improve government efficiency.

Organizational Structure of OECD

The OECD's organizational structure is designed to facilitate international cooperation and policymaking. The organization operates through various governing bodies and committees to ensure broad participation and effective decision-making.

  • Council: This is the main decision-making body. It is composed of one representative from each member country and the European Commission. It meets regularly to discuss policy issues and make decisions.
  • Committees: Around 250 specialized committees and working groups bring together experts from member countries to discuss specific economic and social issues.
  • Secretariat: The OECD Secretariat, headed by the Secretary-General, carries out the work mandated by the Council. The Secretariat is divided into directorates and departments that tackle various policy areas.

Read the article on the Asia Pacific Economic Cooperation (APEC)!

OECD Members

The OECD has 38 member countries from various regions. The members are primarily high-income economies with a high Human Development Index (HDI), but the organization also includes emerging economies. Below is a list of some key members:

  • United States
  • Canada
  • United Kingdom
  • Germany
  • France
  • Japan
  • Australia
  • South Korea
    Moreover, it has engaged with several non-member countries through various programs and partnerships. It has expanded its influence beyond its formal membership.

Focus Areas of OECD

The OECD focuses on a wide range of areas, reflecting its goal to promote better policies for better lives. These areas are crucial for ensuring comprehensive economic growth and social development.

  • Economic Policy: Formulation and evaluation of economic policies to ensure sustainable growth.
  • Education: Improving education systems through international benchmarks and policy analysis.
  • Environmental Policies: Developing strategies for sustainable development and tackling climate change.
  • Health: Enhancing public health systems and policies.
  • Science and Innovation: Promoting research, technological development, and innovation.
  • Employment: Analyzing labor markets and promoting job creation policies.
  • Corporate Affairs: Encouraging responsible business practices and fostering corporate governance.

Read the article on South-South Cooperation!

Activities and Functions of OECD

The OECD performs a range of functions and engages in various activities to fulfill its objectives. These activities are diverse and are conducted with the aim of providing constructive analysis and policy advice.

  • Research and Analysis: Conducts extensive research on economic and social issues. It provides data and policy recommendations.
  • Policy Dialogue: Provides a platform for dialogue among policymakers from member and non-member countries.
  • Peer Reviews: Conducts peer reviews to evaluate and improve policy performance in member countries.
  • Database Provision: Maintains large databases on economic indicators, social and environmental metrics.
  • Capacity Building: Offers training and capacity-building programs for government officials from member and partner countries.

OECD Reports

OECD reports are among the most influential tools the organization uses to disseminate knowledge and policy advice. These reports cover a wide range of topics and are used globally to guide policy-making.

  • Economic Outlook: Provides analysis and forecasts of the economic outlook for member and selected non-member countries.
  • Employment Outlook: Analyzes the latest trends in the labor markets.
  • Education at a Glance: Offers insights into the state of education across OECD countries.
  • Environmental Performance Reviews: Evaluates environmental policies and practices.
  • Going for Growth: Assesses the reform priorities for member countries to enhance economic performance.

Read about International organizations here.

India and OECD

India’s relationship with the Organisation for Economic Co-operation and Development (OECD) is multifaceted. It has evolved considerably over the years. While India is not a member of the OECD, it actively engages with the organization through various programs. This engagement allows India to benefit from the OECD's wealth of knowledge and experience in economic and social policy.

India collaborates with the OECD in several key areas. It leverages the organization’s expertise to inform and improve its own policy frameworks. These areas include:

Economic Policy and Taxation

India participates in the OECD's economic surveys and reviews. This allows it to benchmark its policies against international standards and best practices. The country is also part of the OECD's initiatives on tax transparency and tackling Base Erosion and Profit Shifting (BEPS). These are aimed at curbing tax evasion and ensuring fair taxation.

Education

India has shown interest in the OECD’s Programme for International Student Assessment (PISA). After a hiatus, India re-joined PISA to assess the competencies of 15-year-olds. This provides valuable insights into the country’s educational outcomes and areas needing intervention.

Environment and Climate Change

India engages with the OECD on environmental performance reviews and policy recommendations. These are aimed at promoting sustainable development and addressing climate change.

Health

Through collaboration with OECD health committees, India gains insights into improving its healthcare system. It focuses on areas such as public health, health statistics, and policy reforms.

Trade and Investment

The OECD's comprehensive databases and analytical reports on trade and investment flows are instrumental for Indian policymakers. These resources help frame policies that attract foreign investment and boost trade.

Innovation and Digital Economy

India takes part in OECD discussions on the digital economy and innovation policies. These are crucial as the nation continues to strengthen its digital infrastructure and innovation ecosystems.

Read the article on the South Asian Association for Regional Cooperation!

About OECD's PISA

The Programme for International Student Assessment (PISA) is one of the most significant contributions of the OECD to the field of education. Conducted every three years, PISA assesses the learning outcomes of 15-year-olds in reading, mathematics, and science across member and partner countries.

  • Objective: Evaluate and compare the performance of education systems worldwide.
  • Assessment: Focuses on students' ability to apply knowledge to real-life situations.
  • Impact: Provides benchmarks for countries to improve their school systems and educational outcomes.
  • Global Participation: Includes countries from diverse geographical regions, providing a global view on educational performance.

Key Takeaways for UPSC Aspirants

  1. Foundation and Purpose: The OECD was set up in 1961 to promote economic growth, stability, and improved well-being through international collaboration and policy coordination.
  2. Membership: The OECD comprises 38 member countries. These are mostly high-income economies from Europe, North America, Asia-Pacific, and Latin America.
  3. Headquarters: The organization's headquarters is located in Paris, France.
  4. Functions: The OECD provides a platform for governments to collaborate on common policy issues. It offers data-driven analysis, research, and recommendations on a wide range of economic and social topics.
  5. Key Areas of Work: Major areas of focus include economic policy, education, health, taxation, environment, and social issues. It aims to foster sustainable development and inclusive growth.
  6. Global Impact: Although primarily consisting of developed nations, the OECD engages in dialogue and partnerships with many non-member countries, including emerging economies like India, to promote global economic stability and development.
  7. Funding: The organization is funded by its member countries. Contributions are calculated based on the relative economic size and income levels of each member.
  8. Reports and Data: The OECD is renowned for its comprehensive data and reports, such as the OECD Economic Outlook, PISA educational assessments, and various policy studies. These serve as benchmarks for global policy-making and economic analysis.

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OECD UPSC FAQs

The OECD stands for the Organization for Economic Cooperation and Development.

The Organisation for Economic Co-operation and Development (OECD) is an international organization founded in 1961. It promotes policies that improve the economic and social well-being of people around the world.

The OECD has 38 member countries. This countries Australia, Austria, Belgium, Canada, Chile, Colombia, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, South Korea, Latvia, Lithuania, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, United Kingdom, and the United States.

No, India is not a member of the OECD.

The OECD is funded by contributions from its member countries. Each member's contribution is determined based on its economic size and income levels.
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