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

The organization is headquartered in the Chateau de la Muette in Paris, France. The Organisation for Economic Co-operation and Development (OECD) is a group of 37 member countries that discuss and develop economic and social policy.

OECD members are typically democratic countries that support free-market economies. The stated goal of the OECD is to shape policies that foster prosperity, equality, opportunity and well-being for all

Understanding the Organisation for Economic Co-operation and Development (OECD)

The OECD is variously referred to as a think tank or a monitoring group. Its stated goal is to shape policies that foster prosperity, equality, opportunity and well-being for all. Over the years, it has dealt with a range of issues, including raising the standard of living in member countries, contributing to the expansion of world trade, and promoting economic stability.

The OECD was established on Dec. 14, 1960, by 18 European nations, plus the United States and Canada. It has expanded over time to include members from South America and the Asia-Pacific region. 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 emphasized the importance of working together for economic development, with the goal of avoiding any more decades of European warfare. 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’s 38 members are: Austria, Australia, Belgium, Canada, Chile, Colombia, Costa Rica, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom and the United States.

The OECD publishes economic reports, statistical databases, analyses, and forecasts on the outlook for economic growth worldwide. Reports are variously global, regional, or national in orientation. The group analyzes and reports on the impact of social policy issues–such as gender discrimination on economic growth and makes policy recommendations designed to foster growth with sensitivity to environmental issues. The organization also seeks to eliminate bribery and other financial crime worldwide.

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.

Why does Indonesia want to become an OECD member?

Indonesia aims to achieve “developed country” status by the 100th anniversary of its independence in 2045. Joining the OECD and implementing institutional reforms to meet the group’s high regulatory standards is a way to achieve this goal.

“The standards from OECD will become benchmarks and best practices at the same time as peer support for the development in Indonesia,” Indonesia’s Coordinating Minister of Economic Affairs Airlangga Hartarto said last August after Indonesia formally expressed its intention to join the group the previous month.

Additionally, Indonesia is looking into improving its reputation and domestic economic stability to attract foreign direct investment. “OECD membership will facilitate the trade and partnership agreement for boosting the export of national products,” the finance ministry said.

Defense Minister Prabowo Subianto, the probable winner of last week’s presidential election, will likely pursue the goals, as he has said he would continue the current administration’s key policies.

Observers say the move will also help raise Indonesia’s profile. “Hopefully, this can be seen as a good sign for other countries that Indonesia is committed to maintaining individual liberty, market-oriented democracy, the rule of law and the protection of human rights as shared-value among the OECD members,” said Dandy Rafitrandi, a researcher at the Jakarta-based Center for Strategic and International Studies (CSIS), in comments to Nikkei Asia.

Why does the OECD welcome Indonesia’s application?

Since its founding in 1961, the OECD has expanded its member states, but the current 38 members are mostly from the West, with only Japan and South Korea representing Asia. As such, the organization tasked with shaping economic policies is now facing a challenge in maintaining its influence as non-member countries, such as China, India, and Brazil, have rapidly strengthened their global footprint. Having a populous emerging country with a growing international presence would help the OECD’s relevance globally.

“Indonesia’s application is the first from Southeast Asia, one of the most dynamic growth regions of the world,” said OECD Secretary-General Mathias Cormann in a statement on Tuesday. “Importantly, Indonesia engaging in this process with the OECD as an accession country will also help to further strengthen our Organisation’s global relevance and impact,” he added.

How does the application process work, and what are the criteria for becoming a member?

OECD has a set of criteria that countries must meet if they want to join.

According to OECD’s announcement on Tuesday, the review process will include “a rigorous and in-depth evaluation” by more than 20 technical committees of Indonesia’s alignment with OECD standards, policies and best practices. The reviews will focus on priority issues, including open trade and investment, progress on public governance, integrity and anti-corruption efforts, and the effective protection of the environment and action to tackle climate change.

“There is no deadline for completion of the accession processes,” the announcement said, adding that the outcome and timeline depend on Indonesia’s capacity to adapt and adjust to align with the OECD’s standards and best practices.

Indonesian Finance Minister Sri Mulyani said that Indonesia has already collaborated with the OECD on economic surveys and assessments of the policies on state-owned enterprises, taxation, capital movement, public procurement, anti-corruption and the environment. “So Indonesia won’t start from zero for the membership process,

What do OECD members say about Indonesia’s application?

The reactions from OECD members over Indonesia’s application are generally positive. In a summit meeting with President Joko Widodo in November, U.S. President Joe Biden expressed his support for Indonesia initiating the accession process. The U.S. “looks forward to working with all OECD members to ensure Indonesia is successful in fulfilling all its commitments in the OECD accession roadmap, including all necessary economic, trade, labor, and employment reforms,” they said in a joint statement.

Most recently, the U.K. expressed its support for the deal. In a letter to Prabowo, Prime Minister Sunak Rishi wrote, “I am committed to deepening the UK-Indonesia trading relationship and have supported Indonesia’s application to join the OECD.”

However, Israel showed objection to Indonesia’s bid. The majority of the Indonesian population is Muslim, and the country lacks diplomatic relations with Israel. Since the latest outbreak of violence between Israel and Hamas, Jakarta has been criticizing Jerusalem over its military offensive in Gaza.

How would Indonesia’s membership impact the international community?

One observer says Indonesia’s participation has the potential to change the global geopolitical landscape.

“The bid is signaling Indonesia’s strong message by distancing itself from BRICS and joining the Western-centric group,” said Junichi Takase, a professor at Nagoya University of Foreign Studies, referring to a loose grouping of Brazil, Russia, India, China and South Africa. “This is also a move for Indonesia to take pride in aiming to become a developed country … rather than being biased toward the Global South countries, which counter developed countries,” Takase told Nikkei Asia.

Takase also pointed out that Indonesia’s accession to the OECD could motivate other ASEAN countries, such as Malaysia and Thailand, to become members of the group.

posted by gandatmadi46@yahoo.com

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