Asia in the OECD

The OECD seeks to be a major player on global issues, but the Asian sources of global dynamism are insufficiently present at the OECD.  If the OECD is to be central to the newly emerging forms of global governance, such as the G20, it had better expand its influence among the emerging world’s key economies, particularly in Asia.  

At the same time, in the wake of the global financial crisis, the G20 group has assumed the role of the steering committee for the global economy.  But several members of the G20, including China, India and Indonesia are not members of the OECD.  The central argument of this paper is that the OECD needs to launch a membership recruitment drive into Asia in order to remain an effective organization.  This recruitment drive should two arms: first, adopting a more flexible approach regarding membership criteria and undertaking institutional reforms, as discussed above; and awakening Asia’s interest in the OECD.

The OECD has much to offer Asian countries.  Its core business is multilateral economic surveillance.  It is usually conducted through a process of “peer review” involving committees of national economic policy experts (1).  Surveillance can be based on Secretariat research, like that ultimately published as the Economic Outlook and Economic Surveys for its member countries and a number of non-members.  “Policy standards” across a vast array of topics like agriculture, corporate governance, development c-operation, employment, environment and taxation provide the framework for multilateral surveillance in these areas.  These policy standards are broadly recognized by the international community (G20, G7/G8, Financial Stability Board) as being the “gold standard” for economic, social and environmental policies.  

Such multilateral surveillance is often criticized as lacking teeth, notwithstanding the process of “peer group pressure”.  It is however best seen from a constructivist perspective in terms of the learning and socialization that takes place.  Even though OECD countries may disagree on many specific policies, they are able to discuss policies based on a commonly agreed analytical framework and data set.  And views very often ultimately converge thanks to this learning and socialization.  This could also be of great benefit to East Asia for developing its own surveillance activities.  In the framework of the Chang Mai Initiative Multilateralisation, an independent surveillance unit is being established in Singapore (“ASEAN Plus Three Macroeconomic Research Office” -- AMRO) (2).

A major benefit of OECD membership is being able to participate in this multilateral surveillance, although an increasing number of non-member economies do already participate.  Another benefit of membership derives from the market and international community recognition of a country’s willingness to accept and commit to the OECD’s policy standards and values.  Even countries like China can appreciate the OECD’s multilateral surveillance.  It can be better to have a range of countries around the table rather being face to face with one or two other major economies.

Asian economies would have much to gain from the OECD’s analytical work, peer review and multilateral surveillance, and I will cite just a few topics:

1. The current global financial crisis has highlighted the need for Asia’s emerging economies to develop sound social policies to help their populations cope with the manifest insecurities of globalization.  Even China, which has sailed through the crisis thanks to its strong stimulus package, reportedly saw some 20 million workers driven from cities back to their rural homelands because of job losses.

2. Even the most successful Asian economies have a long way to go in terms of realizing their full potential and catching up the advanced member countries of the OECD -- better policies in the areas of education, competition, and science and technology are vital to this challenge.  As Asian Development Bank indicators testify, many of Asia’s developing countries have a long way to go in terms of achieving the Millennium Development Goals (3).

3. Asian societies are “ageing”, and at a much faster rate than the OECD economies, raising challenges for retirement, pension and health policies to name just a few;

4. Asia’s societies are progressively become more open and democratic, and this requires more sophisticated public governance, including relations with civil society and other stakeholder groups;

5. OECD’s eurocentric character means that it can be a useful organization through which to establish more relations with that continent, something which many Asian countries are interested in doing after so many years of US domination.  Notwithstanding the recent sovereign debt crisis, Europe is still a very important player with total GDP around the same as the US.

In all these, and other areas, the OECD and its member countries have much to offer in terms of both good and bad lessons of experience.  And while the OECD is now subject to much competition from private think tanks, other international organisations, and even the policy research outfits of some large member countries, it is unique in terms of its capacity to bring together national policy makers to share experiences and guide the Organisation’s work.

At the same time, as major beneficiaries of globalization, Asia’s economies arguably have a responsibility to adopt more of the OECD’s values-based culture in terms of good governance and transparency.  As the OECD founding Convention says – “Members agree that they will keep each other informed and furnish the Organisation with the information necessary for the accomplishment of its tasks” (4).  This would ultimately be beneficial to them and the global economy, and they would thereby become more responsible stakeholders in the global system.

1.  OECD (2003), “Peer Review: an OECD Tool for Co-operation and Change”.

http://213.253.134.43/oecd/pdfs/browseit/0103083E.PDF  

2.  Sussangkarn, Chalongphob.  The Chiang Mai Initiative Multilateralization: Origin, Development and Outlook.  Asian Development Bank Institute Working Paper. 

http://www.adbi.org/working-paper/2010/07/13/3938.chiang.mai.initiative.multilateralization/  

3.  Asian Development Bank.  Key Indicators for Asia and the Pacific 2010

http://www.adb.org/Documents/Books/Key_Indicators/2010/   

4.       OECD, Convention on the Organisation for Economic Cooperation and Development, Paris, 14th December 1960

www.oecd.org .

Complete Series of Articles

OECD and Asia:I -- World’s Apart in Today’s Globalization

http://www.mrglobalization.com/governing-globalisation/306-oecd-and-asiai

OECD and Asia: Introduction

http://www.mrglobalization.com/governing-globalisation/305-oecd-and-asiaii

Asia and the Evolving Logic of OECD Membership

http://www.mrglobalization.com/governing-globalisation/304-oecd-and-asia-iii

Non-member partnerships with Asia

http://www.mrglobalization.com/governing-globalisation/303-oecd-and-asia-iv

Why Asia Matters to the OECD

http://www.mrglobalization.com/governing-globalisation/302-oecd-and-asia-v

Adapting the OECD to Asian-led globalisation

http://www.mrglobalization.com/governing-globalisation/301-oecd-and-asia-vi

Asia in the OECD

http://www.mrglobalization.com/governing-globalisation/300-oecd-and-asia-vii

Concluding Comments

http://www.mrglobalization.com/governing-globalisation/299-oecd-and-asia-viii