Why Asia Matters to the OECD

Asia does and should matter immensely to the OECD based on how the Organisation perceives its role and function.  According to the present OECD Secretary-General Angel Gurria, the “OECD has been working to produce a more harmonious globalisation for many decades (1)”. 

The OECD is a “hub of globalization” (2).  “The OECD’s ultimate goal is not only to identify problems, measure them, compare them, and propose policy solutions, but about making reform happen and evaluating the outcomes.” (3)  Since Asia has become the main driver of globalization, its presence and participation are essential as the Organisation seeks to help its members address the manifold economic, social and environmental challenges of globalization.

Asia’s diversity is rich, and the potential interest for the OECD is similarly very rich.  Asia contains economies like Hong Kong, Macao, Singapore and Taiwan (4) which are as advanced and developed as most OECD countries, and have much experience to share across a broad range of policy domains.  For example, school students from Hong Kong, Taiwan and Macao have been assessed as being significantly above the OECD average for science and mathematics performance (Singapore did not participate in this 2006 exercise, but has participated in the soon to be published 2009 assessment) (5).  Also, most of these economies are major players in many fields.  Even the liliputian Macao is a very major player for financial governance issues in light of its very important gambling industry.

Although the OECD’s interest in the large Asian economies of China, India and Indonesia lies in their economic size more than their level of development, a number of cities in China like Suzhou, Wuxi, Shenzen, Guangzhou, Shanghai, Zhuhai, Foshan, Beijing and Xiamen have GDPs per capita above $15,000 a year, well into the lower range of the OECD membership (6).  Fast growing Indian cities like Bangalore and Mumbai are also moving in this direction.

Overall, GDP per capita in China, India and Indonesia is much lower than the bottom ranges of the OECD’s membership.  But there size is immense.  China already has the world second biggest economy after the US in purchasing power parity terms, while India comes in fourth just after Japan.  Indonesia’s economy is much smaller, but it just eclipses Australia’s (7).  All three economies are major trading nations with China being the world’s second biggest exporter of merchandise goods, and India and Indonesia ranking 27th and 31st respectively (8).  When it comes to carbon emissions, China is presently the world biggest emitter, with India being 3rd and Indonesia 15th (9).  And in the lead-up to the current global financial crisis, emerging Asia was the most dynamic growth motor in the world economy, and following the crisis it is virtually the only part of the world economy which has maintained strong economic growth (10).

It is somewhat ironical that the Enhanced Engagement countries are members of the G20, but not members of the OECD.  This can limit the OECD’s capacity to participate in and contribute to the activities of this Group, whose leaders have “designated the G-20 to be the premier forum for our international economic cooperation” (11).

The OECD leadership is only too aware of the problem, as Secretary-General Gurria made clear in his 2010 report to OECD Ministers:  “Much has been accomplished since the Enhanced Engagement Initiative was launched in 2007.  Now, after three years, we need a “Quantum Leap” to improve the quality, the depth, the breadth and the level of trust with our Enhanced Engagement partners.  We must create what P.M. Gordon Brown described as a “comfort zone” with Enhanced Engagement countries, both bilaterally … and in multilateral for a such as the G8, the G20 and the many specialized high-level and Ministerial meetings where we participate.”

1.  Gurria, A. (2007), ‘Making the World Economy Work Better’, OECD Observer No. 262, July 2007 http://www.oecdobserver.org/news/fullstory.php/aid/2294/Making_the_world_economy_work_better.html

2.  OECD.  Strategic Orientations by the Secretary-General.  Meeting of the Council at Ministerial Level, 27-28 May 2010.

http://www.oecd.org/officialdocuments/displaydocumentpdf/?cote=c/min(2010)1&doclanguage=en  

3.  Hong Kong, Singapore and Taiwan are each separately members of many organizations like APEC, the Asian Development Bank and the World Trade Organisation, while Macao is a member of the World Trade Organisation.

4.  OECD Programme for International Student Assessment.  2006 Science Competencies for Tomorrow's World

http://www.oecd.org/dataoecd/15/13/39725224.pdf  

5.  Demographia, Cities in China, Gross Domestic Product per Capita.  2007.

http://www.demographia.com/db-chinacitygdp.pdf

6.  World Bank, World Development Indicators 2010. 

http://data.worldbank.org/data-catalog/world-development-indicators/wdi-2010

7.  World Trade Organisation.  International Trade Statistics 2009

http://www.wto.org/english/res_e/statis_e/its2009_e/its09_toc_e.htm  

8.  Carbon Dioxide Information Analysis Center.  Top 20 Emitting Countries by Total Fossil-Fuel CO2 Emissions for 2007.

http://cdiac.ornl.gov/trends/emis/tre_tp20.html  

9.  IMF.  World Economic Outlook Update.  7 July 2010.

http://www.imf.org/external/pubs/ft/weo/2010/update/02/index.htm  

10.  G20 Leaders’ Statement, the Pittsburgh Summit, September 24-25, 2009.

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