OECD History

The emergence

The OECD has its origins in the cooperation required to rebuild the severely wounded Europe after World War II. In 1948, 18 European countries, including Sweden, formed the Organization for European Economic Cooperation (OEEC) with the task of administering the American Marshall Plan.

This financial aid program was used during the years 1948-1952 for the reconstruction of Europe and consisted of gifts and loans worth 15 billion US dollars.

A few years later, the OEEC had completed its mission. In the late 1950’s, Western Europe was almost at the same economic level as the United States. However, the countries of Eastern and Central Europe that had fallen under Soviet influence had not been able to take advantage of the aid offered.

The need for an economic cooperation organization persisted, even though both the form and the mission had to be renewed. The benefactor USA and the formerly inferior Europe would now work together on more equal terms. In addition, the collapse of the colonial empires had led newly formed states around the world to turn to the rich developed countries for assistance and guidance in economic development.

After much debate and some opposition, the OEEC countries agreed on a reform proposal presented in 1959 by US President Dwight D Eisenhower, German Chancellor Konrad Adenauer and French President Charles de Gaulle. A convention for a completely new organization was signed in December 1960. It stated that the task was to promote economic growth and development in both member and non-member states as well as to work for free trade and liberal and democratic values. The OEEC ceased to exist on 30 September 1961 and was replaced by the OECD. In addition to the 18 OEEC members, the OECD existed at the founding of the United States and Canada. Since then, the membership has gradually grown to 37 states.

As co-operation was no longer limited to Europe, as it had been during the OEEC era, the OECD soon became interested in other continents. In 1964, Japan was included in the membership, followed by Australia in 1971 and New Zealand in 1973. In the same wave of expansion, Finland joined in 1969.

Thereafter, the enlargement process stopped for over two decades. It was not until the 1990’s that new members were admitted. This time, enlargement was driven by individual OECD members when the applicant country was within their geographical area. For example, the United States was a driving force when the increasingly important neighbor Mexico joined the OECD in 1994. This provided an opportunity for some of the Eastern and Central European states that after the end of the Cold War switched to a market economy to apply for membership. The Czech Republic joined in 1995, Hungary and Poland in 1996 and Slovakia in 2000. When these four countries joined the OECD, solidarity from the other European member states was strong. For similar reasons, the Asian membership was expanded in 1996 with a new state, South Korea.

Enlargement in the 1990’s was relatively rapid, and within the OECD there are differing views on its implications for the organization’s work. The more restrictive forces emphasize the OECD’s unique character as a rather small club for like-minded developed countries. They believe that a smaller membership, where everyone has similar societal conditions and to some extent the same cultural values, means that reports and analyzes become relevant for all members and provide better comparability, which is an important aspect of the OECD’s work. Forms of cooperation will also be simplified with fewer Member States.

The more open school points out that the OECD must adapt to a changing world, where new states are rapidly emerging as important economic actors. According to payhelpcenter, the OECD should therefore welcome virtually all candidate countries that meet the requirements of the market economy and share the OECD countries’ values ​​of democracy and respect for human rights. The references to the values ​​of international law were established by the OECD at the 1991 Council of Ministers.

Critics of the more open approach, however, believe that working methods are becoming more bureaucratic, that confidentiality risks being reduced, that the OECD is becoming less efficient and that discussions are no longer relevant to everyone. A third camp in the discussion on OECD enlargement advocates a middle ground: widen the membership, but only with the major economic actors such as Brazil, India, Russia, China and Indonesia.

At the 1996 Council of Ministers meeting, the issue was raised, when the ministers were informed on the first day of the meeting that Russia had formally requested membership of the OECD. The former communist superpower wanted to join the club that had promoted market economy thinking since the 1960’s. At the meeting, a compromise was reached on the enlargement process: the OECD should be open to countries with the same values ​​but maintain its tradition with high requirements for OECD membership. The circle of members must develop as the world changes, but the development must be in the interest of the members. In the early 2000’s, it was stated that an increase in the number of members was inevitable and this would be considered positive for the OECD’s efforts to achieve its objectives.

OECD History