groups 30 member countries sharing a commitment to democratic government
and the market economy. With active relationships with some 70 other
countries, NGOs and civil society, it has a global reach. Best known for
its publications and its statistics, its work covers economic and social
issues from macroeconomics, to trade, education, development and science
The O plays a prominent role in fostering good
governance in the public
service and in corporate activity. It helps governments to ensure the
responsiveness of key economic areas with sectoral monitoring. By
deciphering emerging issues and identifying policies that work, it helps
policy-makers adopt strategic orientations. It is well known for its
individual country surveys and reviews.
The O produces internationally agreed instruments, decisions and
recommendations to promote rules of the game in areas where multilateral
agreement is necessary for individual countries to make progress in a
globalized economy. Sharing the benefits of growth is also crucial as
shown in activities such as emerging economies, sustainable development,
territorial economy and aid.
Dialogue, consensus, peer review and pressure are at the very heart of
OECD. Its governing body, the Council, is made up of representatives of
member countries. It provides guidance on the work of O committees and
decides on the annual budget. It is headed by Donald J. Johnston, who has
been Secretary-General since June 1, 1996.
The Organization for
Economic Co-operation and Development has been called a think tank, a
monitoring agency, a rich man's club and an unacademic university. It has
elements of all, but none of these descriptions captures the essence of
The O groups 30 member countries in a unique forum to discuss, develop
and refine economic and social policies. They compare experiences, seek
answers to common problems and work to co-ordinate domestic and
international policies to help members and non-members deal with an
increasingly globalized world. Their exchanges may lead to agreements to
act in a formal way-- for example by establishing legally binding
agreements to crack down on bribery, or codes for free flow of capital and
services. The O is also known for 'soft law' -- non-binding instruments
on difficult issues such as its Guidelines for multinational enterprises.
Beyond agreements, the discussions at the O make for better-informed
work within member countries' own governments across the broad spectrum of
public policy and help clarify the impact of national policies on the
The O is a group of like-minded countries. Essentially membership is
limited only by a country's commitment to a market economy and a
pluralistic democracy. It is rich, in that its 30 members produce two
thirds of the world's goods and services, but it is by no means exclusive.
The core of original European and North American members has expanded to
include Japan, Australia, New Zealand, Finland, Mexico, Korea and four
former communist states in Europe: the Czech Republic, Hungary, Poland and
the Slovak Republic. Non-members are invited to subscribe to O agreements and treaties, and the organization now involves in its work
some 70 non-member countries from Brazil, China and Russia to least
developed countries in Africa and elsewhere.
Exchanges between O governments flow from information and analysis
provided by a Secretariat in Paris. The organization is one of the world's
largest and most reliable sources of comparable statistical, economic and
social data. Parts of the Secretariat collect data, monitor trends,
analyze and forecast economic developments, while others research social
changes or evolving patterns in trade, environment, agriculture,
technology, taxation and more.
The O is at the forefront of efforts to understand and help governments
respond to new challenges such as sustainable development,
electronic commerce and biotechnology . This work underpins discussion by
member countries when they meet in specialized committees of the O .
Much of the research and analysis is published, on paper or online.
The OECD provides governments with
methodological guidelines, databases and policy-relevant analysis in this
area, much of it focusing on productivity, international competitiveness
and structural change. O work in this area is carried out under
the auspices of the Statistical Working Party of the Committee for
Industry and Business Environment (CIBE). It involves close co-operation
with the Statistics Directorate (STD). It covers methodological work, e.g.
the O Productivity Manual; database development; and analytical work
that informs the policy discussion in CIBE and other O committees.
The methodological work provides guidelines on the measurement of
industrial performance. In recent years, it has focused on the measurement
of productivity growth, price measurement in areas of rapid change, such
as information technology, and the classification of industries by their
degree of knowledge intensity. This work benefits from close co-operation
with methodological work in STD.
Several databases are available. The key one is the Structural Analysis
(STAN) database, which provides output, input and trade data by economic
activity, enabling detailed analysis of industrial performance. Other
databases include the SSIS and SME database, that provide industrial
survey data; the Bilateral tradebase; and the O Input-Output Database,
that is currently under development.
The analytical work informs the policy debate. In recent years, much work
has focused on the sources of economic growth, including studies on the
contribution of ICT-using and ICT-producing sectors to growth, the role of
structural change, and the contribution of ICT investment. This work is
published in the STI Working Papers series; several studies have been
published in O Economic Studies.
Corporate Governance principles 2004
The governments of
the 30 O countries have approved a revised version of the OECD's
Principles of Corporate Governance adding new recommendations for good
practice in corporate behavior with a view to rebuilding and maintaining
public trust in companies and stock markets.
The revised Principles respond to a number of issues that have undermined
the confidence of investors in company management in recent years. They
call on governments to ensure genuinely effective regulatory frameworks
and on companies themselves to be truly accountable. They advocate an
increased awareness among institutional investors and an effective role
for shareholders in executive compensation. They also urge strengthened
transparency and disclosure to counter conflicts of interest.
The O Principles of Corporate Governance, first published in 1999, have
been widely adopted as a benchmark both in O countries and elsewhere.
They are used as one of 12 key standards by the Financial Stability Forum
for ensuring international financial stability and by the World Bank in
its work to improve corporate governance in emerging markets.
In 2002, O governments called for a review of the Principles to take
account of developments in the corporate sector. The revised text is the
product of a consultation process involving representatives of both O and non-OECD governments as well as of businesses and professional bodies,
trade unions, civil society organizations and international
Veronique Ingram, Chair of the O Steering Group on Corporate
Governance, said: "The revised Principles emphasize the importance of a
regulatory framework in corporate governance that promotes efficient
markets, facilitates effective enforcement and clearly defines the
responsibilities between different supervisory, regulatory and enforcement
authorities. They also emphasize the need to ensure transparent lines of
management responsibility within companies so as to make boards and
management truly accountable."
addressed by the revised Corporate Governance Principles include:
They should disclose their corporate governance policies, how they decide
on the use of their voting rights and how they manage conflicts of
interest that may compromise their voting;
Restrictions on consultations between shareholders about their voting
intentions should be eased to reduce the cost of informed ownership.
The rights of investors must be strengthened. Shareholders should be able
to remove board members and participate effectively in the nomination and
They should be able to make their views known about executive and board
remuneration policy and any equity component should be subject to their
Conflicts of interest and auditor responsibility
A new principle calls for rating agencies and analysts to avoid conflicts
of interest which could compromise their advice;
The duties of the auditor must be strengthened and include accountability
to shareholders and a duty to the company to exercise due professional
care when conducting an audit;
Auditors should be wholly independent and not be compromised by other
relations with the company.
Stakeholder rights and whistle-blower protection
The Principles make reference to the rights of stakeholders, whether
established by law or through mutual agreements.
A new principle advocates protection for whistleblowers, including
institutions through which their complaints or allegations can be
addressed and provides for confidential access to a board member.
The duties and responsibilities of the board have been clarified as
fiduciary in nature, particularly important where company groups are
The principle covering board independence and objectivity has been
extended to avoid conflicts of interest and to cover situations
characterized by block and controlling shareholders, as well as the
board's responsibility for oversight of internal control systems covering
Click here to see
version of the OECD Corporate Governance Principles 2004
World Trade Organization |
Global Corporate Governance Forum