OECD facts for kids

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Quick facts for kids
Organisation for Economic Co-operation and Development
Organisation de coopération et de développement économiques

Member states Applicants
Abbreviation	OECD OCDE
Established	16 April 1948 (77 years ago) (1948-04-16) (as OEEC) 30 September 1961 (63 years ago) (1961-09-30) (as OECD)
Type	Intergovernmental organisation
Headquarters	Château de la Muette Paris, France
Membership	38 countries Australia Austria Belgium Canada Chile Colombia Costa Rica Czechia Denmark Estonia Finland France Germany Greece Hungary Iceland Ireland Israel Italy Japan Latvia Lithuania Luxembourg Mexico Netherlands New Zealand Norway Poland Portugal Slovakia Slovenia South Korea Spain Sweden Switzerland Turkey United Kingdom United States
Official languages	English French
Secretary-General	Mathias Cormann
Deputy Secretaries-General	Ulrik Vestergaard Knudsen Yoshiki Takeuchi Fabrizia Lapecorella
Budget	€338.3 million (2023)

The Organisation for Economic Co-operation and Development (OECD; French: Organisation de coopération et de développement économiques, OCDE) is an intergovernmental organisation with 38 member countries, founded in 1961 to stimulate economic progress and world trade. It is a forum whose member countries describe themselves as committed to democracy and the market economy, providing a platform to compare policy experiences, seek answers to common problems, identify good practices, and coordinate domestic and international policies of its members.

The majority of OECD members are high-income economies ranked as "very high" in the Human Development Index, and are regarded as developed countries. As of 2024 their collective population is 1.38 billion people with an average life expectancy of 80 years and a median age of 40, against a global average of 30. As of 2017^[update], OECD Member countries collectively comprised 62.2% of global nominal GDP (USD 49.6 trillion) and 42.8% of global GDP (Int$54.2 trillion) at purchasing power parity. The OECD is an official United Nations observer.

The OECD's headquarters are at the Château de la Muette in Paris, France, which housed its predecessor organization, the Organization for European Economic Co-operation. The OECD is funded by contributions from member countries at varying rates and had a total budget of €338.3 million in 2023, and is recognised as a highly influential publisher of mostly economic data through publications as well as annual evaluations and rankings of member countries.

History

Organisation for European Economic Co-operation

The OECD is the successor organization to the Organisation for European Economic Co-operation (OEEC), established in April 1948 among the European recipients of Marshall Plan aid for the reconstruction of Europe after World War II. Only Western European states were members of the OEEC, whose primary function was the allocation of American aid. Its Secretaries-General were the Frenchmen Robert Marjolin (1948–1955) and René Sergent (1955–1960). It was headquartered in the Château de la Muette in Paris.

Following the end of Marshall aid in 1952, the OEEC focused on economic issues. Its coordinating role was challenged after the 1957 Rome Treaties establishing the European Economic Community and Euratom. The OEEC provided a framework for negotiations aimed at setting up a European Free Trade Area, to bring the EEC's Inner Six and other OEEC members together on a multilateral basis. In 1958, a European Nuclear Energy Agency was set up in response to Euratom.

By this time, some leading countries felt that the OEEC had outlived its purpose but could be adapted to fulfil a more global mission, which proved to be a cumbersome task. Following several (occasionally unruly) meetings at the Hotel Majestic in Paris, which began in January 1960, a resolution was reached to create a body that would not only solve European and Atlantic economic issues, but also devise policies that could assist less developed countries. This reconstituted organisation would bring the US and Canada, who were already OEEC observers, on board as full members, and the OEEC would set to work straight away on convincing Japan to join the organisation.

Founding

The Convention on the Organisation for Economic Co-operation and Development was signed on 14 December 1960, and the OECD officially superseded the OEEC in September 1961, consisting of the European founder countries of the OEEC, with the additions of the United States and Canada. Three countries, (Netherlands, Luxembourg, and Italy)—all OEEC members—ratified the OECD Convention after September 1961, but are nevertheless considered founding members. The official founding members are the following:

Austria
Belgium
Canada
Denmark
France
West Germany
Greece
Iceland
Ireland
Italy
Luxembourg
Netherlands
Norway
Portugal
Spain
Sweden
Switzerland
Turkey
United Kingdom
United States

During the next 12 years, Japan, Finland, Australia, and New Zealand also joined the organisation. Yugoslavia had observer status in the organisation, starting with the establishment of the OECD, until its dissolution as a country. The OECD also created agencies such as the OECD Development Centre (1961), International Energy Agency (IEA, 1974), and Financial Action Task Force on Money Laundering.

The aims of the OECD are stated in Article 1 of the Convention as:

to achieve the highest sustainable economic growth and employment and a rising standard of living in Member countries, while maintaining financial stability
to contribute to sound economic expansion in Member as well as non-member countries
to contribute to the expansion of world trade

Unlike the Organisations of the United Nations system, OECD uses the spelling "Organisation" with an "s" in its name rather than "organization", together with a hyphenated "Co-operation".

Enlargement to Eastern Europe

Following the Revolutions of 1989, the OECD began assisting countries in Central and Eastern Europe (especially the Visegrád Group) to prepare market economy reforms. In 1990, the Centre for Co-operation with European Economies in Transition (now succeeded by the Centre for Cooperation with Non-Members) was established, and in 1991, the programme, "Partners in Transition", was launched for the benefit of Czechoslovakia, Hungary and Poland, including a membership option for these countries. As a result of this, Poland, Hungary, the Czech Republic and Slovakia, as well as South Korea and Mexico, became members of the OECD between 1996 and 2000.

Reform and further enlargement

East Germany joined on 3 October 1990 through reunification with West Germany. In the 1990s, several European countries, now members of the European Union, expressed their willingness to join the Organisation. In 1995, Cyprus applied for membership, but according to the Cypriot government, it was vetoed by Turkey. In 1996, Estonia, Latvia, and Lithuania signed a Joint Declaration expressing willingness to become members of the OECD, and Slovenia also applied for membership that same year. In 2005, Malta applied to join the Organisation. The EU is lobbying for the admission of all EU member states. Romania reaffirmed in 2012 its intention to become a member of the Organisation through the letter addressed by Romanian Prime Minister Victor Ponta to OECD Secretary-General José Ángel Gurría. In September 2012, the government of Bulgaria confirmed it would apply for membership before the OECD Secretariat.

The OECD established a working group headed by ambassador Seiichiro Noboru to work out a plan for the enlargement with non-members. The working group defined four criteria that must be fulfilled: "like-mindedness", "significant player", "mutual benefit" and "global considerations." The working group's recommendations were presented at the OECD Ministerial Council Meeting on 13 May 2004, and on 16 May 2007, the OECD Ministerial Council decided to open accession discussions with Chile, Estonia, Israel, Russia, and Slovenia, and to strengthen cooperation with Brazil, China, India, Indonesia, and South Africa through a process of enhanced engagement. Chile, Slovenia, Israel, and Estonia all became members in 2010. In March 2014, the OECD halted membership talks with Russia in response to its role in the 2014 Annexation of Crimea.

In 2013, the OECD decided to open membership talks with Colombia and Latvia. In 2015, the Organisation opened talks with Costa Rica and Lithuania. Latvia became a member on 1 July 2016, and Lithuania soon followed on 5 July 2018. Colombia signed the accession agreement on 30 May 2018 and became a member on 28 April 2020. On 15 May 2020, the OECD decided to extend a formal invitation for Costa Rica to join the OECD, which joined as a member on 25 May 2021.

Other countries that have expressed interest in OECD membership are Argentina, Brazil, Croatia, Malaysia and Peru.

In January 2022, the OECD reported that membership talks were underway with Argentina, Brazil, Bulgaria, Croatia, Peru and Romania.

In March 2022, the OECD suspended the participation of Russia and Belarus due to the ongoing 2022 Russian invasion of Ukraine.

In June 2022, during the annual OECD Ministerial Council Meeting, the Roadmaps for the Accession to the OECD Convention for Brazil, Bulgaria, Croatia, Peru and Romania were adopted.

Objectives and issues

Taxation

The OECD sets the rules governing international taxation for multinationals through the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, a Model Tax Convention and country-by-country reporting rules.

Payroll and income tax by OECD country

The OECD publishes and updates a model tax convention that serves as a template for allocating taxation rights between countries. This model is accompanied by a set of commentaries that reflect OECD-level interpretation of the content of the model convention provisions. In general, this model allocates the primary right to tax to the country from which capital investment originates (i.e., the home, or resident country) rather than the country in which the investment is made (the host, or source country). As a result, it is most effective between two countries with reciprocal investment flows (such as among the OECD member countries), but can be unbalanced when one of the signatory countries is economically weaker than the other (such as between OECD and non-OECD pairings). Additionally, the OECD has published and updated the Transfer Pricing Guidelines since 1995. The Transfer Pricing Guidelines serve as a template for the profit allocation of inter-company transactions to countries. The latest version, of July 2017, incorporates the approved Actions developed under the Base Erosion and Profit Shifting (BEPS) project initiated by the G20.

Pillar 1: An OECD proposal to allocate multinational profits (for taxing purposes) to countries where they do business, by a formula, including to markets which multinationals sell into without a physical presence. This is hoped to eliminate the need for Digital Services Tax implemented by several countries, including France. There are exclusions and minimum thresholds, including banking and extractive industries. The proposal involves allocating only residual profit (i.e., profits above what is established through transfer pricing, thus creating a hybrid mechanism). This is essentially no change to what is currently allowed (routine profits allocated using transfer pricing + residual profits allocated through profit split).
Pillar 2: On 1 July 2021, finance officials from 130 countries agreed on plans for a new international taxation policy known as the global minimum corporate tax (of 15%). If a country taxes a multinational at a lower rate, the multinational's HQ will receive the difference.

It is not certain when the proposals will be implemented.

All the major economies agreed to pass national laws that would require corporations to pay at least 15% income tax in the countries they operate. This new policy would end the practice of locating world headquarters in small countries with very low taxation rates. Governments hope to recoup some of the lost revenue, estimated at $100 billion to $240 billion each year. The new system was promoted by the Biden Administration in the United States and the OECD. Secretary-General Mathias Cormann of the OECD said, "This historic package will ensure that large multinational companies pay their fair share of tax everywhere."

Multinational corporations

The OECD Guidelines for Multinational Enterprises are a set of legally non-binding guidelines attached as an annex to the OECD Declaration on International Investment and Multinational Enterprises. They are recommendations providing principles and standards for responsible business conduct for multinational corporations operating in or from countries adhering to the Declaration.

Structure

The OECD's structure consists of three main elements:

The OECD member countries, each represented by a delegation led by an ambassador. Together, they form the OECD Council. Member countries act collectively through Council (and its Standing Committees) to provide direction and guidance to the work of Organisation.
The OECD Substantive Committees, one for each work area of the OECD, plus their various subsidiary bodies. Committee members are typically subject-matter experts from member and non-member governments. The Committees oversee all the work on each theme (publications, task forces, conferences, and so on). Committee members then relay the conclusions to their capitals.
The OECD Secretariat, led by the Secretary-General (currently Mathias Cormann), provides support to Standing and Substantive Committees. It is organised into Directorates, which include about 2,500 staff.

Meetings

The main entrance to the OECD Conference Centre in Paris

Delegates from the member countries attend committee and other meetings. Former Deputy Secretary-General Pierre Vinde [sv] estimated in 1997 that the cost borne by the member countries, such as sending their officials to OECD meetings and maintaining permanent delegations, is equivalent to the cost of running the secretariat. This ratio is unique among inter-governmental organisations. In other words, the OECD is more a persistent forum or network of officials and experts than an administration.

The OECD regularly holds minister-level meetings and forums as platforms for a discussion on a broad spectrum of thematic issues relevant to the OECD charter, member countries, and non-member countries.

Noteworthy meetings include:

The yearly Ministerial Council Meeting, with the Ministers of Economy of all member countries and the candidates for enhanced engagement among the countries.
The annual OECD Forum, which brings together leaders from business, government, labour, civil society and international organisations. Held every year since June 2000, the OECD Forum takes the form of conferences and discussions, is open to public participation and is held in conjunction with the MCM.
Thematic Ministerial Meetings, held among Ministers of a given domain (i.e., all Ministers of Labour, all Ministers of Environment, etc.).
The bi-annual World Forum on Statistics, Knowledge and Policies, which does not usually take place in the OECD. This series of meetings has the ambition to measure and foster progress in societies.
The Forum for Harmful Tax Practices
The Committee on Fiscal Affairs
OECD Eurasia Week, which includes several high-level policy dialogue discussions to share best practices and experiences in addressing common development and economic challenges in Eurasia.

Secretariat

The exterior of the Château de la Muette and the grounds of the OECD Conference Centre

Exchanges between OECD governments benefit from the information, analysis, and preparation of the OECD Secretariat. The secretariat collects data, monitors trends, and analyses and forecasts economic developments. Under the direction and guidance of member governments, it also researches social changes or evolving patterns in trade, environment, education, agriculture, technology, taxation and other areas.

The secretariat is organised in Directorates:

Centre for Entrepreneurship, SMEs, Regions and Cities
Centre for Tax Policy and Administration
Development Co-operation Directorate
Directorate for Education and Skills
Directorate for Employment, Labour, and Social Affairs
Directorate for Financial and Enterprise Affairs
Directorate for Science, Technology, and Innovation
Economics Department
Environment Directorate
Public Governance Directorate
Statistics Directorate
Trade and Agriculture Directorate
General Secretariat
Executive Directorate
Public Affairs and Communication Directorate

Secretary-General

The head of the OECD Secretariat and chair of the OECD Council is the Secretary-General. Secretary-General selections are made by consensus, meaning all member states must agree on a candidate.

Secretary-General of the OEEC
No.	Secretary-General	Time served	Country of origin
1	Robert Marjolin	1948 – 1955	France
2	René Sergent	1955 – 1960	France
3	Thorkil Kristensen	1960 – 30 September 1961	Denmark

Secretary-General of the OECD
No.	Secretary-General	Time served	Country of origin
1	Thorkil Kristensen	30 September 1961 – 30 September 1969	Denmark
2	Emiel van Lennep	1 October 1969 – 30 September 1984	Netherlands
3	Jean-Claude Paye	1 October 1984 – 30 September 1994	France
—	Staffan Sohlman (interim)	1 October 1994 – November 1994	Sweden
3	Jean-Claude Paye	November 1994 – 31 May 1996	France
4	Donald Johnston	1 June 1996 – 31 May 2006	Canada
5	José Ángel Gurría	1 June 2006 – 31 May 2021	Mexico
6	Mathias Cormann	1 June 2021 – present	Australia

Committees

A meeting room in the Château de la Muette

Representatives of member and observer countries meet in specialised committees on specific policy areas, such as economics, trade, science, employment, education, development assistance or financial markets. There are about 200 committees, working groups and expert groups. Committees discuss policies and review progress in the given policy area.

Special bodies

OECD has a number of specialised bodies:

Africa Partnership Forum
Blue Dot Network
Business and Industry Advisory Committee (BIAC)
Development Assistance Committee
OECD Development Centre
International Transport Forum (ITF) (formerly known as the European Conference of Ministers of Transport)
International Energy Agency
Nuclear Energy Agency
Multilateral Organisation Performance Assessment Network (MOPAN)
Partnership for Democratic Governance (PDG)
Sahel and West Africa Club
Trade Union Advisory Committee (TUAC)

Voting

OECD decisions are made through voting, which requires unanimity among all of those voting. Each member country has one vote. However, dissenting members which do not wish to block a decision but merely to signal their disapproval can abstain from voting. 22 of the OECD member countries are also EU member states.

Member countries

Current members

As of May 2021^[update] there are 38 members of the OECD:

Country	Application	Negotiations	Invitation	Membership	Geographic location	Notes
Australia				7 June 1971	Oceania
Austria				29 September 1961	Europe	OEEC member
Belgium				13 September 1961	Europe	OEEC member
Canada				10 April 1961	North America
Chile	November 2003	16 May 2007	15 December 2009	7 May 2010	South America
Colombia	24 January 2011	30 May 2013	25 May 2018	28 April 2020	South America
Costa Rica	9 April 2015		15 May 2020	25 May 2021	Central America	Joined OECD in 2021
Czech Republic	January 1994	8 June 1994	24 November 1995	21 December 1995	Europe
Denmark				30 May 1961	Europe	OEEC member
Estonia		16 May 2007	10 May 2010	9 December 2010	Europe
Finland				28 January 1969	Europe
France				7 August 1961	Europe	OEEC member
Germany				27 September 1961	Europe	Joined OEEC in 1949 (West Germany). Previously represented by the Trizone.
Greece				27 September 1961	Europe	OEEC member
Hungary	December 1993	8 June 1994		7 May 1996	Europe
Iceland				5 June 1961	Europe	OEEC member
Ireland				17 August 1961	Europe	OEEC member
Israel	15 March 2004	16 May 2007	10 May 2010	7 September 2010	Middle East
Italy				29 March 1962	Europe	OEEC member
Japan	November 1962		July 1963	28 April 1964	Asia
Latvia		29 May 2013	11 May 2016	1 July 2016	Europe
Lithuania		9 April 2015	31 May 2018	5 July 2018	Europe
Luxembourg				7 December 1961	Europe	OEEC member
Mexico			14 April 1994	18 May 1994	North America	Joined OECD in 1994
Netherlands				13 November 1961	Europe	OEEC member
New Zealand				29 May 1973	Oceania
Norway				4 July 1961	Europe	OEEC member
Poland	1 February 1994	8 June 1994	11 July 1996	22 November 1996	Europe
Portugal				4 August 1961	Europe	OEEC member
Slovakia	February 1994	8 June 1994	July 2000	14 December 2000	Europe
Slovenia	March 1996	16 May 2007	10 May 2010	21 July 2010	Europe
South Korea	29 March 1995		25 October 1996	12 December 1996	Asia	Officially the Republic of Korea
Spain				3 August 1961	Europe	Joined OEEC in 1958
Sweden				28 September 1961	Europe	OEEC member
Switzerland				28 September 1961	Europe	OEEC member
Turkey				2 August 1961	Middle East	OEEC member
United Kingdom				2 May 1961	Europe	OEEC member
United States				12 April 1961	North America

Dependent territories

Dependent territories of member states are not members in their own right, but may have membership as part of their sovereign state. As of January 2021, the Dutch Caribbean and the British territories of Guernsey, Jersey, the Isle of Man, Gibraltar, and Bermuda are included as part of the OECD memberships of the Netherlands and the U.K., respectively. Other dependent territories of OECD member states are not members of the OECD.

Participating Partners

The European Commission participates in the work of the OECD alongside the EU member states. The OECD designates Brazil, China, India, Indonesia, and South Africa as Key Partners, which participate in policy discussions in OECD bodies, and take part in regular OECD surveys.

Negotiating Membership

Argentina since 2022
Brazil since 2022
Bulgaria since 2022
Croatia since 2022
Indonesia since 2024
Peru since 2022
Romania since 2022

Applicants

Malta applied in 2007
Thailand applied in 2024
Ukraine applied in 2022

Expressed interest

Kazakhstan

Former Members

Free Territory of Trieste

The Free Territory of Trieste (Zone A) was a member of the OEEC until 1954, when it merged with Italy and ceased to exist as an independent territorial entity.

Accession talks terminated

Russia

In May 2007, the OECD decided to open accession negotiations with Russia. In March 2014, the OECD halted membership talks in response to Russia's role in that year's Crimean Annexation and continuous human and civil rights abuses. On 25 February 2022, the OECD terminated the accession process with Russia after it invaded Ukraine. In March 2022, Belarus was suspended from any participation in the OECD.

Budget

As of 2023^[update], the OECD's budget is composed of Part I and Part II programmes of work. All member countries contribute funding to the Part I budget, representing around two thirds of OECD Part I expenditure. The contributions (see table below) are based on both a proportion that is shared equally among member countries and a scale that is proportional to the relative size of their economies. The Part I budget for 2023 is €219.6 million. The part II budgets, meanwhile, cover programmes that are of interest to a limited number of members and are funded according to scales of contributions or other agreements among the participating countries. The consolidated Part II budgets for 2023 amount to €118.7 million.

The overall combined OECD budget for 2023 comes to €338.3 million.

Member countries' percentage shares of Part I budget contributions for 2023
Country	% contribution
Australia	3.1
Austria	1.5
Belgium	1.7
Canada	3.6
Chile	1.2
Colombia	1.2
Czech Republic	1.2
Denmark	1.4
Estonia	0.8
Finland	1.2
France	5.1
Germany	7.5
Greece	1.1
Hungary	1.0
Iceland	0.6
Ireland	1.3
Israel	1.5
Italy	3.9
Japan	9.0
South Korea	3.5
Latvia	0.8
Lithuania	0.9
Luxembourg	0.8
Mexico	2.6
Netherlands	2.3
New Zealand	1.1
Norway	1.5
Poland	1.7
Portugal	1.1
Slovakia	1.0
Slovenia	0.9
Spain	2.9
Sweden	1.6
Switzerland	2.1
Turkey	1.9
United Kingdom	5.4
United States	19.1
Total	100.0