The OECD report finds that income inequality has been rising in most OECD countries over the past two decades. Regulatory reforms to product and labor markets that were intended to boost employment and growth have also contributed to widening wage disparities. While economic growth has occurred, the benefits have disproportionately favored the rich over the poor and middle-class in many countries. If left unaddressed, growing inequality could undermine social cohesion.

1. [Type text]
GUIDE: PROF. RAVI KUMAR
OECD COUNTRIES AND
CONTEMPORARY ISSUESemerging
economies’ perspective

2. Source:OECD
WHO ARE OECD COUNTRIES
Twenty countries originally signed the Convention on the Organisation for
Economic Co-operation and Development on 14 December 1960. Since then
fourteen countries have become members of the Organisation.

3. Here is a list of the Member countries of the Organisation and the dates on which
they deposited their instruments of ratification.

4. Current membership:
1. Australia
2. Austria
3. Belgium
4. Canada
5. Chile
6. Czech Republic
7. Denmark
8. Estonia
9. Finland
10. France
11. Germany
12. Greece Hungary
13. Iceland
14. Ireland
15. Israël
16. Italy
17. Japan
18. Korea
19. Luxembourg
20. Mexico
21. Netherlands
22. New Zealand

5. 23. Norway Poland
24. Portugal
25. Slovak Republic
26. Slovenia
27. Spain
28. Sweden
29. Switzerland
30. Turkey
31. United Kingdom
32. United States
Other countries joined in, starting with Japan in 1964. Today, 34 OECD member
countries worldwide regularly turn to one another to identify problems, discuss and
analyses them, and promote policies to solve them.
The track record is striking. The US has seen its national wealth almost triple in the
five decades since the OECD was created, calculated in terms of gross domestic
product per head of population. Other OECD countries have seen similar, and in
some cases even more spectacular, progress.
In a Supplementary Protocol to the Convention on the OECD of 14 December
1960, the signatory countries agreed that the European Commission should take
part in the work of the OECD.
European Commission representatives work alongside Members in the preparation
of texts and participate in discussions on the OECD’s work programme and
strategies, and are involved in the work of the entire Organisation and its different
bodies.

6. While the European Commission’s participation goes well beyond that of an
observer, it does not have the right to vote on decisions or recommendations
presented before Council for adoption..
Currently, 25 non-members participate as regular observers or full participants in
OECD Committees. About 50 non-members are engaged in OECD working parties,
schemes or programmes.
The OECD conducts a policy dialogue and capacity building activities with non-
members (Country Programmes, Regional Approaches and Global Forums) to share
their views on best policy practices and to bear on OECD's policy debate.
The OECD's Centre for Co-operation with Non-Members develops and oversees the
strategic orientations of the relations with non-members.
On 16 May 2007, the OECD Ministerial Council decided to strengthen OECD's co-
operation with Brazil, China, India, Indonesia and South Africa, through a
process of enhanced engagement.
The countries listed are key partners to the OECD. The countries contribute to the
OECD's work in a sustained and comprehensive manner by direct and active
participation in substantive bodies of the Organisation determined by mutual
interest.
The OECD explores the possibilities for enhanced co-operation with selected
countries and regions of strategic interest to the OECD, giving priority to South
East Asia with a view to identifying countries for possible membership.
The OECD has been criticised by several civil society groups and developing
countries. The main criticism has been the narrowness of the OECD because of its
limited membership to a select few rich nations.

7. HISTORY:
The Organisation for European Economic Cooperation (OEEC) was established in
1948 to run the US-financed Marshall Plan for reconstruction of a continent
ravaged by war. By making individual governments recognise the interdependence
of their economies, it paved the way for a new era of cooperation that was to change
the face of Europe. Encouraged by its success and the prospect of carrying its work
forward on a global stage, Canada and the US joined OEEC members in signing the
new OECD Convention on 14 December 1960. The Organisation for Economic
Co-operation and Development (OECD) was officially born on 30 September 1961,
when the Convention entered into force.
Way of OECD
OECD uses its wealth of information on a broad range of topics to help
governments foster prosperity and fight poverty through economic growth and
financial stability. We help ensure the environmental implications of economic and
social development are taken into account.

8. OECD's work is based on continued monitoring of events in member countries as
well as outside OECD area, and includes regular projections of short and medium-
term economic developments. The OECD Secretariat collects and analyses data,
after which committees discuss policy regarding this information, the Council
makes decisions, and then governments implement recommendations.
Peer reviews
Mutual examination by governments, multilateral surveillance and a peer review
process through which the performance of individual countries is monitored by their
peers, all carried out at committee-level, are at the heart of our effectiveness.
An example of the peer review process at work is to be found in the Working Group
on Bribery, which monitors the implementation by signatory countries of the OECD
Convention on Combating Bribery of Foreign Officials in International Business
Transactions.
Agreements, standards and recommendations
Discussions at OECD committee-level sometimes evolve into negotiations where
OECD countries agree on rules of the game for international co-operation. They can
culminate in formal agreements by countries, for example on combating bribery, on
arrangements for export credits, or on the treatment of capital movements. They
may produce standards and models, for example in the application of bilateral
treaties on taxation, or recommendations, for example on cross-border co-operation
in enforcing laws against spam. They may also result in guidelines, for example on
corporate governance or environmental practices.
Publications

9. OECD publications are a prime vehicle for disseminating the Organisation's
intellectual output. OECD publishes regular outlooks, annual overviews and
comparative statistics. Among them:
 OECD Economic Outlook assesses prospects for member and major non-
member economies.
 OECD Fact book is a key reference tool for everyone working on economic
and policy issues.
 OECD Economic surveys provide individual national analyses and policy
recommendations.
 Going for Growth presents comparative indicators and evaluations of national
performance.
Uruguay Round
The Uruguay Round was the 8th round of multilateral trade negotiations (MTN)
conducted within the framework of the General Agreement on Tariffs and Trade
(GATT), spanning from 1986 to 1994 and embracing 123 countries as "contracting
parties".

10. The Round led to the creation of the World Trade Organization, with GATT
remaining as an integral part of the WTO agreements. The broad mandate of the
Round had been to extend GATT trade rules to areas previously exempted as too
difficult to liberalize (agriculture textiles) and increasingly important new areas
previously not included (trade in services, intellectual property, investment policy
trade distortions).
The Round came into effect in 1995 with deadlines ending in 2000 (2004 in the
case of developing country contracting parties) under the administrative direction of
the newly created World Trade Organization (WTO).
One of the achievements of the Uruguay round would be the Uruguay Round
Agreement on Agriculture, administered by the WTO, which brings agricultural
trade more fully under the GATT. The Agreement on Agriculture (AoA) brought
national agricultural policies under multilateral rules and disciplines, with the long-
term objective of establishing "a fair and market-oriented agricultural trading
system ... through substantial progressive reductions in agricultural support and
protection." The AoA includes specific binding commitments by WTO members to
improve market access and to reduce production- and trade-distorting domestic
support and export subsidies.
Prior to the Uruguay Round, conditions for agricultural trade were deteriorating
with increasing use of subsidies, build-up of stocks, declining world prices and
escalating costs of support
It provides for converting quantitative restrictions to tariffs and for a phased
reduction of tariffs. The agreement also imposes rules and disciplines on
agricultural export subsidies, domestic subsidies, and sanitary and phyto-sanitary
(SPS) measures through the Agreement on the Application of Sanitary and Phyto-
sanitary Measures.

11. Criticism
Uruguay Round was mainly criticized for paying insufficient attention to the special
needs of developing countries. The developing countries’ lack of experience in
WTO negotiations and lack of knowledge of how the developing economies would
be affected by what the industrial countries wanted in the WTO new areas; the
intensified mercantilist attitude of the GATT/WTO’s major power, the US.; the
structure of the WTO that made the GATT tradition of decision by consensus
ineffective, so that a country would not preserve the status quo, were the reasons for
this imbalance.
OECD MUST GROW TO ABSORB THE GROWING TALENT POOL:
The Organisation for Economic Cooperation and Development (OECD) has just
released a new report, which is part of the Education Indicators in Focus series,
looking at higher education graduates between the ages of 25 and 34 in OECD and
Group of Twenty member countries – 42 countries in total.
The expansion of higher education in rapidly-developing G20 nations has reduced
the share of tertiary graduates from Europe, Japan and the United States in the
global talent pool.
If current trends continue, China and India will account for 40% of all young people
with a tertiary education in G20 and OECD countries by the year 2020, while the
United States and European Union countries will account for just over 25%.
The strong demand for employees in “knowledge economy” fields (i.e., STEM)
suggests that the global labour market can continue to absorb the increased supply
of highly-educated individuals.

12. China is expected to produce 29% of all higher education graduates aged 25-34 (up
from 18% in 2010); United States is expected to produce 11% of all those graduates
(down from 14% in 2010);
India, which produced 11% of graduates in 2010, is expected to overtake the United
States and produce 12% of the share of graduates by the end of this decade;
UK’s share should increase from 3% in 2010 to 4% in 2020; significant declines are
forecasted for Japan (from 7% to 4%) and the Russian Federation (from 11% to
7%); in 2020, 6% of young graduates will hail from Indonesia.
Share of 25-34 year-olds with a tertiary degree across OECD and
G20countries(2000, 2010, 2020)
SOURCE: OECD
In 2000, there were 51 million 25-34 year-olds with higher education (tertiary)
degrees in OECD countries, and 39 million in non-OECD G20 countries.

13. More importantly, between 1998 and 2008, employment in HRST occupations
increased at a faster rate than total employment in all OECD and G20 countries
with available data.
SOURCE: OECD
Over the past decade, however, this gap has nearly closed, in large part because of
the remarkable expansion of higher education in this latter group of countries. For
example, in 2010 there were an estimated 66 million 25-34 year-olds with a tertiary
degree in OECD countries, compared to 64 million in non-OECD G20 countries.
By contrast, the United States and the European Union countries are expected to
account for just over a quarter of young people with tertiary degrees in OECD and
G20 countries.
In fact, these projections may underestimate the future growth of the global talent
pool, because a number of countries are pursuing initiatives to increase tertiary
attainment rates even further.

14. For instance, in 2009 the United States established a goal to become the nation with
the highest proportion of 25-34 year-old university graduates by 2020. To meet this
target, officials estimate that the proportion of younger adults in the US with a
tertiary degree will need to reach 60% by the end of the decade.
It’s likely that the global talent pool
will continue to grow across most
OECD and G20 countries, and that the
fast-growing G20 economies will
continue to account for an increasingly
large share. According to OECD
calculations, there will be more than
200 million 25-34 year-olds with
higher education degrees across all
OECD and G20 countries by the year
2020
SOURCE: OECD
In addition, the European Union established a goal to increase the percentage of 30-
34 year-olds who have completed tertiary education by at least 40% in each EU
country by 2020. In 2009, Belgium, France, Ireland, Luxembourg, the Netherlands,
Sweden, Switzerland and the United Kingdom already reached this goal for the
larger 25-34 year-old population.
Meanwhile, China – which has quintupled its number of tertiary graduates and
doubled its number of tertiary institutions in the last 10 years – is also pursuing
ambitious objectives. In many ways, the rapid expansion of the global talent pool –

15. and its expected growth in the future – is no surprise. Since higher levels of
education are strongly linked to higher employment rates and larger earnings
premiums, individuals have strong incentives to pursue more education.
Similarly, as national economies continue to shift from mass production to
“knowledge economy” occupations, countries have strong incentives to build the
skills of their populations through higher education.
At the same time, the explosive growth of the talent pool raises an important
question: ‘Will the global labour market continue to absorb the increased supply of
higher-educated workers in the future?’
Evidence from science and technology occupations – jobs emblematic of the
knowledge economy – may provide some insights.
On average across OECD countries, human resources in science and technology
occupations (HRST) represented more than a quarter of total employment in 2010.
In Luxembourg, Sweden, Denmark, and Switzerland, HRST workers accounted for
more than 40% of all employees, while in India, China, and Indonesia, they
accounted for less than 10%.
The average annual growth rate was uniformly positive, ranging from 0.3% in
China to 5.9% in Iceland. This consistently upward trend – and even the

16. comparatively smaller shares of HRST occupations in fast-growing economies like
China – signals that the demand for employees in this knowledge economy sector
has not reached its ceiling.
Applied to the overall labour market, these findings suggest that individuals from
increasingly better-educated populations will continue to have good employment
outcomes, as long as economies continue to become more knowledge-based.
These findings also suggest that countries would be well-advised to pursue efforts
to build their knowledge economies, in order to avoid skills mismatches and lower
private and public returns on education among their higher-educated populations in
the future.
The global talent pool has never been larger – and will continue to expand, with
rapidly-growing G20 nations likely leading the way.
INCOME INEQUALITY IS RISING IN MOST OECD COUNTRIES:
According to a new OECD report, Growing Unequal? Income Distribution and
Poverty in OECD Countries, a combination of globalization, economic growth, and
other societal changes has not only led to a larger gap between rich and poor
nations; it’s also led to a growing gap between rich and poor in more than three-
quarters of OECD countries over the past two decades.
Growing inequality is divisive. It divides societies, it divides regions within
countries, and it carves up the world between rich and poor. Greater income
inequality stifles upward mobility between generations, making it harder for
talented and hard-working people to get the rewards they deserve. Ignoring
increasing inequality is not an option.

17. Of the OECD countries, except for Mexico and Turkey, the United States has
highest inequality level and poverty rate. Since 2000, income inequality has
increased rapidly, accentuating a long-term trend that began in the 1970s.
In the two decades from 1980 to 2008, most OECD countries carried out regulatory
reforms to strengthen competition in the markets for goods and services and to
make labour markets more adaptable.
All countries, for example, significantly relaxed anti- competitive product-market
regulations and many also loosened employment protection legislation (EPL) for
workers with temporary contracts. Minimum wages also declined relatively to
median wages in a number of countries between the 1980s and 2008.
Wage- setting mechanisms also changed: the share of union members among
workers fell across most countries, although the coverage of collective bargaining
generally remained rather stable over time.
A number of countries cut unemployment benefit replacement rates and, in an
attempt to promote employment among low-skilled workers, some also reduced
taxes on labour for low-income workers.
These changes in policies and institutions affected the ways in which globalisation
and technological changes translated into distributional changes. On the one hand,
past empirical evidence points to the significant positive impact of reforms on
employment levels (e.g. OECD, 2006).
Greater product market competition in particular has been found to increase
aggregate employment by reducing market rents and expanding activity, which in
turn leads to stronger labour demand .

18. There is
also some
evidence
that
lower
unemploy
ment
benefit
replacem
ent rates
and lower
tax
wedges
are
associate
d with
higher
employm
ent. On
the other
hand,
most policy and institutional reforms also contributed to widening wage disparities,
as more low-paid people entered employment and the highly skilled.
Report further finds that the economic growth of recent decades has benefitted the
rich more than the poor. In some countries, such as Canada, Finland, Germany,
Italy, Norway and the United States, the gap also increased between the rich and the
middle-class.

19. Countries with a wide distribution of income tend to have more widespread income
poverty. Also, social mobility is lower in countries with high inequality, such as
Italy, the United Kingdom and the United States, and higher in the Nordic countries
where income is distributed more evenly.
ECONOMIC OPPURRTUNITIES WITH OECD:
Countries that a few decades ago were still only minor players on the world stage.
China, India and Brazil have emerged as new economic giants.
Most of the countries that formed part of the former Soviet bloc have either joined
the OECD or adopted its standards and principles to achieve our common goals.

20. Russia is negotiating to become a member of the OECD, and now OECD has close
relations with Brazil, China, India, Indonesia and South Africa through “enhanced
engagement” programme. Together with them, the OECD brings around its table 40
countries that account for 80% of world trade and investment, giving it a pivotal
role in addressing the challenges facing the world economy.
TRADE POSSIBILITIES WITH OECD COUNTRIES:
The OECD's "Enhanced Engagement" outreach to China, Brazil, Indonesia,
Indonesia and South Africa promotes market-based and rules-based policies in
these major emerging economies. In turn, this raises growth and increases the
openness needed to generate U.S. exports and U.S. jobs.
Although OECD members continue to represent 60.5 percent of world trade and
71.9 percent of global GNI, their share of global GDP is shrinking as major new
emerging economies assume a greater global share.
In 2007, OECD members agreed that an outreach to major emerging economies
China, Brazil, Indonesia and South Africa and to the South East Asia region would
expand the OECD's global reach, policy impact and relevance.
Participating countries contribute to the OECD's work in a sustained and
comprehensive manner under the "Enhanced Engagement" partnership. A central
element of the program is the promotion of direct and active participation of these
countries in the work of substantive bodies of the Organization. Each country
participates in OECD work through a program containing a mix of several
elements, notably:
participation in OECD committees,
regular economic surveys,

21. adherence to OECD instruments,
integration into OECD statistical reporting and information systems, and
policy-specific peer reviews.
The actual mix and the sequencing of the elements is determined by mutual interest.
While Enhanced Engagement programs are distinct from accession to the OECD,
they have the potential in the longer term to lead to membership of the
Organization, should the participating countries decide to explore that possibility.
The OECD also works closely with over seventy other non-member economies in
areas from exchange of tax information to educational assessments. OECD free-
market principles and internationally recognized benchmarking and peer review
support good economic governance in these countries helping to increase
prosperity, investment and trade in goods and services - all of which benefit the
United States.
BIBLIOGRAPHY:
wordpress.com
Cline, William R., (1 984), Exports of Manufactures from Developing Countries:
Performance and Prospects
http://www.google.co.in
OECD, (1 979), The lmpact of the Newly-industrializing Countries on Production
and Trade in Manufactures
Valdes, A. Zietz, J.,( 1 9801, Agricultural Protection in OECD countries: Its Cost to
Less Developed Countries,
http://HlDK-UUQ
World Bank, (1 9831, World Development Report (Washington, D.C.).

22. http://www.oecd.org/conferencecentre
Organisation for Economic Co-operation and Development
OECD's portal for books, reports, statistics, working papers and journals
International Futures Programme
OECD Forum
Text of the OECD Guidelines for Multinational Enterprises
The OECD Observer
OECD Statistical portal
OECD-UNDP Partnership for Democratic Governance
Statistics
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OECD Factbook
On-Line Guide to OECD Intergovernmental Activity oecd.org. Retrieved 2011-11-
04.
Organisation for Economic Co-operation and Development, Oecd.org. Retrieved
2013-05-30.