VBM logo


Learn more: Articles  |  Books  |  Dictionary  |  Faq  |  Home  |  Leaders  |  Organizations  |  Search


 Corporate Governance - Measuring Industrial Performance - Sustainable Development

OECD Organization Profile

The OECD (O) 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 and innovation.

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 OECD.

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 international community.

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.


Activities Services


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 standard-setting bodies.

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."

Issues addressed by the revised Corporate Governance Principles include:

Institutional investors
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.

Shareholder rights
The rights of investors must be strengthened. Shareholders should be able to remove board members and participate effectively in the nomination and election processes;
They should be able to make their views known about executive and board remuneration policy and any equity component should be subject to their approval.

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.

Board responsibilities
The duties and responsibilities of the board have been clarified as fiduciary in nature, particularly important where company groups are concerned;
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 financial reporting.

Click here to see the full version of the OECD Corporate Governance Principles 2004


Compare also:  Sarbanes-Oxley  |  World Trade Organization  |  IASB  |  FASB  |  Global Corporate Governance Forum


OECD - home page



About us  |  Advertise  |  Privacy  |  Support us  |  Terms of Service

2022 Value Based Management.net - All names by their owners