The OECD’s Positive Peer Pressure

According to a recent report, roughly 52% of the OECD’s policy recommendations are adopted. But, while the OECD cannot enforce its advice, its mechanism of multilateral surveillance can help policymakers to appraise the costs and benefits of potential reforms and stimulate them to take action.

SOUTH ORANGE, NEW JERSEY – If an international organization made recommendations for improving a country’s economy, and the country adopted fewer than half of them, the organization might seem like a failure. But an international organization should be judged according to the quality of the information and advice that it provides, not by whether governments listen. Indeed, measuring its success solely on the basis of compliance ignores the purpose: to encourage – and facilitate – reform by informing officials about its costs and benefits.

Every 18 months, the Organization for Economic Cooperation and Development releases an economic survey of each of its 34 member countries, including a list of previous recommendations and their implementation status. In its 2010 survey of the United States, the OECD made 29 recommendations, from rebuilding the national electricity grid to expanding health-care coverage to implementing a cap-and-trade scheme. But, according to its latest US survey, only 14 recommendations have been adopted.

This pattern is not unique to the US. According to a recent report that evaluated OECD surveillance in 24 randomly selected member countries, 52% of the OECD’s economic recommendations are adopted – a level of adoption that is consistent over time and across different types of issues.

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