When the OECD launched its Growth Project in 1999 it was not clear whether the divergences in growth performance were permanent. Today it is clear not only that the divergences are well entrenched, but also that policy differences are largely responsible. To drive this message home the project has continued along three fronts:
Indicators to Measure Decoupling of Environmental Pressure from Economic Growth
This report aims to assist countries in realising their sustainable development objectives.The OECD undertook the task of developing agreed indicators to measure progress across all three dimensions of sustainable development. This includes indicators that can measure the decoupling of economic growth from environmental degradation and that might be used in conjunction with other indicators in OECD's economic, social, and environmental peer review processes.
Working Together Towards Sustainable Development: The OECD Experience
This report responds to a request by OECD Ministers to develop an OECD input to the World Summit on Sustainable Development (WSSD). The WSSD brought together tens of thousands of participants, including heads of State and Government, national delegates and leaders from non-governmental organisations (NGOs), businesses and other major groups to review progress towards sustainable development in the ten years since the Rio Earth Summit. The OECD report assesses the contribution that OECD countries make to sustainable development both at home and internationally, and brings together the main lessons learned through the Organisation's extensive work on sustainable development.
OECD and the New Partnership for Africa's Development (NEPAD)
Ministers from countries adhering to the New Partnership for Africa's Development (NEPAD) and OECD ministers agreed in mid-2002 to seek ways in which the OECD could help implement NEPAD's objectives. The OECD has launched a series of initiatives covering the three specific areas for co-operation agreed by Ministers: sharing the OECD's experience in designing and implementing peer review mechanisms; increasing African participation in OECD activities with non-members; and discussing development effectiveness and improved aid management.
The annual African Economic Outlook provides information on economic and social developments in 22 African countries, as well as on their short-term prospects. The country-by-country analysis uses a common analytical framework, allowing for comparison across countries. This common framework includes macroeconomic forecasts for the following two years with an analysis of the social and political context. The AEO places the evolution of African economies in the global context, focussing on a particular topic (in 2002/03 on privatisation, in 2003/04 on energy) and is completed by a statistical annex. It provides a knowledge base to contribute to the establishment of the NEPAD African Peer Review Mechanism (APRM). The AEO, jointly prepared by the African Development Bank (AFDB) and the OECD Development Centre, is published annually in the spring.
The Sahel and West Africa Club is an informal forum that creates and facilitates links between OECD member countries and west African countries and between the public and the private sectors. Work on regional development, the core of the Club's activities, focused in 2002 on competitiveness, governance and democracy, post-conflict development and regional integration.
The Club's secretariat began updating information on structural developments in the regional economy, carrying out a critical review of support structures in the private sector and analysing the structure of family-based agriculture. It also began a test exercise on regional integration in postconflict situations in the Mano River Union (Guinea, Liberia and Sierra Leone). Work is also under way on cross-border local development in the Sikasso-Korhogo-Bobo Dioulasso region of Mali-Ivory Coast-Burkina Faso. The Club is preparing a framework document for work on governance which will be completed in 2003.
The Club also continued work on transferring regional management of its ECOLOC method for analysing the local economy in West Africa to the regional Municipal Development Programme.
Contributing to global development is a key objective of the OECD. This objective is vital in order to achieve poverty reduction and sustainable development globally. OECD countries play a major role in this area, accounting for 95% of total official development assistance (ODA). Much of the Organisation's development work focuses on how to use this aid in the most effective manner to reduce poverty and ensure sustainable development in developing countries.
During 2002, a number of donor countries announced major aid increases for the next four years as part of strengthened international efforts to achieve the Millennium Development Goals (MDGs) for poverty reduction. Most of the Goals were originally selected by OECD donor countries in 1996 and incorporated by UN Heads of State in their Millennium Declaration in 2000. With respect to Africa, OECD is particularly concerned with a number of topics, including:
Developed nations pledged at an international conference on financing for development in Monterrey in March 2002 to increase ODA to developing countries, promising a very different aid scenario from the 1990s, when aid flows declined. These and other commitments could raise ODA in real terms as much as US$ 15 billion by 2006, boosting aid from OECD donor countries in the Development Assistance Committee (DAC) back to its 1995 level of 0.26% of gross national income (GNI), up from 0.22% in 2001.
A study carried out by the Development Centre in 2003, Public Opinion and the Fight Against Poverty, sums up existing data on public attitudes to international development and concludes that public support remains high, thus underpinning official efforts to maintain and increase aid levels.
But simply increasing aid is not enough. The Monterrey meeting also produced a two-way commitment emphasising the fundamental role of good governance in developing countries in making aid more effective and the need for better policy coherence on the part of donor countries. These commitments were central elements of the OECD annual ministerial meeting in May 2002. For the first time this included a joint session with DAC ministers and produced a special statement on " OECD action for a shared development agenda " covering areas such as policy coherence, governance and aid effectiveness. African ministers representing the New Partnership for Africa's Development (NEPAD) also met OECD ministers .
Improving aid effectiveness to ensure best value for the limited resources available is a fundamental part of DAC work. The focus is now shifting towards measurable results of progress towards the MDGs in individual developing countries.
DAC also provides practical guidance on how donors can simplify their procedures and regulations to improve aid effectiveness. Papers were produced in 2002 outlining good practice in a number of areas, including coordination; preparing projects; and reporting and monitoring and will be presented to an international development forum in Rome in 2003.
Peer reviews Development co-operation peer reviews check members' performance against their own objectives, DAC guidelines and good practice. A survey in 2002 confirmed the high priority that DAC members attach to the reviews and suggested a number of improvements. DAC peer reviews in 2002 covered Canada, the European Commission, Greece, Spain and the United States. For the first time, observers from developing countries were involved in a peer review process at the request of the Canadian government. Peer reviews of Denmark, Finland, Ireland, Japan and Luxembourg are planned in 2003, as well as an assessment of donor activities in Tanzania.
Policy coherence for development New OECD work on policy coherence for development will assess the impact of OECD countries' policies on developing countries and identify more effective ways to promote development. This includes efforts under the Doha Development Agenda to ensure that a new round of global trade liberalisation increases benefits to the developing world.
Aid is only a small part of our efforts to create growth for all countries, making it important to define the concept of development more broadly. Aid produces better results if donor countries' policies in areas such as investment, trade, agriculture and development support each other, for instance when donor countries combine support for African countries' efforts to avoid or minimise violent conflict with action to limit arms exports. But when policies are incoherent, aid effectiveness is reduced, for example, when OECD countries spend sizeable amounts of ODA on building trade capacity in African countries but at the same time restrict the same countries' access to their markets.
Trade, development and capacity building The OECD has boosted the development aspect of its trade work in response to the Doha Development Agenda. A workshop in Hong Kong , China, in June brought together more than 80 participants from OECD economies and beyond to discuss investment, competition, transparency in government procurement and trade facilitation. The meeting was organised in co-operation with the Asia Pacific Economic Co-operation forum (APEC) and the government of Hong Kong, China. A second workshop in New Delhi, India in December addressed developing country market access concerns arising from OECD countries' environmental requirements.
A regional workshop on trade capacity building held in Kenya, in August, discussed how Africa can increase its capacity to generate higher growth and poverty reduction through effective trade and investment. In April 2003 the OECDalso organised an international conference on trade and investment in Africa in Dakar, Senegal, which brought together leaders from the African private sector, the African public sector, leading international experts and academics, and the international donor community in order to help African countries make the most of the benefits of globalisation. In June 2003, the OECD will hold and international meeting on The Market Access Challenge in the Doha Development Agenda to allow OECD member and non-member governments to discuss the opportunities and challenges of improving market access through the removal of trade barriers, highlighting the development aspects of trade liberalisation.
Trade-related technical assistance and capacity-building needs are a central component of the Doha Development Agenda. In September, the OECD issued a CD-ROM containing more than 40 OECD trade-related analytical publications and reports, a valuable tool for governments and the public to enhance their understanding of trade policy issues and negotiating procedures. In December, the OECD and the World Trade Organization (WTO) also launched a user-friendly joint database providing information about trade-related technical assistance and capacity building. Trading Competitively: Trade Capacity Building in sub-Saharan Africa was a highlight of work on integrating developing countries into the world trading system. This book found that despite significant policy improvements in recent years, the inadequate provision of trade support services, lack of coherence in government policies and high transaction costs remain major obstacles to the expansion of export businesses in the region.
Poverty and health
Investment in health is central to economic development and poverty reduction. Better health itself is an important objective of development and so figures prominently in the Millennium Development Goals. Pro-poor health policies are not just about ensuring provision of accessible quality healthcare but also cover other areas that affect the health of the poor such as education, nutrition, water and sanitation. In addition, they encompass global action on trade and the funding of health research as they affect health and poverty reduction in developing countries. In 2002 the DAC extended its work in this area, building on the DAC Guidelines on Poverty Reduction endorsed by ministers in 2001. A new reference document was published in early 2003, and identifies the key components of a pro-poor health approach and provides a framework for action. The 2002 publication Education and Health Expenditure and Poverty Reduction in East Africa , provided a cogent analysis of the poverty-reduction effect of social spending in very poor countries.
3. Financial security
The OECD Corporate Governance Principles were agreed in 1999 after extensive consultations with business, civil society as well as non-member countries. Since that time we have worked in partnership with the World Bank to establish five regional roundtables and related action plans for reform. In light of this experience and recent events, the Principles are now being reviewed to strengthen their content and to provide more substantial guidance on applicability, implementation and enforcement. The IMF, World Bank, the Financial Stability Forum and the BIS participate in this OECD work. The partnership with the World Bank provides a platform for spreading good governance principles widely among non member partners.
The OECD Guidelines for Multinational Enterprises provide the only comprehensive multilaterally endorsed framework for promoting corporate social responsibility worldwide. They were updated in 2000 following an extensive consultation process and strong participation of non-members as well as civil society.37 countries now adhere to this instrument. The Guidelines comprise a benchmark for good corporate behaviour and implementation procedures in which all major stakeholders -- governments, business, labour and other civil society groups -- have a recognised role. OECD holds annual meetings to review progress in implementation. Work on the Guidelines can contribute to advancing the international integrity agenda; the OECD Roundtable on Corporate Responsibility in June will be devoted to the fight against corruption.
The OECD Anti-Bribery Convention is being vigorously monitored to ensure effective implementation by adhering governments and a level playing field for business. Open policy issues -- such as bribery acts in relation to foreign political parties, candidates for public office or the use of foreign subsidiaries in bribery transactions -- need to be addressed and emphasis should be given toraising awareness and preventing corruption. OECD is actively supporting the reform efforts of non-member partners by sharing information on best practices and successful anti-corruption programmes, in co-operation with the World Bank, IMF, regional development banks, Council of Europe and civil society groups.
4. The fight against the financing of terrorism
Financial Action Task Force on Money Laundering (FATF)
The FATF is an independent intergovernmental body whose Secretariat is housed at the OECD. The FATF helps governments to combat terrorist financing and prevent criminal money laundering. A key aspect of its work in 2002 involved assessing whether members' legislation complied with Eight Special Recommendations on terrorist financing drawn up after the 11 September 2001 terrorist attacks. These include making the financing of terrorism a criminal offence, freezing or confiscating terrorist assets, reporting suspicious transactions linked to terrorism and imposing anti-money laundering requirements on alternative remittance (informal money transfer) systems. By February 2002, FATF members had completed the first phase of a selfassessment exercise and by December more than 100 non-FATF members had followed suit.