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The OECD and Estonia - For a better world economy

Marten Kokk
Ambassador, Permanent Representation to the OECD

Why is joining the OECD so essential right now?

We are currently in a situation where the International Monetary Fund (IMF) is saying that the financial crisis is not yet a thing of the past, although we wish that it would be. In a recent interview, IMF Managing Director Dominique Strauss-Kahn noted that one of the reasons for this is that global recovery has been uneven. Strauss-Kahn urged European politicians to co-operate with each other, since an imbalance between various economies makes the global recovery particularly fragile. In addition, the current level of co-ordination has not been sufficient. In order to improve economic management in the region, European Union member states should rely more on central institutions and spend more time sharing their experiences.

Economist Angus Maddison, who has been a pioneer in the projection of long-term economic trends, has said that the pace of economic activity is determined by the historical background. Economies do not start from an empty place; economic growth is created by people’s ability to communicate and to share technologies and ideas, and these processes have deep historical and cultural roots.

The reasons for the success of the Organisation of Economic Cooperation and Development (OECD) must be sought in its history – the OECD is a forum of developed democratic countries, whose predecessor was created after World War II to co-ordinate the aid provided by the U.S. and Canada to rebuild Europe, known as the Marshall Plan. This also provides the direction for OECD activities today. The goal is the promotion of economic well-being and good governance through the exchange of ideas and experiences. Estonia will soon be able to base its economy and governance on these experiences.

  • Estonia became a full member of OECD after Estonian Ambassador to France Sven Jürgenson presented Estonia’s accession treaty to the French Foreign Ministry for storage, 9th November 2010
  • Estonia became a full member of OECD after Estonian Ambassador to France Sven Jürgenson presented Estonia’s accession treaty to the French Foreign Ministry for storage, 9th November 2010

In addition, the opinion of the OECD carries tremendous weight in the global economy because its member states are the most economically developed countries in the world. After the completion of Estonia’s accession process on 9 December, there are 34 countries in the OECD. The accession of Russia, which received an invitation at the same time as Estonia, is still in the distant future. After that happens, the OECD will probably halt its enlargement process for an extended period. Therefore it was important for Estonia to be included and to participate successfully in the current enlargement round.

How will Estonia benefit from accession to the OECD?

The OECD assembles the world’s best experts in the fields of economics and governance by being an internationally recognised and accepted centre for economic analysis, the diverse activities of which cover the entire governmental sector. For example, if we are not able to develop a good plan for administrative reform, with the help of the OECD it will definitely be possible – without the slightest doubt.

The OECD is primarily a place where countries exchange experiences. About 200 committees and working groups operate within the framework of the organisation. These deal with various fields of activity: economic analysis, regional development, agriculture, commerce, entrepreneurship, education, health care, employment, development co-operation, financial markets, pensions, investments, tax policies, the fight against corruption, business management, public administration, biotechnology, communication technology, fishery, energy, the environment, and sustainable development.

In addition to the exchange of information in working groups and committees, OECD experts regularly compile analyses and reviews in various fields of activity. These cover either a certain sector in a specific country, or are a comparison of the situations in a certain sector across various countries (e.g. the PISA study of educational efficiency, in which Estonia has stood out with its good results). OECD analyses also include valuable recommendations for shaping policies in the corresponding field of activity.

  • Foreign Minister Urmas Paet meeting with OECD Secretary General Angel Gurria
  • Foreign Minister Urmas Paet meeting with OECD Secretary General Angel Gurria

Estonia has something to offer too – for instance, experience in carrying out successful economic reforms (from kolkhozes to a market economy); in building an e-state and e-service sector, etc.; as well as in developing public services. In Estonia, the public sector at the national level is actually very small and inexpensive, and I believe also quite well motivated and managed.

People who have participated in OECD meetings know that there is great interest in Estonia. This interest will no doubt have a positive impact on Estonian businesses that are working out specific solutions for accessing new markets, as well as for Estonia’s reputation in the world generally. OECD membership is definitely better “advertising” for us than buying air time on CNN or BBC to advertise our country.

It is also important that the OECD is known for its flexibility and speed of response –emerging problems are identified while they are still germinating so that resolutions can be proposed at the right time to help policymakers make their decisions. In addition, their economic analysts are really very good.

The principles developed by the OECD are often adopted by the entire world, and in some fields of activity become the guidelines or norms that are observed even by countries that are not members of the organisation. For instance, the agreements for the prevention of double taxation that are concluded by most countries (including Estonia) are based on an OECD sample agreement. Participation in the development of such widely accepted international principles also provides us with the opportunity to implement what we have learned through our experiences and learn about better practices.

Accession to the OECD – One of Estonia’s three key foreign policy events in 2010

Estonia had several large foreign policy successes in 2010. One of the most important and noteworthy was remaining – clearly and very successfully – on the course to euro adoption, as well as the organising of the informal meeting of NATO foreign ministers in Tallinn. Estonia’s accession to the OECD in December 2010 is also, undoubtedly, a historical step for Estonian foreign policy. After all, Estonia will only join NATO, the EU, UN, OECD, and other organisations once.

When this yearbook is published, Estonia will have been the 34th OECD member state for a few months already. The road that had to be travelled to reach the OECD has been very long. Estonia took its first official step towards the OECD in 1996, when the foreign ministers of the three Baltic states sent the OECD a joint resolution asking for a Baltic Regional Programme to be developed. At the same time, the wish was expressed to join the OECD in the future. The Baltic Regional Programme was approved by the OECD Council in 1998, and until the programme ended in 2004 it was the primary basis for relations between Estonia and the OECD. The accession invitation to join the OECD was received by Estonia in 2007, and three years later we achieved full member status.

Estonia’s expectations related to the OECD

In general, we expect the same from the OECD as we do from other international organisations – an increase in Estonia’s well-being and increased influence in the international context. Since the OECD is an economic organisation, in the given context an increase in well-being is primarily tied to strengthening our economic analysis. However, the strengthening of one’s economy cannot happen in isolation – it can only occur through development in various fields of activity, from social policy to public administrative reform.

To mention more tangible aspects, it was already mentioned that the OECD is a very professional analysis centre. OECD Secretary-General Angel Gurría has said that the OECD is like a gym where all the necessary machines exists for developing one’s muscles, but everyone must decide which of these to use, and which muscles to train. From this point on we hope to make maximum use of these machines in the interests of our country and to also add more power to the machines themselves.

Last updated: 23 February 2011

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