The OECD and the world economy
- Author(s):
- Parliamentary Assembly
- Origin
- Assembly debate
on 5 October 2005 (29th Sitting) (see Doc. 10645, report of the Committee
on Economic Affairs and Development, rapporteur: Mr Vrettos). Text
adopted by the Assembly on 5 October 2005 (29th Sitting).
- Thesaurus
1. The enlarged Parliamentary Assembly,
composed of delegations of the Organization for Economic Co-operation
and Development (OECD) and Council of Europe member states, has
examined the recent activities of the OECD as they relate to the
world economy, in the light of the report prepared by the enlarged
Assembly’s Committee on Economic Affairs and Development and the
contributions from various other committees.
2. It welcomes the overall solid growth of the world economy,
thanks in particular to continued growth in the United States as
well as in China, India, Brazil, the Russian Federation and numerous
emerging economies. All of these increasingly provide the main impetus
to global economic growth and the enlarged Assembly welcomes the
OECD’s growing co-operation with them, making its reach and sphere
of influence global, even if its membership is not.
3. The enlarged Assembly notes with satisfaction that inflation
in the OECD area has nevertheless remained well contained, likely
reflecting both rising productivity and increased competition, but
also a richer supply of goods and services that results from rapidly
increasing world trade. In the interest especially of emerging and
developing economies and for the realisation of the United Nations
Millennium Development Goals, it is vital to develop further an
open trading and financial system that is rules-based, predictable
and non-discriminatory and to provide development assistance to
countries committed to poverty reduction. This can be achieved notably
through the successful conclusion, under the auspices of the World
Trade Organization (WTO), of the Doha Development Agenda which also
reflects the efforts to eliminate poverty, improve social conditions
and raise living standards in the world economy. The enlarged Assembly
asks the OECD, together with the WTO, to identify new principles
to guide world trade in order to encourage technological investment
flows to countries in particular need.
4. However, a number of worrying developments cloud the horizon.
The huge and steadily rising current account deficit of the United
States is unsustainable over time and may lead to a painful correction
by markets as the world’s savings are spent to compensate for low
United States domestic savings. In this context, it is important
that the United States and other countries implement macroeconomic
policies in an appropriate and timely manner.
5. The enlarged Assembly also hopes that countries which deliberately
maintain weak national currencies vis-à-vis others will cease doing
so as soon as possible and believes that countries all over the
world should adopt a more flexible exchange rate regime in order
to gradually improve global imbalances.
6. Timid growth in the eurozone is another source of concern,
with Italy and Germany on the verge of recession and the 12 participating
countries diverging rather than converging economically. The enlarged Assembly
agrees with the OECD that the European Central Bank (ECB) may now
well have room to lower its policy-setting interest rate in order
to revive economic activity. At the same time it calls on the European Monetary
Union (EMU) member states concerned to speed up economic reform
in the spirit of the 2000 Lisbon Agenda. It is important that the
will to reform not be weakened by the results of a number of national referendums
on the European Union Constitutional Treaty, since this would only
aggravate an already difficult economic situation and jeopardise
growth.
7. High and volatile oil prices, due in particular to rapidly
rising demand in the United States and in emerging economies, especially
China, pose a further risk to world economic growth. The enlarged
Assembly calls on OECD member countries to make greater efforts
to increase energy efficiency; reduce their dependence on fossil
energy, especially oil and coal; diversify energy sources including
via nuclear energy, particularly addressing the unresolved problem
of the processing and storage of radioactive nuclear waste, and further
develop renewable energy sources and technologies. The enlarged
Assembly also invites OECD member countries to intensify efforts
to promote peace and political stability in the Middle East and
the Persian Gulf regions. In this context, it welcomes the Initiative
on Governance and Investment for Development launched by MENA (the
states of the Middle East and Northern Africa) and supported by
the OECD and the United Nations Development Programme (UNDP).
8. The enlarged Assembly welcomes the OECD’s extensive co-operation
with the Russian Federation under its programme devoted to that
country, which provides notably for assistance in the accession
process to the WTO. The enlarged Assembly hopes that this can be
completed in the very near future, especially if Russia undertakes
the needed domestic structural reforms, the liberalisation of its
economy and manages to broaden the country’s economic base away
from oil and gas, thereby strengthening investor confidence.
9. Given the impact of the opening up and growth of the Chinese
economy, the enlarged Assembly also welcomes the first OECD Economic
Survey of the country completed in 2005, as well as the launch of
the China Governance Project, and urges further development of these
programmes.
10. The pronounced imbalances in the world economy – as illustrated
for example by the US current account deficit, the increasing divergence
between eurozone economies and the preoccupying fact that many of
the world’s poorest countries are lagging further and further behind
– are additional sources of concern. The enlarged Assembly in this
context calls on the OECD to conduct more research on hedge funds
and derivatives such as swaps, options and collateralised debt obligations.
11. The enlarged Assembly is pleased to note the success, one
year onwards, of the European Union’s 2004 enlargement to include
10 new member states, as demonstrated by these countries’ rapid
economic and institutional development and growing integration within
the wider EU. It recognises the OECD’s contribution to this process
via programmes such as SIGMA (Support for Improvement in Governance
and Management) which are also carried out with respect to other
countries in eastern Europe and beyond.
12. It is important in this respect that thought be given to the
further enlargement of the OECD itself, so as to include, as soon
as possible, all the countries in the world that meet the its criteria,
with due attention paid to ensuring a proper balance between world
regions. OECD enlargement is all the more important when considering
that its current membership is less and less apt to reflect the
world’s new economic realities and the sea-change in the distribution
of its increasing wealth. The OECD’s co-operation programmes with
rising economies, while laudable, will no longer suffice in tackling
challenges facing richer countries, including how this group may
best assist the world’s poorer countries, for instance in the realisation
of the Millennium Development Goals.
13. The enlarged Assembly notes the growing impact of such factors
as education, scientific research, social cohesion, good governance
and democratic stability on the economic performance of individual
states and the world economy as a whole and recommends that OECD
member states pay closer attention to such factors. In this respect,
it welcomes the multilateral work achieved and standards set in
those areas by the OECD and the Council of Europe and calls on these
organisations to intensify their co-operation and co-ordination
in this respect.
14. It invites the OECD to carry out a comparative study on performance
in OECD member countries examining the role of higher education
and research in enabling students to achieve their full potential,
for example in meeting an increasing diversity of needs and demands
associated with the knowledge society, lifelong learning, globalisation,
national and regional economies, local communities, as well as social
cohesion and equity.
15. The enlarged Assembly calls on the OECD and the Council of
Europe to co-ordinate their action on mutually identified priority
areas in the field of education policy.
16. It calls on the OECD to consider the non-economic aspects
of agriculture. Consideration should be given not only to the production
aspect, its primary role, but also to the contribution of agriculture
to the economic and social life of rural regions, the preservation
and maintenance of landscapes and the protection of life’s essential
elements: water, air and land. Only on this condition will the balance
between cities and rural areas be preserved.
17. The enlarged Assembly strongly supports the OECD’s ongoing
mandate to mainstream sustainable development and considers that
the implementation of the objectives of the OECD’s Environmental
Strategy for the First Decade of the 21st Century to achieve environmental
sustainability should be treated as an urgent priority. In particular,
urgent action is needed to implement the Kyoto Protocol and reduce
greenhouse gas emissions in the post-Kyoto period, beyond 2012.
18. Finally, the enlarged Assembly on the activities of the OECD
decides to modify its Rules of Procedure adopted in 1992 as contained
in the appendix to this report.
Appendix
Modification of the Rules of Procedure
for enlarged debates of the Parliamentary Assembly on the activities
of the OECD
1. The Rules of Procedure for the enlarged debates of
the Parliamentary Assembly on the activities of the OECD were adopted
in 1992 and amended in 1994. They appear on pages 150 to 158 of
the 2005 version of the Rules of Procedure of the Assembly.
2. Since then, the Rules of Procedure of the Parliamentary Assembly
of the Council of Europe have been modified to reflect changing
circumstances, such as the Council’s enlarged membership, now counting
46 member states plus observers.
3. In line with the above, the Rules of Procedure for the enlarged
Assembly are modified as follows:
- Part
III.1, add “or a Vice-President” after “the President”;
- Part III.1, delete the second sentence;
- Part V.5, in the third sentence, replace “7 minutes” with
“3 minutes”, in order to align speaking times with those in the
Assembly, thereby allowing persons speaking on behalf of committees
3 minutes;
- Part VI.3, add at the end: “Sub-amendments must be tabled
at least one hour before the end of the previous sitting of the
same part-session preceding that in which the debate begins” (same
rule as for the Assembly):
- Part VI.5, replace “3 minutes” with “1 minute”;
- Part VIII.2, replace “ten members” with “thirty members”
and “three parliamentary delegations” with “five parliamentary delegations”;
- Part IX.6, replace “three minutes” by “one minute”.
In
the English version only, on page 154, Part VI.3, add the following
words at the end of the last sentence “, by 7 p.m. on the eve of
the debate.”
