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News Brief
Jacques Delors joins OECD as a Special Adviser
Jacques Delors, former president of the European Commission and France’s former minister of economy and finance under François Mitterrand, is joining the OECD on a part-time basis to act as Special Adviser to the Secretary-General of the OECD, Donald J. Johnston. According to the Secretary-General, Mr. Delors will play an important role in assisting with policy formation. “Mr. Delors will help us bring together more effectively the economic and social dimensions of our work, a challenge for all member governments as we move further into knowledge-based economies where the quality of human capital is the major comparative advantage for everyone,” Mr. Johnston said on announcing the appointment, which takes effect from 1 July 1999. Mr. Delors will advise on a wide range of subjects in the OECD’s work programme, which touches nearly all areas of public policy. Observer@oecd.org.
Corporate governance: getting it right in Russia
Abuse of corporate governance remains a common problem in Russia. Investors have often seen their shares diluted by insiders and major share-holders. Companies have seen their assets stripped by various means of transfer pricing. The interests of creditors have not been adequately protected and the mobilisation of capital has been hampered. Yet, good corporate governance is central for raising much-needed investment and stimulating economic activity. The Russian government has made pro-gress in economic reforms but more is needed to promote better governance, encourage dialogue, identify areas for technical assistance and to plan the way ahead. It is against this background that a decision was taken at an OECD meeting in Moscow to set up a twice yearly Round Table on corporate governance in Russia. The aim is to bring together securities regulators, judiciary experts, representatives of the financial and securities institutions and corporate leaders, as well as representatives of stakeholders and civil society. The Moscow initiative was co-sponsored by the World Bank and the US Agency for International Development, with close support from the Russian government. http://www.oecd.org/daf/peru/home.htm http://www.worldbank.org/html/fpd/privatesector/cg/
Irish aid rises fastest
This year Ireland marks the 25th anniversary of its official aid programme. Over the last five years, the volume of Ireland’s official development assistance (ODA) has risen by an average of 20% a year in real terms, the most rapid growth of any of the OECD’s Development Assistance Committee (DAC) countries. Preliminary data indicate that Ireland’s development co-operation reached 0.3% per cent of GNP in 1998, nearly double its 1992 level. Six DAC reviews are conducted every year. Forthcoming reviews include Norway in October, Austria in November and Australia in December. Reviews have already been released this year on Japan (April) and Denmark (March). dac.contact@oecd.org
Balkans aftermath: the OECD’s role
At a meeting in Petersberg, Germany, on June 10, foreign ministers of the countries participating in the Stability Pact for south eastern Europe, including European Union countries, the United States, Canada, Japan, Russia and a number of south-east European states, acknowledged the OECD’s strength as a forum for dialogue on medium-term structural policy. In a communiqué, they invited the OECD “to take an active part in the South Eastern Europe Regional Table and to assist in the process of economic reconstruction, the strengthening of good governance and administrative capacities and the further integration of affected states into the European and global economy”. ccnm.contact@oecd.org
A clearer perspective on GDP
Thanks to new OECD data, it is now possible to compare real GDP per capita accurately across 52 different countries. The new OECD data on real GDP per capita based on purchasing power parities (PPPs) covers not just OECD countries, but a number of former command economies in Central, Eastern and South Eastern Europe and the former Soviet Union as well. Comparing GDP levels of different countries using PPPs gives a clearer picture of actual wealth than calculations based on regular currency exchange rates. This is because PPPs adjust for the differences in price levels, and hence in purchasing power, between countries. The new data reveals some rather wide income gaps. For the OECD as a whole, including the Czech Republic, Hungary and Poland but excluding Korea (figures not available), real GDP per capita in 1996 averaged nearly US$20 000. However, the average for Slovenia and the Czech Republic was 67% and 64% of the OECD level. On the same scale, per capita GDP in the Balkan region were: Romania 33%, Croatia 32%, Bulgaria 25%, the Former Macedonian Republic of Yugoslavia 21% and Albania 14%. Russia had the highest GDP per head of the former Soviet Union, according to the PPP measure, with 34% of the OECD average, followed by Belarus and Kazakhstan with 26% and 22% respectively. Most of the others were 15% or less. The data will be updated in 2000. stat.contact@oecd.org
New concern about renewables
In a report released at the end of June, called The Evolving Renewable Energy Market, the International Energy Agency called on governments, industry, researchers and consumers to work actively to promote renewable energy resources. Renewables, the IEA maintains, are the key to a sustainable energy future. The new report identifies a number of problems that slow the rate at which the market adopts renewables. It suggests several solutions, including: reduction of technology costs, innovative financing mechanisms, stable energy policies, fair access for renewables, information and training, enhanced research and development efforts and international co-operation. http://www.iea.org
Measuring minds
Although it is the combination of intellectual and tangible capital of a company that creates value, intellectual capital is still not measured or reported adequately. That was one of the key messages of a symposium on measuring and reporting companies’ intellectual capital in Amsterdam 9-11 June. It was organised by the OECD with the Netherlands Ministry of Economic Affairs and Ministry of Education, Culture and Science and the Nordic Industrial Fund. Frans van der Wel, professor of accounting at the Free University, Amsterdam and former head of the Royal Dutch Institute of Chartered Accountants, chaired a technical meeting to review results of recent surveys of 1,800 companies, and case studies and experimentation in 125 companies in OECD countries. “Intellectual capital”, or “intangibles”, includes know-how and experience of employees, research and development and technology, organisational structure, marketing, customer and supplier networks, and software. There has been some progress in measuring human capital, but clearly not enough. According to some, one of the difficulties is the damaging tendency to see the labour market rather like one sees financial markets, although for humans rather than financial capital. For more on this idea, readers are invited to read last January’s edition of the Observer no. 215, where Joop Hartog, of the University of Amsterdam, takes a look behind the veil of human capital. dsti.contact@oecd.org
ADB chief calls for higher private-sector standards in Asia
Tadao Chino, the president of the Asian Development Bank, has called on the private sector in Asia to enhance governance, transparency and information disclosures. “Like the public sector,” the ADB president said, “the private sector should, for example, also adopt international standards in the area of transparency and good go-vernance, and ensure stronger due diligence and better risk management in their operations.” The ADB President also called for corporate restructuring, partnerships between the private and the public sectors and targetted financing for reform measures from the international community, including the multilateral lending institution. Tadao Chino went on to explain that the ADB was exploring ways of helping the private sector to achieve these ends, but warned that these investments by the ADB could only bring about benefit in a context of “good governance, privatisation of state-owned banks, and the creation of sound financing mechanisms for the private sector.” The ADB president was speaking at the 1999 International Forum on Asian Perspectives, organised jointly by the OECD Development Centre and the ADB in Paris on June 29. cendev.contact@oecd.org or colm.foy@oecd.org
Better regulation for better governance
It is one thing to have regulation, it is quite another to have good regulation. Improving the legal quality of regulations, whether by revising them individually or rebuilding whole sections, can help economic and social performance, as well as go-vernance. Not surprisingly, regulatory reform is attracting more and more interest as governments volunteer themselves for review under the OECD’s Regulatory Reform Programme. The aim is to assess individual countries against international best practices and to suggest targetted action for reform. The United States and the Netherlands have recently been reviewed. A report on Japan was published in April, and another on Mexico is due shortly.
Please visit http://www.oecd.org/subject/regreform/
Staying up with e-commerce
What does electronic commerce really mean for business and government? Getting a grasp on the policy implications of the fast-moving digital economy is a central part of the OECD’s work. In October 1998 the OECD ministerial conference ’Realising the Potential of Global Electronic Commerce“, held in Ottawa, set out action plans regarding the policy issues to be tackled both by the public and private sectors. To take stock of developments and to check progress since then, a follow-up forum will be held at the OECD in Paris in October 1999. It will examine emerging issues and look at what remains to be done to help policy-makers to keep ahead in the growing e-world. Meanwhile, as a follow-up to the OECD book, The Economic and Social Impacts of Electronic Commerce—Preliminary Findings and Research Agenda, the OECD is preparing a new study on business-to-business e-commerce. Its aim is to provide a comprehensive quantitative and analytical picture, with some policy conclusions, of this dominant, though still insufficiently understood, area of the e-commerce market.
E-commerce at the OECD (http://www.oecd.org/subject/e_commerce/)
Corporate governance: getting it right together
The OECD and the World Bank agreed at the end of May to co-operate in the promotion of improved corporate go-vernance on a world-wide basis. Both institutions are committed to assisting go-vernments in evaluating and improving the legal, institutional and regulatory framework for corporate governance in their countries. The move responds to mandates from finance ministers and central bank governors of the G-7 and the OECD countries.
The agreement envisages a newly created Global Corporate Governance Forum and enhanced structures for policy dialogue and development in regions and individual countries. The new forum is expected to be launched in September and will bring together representatives from regional development banks, international organisations, private sector, and developing transition countries. There will be a Private Sector Advisory Group drawn from around the world. The new initiative leans on the respective strengths of the two organisations: the World Bank’s long experience of working with developing and transition economies to establish effective corporate governance systems and infrastructures, the OECD’s rich experience of consulting with both public and private sectors in its member and non-member countries, culminating in its Corporate Governance Principles that were finalised earlier this year.
http://www.oecd.org/daf/governance/principles.htm