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COMPARATIVE ASPECTS OF PEER REVIEWS – OECD, IMF AND THE EUROPEAN UNION

The First OECD- Southeast Asia Regional Forum 2007 Session 1. COMPARATIVE ASPECTS OF PEER REVIEWS – OECD, IMF AND THE EUROPEAN UNION. Presentation for Conference on Peer Review Processes, hosted by the Government of Indonesia Jakarta, 23 – 24 January 2007 Niels Thygesen

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COMPARATIVE ASPECTS OF PEER REVIEWS – OECD, IMF AND THE EUROPEAN UNION

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  1. The First OECD- Southeast Asia Regional Forum 2007 Session 1 COMPARATIVE ASPECTS OF PEER REVIEWS – OECD, IMF AND THE EUROPEAN UNION Presentation for Conference on Peer Review Processes, hosted by the Government of Indonesia Jakarta, 23 – 24 January 2007 Niels Thygesen Chair of Economic Development and Review Committee, OECD

  2. A BRIEF HISTORY OF SURVEILLANCE OF ECONOMIC PERFORMANCE AND POLICIES AND PEER REVIEWS IN THE OECD 1948-60 Crucial role in trade liberalisation, multi- lateralisation of payments and structural reforms in western Europe (as OEEC) 1961 US and Canada join; mandate redefined and made more global; annual country (macro) economic reviews launched until 1973 Europe (and Japan) as growth benchmarks?

  3. 1973 – 82 First two energy price hikes lengthen horizon for macro policies and inspire analysis of “positive adjustment policies” to step out from stagflation 1980s Growing competition in surveillance (IMF, EU, private financial institutions, national economic councils etc.) 1990s Also growing differentiation in surveillance focus, methodology, and in reliance on peer reviews in three international frameworks

  4. 1994 OECD JOBS STRATEGY is first formulated – remains main example of indicator– based analytical approach to comparative policy analysis OECD country economic reviews become heavily focussed on the importance for macroeconomic performance of good policy frameworks and of structural reforms 1995 1996 Korea, Mexico and four largest Central European countries join OECD and surveys of non-members expand

  5. THREE FRAMEWORKS FOR BILATERAL SURVEILLANCE • IMF ARTICLE IV CONSULTATIONS • EDRC COUNTRY REVIEWS IN THE OECD • BROAD ECONOMIC POLICY GUIDELINES IN THE EUROPEAN UNION

  6. ALL THREE FRAMEWORKS PROVIDE ELEMENTS OF PEER REVIEW IN DIFFERENT WAYS • IMF has particular clout in programme countries – but there are fewer of those today – and to some extent in emerging economies • OECD has to rely on qualityof ideas and relevance of comparative policy analysis • The European Union processes go beyond surveillance through a comprehensive “rule book” and involvement of many high level national decision makers

  7. “PEER REVIEW” IN THE IMF IS EXERCISED THROUGH BOARD CONCLUDING STATEMENT (PUBLIC INFORMATION NOTICES, PINs), BUT STAFF HAS CONSIDERABLE DISCRETION, NOTABLY THROUGH CONCLUDING STATEMENT AT THE END OF MISSION ROLE OF EXECUTIVE BOARD IS CIRCUMSCRIBED BY THE WEIGHT OF THE OVERALL AGENDA AND THE NUMBER OF ART. IV REPORTS (app. 130 A YEAR)

  8. THE EUROPEAN UNION HAS • Centralised monetary and exchange-rate policy (for the euro area) • Introduced joint trade, agricultural and competition policy with authority shared with the European Commission • Introduced a rule book (or frameowork for negotiation) for national budgetary policies (ceilings for public deficits) • Based cooperation in other policy areas on the “Open Method of Coordination”

  9. PEER REVIEW IS OMNIPRESENT IN THE EU – BUT STILL VERY DIFFICULT TO DEFINE HEAVY RELIANCE ON INPUTS AND EVEN ON SELF-EVALUATION BY PARTICIPATING GOVERNMENTS OF STRUCTURAL POLICIES THE CENTRAL BODY IN THE PEER REVIEW PROCESS, THE COMMISSION, IS TOO STRONG TO REGARD ITSELF AS A SECRETARIAT, YET TOO WEAK POLITICALLY TOBE REGARDED AS A PEER BY GOVERNMENTS

  10. IN THE RESPECTIVE PEER REVIEW PROCESSES ONE COULD SAY THAT • The IMF relies almost exclusively on the evaluations of its staff, but allowing Board members and the country authorities to disagree • The EU process – outside the partly rules-bound fiscal area – gives primacy to national input and proposals (“ownership”) • The OECD process is an intermediate one – no subject is off the table, but governments influence the form in which recommendations are adressed to them

  11. THOSE FAMILIAR WITH THE IMF PROCESS THINK OECD MESSAGES MAY OFTEN BE DILUTED AND ISSUES FUDGED BY THE NEED TO BRING ALSO THE COUNTRY AUTHORITIES ON BOARD – WHILE THOSE FAMILIAR WITH THE EU PROCESSES BELIEVE OECD MESSAGES ARE OFTEN OVERLY STANDARDISED AND DO NOT PAY SUFFICIENT ATTENTION TO NATIONAL CIRCUMSTANCES THERE IS SOME TRUTH IN BOTH OF THESE VIEWS, BUT THE USEFULNESS/IMPACT OF OECD RECOMMENDATIONS SHOULD NOT BE UNDERRATED

  12. OECD PROCESS HAS ADVANTAGES • More interaction with relevant national policy officials on the basis of staff draft survey • Considerable involvement by EDRC in discussing and modifying report, with • Useful element of two examining countries/lead speakers • Subsequent process of revising and approving survey brings further improvements • Manageable size and diversity of membership (up to 2007)

  13. REQUIREMENTS FOR MAKING THE OECD INTERMEDIATE PEER REVIEW PROCESS EFFECTIVE • Give the OECD secretariat sufficient resources to produce country surveys of high objectivity and at regular – and not too long – intervals • Provide the EDRC with experienced national officials (and examiners) • Maintain focus on structural policy areas for which an analytical framework for benchmarking can be developed

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