OECD or The Organisation for European Economic Cooperation

OECD or The Organisation for European Economic Cooperation
was created in 1948 to run the US-financed Marshall Plan for rehabilitation of
a continent demolished by war. Encouraged by its achievement and the assumption
of carrying its work forward on a global stage, Canada and the United States
joined OEEC members in signing the new OECD Convention on 14th December of 1960.
By making individual governments recognise the interrelationship of their
economies, it paved the way for a new generation nowadays of cooperation that
was to adjust the image of Europe The Organisation for Economic Co-operation
and Development (OECD) was done properly established on 30th September of 1961 when
the Convention entered into force.


OECD is a distant
forum where the ministry of 34 equalities with display economies get with each
other, with more than 70 non-member economies to advertise economic growth,
prosperity, and continuous development. Readers of the business pages may know at
least that those basics stand for the
OECD. Their goals are to promote administration that will upgrade the
economic and social well-being of people around the world. The OECD administer
a forum in which governments can performed together to share experiences and investigate
resolution to common problems. We work with governments to figure out and
investigate what runs economic, social and environmental changes. OECD measure capacity
and global flows of trade and investment, evaluate and analyse data to foresee
future trends of economy.


Other countries also joined in starting with Japan in 1964.
Today, 35 OECD member countries worldwide regularly turn to one another to
identify the problems, consider and analyse them and advertise policies of economy
to compromise with them. Other OECD region have seen identical, and in some
cases even more spectacular, progress. So, to have community and society that a
few decades ago were still only lesser players on the world stage. The
countries such as Brazil, India and the People’s Republic of China have developed
as new economic giants. The three of them, along with Indonesia and South
Africa, are the Key Partners of the Organisation and devote to its work in a
sustained and complete manner. The OECD brings around its table 39 countries or
states that account for eighty percent of world contract and investment, giving
it a main role in addressing the threat and intimidation facing the world recession.


OECD also set global standards on a wide
range of stuffs, from agriculture and tax to the safety of synthetics.
OECD also look at concern that directly influenced everyone’s everyday life,
like how much people pay for taxes and social security, and how much free time
they can take or put on. OECD compare how contrast countries’ school systems
are readying their youthful for contemporary life, and how different countries’
annuity structure will look after their citizens in elderly age. Drawing on
facts and real-life maturity, OECD approved policies designed to upgrade and
improve the quality of people’s lives. OECD work with business, through the
Business and Industry Advisory Committee to the OECD (BIAC), and with job through the Trade Union Advisory Committee
(TUAC). The frequent thread of their work is a shared
commitment to market economies backed by democratic institutions and focused on
the prosperity of all citizens. Besides, OECD also set out to make life tougher
or harder for tax dodgers, the terrorists, devious businessmen and others whose
actions undermine and threaten a fair and public society.


The OECD’s
origins date back to 1960, when 18 European countries plus the United States
and Canada accompany forces to create an organisation devoted to economic evolution.
Present-day, our 35 Member countries interval the globe from North and South
America to Europe and Asia-Pacific. They added many of the world’s most
advanced countries but still also emerging countries such as Mexico, Chile and
Turkey. We also work carefully with emerging economies like the People’s
Republic of China, India and Brazil and established recession in Africa, Asia,
Latin America and also the Caribbean. Our goal extended to build a stronger, uncluttered
and fairer world. In the Supplementary Protocol No.1 to the Convention on the
OECD of 14th December 1960, the signatories to the Convention allowed that the
European Commission shall carry out in the work of the OECD. European
Commission delegates participate alongside Members in discussions on the OECD’s
work programme, and are associate in the work of the whole Organisation and its
different bodies. While the European Commission’s participation fit beyond that
of a viewer, it does not have the legal right to vote and does not
officially take part in the endorsement of legal instruments submitted to the
Council for adoption.





United Kingdom









New Zealand












Slovak Republic




United States


Czech Republic








            GDP per capita is the most familiar and commonly
used to measure of a ones country’s economic success or structure, yet it is usually
criticised as a guide and indicator to a nation’s wellbeing. A recently
released debate by the OECD considers some of the options. The OECD uses
illustrative for calculations to ‘extend’ GDP to cover up free time, the
sharing of earning among households and income distribution. A key result of
the study is that cross-country rate based on these indicators and index shown
and GDP per capita are mostly identical, giving support to the consequences
that GDP per capita can serve as a reasonable intermediary of long-term wellbeing.
Also, the OECD researchers find that survey-based data and evidence on
happiness and life satisfaction across OECD countries are only weakly related
to levels of GDP per capita for each country. This article concise explores the
findings of the OECD’s study, and reflects on some of the difficulties to experience
for develop other indicators of wellbeing or prosperity.

There is a rapid growing literature which
uses self-assessed measures of happiness or life satisfaction as proxies for concluding
utility. This literature has also turned to examining the brunt of income
inequality on this utility surrogate. Consequently, it may attempt some new and
interesting insights to a consideration of the age-old question of defining an
axiomatically equal income distribution which would optimise utility.
Discussions about the links between inequality, however defined and well-being
can be traced to the philosopher John Rawls notion of justice as fairness which
he began to establish in the 1950s as a critique of the then a leading theory
of utilitarianism that collective welfare can be noticed as a sum of individual
well-beings. In opposition to utilitarianism, Rawls come up with a theory of
social justice, built upon a social contract between individuals who choose on
the basic of a so-called “veil of ignorance”. The basic principle which control
their view of justice is the so-called “maximum principle”. In this view,
inequalities in the distribution of primary goods and services are regarded as
unjust except to the amount that they serve to increase the well-being of the
worst-off in community. Primary goods are “things that citizens need as free
and equal persons” and include earning and wealth. Sen’s work drawn-out the
focus from equalising goods to what goods do for people, in his framework of authorities
as equalising capabilities across persons.

The OECD findings are not unexpected. The feeble
link between money income and happiness appears to be explained by the
combination of two aspects of human behaviours and nature. Firstly, individuals
accustom for a higher income. People get used to bigger income so its effect on
life-satisfaction disperse over time (‘hedonic treadmill’). Second, once basic
needs are satisfied, aspirations increase with higher income (‘satisfaction
treadmill’) but also become tougher to achieve as the achievement difficulties
is higher, leading to unaccomplished goals or target and bigger frustration.
Evidence supporting the existence of ‘adaptation’ has been provided by a few of
empirical and experimental studies (Diener and Seligman 2004; Layard 2005; Van
Praag and Frijters1999).

            The scatter-plot chart below shows a
positive link between average GDP per capita in year 2000 and mean happiness
scores. Approximately, in countries with incomes that are higher by US$10,000 per
capita, happiness scores lean to be higher by around e0.1 (and this
relationship is statistically significant). This examination does not mean the
outcome of a well-specified formal econometric study. More deliberate
statistical investigation is warranted to better understand, among the other
things, if the relationship holds for the higher income OECD group and, if so it’s
a functional form.


Chart 1: Relationship between happiness and GDP
per capita, OECD countries

Notes: Chart covers 27 OECD countries excluding Luxembourg and
Czech Republic. Australia is depicted by the dark shape.

Source: Mean happiness scores from World Values Survey in Layard
(2005). Data on US$ GDP per capita purchasing power parity for the year 2000
from Groningen Growth and Development Centre.

One proposition explored by the author was that
if a country’s GDP per capita grew more faster during the 1990s than during the
1980s, so that income grew more rapidly than people might have expected given
historical experience, then people in that country might be happier and much
contented. This hypothesis was tested, but no statistical link between
happiness and recent trends in GDP growth rates was found.








The empirical composition about
inequality and subjective well-being shows that the brunt of income inequality
depends on the vision that citizens have of their society, their desire
concerning this society and their beliefs about the way it functions and the
groups that belong to it. What are the possible policy implications that can be
derived from these findings? The literature is in its disorderly teenage years,
and strong policy conclusions are not available yet. However, some things also
can be said. Beliefs about the causes of high and low earning matter. People
consider it unfair to free ride on the improvement and efforts of others. In
this view, a pro-poor policy should try to design a system of income guarantee
and economic opportunity that would valve these motivations. One of the
strongest research focuses in the literature on subjective well-being has been
the causal impact of innovation in income on subjective well-being, finding a
positive but abate relationship between income and subjective well-being. This
non-linearity immediately proposed the policy possibility of raising middle subjective
well-being by redistribution of income from high to low-income people.


The strong confirmation of
loss-aversion (a given rise in income has a lesser effect than a given fall on
subjective well-being) suggests that it may only be insignificant additional
income which can be redistributed in such a mode. This also has implications
for policies forward inter-generational inequality. If gains are more rapidly
and thoroughly adapted to than losses (loss aversion), it becomes crucial to
avoid downward mobility and there is fewer to be gained by higher mobility.
This paper has shown that people’s happiness is affected in different action by
earning inequality in different countries, and that the impact likewise depends
on which groups each person compares himself or herself to. While in some cases
inequality can have an encouragement effect, it is also often recognized as a
threat, a possibility of accelerated down the ladder rather than going up.
Thus, from the abstract well-being perspective alone, economic growth with expanding
inequality would not deserve to be classified as pure progress. When the
economic costs and political costs of increasing income discrimination are
added, there appears to be a good case for modifying the concept of growth to
take inequality into account.


            All economic index has their problems and complication. GDP
per capita has the benefit of being objectively measured in a manner that is
reasonably commensurate across countries and time periods. It appears to do a great
job of measuring one dimension of wellbeing consumption opportunities. Other communal
indicators capture many other crucial aspects of wellbeing and presentation of
internationally comparable data in future stocktaking exercises could comfort
policy makers to identify potential administration priority or preference areas.
However, they cannot be meaningfully associated with GDP per capita into a
single index of wellbeing.

Nevertheless, GDP per capita seems to be commonly
correlated with many of these indicators suggesting that it is a better
starting point for understanding the capabilities and opportunities available
to community. Moreover, the long and wide international data set available on
GDP per capita makes this a demanding measure for comparisons. Happiness as an
aggregate social concept is in its immature stages of development. It is too
early to tell if it will ever be favourable to policy formulation, though there
are logic to be sceptical. Within-country studies have identified several
factors that affection individual life satisfaction. These studies provide a probably
useful context for micro policy design.