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

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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
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
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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?
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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
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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
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THREE FRAMEWORKS FOR BILATERAL SURVEILLANCE

• IMF ARTICLE IV CONSULTATIONS
• EDRC COUNTRY REVIEWS IN THE OECD
• BROAD ECONOMIC POLICY GUIDELINES IN THE
  EUROPEAN UNION

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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

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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)
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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

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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 TO BE REGARDED AS A PEER BY
GOVERNMENTS
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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

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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
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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)

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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