[Auto-generated transcript. Edits may have been applied for clarity.] To clear. Pandemic, as we saw, has impact on the economic development of the world.
Does it mean that you'll react the same way? But 911 is.
We all have seen it, you know, so it's synchronised at the moment.
Covid, but they might differ. The shocks that were considered real shocks internal for the organisation.
Then what might be the global shocks. Welcome to Global Shots, the podcast of the Oxford Martin programme on changing global borders.
My name is John Icahn and I'm a research fellow in international relations.
And in this podcast we're going to explore how international organisations deal with global shocks.
Global shocks are all around us, from humanitarian emergencies to war, financial crises to pandemics.
So how can international organisations respond to them, adapt to them and survive such turbulent times?
To find out, we are entering the conversation with leading figures from these organisations to find out how they're affected by crisis and turbulence,
what lessons they draw from the past and what future prospects they have.
Today, we'll take a closer look at the organisation for Economic Co-operation and Development short OECD.
The OCD was founded in 1961 as a successor organisation to the organisation for European Economic Cooperation,
which had since 1948 administered Marshall Plan aid for European post-war recovery.
Throughout the Cold War, the OECD's mission evolved to promote economic growth and trade.
Headquartered in Paris, the OECD today has 38 member countries and accounts for 41.1% of global GDP.
Initially comprised of European nations, the organisation expanded to include countries from North America, Asia and the Pacific region.
Though most members are high income countries, leading some to refer to the OECD as a club of rich nations.
I spoke to the OECD's former deputy secretary general, Murray giving Jemmy Murray given.
Amy was the Prime Minister of Finland from 2010 to 2011,
before which she served her country as Minister for Foreign Trade and Development and as Minister for European Affairs, among other posts.
In 2014, she joined the OECD, where she was responsible for areas including efficient and effective governance,
territorial development and trade and agriculture.
We discussed her experience working for the OECD, what the OECD does exactly, and how the OECD has dealt with different periods of turbulence.
Just to begin our interview. Maybe tell us in your own words why thinking about global shocks matters.
Yes, I'm marketing Amy from Finland. And for the last five years, I have been working as the managing director of the Finnish Commerce Federation.
And before this position, I worked a bit more than four years as the deputy Secretary general of the OECD,
and I oversaw the directorates of Public Governance, Trade and Agriculture and Local and Regional governments and SMEs.
And before that, I hold various positions in the Finnish government, and I was Prime Minister of Finland from 2010 to 2011.
And I was elected to the Finnish Parliament for the first time in 1995.
And when it comes to the question of years, why thinking about global shocks matters.
Yes, I think the answer is obvious. Of course they matter.
And nowadays it's a bit difficult to find any shocks which are not global because the world is very interconnected when it comes to economies,
societies and systems. The globalisation has increased the interconnectedness so shocks very seldom stay in one
country and they can have very cascading effects impacting other regions and nations.
So whatever shock we are talking about, economic crises, pandemics,
natural disasters or geopolitical events and shocks are very multidimensional and complex.
They can have environmental, economic, social and political consequences.
When it comes to the reasons why I think global shocks matter, another one is that every governments have to be prepared.
Anticipating and preparing for global shocks is crucial.
Governments have really the responsibility to manage complex crises and shocks.
So risk management is needed not only from governments, but also other organisations and and companies.
And it's utmost important to in order to manage risks, to work together.
And there international organisations play a crucial role.
And I have seen as minister and prime minister how a country banishes and governs shocks and been involved in crisis management,
manage risk that is everyday work for everyone.
You've got a very special perspective since you've worked as a Prime minister and at the heart of a very important international organisation,
the OECD. So you just told us that global shocks matter since they're multidimensional.
They affect so many different parts of social and political and economic life.
And on the other hand, the responses to global shocks need to be multi-dimensional in equal measure.
So let's zoom in on the OECD as an organisation that deals with shocks in some way or another.
What does the OECD do exactly, and what might be its role in a world that faces global shocks?
Yes. First of all, I would like to tell something about what the OECD really is, because I'm a bit irritated about the definition,
which I hear very often, that the OECD is a group of rich countries, and it's so much small.
So of course, economy and wealth plays a role.
But in order to become a member of the OECD, you have to fulfil certain criteria.
You have to be a stable and developed economy. You have to support open markets, free trade and investment liberalisation,
and you should have democratic political system, respect for human rights, rule of law and good governance principles.
And that includes, of course, having transparent and accountable institutions and independent judiciary.
And then it's important also that members implement market oriented economic policies that they promote competition,
innovation, interpret ownership and efficient allocation of resources.
And they are expected also to align the policies and practices with OECD standards in various areas.
And in order to implement and enforce these standards and recommendations effectively, you should have legal and administrative capacity to do that.
So that is really what the OECD is via its membership.
And the OCD is a think tank. It's a high level policy design,
and it creates evidence based analysis and research in order to help governments to make better policies for better lives.
And so we help countries to to tackle the social, economic and environmental challenges, including risks and global shocks.
And really, the aim of the OECD is to help the member countries.
And it's not only a think tank, it's also a dual tank,
because I think that the peer review reviewing process and the way the OECD kind of produces its advice is partly also very hands on recommendations.
So all that those policy recommendations which are then produced by the OECD should be also implementable.
And then OCD is a global standard setter and supporter of the international cooperation because more than 400 legal instruments.
So also in the area of risk governance, OECD does a lot by helping the member countries.
What would you say, given your particular background? You studied economics, you worked as a prime minister and then you entered this organisation.
From your point of view, what was the most challenging global shock that you had to face, that you and your colleagues had to face?
And what would you say were its consequences for the work of the organisation of the OECD?
So definitely it was the financial crisis. Maybe a bit funny to say so, because the financial crisis happened in 2008 and 2009,
the effects and consequences of it were still felt, and they were there during my years at the OECD.
The aftermath of the crisis really had a lasting impact on various aspects of the global economic landscape.
And what the OSCE wanted to do was to support governments in tackling the problems they faced after the financial crisis.
As we remember, sluggish growth, high levels of public and private debt, low interest rates, which was a totally new world for most of the countries.
Also, questions like how to balance stimulus measures with long term fiscal sustainability, how to manage euro crisis,
and and also, I think that the crisis prompted a re-evaluation of economic models and assumptions.
There was a discussion slide on secular stagnation, the role of globalisation, the impact of technology on labour markets, inclusive growth and so on.
So policymakers and economists, they address the underlying causes of the crisis.
And also the consequences to that discussion at the OECD produced a lot of material research and surveys, evaluation and reviews.
So I would say that the financial crisis affected in a profound way the work and agenda of the organisation.
To a certain extent, you could even say that it set the agenda.
And it's very obvious when you think about that, what the OCD does and what it does in its.
Name to the organisation for Economic Cooperation and Development, and also to give some concrete examples.
What happened and what was created during those years?
All of the countries almost in the global sphere, not all that, but most of them are struggling with balancing their budgets.
The slow growth challenges in the finance sector. So it was necessary for them to find more funding for the budget.
So efforts to kerb tax evasion gained momentum.
And many remember the G20 leaders meeting in 2009, which stated that the era of banking secrecy is over.
So the Global Forum on Transparency and Exchange of Information for Tax Purposes was established, and now the forum has more than 170 members,
and it has achieved massive progress in implementing the international tax transparency and exchange of information standards.
And also part of that purpose, so-called BEPs project, which started as the year 2013.
It was an always CD G20 project to set up an international framework to combat tax avoidance by multinational enterprises.
So the financial crisis really elevated the cooperation of economic powers in meetings of the G20 countries.
And for those meetings, the G20 meetings, they always had prepared reports,
together with WTO and Unctad and similar collaborations we also undertaking with other organisations.
But then I want to mention also and other a bit more limited crisis.
And it was the immigrant and refugee crisis in 2015, 2016,
when the number of migrants and refugees seeking asylum surged in Europe and created a humanitarian crisis.
And it raised questions about immigration and integration, also sparked political debates on a global scale.
And the OECD had worked in this policy area for decades.
So the organisation's help was asked when it comes to special integration policies,
how to manage such a big flow of migrants and refugees and the OCD during those
years and after that undertook country reviews and also make recommendations,
which is kind of a normal procedure and what it had done earlier to the several countries, but also fast track reviews where they produced.
But we also have to remember that the OCD is not a rapid response force when it comes to its reviews and in-depth analysis,
and it always takes some time to produce those.
But the good thing is that there is already a lot of work done on which you can base your support to to governments.
And also when you think about the the recommendations and then the actual implementation work,
which will be then done by the governments to which advice is given.
That takes also time. If I may just take you up on that last point on the OECD not being a rapid response force.
I think that's very interesting. If we take your insider perspective, what does it actually look like for the OECD to respond to a global shock,
like the financial crisis, like the refugee crisis?
Is it a process of monitoring, observing and then slowly analysing what the situation actually is,
what the priorities need to be for the organisation? What are the steps that are being followed?
And I mean, if you could just give us a bit of a concrete example of how the organisation faces the global shock at hand,
what happens within the organisation once the shock hits, as it were?
Yes, of course, much depends on that. Is there already work done in that area?
So to certain extent, yes. The OECD can be the rapid response force because maybe there are already recommendations
set which can be used by the government which have been hit by the the crisis.
But then if you really need kind of in-depth analysis of, of the situation, then you need some time.
But that is also based on the work earlier done and it depended on that.
Was it so that it was so a government who asked for the support, what kind of work we be able to offer.
Sometimes they were requests to kind of produce a report very quickly, and that was possible then when,
as was always almost the case, because the government knew that we had done something in this area.
So they relied on that by knowing that we have some previous work recommendations concerning the current situation.
Right. So at the Oxford Martin programme on Changing Global Orders, we're interested in historical lessons and the past,
and I'm curious to hear from your point of view in this process that you just described
of how the OECD analyses and contextualises particular challenges that occur.
Do historical analogies play any role?
Does it matter to the OECD to put a particular governance problem into longer term perspective, or is that more of a background aspect to its work?
Yes, of course, because in many policy areas, the OECD has decades of experience in conducting surveys, research and analysis on on various crises.
So it's clear that you have learned from from past and you can use those lessons.
So I think that historical analogies really help recognise similarities in their
underlying causes and responses and consequences of past and present situation,
and helps identifying lessons learned from past experiences.
But of course, it's essential to approach historical analysis with caution because its historical
context is unique and direct comparisons may not always be appropriate.
It really depends on the crisis which we are handling.
If you think back to the financial crisis and the migrant crisis, was there a discussion of have we seen this before?
Does this bear any resemblances to past crises that the OECD faces?
Did that kind of conversation happen? Yes, definitely.
In both crises. Our experts or economists were thinking about the past crisis to is there any analogies that help we see this earlier,
and especially when it comes to migration crisis,
that was more like a crisis where you can really benefit from earlier experiences because they are a bit more like them,
or they have more similarities than the financial crisis had this earlier crisis.
There is, of course, a lot of debate as to what actually a crisis is, what counts as a crisis, when something becomes a crisis,
when it becomes a sort of emergency that an organisation like the OECD needs to respond to, and why something is a crisis and to whom.
So I'm curious to hear how the OECD actually goes about determining what counts as a sort of urgent enough crisis to respond to.
How does that matter to the OECD's work?
Yeah, I think that the first question which was asked at the OECD versus is this a crisis where our expertise is needed?
Can we offer something to the governments or regional governments of the countries which had been hit by the crisis?
And is it something where we have knowledge and high level expertise?
And the answer was obvious. It definitely was.
The OECD is a piece of cake, and I think that it's the interaction between Secretary General's office and the whole Secretariat,
as well as the council with its permanent representatives.
They all played a role defining the answer and also the committees.
And of course, in the member countries, they had a say when analysing that is is something where we could contribute and by which way.
And sometimes really it was so that the particular government asked for help,
that they wanted us to produce a survey and wanted us to give some advice.
And sometimes we also, as an organisation, when we knew that we have something to offer,
we offered to governments that we could maybe undertake a review on this policy area, you know, to to help you.
But then when and if the answer was yes, definitely. This is something where we should be active.
Then we had a look if there is work already done and what kind of new material is then needed.
Let's take it as an example. The migrant crisis. Yeah.
Was the perception one of threats or if an opportunity or was it a bit of both?
It was really a bit of both.
Many of the member countries of the OECD were seen to be in a, in a certain danger in a way that how to handle the situation.
So it really was so that the OECD wanted to offer its, its support, uh, in order to stabilise the situation.
But also there were also opportunities for the organisation to develop its work to a new level.
So right at the beginning of the conversation,
you mentioned how global shocks connect different policy domains and spread across different areas of social, economic, political life.
And of course, in recent months, over the past year,
maybe poly crisis has been the kind of big buzzword that policymakers and and public commentators have been talking about,
trying to capture how every crisis is always connected to other crises, actually, and other issue areas.
And of course, I can imagine, from your point of view as an economist,
that is a very clear aspect to you that an economic crisis is going to have social consequences.
It's going to have. Political consequences. Does this term poly crisis make sense from the Euro OECD point of view?
Yes, definitely it does. The interconnectedness of global challenges is really so, so high that you have to find multidimensional solutions also.
And during your time working at the OECD,
you mentioned that the OECD at some points needed to coordinate its policies and its actions with other organisations like you mentioned,
Unctad and the WTO. Is this part of dealing with a world in which crises intersect with other crises?
Is that what's what's required for the OECD to coordinate its action with other organisations working on adjacent areas?
Yes, I think it's essential to coordinate and cooperate,
but I would use the word cooperation more than coordination, because I think that every organisation,
when it comes to international ones, they have their own rather well-defined roles among the international organisations.
So each of them knows what to do and where the limits where they can go.
But of course, you can always raise the question that is the number of organisations the right one.
Are there too many that in any case international organisations,
they cooperate and they also to a certain extent the work is coordinated well and this occurs through discussions between organisations.
But primarily, I would say through the political decisions made by member countries and in the organisation.
So the long term agenda of each organisation is set in collaboration with the organisation's secretariat and member countries,
and this then last determines the agenda for each of them and where to go in which areas to be active,
in which policy areas to be to be active, and in which crisis.
The organisation is going to be one of the problem solvers.
Yeah. And that has said this interaction with the countries.
So with Secretariat and, and also discussions with other organisations then kind of defined the limits of, of actions.
We live in a world where there are many geopolitical shifts happening.
Who gets a seat at the table has changed dramatically.
And so the OECD in this context I think is quite interesting.
Its roots are geopolitical in the sense that the organisation was founded to administer the Marshall Plan,
and at that time the Soviet Union and its satellite states rejected that.
But then over the over the longer run and the post-Cold War world, OECD membership has globalised in a way.
Right. So countries like Colombia, Costa Rica, Chile are just a few examples of new OECD members.
Membership has changed a lot, and arguably that has an effect for the fundamental purpose and identity and mission of the OECD.
How would you say, does the OECD relate to these kinds of longer term changes,
and how have its changes in membership affected the organisation's work?
Yes. So you mentioned really geopolitical shifts really affected the growth of the OECD.
And you can see it in in the composition of the OECD.
Its membership information and bloc countries are now now, uh, that are more in the line.
But my years at the OECD, Latvia and Lithuania became a membership.
But there are still a couple of EU countries which are not yet there.
And Latin American countries, as you as you mentioned.
So and I think also what has happened and what can be seen because of these geopolitical shifts that the OSCE, this work demand has been increased.
So there are more and more countries and partners who want to cooperate with us, and they are quite many in line and in the accession process already.
So the always it has to become more and more global organisation.
And it's not only the members but also the OECD is cooperation with key partners with China in South Africa, India, Indonesia.
It is something new a couple of decades ago and also with some regional economic organisation like Southeast Asia, G20, G7.
So what we see is a more wanted organisation all over the world that has also increased the OECD's importance as a global standard setter.
So this really shows how much more important the organisation is.
Right. So you're saying that the OECD has become more important. There's an increased demand for the OECD as an actor in global governance,
and that the OECD has also played a role or starts to play a role as a kind of global standard setter in a way.
Exactly, yes. Would you say that given that there are geopolitical conflicts not only on the horizon,
but we've seen many over the last decades, we're seeing many at the moment.
These kinds of conflicts, of course, require that somehow we we build resilience, not least through international organisations.
Would you say that the OECD can play a role in building this kind of resilience against geopolitical conflict?
Definitely. And of course, I'm also worried about the fragmentation of global order and the geopolitical tensions which have been rising.
But I think the OECD can really be quite a big player trying to to to solve and tackle this
challenge via getting more members who can actively seek to expand its membership as it has done.
And then the OCD should continue to foster partnerships and collaborations with key partners with interested countries,
regional organisation and and other stakeholders.
So the work it has been doing for decades. So already when the OECD is also continuing its work in building capacities and sharing knowledge,
that is also important because we need more and more evidence and we need to promote the evidence base,
which clearly shows how important for the economic growth and wealth of free trade is and how bad fragmentation is.
We've talked about how the OECD does its work, how it responds to global shocks, what kinds of global shocks it responds to.
We've spoken about the financial crisis as an example from your perspective and the migrant crisis as another example.
If we think about all of this,
what would you say going forward is the biggest challenge for the OECD as an organisation and its role in regional economic governance in the future?
I think that the biggest challenge is so the geopolitical fragmentation.
The whole city operates in a world where geopolitical fragmentation and power,
political divides are increasingly pronounced and there are tensions between major powers and also national security and resilience,
uh, prioritised over multilateralism, international cooperation and rules based global order nowadays in many countries.
So there is a need for functional global rules and practices still in many area areas.
So in that sense, I think that there's a lot of need for the work of the, uh, OECD in the long run,
the global opinion will understand the benefits of free trade and the global or multilateral rules based system.
So definitely, the OECD has an important place also in the future in promoting the multilateral cooperation.
How would you say, can the OECD learn from past shocks to improve its preparedness for the future?
I think that we should keep up the good work and continue its work.
There's no silver bullet to change the public opinion, which to quite the extent is against multilateralism.
But when it comes to two global shocks, the OECD has done actually also a lot of work in the field of risk governance policies.
And the OECD has definitely learnt from past experiences.
And I think that that is kind of internalised very well in the work of, of the OECD Secretariat.
And I would like to mention the OECD High-Level Risk Forum, which brings together policymakers,
experts and stakeholders from member countries to discuss emerging risks,
also share best practices and develop strategies to enhance resilience and improve risk governance at both national and international levels.
And that forum also conducts uh research to help policymakers understand and identify critical risks.
And then there's also the OECD recommendations on the Governance of Critical Risks, which was adopted 2014.
And there has been also an assessment,
reports which have been published in order to get an overview of countries progress in implementing the recommendations.
This work done by the OECD really can help the member countries to to govern the global risks.
And also the strategic foresight work has to be mentioned to which supports not only the OECD,
its own resilience, but also that of the all of the member countries.
Murray, given me, it's been a great pleasure having you today and talking to you.
It's been a fascinating conversation. Thank you so much. Thank you.
You. You've been listening to Global Shocks, the podcast of the Oxford Martin programme on changing global orders.
My name is John. I'm a postdoctoral research fellow in international relations.
And I'm the host and producer of this podcast. If you enjoyed this episode, make sure to follow us and subscribe wherever you get your podcasts.
Do have a look at the show notes for further reading on today's topic, as well as links to our website and social media channel.
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Thank you.