Introduction: The OECD and Policy Transfer: Comparative Case Studies

Abstract

The six articles in this issue examine the role of the OECD in policy transfer. Two articles (Kudrle on international tax agreements, and Legrand and Vas on Australia’s vocational and educational training policy) conclude that the OECD has been influential, albeit in a grinding and lengthy way. Two others (Clifton on the OECD’s “enhanced engagement” policy with five G-20 countries, and Eccleston and Woodward on tax transparency) find the OECD’s influence either patchier or even dysfunctional. Carroll’s article provides a novel analysis of policy transfer through accession processes, while Alasuutari explores transfer in terms of a comparative analysis of policy rationalizations that refer to the OECD as a “standard.” A common theme of all six articles is the way in which policy transfer is driven by exogenous pressures and crises, and how international governmental organizations like the OECD exploit these pressures to protect and expand their global relevance.

Keywords:

• accession
• enhanced engagement
• epistemic community
• international governmental organizations
• learning
• Model Tax Treaty
• OECD
• peer review
• policy transfer
• tax transparency
• vocational education and training
• world polity

Though there are antecedents, the scholarly interest in policy transfer can be conveniently dated from Rose’s book on “lesson-drawing” (1993). It is surprising that the concept took that long to incubate – with the beginning of the Cold War governments were feverishly trying to “transfer” their policy models to their respective blocs. As various crises hit the West in the 1970s and 1980s (stagflation, oil embargoes, recession) there was a greater if grudging need to coordinate responses, and hence compare policy models. Since Rose’s book, of course, the pace of globalization, interdependence, and lesson-drawing has only grown in scale and pace, and the scholarly interest accordingly has enjoyed a resurgence as well (Dolowitz 2006; Evans 2009). The basics of policy transfer are straightforward. On the demand side, governments “puzzle”, they search for solutions, they seek “best practices”, they wish to be leaders rather than “laggards”, they need resources and will accept conditions (i.e. changing their policies) if necessary. On the supply side, the hawkers are almost endless: NGOs, think tanks, corporations, unions, citizens’ movements, movie stars, individual governments, regional governmental associations (think EU), and of course international organizations like the ever-clucking World Bank and ever-stern IMF. Even the Pope has climbed on board, urging a new evangelicalism that will surely translate into Catholic-inspired movements to temper the excesses of Wall Street (and thereby borrow more inflexible financial regulatory tools) (Pope Francis 2013).

Understanding contemporary public policy means understanding how policy models are spread, by whom, why, how they are received, and how they compare once in action. The topic is vast, and we can only feel parts of the elephant at any given time. The articles in this special issue address the question of policy transfer by international governmental organizations (IGOs), and, in this case, specifically from the Organisation for Economic Co-operation and Development (OECD), though with some comparisons to other IGOs. The rationale for this focus is two-fold. First, of all the “hawkers” of policy transfer, IGOs are among the most important: they typically have more resources than NGOs, their members are typically governments, they can claim special expertise and prestige, and they sometimes can carry a big stick in the form of conditionalities attached to aid and loans (Barnett and Finnemore 2004). For example, it would be impossible to understand policy developments in Central and Eastern Europe after the collapse of communism without understanding the role of the World Bank, the European Union, and the OECD, to name a few. The developing world has also been especially fertile ground for the transfer of public policy models across the spectrum of policy fields and management (Common 2001; McCourt and Minogue 2001; Evans 2004; Larmour 2005; Desai and Snavely 2007; Karini 2013), even if the efficacy of that transfer is increasingly brought into question (Easterly 2006; Moyo 2009). Second, the OECD represents an almost pure case of an international organization advising on policy transfer and best practices (though it resists using this terminology) without the big stick, and with only the power, more or less, of persuasion and research instead. The articles in this issue therefore make an important contribution to our understanding of the OECD as an organization, to the way in which it urges policy models on its members and non-members, the subtle dynamics of that transfer, and its success. We do not claim that the OECD is the most powerful of IGOs or that it can force its ideas on recalcitrant governments. Far from it. Yet understanding the OECD as an “ideational artist” in a global policy-making world helps us understand the role of research, persuasion, modeling, peer-review, and a host of other tools which, while not unique to the OECD, are used by other IGOs to spread the word.

Special Issue Focus

The articles in this special issue stem from two panels organized for the World Congress of the International Political Science Association held in Madrid, July 2012, on the OECD and aspects of policy transfer. They underwent a rigorous double-blind review process, and I am grateful to the reviewers and the editorial team of the Journal of Comparative Policy Analysis: Research and Practice for making this project possible.

The six articles in this issue can be viewed as thematic pairs: two are quite positive about the OECD’s success in policy transfer; two are more skeptical; and two step somewhat outside the conventional categories of the policy transfer literature to raise some fresh considerations.

The two positive pieces are Robert Thomas Kudrle, “The OECD and The International Tax Regime: Persistence Pays Off”, and Tim Legrand and Christopher Vas, “Framing the Policy Analysis of OECD and Australian VET Interaction: Two Heuristics of Policy Transfer”. Kudrle examines the OECD’s role in developing an international regime around tax transparency (another article, by Richard Eccleston and Richard Woodward, does the same, but with somewhat more critical conclusions, so the two pieces are useful comparators on this question). He distinguishes between “vertical diffusion”, as when the US became (and lobbied for) the template for the OECD’s adoption of the Model Tax Treaty and its diffusion among member states, and “horizontal diffusion”, as when the OECD itself worked through the G-20’s Global Forum on taxation to encourage the spread of Tax Information Exchange Agreements. Kudrle agrees with critics that the Global Forum’s approach of “information on request” is, in principle, weak when compared with obligatory models. However, in examining some key proposals for such models, he finds that they fall short of a standard of rational institutional design. By that same standard, the OECD’s work through the G-20 over the years has successfully “incubated” a global scheme of tax cooperation. “The Forum appears to involve precisely the combination of consultation and information-sharing with scant formal power that marks the maximum institutionalization allowed by current political constraints.”

In “Framing the Policy Analysis of OECD and Australian VET Interaction: Two Heuristics of Policy Transfer”, Tim Legrand and Christopher Vas focus on a single country case study, the redesign of Australian Vocational Education and Training (VET) policy. They argue that the OECD was influential in that redesign, principally because it serves as an epistemic community that mobilizes and privileges some policy options over others, and because its mechanism of peer review induces both competition among members (and non-members) and ultimately some degree of conformity. VET in Australia has been the poor cousin to post-secondary education, and moreover is complicated by the jurisdictional divisions of a federal state (states and territories have primary responsibility for program delivery, but the Australian government has a coordinating and funding role through its responsibility for national economic development). Legrand and Vas point out that the OECD has been crucial to Australia as a source of policy ideas in this field, particularly in a 17-country study that led to the 2010 report Learning for Jobs. Australia participated vigorously, and took the OECD’s study of its own policy regime seriously. The OECD report was used by Australian policy advocates as another source of pressure. The results took several years, but the authors nonetheless point to the symmetry between OECD recommendations and country policy results.

Judith Clifton and Daniel Díaz-Fuentes’ “The OECD and ‘The Rest’: Analyzing the Limits of Policy Transfer”, and Richard Eccleston and Richard Woodward’s “Pathologies in International Policy Transfer: The Case of the OECD Tax Transparency Initiative”, have more pessimistic assessments of the OECD’s role in policy transfer. Clifton points out that the OECD was well aware through the 1990s and 2000s that its global influence was waning, not least because its members collectively were representing less and less of total global economic production. It launched a program of “Enhanced Engagement” focusing on five G-20 countries: Brazil, China, India, Indonesia, and South Africa. Clifton closely examines the strategy, and finds that it was relatively successful with South Africa and Brazil, but went nowhere with China. Why? While China did accept some OECD advice on taxation reform, this was purely pragmatic. The problem is that the OECD, despite these efforts, is still a “Western” organization in its approaches, models, and even its personnel. “The Rest” is the wider world of different policy traditions and cultures, increasing assertive and skeptical of “made in Paris” solutions. Clifton argues that it is not too late for the OECD, but that it will have to adapt more vigorously to this new global set of players.

Eccleston and Woodward, like Kudrle, examine the OECD’s work around tax transparency, but through the lens of what they call “dysfunctional policy transfer”. This is an important reminder, since there is an almost unconscious reflex among analysts to rate a transfer of policy from an IGO to a state as a “success” if the transfer actually occurred. Of course, the “what” and the “how” of the transfer may in fact be negative, detrimental, and even dysfunctional. The specific dysfunction that they focus on is a bureaucratic one – the OECD, like other IGOs, is a bureaucracy with organizational interests in survival and prominence. In some cases, IGOs will prefer weak or “lowest common denominator” international agreements simply in order to claim success and put something in the policy window. The OECD’s “success” in promoting Tax Information Exchange Agreements has drawn criticism because it actually confers legitimacy on jurisdictions that meet an empty standard but flout the larger purpose of tax transparency. Nonetheless, the article points out that the somewhat surprising OECD endorsement of stronger transparency standards in 2012 suggests a counter-dynamic: IGOs also need to demonstrate their efficacy over time, rather than just forging empty agreements. If one takes into account the “long game” that IGOs need to play, it might be that what appears at first as failure (i.e. an empty or insipid agreement) is actually a deliberate stepping stone to stronger regime formation along the way.

In his article “Policy Transfer and Accession: A Comparison of Three International Governmental Organisations”, Peter Carroll steps somewhat outside the conventional framework of examining the transfer of single policies, to the transfer of what might be called “bundled policies” through accession. Based on archival work and interviews with staff from all three IGOs, his cases are accession to the WTO, the EU, and the OECD in three phases: pre-accession, accession, and post-accession. Carroll finds that there has been an increase in the extent of pre-accession transfer (adopting policies in order to be “ready”), earliest in the case of the EU. Formal accession is more complex, as one would assume, and has interesting characteristics: (1) the degree of “opting out” permitted (the EU is the most restrictive); (2) increasing degree of transfer; (3) increasingly detailed accession processes over time; (4) increasing provision of technical assistance during all stages of the accession process (most by the EU, least by the OECD); and (5) a trend toward parallel accession processes. One would think that accession was the end of the story, but Carroll suggests that the post-accession phase includes implementation and transfer, as well as continued bargaining over at least some items in the original accession agreement. Carroll concludes that accession means substantial policy transfer, but with variations linked to the required range of transfer, the pre-existing isomorphism between the recipient and the IGO, and a host of possible opt-outs, temporary reservations and derogations, technical assistance, and IGO capacity to monitor compliance.

Pertti Alasuutari’s “Following the Example of Other Countries? Policy Analysis of New Legislation in Canada, the United Kingdom and the United States” also applies a distinct lens to the question of policy transfer. He takes the interdependence of decision making in a world polity as given, and asks the deceptively simple question of how it actually occurs. His focus is recorded (and hence searchable) legislative debates and documents in Canada, the UK, and the US from 2001 to 2011. How do national parliaments take account of other governments’ policy models in drafting new, national legislation? Do the states differ in their modes of discourse? With a unique methodology, Alasuutari grounds his understanding of policy transfer in terms of policy argumentation, making the point that policy transfer is not only about institutions and laws, but also about rationalizations, justifications, and argument. Among his findings are that in all three countries the modes of general policy justification are similar: the national interest, existence and gravity of the problem, and rationality and acceptability of the proposed reform. When it comes to international comparisons (again a common feature of policy argumentation in all three countries) he finds five types of references: international comparison, international treaties or norms, exogenous policy models, models considered as something that other countries should adopt, and the nation’s reputation. While these five types are common, he does find differences in their use. As would be expected, Canada and the UK are broadly similar, while in the US the frequency of references to international norms or standards is significantly lower. In this, Alasuutari finds support for the persistence of a sense of American exceptionalism: “Overall, the US political culture does not seem to favor arguments that justify a policy by referring to its success in other countries.”

This special issue casts new analytical light on both the OECD and on the macro- and micro-dynamics of policy transfer. Though the authors were not explicitly asked to consider this variable, it emerges as a thread that binds all the articles, notwithstanding their differences: the combination of organizational entrepreneurship and global crisis. We learn, for example, that governments typically search for external models/help when they are in some trouble: China with its tax system, Australia with vocational training, the US with tax transparency after 9/11. At the same time, most of the articles point out that the OECD was well aware of rival IGOs, the declining influence of its core (Western) membership, the need to be relevant, and the strategic challenges of pushing policy agendas on the global stage. In short, it would seem that policy transfer frequently occurs because a crisis has generated an appetite for new solutions, and international organizations like the OECD are waiting in the wings to offer them, not only for national or global benefit, but to further their organizational interests. This is a potentially fertile field for future inquiry.

Additional information

Notes on contributors

Leslie A. Pal

Leslie A. Pal is Chancellor’s Professor at Carleton University in the School of Public Policy and Administration. His research interests focus on international organizations and their advice on public policy and management, how that advice is taken up, and how it seeps into academic programs such as MPAs and MPPs. His articles have appeared in Governance and Policy & Society, and his most recent books are Frontiers of Governance and Beyond Policy Analysis (5th ed.).