Membership Conditionality and Institutional Reform: The Case of the OECD

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Conditional membership may be one of the most important sources of leverage for IOs. What underlies the terms of selection and the willingness of applicants to pay the price of entry? The influence of accession conditions has been studied in the context of EU and NATO, where sizable benefits motivate major concessions by applicants. This paper examines a much less powerful organization, the OECD. The organization provides both public goods in the form of policy information and club goods in the form of status. Through a process of self-selection by applicants and screening by members, the organization has managed gradual expansion while preserving its value as an elite club of like-minded states. Informality of accession criteria has allowed flexibility to raise and lower the bar for entry. Statistical analysis highlights broad conditions related to income, democracy, and geopolitics that correlate with earlier entry into the OECD relative to other countries while there are less clear patterns for the role of trade and financial openness. Case studies of Japan, Mexico, Korea, and the Czech Republic are used to examine how prospective OECD membership motivated reforms in regulatory policies and trade. These countries sought to benefit from the status of association with the advanced industrial democracies. On the basis of shared liberal orientation and geopolitical alignment, these outsiders were accepted into the club. At the same time, a case study of Brazil highlights how its refusal to seek OECD membership reflects a political preference to remain distant from the advanced industrial nations even as its economy and policies are more integrated with these states.