The year 1964 holds golden memories for post-war Japan. I was still just a 10-year-old elementary school student, but I vividly recall how the streets were buzzing with the opening of the Shinkansen high-speed rail system (a good decade and a half before the French TGV) and the hosting of the Tokyo Olympics, and how our lives were steadily becoming enriched, not to mention the stench of exhaust fumes and the roar of the traffic. This was also the year in which post-war Japan was fully recognised as an important member of the international community. Japan became an IMF “Article 8” nation, hosted the Annual Meetings of the International Monetary Fund and World Bank Group for the first time, and also finally achieved accession to the OECD. However, at the time, Japan’s per capita GDP was only a quarter of that of the US, and two-thirds of Argentina’s, so one ought to consider that its admission to the OECD (as the first member country outside Europe and the US) was due to recognition of Japan as a partner worthy of good debate, rather than as a prosperous developed economy.
Twelve years later, in 1976, I joined the Ministry of Finance, and one day I discovered a vast file in an underground archive containing the work involved in attaining OECD membership. Conditions for membership had been met in various fields such as finance, taxation and aid, including OECD codes on freeing up capital movements. The efforts and enthusiasm of my predecessors seemed to leap off the page.
At that time, which was marked by the 1970s oil shock, the OECD was playing a central role in efforts to tackle the current account imbalance among developed countries. A typical example of this was the establishment (although eventually aborted) of the OECD Financial Support Fund, which was my first job at the Ministry of Finance, and the most important international financial conference was Working Party 3 (WP3) of the OECD Economic Policy Committee (EPC) which I had to prepare (see also article by Kumiharu Shigehara). I was on tenterhooks, as the materials for the WP3 conference had still not arrived by air mail as the day fast approached.
Through to the mid-1980s, I was fortunate enough to have two opportunities for secondment to the OECD secretariat: the first time as an economist in the Economics Department, and the second time in the department handling international taxation issues. The OECD was then a tight-knit world of 24 homogenous member countries, while non-member and developing countries were virtually out of view.
On returning to the OECD a quarter of a century later, I was surprised at the various changes that had occurred in the intervening years. Not only had the number of member countries risen from 24 to 34, but there was no longer the same distinction between member (essentially developed) countries and non-members(mainly emerging nations and developing nations) in the OECD policy debate. In fact, nowadays this latter group are referred to as partner countries. This makes sense. After all, the debate about the ageing population in Japan and Korea is also a matter of concern for other Asian countries, such as Thailand and even China. Moreover, the fair distribution of income is also an issue in the growth of emerging countries, and tax issues for multinational corporations that cannot be discussed without the involvement of developing countries.
Now that the global economy is more closely interconnected than ever, it seems fair to say that there are few if any policy issues that a single country faces alone, nor policy responses that do not affect other countries. If the OECD is able to continue addressing such global changes, then there is much that Japan will gain from the OECD policy debate, and the best points of Japan’s policy responses will then become a reference point for other countries worldwide through the “best practice” prism of the OECD. For this to happen, we must do our utmost to understand and address conditions in Japan from an even wider global perspective. The accession efforts of 50 years ago will then be amply rewarded.
©OECD Observer No 298, Q1 2014