What Will the OECD Do for You?

A lot of officials are going to be patting themselves on the back. Prime Minister-cum-acting finance minister Ehud Olmert will presumably not miss a chance to win a half point or so in public opinion.

Why? Because the Organization of Economic Development has invited Israel to negotiate membership.

It took 13 years of intensive lobbying for this to happen. Granted, Israel won't be joining for a year or two, if it's accepted at all, but self-congratulations are in order.

Bank of Israel Governor Stanley Fischer: "The OECD's invitation reflects the Israeli economy's strong economic status. It will help to further integrate Israel's into the global economy."

He added that The Bank of Israel would like to thank all the relevant parties - "this includes the Prime Minister's Office, the Finance Ministry, the Foreign Ministry, the Ministry of Industry, Trade and Labor, and the Justice Ministry and others - in their efforts to promote Israel's membership in the OECD."

The OECD is a major economic organization, but unlike the United Nations or the World Monetary Fund, it has no formal powers. What it has is a reputation, a campus in Paris and people who conduct global economic studies, some of them important.

Members of the organization, senior public servants of member countries, discuss economic issues, and occasionally make policy recommendations.

Once the champagne is downed - who benefits from this new development? And what precisely does joining the OECD mean to the public?

There is no argument about one thing: the immediate beneficiaries are a long list of public officials and politicians, who will now start frequenting the Paris-Tel Aviv line to participate in the organization's activities. Paris is a nice place to meet for discussions on global economic policies.

Other than that, not everyone agrees about what will happen.

In the opinion of David Klein, former Bank of Israel governor, joining the organization doesn't actually mean a thing, regarding the status of our economy. Klein may be speaking cynically, but many share his opinion.

The Finance Ministry says the results will be indirect "because the organization requires its members to operate according to high standards, and Israel will also be obliged."

A good example of this is the issue of intellectual property: the OECD is among the leading proponents of public awareness of this issue, and Israel will be required to take a more decisive stand on protection of intellectual property.

Other economists with a fine grasp of what membership in a prestigious club can do for one's reputation, say membership in the OECD will draw foreign investors to Israel, and it may even result in reduced costs of raising capital in international markets for the state and for Israeli companies.

Had Israel been accepted in 2002, or a decade ago, it would have been real news. Then, Israel's image of an attractive investment environment needed legitimization. This is less the case today. Israel is already flooded with investors and foreign capital, and it is sufficient to note the falling dollar to understand that no one is waiting for the OECD's approval to invest in Israel.