World Savvy Monitor

An interesting way to think about the overall implications of development assistance is to consider the following information from the Center for Global Development, an independent US-based think tank that annually ranks the world’s 21 wealthiest nations by how much they help “countries build prosperity, good governance, and security.”  According to the 2007 summary by David Roodman, development assistance given from the public sectors of these countries is ranked along seven indicators “to compare how well countries are living up to their potential to help:”

• Quality and quantity of foreign aid:  The index considers aid as a percentage of the size of the donor’s economy, and penalizes tied aid.  It also discounts aid given to recipient countries with high levels of corruption.  For example, aid to Iraq is counted at 10 cents on the dollar, while aid to Mozambique is counted at 77 cents on the dollar.  Donors are penalized for launching too many small aid projects that lead to fragmentation and undue burdens on the recipient country; the index rewards countries that give tax incentives for private contributions (such as tax deductibility for private donations made to international charities).

• Openness to developing-country exports:  All trade and subsidies enacted by the donor nation are converted into “one flat across-the-board tariff,” representing the total effect of the wealthy country’s trade policies on developing countries.  Impact is adjusted for size of the country.  For example, US tariffs count more than Swedish ones because they have a greater impact due to the larger US share of global trade.

• Policies that influence investment:  The index looks at FDI as well as the purchase of securities from developing countries on the open market.  Wealthy countries are subjected to a “checklist” of policies that incentivize and facilitate such investments, ranging from tax breaks to participation in international investment transparency initiatives such as the Kimberley Process.

• Migration policies:  The index rewards countries who implement policies encouraging the migration of both skilled and unskilled labor from developing countries to their countries, though unskilled labor counts more.  Openness to students from LDCs and aid to refugees and asylum seekers is also considered.

• Environmental policies:  The index looks at what developed countries are doing to reduce their own greenhouse gas emissions as well as whether or not they participate in environmentally degrading activities in the developing world, such as timber mining or the patronization of harmful fisheries.

• Security policies:  Countries are rewarded for participation in international (UN) peacekeeping and humanitarian endeavors (under multilateral control only – the US-led war in Iraq does not count, but the NATO-led invasion of Afghanistan does).  They are also rewarded for using their navies to patrol and protect international shipping lanes.  They are penalized for arms sales and military aid to developing nations.

• Support for creation and dissemination of new technologies:  The index rewards government-led Research and Development (R & D), as well as government subsidies for private R & D, though it counts military-oriented technology at a 50% discount.  Countries are rewarded for participating in trade negotiations to reduce intellectual property and patent restriction on certain products needed by LDCs, and are penalized for over-zealous protection of these rights themselves.

(Center for Global Development)

All scores are then averaged for an overall CDI measure.  This approach is widely seen as being a comprehensive and inclusive way to capture the types of things that have been discussed in this issue of the Monitor: providing aid, facilitating trade, encouraging private investment, transferring expertise, and promoting peace and cooperation on issues that affect the global commons as a whole and, often disproportionately, the world’s poorest citizens.  Among its other findings, the 2007 CGD report concluded: development is about much more than direct aid; the design and delivery of aid programs is as important as the quantity of aid; and the policies of developed countries have a significant impact on the developing world. 

The rankings of the 21 nations scored for the 2007 report can be seen below:

* Over the past five years, the United States made steady improvement.  From 2003 to 2006, it incrementally increased its overall score from 4.5 to 4.9 to 5.3 to 5.1, and ranked second for overall improvement during that time period.  However, in 2007, the US fell one rank with its overall score of 5.0 dragged down by its performance in terms of aid and the environment.  

Next:  Appendix I:  What Individuals Can Do