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Woo hoo! We’re #13!

The fine folks at the Center for Global Development keep a raptor’s eye on the world of development aid. Each year, they issue a report in conjunction with Foreign Policy magazine, “Ranking the Rich” on their commitment to international development.

Their index is considerably more subtle than the comparisons usually used to determine who’s giving a little and who’s giving a lot of international aid. Large nations like the US point to their overall giving as evidence of their responsibility and generosity. The FP index adds a bit more nuance to this, by considering aid in relation to national GDP. Given the US’s vast GDP, the large amount of aid given – the largest in absolute dollar terms – is small in comparison to the generosity of nations like Denmark, which spend single-digit percentages of their national budget on foreign aid. (The US government allocates $0.19 per citizen per day to foreign aid, as compared to $0.86 in Sweden and $1.06 in Denmark.) The FP index also discounts tied aid – aid that goes to purchase products or services from the donor nation, and aid to dictatorships and nations unlikely to spend the money well. (US aid to Iraq is counted at $0.10 on the dollar to recognize the unlikelihood of most of that money reaching the people it is intended to benefit.)

But while the US does badly on the aid score (2.2 out of 10), the US finishes in the middle of the pack of the world’s 21 donor nations, at 13th. That’s because the index also measures scores in trade, investment, migration, environment, security and technology transfer. In comparison to the largely European competition, the US gets excellent scores in trade and investment, pointing to a willingness to enable private investment in developing nations and comparatively low trade barriers. (While the US continues to heavily subsidize farmers in otherwise unprofitable industries like cotton and sugar, these subsidies are modest compared to European farm subsidies and Japan’s notorious 900% tarrif barrier on imported rice.)

What’s most interesting to me about the index is that none of the nations listed are perfect, or even close to perfect. (And only one, Japan, scores dramatically worse than the others.) The Netherlands, topping the index due to outstanding scores in aid, environment and investment is around average on migration. Nations I’ve never thought of as immigration-friendly – Austria, Switzerland – get high marks for admitting unskilled as well as skilled labor. It’s fascinating to see how many levers nations have that affect development policy, far beyond just trade tarrifs, aid dollars and border control.

Very much worthwhile – the visualization tool CGDev offers on their site to let you explore this year’s findings. You’ll note that the most succesful countries have a strong geographic clustering effect – evidently the Scandinavians and the Low Countries “get” development in a way few other nations do.

6 thoughts on “Woo hoo! We’re #13!”

  1. Great information Ethan, thanks for bringing it to our attention. Notice that the U.S. ranks #3 in Table 2 (CDI Performance over Time 2003-2006) behind Spain and the U.K. and Denmark ranks dead last at #21.

    Development and Reconstruction Aid to Iraq looks like a bottomless moneypit according to this report, ranking only behind Somalia in combatting corruption and graft and enforcing the rule of law. As much as 30% of their national budget is lost to corruption (and theft). Yikes!!!

    I wonder why the the 4th Annual CGD-Foreign Policy Commitment to Development Index (CDI) includes only 20 (mostly Western) countries? Is development aid from the rest of the “international community” not worth mentioning or what? How much does everybody else contribute as a percentage of their GDP to helping the poor in developing countries???

  2. Thanks, BRE. Regarding the performance over time: the US has improved in its rankings, due to changes in agricultural subsidies – Denmark has declined, cutting their (huge) aid budget. That table measures change year to year, but not absolute performance.

    As for why the 21 nations selected are the only ones tracked, I don’t really know – the site lists them as the 21 wealthiest nations, which doesn’t sound right to me – I would assume that, in terms of per capita wealth – some of the Gulf petrostates would rank as well, no?

  3. Hi there. Since I chose the 21, I can give you the authoritative answer! I started with the membership of the Development Assistance Committee, which is the official club of aid donors, and is run out of the Organisation for Economic Co-operation and Development. See http://www.oecd.org/document/38/0,2340,en_2649_34447_1893350_1_1_1_1,00.html. There are 23 members. From this list, I dropped the European Commission, since it is not a country but an agency funded by national governments, and Luxembourg, because it is so small. A major consideration driving this choice is data availability. China, Saudi Arabia, South Korea, and others give out aid–but they don’t give out much in the way of aid statistics. A major function of DAC is to collect aid statistics from its members. As more countries join the DAC, we will try to add them to the Commitment to Development Index.

  4. Thanks, David – that’s a big help. I’m sure statistical availability is the key factor on all this – given how much analysis you guys are adding, it would be very hard to analyze some of the other nations you mention. That said, it would be a really interesting study to try to quantitatively and qualitatively compare some of the nations that are beginning to get active in aid – China, India, Saudi Arabia – as well as some even harder-to-study entities – Iran’s aid via Hizbullah, for instance. No idea how one would organize this sort of comparison, but I suspect it would be fascinating.

  5. You never know who is reading your stuff out there in the blogosphere, heh Ethan? Ref: David Roodman, chief architect and project manager of the Center for Global Development Commitment to Development Index 2006. Ain’t it great?

    I put in a word about this post over at the Germany-based blog Atlantic Review, authored by 3 German Fulbright Alumni including my buddy Jörg Wolf in Berlin. Check out their post of August 24th “One Year after the G8 Summit on Extreme Poverty”


  6. David wrote: “From this list, I dropped the European Commission”

    Since the EU is funded by its memberstates, I assume you used some formula to give credit to the EU member states…?

    I am not sure, if I was able to express myself clearly.

    I mean: Germany for example spends amount x for national development programs. Additionally Germany pays amount y for the EU ‘s development programs. Since you dropped the EU Commission from the list: Did you add x and y for Germany?

    Endnote: I wrote the post Bill mentioned. I received quite a few comments on my blog. There are quite a few popular myth out there. And some Americans are not ready to accept that they are not helping the poor as much as they think.
    Thus I pointed to Steven Radelet’s article in Foreign Policy in my reply in the comments section:

    The good news, however, is that US policy has been improving.

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