Aug 22, 2006

Who is Generous? (Government Edition)

by Laura Starita

According to the latest Commitment for Development Index (CDI), Northern European countries are the most generous. The CDI is a ranking of the world’s 21 richest nations according to their commitment to reducing poverty in the developing world. A joint effort between the Center for Global Development and Foreign Policy magazine, the CDI assigns each country a grade based on its policy in seven critical areas: aid, trade, investment, migration, environment, security and technology. The Netherlands came in first, followed by Denmark, Sweden and Norway.

Great Britain and the United States placed 12th and 13th respectively; Japan was last.

As a piece of research the CDI is generally well thought out and executed, considering some obscure factors. For example, it highlights that wealthy nations spend almost as much subsidizing their farmers – a practice which contributes to the cycle of poverty in the developing world by depressing world prices for agricultural goods – as they do on foreign aid. Another thought-provoking figure: “U.S. tariffs on imports from India, Indonesia, Sri Lanka and Thailand brought in $2.06 billion in 2005 – twice what the U.S. committed to these countries for tsunami relief.“

Countries are also not given blanket credit for the quantity of aid given. Aid to relatively wealthy countries is discounted, while aid to the poorest nations gets a higher grade. Despite its nuanced analysis, however, there are also some dubious qualitative factors included in the index. For example, the assessment gives bonus points for aid dollars given for larger projects, as opposed to multiple small ones that add up to the same dollar amount. Large projects, though, tend to generate more graft and corruption and require more ‘experts’ be imported from the wealthy countries.

Overall, the rankings are more interesting in their component parts than in their summary totals. For instance, while the United States summary score was quite mediocre, the US gained high marks for its trade policy: the country is open to global trade and its tariff rates are low relative to other rich countries. It ranks poorly in the aid category primarily beacause the U.S. ‘ties’ 70 percent of the aid it gives, meaning it requires that recipient countries spend the aid dollars on U.S. goods and services. Regarding the UK, it gained top marks for its environmental practices and for its investment in developing nations. In the overall ranking, these efforts do not make up for a poor ranking on security (the UK has a history of selling arms to unstable nations) and migration.

And what does this all say about wealthy countries and our commitment to ending world poverty? We can do better, much better.

Finally, it’s worth specifically pointing out that the rankings only take into account official government aid and policies. They do not recognize private generosity at all. According to a variety of studies it is clear that American private giving dwarfs public aid. While figures are not so clear cut in Britain, the country’s private citizens are also quite generous.
Center for Global Development / Foreign Policy: http://www.cgdev.org/section/initiatives/_active/cdi/“ target=“_blank”>Commitment to Development Index 2006