Ranking the Rich 2003

In a groundbreaking new ranking, FOREIGN POLICY teamed up with Center for Global Development to create the first annual CGD/FP Commitment to Development Index, which grades 21 rich nations on whether their aid, trade, migration, investment, peacekeeping, and environmental policies help or hurt poor nations. Find out why the Netherlands ranks first and why the world's two largest aid givers -- the United States and Japan -- finish last.

BY FOREIGN POLICY, CENTER FOR GLOBAL DEVELOPMENT | MAY 1, 2003

Political leaders in the world's richest nations regularly proclaim their fervent desire to end poverty worldwide. At high-profile meetings and summits, politicians push developing countries to tackle corruption, reduce inflation, and slash budget deficits. These leaders also boast of their spending on foreign aid -- currently about $58 billion a year -- even while they regularly call on each other to spend more.

These objectives and efforts are praiseworthy, no doubt. But cash transfers to poor nations are far from the only or even the most important way rich countries affect poor countries. Indeed, the finger-wagging over foreign aid has actually obscured the critical influence other rich countries' policies have on the development of poor nations. Until now, that is. The first annual CGD/FP Commitment to Development Index (CDI), created by the Center for Global Development and FOREIGN POLICY magazine, ranks some of the world's richest nations according to how much their policies help or hinder the economic and social development of poor countries. The CDI looks beyond mere foreign aid flows to encompass trade, environmental, investment, migration, and peacekeeping policies. In this inaugural edition of the index, the CDI ranks 21 nations: Australia, Canada, Japan, New Zealand, the United States, and most of Western Europe.

In ranking these countries' commitment to development, the CDI rewards generous aid giving, hospitable immigration policies, sizable contributions to peacekeeping operations, and hefty foreign direct investment (FDI) in developing countries. The index penalizes financial assistance to corrupt regimes, obstruction of imports from developing countries, and policies that harm shared environmental resources. Although the governments and leaders of poor nations are themselves ultimately responsible for responding to the many challenges of development, rich countries can and should change their policies to spur economic growth and social development in poorer nations. The CDI highlights and ranks the rich countries' policies themselves, not their final impact. This approach emphasizes what each rich country -- regardless of size and reach -- can do to improve opportunities for development throughout the world.

The results of the first annual CDI cast traditional assumptions about the most development-friendly countries in a new, unexpected light. For example, the two countries providing the highest absolute amounts of foreign aid to the developing world -- Japan and the United States -- bring up the rear in the index. Japan ranks last overall, with low marks in migration and aid. The United States ranks high in trade policy but finishes second to last overall due to particularly poor performances in environmental policy and contributions to peacekeeping. By contrast, the Netherlands emerges as the top-ranked nation in the index, thanks to its strong performance in aid, trade, investment, and environmental policies. Two other small countries, Denmark and Portugal, follow in second and third place, respectively. Norway, which is usually regarded as a model global citizen and a force for peace worldwide, comes in a disappointing 10th, mainly due to its poor trade performance. And though New Zealand is not noted for its particularly generous aid giving, that country finishes fourth overall thanks to a strong showing in migration and peacekeeping policies.

The CDI results are critical for two reasons. First, helping impoverished people worldwide build better lives is the right thing to do, and this index can educate policymakers, provoke public discussion, stimulate research, and guide activists seeking that goal. The hard truth is that even the best-performing nations in the CDI have a long way to go to make their policies as helpful as possible for poor families in developing countries. The Netherlands, even though it ranks highest, averages merely 5.6 points on the 10-point scale. Second, what rich countries do to and for the rest of the world comes back to affect them -- poverty and instability do not respect borders. Surely the United States would benefit if Mexico were as stable and prosperous as Canada. Surely West European nations would benefit from an economic resurgence in Poland, Hungary, and the Czech Republic. Call it trickle-up economics: When the poor become better off, so do the rich.