The world's poor countries are ultimately responsible for their own development -- and for years, rich countries have measured, categorized, scored, advised, and admonished them to cut their budget deficits, invest more in education, or liberalize their financial markets. Last year, the Center for Global Development (CGD) and FOREIGN POLICY turned the tables: We created the Commitment to Development Index (CDI), a ranking of rich nations according to how their policies help or hinder social and economic development in poor countries. One year and much additional data later, we unveil a second edition of the CDI that brings into sharper focus which governments lead the global community in the challenge of development.
Why should rich countries care about development in poor ones? For reasons both pragmatic and principled. In a globalizing world, rich countries cannot insulate themselves from insecurity. Poverty and weak institutions are breeding grounds for public-health crises, violence, and economic volatility. Fairness is another reason to care. No human being should be denied the chance to live free of poverty and oppression, or to enjoy a basic standard of education and health. Yet rich nations' current trade policies, for example, place disproportionate burdens on poor countries, discriminating against their agricultural goods in particular. Finally, the countries ranked in the CDI are all democracies that preach concern for human dignity and economic opportunity within their own borders. The index measures whether their policies promote these same values in the rest of the world.
In order to rank rich nations as accurately as possible, this year the aid, trade, and environment components of the index were revised, a technology component added, and the sections on investment, migration, and security (formerly called peacekeeping) overhauled. Australia gains most from these improvements in method, surging from 19th place in 2003 to 4th place this year, due in part to changes in the investment and security components. The new measure of security also helps boost the United States 13 slots; Australia, the United States, and Canada all gain from improved data on migration. Amid all the jockeying, however, the same stalwarts anchor first and last place: Japan remains at the bottom of the CDI while the Netherlands stays at the top, though it now shares that position with last year's number two, Denmark.
Some governments got the CDI's message last year. For example, the Dutch government has adopted the CDI as one of its external performance standards for development and is now drafting a report on how it can improve its score. But despite such encouraging signs, underlying realities appear to have changed little. True, most donor countries gave more aid in 2002 -- the last year for which data are available -- than in 2001. And under the aegis of the World Trade Organization (WTO), rich nations came to agreement on permitting poorer countries to import "generic" copies of patented pharmaceuticals, thus opening the door to cheaper AIDS drugs for Africa. However, rich countries -- led by the United States, Japan, and France -- remained intransigent on removing their agricultural tariffs and subsidies, contributing to the collapse of WTO negotiations in Cancún, Mexico, in September 2003. And international efforts to reduce harmful greenhouse gas emissions also suffered when Russia joined the United States in blocking the passage of the Kyoto Protocol.
Ultimately, for all the CDI's focus on winners and losers, no wealthy country lives up to its potential to help poor countries. Generosity and leadership remain in short supply.
THE ELEMENTS OF DEVELOPMENT
The CDI assesses seven major domains of government action: foreign aid, trade, investment, migration, environment, security, and -- new this year -- technology policy. How much foreign aid do countries give and to whom? Do rich nations erect high trade barriers to products made in the developing world? How do they treat the global environmental commons? Each country is scored in each area and averaged to arrive at a country's final ranking. The index ranks Australia, Canada, Japan, New Zealand, the United States, and most of Western Europe in their effort and leadership in promoting development in poorer countries -- not their absolute impact. For instance, one cannot expect Denmark to give as much foreign aid to poor countries as Japan (whose economy is 20 times bigger), but one can ask Japan to give as large a share of its gross domestic product (GDP) as Denmark does.
Aid | Foreign aid is the national policy most commonly associated with development efforts. In 2002, total aid flows from rich countries to poor ones reached $58 billion. Rich countries provide poor ones with grants, loans, food, and technical advice to support everything from massive infrastructure projects to immunization programs in tiny rural villages. Most comparisons of aid examine simple measures such as total assistance as a percentage of the donor's GDP. The CDI goes further, by considering the quality and not just the quantity of aid provided.
For starters, the CDI discounts "tied aid," whereby donors require recipient countries to spend their aid on goods and services such as tractors or educational consultants from the donor nation. (Tying aid can raise the costs of any given development project by 15 to 30 percent by preventing recipients from shopping around for the best deal.) The index also subtracts all debt payments received from developing countries on aid loans, rewarding donors that forgive poor countries' debts. Choice of recipient countries is considered too: The CDI rewards aid to countries that are relatively poor yet relatively uncorrupt and accountable to their citizens.