While the world’s wealthiest nations made lofty promises to better the lives of the world’s poorest nations, at the G8 summit in 2005, an analysis of their policies on trade, aid, the environment and immigration by the Center for Global Development shows that they haven’t made good on their promises.A unique index that measures the world’s wealthiest nations’ commitment to evolving policies and providing aid to enhance development in poorer nations finds that while two-third of rich countries had improved in the last three years, seven had slipped backwards. The ‘Commitment to Development Index 2006’ (CDI 2006), that ranks the Netherlands as the star performer and Japan as the slacker in a survey of 21 rich nations, reflects a slow overall improvement since 2003, but not nearly in keeping with the development promises made by these nations as recently as 2005.
In fact, as toppers in this year’s survey, the Dutch have done slightly better than average in four of seven categories analysed for the CDI, which has been developed by the Center for Global Development (CGD), a Washington-based think-tank. Britain with its much-touted pro-development agenda ranks a lowly 12th on the index that was released in mid-August.
The Netherlands replaced last year’s leader Denmark only because of a major fall in that country’s rating. Its rating of 6.6 to top this year’s CDI was, in fact, lower than Denmark’s rating of 6.7 as top ranker in 2005. The average score of all 21 countries in the index, which rose slightly since the study began in 2003, also dropped this year to 5.2, from 5.3 in 2005.
The Commitment to Development Index assigns points in seven policy areas: aid (both quantity as a share of income and quality), trade, investment, migration, environment, security, and technology. Within each parameter, countries receive points for policies and actions that support poor countries in their efforts to build prosperity, good government and security. The scoring adjusts for size, levelling the playing field for large and small nations. The ratings are averages of points assigned for each country’s performance on the seven components.
The Netherlands garnered the No 1 spot this year because the amount of foreign aid it gives in proportion to the size of its economy is high, as is the quality of its aid programmes. The country also ranked high for policies that promote productive investment in poor countries, and for its strong environmental record that included falling greenhouse gas emissions.
But even the Dutch could do better, notes Dennis Roodman, designer of the CDI. They are party, for instance, to the European Union’s agricultural policies, which levy an effective 46% tax on farm imports from poor countries, making it harder for poor farmers to escape poverty.
Indeed, the main reason the Netherlands came out on top is because other nations failed to live up to their commitments on development.
Denmark, last year’s top-ranker and historically the index’s best performer, saw its score fall from 6.7 in 2005 to 6.4 this year, the largest drop by any country since the CDI was formulated in 2003, thus landing in second spot in the 2006 index. The fall in its rating was attributed to large reductions in foreign aid between 2001 and 2004 — 14% — while its economy grew by 9%.
Northern European countries and New Zealand and Australia dominated the list this year, as they have since the annual survey began. Sweden, Norway and Finland, ranking third, fourth and seventh respectively, together with New Zealand and Australia (fifth and sixth respectively) made up the top one-third of the CDI 2006.
Britain, which ranks 12th on the CDI 2006, has slipped back two places from 10th in 2005, despite Tony Blair and Gordon Brown having put foreign aid at the top of the G8 agenda in 2005. With a rating of 5.1 this year, Britain fell from the 5.3 it scored in 2005 mainly due to arms sales to undemocratic governments. It scored high for its investment policies towards developing countries, and has the best environmental record on the index. However, it was almost at the bottom of the security component because of its arms sales and immigration policies, which mean its borders are relatively closed to immigrants from poorer countries.
The US’ rating of 5.0 is identical to last year’s, but its ranking, shared with Ireland, is down one place to 13th on the CDI 2006 from last year’s 12, keeping it close to the bottom third of the index. But, the country is up half a point since 2003 due partly to falling farm subsidies and rising levels of foreign aid. While the US is the world’s largest aid donor in absolute terms, its aid is small relative to the size of its economy. And Washington ties a large share of this aid to the purchase of US goods and services — a backdoor subsidy for American interests.
The US also ranks last on the environment component because of low gas taxes, which encourage consumption, and because of per capita greenhouse gas emissions that are second only to Australia’s, among the rich countries. The CGD says that its environmental and energy policies indirectly harm developing countries by enhancing global warming, whose impacts are felt most strongly by the poorest people in the poorest nations.
On the positive side, the US does well on the trade component, coming second to tiny New Zealand, because US barriers to developing country agricultural exports are not as high as those of most CDI 2006 countries. Also, some US policies promote healthy investment in poor countries, putting the US in the top half of the index’s investment component.
Japan’s 3.1 rating put it in last place, where it has been since 2003. The country serves as a prime example of how the CDI attempts a more holistic understanding of development indices. As recently as 2000, Japan gave more aid than the United States despite having half the population, and took pride in its peaceful role on the world stage. But Japanese society remains much more closed than that of other rich countries, says the CGD. It does not welcome foreign workers and products as much as other countries do. It rarely participates in international peacekeeping. And, like the United States, it gives little aid for its size. All that pulls it down in the CDI, which rewards policies that strengthen links to developing nations.
Austria, Germany, Canada, Switzerland, Belgium, Portugal, Spain, France, Italy and Greece were the other countries surveyed in the CDI 2006. Over the years, Britain and the US were jointly the second most improved countries on the index.
Other findings of the CDI 2006 are that while total foreign aid from the major donors increased 31.4% in 2005 to a record US$ 106.5 billion, a major part — $ 20 billion — was in the form of write-offs of old debts owed by Nigeria and Iraq. In addition, US$ 6.3 billion consisted of US aid to Iraq, and the majority was wasted.
The index also indicated that wealthy countries are contributing more aid to Africa. But the aid given is less when it comes to reducing trade barriers and promoting policies that encourage investment in poor countries.
Nancy Birdsall, president of the CGD, said the new ratings show slow but steady improvement since the first index in 2003, but “fall far short of leaders’ soaring rhetoric in 2005, the so-called ‘Year of Development'”. That year, British Prime Minister Tony Blair had made development aid to poor countries of Africa a major goal of Britain’s chairmanship of the G8 developed countries. This June, however, Blair acknowledged that major commitments made at last July’s G8 meeting remained unmet.
At the 2005 G8 summit in Gleneagles, Scotland, the world’s wealthy nations agreed to increase aid to Africa by US$ 25 billion a year by 2010, and by a further US$ 25 million each year by 2015. The summiteers also committed to write off US$ 40 billion of 18 countries’ debt. The World Bank says they followed through on the debt write-offs but at an actual cost of US$ 650 million. That is less than 1% of total aid. The rest of the US$ 40 billion “was like forgiving the debt of a bankruptcy; you haven’t had that money for a long time,” said Roodman.
“From what was needed and what was promised, the results are disappointing,” Roodman said. According to him, the real value of the CDI is that it is a detailed road map and scorecard for policymakers to help the 2.7 billion people who survive on less than two dollars a day. “What we want to do with the index is to provide a pretty powerful road map that shows how all these kinds of policies matter. They are all the ways that rich countries hurt or help the poor,” he added. “In general, governments don’t want to talk about this stuff. They want to hide, and we want to reveal,” he said. “In order to be effective, improving lives must be about much more than giving money. It must be about the rich and powerful taking responsibility for policies that affect the poor and powerless.”
“The lives of a billion people could be improved in the next decade if rich countries reform their trade, migration and investment policies. Politically, these changes are difficult. However, if rich countries are truly committed to development, they could easily bear the short-term costs of the reforms and the spread of prosperity would serve the interests of all countries.”