WASHINGTON,D.C.(November 4, 2010)–The world’s richest countries have made modest progress in improving policies that support development but still have a long way to go, according to a Center for Global Development analysis released just days before Group of 20 leaders are expected to adopt a development action plan at their summit in South Korea.
The Center’s 2010 Commitment to Development Index (CDI) shows most wealthy nations have modified their policies since 2005 in ways that make them more supportive of sustained growth and poverty reduction in the developing world. But the CDI found overall improvement has been slight, and the seven major industrialized countries, in particular, could do far better.
Only three of those seven – Canada, the United States and Germany – were ranked in the Index’s Top 15. The United Kingdom, which recently announced plans to boost development aid amid a government austerity campaign, ranked 16th, pulled down by a poor showing on the Index security component due to arms sales to undemocratic regimes.
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Sweden again led the Index, with its neighbors, Denmark and Norway, and the Netherlands close behind. “At the Seoul Summit, development will be a key part of the agenda for the first time since the steering group for the global economy was expanded from the G8 to the G20 during the 2008 financial crisis,” CGD President Nancy Birdsall said.
“The CDI contributes to this discussion by measuring whether the rhetoric of the high-income countries, including the richer G20 members, is matched by their policies,” she said. “There are many connections between industrialized countries and developing ones, not just aid but also trade, investment, environmental policy and other linkages. The failure to use these channels to their full potential is a blow to the goal of shared global prosperity.”
At their Toronto summit in June, leaders of the globe’s 20 advanced and emerging economies established a working group to propose a development agenda and multi-year action plan for approval when they meet again in Seoul on Nov. 11-12.
In its Toronto summit declaration, the G20 said narrowing the gap in development between rich and poor countries and reducing poverty was integral to achieving strong, sustainable and balanced growth and ensuring a robust and resilient global economy for all.
The Center’s annual Index ranks 22 of the world’s wealthiest countries based on their dedication to development policies that benefit poor nations. The CDI goes beyond standard comparisons of aid flows to measure national efforts in seven policy areas that are important to developing countries: aid, trade, investment, migration, environment, security and technology. The Index is adjusted for size to compare how well rich countries are living up to their potential to help.
In 2010, the average score for all nations included in the Index was 5.3, up from 5.1 in 2005, and 18 countries improved their scores over that period.
Scandinavian countries continued to do well on the CDI. Sweden ranked first for the second straight year with an overall score of 7.0, Denmark was second at 6.8 and Norway was fourth at 6.4. The Netherlands, another country that regularly does well on the Index, was third at 6.7. The scores for all four nations were higher in 2010 than in 2005.
South Korea, which just recently joined the ranks of rich countries and is featured in the Index for only the third year, again finished last, but improved its score to 3.1 from 2.8 in 2009 and 2.5 in 2008. South Korea and South Africa are co-chairing the G20 working group on development.
Among the G7 nations, all of which are part of the G20, Canada tied for ninth in the Index with a score of 5.5. The United States tied for 11th and Germany tied for 14th with scores of 5.4 and 5.1, respectively. The United Kingdom was 16th at 5.0, France 17th at 4.9, Italy 18th at 4.8 and Japan was 21st at 3.3.
All of those scores at least matched 2009’s performance and, of the seven, only the UK and Germany had lower scores this year than they did in 2005. But none of the G7 nations have finished in the Top Five of the Index since the UK tied for fifth in 2006.
“What we see are slight improvements, but overall the G7 nations fall well short of their potential. Each of the G7 countries perform above average on one or two policy components, but lag dramatically behind on the rest,” said David Roodman, CGD senior fellow and chief architect of the Index.
“For instance, Canada, Germany and the UK score within the top five on the investment component,” Roodman said. “Yet the UK finishes second from the bottom on security due to large arms exports to undemocratic regimes. Canada is second to last on environment as a result of high fishing subsidies and greenhouse gas emissions. And Germany ranks near the bottom for little support to technological advances.”
Roodman said the U.S. score rose dramatically in 2010 primarily due to financial and troop contributions in Afghanistan, which the Index credits as a contribution to security since it is an internationally sanctioned intervention.
“Yet the United States ranks in the bottom half of CDI countries for its aid, investment, migration, environment and technology policies,” he said. “In general, when it comes to policy coherence, the G7 countries have clear room for improvement across the board.”
Following are summaries of how each of the G7 nations fared in the 2010 Index and how their overall scores have changed since 2005.
Canada (comparison with 2005 score, +0.2): As in 2009, Canada’s main contributions to the development of poor countries come through its strong support of technological innovation and dissemination, its low barriers against developing country exports, and its policies that promote productive investment in poor countries. Canada also bears a large burden of refugees in humanitarian emergencies. But the Canadian government’s positive impact is reduced by its aid to less poor and relatively less democratic governments, its relatively small contributions to international peacekeeping efforts, and its poor environmental record from the standpoint of developing countries.
United States (comparison with 2005 score, +0.9): Along with Portugal, the United States recorded the largest one-year gain in the Index, up 0.7 points from its 4.7 score in 2009. Much of that gain was due to the increase in U.S. troops to the U.N.-mandated military force in Afghanistan because the Index gives countries credit for contributing to internationally sanctioned security operations. As in past years, the United States also scored well in the trade component of the Index but lagged behind in aid and environment. U.S. foreign aid is small as a share of its income, and it ties a large share of this aid to the purchase of U.S. goods and services. The United States also has the lowest gas taxes and among the highest greenhouse gas emission and fuel production rates per person. It is the only CDI country that has not signed the Kyoto Protocol.
Germany (comparison with 2005 score, -0.1): Germany finished second in 2010 on the investment component. The German government also has a strong environmental record from the developing country perspective and does well on the migration component for taking in relatively large numbers of refugees during humanitarian crises. But Germany would score higher if it gave more and better quality aid, lowered barriers to agricultural imports from developing countries, increased participation in international peacekeeping efforts and provided more support for the creation and dissemination of technological advances.
United Kingdom (comparison with 2005 score, -0.5): The United Kingdom ranks near the top of the investment and environment components, but finishes low in the security component. British borders are also relatively closed to immigrants from poor countries, and its government policies do little to support the diffusion of technological advances abroad. Britain scores above average on aid, much better than the United States but considerably worse than the Scandinavians.
France (comparison with 2005 score, +0.2): France scores highest on the environment and technology components, thanks to low greenhouse gas emissions and strong support for research and development. The French government also has policies in place that promote productive investment in poor countries, finishing above average in the investment component. But France’s performance is hurt by below-average scores in three components: aid, migration, and security. France has a poor immigration record due to the low number of immigrants entering from poor countries and is one of the world’s largest exporters of arms to undemocratic governments.
Italy (comparison with 2005 score, +0.3): Italy’s overall score is brought down by a very small foreign aid program, poor donor practices, a low number of unskilled immigrants entering from developing countries as a share of the Italian population, and its lack of support for research and development. Its strongest contributions to development come from low greenhouse gas emissions per person and for providing little protection to domestic producers for agricultural products.
Japan (comparison with 2005 score, +0.9): Japan’s barriers to exports from developing countries are among the highest in the CDI, driven mainly by rice tariffs, and its foreign aid is one of the smallest as a share of income. Japan also admits very few immigrants from poor countries, and makes small financial and personnel contributions to internationally sanctioned security operations. Japan’s strongest contribution to development comes through government support for research and development, earning it a high score on the technology component.
An embargoed copy of the entire CDI report can be found here . Following is a table of results.