G7 Nations Fare Poorly in Ranking of Wealthy Countries' Policies Benefiting Developing World

WASHINGTON,D.C.(October 22, 2009)-The Group of Seven major industrialized nations fared poorly in the latest assessment of wealthy countries’ policies related to building prosperity in the developing world, with none finishing in the top 10 of the 22 countries ranked, the Center for Global Development announced on Thursday.

The Center’s 2009 Commitment to Development Index (CDI) ranked Canada highest among the G7 countries, at 11th. France, Germany and the United Kingdom tied for 12th. The United States was 17th, Italy 18th, and Japan 21st.

The CDI ranks 22 of the world’s richest countries based on their dedication to policies that benefit poor nations, adjusting for size to compare how well the wealthy are living up to their potential to help. Because rich and poor nations are linked by more than foreign aid, the Index 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 2009 Index was released on Thursday at the fourth edition of European Development Days in Stockholm.

“The CDI ranks wealthy nations on whether they are living up to their potential, given their own resources, to help through trade, investment, foreign aid and other linkages,” CGD President Nancy Birdsall said. “Sweden scores better than, for example, the United States measured against its economic size and potential to help. But it is the United States, Germany, France, Japan and the other economies that have the multiple linkages and potential in absolute terms to make a difference for poor countries. Their failure to use it to the fullest is a blow to the cause of truly shared global prosperity.”

Scandinavian countries have generally done well on the CDI and do so again this year, with Sweden ranked first with an average score of 7.0, Denmark second at 6.7 and Norway tied for third with the Netherlands at 6.6.

South Korea, which only recently joined the ranks of rich countries and is featured in the Index for its second year, again finished last at 2.8.

By comparison, Canada had a score of 5.3. France, Germany and the U.K. rated a 5.1 score. The United States scored a 4.9, Italy a 4.4 and Japan a 3.1.

Collectively, the G7 nations did best in the investment and trade policy areas and worst in the aid and migration components of the Index.

The rankings for Canada, the United States, Japan, and Germany remained unchanged from 2008. But the U.K. dropped from sixth to 12th, largely because of poorer scores on the aid and security components, France improved from 16th to 12th and Italy moved up from 20th to 18th.

“The U.K.’s aid giving slowed in 2007, the latest year for which complete data are available, while its exports of arms to undemocratic regimes such as Pakistan and Saudi Arabia ticked upward,” said David Roodman, a CGD research fellow and the architect of the Index.

“Italy’s climb is due to a jump in donations to international aid agencies such as the World Bank and the country’s acceptance of 246,000 immigrants from such poor countries as Morocco and India, up from 165,000 the year before,” Roodman said. “France gained on contributions of more than 1,000 troops each for peacekeeping in Chad and Côte d’Ivoire, a two-thirds cut in fishing subsidies, and improved data within the CDI on France’s policies supporting overseas investment.”

Following are summaries of how each of the G7 nations fared in the Index.

Canada: Canada’s main contributions to the development of poor countries came 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. But the country’s positive impact is reduced by its aid to less poor and relatively less democratic governments, its small contributions to international peacekeeping efforts and its poor environmental record from the standpoint of developing countries.

France: France scores highest on the investment and environment components, thanks to policies that promote productive investment in poor countries and low greenhouse gas emissions. The French government is also a strong supporter of research and development, putting France among the top countries in the technology component. But France’s performance is affected by below-average scores in three CDI components -- aid, migration and security. France has a poor immigration record due to the low number of immigrants entering France from poor countries, and is one of the world’s largest exporters of arms to undemocratic governments.

Germany: Germany finishes first on the investment component thanks to policies that promote healthy investment in developing countries. The German government also has a strong environmental record from the developing-country perspective and earns a high score on the migration component for taking in relatively large numbers of refugees during humanitarian crises. Germany would score higher if it 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: The United Kingdom finishes near the top of the investment and environmental components, thanks to policies that promote healthy investment in poor countries and a very strong environmental record from the perspective of those countries. But the U.K. ranks low in the security component because of arms sales to undemocratic governments. British borders are also relatively closed to immigrants from poor countries, and government policies do little to support the diffusion of technological advances abroad.

United States: U.S. barriers against developing countries’ agricultural exports are lower than those of most CDI countries, and the United States provides the most protection of sea lanes important for international trade. But the United States finishes near the bottom of the rankings in both the foreign aid and environment components. 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 gasoline taxes and among the highest greenhouse gas emission rates per person. It is the only CDI country that has not signed the Kyoto Protocol.

Italy: Italy’s overall score is brought down by a very small foreign aid program, poor donor practices -- including a large share of aid fully or partially tied to the purchase of Italian goods and services -- and its lack of support for research and development. Its strongest contributions to development come from low greenhouse gas emissions and protection of sea lanes important to international trade.

Japan: 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 has a poor environmental record from the perspective of poor countries and admits very few immigrants from those nations. Japan’s strongest contribution to development comes through government support for research and development, earning it a high score on the technology component.

Each component of the CDI combines many numbers into a single score, placing that score on a standard scale, so that an average score in 2008, the reference year, equals 5. If a country is twice as good as average, it scores a 10, and if it is more than twice as good, it scores above 10. All seven component scores are then averaged for an overall score.

The entire CDI report can be found at /cdi after 1400 GMT on October 22. Following is a table of results.