Development & Aid, Headlines, North America

DEVELOPMENT: Netherlands, Denmark Most Committed to Poor – Index

Jim Lobe

WASHINGTON, Apr 28 2003 (IPS) - Of the world’s 21 wealthiest developed countries, the Netherlands, Denmark and Portugal are the most helpful in fighting poverty in the world’s poor nations, according to a new index released Monday by two peace and development organisations.

The index, from the Washington-based Center for Global Development (CGD) and the Carnegie Endowment for International Peace and published in the latest edition of the Endowment’s ‘Foreign Policy’ (FP) magazine, also gave high marks to the efforts of New Zealand and Switzerland to spur development in poor countries.

At the opposite end of the rankings developed by the CGD and ‘Foreign Policy’, the United States ranked 20th, just ahead of Japan, despite the fact that the two countries have the largest foreign-aid programmes in the world.

Indeed, of the Group of Seven (G7) Western powerhouses, which give the most aid and engage in the most trade with poor nations, only Germany, which tied with Spain for the number six slot, was found to be among the 10 most helpful in fighting poverty.

The other six – Britain (11), France (14), Italy (15), Canada (18), the United States (20) and Japan (21) – all ranked lower in the ‘Commitment to Development Index’.

”The G7 are not leaders,” says the report. ”By virtue of their sheer size, the G7 engage in more trade, more aid giving, more peacekeeping and more pollution than any other group of nations. They have the greatest power to help developing countries, but, with the exception of Germany … they generally use their enormous potential the least”.

”These countries aren’t really committing themselves to policies that truly help the developing world,” said Moises Naim, chief editor of ‘Foreign Policy’. To obtain the rankings, the authors of the report gave equal weight to six categories of policies pursued by the 21 wealthiest nations that affect the welfare of the world’s poor. The categories are aid, trade, investment, immigration, peacekeeping and the environment.

Using various criteria within each set of policies, they awarded a raw score of between zero and 10 to each country’s performance in that category and then averaged the six figures.

The aid score, for example, was based on the amount of foreign assistance the countries provided to poor countries as a percentage of their gross domestic product (GDP). The quality of the aid was measured by determining how much of it was ”tied” to the purchase of goods and services from the donor country or included administrative costs. Of the roughly 58 billion dollars provided in bilateral and military assistance in 2001, about 45 percent was ”tied”, according to Naim.

In addition, aid to poorer countries received greater weight – thus, U.S. aid to Israel, a relatively wealthy country, did not count, while aid to sub-Saharan African countries received more weight than aid to Russia. More weight was also given to aid to countries with less corruption and more democratic decision-making processes.

Similarly, the trade score considered the rich nations’ barriers to exports from poor countries and the amount they actually imported from poor nations. Wealthy countries earned extra points if they imported more from poorer countries and if they imported manufactured goods, which generally have a higher value than raw commodities.

The investment score measured foreign direct investment from the rich countries to poor countries as a percentage of their GDP 1999-2001, discounted by the propensity toward bribery by the investing country’s corporations, as measured by Transparency International.

The migration category weighed the number of legal migrants admitted by rich countries each year as a percentage of the receiving country’s population as well as how much aid and assistance they provided to refugees from poor countries. Peacekeeping scores were based on financial and personnel contributions by wealthy countries to international peacekeeping operations as a percentage of GDP.

The environment measured each rich nation’s depletion of the shared commons, such as greenhouse gas emissions, per capita consumption of ozone-depleting substances and fishing subsidies as a percentage of GDP, as well as contributions to international environmental initiatives and government support for clean-energy technologies.

The highest-ranking country, the Netherlands, received a final average of 5.6, while the worst performing, Japan, received 2.4, slightly below Washington’s 2.6 score. Ironically, although both the United States and Japan provide the greatest amount of foreign aid to poor countries in nominal terms, they received the two lowest scores in the aid category, both because U.S. aid as a percentage of GDP ranks lowest among the 21 wealthiest countries, and because the quality of the aid in both countries is regarded as particularly poor.

Much of the two countries’ aid is "tied”; indeed, in the late 1990s, the U.S. Agency for International Development (USAID) told Congress that almost 80 percent of its resources were used to buy U.S. goods and services.

On the other hand, the United States got the best score of all 21 countries – a 7.7 – in the trade category. But its average score was dragged down by its poor performance in peacekeeping and the environment, as well as aid. Conversely, Norway, which along with the other Nordic countries has long been considered a leader in Third World development assistance, ranked number 10 overall, largely because its trade policies were considered the worst by far of the 21 wealthiest nations.

One of the more anomalous findings was Switzerland’s capture of the top spot for migration policies, which the authors attributed to its liberal programme for admitting temporary foreign workers.

Portugal and Spain scored highest in the investment category – 9.0 and 9.2 respectively, followed by Switzerland and the Netherlands, with 6.3 and 6.1. At the bottom were Greece (0.0), Denmark (1.0) and Germany and Belgium, tied at 1.4.

On the environment, the United States was at the bottom with a score of 1.0, while Switzerland is highest rated (7.2), followed by Sweden (6.1) and Germany and Spain, tied at 6.0.

The new index should promote greater discussion of the role of wealthy countries in reducing poverty, CGD President Nancy Birdsall told a news conference, pointing out that poor countries have been ranked for years on all kinds of scales. ”The index finally puts the spotlight on the rich world’s responsibilities in a global economy,” she said.