Commitment to Development Index

The Commitment to Development Index (CDI), published annually by the Center for Global Development, ranks the world’s richest countries on their dedication to policies that benefit the five billion people living in poorer nations. Rich and poor countries are linked in many ways; thus the Index looks beyond standard comparisons of foreign aid flows. It measures "development-friendliness" of 22 of the world's richest countries, all member nations of the OECD's Development Assistance Committee. The CDI assesses national effort in seven policy areas: aid, trade, investment, migration, environment, security, and technology.^[1] It is considered to be a numerical targeting indicator for Goal 8 of the Millennium Development Goals.^[2] It shows that aid is about more than quantity - quality also matters - and that development policy is about more than aid. The Index penalizes countries that give with one hand, for instance through aid or investment, but take away with the other, through trade barriers or pollution.

Commitment to Development Index 2011

In 2011, the CDI ranked Sweden number one in the world, followed by Norway, Denmark, and the Netherlands. The United States is the only member of the Group of 8 richest countries in the world to make the index's top 10^[3]. Italy, Japan, and South Korea finished at the bottom, partly because of high trade barriers and low levels of foreign aid.

History of the CDI

The CDI is a flagship initiative of the Center for Global Development (CGD), a non-profit think-tank based in Washington, DC. In 2003 CGD first published the Index in Foreign Policy magazine with the aim to provoke discussion, highlight gaps in current knowledge, and encourage policy reform.^[4] The Index was published annually in conjunction with Foreign Policy through 2006, and since published by CGD alone. David Roodman, Senior Fellow at the Center for Global Development, is the chief architect of the index with research and support from key collaborators for technical work on components. Although the formulas and analysis at the heart of the CDI remain the same, slight methodological changes occur every year and indicators are constantly updated. Originally the CDI ranked 21 countries; South Korea was added in 2008 as their DAC membership was imminent. In 2008 regional CDIs were also published, assessing donor government policies and engagement to specific regions of the world such as sub-Saharan Africa and Latin America.

Components

Aid

Foreign aid is the first component of the CDI, assessing both quantity as a percent of GDP and quality. The Index penalizes tied aid, which requires recipients to spend aid on products from the donor nation and raises project costs by 15 to 30 percent. Aid to poor, better-governed nations is also favored by the CDI. While aid to Iraq—where corruption is more widespread and rule of law is weaker—is counted at 22¢ on the dollar, aid to Ghana—where poverty is high and governance relatively good—is counted at 97¢ on the dollar^[5]. Donors are penalized for overloading recipient governments with too many small aid projects, which burden recipient officials with hosting obligations and regular report filing. Finally, the Index rewards governments for letting taxpayers write off charitable contributions, since some of those contributions go to Oxfam, CARE, and other nonprofits working in developing countries.

Trade

International trade has been a force for economic development for centuries. Because rich-country players call most of the shots in this intensely political process, some goods that poor countries are best at producing, including crops, still face high barriers in rich countries. The trade component of the CDI penalizes countries for erecting barriers to imports of crops, clothing, and other goods from poor nations. It looks at two kinds of barriers: tariffs (taxes) on imports, and subsidies for domestic farmers, which stimulate overproduction and depress world prices.

Investment

The CDI strives to reward rich countries that pursue policies that promote investment that is good for development. It looks at two kinds of capital flows: foreign direct investment, which occurs when a company from one country buys a stake in an existing company or builds a factory in another country; and portfolio investment, which occurs when foreigners buy securities that are traded on open exchanges. The investment component is built on a checklist of twenty questions. Do the rich-country governments, for example, offer political risk insurance, encouraging companies to invest in poor countries whose political climate would otherwise be deemed too insecure? Do they have tax provisions or treaties to prevent overseas investors from being taxed both at home and in the investment country?

Migration

The CDI rewards migration of both skilled and unskilled people, though unskilled more so. It uses data on the gross inflow of migrants from developing countries in a recent year and the net increase in the number of unskilled migrant residents from developing countries during the 1990s. The CDI also uses indicators of openness to students from poor countries and aid for refugees and asylum seekers.

Environment

Rich countries use a disproportionate amount of scarce resources, and poor countries are most vulnerable to global warming and ecological deterioration. The environment component looks at what rich countries are doing to reduce their disproportionate use of the global commons. Countries do well if their greenhouse gas emissions are falling, if their gas taxes are high, if they do not subsidize the fishing industry, if they have a low fossil fuel rate per capita, and if they control imports of illegally cut tropical timber.

Security

The security component of the CDI compares rich countries on military actions that affect developing countries. The CDI looks at three aspects of the security-development nexus. It tallies the financial and personnel contributions to peacekeeping operations and forcible humanitarian interventions, although it counts only operations approved by an international body such as the U.N. Security Council or NATO. It also rewards countries that base naval fleets where they can secure sea lanes. Finally, the CDI penalizes some exports of arms to nations, especially ones that are undemocratic and spend heavily on the military.

Technology

The technology component of the CDI analyses policies of the rich countries that support creation and dissemination of new technologies, which can profoundly shape life in developing countries. The CDI rewards polices that support the creation and dissemination of innovations of value to developing countries. It rewards government subsidies for research and development(R&D), whether delivered through spending or tax breaks, while discounting military R&D by half. Also factored in are policies on intellectual property rights (IPRs) that can inhibit the international flow of innovations. These take the form of patent laws that arguably go too far in advancing the interests of those who produce innovations at the expense of those who use them. U.S. trade negotiators, for example, have pushed for developing countries to agree never to force the immediate licensing of a patent even when it would serve a compelling public interest, as an HIV/AIDS drug might if produced by low-cost local manufacturers.

Methodology

The CDI ranks 22 countries which are the richest, most developed countries in the world, leaving out tiny countries like Luxembourg and Iceland. Along with Luxembourg, the 22 countries constitute the OECD's Development Assistance Committee which is the official organization of aid donors.

The CDI quantifies a range of rich-country policies in seven policy area. Scores on each component are scaled so that an average score in 2008, the reference year, equals 5.0. A country’s final score is the average of those for each component. The CDI adjusts for size in order to compare how well countries are living up to their potential to help. Data for the CDI come from official sources such as the World Bank, the Organization for Economic Co-operation and Development, and the United Nations, or from academic researchers. CGD and its collaborators also collect information country by country for parts of the aid, migration and investment components. The 2011 technical paper and spreadsheet provide more detail.^[6][7].

2011 Rankings

Commitment to Development Index 2011^[8]

	Rank	Aid	Trade	Investment	Migration	Environment	Security	Technology	Overall (Average)	Change 2003-11
Sweden	1	14.9	6.5	5.6	9.2	8.1	4.4	4.9	7.7	+1.6
Norway	2	12.7	2.6	6.4	8.4	6.5	6.4	5.8	7.0	+0.9
Denmark	3	11.9	6.2	4.7	5.6	7.4	6.1	6.5	6.9	-0.2
Netherlands	4	11.5	6.6	6.0	4.9	7.3	5.3	5.2	6.7	+0.2
United States	5	3.1	7.4	5.3	4.9	4.4	13.8	5.6	6.4	+2.2
Finland	6	7.3	6.6	4.9	3.8	8.4	5.9	6.1	6.1	+1.1
New Zealand	7	3.3	8.1	4.7	6.1	6.4	8.7	4.9	6.0	+0.3
Austria	7	3.9	6.5	4.0	11.1	6.7	4.2	5.5	6.0	+0.6
Portugal	9	2.8	6.5	5.4	4.0	7.3	5.7	7.0	5.5	+1.0
Ireland	9	8.6	6.1	3.1	4.1	7.4	5.2	4.0	5.5	+0.4
Australia	9	4.1	7.7	6.1	4.0	4.2	7.0	5.3	5.5	-0.1
United Kingdom	12	7.0	6.3	6.4	3.5	7.7	2.7	5.3	5.5	-0.1
Canada	12	4.2	6.7	6.1	6.2	3.4	5.3	5.7	5.4	+0.4
Spain	14	4.8	6.4	6.0	4.6	6.6	2.8	5.9	5.3	+1.0
Germany	14	4.0	6.3	6.4	4.8	7.2	3.5	4.7	5.3	+0.3
Belgium	16	7.0	6.3	5.6	4.0	7.6	1.4	4.7	5.2	+0.7
France	16	4.3	6.4	5.3	3.4	7.4	3.3	6.1	5.2	+0.6
Switzerland	18	5.7	3.2	4.6	7.9	6.3	2.7	5.0	5.1	+0.5
Greece	19	2.3	6.3	4.0	6.8	6.9	5.1	2.7	4.9	+1.1
Italy	20	2.0	6.5	5.6	3.7	7.0	4.7	4.5	4.8	+0.5
Japan	21	1.5	3.3	4.9	1.8	5.7	2.0	6.3	3.7	+1.1
South Korea	22	1.0	2.8	5.9	1.0	2.8	1.7	6.8	3.1	N/A

Collaborators

CGD commissions background papers and research for most of the components. However, final design responsibility rests with CGD and the CDI does not necessarily represent the views of contributors.

• David Roodman, Senior Fellow, Center for Global Development (Chief Architect)

• Theodore Moran, Non-Resident Fellow, Center for Global Development (Investment)

• Kimberly Hamilton and Jeanne Batalova of the Migration Policy Institute (Migration)

• B. Lindsay Lowell and Victoria Carro of Georgetown University’s Institute for the Study of International Migration (Migration)

• Amy Cassara and Daniel Prager of the World Resources Institute (Environment)

• Michael O'Hanlon and Adriana Lins de Albuquerque of the Brookings Institution (Security)

• Jason Alderwick and Mark Stoker, formerly of the International Institute for Strategic Studies (Security)

• Keith E. Maskus of the University of Colorado at Boulder (Technology)

Criticism

The Commitment to Development Index has received much media attention over the years and has sparked criticism and discussion among a wide range of audiences. One of the most frequent comments, voiced by the Japanese Ministry of Foreign Affairs, questions the selection of the seven components.^[9]. The ministry argues that several categories may be extraneous when measuring contributions to poverty reduction. The equal weighting of components in the Index is also questioned; the CDI fails to take into account different degrees of impact, thus assuming that foreign aid and migration have equal effects on development. To continue the conversation, David Roodman responded in a blog post to such comments.^[10] Experts have also written papers on how to improve the CDI and proposed similar measures.^{[11][12][13][14]}

External links

1. Center for Global Development website

2. Commitment to Development Index

3. 2011 Technical Paper for the CDI

References

1. ^ Inside The Index
2. ^ Human Development Report 2003
3. ^ The Scotsman, October 23, 2009
4. ^ Birdsall and Roodman, Technical paper 2003
5. ^ Commitment to Development Index Aid Component
6. ^ Roodman, Technical paper 2011
7. ^ 2011 CDI Spreadsheet
8. ^ http://www.cgdev.org/doc/CDI%202011/CDI%20Postcard_2011.pdf
9. ^ Critical Comments - MOFA (Japan)
10. ^ Japanese Government Criticizes CGD Index
11. ^ Sawada et al. 2004
12. ^ see also Picciotto 2003
13. ^ Chowdhury and Squire 2003
14. ^ McGillivray 2003