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Index rate countries’ assistance

Eva Binda | Friday, December 1, 2006

While attempts to measure just how much the world’s 21 richest countries are helping the development of poor countries can often seem tainted by opinion, Center for Global Development research fellow David Roodman claims there is an objective tool to judge this – the Commitment to Development Index.

Roodman spoke Thursday in the Hesburgh Center about the Index and the Center for Global Development, a think tank in Washington, D.C. founded in November 2001 that “focuses on what rich countries are doing to help poor countries,” looking primarily at government policy.

The Index takes size into account when considering countries, which explains why, for example, a small country like Denmark can rank higher than the U.S. or Canada.

“We’re interested in seeing if countries are living up their potential,” Roodman said.

Seven components go into the Commitment to Development Index: foreign aid, trade (specifically, openness to the exports of developing countries), investment, migration, environment, security and technology. These components are all weighted equally, which can create controversy, Roodman said.

“The main purpose of this tool is to create communication and stimulate discussion. The biggest advantage for not weighting the components is to make it easy for people to understand,” Roodman said. “I’ve heard people argue that [a particular component] should be weighted more heavily for each one of these components so I think it’s balanced.”

When looking at foreign aid, Roodman insists that aid is more than quantity. Quality of aid is important, he said, which means looking at how democratic the governments are and whether or not the aid is “tied.”

“For example, if the United States gives aid to Uganda, there could be strings attached. ‘If you take this money, you have to spend on it on American contractors,'” Roodman said. “That’s ‘tying’ the aid, which reduces the quality of the aid because it prevents the ability to shop around. The United States is one of the worse offenders.”

Another example of the limitations of benefits of foreign aid is shown through the relation to trade, which includes tariffs and subsidies.

“In May 2005, the United States gave 90 million dollars to tsunami relief,” Roodman said. “The three countries that benefited most pay about five million dollars in tariffs to the United States, so you could say the U.S. made back its money in six months.”

Ultimately, Roodman said, all of the components have their own rewards and downsides. Although the U.S. ranked high in the areas of trade and investment, it ended up 13th on the index overall. The Netherlands took the top position this year, and Japan finished at the bottom of the list, which included 21 countries.

“The key message is that helping is more than aid, aid is more than quantity, and every country can do better,” Roodman said. “The big countries, which can make the biggest difference, are not stepping up to the plate.”

Roodman holds a bachelor’s degree in theoretical mathematics from Harvard.