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Assessing aid and policy coherence

by Simon Wright and Jose Manuel Roche

Another day, another index. On Monday, the Center for Global Development launched the 2018 Commitment to Development Index. Since 2003, this is a regular assessment of the development behaviours and policies of the richest countries. This 2018 index ranks Sweden at the top, with the UK at number 8 (down one place from 2017). All of the top 10 countries are European. Sweden and Denmark are still leading the table, while Finland, Germany, Luxembourg and the Netherlands moved up a few places. The USA remains way below in 23rd place and South Korea is at the bottom.

How quantity and quality of aid affects the ranking

Money spent as aid is only one factor; the quality of the way it is spent is as important as the amount. The United States may be the largest donor by amount, but isn’t contributing as much in relation to the size of its economy. The US is below the 0.7% GNI target, spending only 0.18% – an amount that Donald Trump keeps trying to cut. It scores at the bottom of donors for the quality of its aid, with poor performance on maximizing efficiency, fostering institutions, reducing burden, and transparency and learning.

The UK has plaudits for having achieved 0.7% of GNI as ODA, the only G7 country to have done so. Historically, the UK has been judged highly on its aid quality and is still above average, but its one-place drop reflects that UK aid quality is falling. This is something Save the Children has consistently warned about, especially as more UK aid may be spent by less effective government departments or put to other uses, such as helping the UK trade after Brexit. According to the CDI, UK aid does less well in building institutional strength in recipient countries. UK aid does better at using the power of data and evaluation to generate evidence-based decisions that can improve aid effectiveness.

Aid is not enough if your other policies undermine development

One of the most useful features of the Index is to remind us that development is much more than aid. Aid is one small part – albeit visible and controversial – of development; the structuring of financial systems, trade, intellectual property and technology as well as action to protect the environment are crucial to whether low- and middle-income countries can develop and grow. The UK Department for International Development is much more than UK Aid, and the policies of other government departments impact on development. With the UK political party conference season upon us and a spending review looming on the horizon, it will be interesting to see whether UK ministers and their shadows have a plan to take the UK from eighth to first. Our commitment to development will surely be a key part of ensuring post-Brexit Britain really is a global one, so we’ll be watching closely to see what comes out of the conference circuit in coming days and weeks.

This table shows the range of factors included. Yellow and amber cells indicate where countries can improve. Luxembourg is an outlier among those at the top, it went up five places due to improvements in aid, but it is still doing badly in finance policy.

Visit the CGD website to use the infographics and assign different weighting to each component. For example, if you give more weight to development finances policies, Denmark, Germany, Luxembourg and the Netherlands move down. If you prioritise the environment, Australia falls significantly. Norway gets hit quite hard if trade is given more importance. Hats off to CGD for making all data publicly available in downloadable excel files.

What about China?

China is missing from the Index. It is not a member of the OECD Development Assistance Committee and does not submit any information for scrutiny. But there is now evidence that China is now the largest spender in overseas development, overtaking the US in recent years. However, many of its activities, although not declared, appear to be grants for commercial purposes, aid intended to promote exports, subsidies to the private sector and funds in support of private development. These would not be “allowable” under OECD DAC rules, but have a huge impact of economies, particularly in Africa. The Index plans to try to include China and Russia in future years.

Indices such as this are important for trying to apply some analysis about what the rich countries are doing, instead of perceptions, and helping us keep the pressure on governments to be the best development actors they can be across all their spheres of influence.

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