NCPA - National Center for Policy Analysis

Rating U.S. Aid and Trade Policies Toward Poor Countries

April 19, 2004

The Center for Global Development, in association with Foreign Policy magazine, produced an index last year to measure rich countries' commitment to fighting world poverty. Last year, out of 21 rich countries, the United States came in second to last. Holland was at the top and Japan the bottom.

The index incorporated six policies: aid, trade, migration, investment, peacekeeping and environmental policies. In the new version of the index to be released April 28, 2004, the United States is tied for seventh place. America's improved ranking reflects a series of revealing tweaks to the index, says Sebastian Mallaby of the Washington Post. Among them:

  • Last year's version counted contributions to multilateral peacekeeping efforts but not other military expenditures; this year the index counts all internationally sanctioned peace operations, so America's rank in the security category has gone from 18th to 11th.
  • Last year Switzerland did well on migration because it welcomes large numbers of foreign workers, although it boots out immigrants who've been around a bit; by switching to net migration, the new index demotes the Swiss, whereas the United States now comes in second.
  • The new index also includes private giving attributable to tax breaks, modestly raising the U.S. rank in aid from 20th to 19th.

The index still excludes some important U.S. security efforts that support economic progress. It credits rich countries for publicly funded research that could hasten development, but does not reward privately funded research. Finally, the index doesn't weight its components. Although aid is worth $58 billion a year; remittances from migrants may be worth $80 billion a year; and the World Bank estimates that trade barriers in rich economies cost poor nations more than $100 billion per year.

Source: Sebastian Mallaby,Visions of U.S. Aid," Washington Post, April 19, 2004.


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