Independent research & practical ideas for global prosperity

An Index of Donor Performance - Working Paper 67 (Revised October 2011)

David Roodman

09/01/2005

Revised October 2011

In this working paper, CGD research fellow David Roodman describes the methodology of the foreign aid component of the 2011 edition of the Commitment to Development Index. The Commitment to Development Index ranks 22 of the world’s richest countries on their dedication to policies that benefit the 5.5 billion people living in poorer nations. Moving beyond standard comparisons of foreign aid volumes, the CDI quantifies a range of rich-country policies that affect poor people in developing countries.

In the aid component, the top six slots are occupied by the Scandinavian countries, the Netherlands, and Ireland, while Italy, Japan, and South Korea place at the bottom. Sweden takes first place both overall and for sheer aid quantity as a share of GDP. But quality matters too. Germany ranks 11th on sheer aid quantity as a share of GDP, but falls to 14th in the overall aid component for funding smaller projects and tying nearly a quarter of its aid. At 17th, the United States also ranks in the bottom half of donors on aid. It would score higher if it contributed a higher share of its GDP and gave less to corrupt or undemocratic governments in Iraq, Jordan, Pakistan, and elsewhere.

This working paper includes revisions from the methodology used to develop the 2004 CDI. The component on foreign assistance combines quantitative and qualitative measures of official aid, and of fiscal policies that support private charitable giving. The quantitative measure uses a net transfers concept, as distinct from the net flows concept in the net Official Development Assistance measure of the Development Assistance Committee. The qualitative factors include a penalty for tying aid, a discounting system that favors aid to poorer, better-governed recipients, and a penalty for "project proliferation." The charitable giving measure is based on an estimate of the share of observed private giving to developing countries that is attributable to a) lower overall taxes or b) specific tax incentives for giving. Despite the adjustments, overall results are dominated by differences in quantity of official aid given. This is because while there is a seven-fold range in net concessional transfers/GDP among the scored countries, variation in overall aid quality across donors appears far lower, and private giving is generally small.