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Anita Käppeli is a senior policy analyst at the Center for Global Development. She works with Owen Barder on the Commitment to Development Index.
Before joining CGD, Anita spent several years working as a policy advisor for the Swiss State Secretariat for Migration in the field of EU legislation. Prior to that, she worked for the University of Bern and Avenir Suisse. Anita holds an advanced degree in European Law, an MA in Political Science and International Law and a BA in Political Science and Economics. She speaks German, French, Spanish, and Swedish.
Yesterday, the German Social Democrats (SPD) voted in favour of pursuing in-depth coalition talks with Angela Merkel’s Conservatives (CDU). Although the chancellor’s battle for political survival is far from over (as the final coalition agreement will have to be backed by the majority of SPD’s 443,000 party members), it is likely that we will see a remaking of a grand coalition. Here we look what that would mean for Germany’s leadership on development.
After coalition talks for a “Jamaica-coalition” with the Greens and the Liberals failed in mid-November, nearly four months after the elections, Angela Merkel’s CDU hadn’t formed a new government. Having turned to the SPD since, with which she governed twice already, and which initially rejected another term of a grand coalition, it appears as if they’ve now reached a preliminary coalition agreement for another grand coalition which does look promising for development. However, for the actual in-depth negotiations, we have four policy recommendations which should find their way into the final coalition contract:
Continue to welcome migrants and improve integration—this will be a win-win for both migrants and Germany
Use increased defense spending for German support for UN peacekeeping
Continue to invest in global public goods for the environment through subsidies for renewables and energy R&D
Use the billions of freed up ODA due to decreasing refugee hosting cost to increase funding for multilaterals
Is Germany’s leadership on migration under threat?
Germany is a development leader, mainly due to its migration policy and its openness to refugees and asylum seekers, as this year’s Commitment to Development Index (CDI) has demonstrated. Migration and integration are dominant themes in Germany’s political discourse, which is not highly surprising after Germany’s intake of a very high number of refugees and asylum seekers in 2015. As a consequence of this and the concomitant success of the right wing populist party AfD entering parliament for the first time, the CDU has now taken less liberal positions on migration. The main battleground during coalition talks was how many additional refugees Germany should accept in the coming years. The final preliminary coalition agreement states that the number of refugees should not exceed 220,000 annually (this excludes labor migrants and the potential additional people seeking asylum from persecution, which cannot be capped for constitutional reasons). Even adding labor market migrants on top, this would be a massive decrease from the record 2 million immigrants that came to Germany in 2015 (we calculate this to be equivalent to “880,000 poverty weighted migrants” from the extremely poor countries, because of the many refugees coming from poor Syria).
In order to limit the numbers to this cap, several measures are listed. These include:
Better international development cooperation
Increased humanitarian commitment
Bigger commitment to international peacekeeping (incl. international police missions)
Fair trade and agricultural policy (fair trade deals)
Intensified contributions to the protection of the climate
Restrictive arms exports
We welcome all these commitments and measures, which are in itself are all part of our Commitment to Development Index (CDI). However, the fact that these policies are linked to the reduction in the numbers of migrants is problematic:
The preliminary coalition agreement aims to set up a commission to address the refugee crisis “root causes.” A recent paper by CGD’s Michael Clemens finds that aid spending is not generally in line with the root causes rhetoric and that the sectoral split of aid to migrant-origin countries is no different to that of aid spending other countries. Also, they find aid can only deter migration, and improve growth, employment, and security to a limited degree. As research suggests, people are more likely to migrate when their country of origin gets richer, contrary to the belief of many donors that using Official Development Assistance (ODA) to improve living conditions in sending countries will deter people from migrating. Donors should use aid not to deter migration but make it better for both host country and migrants.
The coalition agreement leaves the backdoor open for welcoming labor migrants (as they are not included in the suggested cap of 220,000 migrants annually) which an aging society like Germany could benefit from. While the preliminary coalition agreement presents several additional measures to support economic performance in Germany, research suggests that using the potential of its refugees and migrants can be beneficiary to the economy. Therefore, the artificial distinction between labor migrants, which according to the preliminary coalition agreement should be attracted to the German labor market, and asylum seekers and refugees is contradictory. Unlocking the potential of refugees to contribute to the labor market and the host state through tax and social security contributions will be beneficial to the host nation, the migrant and the country of origin (via remittances. etc.). We therefore encourage the grand coalition to keep its openness towards migrants, not only to live up to its humanitarian obligations but also to support its labor market with both low- and high-skilled workers.
One group of skilled workers desperately in demand are nurses and caregivers, which is reflected in the fact that the care sector is discussed with a whole paragraph in the preliminary agreement. By 2030, the German health industry is estimated to lack around 3 million skilled workers. One step towards a long-term, better balanced and sustainable health sector would be the introduction of a Global Skills Partnership. Pilot projects could combines training for nurses or caregivers funded by a donor country (Germany) with the permit to work temporarily in this country. Such mechanisms benefits both Germany and the chosen country of origin, decrease pressure on health systems in aging societies and equip migrants with skills and experience.
Further, the coalition aims to reduce and limit arms exports. As the CDI 2017 demonstrates, this is an important step as Germany has room for improvement in restricting arms exports to poor and undemocratic countries. In the past, it has sold arms to countries which are supporting sides in the Yemeni Civil war. Its proposed export ban to participants in this conflict is a step into the right direction. Also encouraging are the commitment of both the CDU and SPD to work towards a joint European strategy on arms exports.
Germany should step up its commitment to the environment
Experts predict that it is unlikely that Germany will meet the 2020 Paris agreement of reducing emissions by 40 percent. The new coalition is committed to close the gap between current emissions and their 2020 pledge as quickly as possible. But, even though it is shameful that a rich country like Germany will not meet its pledge and expects developing countries to meet theirs, Germany only emits 2 percent of greenhouse gases globally and might be in a better position to provide global public goods to lower greenhouse gases. The coalition wants 65 percent of energy to come from renewables until 2030, mostly through photovoltaics and offshore wind energy. We hope that this will be achieved through renewable energy subsidies, which are a global public good, and many economists agree that high solar energy subsidies in Germany have produced net social benefits for the world. A recent study estimated these benefits to be around $18.8 billion. The same study quantified the effect of Germany’s national subsidies for solar adoption globally and found that roughly a third of solar adoption due to technical improvement result from German subsidies. Most of the solar adoption occurs outside of Germany—those spillovers are classic global public goods and beneficial to developing countries.
Better international development cooperation is welcome, but what does it mean?
Germany will have to massively ramp up overseas development spending, and fast, as the Coalition aims to continue to meet its 0.7 percent commitment, the absolute value of which will only increase due to robust GDP growth at 2 percent. But more importantly, the 0.7 percent target was only met for the first time in 2016, because of a rapid increase in refugees hosting costs; Germany spent $6.2 billion (or 25 percent) of all their ODA in 2016 on refugee hosting costs. In order to maintain the 0.7 target when only 220,000 refugees arrive, overseas development assistance would have to increase rapidly. There is a unique opportunity to redirect this $5 billion or so to multilaterals: the preliminary coalition talks frequently mention better aid, more international cooperation and so on. Yet, Germany only spends about $5 billion (or 20 percent) of all ODA on multilaterals (international average: 29 percent of all ODA is multilateral). Germany’s own development agency will likely be overwhelmed by such a rapid increase in funding. All else being equal spending through multilaterals has advantages: one can piggyback on the existing infrastructure of multilaterals, that have the economies of scale. And a recent review paper on multilateral vs. bilateral aid found that multilateral spending is less politicised, more demand-driven, more selective in terms of poverty criteria, much less fragmented and is better in terms of global public goods provision. Germany should live up to its repeated calls for international cooperation that can be found in both party manifestos and the coalition agreement, and channel the freed up budget for refugee costs to multilaterals.
What’s next for the coalition agreement?
After last night’s SPD party congress, the conservatives and social democrats will now start negotiating on the final coalition deal that has the potential to have a big impact on development. Still, a final agreement and ultimately a new government could be in jeopardy as the leader of the SPD initiated a game of chicken: the party’s president decided that its members should have the final say about whether or not to accept the coalition agreement, and if the conservatives do not make sufficient concessions in the negotiations ahead, and the party members reject the coalition agreements, there will likely be re-elections. However, experts believe the party base will agree to the coalition agreement given that in 2013, 78 percent of party members voted for a renewal of the grand coalition. If Germany indeed has a new government by Easter, it should ensure to continue its path towards being a global leader on development and the provision of global public goods, as outlined in the preliminary coalition agreement.
In a world with the 2030 Agenda for Sustainable Development, the international investment policy system stands as an obsolete regime in urgent need of revision and reform. This is the main conclusion of the analysis that the think tank CIECODE conducted for CGD’s 2017 Commitment to Development Index (CDI). The analysis measures the amount of “sustainable development content” included in International Investment Agreements (IIAs) signed between developing and developed countries. Here, we look at best practices, main issues and which countries could do better.
But, first, what do IIAs have to do with sustainable development? By balancing foreign investor’s protection on one hand and States’ right to pursue public policy interests on the other, IIAs have the capacity to influence the type of foreign investments and the conditions under which they are made. Foreign investments have been developing countries’ main source of external finance for the last two decades (beyond remittances, external debt, or ODA) and that they have concrete implications in host countries’ day-to-day realities (job creation, environmental impact, fiscal revenues generation, or the promotion of vulnerable social groups).
Worldwide, the investment regime is a complex spaghetti bowl made up of more than 3300 IIAs (mainly, Bilateral Investment Treaties and Free Trade Agreements), which has been expanding relentlessly since the early 80’s.
Figure 1: Trends in Number of IIAs Signed, 1980-2017
Note: Preliminary data for 2017. 3,323 is the cumulative number of all signed IIAs, independently of their entry into force. Terminated IIAs, for which termination has entered into effect, are not included.
CIECODE has analyzed over 300 IIAs signed by developing countries with the 27 CDI countries, and has observed that sustainable development is often poorly secured in these agreements. When IIAs include social or environmental safeguards, they are so weak and full of caveats that their impact is highly diminished. They are focused on protecting foreign investors’ rights and interests leaving aside their obligations. Finally, they have failed in finding equilibrium between protecting foreign investors from unjustified discrimination measures by the host states and ensuring that these retain their right to regulate for pursuing public policy interests. This bias has prevented IIAs from becoming a useful tool to boost and promote sustainable investments at the global and domestic level.
CIECODE’s analysis also shows that IIAs signed with those developed countries most in need are the ones presenting the scarcest development content.
Figure 2: Development Content of IIAs Related to Human Development of Partner Country
Source: CIECODE’s analysis for 2017’ Commitment to Development Index. Data available.
Leaders and laggards
These general conclusions hide many interesting facts and variance at country level. For instance:
Four EU countries (Denmark, Germany, Portugal, and Spain) have obtained the minimum score on all the analyzed issues, meaning that in their treaties there is no disposition in place promoting sustainable development through foreign investment. This is a surprising result as both Denmark and Germany are leaders on the CDI overall—ranked first and fifth in the 2017 edition.
At the upper end of the scoreboard, Canada stands alone as the best student of the class, with the United States and New Zealand in second and third, respectively. In their treaties, they explicitly recognize the right of the Parties to regulate in pursuit of their legitimate public policy objectives. Further, detailed provisions to ensure the independence and transparency of the dispute resolution system are in place.
Although none of the existing IIAs are yet perfect instruments to promote sustainable development, the results of the analysis indicate that some countries are aware of the links between foreign investment and sustainable development when drafting and negotiating their agreements. There is a huge opportunity for countries to learn from each other’s policy design and make their investment agreements more development-friendly.
There is some good news
In terms of the inclusion of sustainable development and human rights content in investment treaties, the overall situation is still unsatisfactory (the average score of the 300 IIAs analyzed by CIECODE is below 2 out of 10). But, it’s at the same time true that almost all the improvements have taken place in the last 5 to 10 years (see Figure 3). The Investor-State Dispute Settlement system (ISDS) is a relevant area in which some advances have been observed.
Figure 3: The Evolution of Development Content on IIAs (2017-2000)
Originally, the ISDS was designed as a tool to protect foreign investors against undoubtedly discriminatory measures by host states. It grants foreign investors the possibility to take their disputes with host states to private international arbitration courts and seek for economic compensation if they believe any law or measure by the host state has damaged its investments and reduced its expected profit.
Today, with more than 60 new ISDS cases presented to tribunals each year, the system has mutated into something vastly different from its original expectations—at times with grave consequences. It gives foreign investors the power to challenge democratic choices by host states, elevates property rights over any other consideration (incl. human rights) and allows for fully confidential procedures. In recent decades, it has allowed investors to oppose health legislations against tobacco and environmental laws against industrial discharges' contamination, and even to challenge the end-of-apartheid laws in South Africa. States, exposed to unforeseen legal and financial risks, may decide to freeze legitimate government policymaking or even withdraw existing regulations. Many actors—from the UN and the EU to academia—agree on the main strands of this verdict.
CIECODE’s analysis shows that the ISDS dispositions are the ones in which few improvements have been made. Around 70 percent of the analyzed agreements do not include any meaningful content to improve the ISDS’ transparency, impartiality, or due process standards.
But there is a new and promising trend. More than 20 States have signed the UN’s Convention on Transparency in ISDS since 2014. This Convention, once in force, will oblige States (and their investors) to comply with a set of stringent transparency standards such as the publication of all relevant documents by the ISDS tribunal or the admittance of any “third persons” affected by the dispute to the process. While these might seem as minor improvements, they are almost disruptive innovations in a system that has remained untouched for almost three decades.
Sustainability and public pressure
One of the most unexpected conclusions of the analysis comes from applying CIECODE’s methodology to the investment chapter of the draft version of the EU-US Transatlantic Trade and Investment Partnership (TTIP). Despite the concerns with loss of democracy and the power of big corporations that the TTIP provoked in European and North American societies, none of the 300 IIAs analyzed in CIECODE’s study have shown a more development-friendly approach than the TTIP’s draft. This draft safeguarded states’ policy space to “achieve legitimate policy objectives, such as the protection of public health, safety, environment or consumer protection” and granted that the ISDS would operate under adequate independence, fairness, and openness.
The fact that the TTIP’s draft—being produced under high levels of social awareness and public scrutiny—is the IIA with the most advanced provisions in terms of development-content and transparency highlights the importance of public scrutiny to achieve sustainability outcomes in policymaking.
Meeting the 2030 Agenda
Today, it is no longer enough for investments to create jobs, contribute to economic growth, or generate foreign exchange. The development challenges that lie ahead demand investments that, on top of everything else, are not harmful for the environment, bring social benefits, promote gender equality, and help local companies to move up the global value chain.
If the 2030 Agenda for Sustainable Development is to be taken seriously, the international community must rise to the occasion and fast track the reform of the global investment policy regime in a coherent and ambitious manner. There are evidences, experiences, and best practices ready to be exploited.
Javier Perez is the director of CIECODE, a Spanish research institute working in development and specialized in the analysis of public policies with an impact on sustainable development, social justice and human rights. Economist and jurist, his main area of expertise is international trade policies and its implications for development and human rights. Lately he has lead two innovative projects to monitor and evaluate the Spanish parliamentarian activity from a PCD perspective. Javier worked until 2011 at Oxfam International as Economic Justice Research Coordinator.
Maria Vega is a researcher at CIECODE. She holds a BA in Journalism from Universidad Complutense de Madrid and a MA in International Public Administrations and Politics from Roskilde University. Her main area of expertise is the analysis of migration public policies from a PCD perspective.
Think tanks and international organisations publish a lot of indices that rank countries or institutions by their policies. We ourselves here at CGD we have recently published the fifteenth edition of the Commitment to Development Index (CDI), which ranks 27 rich countries by how their policies affect the lives of people in poorer countries. As we embark on a review of the CDI, here we start by looking other across country-level indices to see if the CDI is still distinct.
Reviewing the CDI
Because we strive to continuously update and improve the methodology, “before the CDI launch is after the CDI launch.” Indeed, the CDI has evolved substantially over since its inception. Still, we think 15 years is a good point to step back and think about its aims and design: the world has changed since we launched the CDI in 2003: the Agenda 2030 and the SDGs replaced the MDGs; emerging countries such as China and several Arab countries have diversified the donor community and global issues such as climate change; gender and migration receive more attention—and rightly so. In the coming months and years we’ll be taking a fundamental look at the CDI, in particular: how it assesses “development;” whether it measures the most important countries; and whether there are new or alternative components and measures we should consider. We look forward to discussing these issues with you further.
As part of our early thinking, we looked at other country-level indices and the CDI’s comparative advantage—but before we look at those, let’s revisit why indices are potentially valuable.
First, why are indices generally are so popular with the public, with policymakers, and with the think tank world?
But indices truly do have distinct advantages, they can:
Formalize and quantify the things they assess
Holistically assess issues, rather selectively picking on a single element
Create a race to the top and engage the media and public
Consistently assess non-market goods—like global public goods (GPGs)
Initiate discussions about what is important, and what can hopefully change
Secondly, what other indices are out there that are similar to the CDI, and what is our competitive advantage?
To answer this we have surveyed our competitor indices. But there are so many indices that we had to restrict our assessment. Given the CDI is a meta index with subindices measuring countries policies on aid, finance, technology, environment, trade, security, and migration, we have decided to focus our survey on those (a meta-meta index if you will).
Below are the main indices that we identified as comparable to the CDI (if you can think of any indices that fit our search criteria and we’ve missed—we’d love to hear from you in the comments section below).
Country-level indices: aims, measures, and coverage
Name of the index
Tagline / aim
Number of indicators
Commitment to Development Index
Ranks 27 of the world’s richest countries on their dedication to policies that benefit people living in poorer nations.
Seven components: aid, finance, technology, environment, trade, security, and migration
27 countries (OECD)
Good country index
To measure what each country on earth contributes to the common good of humanity, and what it takes away, relative to its size.
Science, Technology & Knowledge; Culture; International Peace and Security; World Order; Planet and Climate; Prosperity and Equality; Health and Wellbeing
Social progress index
An aggregate index of a country’s own social and environmental indicators that capture three dimensions of social progress
Basic Human Needs (nutrition, health, etc.), Foundations of Wellbeing (knowledge, environmental quality), Opportunity (rights, tolerance, advanced education, etc).
Sustainable Development Goals index
Provides a report card for country performance on the historic Agenda 2030 and the SDGs. The annual report shows how leaders can deliver on their promise and it urges countries not to lose the momentum for important reforms.
set of indicators for each of the 17 SDGs
77 indicators of which 14 variables are only available for OECD countries
149 of the 193 UN member states
INFORM Index for risk management
To understand and measure the risk of humanitarian crises and disasters within a country, and how the conditions that lead to them affect sustainable development.
Hazard and exposure to natural and human made risks; Vulnerability; Lack of coping capacity
The Good Country Index (GCI) is perhaps closest in terms of its mission in what it is trying to measure: how much countries do for other countries (we published a more detailed blog post of the GCI from a CDI-perspective previously). This is in contrast to the SDG index, the Social Progress Index, and the INFORM index for risk management, that all measure countries based on their own development progress and performance. This point in particular is where the CDI adds value relative to the SDG index.
Rich countries in particular have the duty and the means to contribute to global development.
This explains our focus on relatively few rich countries for which policy improvements seem most tractable given that only some countries governments will be receptive to policy ideas and are inspired to perform well in international comparisons. For instance, after the poor performance of Japan on the CDI in 2006, the Japanese Ministry of Foreign Affairs issued a statement that started a constructive discussion on the methodology of the CDI.
The other thing that jumps out is that, although the CDI covers far fewer countries than the indices above that aim for virtually exclusive coverage, we do have more indicators overall. There is a clear tradeoff between higher country coverage and fewer indicators due to data availability. Even though all else being equal it would of course be ideal to measure every country’s performance, for poorer or smaller countries, data is often scare. The Sustainable Development Index doesn't have complete data for all its indicators, but only managed to have all the indicators for the OECD countries. Limited data availability severely affects how we can track the implementation of the SDGs.
Building on the CDI’s comparative advantage
In conclusion, the CDI is distinct in its focus on policy effort of developed countries' (rather than all countries) and how they affect poorer countries (including through global public goods). This contrasts with indices that assess outcomes, how countries do in terms of their own development, or only how they contribute to global public goods. Even after 15 years, the CDI’s focus is still unique—and highly relevant to the SDGs. However, the increasing importance of other development actors like China, the changing nature of development, and better data availability on global issues will lead us to review its structure over the next couple of years. We will keep you posted on our next steps and appreciate you sharing any of your ideas.
Our new analysis shows that, despite recent improvements, rich countries' intellectual property policies are still worse for development than they were more than a decade ago. Here we look at why these policies became inflexible, and what countries should be doing to let technology flow more freely.
Technological progress, which mostly originates in developed countries, is at the heart of improving social well-being and advancing productivity across the globe. Despite the vital role of technology for development, we show here that after a promising start in 2003, rich countries have since impeded the spread of technology across borders. Even though there has been an upward trend lately, rich countries can do more to allow knowledge to spread, without hampering innovations at home. Smart intellectual property policies such as liberal copyright laws or eased access to health and agricultural innovations will improve the lives of people across the globe.
Stringent protection of innovations at home comes at a price
In our interdependent world economy, productivity advances occur not only through locally developed knowledge and skills, but also from the absorption of expertise and technologies developed in other parts of the world. To name a few examples, just look at how mobile phones and digitalization affect developing countries and how biometrics can make development outcomes more effective, if well designed. For smaller economies in particular, the major source of their productivity growth is the technology and knowledge produced by the leading developed economies. That said, there are often impediments to the flow of technologies from the developed world to the developing world that prevent the latter from fully benefiting from global knowledge. Part of the problem of access is commercial—the lack of trade and investment opportunities. But another is regulatory, such as intellectual property rules (IPR) that prohibit the free dissemination of innovative technologies, or which impose contractual conditions on the utilization of new technological knowledge.
A lost decade? Little progress in intellectual property rules after a promising start
Since 2003, CGD's Commitment to Development Index (CDI) has been tracking the commitment of 27 developed governments to support the spread of technology to the developing world. The CDI has focused on two ways in which the developed economies can affect this process: The first is to help create technologies that foster economic and human development as measured by public and private spending on Research & Development (R&D) and tax incentives for R&D. The second is to help make the technology created more accessible via appropriate IPR.
Independently, the World Trade Organization in 2003 (following the Doha Round) instituted procedures to help ensure that developed country governments were fulfilling their mandate to facilitate technology transfers to the least developed country members. Until that point, it was uncertain whether and how developed country members were complying with the mandate to foster technological development in the developing world. As we have demonstrated previously, it is still unclear whether these rich countries are sufficiently fulfilling those obligations.
While the CDI’s technology component is not a measure of developed country compliance with international technology transfer mandates (nor was it designed to be), the CDI assesses developed governments’ commitments to objectives that are similar in spirit, such as raising the productivity potential of poorer nations. We do this by measuring and analyzing the restrictiveness of the country's patent regime as laid out in its legislation and rules.
Moreover, the CDI heavily weights the role of IPR of developed countries in facilitating—or at least not harming—the developing world’s access to global knowledge goods. As the chart below shows, since 2003, there has been a downward secular trend in developed country commitments to the spread of knowledge and technologies. The rating shown is for the 27 countries as a whole. However, since 2014, their commitment to the global spread of technology appears to have increased again.
This is a good sign. But there is scope for greater efforts on the part of rich country governments. The recent efforts are still shy of the dedication to technological development shown by developed country leaders back in 2003.
How supporters for a free internet became advocates for development
Much of the trend in the CDI’s technology component is due to changes in IPR. During the 2000 decade, developed economies like the United States, Japan, and the European Union pursued regional free trade agreements with developing country partners that included more stringent intellectual property provisions—especially provisions that limited exceptions to IPR. For example, developing country governments were required to limit the use of compulsory licensing, whereby intellectual property holders could be compelled to license their technologies to third parties if the technologies were not widely supplied in the market or licensing fees were too prohibitive. Other provisions tended to limit “fair use”; namely the ability of the public to use certain copyrighted works in certain ways and conditions without obtaining permission. Developed economies also pursued global agreements like the Anti-Counterfeiting Trade Agreement (ACTA), which attempted to raise enforcement standards. Individual countries, like the United States, pursued legislation like the Stop Online Piracy Act (SOPA) which sought to more heavily regulate internet service providers and search engines.
The public and user rights groups pushed back against such legislation and international agreements, regarding them as undermining internet freedom, and as unduly restricting fair use and other intellectual property exceptions. Consequently, during the 2013–2017 period, developed country governments appeared to retreat somewhat from further reforms. This helped, by default, to raise their CDI scores since less stringent regulations better enable technologies to flow to the developing world.
At the same, developed country governments were also more proactive in enabling the flows of technological knowledge. The European Union issued a “stay” on the patenting of plants and animal subject matter, while New Zealand raised the bar for approving such patents. This should benefit the developing world’s access to medicines and agricultural innovations. Canada, France, Germany, and the UK helped make digital technologies more accessible by tightening standards for software patentability. In 2015 Australia created more exceptions for copyright law, potentially enabling greater scope for learning-by-doing and imitation.
Help innovations to arise and spread, even beyond borders
Intellectual property regulations have effects beyond national borders. While they support incentives for innovation, they do affect how innovation spreads across borders. Developing economies typically require standards of IPR appropriate for their technological needs. Realistically they are not likely to fulfill their needs for combating poverty, disease, and fragility to environmental shocks by raising their intellectual property standards to those of developed economies. This would not increase local R&D, not with their limited technological resources, nor stimulate global R&D, given their relatively small market size. If anything, access to goods may be hampered if higher intellectual property standards raise market prices. Instead, developed governments should continue to fill the global R&D gap by contributing resources for R&D and design regulations—with flexible exceptions and exemptions—to support the wide diffusion of technologies to the developing world.
Walter Park is a professor of Economics and the PhD program director (Economics) at American University.
The level of challenge faced by Jordan and Moldova on refugees and migration is remarkable: while Jordan has welcomed over a million Syrian refugees, Moldova has a migration outflow equivalent to a quarter of its population. Without the option of closing their borders, the scale of these movements not only puts the challenge for developed countries into context, but provides important insights on the importance of planning, and of innovation in policy.
Here we draw out some of those insights from our event at this week’s UN General Assembly (UNGA). The event looked at Commitment to Development, migration’s role, and how developed countries can learn from those countries that have faced massive and contrasting challenges on refugees and migration.
The UN General Assembly and the future of migration
At last year’s UNGA, world leaders instigated work on two new “compacts,” which aim to agree consistent responsibilities and expectations on refugees and migration. This year’s event marked a mid-point in that work. Accordingly, we convened a high-level panel on our Commitment to Development Index and innovations in migration policy.
In her opening remarks, UN Special Representative for International Migration Louise Arbour reminded us about the valuable contribution migrants make, but also that in many societies, migrants are being held back in everyday life which prevents them from contributing fully.
Migration challenges and innovations in Jordan and Moldova
The Commitment to Development Index (CDI) measures 27 rich countries’ policies on migration, and the example of the two developing countries—Jordan and Moldova—provided some policy inspiration.
The Jordanian Minister of Planning and International Cooperation Imad N. Fakhoury described the scale of challenge around hosting more than a million Syrian refugees (over 10 percent of Jordan’s total population), and the new realities that internationally displaced people tend to stay in their host countries long-term (on average almost a quarter of a century). This has required policy innovation in the face of emerging challenges.
For example, should Jordan pay to educate refugee children? Fiscally, this was a significant challenge for an emerging economy. And should refugees be given the right to work given the likely alternative of un-taxed employment with the risk of exploitation? Minister Fakhoury provided an inspirational perspective on how Jordan responded to the challenges of integrating migrants in a both innovative and pragmatic way—issuing labour permits, allowing refugees to integrate in communities (only about 10 percent of all Syrian refugees live in designated camps), and ensuring education for their children. These steps enable refugees to contribute and to lead a self-determined life.
Deputy Minister for Foreign Affairs and European Integration Lilian Darii explained his country’s innovative policies facing a different challenge: how a quarter of Moldovans had emigrated—either permanently or to take up seasonal employment.
For Moldova, this has necessitated taking a long-term approach to migration—harnessing the benefits of remittances which account for almost a quarter of Moldova’s GDP and making the most of potential returners with an active diaspora programme and working to transfer pension rights on their return. A Mobility Partnership agreement with the EU has also helped promote legal mobility.
Two broad lessons for developed countries
The CDI takes a broad and holistic view of developed-countries’ approach on refugees and migrants. Along with the insights form Jordan and Moldova, we suggest the most successful approaches rely on two broader approaches:
Future planning: as obvious as it sounds, being prepared for potential demand for migration is important. In the coming years, growing economic prosperity will give more people the opportunity to move away from the risk of persecution, or if climate or other disasters strike or simply to pursue a better life for themselves and their children. Moldova and Jordan now plan for the reality of migration, and were ready to tackle its challenges.
Innovative policy: international migration is growing and offers huge developmental opportunities, but will require genuinely new and innovative approaches. There are examples of successful policies which benefit host countries, the country of origin and the migrant himself. CGD’s Michael Clemens has highlighted New Zealand’s extremely successful seasonal workers scheme. He also written about the potential of the Global Skills Partnership to simultaneously tackle problems related to aging populations and a lack of skilled workers in developed countries, while enabling training in sending countries—and a better live for migrants.
Investing in migration policy
Rich countries can learn from the experience of Jordan and Moldova on refugees and migrants. The level of challenge faced by these countries has driven them to plan carefully—considering costs against unspent potential of refugees and migrants—and then use innovative policy approaches to achieve the right balance. In different ways, these policies have helped ensure refugees, migrants, and their children can both contribute and benefit.
The words of one of our participants seem an appropriate way to conclude:
“Migration is a challenge that is here to stay. We must invest in ways of dealing with it."
The Commitment to Development Index ranks 27 of the richest countries on their dedication to policies that benefit poorer nations. Finland takes first in 2016. The UK moves down three places to 9th while the United States moves up one to 20th. Switzerland takes last of 27.
Today, we published this year’s Commitment to Development Index (CDI), which ranks 27 of the world’s richest countries in how well their policies help to spread global prosperity to the developing world.
We will be presenting the Index and our recommendations at the high-level period of the UN General Assembly (UNGA) later this month. As political leaders prepare to meet for UNGA, here are some key takeaways from our research that should help guide their policies and discussions.
1. Leadership on global development isn’t only for the richest!
The CDI analyzes the policies of 27 of the world’s richest countries in seven key areas: aid, finance, technology, environment, trade, security, and migration. The indicators adjust for size and economic prosperity—and the results demonstrate that country wealth does not determine the results. The wealthiest countries—represented by the G7—rank anywhere between fourth and twenty-sixth. Income per person averages half that of the United States in Visegrád countries (Czech Republic, Hungary, Poland, and the Slovak Republic), but all four now rank higher in their commitment to development. Portugal, who ranks sixth, performs well in most components despite being less prosperous than many of the CDI countries. Smart policy design is not a matter of prosperity only. Therefore, our first key message to all the leaders of the 27 CDI-countries:
Domestic economic challenges needn’t prevent leadership on smart policies to increase global prosperity.
2. Development is about much more than aid
The CDI draws attention to the fact that global development is about so much more than the amount or quality of foreign development assistance provided. Policymaking in various policy fields directly affect the lives of poor people around the globe.
For example, the design of our policies on technology or finance affect the prospect for people living in poorer countries. Both research and development policies and investment policies are mainly pursued for domestic goals. However, they have a lasting effect on developing countries. Smart intellectual property rights can enable knowledge sharing and technology transfer. Also, bilateral investment agreements with developing countries recognising specific public policy goals such as labour rights, environmental standards, or human rights can have an important effect on the prospect for development.
The commitment to implementing balanced and sustainable policies domestically also sends a strong signal about their importance globally and irrespective of countries borders. Money spent on foreign development assistance does not have the same lasting effect if countries don’t recognise the international impact of their actions in other policy areas. Therefore:
In our integrated world, your policies and decisions as a leader of a rich country have an important bearing on the lives of people in developing nations.
3. Even the bottom-ranked country has smart policies we all can learn from
Like the Sustainable Development Goals (SDGs), the CDI recognizes development has many angles. But while the SDGs cover all nations and their outcomes, the CDI concentrates on the richest countries and emphasizes how policies can make a huge difference to development globally. The fact that we limit our evaluation to high income countries means that policy recommendations are more tailored and relevant. Even the best-ranked countries have weaknesses where they can learn from their peers. Overall leader Denmark performs weaker on migration and could learn from the migration policy designs from countries as varied as Luxembourg, New Zealand, or neighbouring Sweden. Similarly, bottom-ranked South Korea could advise all other 26 CDI countries on how to build long-lasting support for research and development. Accordingly:
Use the CDI as a tool to learn from others and to inspire change through your own best-practice policies.
4. Some overall progress on the Environment component but stronger commitments are needed
Tragically, Hurricane Harvey has reminded the United States how vulnerable we all are when natural disasters hit. Further, people in South Asia were left suffering after massive flooding and devastation affected millions, while earlier this year we saw how the unprecedented drought in Africa affected the lives of millions facing malnutrition. These tragic events, sadly far from unique, remind us that we all need to do more to combat climate change.
This year’s CDI points out that progress has been made—CDI countries report progress in curbing new greenhouse gas emissions and the amount of Ozone-depleting substances has been cut significantly. However, many environmental challenges remain. We need to see an even bigger commitment to development from the CDI countries in the future, such as a complete support for the Paris Agreement and the willingness to tackle issues such as overfishing and deforestation. Thus, our final recommendation:
While progress has been made, many global challenges remain. We ask this generation of world leaders to strengthen and deepen their commitment to development.
These findings show that we and our governments can do so much more to spread prosperity to poorer countries. The CDI serves as a useful tool to identify which national policies still have potential to be designed in a more development friendly way. We hope world leaders use the opportunity of UNGA to discuss ways to make further progress in all policy fields, inspiring each other to achieve more on global development.
Global policymaking is at risk, threatening the international liberal order which has, for all its faults and lacunae, served the world well since the second world war. There has never been a period of such rapid progress in the human condition. Most of humanity has benefited from unprecedented increases in life expectancy, reductions in violent deaths, progress on equality and rights, and improvements in the standard of living.
This progress has been, in part, the happy consequence of better global policies. This prosperity is the result of the spread of market economies, open trade, investments in science and evidence, wider availability technologies, the establishment of norms and standards, the movement of people and capital to where the opportunities are greatest, and, though we have sadly not eliminated war, a significant reduction in violent interstate conflict.
The policies and international cooperation that have brought all this about are not always easy. Our Commitment to Development Index, the 14th annual edition of which is published today, measures the progress of the world’s industrialised economies towards policies that contribute to make this world better for everyone. We use literally millions of pieces of data to calculate each country’s performance in seven categories: trade, environment, security, technology, finance, migration and aid. This short video explains.
How Countries Ranked in the 2016 CDI
Not surprisingly, Scandinavian countries top the list again this year, with Finland, Denmark and Sweden, respectively, in the first three slots. They tend to have open and transparent financial systems and support sustainable investments in developing countries, while doing the most, relative to their size, to contribute to the global system. Such a functioning system protects the environment and improves standards of living for everyone through international security regimes and shared technology to enhance global progress. Lagging countries like Switzerland (last) and Japan (second last) demonstrate how much potential for contribution to global progress even rich countries have. While the Swiss still have room for improvement regarding financial transparency, Japan could increase its contribution to fighting climate change. But as both countries perform well in some other components, their case illustrates that the CDI is an instrument for a race to the top, inspiring the public and policy makers on how we all can do more to fight global poverty.
The US is 20th out of 27 in the latest rankings, with performances above average in aid and trade but lagging especially on its environmental policies. Although they get credit for signing the Paris agreement on climate change, the US still has by far the lowest gasoline taxes and could do much more to fight global climate change. The UK ranks 9th out of 27, and also does well on aid and trade. Though they are among the leading nations for science and research, neither country does enough to help spread that knowledge to developing countries. Together with Sweden, they have the most stringent intellectual property rights in place, which restricts access to innovation for poorer countries.
In the last 14 years, there has been considerable progress—the CDI shows that rich countries can do more to fight global poverty and have done so. 24 CDI countries have improved their overall score since our first edition in 2003, thereby demonstrating that more equal international policies are possible. No countries have gotten worse overall. The case of Austria, which shows the biggest improvement and now tops the index on security, demonstrates that even small and landlocked countries can pursue policies which have a significant impact on the wellbeing of millions of people in developing countries.
Have we now seen the highpoint of this international cooperation? Obviously we hope not. There is a huge amount to do—if all countries raised their standards up to just the current average in each dimension of the CDI, that would transform the quality of life for hundreds of millions of people.
What holds us back, and indeed threatens the progress the world has made, is our apparent inability to manage change.
Economists will tell you that it is "win-win" to have free trade, to end agricultural subsidies, to let workers move to where they can earn more money, and to spread technologies faster. But while it might be good for every country on average, there are always individual winners and losers. In theory the losers can be compensated, but in practice we don’t seem to be able, or willing, to do that. The consequence of their resistance, and justifiable anger, is that all this progress is now under threat.
We are unrepentant globalists: there is no doubt that better international cooperation has brought about, and can continue to bring about, unprecedented sustainable prosperity. The right response to the present political challenge to this agenda is to do a far, far better job of making sure that we properly manage the negative effects for people who have lost out, and work much, much harder to share the gains more widely.
How well do your country's policies make a positive difference for people in developing nations? That’s the question CGD seeks to answer each year in our Commitment to Development Index (CDI). The team behind the CDI, deputy director of CGD Europe Ian Mitchell and policy analyst Anita Käppeli, join me to discuss why these rankings matter, how countries stack up, and how their scores may be impacted by the shifting political environment.
How well do your country's policies make a positive difference for people in developing nations? That’s the question CGD seeks to answer each year in our Commitment to Development Index (CDI). It’s a ranking of 27 of the world’s richest nations based on seven policy areas: aid, finance, technology, environment, trade, security, and migration.
The team behind the CDI, deputy director of CGD Europe Ian Mitchell and policy analyst Anita Käppeli, join me this week on the CGD podcast to discuss why these rankings matter and how countries stack up.
In first place this year is Denmark, followed by Sweden, Finland, France, and Germany. Greece, Japan, and South Korea rank at the bottom—though South Korea actually ranks first on the technology component.
Among the countries in the middle are the UK, tying with the Netherlands for 7th place, and the US, all the way down at 23rd. In the future, how might these scores be impacted by the changing politics of the two nations?
“On Brexit, there’s real potential for this to affect the CDI score,” Mitchell tells me in the podcast. “The UK will take control of its own migration policy more fully and it will have its own trade policy and it will take control of agricultural policy form the EU. All of those things feature in the Commitment to Development Index.”
As for the the Trump Administration’s America-first approach, Mitchell says, “It’s surely in the interest of countries to see other countries developing to reduce the security risk, to make sure there’s lower risk of disease emerging . . . and the CDI is a framework for prioritizing action on that.”
Overall, Käppeli tells me, the CDI is a reminder to countries that “policy coherence is an issue; that they should not pursue policies in [only] one field—for instance, give a lot of aid, but then close the boarders for products from developing countries.”
“The CDI is holistic,” Mitchell adds, pointing out that the CDI’s focus on policy is “complementary” to the Sustainable Development Goals’ focus on outcomes: “If you think about how we’re going to achieve the SDGs, then looking at the CDI [is] a great way to do that.”
Each year, CGD’s Commitment to Development Index (CDI) rates 27 of the world‘s richest countries on their commitment to sustainable and fair policies towards poorer countries. In 2016, Finland topped the table, with the highest Index score, while Germany, this year’s G20 chair and the third largest economy that the CDI measures lies barely above the middle of the table (the larger economies, Japan and the US, rank even lower). This blog, translated and adapted from a version written for German think tank DIE, looks at why Germany’s performance is only mediocre, why the Finns do so much better, and how Germany’s policies could become more coherent, sustainable and fair.
Like the Sustainable Development Goals (SDGs), the CDI assesses several different policy fields. The CDI project team evaluates institutional commitments, policies and actual outcomes of public actions not only in aid, but also in security, environment, finance, trade, migration and technology.
Learning from the Nordics
In the latest edition of the CDI, Germany is only mid-table (position 15 out of 27). A Nordic trio leads the CDI 2016: the leader in sustainable and development friendly policies is Finland, followed by Denmark and Sweden. France ranks 4th and Portugal completes the top 5. However, with the CDI, the Center for Global Development is not pointing the finger at certain states nor intending to name and shame. Rather, we want to encourage discussions and enable mutual learning. Below, based on two distinct policy fields, we look at where Germany could learn from leader Finland but also where Finnish policy makers get inspiration from their German counterparts. The following two graphs illustrate where Germany and Finland have relative deficits and strengths.
The graphs above illustrate Germany and Finland’s respective performance in each policy field (coloured bars) as well as overall (black bar). The stars show us the leader in each policy field and how much potential for better policies in comparison to the leaders still exists (space between the bars and the stars).
Germany’s comparatively weakest policy fields are finance (position 25 out of 27) and security (22 out of 27). Its strongest performance is in migration (6th of 27) and environment (9th of 27).
Germany’s dual-natured openness: migration vs. finance
Not surprisingly, Germany’s humanitarian migration policy could inspire many other CDI-states, such as overall leader Finland, which has its weakest performance in migration (rank 16). Germany’s openness to migrants has attracted new interest, especially since the summer of 2015 in relation to the vast inflow of people from the Middle East and North Africa. However, our data for the composition of the CDI 2016 placing Germany sixth in migration originates from 2014 and does not yet reflect that period.
Germany also deserves praise for the design of its integration policies as reflected by the MIPEX Index. This Index, which is included in the CDI migration component, scores the rights of migrants in each of the CDI states in eight different policy areas and is a good proxy for how states promote the integration of migrants. Although Germany’s integration policies are not the friendliest overall (Sweden and Portugal are top) they improved significantly, whereas in many other European states policies have become less accommodating.
As illustrated by the length of the orange bar, Germany receives a relatively low score for its financial policies. Its position in the finance component (position 25—only Ireland and Switzerland have financial policies which are even less development-friendly) is mainly due to the design of policies aimed at the financial sector. In the CDI, we measure the finance component in two equally weighted subcomponents; the transparency of the financial sector and the strength of the international investment policies of each country.
The first subcomponent (financial transparency) reflects the results of the Financial Secrecy Index (FSI) of the independent organisation «Tax Justice Network». Their verdict is mixed: the current design of German financial policies enables and facilitates illegal financial transactions. Despite recent progress in new commitments to international anti-money laundering frameworks and obligations, the German financial sector is still too open to illicit financial flows, un-transparent financial and secrecy instruments.
On the second subcomponent, the German government could enhance its standing by making its international investment agreements (IIA) with developing countries more well-rounded. In this area, Germany could learn a lot from CDI-leader Finland which has the most development-friendly finance policies. Investment agreements with developing countries should go beyond safeguarding the interests of investors from unjustified interventions by foreign states as, in most cases, investment agreements with poorer countries contain an inherent power imbalance. In the CDI, we therefore reward countries such as Finland whose IIAs strengthen poorer states’ public policies like labour and environment standards.
Finland demonstrates that it is possible to conclude equally profitable, lucrative and at the same time sustainable investment agreements that incorporate the interests of both parties and societies. Promoting compliance with environment standards and employment rights abroad generates not only a sustainable social and economic benefit in developing countries.
The CDI: a valuable tool to highlight mutual benefits of sustainable development
The example of the fair and, at the same time, profitable Finnish investment policy demonstrates that thorough and development-friendly policy-making can support and benefit us all: when poor countries move up the global value chain in the longer term, this will also benefit us by smoothing access to new consumers for our products and services, and protect the global environment. In addition, with so much scepticism in developed countries over the value of globalisation, the example of investment agreements shows how—by using the principle of sustainable development—the benefits of global prosperity can be shared between rich and poor alike. We need to get better at highlighting the sustainability of global and fair policies for the good of us all.
These mutual benefits are at the heart of sustainable development—and, as with the SDGs, Germany and other countries can use the Commitment to Development Index to understand opportunities in a coherent framework.