Aid

Aid remains an important source of foreign finance for many countries. The CDI takes account of both aid quantity through their share of national income given as ODA; and of aid quality through their scores in the Quality of Official Development Assistance – QuODA exercise.

Luxembourg’s aid performance

• Rank: 7

Strengths

• Small share of tied aid
• Large share of aid to poor countries
• High aid volume as a share of the economy

• Not a member in the International Aid Transparency Initiative
• Low commitment to evaluation and learning

Trade

International trade has been a force for economic development for centuries. The CDI measures trade barriers in rich countries against imports from developing countries. It also penalizes costly importation processes and restrictions against purchasing services from foreigners.

Luxembourg’s trade performance

• Rank: 10

Strengths

• As a member state of the European Union, Luxembourg imposes low tariffs on agricultural products including wheat, dairy, some meats, textiles and apparel
• Few days to import a shipping container
• Few documents required for importation
• Few limitations on the importation of services

• As a member state of the European Union, Luxembourg imposes high tariffs on rice, sugar, vegetables, fruits, nuts and beef
• High cost to import a shipping container

Finance

Rich-country investment in poorer countries can promote economic growth, help spread technologies, skills, and create jobs. Conversely, policies that permit secrecy can facilitate illicit activities and financial flows abroad. The CDI rewards policies that support healthy investment in developing countries and promote transparency in financial transactions at home as well as globally.

Luxembourg’s finance performance

• Rank: 26

Weaknesses

• Political risk insurance agency does not screen projects for violations of local environmental rights
• Scores below average in the Financial Secrecy Index for regulations in place to promote transparent financial transactions within its jurisdiction
• Low engagement in extractive industries transparency initiatives such as the Extractive Industries Transparency Initiative (EITI) and the Kimberley Process on blood diamonds

Migration

Allowing people to move from poor to rich countries provides unskilled immigrants with jobs, income and knowledge. It also increases the flow of money migrants send home and the transfer of skills when the migrants return. The CDI also rewards countries for enabling students from developing countries to study at their universities, and for sharing the burden of refugees and asylum seekers.

Luxembourg’s migration performance

• Rank: 7

Strengths

• Large number of immigrants from developing countries entering Luxembourg 

• Small share of foreign students from developing countries 

Environment

Rich countries use a disproportionate amount of scarce resources while poor countries are most vulnerable to global warming and ecological deterioration. The CDI measures the impact of policies on the global climate, fisheries, and biodiversity, all of which affect the lives of those far beyond one country’s borders.

Luxembourg’s environment performance

• Rank: 21

Strengths

• No fishing subsidies
• No fossil fuel production

• Low gas taxes
• GDP growth exceeded growth in greenhouse gas (GHG) emissions over the past decade
• High greenhouse gas emissions rate per capita
• Poor compliance with mandatory reporting requirements under multilateral environmental agreements relating to biodiversity

Security

Since security is a prerequisite for development, the CDI rewards contributions to internationally sanctioned peacekeeping operations and forcible humanitarian interventions, military protection of global sea lanes, and participation in international security treaties. It penalizes arms exports to poor and undemocratic governments.

Luxembourg’s security performance

• Rank: 19

Strengths

• Participates in major international security treaties and regimes
• Low Arms exports to poor and undemocratic governments

• Small contribution to personnel and financial contributions to internationally-sanctioned peacekeeping and humanitarian interventions

Technology

Rich countries contribute to development through the creation and dissemination of new technologies. The CDI accounts for this by rewarding government support for research and development (R&D), and penalizing strong intellectual property rights regimes that limit the dissemination of new technologies to poor countries.

Luxembourg’s technology performance

• Rank: 21

Strengths

• Does not impose strict limitations on anti-circumvention technologies that can defeat encryption of copyrighted digital materials

Weaknesses

• Low government expenditure on R&D
• Allows patents on plant and animal varieties
• Allows patents on software innovations
• Allows patents for research purposes
• Pushes to extend intellectual property rights in bilateral trade treaties (“TRIPS Plus” measures) that restrict the flow of innovations to developing countries