Most comparisons between donors are based only on how much aid each gives. Have they doubled aid to Africa? Are they giving 0.7 percent of GDP? For the CDI, quantity is merely a starting point in a review that also assesses aid quality. The CDI discounts “tied” aid, which requires recipients to spend aid on products from the donor nation; this prevents recipients from shopping around and raises project costs by 15–30 percent. The CDI also looks at where aid goes, recognizing that aid is more effective in poor and relatively well-governed nations. While aid to Afghanistan—where corruption is rampant and rule of law weak—is counted at 1¢ on the dollar, aid to Ghana—where poverty is high and governance relatively good—is counted at 99¢ on the dollar. Aid is deemed less useful if donors overload recipient governments with too many small aid projects, which burden recipient officials with hosting obligations and frequent report filing.
The the Index recognizes governments for letting taxpayers write off charitable contributions, since some of those contributions go to Oxfam, CARE, and other nonprofits working in developing countries. Since the Index is about government policy, it counts only private giving that is attributed to tax incentives.
The top performers on the aid component all give large quantities of aid as a share of GDP (Norway 0.99 percent, Sweden 0.98 percent, and Luxembourg 0.97 percent). But quality matters too. Norway as well as Australia and the United Kingdom report that none of their aid is tied. Portugal, Japan, and Ireland score best on selectivity, that is, providing aid mainly to poor and well-governed countries. Ireland ranks 9th on sheer aid quantity as a share of GDP, but its overall rank in the aid component rises 3 places because it choose countries well and little of its aid is tied. The United States, Ireland, and Canada promote policies that support private charitable giving, but the United States also ties nearly 50 percent of its aid and supports corrupt or undemocratic governments in Iraq, Jordan, Afghanistan, and elsewhere. This negatively affects the quality of its aid, and therefore its final score in the aid component. The Visegrád countries—the Czech Republic, Hungary, Slovakia, and Poland—provide only small amounts of aid measured as a share of their GDP, and they do not report whether their aid is tied aid (except for the Czech Republic, which reported 65 percent of aid as tied). They also do not report charitable giving. Japan and South Korea also provide only small amounts of aid (0.13 percent and 0.12 percent respectively), and are penalized for having too many small projects which overburden the recipients.
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