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Foreign aid is the first policy that comes to mind when people in rich countries think of helping poorer ones. The aid component of the CDI moves beyond standard but narrow comparisons of the quantity of aid governments give, by also taking account of the quality of aid. It penalises donors for giving aid to relatively rich or worse-governed recipients, for overburdening governments with lots of small aid projects, or for "tying" aid, which forces recipients to spend it on the donor country's own goods rather than get the best value for scarce resources. The component also rewards tax deductions and credits that support private charity.
Europe's Aid Policies
Europe’s top performers on Aid
High net aid volume as a share of the economy (1.04%)
Small share of tied or partially tied aid
Prevents project proliferation; large average project size
Large share of aid to poor and relatively well-governed recipients
Europe’s lowest performers on Aid
Lowest net aid volume as a share of the economy (0.08%)
Low aid volume as a share of the economy
Largest share aid to less poor and worse-governed recipients (bottom of CDI on selectivity)
Low net aid volume as a share of the economy; and fails to report tied aid
European countries in the Commitment to Development Index have consistently outperformed the rest of the world in the aid component, thanks largely to strong performances by Norway, Sweden, Denmark and the Netherlands. New to the CDI in 2012, Luxembourg takes the top spot. However, a weighted average, which reflects the economic strength of European countries, falls below the unweighted average, because it is the smaller economies which give most aid.