Commitment to Development Index - Development Finance | Center for Global Development : Shared by Lou Mendez
Development finance
Development finance is likely the first policy area that comes to mind when considering how countries help to promote development beyond their borders. It remains an important source of assistance for many developing countries. We use a measure of the quantity which is comparable across the countries we assess alongside a suite of measures which assess the quality of that finance in promoting development. Many of the higher-income countries we assess agreed to the UN resolution to spend 0.7 percent of national income on development assistance originally. More than 50 years after it was set, only a handful of countries are meeting this target.
Income-adjusted rankings
A country’s contribution to international development is expected to go up as it becomes richer—but by how much? CDI scores already adjust for the size of a country, but the income-adjusted ranking shows scores and ranks after taking account of a country’s average income-level.
To calculate an income-adjusted score, we measure whether a country scores above or below an expected CDI score based on the relationship between all countries’ scores on that component and their income level (as measured by GNI per capita). The expected CDI score is calculated using a line of best fit using ordinary least squares regression (OLS). We then calculate a country’s income-adjusted score as the distance from this expected score: it is the (positive or negative) deviation from that expected score line.
Income-adjusted rankings
A country’s contribution to international development is expected to go up as it becomes richer—but by how much? CDI scores already adjust for the size of a country, but the income-adjusted ranking shows scores and ranks after taking account of a country’s average income-level.
To calculate an income-adjusted score, we measure whether a country scores above or below an expected CDI score based on the relationship between all countries’ scores on that component and their income level (as measured by GNI per capita). The expected CDI score is calculated using a line of best fit using ordinary least squares regression (OLS). We then calculate a country’s income-adjusted score as the distance from this expected score: it is the (positive or negative) deviation from that expected score line.
The Development Illusion
ReplyDeleteThe aid industry ranking is designed to show which wealthy nations are the world’s most generous benefactors. It is a sleek, data-heavy exercise that claims to measure how countries promote development beyond their borders. It is earnest, elaborate, and almost entirely beside the point.
The Index, like so many donor-friendly scoreboards, is built on an improbable assumption: that the quantity and “quality” of aid tell us something meaningful about development. The numbers are certainly tidy. They track how much money rich countries give, how concessional it is, whether it is politically “tied,” and how those flows compare to what a nation of similar income ought to provide. Add some regression lines and income-adjusted rankings, and the whole construction acquires an air of econometric gravitas.
Yet none of this brings us any closer to understanding whether development is actually happening. A country can score brilliantly on the Index while presiding over aid systems that leave the intended beneficiaries almost entirely untouched. To the mother of four living in an unpaved alleyway in Lusaka, the Index’s OLS-adjusted generosity rankings have roughly the same practical value as a horoscope. For the malnourished children in the Southern Highlands of Tanzania, regions that have hosted nutrition programmes, pilot interventions, and visiting consultants for decades, the correlation between donor virtue signalling and improved nutrition is, at best, weak.
The problem is not merely one of mismeasurement. It is conceptual. The Index tracks inputs, not outcomes. It measures donor effort, not development progress. It is, fundamentally, a mirror in which wealthy nations admire themselves for being fractionally more virtuous than their peers. The incentives are clear: governments enjoy the positive press, NGOs enjoy the validation; think-tanks enjoy the renewed relevance. Meanwhile, African economies, on average, continue to diverge from the rest of the world, their relative positions slipping even as the aid flows hum steadily along.
The reliance on the 0.7% target, a number from a different era for a different world, reveals the extent of the problem. After half a century, only a few countries meet it, and almost none can plausibly argue that their contributions have moved the development needle in a structural sense. Vast sums have been allocated, yet few African health systems function reliably; education systems routinely fail to teach; states often collect less tax than they spend on their own civil servants. These are not failures of charity. They are failures of politics, institutions and incentives, the very things the Index politely avoids.
Donor rankings are serious attempts to understand why some countries prosper and others do not. Development outcomes are produced not by generosity but by governance, productivity, investment, and the slow accumulation of institutional competence. Aid might help in an emergency or in a crisis. But as a driver of long-term development, it is wildly oversold, and this Index helps sustain that illusion.
Rich countries will no doubt continue to congratulate themselves for hitting this or that benchmark. They may even use the Index to justify budget allocations or moral grandstanding. But none of this will make the Tanzanian child less stunted, or the slum dweller’s clinic more functional, or Africa’s economies more competitive. Development is not a function of how good donors feel about themselves. The global poor deserve more than a spreadsheet of donor virtue.
Donors continue to give money for a CAUSE, not for RESULTS. Money has gone to the aid industry on the basis of mostly unfulfilled promises. See also (click) here .
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