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Owen Barder is a Vice President at the Center for Global Development, Director for Europe and a senior fellow. He is also a Visiting Professor in Practice at the London School of Economics and a Specialist Adviser to the UK House of Commons International Development Committee. Barder was a British civil servant from 1988 to 2010, during which time he worked in No.10 Downing Street, as Private Secretary (Economic Affairs) to the Prime Minister; in the UK Treasury, including as Private Secretary to the Chancellor of the Exchequer; and in the Department for International Development, where he was variously Director of International Finance and Global Development Effectiveness, Director of Communications and Information, and head of Africa Policy & Economics Department. As a young Treasury economist, Barder set up the first UK government website, to put details of the 1994 budget online.
Official Side Event to the Global Partnership for Effective Development Cooperation 2nd High Level Meetings. This high-level panel will present new research conclusions and practical policy actions generated by a high-level working group convened by the Center for Global Development to deliver long-term progress on the Sustainable Development Goals by making emergency aid for disasters faster, more effective, and more fair.
What if taxpayers could decide for themselves how some of the UK’s aid budget is spent? Allocating funding would let taxpayers engage meaningfully with development issues, potentially reinforcing support for tackling poverty and deprivation overseas. Competition for funding would give international development organisations an incentive to offer an explicit value proposition. This could catalyse a race to the top in becoming transparent, measuring impact, and delivering value-for-money. AidChoice, as set out below, would be revenue neutral, would not lower the UK’s overall spending on foreign aid (or the amount scored as ODA), and might generate modest but meaningful savings, all while increasing public support for development spending and improving accountability.
This post is part of CGD’s work looking at the UK’s role in delivering shared prosperity beyond Brexit. We’ll be looking into further ideas in the coming weeks.
Whatever you think about Brexit, it doesn’t make sense to secure Britain’s economic future by adding red tape. Theresa May’s government wants to tamp down net migration. That’s has opened space for some new self-defeating proposals. During the UK’s recent Conservative Party conference, Home Secretary Amber Rudd outlined a plan to tackle immigration by enforcing a new visa system for international students.
Clamping down on international students threatens a surprisingly important export sector. It damages Britain’s brand and limits an important instrument of soft power. And it would needlessly constrain opportunities for intellectual and professional achievement for foreign-born students, undermining a valuable and often-unrecognised contribution that the UK makes to shared, global prosperity. Migration is a contentious topic, but on this issue the numbers are clear: most voters don’t think of short-term students as immigrants.
A simple, one-line change avoids this false dilemma: redefine the way the Office of National Statistics calculates Long Term International Migration to exclude short-term and temporary non-EU students.
These students arrive in the UK to study and then leave. There are already strict rules in place requiring those who want to stay to re-apply to transition to other visa classes. And according to a year’s worth of data from exit checks, only around 1 percent of foreign students actually overstay. Whether or not you think net migration is a problem, it's bad policy to target the softest part of a badly-defined indicator—rather like “losing weight” by taking off a heavy coat before getting on the scale.
We don’t think of teaching as an export, but it is. In the jargon, education sold to foreign students is a ‘mode 2’ services export. That shows up as a credit in the UK’s balance of trade. International students contribute directly to University finances and the cities and towns in which they study. Figures collected by accountancy firm Grant Thornton for the non-partisan Times Higher Education indicate that international students paid UK universities more than £4 billion in fees in 2014-15.
They also contribute a further multiple to local economies—£3.5 billion a year in 2011-12 according to analysis by Universities UK, an education industry group. (The British Beer & Pub Association, another industry that also profits handsomely from students, has been curiously silent.) And non-EU students subsidise their peers by paying much more for the same courses, much as the pinstriped bankers who instinctively turn left when boarding the plane help pay for those of us at the back. British undergraduates at Oxford next year, for example, will pay £9,250. Their non-EU peers pay up to £23,190.
Giving international students access to the hallowed halls of British institutions is also an important instrument of the UK’s soft power. A remarkable paper published in the American Economic Review—our field’s most prestigious and competitive journal—shows that being educated in democratic countries catalyses the promotion of democracy at home. Students, in short, bring Britain home with them.
And there’s the well-established fact that studying abroad is good for the students themselves. It increases earnings by upgrading skills. It improves employment by conferring a recognised qualification. It expands their social and professional networks. And it enables them to work in a globalised world. Research shows that English-language skills can create a wage premium of up to 20 percent. Surprisingly, most of these important benefits flow to relatively poorer countries– data from the OECD show that in 2012 (the most recent year for which figures are available) more than half the foreign students in the UK were from countries that receive foreign aid.
As for the politics of this problem, most people inherently recognise that students are not migrants at all. Polling from 2014 commissioned by Universities UK found that nearly 6 in 10 respondents would not reduce the number of international students even if that made it harder to reduce immigration numbers.
Students can’t just transition to the labour market: non-EU students who want to remain in the UK to work still need to apply under other visa categories; permanent settlement still requires a successful application for Indefinite Leave to Remain (ILR). And there are already policies in place targeting institutions that might facilitate visas for people to work under the guise of studying. If the Home Office rejects just 1 in 10 or more visa applications associated a particular institution, it loses its designation as a trusted sponsor and faces a higher compliance burden, making it much harder to accept international students in the future.
Early last year, we (along with our colleague Michael Clemens) introduced a list of 13 shovel-ready improvements that would support British employers, grow the economy, provide better services to British consumes, and support development overseas. Revising the definition of migration to exclude international students was on our list then. Now it seems this one-line fix is more urgent and important than ever.
As my friends know, I’m not religious—indeed, I fall into the ‘militant atheist’ category—but as my day job is trying to promote peace and prosperity around the world, I am often reminded of Reinhold Niebuhr’s famous ‘Serenity Prayer’:
God, grant me the serenity to accept the things I cannot change,
Courage to change the things I can,
And wisdom to know the difference.
This prayer was on my mind recently when I had the opportunity to respond to Rory Stewart MP, who was giving his first speech as Minister of State at the UK Department for International Development. He brings real expertise and experience to the role, having served in East Timor, Montenegro, and Iraq; and he travelled on foot through rural districts of Pakistan, Iran, Afghanistan, India and Nepal, a journey totaling around 6000 miles, during which time he stayed in five hundred different village houses.
Mr Stewart gave a wise speech about how Britain can play a role in global peace and stability. He called for policymakers to be modest and patient when they intervene in conflicts and in fragile states, and to act with greater self-awareness. I agree with everything he said.
There are good examples of successful humanitarian interventions, including, to various degrees, in Bosnia, East Timor, El Salvador, Kosovo, Liberia, Macedonia, Mali, and Sierra Leone. As Mr Stewart said, we should not be isolationist or pacifist, but we should be aware of just how difficult it is to intervene successfully in other countries.
But there is a complementary policy agenda which the Minister did not touch on. There are many decisions over which we do have control, or at least significant influence, which would help promote global peace and security, and secure greater, fairer prosperity both here and abroad. Yet somehow discussions about global peace and security seem to dwell on what we can do over there, not what we can do over here.
In my brief response to the Minister, I suggested twelve policies which are within our control which would help create conditions for stronger, more peaceful, more prosperous countries to thrive, and so reduce the risks of future conflict and instability. Here they are:
We could help tackle the resource curse—by requiring our citizens and companies to be transparent about what they pay for and from whom; and we could go further, as Leif Wenar suggests, by treating as stolen property the oil, minerals and other resources sold by governments that do not have the moral, political or legal authority to sell them on behalf of their population.
We could do more to promote economic growth, stability and jobs by investing in and trading with fragile countries. Countries like Pakistan, Afghanistan, Syria, and Somalia should have predictable, long-term, access to our markets, including in agriculture and services; we should ensure that companies who invest overseas are able to offset the taxes they pay overseas against their domestic tax liabilities; and we should use development finance to invest more in fragile states;
We could help countries to build up a social contract by including developing countries in the mechanisms which determine international tax rules and cooperation, and by shutting down tax havens and financial secrecy jurisdictions, so that countries can collect more tax from citizens and companies operating within their borders, and be less dependent on aid from outside;
We can address resource scarcity, which is a major driver of conflict, by increasing our investment in global public goods. For example we could accept the Lima Challenge proposing a partnership to do more to reduce deforestation. This would be hugely good value in terms of the cost per tonne of carbon saved. We could tackle overfishing, the pollution of our seas, and protect biodiversity. And we could put a price on carbon emissions, both to help stop climate change and to give the poorest countries a tradeable asset.
We could offer more opportunities to temporary and permanent migrants from fragile states, as a proportion of whatever limit we set on immigration, for example by enabling them to come here as students, offering seasonal agricultural workers’ visas and through global skills partnerships that educate them in skills that are in short supply here, like nursing and care for the elderly. That integration increases incomes and opportunities for families in fragile states, it spreads democratic ideas and values, and it is good for our own economy and society too.
We canpromote global values and norms, and increase global accountability including by the way we ourselves behave, e.g. through rules on controlling land mines and small arms, rules of war and prosecuting war crimes, supporting the international criminal court, standing out against the use of torture, or detention without trial, or capital punishment, and for open government, freedom of the press, and the rights of minorities.
We can do more to fight corruption and illicit financial flows, including by opening up public registers of beneficial ownership, by forcing UK overseas territories and crown dependencies to open up, and by announcing that the UK courts will no longer enforce contracts on behalf of anonymous shell companies or other anonymous parties.
We can invest more in UN peacekeeping, both in money and in troops. And we should consider Paul Collier’s proposal for a security guarantee, by which a democratically elected government could ask for a guarantee that if they are overthrown by a coup, the international community will step in, with force if necessary, to restore democracy.
We should have much tighter controls on arms sales—it is obscene that the UK is selling arms to Saudi Arabia which are used to bomb Yemen, which we then provide aid to rebuild.
We can reform international sanctions and prevent the accumulation of debt by odious regimes. For example, it is deeply short-sighted and hypocritical that when Assad is no longer in charge in Syria, the contracts entered into by his government will be enforceable in British courts against a legitimate successor government, even though those contracts are in breach of UK sanctions. (I worked in the South African Treasury when Nelson Mandela was President and we found that we had to pay the debts of the apartheid regime because those contracts could be enforced against the new government in international courts.)
We can work harder on the reform of governance of international institutions such as the World Bank, Security Council, the WHO to give all countries a stake in these institutions that we need to build and strengthen. It is a great shame that the UK acquiesced this month in the uncontested re-election of Jim Kim as President of the World Bank, rather than insist on the agreed policy of an open, merit-based process.
We can reform the international humanitarian architecture, over which the UK has direct power as one of a handful of key funders, but which we are reluctant to take on. Refugee camps are a breeding ground for resentment, conflict and terrorism, and we have all the evidence we need on how to improve it. Compacts, like the one the international community is developing with Jordan, could help migrants work legally, supporting the services they need by growing their local economies.
The Minister responded—rightly—by pointing out that there are domestic political constraints to all of these things. But there are domestic political constraints in developing countries too: that doesn’t stop well-meaning westerners from flying around the world telling governments that they need to get themselves a new judiciary, reform their state-owned enterprises or embrace federal autonomy.
I don’t believe that it is politically too difficult for the UK to close the tax havens in its overseas territories, or to stick to its promises to appoint the leadership of international institutions on merit; nor do I believe that these policies require a political lift of the same magnitude as we routinely expect of others. These reforms would be good for the majority of our own citizens too—while they require a bit of backbone to take on vested interests who benefit from the status quo, they could potentially bring about huge, long-lasting and sustainable benefits for the rest of us and for the rest of the world.
By all means, let’s have the serenity to accept the things we cannot change; but give us the courage too to change the things we can.
Last week, we released the migration scores from the 2016 Commitment to Development Index. A few eyebrows were raised at Australia’s relatively good performance, at third place, better than any G-8 country and far better than the US or UK. That didn’t seem to fit with what we think we know about Australia’s attitude to immigrants. So did we get something wrong? We don’t think so, and here we explain why not.
Given this, how can Australia do so well on our index? Does this score, as one correspondent suggested, “fail the smell test”?
We are comfortable that the index reflects the overall policy stance. But we acknowledge that as well as averages, outliers and extremes are also important. Australia’s offshore detention of migrants is without question a hugely important issue—indeed, we think it so important that in July this year we proposed an innovative approach to tackling it. The challenge for any index is adequately to reflect extremes in a composite score, since the averages inevitably mask outliers. We should not ignore the scandal of offshore detention, but nor should our outrage about these cases lead us to ignore the wider policy environment, which is also important for millions of people. And looking at these broader policies, the data shows that, Australia is remarkably open to immigration. 27 percent of Australia’s population is foreign-born, compared to 13 percent in the United States and 12 percent in the UK. (Of OECD countries, only Luxembourg has a higher percentage than Australia.) Put another way, the US would need to open its doors to more than 60 million additional immigrants to increase its foreign-born population to the same proportion as Australia.
A country’s policies cannot be completely represented by measures based on averages; but nor can it be completely represented by the extremes. It is important to supplement quantitative summary scores, of the kind we produce in the CDI, with broader narrative information, including about distribution and outliers, and to make policy recommendations about what needs to be fixed; and that is what we do.
The migration component of the CDI is a reasonable overall measure of a country’s immigration policies as they affect development, and on this overall measure, Australia deserves its place near the top of the index.
First, our index is heavily influenced by the evidence—explained in Clemens (2011)—that it is good for development if rich countries offer opportunities to migrants from developing countries. This has led us to give 30 percent of the index score to the number of new immigrants that a country accepts from developing countries each year, as a proportion of the population in the receiving country. We give more weight to immigration from poor countries. Admittedly the data lags reality by a couple of years, but on this measure Australia scores highest of all the CDI countries, closely followed by New Zealand, Canada, and South Korea.
The positive effects of its large foreign-born population aside, Australia does not do so well on our measure of the numbers of asylum seekers and refugees they accept, which counts for a quarter of the migration component. On this Australia is about middle of the pack: way below Sweden, for example. But Australia takes a lot of students relative to its student population (second only to New Zealand), and this accounts for 15% of the score. Furthermore, Australia gets extra recognition for the fact that, of those foreign students, 71 percent are from developing countries (a proportion bettered only by South Korea and Japan—the equivalent figure for the UK is 51 percent).
Finally, and perhaps most controversially, Australia does relatively well on MIPEX, a measure of whether a country has policies which promote integration and well-being of migrants. This is important for the impact on development, both because it is an indicator of the improvements in the lives of the migrants themselves, and because it is an indicator of whether migrants will be able to send remittances home, or reunite families. It may be surprising that Australia does well on this measure: eighth out of the countries in the CDI and comfortably ahead of both the UK and the US. But for most immigrants, this score is justified. For example, Australia is second only to Sweden in the way that the children of immigrants are integrated into the education system; and nearly all permanent residents can quickly become citizens and fully participate in Australia’s civic life, a measure of integration on which Australia comes fourth after Portugal, Sweden and Denmark.
But the way MIPEX is constructed means that it does not, unfortunately, reflect concerns about the way some asylum seekers, refugees and migrants are treated in some countries, including the salient example, which is sadly not unique, of Australia’s detention centres. We constantly update the methodology and data sources for the CDI, and to the extent that comparable cross-country data can be produced, the treatment of potential refugees who are not granted asylum should indeed be part of future iterations.
No index is perfect, of course. The CDI is doing its job of drawing attention to the many ways in which a country’s policies affect international development, stimulating a conversation about what the evidence tells us about which policies are important, identifying room for improvement, praising countries which pursue good policies, and creating a framework for more qualitative analysis and policy recommendations. We think it is important to recognise that, overall, Australia does have relatively development-friendly migration policies, while at the same time deploring alleged human rights violations in immigration detention centres.
As President Obama convenes an important global summit on refugees, and world leaders at the UN General Assembly address the burgeoning issue of migration and forced displacement, we’ve taken a closer look at how the richest countries in the world support development and the alleviation of poverty through their migration policies. Migration is one of the seven components of our Commitment to Development Index, an annual exercise to marshall millions of data points to track how rich country policies affect the world’s poorest people and places, across seven different policy areas.
We will be publishing the full index in October, but, we are revealing the CDI’s migration rankings now, so they may offer a backdrop for the discussions in New York. Read on to find out how countries measure up.
The Who, What and Why
Migration policies are one of the most important, and underused, tools to reduce poverty and promote development. In the words of our colleague Michael Clemens, we are leaving trillions of dollars on the sidewalk (or pavement). As Clemens has convincingly argued, migration leads to a development gain, not a brain drain. Increased opportunities for well-managed migration bring massive increases in incomes and well-being for individuals, their families and their countries, through higher earnings potential, remittances, trade, and the increased circulation of ideas and knowledge.
To arrive at the index for each country, we look at three broad aspects of rich countries’ migration policies. First, their willingness to accept migrants from the developing world; second, how well those migrants are integrated; and third, whether the country participates in a raft of international conventions on migration.
Based on those broad criteria, New Zealand, Norway and Australia have the most development-friendly migration policies; while the Visegrad four - Czech Republic, Hungary, Poland and Slovakia, languish at the bottom of our table of 27 rich countries. Of the G7 major economies, Canada ranks highest for its migration policies, at 4th place, with Germany 6th and Italy at number 12. The US, Japan, UK and France all lie in the bottom half of the table.
More Detail on Where our Numbers Come From
First we score countries on the number of people they accept: migrants and students from developing countries; and refugees and asylum seekers; and we look at these broadly in proportion to their population. Australia and New Zealand have the largest inflow of immigrants relative to their populations, while, if you’ve been following news reports of the reaction to (mainly) Syrian refugees arriving in Eastern and Central Europe, you perhaps won’t be surprised to learn that the least open are the Visegrad countries – Czech Republic, Hungary, Poland and Slovakia. New Zealand and Australia are also the most welcoming toward students from developing countries. On this measure, the Czech and Slovak Republics again find themselves at the bottom, where they are joined by Denmark and The Netherlands. (To be fair, the relatively low numbers of people wanting to study in these countries may have something to do with the perceived difficulty of the language, as well as how welcoming they are to students.) Though the Netherlands does badly on students, it can boast of rivalling Sweden for being most open to refugees and asylum seekers. Portugal, Slovakia and South Korea accept the fewest refugees, and Japan and Poland accept the least asylum seekers.
The benefits to migrants, and their families and countries of origin, depend not only on numbers but on how those people are treated and the opportunities that are available to them in their new home. We use data from the Migrant Integration Policy Index (MIPEX), a tool which comprehensively assesses whether countries have good policies to support the integration of migrants. MIPEX takes into account 167 policy indicators, which grouped into 8 categories: education, health, political participation, family reunion, anti-discrimination, access to nationality, and permanent residence. Among the CDI countries, Portugal and Sweden top the list for integrating migrants, followed by Finland, Belgium, and Canada.
Finally, we look at the extent to which countries participate in international conventions on migration. We understand, of course, that international conferences often have only a distant connection to people’s real lives; but we also know that over time, international conventions help to establish standards, norms and principles which help shape the behaviour of the international community and individual countries. We argue that there are therefore long-run benefits from countries being willing to agree to these standards, even if they are not always able to live up to their commitments in full immediately. The migration component therefore gives countries credit for ratifying three international agreements: the 1949 Migration for Employment Convention, the 1975 Migrant Workers Convention, and the Protocol to Prevent, Suppress and Punish Trafficking in Persons. Only three countries – Italy, Norway, Portugal – are party to all three conventions, while Japan and South Korea have ratified none of them.
Migration policies reflect the economic, social and political circumstances of each country, and it is foolish to claim that any country could simply adopt the policies being pursued elsewhere. Nonetheless, looking at the fine detail of countries’ policies can help us understand where there might be room for improvement, and help us to identify inspiring examples of countries that do this well.
And the CDI migration scores are on element of the annual Commitment to Development Index, along with hundreds of other indicators across six other policy areas: aid, trade, finance, security, climate and technology. This short video helps explain. The full CDI results for 2016 will be released in a few weeks.
“Private sector” appears 18 times in the outcome document from last year’s UN financing for development conference in Addis Ababa—exactly the same number of times as “international cooperation.” As we approach the first anniversary of the world signing up to the SDGs, where are the ideas that bring private sector ingenuity and capital to delivering them? In the coming weeks, we’re going to tell you about six.
They are the result of a challenge that CGD laid down to UBS, a Swiss bank: can its staff use their financial expertise to address urgent problems in international development? CGD’s senior fellows worked up a list of tough development problems for an internal Grand Challenge competition. We asked them how clever financial engineering and smart product design could help us:
Crowd investment into neglected diseases?
Help investors divest from carbon to fight climate change?
Catalyse investment in infrastructure?
Make it easier to save for the future?
Transform education by using data to reward learning outcomes?
More than 1,200 UBS staff from across the world took part by forming 300 teams and coming up with 250 ideas. UBS executives and CGD senior fellows whittled those down to just six finalists, and a group of CGD senior fellows gave these six teams focused feedback on how to ramp up the development impact of their business cases for new products, services, or funds. These were all compelling and clever, and we’ll tell you about them in a series of blogs. But there could be, as they say, just one winner: a single team won out in a tough jury session held in Zürich in June.
The winning concept is nattily-named Spavest (for SPend, sAVe, invEST—we know, we know...). It’s an automatic savings app that sits on top of normal transactions to make building up a healthy pot of savings much easier for anyone using electronic payments. Each time someone enrolled in Spavest pays for something, a small percentage of the transaction is shaved off and deposited in a long-term savings account.
Rather than creating liquid assets to protect against ill-health or unexpected expenses which derail family finances, Spavest’s app helps households save for retirement or other long-run goals. That means the savings can be accrued slowly and pooled into cheap, safe investments like index funds.
That’s a smart solution to a surprising new problem. Saving is psychologically taxing, and we all struggle to save enough (this is true of people who are relatively poor in richer and poorer countries alike). That’s now creating a downside risk for otherwise dynamic emerging economies: many developing countries are, in fact, ageing quickly. Birth rates are at or below the 2.1 replacement rate that populations need to sustain themselves across emerging Asian and Latin American markets.
As a result, the number of elderly people to workers (the “old age dependency ratio”) is rising. Despite rising incomes, this shift creates a mismatch between elderly populations and the resources for their care. Even if we account for better productivity and later retirement, governments and social safety nets have not kept up.
Spavest and related interventions sit in the wedge between demand for savings and supply of cheap, scalable, sustainable, and psychologically easy ways to save. Packaging the idea as an app takes advantage of the growing number of smartphone users in frontier economies. The GSMA, a mobile operators industry group, predicts that four-fifths of smartphone connections will come from the developing world by 2020. And people in a growing list of countries are already leapfrogging some banking services on even simpler technology, making electronic payments through M-pesa and related protocols.
Let’s be clear: Spavest probably won’t start out by targeting the 'bottom of the pyramid'. For one thing, along with China and other emerging economies, the current business plan would roll out the service for lower-income people in the UK and the US. And in frontier economies, its primary users will be people comparatively well-off enough to own smartphones. Though research by Pew finds that smartphone use is quickly rising in emerging economies (and you can pick up a barebones model for less than $20 in some places), the very poorest of the poor generally don't use mobile payments or have the slack in their budgets to accrue savings.
But that’s okay. People just a rung or two up the ladder also struggle to save, continue to share unequally in the fruits of economic growth, and deserve to reap the benefits of precisely these kinds of innovations. The premise of working with the private sector to deliver development wins cannot be that every intervention tackles every market segment, or that we focus only on innovations which need continuous subsidies to be viable.
Over the coming weeks, Spavest’s originators will take their idea through more rounds of feedback and iteration with CGD’s senior fellows. After that, there’s a real chance that Spavest will be piloted in some key test markets.
In the end, there are two simple reasons that the global public sector—donor agencies, private foundations, national governments, and multilateral agencies—should want to work with private firms: finance and function. Our ambitious Sustainable Development Goals are underfunded, with an estimated gap of over $2 trillion a year between what is needed and the public funding that’s on the table. Even if the global public sector had deep enough pockets, though, there are innovations that tackle development problems that private firms are better placed to develop and deploy. Governments might pay for roads, but we’d be in trouble if bureaucrats built them.
So bringing the public and private sectors together is about “how?” much more than “how much?” CGD’s new workstream on innovative finance focuses on how to effectively balance the public sector’s patience with the private sector’s appetite for risk and capacity to fail, learn, and iterate.
The financial sector hasn’t covered itself in glory through the financial crisis and other scandals. But the artificial dividing line between the issues people who care about fighting poverty rightly obsess over and the solutions that firms like UBS can develop impacts billions of people every day.
Really delivering on the SDGs means gaining a level of comfort and a level of expertise in crossing that divide. Done right, we will unlock much more capital and much more innovation for the global poor.
Over the coming weeks, CGD’s senior fellows who coached finalists in the Grand Challenge will be posting brief blogs about the proposals, and on what else could be done. You can read about the business cases here.
UBS provides unrestricted support for CGD's independent research on innovative finance for development. UBS also supports CGD's participation in its Grand Challenges program.
It drives me crazy that so many people equate development policy with foreign aid.
More Than Aid — The Commitment to Development Index tracks countries’ policy performance on seven components: aid, trade, finance, migration, environment, security, and technology.
That’s why I welcome this week’s landmark report from the British parliament’s Select Committee on International Development. As the UK nears the end of a five-year parliament, this well-respected cross-party committee has delivered its legacy report, which argues that development is about much more than aid.
The three key tasks of development policy are now to help fragile states become stable, make growth in middle-income countries more inclusive, and address cross-border problems that affect us all.
Yes, aid is needed for all three of these tasks, but aid isn’t the answer to any of them. Nor is the new development agenda merely a matter of finding new sources of finance to replace or supplement aid. These three tasks demand a different kind of development policy.
Within developing countries, a 21st-century development policy means supporting peace-building, reforming the security sector, collecting taxes, designing social protection, managing public services, and promoting human rights and freedom.
Internationally, a 21st-century development policy means negotiating cooperative international frameworks on a wide range of issues, such as reducing tax avoidance by multinational corporations, protecting a fair and open trading system, controlling the proliferation of weapons and limiting climate change. It means building and sustaining effective international institutions.
And at home, the unintended consequences of our own policies do more to promote or inhibit development than all the aid we give. We affect development directly by creating tax havens, limits on student visas, money laundering rules which prevent remittances, drug prohibition which fosters organized crime, agricultural subsidies, intellectual property laws which prevent poor countries from benefitting from knowledge created elsewhere, and in a whole host of other ways.
A 21st-century development policy means paying more attention to the impact of all our policies on the rest of the world. It does not mean making big sacrifices for the world’s poor. Better policies at home would be good for our own citizens as well as for the rest of the world. Getting rid of tariffs on imports of clothing made in India, for example, would be good for British consumers and it would be good for Indian workers and—by increasing household income—their families too. And the same is true of almost everything else that forms part of a 21st century development agenda, from ending agricultural subsidies to allowing universities to accept more foreign students.
The Ebola crisis is a microcosm of the problem. We should be proud of the way that aid has helped to start to bring the outbreak under control. But while outbreaks are inevitable, epidemics are optional. A modern development agenda would have invested long ago in the research and development needed for vaccines and drugs to prevent the spread of infectious diseases like Ebola. It would have built an effective World Health Organisation, with staff appointed on merit, and with the capacity and resources to ensure effective disease surveillance. It would have invested more in health systems and policies, so that countries could have managed the outbreak better themselves.
Such a forward-thinking approach to development requires more coherent policies across government departments—as the House of Commons Select Committee has called for in its report. In fact we can already measure how rich countries’ policies impact the world’s poor. Since 2003, the Center for Global Development has published the Commitment to Development Index, a ranking of rich nations based on hundreds of indicators that track policies on not just aid, but also trade, finance, migration, security, environment and technology transfer. Our latest rankings show that Denmark has the most development-friendly policies in the industrialised world, followed by Sweden and Finland.
The Commitment to Development Index allows countries to learn from each other’s best practice. It shows us that rich countries could accelerate global development even if they did no more than adjust their policies to match the best approaches already pursued by their peers. But it also shows us that actual progress towards better policies is glacially slow, despite grandiose statements about the importance of policy coherence.
Britain ranks a creditable fourth in the Index, the highest-placed of all the Group of Seven richest nations (the US ranks 19th of 27). The UK is also the first G7 nation to hit the international target for aid of 0.7% of national income. This is a reflection of DFID’s leadership. It is one of the world’s most respected and effective aid agencies, adding greatly to Britain’s reputation overseas. But the International Development Select Committee has rightly understood that aid alone won’t tackle the most pressing development problems. The UK has significant room for improvement in several areas of the Commitment to Development Index. It scores poorly on sharing knowledge and technology with the developing world, and its once admirable record on promoting global security has been eroded by arms sales to poor and undemocratic countries and a decline in contributions to international peacekeeping.
Tackling global poverty and insecurity in the 21st century requires a new approach to policies internationally and at home. Global challenges offer shared opportunities. In the UK that means giving DFID a clear mandate and the resources to work across Whitehall, to ensure the government’s policies are coherent with its development goals. This report by the International Development Select Committee is a clear statement of why that is important—for the UK’s own security and prosperity as well as for the rest of the world. They have thrown down the gauntlet: let’s hope that Britain’s politicians—and rich country governments around the world—will rise to the challenge.
Emergencies cause poverty, drive displacement, and exacerbate insecurity. Aid to tackle natural disasters is generous, but mainly arrives when needs are acute rather than when it would do most good. Responding effectively is hard because budgets are uncertain and funding gets promised but not delivered. Please join us for the launch of a new CGD report Payouts for Perils: Using Insurance to Radically Improve Emergency Aid setting out how we can use the principles and practice of insurance to save lives, money and time when catastrophes strike.
CGD’s Europe Beyond Aid initiative explores how the individual and collective policies affect the developing world and how they could be improved. Using the Commitment to Development Index (CDI), it combines the scores of the 21 European countries that feature in the Index and calculates a consolidated score.
After a lot of background work with leading experts on the seven policy areas of the CDI (aid, trade, migration, finance, environment, security, and technology), we are now launching a series of discussion papers for public consultation. Our goal is to press for a broader and more informed discussion about how European policies can improve.
The technology component assesses the contributions of donor countries to global economic development through the creation and spread of new and existing technologies. It takes into account government support to research and development, and whether the country’s intellectual property rights system provides access to knowledge and technologies to the developing world.
Europe as a whole scores about average on the technology component, as it does on finance. It leads the aid and environment components and scores below average on migration and security when compared to non-European countries.
Source: Commitment to Development Index 2013
Why doesn’t it do better on technology? Our paper with Professor Park paints an alarming picture of European countries’ failure to support technological development in developing economies. Furthermore, their commitment has declined over time and lags behind the commitment and effort of other developed countries.
Among other things, our study recommends to the European countries and European institutions specific proposals to
increase public research and development in technology areas that most benefit developing nations;
relax rather than tighten intellectual-property laws that impede the diffusion of technologies to developing nations; and
take a more active lead in the process of transferring substantive technologies to the developing world.
Please share your comments, suggestions and ideas in the comments field below or by email to firstname.lastname@example.org. By the end of the year, we will synthesize the expert consensus on the seven themes of the CDI into a comprehensive and specific policy agenda for European countries setting out practical, evidence-based conclusions on how they can improve their policies which affect development and global poverty. We look forward to hearing from you.
The European Union is a unique and inspiring association. We are alarmed that a narrow majority of the British people might choose to destroy that by voting to leave the European Union, undermining our ability to secure our foreign, economic, and international development interests. This would be harmful for Britain and for the rest of the world.
UN agencies are blocking reforms to aid to Syrian refugees. The donors should hold firm. Here’s why, and what they should do.
The High Level Panel on Humanitarian Cash Transfers, which I chaired, found that 30 different agencies were providing cash transfers to refugees in Lebanon for 14 different objectives ranging from food to legal assistance. We recommended that donors should designate a single delivery agency to manage cash payments to each refugee in situations like this. (This endorsed the recommendation made in independent research commissioned by the cash working group in Lebanon that donors should designate a single delivery agency to manage cash payments to each refugee in situations like this.) Providing a single payment will be less burdensome on refugees, more efficient for donors, and remove unnecessary overheads and duplication. It will achieve the biggest bang for the taxpayer’s buck, and get the most money to the people for whom it is intended.
DFID and ECHO, the EC’s Humanitarian arm, have now asked the UN agencies to make proposals for providing a single cash payment to each eligible Syrian refugee in Lebanon, just as we suggested. The donors have committed $85 million in the first year to cover food and basic needs. (The evidence shows that cash payments are generally more cost effective, enable people to buy what they need, easier to target, and help the local economy. When you give people goods in kind instead they often sell them, at a massive discount, to buy what they really need.)
The High Level Panel warned that there is a risk that the inefficiencies, duplication and turf wars of humanitarian aid are being reproduced in the new cash transfer programmes. We urged instead that the move to cash transfers be used as an opportunity to streamline and simplify the humanitarian system, and introduce more competition and innovation, so helping to move forward long-needed reforms.
The High Level Panel decided not to recommend that there should be a single UN agency responsible for managing all humanitarian cash transfers around the world. Instead we wanted to encourage competition for these contracts between UN agencies, civil society organisations and the private sector, and consortiums of these, to promote innovation and new partnerships, so that we move over time to the most user-centred, cost-effective, secure and technologically-advanced cash transfer systems. But while we don’t want a monopoly cash agency for the world, for any particular refugee population at a given time there is clearly no need for multiple organisations to be managing multiple payments to the same person. That is why we recommended that donors run competitions for who will manage a single cash payment in each context.
Here’s a picture from the DFID and ECHO proposal which shows why a single payment would be an improvement on the current situation, and also offers some clues as to why the UN agencies might feel threatened by it:
The proposal for a single, joined up cash payment for Syrian refugees in Lebanon has sent shock waves through the humanitarian system. Instead of deciding which agency should manage cash payments in Lebanon, as DFID and ECHO are proposing, UNHCR and WFP insist that several different UN agencies should be involved in making cash payments to the same groups of refugees, using their ‘LOUISE’ platform which they launched publicly in December 2016. They aren’t proposing to divide the refugee population between them, for example by covering half each: they are insisting that they must both make payments to all the eligible refugees.
There is no reason, other than their own bureaucratic interests, for the UN agencies to insist on this duplication. Each of them wants to be able to boast of coverage of as many of the refugees as possible, and to claim their share of overheads for serving those populations. And neither of them wants to concede ground to the other as a provider of cash payments to refugees. All at the expense of the Syrian refugees for whom the aid is intended.
The UNHCR and WFP think we should appreciate their efforts to coordinate better—and coordination is indeed better than nothing. But coordination is a sorry second best to avoiding unnecessary duplication in the first place. DFID and ECHO are doing the right thing by demanding a single payment to refugees and should not accept coordination as a substitute.
Since this initiative launched in December 2016, there has been no public announcement of progress on awarding this contract. It appears to be deadlocked. If DFID and ECHO cave in to collusive intransigence by the UN, they will be throwing in the towel on the reforms of humanitarian aid envisaged in the Grand Bargain. The UN agencies will heave a sigh of relief, and we will be stuck with decades more of duplication, inefficiency and waste.
DFID and ECHO should now find a way urgently to open this tender up to other service providers—including private sector organisations such as Mastercard and PayPal—to take on the role over which the UN agencies are squabbling. (This may need some tweaking of procurement rules.) That kind of competition would push the UN agencies to improve their offer, or be driven out of this market. And in the long run, that would be better for everyone.
DFID’s Multilateral Development Review in 2016 says:
“It is because the UK is such a committed champion of the multilateral system that we will press hard for radical action to raise its performance. The world’s poorest people, and our taxpayers, deserve nothing less.”
This battle with the UN over streamlining aid to Syrian refugees in Lebanon is becoming an intriguing litmus test of whether Ministers and EU officials have the stomach for the fight. Admittedly they are taking on large, politically-influential organisations with whom we need to work. But donors hold all the cards—especially the UK, which is by far the world’s largest donor of multilateral aid. They should use that power to drive reform.
Like you, I know that there are many ways to make a difference in the world. I believe that improving the policies and practices of the rich, powerful, and influential is one of the most powerful and effective ways to support poor people in their efforts to improve their lives.
At the Center for Global Development our research feeds directly into practical policy proposals; we then work with thought leaders and decision makers to push these ideas into action. Our work is making a difference in the lives of small-holder farmers in Africa and unemployed workers in Haiti—and a CGD proposal for a new form of sanctions could help to end the violence in Syria, to name just three recent examples.
I invite you to join the CGD Society with a gift of $150 or more to help us continue to punch above our weight, pushing for policy changes that better the lives of the world's poor. By joining today with a check, wire transfer, or secure credit card transaction online, your investment in our work will be doubled thanks to a generous challenge grant from the William and Flora Hewlett Foundation.
Let me tell you about three ways that we will put your gift to work.
Our work on pull funding—market-like incentives for the delivery of products and services needed by poor people—paid off last month with an announcement at the G-20 Summit in Mexico that five countries and the Gates Foundation will provide $100 million for agricultural technology innovations to benefit farmers in Africa. CGD is now urging that the approach be applied to big technology challenges, such as a new form of fertilizer.
After a two-year research and policy engagement effort through our Migration as a Tool for Disaster Recovery Initiative this year the the US government added Haiti to the list of countries eligible for H-2 temporary worker visas, a move that could make available hundreds of millions of dollars to the poorest people in the Western Hemisphere. This month a CGD team returned from a trip to Port-au-Prince where they met with Haitian government officials who said that they were determined to implement the program efficiently.
The CGD proposal for preemptive contract sanctions to bring pressure on the Assad regime in Syria to stop civilian killings is outside of our usual work on poverty and inequality but very much within the CGD tradition of encouraging the rich and powerful countries—in this case primarily the United States and United Kingdom—to use creative measures to create a fairer, more just and more prosperous world. Our latest effort in pushing this idea is a draft Declaration Regarding Illegitimate Contracts with the Syrian Government.
While identifying policy opportunities such as these and then pushing for them to become reality, CGD also hosts a lively calendar of events that serve as a nexus for senior officials, development practitioners, academics and experts, and others like you who are a part of the global development community. In the first half of 2012, we hosted engaging, open dialogues on the leadership selection process at the World Bank and the European Bank for Reconstruction and Development. We also hosted major speeches by UN Secretary General Ban Ki-moon and IMF Managing Director Christine Lagarde on sustainable development ahead of the recent Rio+20 Summit. And we welcomed other "development heavyweights" as speakers at CGD events, including former U.S. Treasury Secretary Larry Summers, the World Bank's Justin Lin, and the White House's Gayle Smith.
By joining the CGD Society now with a gift of $150 or moreyou will gain preferred access to upcoming CGD conferences, events, and meetings—and the opportunity to exchange ideas with CGD experts and other leading figures in international policy, business, NGO, and media circles. You will be subscribed to our weekly newsletters and blogs , where you can comment on our work on aid, financial services, trade, migration, health, climate change, and other research spheres that enhance opportunities for the world's poor. Society members are acknowledged on our website and have access to the Center's intellectual resources by receiving complimentary copies of our books and reports published throughout the year.
The support of individual donors is fundamental to our independence and future success. I hope that you will choose to invest in CGD today and take advantage of the Hewlett Foundation's commitment to match your individual investment dollar for dollar.
Center for Global Development
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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.