TCS Daily


Great Responsibility

By Daniel Drezner - May 6, 2003 12:00 AM

Americans like to think of themselves as generous to the less fortunate. It's therefore disheartening to read in the Financial Times that, "Japan and the US are the least helpful of the rich countries towards the developing world, according to a new measure from a leading think tank."

The "leading think tank" is the Center for Global Development (CGD), a recent offshoot of the prestigious and nonpartisan Institute for International Economics (IIE) Anyone familiar with IIE's work over the past two decades knows that they excel at producing sober international policy analysis. Any report they publish needs to be taken seriously.

The CGD project - Ranking the Rich, conducted jointly with Foreign Policy magazine - creates an index that measures 21 developed countries on a plethora of policies that help or harm poor nations. The Foreign Policy essay provides a readable summary. For a technical description, the CGD provides a primary technical paper and background memos for each of six categories - aid, trade, migration, investment, peacekeeping, and the environment.

Why does America do so poorly? It's not because of protectionist barriers - on the trade dimension, the U.S. is the developed country most open to imports from emerging markets.

However, on the other five dimensions, the U.S. ranks at or near the bottom. In raw dollars, the U.S. spends a lot on development outputs compared with other developed countries. However, as a fraction of gross domestic product, American expenditures on foreign direct investment or U.N. peacekeepers are piddling.

Ranking the Rich poses some harsh truths for American policymakers. The report deservedly takes the U.S. to task for being foreign aid misers and for tying American aid to purchases of American goods and services, which renders it less useful for economic development. No matter how the data is sliced, the U.S. should be spending more on promoting economic development and good governance. President Bush acknowledged this fact when he proposed the Millennium Challenge Account and the Emergency Plan for AIDS Relief, neither of which is factored into the current index.

Ranking the Rich exposes some trouble spots for American policymakers to address. Its authors should be applauded for starting a genuine debate on how the world's rich can help the world's poor. However, the authors should also acknowledge that, consciously or unconsciously, they stacked the deck against the United States.

On some policy dimensions, the problem is that in areas where one would expect the U.S. to do well, reliable data is unavailable. For example, the primary inputs into the migration component of the index are the inflows of immigrants and refugees. However, the migration memo acknowledges that other factors are equally important, such as the admission of foreign students from developing countries or the existence of temporary worker provisions. The U.S. probably does well on those dimensions, but since there appears to be no reliable data, these variables were not considered.

On other policy dimensions, judgment calls went against the United States. Consider the creation of the environment dimension. Almost half of the index comes from a single figure - greenhouse gas emissions per capita. The U.S. does quite poorly on this score - in part because it is the most productive economy in the world. One could argue that the more appropriate measure would be greenhouse gas emissions per unit of output - which would take this factor into account. If U.S. performance was calculated using this measure, then its score on the environmental dimension improves by more than 20%. However, the environment memo dismisses that possibility because:

"[T]he use of GDP in the denominator of a 'bad' indicator such as GHG emissions sends the odd moral signal that the richer a country is, the more acceptable it is to pollute.... If anything, the opposite message seems more appropriate: the more affluent members of the global community arguably ought to bear a disproportionate share of the responsibility for protecting climate, an international analog of progressive taxation."

That's a matter of opinion and not fact - and I'm far from certain whether most Americans would agree with the opinion.

Whether greenhouse gas emissions should count for so much is another important question. Appreciable global warming would have devastating environmental effects, but there are excellent reasons to question whether the problem is as serious as environmentalists like to claim.

The security dimension is even more problematic. The CGD had initially planned on incorporating data beyond contributions to peacekeeping operations. One obvious public good is the protection of shipping lanes against piracy or armed conflict. The U.S. Navy is practically the sole provider of this good. Furthermore, this facet of security provision benefits a much broader swath of the developing world than peacekeeping, which is currently concentrated in the Balkans and Afghanistan.

The peacekeeping memo acknowledges: "ignoring this type of contribution does a disservice to the United States in particular." Nevertheless, because it was thought to be "contentious," such efforts were not quantified. If protecting sea lanes is considered controversial, then it's not surprising that other aspects of global security - the global war on terrorism, the enforcement of nonproliferation regimes, the removal of dictators like Slobodan Milosevic or Saddam Hussein - are not seriously discussed. The result is an index that has Denmark contributing four times as much as the U.S. to keeping the peace.

Finally, the report assigns equal weights to each of the six policy dimensions. In other words, aid counts as much as peacekeeping, which counts as much as the environment, etc. There are sound reasons for this: certainly, it would be hard to develop accurate weightings for such different phenomenon.

However, the Foreign Policy article observes: "The World Bank estimates that trade barriers in developed economies cost poor nations more than $100 billion per year, roughly twice what rich countries give in aid." (emphasis added). The technical paper acknowledges, "trade policies probably have the most direct impact [on development]." This suggests that the trade dimension should count roughly twice as much as the aid dimension - which makes the United States look much less miserly.

What happens to the rankings if the environment and peacekeeping components are adjusted as described, and trade is given its due weight? By my back-of-the-envelope calculations, most countries move up or down one place - except for the United States. The U.S. moves from the 20th out of 21 countries to a middle-of-the-road 13th - ahead of France, Canada, and Italy. This result is a less provocative but more accurate depiction.

Does this get the United States off the hook? Not a chance. A benevolent hegemon needs to be benevolent, and the U.S. can do better. Specific policies include an increase in development aid, further trade liberalization, more tolerance for legal migration, and the removal of state-level barriers to overseas investment. American policymakers should aspire to be more generous than Portugal or the Netherlands. As a wise comic-book character once observed, with great power comes great responsibility.

Daniel W. Drezner is Assistant Professor of Political Science at the University of Chicago. He keeps a daily weblog at http://drezner.blogspot.com.
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