Little Luxembourg gives big for international development

(MSS) Of the world's 27 richest countries, Luxembourg has the fourth best policies to support international development, a new study by the think tank Center for Global Development (CGD) has found.

The US-based centre's Commitment to Development Index ranked the world's 27 richest countries after measuring their performance in foreign aid in seven areas, which included:

• Quality and quantity of foreign aid
• Openness to trade
• Policies that encourage investment and financial transparency
• Openness to migration
• Environmental policies
• Promotion of international security
• Support for technology creation and transfer

Well-being for everyone - a global imperative

Committing to policies that promote development and well-being for everyone is a global imperative in a world where nations' economies, industries, policy-making and cultures are integrated across borders.

“The Index is a powerful reminder that rich world support for development is about much more than aid,” said Nancy Birdsall, president of CGD.

“There are many ways for high income countries to help foster shared growth in the poorest countries. Many of the necessary policy changes are good for the rich countries themselves and don’t cost them a cent.”

Denmark had the best overall score for the second year in a row because of a consistent performance across the components, although it didn't rank first in any of them.

Close behind were Denmark's Scandinavian neighbours, Sweden and Norway, and in fourth place came Luxembourg because of its large share of aid as a proportion of GDP and its strong migration records.

Countries must learn from each other

However, as goes for all the countries, there is still room for improvement for Luxembourg, which performs poorly on trade, investment, environment, security and technology.

The specific problems can be traced to the Grand Duchy's large agricultural subsidies that hamper developing country exports.

Additionally Luxembourg is offering only weak support for extractive industry transparency initiatives and peacekeeping. At the same time gas taxes are too low, while greenhouse gas emissions too high.

Finally there's little support for research and development and the country lacks transparency in the financial sector, according to the report.

Looking at the complete list of countries, the wide variation in scores between countries suggests that there's room for improvement if the countries learn from each other in each policy-making area.

For example, if every nation pursued trade policies as development-friendly as New Zealand, or made the same proportionate contribution to global security as Norway, they would collectively be doing much more to create conditions for growth and poverty reduction in the poorest nations.

To read the Commitment to Development Index report, click here.