The through-the-eye-of-the-needle index

“It is easier for a camel to pass through the eye of a needle than for a rich man to enter the Kingdom of God” (Matthew 19:24), and recently the Center for Global Development and Foreign Policy gave us their impression as to how 21 rich nations are wiggling along, according to their annual Commitment to Development Index (CDI) which grades rich nations on how much they help or hurt poor nations. 

The CDI effort is truly welcomed as it tries to rate the other side of the coin of development, just as Transparency International does when it publishes a Bribe Payers Survey to balance (or ask for forgiveness) for their much more famous Corruption Perception Index, where the blame is squarely laid on the shoulders of the weak party.

CDI is a young index and probably needs a couple of years before developing into a strong and coherent index (I am too fed up with the use of robust) and so the many changes in the ranks of this year’s CDI, are mostly consequences of changes in the methodology. Trying to nudge the future of the index into an even better direction, I dare to make following comments.

What I like least about the CDI is that, in the long term, it can become too good for its own sake, or so developed, so to say, that it risks becoming a goal in itself that may lead everyone to work toward a good rating in the index instead of toward true development. As development is a very difficult and serious matter where diversity of opinion is much needed, there is always the risk that by standardizing its arguments, one could introduce fatal systemic errors. Neither do I like its current scale, from 1 to 10, as it could perhaps give the impression that, although in different degrees, all rich countries help, and so a scale from minus 5 to plus 5 would perhaps tell the story better.

It is said that the different categories are equally weighted, since the average point of each is five, but the fact that within each category the distribution of the points is uneven—with standard deviations ranging from 1.11 points in investment to 3.54 points in aid, and skew factors as high as 2.82 for trade—results anyhow in a not so transparent weighting, whether intended or not.

At the end of the day, commitments to development need to translate themselves, one way or another, into real financial flows, unless we want to settle for a hybrid Intentions to Help Development Index. In this respect trade, migration, investment, and aid are quite plausibly more important and easier to measure in an objective way, than environmental security and technology, and so perhaps the different categories should be unevenly weighted. Let me comment on the more difficult categories: 

Technology, currently measured as R & D as a percentage of GDP, seems to ignore what the R & D is used for. Clearly the development of global goods must, at least in the short term, have quite different implications for poor nations than R & D investments that are going to translate themselves into new ways to extract intellectual property rents, to be paid for by developing nations.

Security, a category that includes peacekeeping and forcible humanitarian interventions (approved by international bodies such as the United Nations), might somewhat cloud the issue as it is hard to differentiate between proactive assistance in preventing disasters and reactive response, once the disaster is unfortunately taking place. 

Environment is clearly of utmost importance for all countries, especially the poor ones, but, until we can ascertain for a fact that environment investments are made according to criteria of economic efficiency, measuring may only introduce unintended bias. For instance, the investments in windmills instead of compensating Brazil for the opportunity cost of not developing the Amazon do not make much global sense and seem more directed to satisfy the interests of some individual countries.

What I most like about this index is that it should help to remind its developers from the rich nations about how difficult this art is, and also remind the rich countries themselves how it hurts when any of its unfairness gets to be marketed as if it were the result of an exact science Although a good start—the CDI needs a lot of improvements before it can show the rich nations the route to their eye of the needle. Whether they later want to and can make it through it that is altogether a much more difficult question.

P.S. Colleagues, I tried to get this one published … no such luck.