Nordic Countries Lead the Way in Assisting Developing Nations

Jake Cash and Grey Reames

According to a new report from the Center for Global Development, the Nordic Countries Denmark, Sweden, and Finland top this year’s Commitment to Development Index, which is an annual ranking of the wealthiest countries in the world and how well they are helping those in developing countries through their policies. The index takes seven measures into consideration, and these are aid, finance, technology, trade, environment, security, and migration. Along with these measures, they make adjustments based on the size of the country’s economy, measured through GDP.

Flags of Nordic Countries, retrieved from wikimedia.org

The top country for aid and security was Denmark, which spends 0.75 percent of its national income towards aid efforts. Norway and Luxembourg spend a larger share of their national income towards aid, but Denmark is ranked higher in the index because their spending, all things considered, is more effective. In terms of finance, Finland, Denmark, and Norway are the top three countries according to the index, meaning that they have the best government policies to promote transparency and direct investment into developing countries. According to the report, direct investment is the best way to help a developing nation’s infrastructure, transportation, and energy.

While the Nordic Countries rise to the occasion, the United States seems to be falling behind in the Commitment to Development Index. The US is ranked 23rd out of 27 overall, and within the metric for environmental help the US is 24th out of 27. These rankings are expected to keep dropping as well following the United States’ withdrawal from the Paris Climate Agreement. Not that the United States is doing nothing, in fact the US donates more in absolute terms than any other country, but the donations only come out to 0.18 percent of its national income. This puts the US in 22nd out of the 27 countries in the index when measuring the ratio of donations to income. Even though only a select few countries have managed to meet the 1970 UN goal of 0.7 percent of national income going towards donations, the United States falls terribly short of this metric.

The future doesn’t look bright for the United States’ future in these rankings either. Just earlier this year, President Trump signed an executive order banning Washington from helping pay women in developing countries for birth control, abortion, and family planning education. Quickly following this decision, The Netherlands created an international fund to help offset the impending withdrawal of US funding. These backwards steps by the United States will likely drag the US even further down in the index, and the response from The Netherlands will undoubtedly keep them high in the rankings.

This Index is not 100 percent accurate in its rankings, but it does a fairly good job of showing what certain countries are excelling at and what certain countries could improve upon. Clearly, the Nordic countries are a pretty good example of how to move forward in terms of aid and development. If the United States would follow in their wake, it would very likely mean great improvement for developing countries considering the absolute size of the US economy. The Nordic countries can only do so much with their limited resources, but the example they’re setting for the rest of the world can help far more in the coming years.

  • How should the United States move forward?
  • Is it possible for the United States to do as well as the Nordic Countries in these metrics given the extreme size difference?
  • Is the UN target of 0.7 percent of GDP going towards aid a realistic target? How could this target be improved?

Source: Nordic Countries Most Committed to Development – Gaby Galvin, USNews

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15 Responses to Nordic Countries Lead the Way in Assisting Developing Nations

  1. mesisklism19 says:

    It seems the Nordic countries are able to reinvest so heavily into their own nations because of their lack of need for a military. Being NATO members, Iceland, Denmark, and Norway have no inherent need to keep a deep-sea fleet and have a well-protected merchant marine. Perhaps the nations are extremely well-developed and cared for, they could be in great danger in a national crisis scenario.

    Addtionally, the natural American cultural mindset is one of fierce independence, so it doesn’t seem like the government will aim to reinvest in aid nearly as much as the Nordic states, which have a far more communalist culture.
    Smaller countries also have fewer expenses, so I doubt the US, even if implementing these policies, could affect nearly as much HDI growth as they have achieved.

  2. mesisklism19 says:

    It seems the Nordic countries are able to reinvest so heavily into their own nations because of their lack of need for a military. Being NATO members, Iceland, Denmark, and Norway have no inherent need to keep a deep-sea fleet and have a well-protected merchant marine. Perhaps the nations are extremely well-developed and cared for, they could be in great danger in a national crisis scenario.

    Addtionally, the natural American cultural mindset is one of fierce independence, so it doesn’t seem like the government will aim to reinvest in aid nearly as much as the Nordic states, which have a far more communalist culture.
    Smaller countries also have fewer expenses, so I doubt the US, even if implementing these policies, could affect nearly as much HDI growth as they have achieved.

  3. nshimyumukizas18 says:

    In the most recent World Economic Forum, President Trump delivered the message of “America first does not mean America alone”. His speech focused two key words: fair and reciprocal. In my opinion, assisting developing countries does not necessarily mean aid to these countries. Fair and reciprocal trade agreements between the United States and developing countries benefitting both sides. However, aid is still necessary for most developing countries to cover health and economic growth. Aid especially helps developing countries to fight AIDS, tuberculosis, malaria and during crises such as wars.

    • the prof says:

      ==== note that comments below counted, more or less ===

      “Fair” in the President’s usage means “bilateral trade surplus”. If there’s triangular trade, then even if every country runs a global balance, bilateral flows will never balance. In any case, the idea of helping people because it’s a good thing to do does not appear to be part of the President’s mindset, he has no presence in the philanthropic world. So the policy thrust is that “aid” should be buying something of value for the US.

      That is an extremely narrow view – we benefit from the economies of the rest of the world doing well, and we benefit if global health improves, particularly when it involves infectious diseases. Furthermore, even when there is a payoff, it won’t necessarily be immediate. The President appears unmindful of the future, in contrast to the mindset that the W&L motto enjoins us to have.

  4. the prof says:

    One data comment: historically US foreign aid has been tied to the concerns of the Department of Defense. While some of that is easy to spot – loans to buy jet fighters – it may not be easy to disentangle if the US data reporting doesn’t provide such details. There are surely challenges with the data of other countries, but my guess is that data are more likely to overstate the amount of “true” aid for the US than for other countries.

  5. Chris DuPont says:

    This is an interesting development for both the Nordic countries and the United States. Looking quickly it may seem as though this index is not incredibly important, however it can have some implications for the US. I think it would be in the United States best interest to adapt policies similar to that of the Nordic countries, because if we donate the most amount of absolute money, we need to adopt a more efficient way of donating to be more effective similar to Denmark. This is an issue that I can see the United States taking a very hands-off approach to helping these developing nations in terms of financial aid and an increase in the CDI, and as a result, the US will probably continue to fall down the ranking list for this index.

  6. reamest18 says:

    Though the United States lags in these rankings, I think it is important to consider the United States not just from an explicit dollar amount in donations but also to consider the impact the US economy has on the world as a whole. The US is arguably the center of global business – that is, many countries around the world rely on markets created and regulated by the United States for their operations. While I agree that the United States can do much more to climb in the rankings, it must be noted that a large part of the money being donated from foreign countries is due to either a market created in the United States or a technology originating from here.

    On the contrary, it would be nice to see the United States commit itself to being more efficient in donations and aid. In the wake of Hurricane Maria, FEMA awarded an independent contractor $156 million dollars to deliver 30 million meals to Puerto Rico. In a NYT article published today, it was revealed that only 50,000 meals were delivered. (source: https://www.nytimes.com/2018/02/06/us/fema-contract-puerto-rico.html)

    It is instances such as this example in Puerto Rico where the US could and should do more to ensure aid dollars and relief efforts are appropriated efficiently. Even without increasing donations, the simple act of following through with promises would go a long way in making a difference.

  7. John Gaugin-Rosenthal says:

    I believe that this discrepancy in regards the level of foreign aid/investment between Scandinavia and the United States lies in cultural differences. As the United States seemingly begins to withdraw from the international system and takes on an “America First” approach, policies are no longer directed at foreign aid and investment unless it directly satisfies American monetary interests. Furthermore, I believe that the only reason that the United States continues to provide relatively high levels of aid is to live up to its reputation as a ‘global leader and influencer’ so as not to give room for China to move in on our standing. Whereas American principles are self-oriented and take on a “eat or be eaten” philosophy, Scandinavia and Europe’s cultures are people-oriented and their values/principles align with the idea of being a ‘global citizen’.

  8. ahny19 says:

    The Commitment to Development Index seems like an interesting metric for the level of engagement the world’s wealthiest nations have with the rest of the world. I agree with the above comments stating that the relatively smaller donation of the U.S. compared to European countries is influenced by cultural differences, however, I’m more curious about the real outcomes aid efforts have on developing nations. The blog post mentions Denmark as the “top country for aid and security,” attributing this title to not only the nation’s aid amount as a proportion of national income but also the effectiveness of their contribution–considering direct investment is supposedly the “best way” to assist a developing nation’s challenges. Few will object the importance and (predominantly) positive association between foreign direct investment and economic growth, however, the transformation of developing nations required substantially more assistance than economic stimulus. Political corruption, underdeveloped financial sectors, commodity price shocks, unstable institutions, and diminishing natural resources are all principal barriers to development for poor countries. I’m curious to learn how countries like Denmark and Nordic countries as well are implementing policies to address such challenges.

  9. Ezequiel Piantoni says:

    I found this post particularly interesting and very relevant to our class. What are developed countries doing to help developing countries? What can they do better? I would be interested in seeing more in detail why Norway is so much more efficient in aiding less developed countries than the rest of the countries in the ranking. Is it doable for the rest of the countries to follow Norway’s path in terms of efficiency? Also, while the U.S. can do a lot better when it comes to donating, it could also help in things like trade. The trade relationship U.S. – Argentina is extremely important to the latter and maybe not that much to the former. But offering “fair” term trades can also help a lot developing countries whose economy rely on agricultural (or any other type) exports.

  10. chandlessa19 says:

    The comparatively poor effort by the United States to provide aid to developing countries is disheartening to see. It is especially disheartening because it is apparent that Trump will be drastically reducing the aid that the US will be providing. The United State’s lack of interest in helping developing nations was very clear after Maria hit Puerto Rico. The United States has handled the recovery efforts extremely poorly, with more than a quarter of Puerto Rico still without electricity. The United States should aim to improve the aid it provides to developing countries to show that we as a country are committed to more than just the advancement of the United States.

  11. rietanob18 says:

    “The index takes seven measures into consideration, and these are aid, finance, technology, trade, environment, security, and migration.” Three of President Trump’s most tweeted about and discussed topics that regard other nations are finance, environment, and migration. All three are related under a common goal from the President: put America’s interests above the world’s. While this goal may help the United States now and in the short term, it is hurting the world. Not only has the US exhibited a recent lack of concern for climate change via pulling out of the Paris Climate Agreement, but also migration and finance. Trump is pulling American company’s factories out of outside nations, and is looking to limit immigration to the United States. While this may help the short term security of the US, and may help with job creation, it is taking away from the rest of the world. The United States is becoming a ‘taker,’ no longer so much of a ‘giver’. Should the US expect a real change or boost towards the top of this index in the coming years? I would argue no; this is primarily because, for better or worse, Trump is putting America first, and is deliberately ignoring some issues outside of the nation.

  12. pezzij19 says:

    I need to look more into how the specific measures were accounted for, but I am skeptical of how holistic the measures of trade, security, and finance account for. I have many questions. Do these measures only look at public spending or is private spending accounted for in things such as trade, aid or finance? I can imagine that American based organizations and non-profits likely make up a significant amount, even per-capita, of the aid going into many developing countries. In regards to things like security, does the 50,000 American military personnel and their support in Europe count as security for Europe? Or the 60,000 or so in Japan and Korea? Of course the point can be made that this is of course self-interested deployment, but that does not mean it is not security or a major deterrent to potentially power hungry nations. One curiosity I have as well is whether these metrics account for our funding of the UN as well, considering we are the largest supporters to my knowledge, or if direct aid or investment to countries themselves must be the case for it to be measured.

    I would also point out this: From my understanding, the United States does not tax proportionally to these Nordic countries. So their tax revenue to national income likely gives them an inherent advantage in these measures. They have more to spend in proportion to their income. This highlights much of what the other students discussed regarding culture. An important part of our culture is the role of the individual, and the influence of the privates sector, which in my opinion, likely yields at least somewhat different results regarding investment and finance.

  13. herndono20 says:

    I think it is difficult to compare the united states to these Nordic countries for several reasons. Much of this comes down to politics in the United states. Firstly social media has the ability to set political agendas as well as influence the population on what issues are most important. There are several issues within the united states such as national security that differ from those in Nordic countries, and this makes it difficult to allocate aid for different development goals. Lobbyists also have a huge influence on the political party agendas. I would be interested to know more about the political agendas in these Nordic countries.

  14. Banks Pflager says:

    The fact that caught my eye the most in this blog is the fact that the US donates the absolute most out of any other country. That seems like it would be an important factor, however; due to the percentage of the national income that is for the US it seems extremely low. This is something that needs to be addressed by the government. The president’s executive order is something that makes this worse. It makes the US look unhelpful towards other nations and hyper-focused on the US. This seems as though he is not looking for how this will affect long term relations with other countries. Every countries national income is much different so I don’t believe that the percentage of national income they should give should be the sole factor of how supporting a country is, however it is something that can reflect how the country determines the importance of supporting other countries. This is why other efforts of clear support should be taken by the US government that does not necessarily have to be simply sending money.

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