Thursday, April 08, 2004

Novel Forms of State Development Aid 

I'm working on a fairly significant project on this topic, of which more later, but I noticed an interesting press release from the WTO recently, which I'd like to discuss. First, some background:

About a year ago, the journal Foreign Policy published a fascinating article attempting to rate the rich countries on their assistance to poorer nations. Despite some questionable methodology, the big contribution of the project was an attempt to include more than just bilateral aid in an index of assistance:
The index examines six policy categories: foreign aid, openness to international trade, investment in developing countries, openness to legal immigration, contributions to peacekeeping operations, and responsible environmental practices.
Unsurprisingly, Norway was an extremely generous donor of bilateral foreign aid, and was somewhere in the middle on all the other elements of the index, except trade. But on trade
Norway ranks a distant last; it has particularly high tariffs against agricultural imports from poor countries, and its various barriers are equivalent in impact to a flat 61 percent tariff on all goods from developing countries—equivalent, that is, in terms of lost profits for producers in poor nations. Norway’s ranking may seem surprising given the country’s record as a beneficent provider of aid. However, in Norway, as in much of Western Europe and the United States, agribusiness and other rural interests, though they are no longer competitive abroad, remain politically powerful, and the government has been unable to reconcile domestic politics with its otherwise enlightened approach to the developing world.
The Norwegian case is an interesting one: why hasn't a nationwide investment in an identity as a good international citizen translated into greater trade liberalization? Is it really a question of interest group politics? Another question is why Norway and the other Scandinavian nations also do fairly poorly on the investment question. Is there just a lack of contacts between Scandinavian importers and poor country exporters, or is there some kind of structural barrier in place?

Having been thinking about these questions for a while, I was intrigued by this press release, which describes a significant contribution by Norway to a WTO project designed to help poor countries learn to take better advantage of the global trading system. Is Norway interested in buying the products this project will help put on the global market? Is there any kind of policy coherence here at all? Hopefully I'll have answers to these questions soon. In the meantime, here's the point of this post: the official aid policies of countries across the world are confused, incoherent, and tough to compare. Since nobody likes to rate as a bad citizen, especially when the degree of badness can be expressed in an ugly number, I'd think that developing a really good scale would be an excellent way to browbeat legislatures into becoming more generous. As we think along these lines, we need to include policy choices like Norway's in any index we create.

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