Q & A

Global development refers to improvements in the conditions of people’s lives around the world, such as health, education, and income. It occurs at different rates in different countries.

The U.S. has undergone its own version of development. When it became an independent nation in 1776:

• The average American earned about $1000 a year in today’s dollars compared with $30,000 today.
• One in five children died before their first birthday, compared with one in 143 today. Less than 50% of white children, and almost no black children, went to school; today almost all American children finish primary school.
• On average, Americans were about four times richer than the people of the world’s poorest countries; they are 100 times richer today.

Poor countries have experienced improvements as well. Over the past 50 years, there has been more progress in reducing poverty and improving health and education than at any other time in history. Over this period:

• Diseases such as smallpox and river blindness that formerly afflicted millions of people a year, often causing disability and death, have been virtually eradicated.
• The average life expectancy worldwide has increased from 47 years in 1955 to 65 years in 2005.
• Many more children attend school. In Sub-Saharan Africa today, 66% of adults have had some formal schooling, up from 28%. In Latin America the average number of years of schooling has risen from 3 to 6 years and in Asia the average number of years has increased from 3 to 9.
• Smallpox disease, which used to kill millions all over the world, was eradicated by a well-coordinated global effort. In West Africa, river blindness was eliminated in over 11 countries where it had afflicted millions, and with the arrival of the polio vaccine in the last century, disability and death due to polio has wiped out polio in most parts of the world.

Much remains to be done. People in many countries do not have access to basic things that Americans take for granted.

• Every year, 11 million children die before their fifth birthday from chronic hunger and related diseases. In addition, 14 million children worldwide have been orphaned by AIDS.
• More than 1 million people a year die from malaria, a preventable disease that has been virtually eradicated in rich countries.
• In India and Pakistan, fewer than half of adult women can read.
• In Ecuador, only one in four poor families has access to running water.
• In Kenya, only 12% of roads are paved, making it hard for farmers and manufacturers to sell their products in their own markets, let alone in global markets.

The world is more interconnected and interdependent than ever. Thanks to dramatic advances in technology, communication and transportation, people, products and ideas travel back and forth with ease and speed across borders. Things that happen in other countries affect us here; and things we do in the U.S. affect people in other countries, particularly where the majority of the population is living in poverty.

We have the ability to make a difference. It makes good sense for us to help the world’s citizens acquire the skills and resources they need to shape their own economic and social development. Because helping them will actually help us – and because it’s the right thing to do.

• AMERICAN VALUES: The United States was founded on the ideals of life, liberty, and the pursuit of happiness. In today’s interconnected world, we have a responsibility to demonstrate these values in our foreign policy by supporting global health, human rights, education, economic opportunity and democracy.
• NATIONAL SECURITY: Poverty, ill-health, and lack of economic opportunity do not lead directly to conflict, crime, or terrorism, but they can create the conditions that make countries more vulnerable to conflict, criminal networks, terrorists, illegal arms dealers, and other destabilizing forces. Peace and stability are affected differently by poverty-related factors depending on the circumstances of the countries concerned.
• ECONOMIC STRENGTH: Trade is an increasingly large part of the U.S.’s economic strength. Over the past 40 years, trade has tripled as a portion of the national economy. Almost 45% of U.S. exports go to developing countries, which means that our economic well-being depends directly on their citizens’ ability to purchase goods from the U.S.

• Americans tend to think that the U.S. spends 24% of its budget on development assistance, and that they would prefer that only 10% be spent in this way. But it turns out that the U.S. spends far less than that! The U.S. budget dedicates less than 1% of total federal spending to development assistance. It’s just a small slice of the pie, much smaller than most people think.
• Over half (53%) of Americans support the growth of global trade in principle, but are not satisfied with the way the U.S. government is dealing with the effects of trade on American jobs, the poor in other countries, and the environment.
• More than three-quarters (78%) of Americans favor helping poor countries develop their economies as a favorable way to fight terrorism.

Microcredit is the extension of very small loans (microloans) to very poor people for entrepreneurial projects that help them to care for themselves and their families.

Of the 4 billion people who live on less than $1400 a year, only a fraction have access to basic financial services. They may be female heads of households, pensioners, artisans or small farmers. These individuals are considered “unbankable”. They lack collateral, steady employment and a verifiable credit history and therefore cannot meet even the most minimal qualifications to gain access to traditional credit.

Microcredit is a part of microfinance, which is the provision of financial services to the very poor. In addition to loans, it includes savings, microinsurance and other financial innovations. Loans are made through microfinance institutions (MFIs).

A microfinance institution (MFI) is an organization -- credit union, down-scaled commercial bank, financial NGO, or credit cooperative – that provides microfinance services targeted to clients who are poorer and more vulnerable than traditional bank clients.

"The World Bank estimates that there are now over 7000 microfinance institutions, serving some 16 million poor people in developing countries. The total cash turnover of MFIs world-wide is estimated at US$2.5 billion and the potential for new growth is outstanding." - Data Snapshots on Microfinance - The Virtual Library on Microcredit

In many developing countries, the self-employed comprise more than 50 percent of the labor force. Access to small amounts of credit—with reasonable interest rates—allows poor people to move from initial, perhaps tiny, income-generating activities to small microenterprises.

In most cases, microcredit programs offer a combination of services and resources to their clients, including savings facilities, training, networking, and peer support. In this way, microcredit allows families to work to end their own poverty—with dignity. Microcredit programs around the world use a variety of models and the results are impressive: poor people achieve strong repayment records—often higher than those of conventional borrowers. Repayment rates are high because, through a system of peer support and pressure used in many microcredit models, borrowers are responsible for each other’s success and ensure that every member of their group is able to pay back her loans.

Microfinance is one part of a multi-faceted strategy for battling an immense problem.

Mohammad Yunus, who through his work with the Grameen Bank won a Nobel Prize for his vision of microfinance for the poor, has this to say: "(Microcredit) is based on the premise that the poor have skills which remain unutilized or underutilized. It is definitely not the lack of skills which make poor people poor....charity is not the answer to poverty. It only helps poverty to continue. It creates dependency and takes away the individual's initiative to break through the wall of poverty. Unleashing of energy and creativity in each human being is the answer to poverty." Expanding Microcredit Outreach to Reach the Millennium Development Goals, International Seminar on Attacking Poverty with Microcredit, Dhaka, Bangladesh, January, 2003.

Loans to women tend to benefit the whole family more than loans to men. Studies have shown that women recipients of small loans gain a higher socio-economic status within the family and community, and their repayment record is better than men’s too.

"Women have become more assertive and confident. In regions where women's mobility is strictly regulated, women have become more visible and are better able to negotiate the public sphere. Women own assets, including land and housing, and play a stronger role in decision-making. In some programs that have been active over many years, there are even reports of declining levels of violence against women." Consultative Group to Aid the Poor (CGAP):

"1.2 billion people are living on less than a dollar a day. Women are often responsible for the upbringing of the world’s children and the poverty of the women generally results in the physical and social underdevelopment of their children. Experience shows that women are a good credit risk, and that women invest their income toward the well being of their families. At the same time, women themselves benefit from the higher social status they achieve within the home when they are able to provide income." Microcredit Summit Campaign: (microcreditsummit.org)

Microfinance loans worldwide are generating repayment rates of 97% (UNCDF: Basic Facts About Microfinance). Kiva.org reports a repayment rate of 99.61%.

Today over 40 million people around the world are infected with HIV; more than two-thirds of those infected are in Sub-Saharan Africa and the Caribbean. By 2010, life expectancy in some of the countries hardest hit by HIV/AIDS might fall to only 30 years—a reversal to the level of a century ago.

HIV/AIDS is also a major health threat in Russia, and there is a strong potential for rapid spread of the infection in countries with big populations like China and India.

HIV/AIDS is one of the largest challenges the global community has ever faced. Since 1981, more than 25 million people have died of AIDS. Last year alone, 3 million people died of AIDS. Less than 1% of people in need of treatment in Africa are undergoing antiretroviral therapy (ART). One reason for that is the high cost of these drugs, which are 30 times the amount most poorest countries spend annually on each citizen’s health.

HIV/AIDS disproportionately affects women. In 2001, of young women aged 15–24 years, 6%–11% were living with HIV, compared with 3%–6% of young men in that age group.

HIV/AIDS is affecting long-term prospects for development in poor countries and is reversing decades of progress. The most profoundly affected countries are experiencing a dramatically diminished workforce.

In Sub-Saharan Africa, one in five working-age adults—teachers, health workers, political leaders, civil servants, small business owners, soldiers, and parents—has HIV/AIDS.

For countries suffering the biggest losses from AIDS, national income is likely to drop by as much as 20% by 2020, leaving countries trapped in poverty.

HIV/AIDS drains health care budgets that are already low. Compared with annual health care expenditures of $2,000 per person in rich countries, the governments of some of the world’s poorest countries spend as little as $10 per person.

Prevention: Behavioral changes are one way to stop spread of the virus. Taking measures to screen the blood supply, and using safe injection equipment in medical care is another. Medicines to prevent mother-to-child transmission are also available.

Treatment: Antibiotics can be used to treat “opportunistic” infections, and antiretroviral therapy (ART) can help prolong the life of those who are HIV-infected.

Care: Care and support for HIV/AIDS-affected families in order to increase awareness and fight stigma associated with the disease are essential. Such steps can help children stay in school, and allow family members to continue working.

Better health systems: Rebuilding or strengthening public health systems for the distribution of treatment and medication will help those most in need.

Prevention of mother-to-child transmission (PMTCT): A combination of ART and counseling on breast-feeding alternatives for mothers with HIV. (One study showed that PMTCT successfully reduced transmission from mother to child by 50% in Uganda.)

Education, behavior change programs and bold leadership: Aggressive public education campaigns and condom distribution and enforcement, particularly for commercial sex workers, are actions governments can take to demonstrate high-level political will.

Global activism: The high cost of HIV/AIDS drugs needs to be reduced. Altered patent laws have made it easier for some developing countries to produce and import generic versions of medicines.

Nearly half (45%) of Americans believe that the U.S. spends too little to fight HIV/AIDS. (AIDS is second only to illicit drug smuggling as an issue for which Americans believe the U.S. is spending too little.)

An overwhelming majority of Americans (86%) believes that the U.S. should not try to prevent African countries from developing generic AIDS drugs.

Sources: Public Opinion Strategies and Greenberg Quinlan Rosner Research, 2001; Americans on Africa, Program on International Policy Attitudes and Knowledge Networks, 2003.

According to the Natural Resources Defense Council, global warming is caused by “carbon dioxide and other air pollution that is collecting in the atmosphere like a thickening blanket, trapping the sun's heat and causing the planet to warm up.”

The United States is the largest source of CO2 emissions. We make up just 4 percent of the world's population, but we produce 25 percent of the carbon dioxide pollution from fossil-fuel burning -- by far the largest share of any country.

If we don't start curbing greenhouse gas emissions now, there is a significant risk that global warming will raise the sea level by 1-3 meters in this century.

Poor countries depend mostly on agriculture and tend to be located closer to the equator, where temperatures are already close to or beyond the threshold of optimum production. The long-term effects on world agriculture productivity will be substantially negative. Developing countries are predicted to suffer an average 10 to 25 percent decline in agricultural productivity by the 2080s, assuming the so-called "business as usual" scenario in which greenhouse gas emissions continue to increase.

Of the world's 300 million people who live less than 5 meters above sea level, 80% are in developing countries: 200 million in Asia (90 million in China alone); 17 million in the Middle East and North Africa; 11 million in Sub-Saharan Africa; and 8 million in Latin America and the Caribbean. Rapid sea-level rise will threaten millions with inundation, as well as more severe flooding from storm surges and abnormally high tides.

Even a 1-meter rise will force up to 60 million people to become environmental refugees. And the affluent West, especially the United States, is only beginning to wake up to this global threat.

The U.S. should take the lead in reducing CO2 and other greenhouse gas emissions. We need to start working now to institute a multi-national, multi-faceted approach to climate change. If we do, we may even be able to keep the seas from rising.

Go as green as you can! Drive less. Cycle and walk more. Find out about how you can make your home and office more energy-efficient. You can start by replacing your incandescent bulbs with compact fluorescents. You'll lower your energy bill and keep nearly 700 pounds of carbon dioxide out of the air over each bulb's lifetime. Next time you buy a refrigerator, get one with the Energy Star label and reduce carbon dioxide pollution by nearly a ton in total.

While poverty, disease and lack of economic opportunity do not lead directly to conflict, crime or terrorism, they create conditions that are hostile to peace and stability, and they can leave fragile countries vulnerable to conflict, criminal networks, terrorists, illegal arms dealers, and other destabilizing forces.

By helping countries fight poverty, build roads, educate children, prevent health crises, create jobs and spur economic growth, development assistance can help improve lives and decrease countries’ vulnerability to conflict, criminal networks, or other destabilizing forces.

Infectious diseases can travel across borders as easily as people and products. By supporting global development efforts, we help prevent health crises and protect our own health as well.

More than three-quarters (78%) of Americans favor helping poor countries develop their economies as a way to reduce the threat of terrorism.

Fragile, weak or collapsed states challenge U.S. national security interests through:

• Illicit networks: Terrorist and criminal networks target weak states for their porous borders and minimal law enforcement. Without a functioning government, Somalia has become a safe haven for members of Al-Qaeda. Relatively new countries such as Kazakhstan and Uzbekistan have become conduits for the trade of illicit light weapons and drugs.
• Spillover effects: The collapse of a government often spawns a wider regional conflict and spreads instability. The activities of Liberia’s former president sparked civil war in neighboring Sierra Leone, and fanned the flames of conflict in West Africa from Guinea to Cote d’Ivoire.

Development assistance from the U.S. helps to jump-start economic growth and promote reform in a number of ways:

• Improved education helps strengthen civil society, democracy, and political stability, allowing people to learn about their rights and acquire the skills and knowledge necessary to exercise them.
• Expanding global trade can help improve the lives of working people around the world by spurring economic growth, creating jobs, reducing prices, increasing the variety of goods for consumers, increasing incomes,and helping countries acquire new technologies. All of these in turn can help to enhance global stability.
• “State building” supports long-term economic, social, and political development.

State building is creating and strengthening the institutions necessary to support long-term economic, social, and political development. In the U.S. we often take these institutions for granted, but in many countries they are weak or absent. State institutions include:

• Legislatures, like the U.S. Congress, to make laws
• Judicial systems, like the U.S. federal and state court systems, to interpret laws
• Executive agencies, such as the Departments of the Treasury, Education, Transportation, and many others, to administer the laws which control the domestic economy, education, trade, and diplomacy, for example.
• Police and military forces to provide security

Development cannot easily take place when state institutions are precariously weak or have failed altogether. A glance at recent headlines provides a powerful demonstration of why state building (or the lack of it) matters:

• Afghanistan has spiraled into a country known for Al-Qaeda terrorists and drug smugglers and produces nearly three-quarters of the world’s heroin supply.
• Haiti, after the fall of its president in 2004, is attempting to build a working government and protect basic human rights at the same time as it tries to escape from the worst levels of poverty in the Western hemisphere.
• Liberia is engaged in post-conflict reconstruction after removing its dictatorial ruler in 2003. The country was left in shambles and incited conflict throughout West Africa.

A number of actions could be taken to improve state building in the world. They could include American commitment to:

• Promote broad-based development and poverty reduction: U.S. development assistance would be more effective if it were complemented by more open trade with developing countries, wider and deeper debt relief, and greater support for foreign direct investment.
• Prepare for and seize potential opportunities: Moments of transition out of conflict or into democracy present opportunities to help a weak state grow stronger or to halt a slide toward failure. The U.S. has acted decisively to seize opportunities for positive change. Examples are this were its actions to:
• Fund post-conflict reconstruction: After the peace agreement in 1996, the U.S. provided about 25% of the reconstruction assistance given to Bosnia and Herzegovina, funding programs ranging from repairing war-damaged infrastructure to promoting independent forms of media.
• Contribute to peace and reconciliation: When the civil war ended in Sierra Leone in 2000, the U.S. helped place the country on a path to peace by contributing to democracy and governance programs, the UN mission there, and the creation of a war crimes tribunal.

Trade has been a part of economic development for centuries. It has the potential to raise incomes worldwide by spurring economic growth, creating jobs, reducing prices, increasing the variety of goods for consumers, and helping countries acquire new technologies. Global trade is in part responsible for the tripling of incomes in poor countries over the past 50 years, compared with a 13-fold increase in incomes in Western Europe and a 17-fold increase in the U.S.

The world is more interconnected and interdependent than ever, and trade is an increasingly large part of the U.S.’s economic strength. Over the past 40 years, trade has almost tripled (from 9.6% to 26%) as a portion of the national economy. Almost 45% of U.S. exports goes to developing countries, which means that our economic well-being depends directly on developing country citizens’ ability to purchase goods from the U.S.

Weak or fragile states hinder the prospects for their own economic prosperity as well as U.S. economic prosperity. For example, countries such as Bolivia, Nigeria and Pakistan could be regional economic anchors and important trade and investment partners with the U.S., but instead are relatively weak and unstable, which reduces both the U.S. and their opportunities for trade and economic growth.

The U.S. is the largest market in the world. A strong U.S. economy is good for global development because it increases U.S. consumption of goods and services from abroad. But specific U.S. trade policies, including those for tariffs, quotas, and subsidies can have a negative affect on poor countries.

The U.S. creates barriers to its market through taxes on imported goods (tariffs) and restrictions on the amount of a good that can be imported (quotas). The highest U.S. trade barriers are against imports made predominantly in poor countries—such as agricultural goods, textiles, and footwear, the production of which is the first step to job creation and economic growth. For example:

• The U.S. often collects more in tariffs on goods from poor countries than from rich countries, even though it imported a much higher value of goods from rich countries. In January of 2005 the U.S. collected more in tariffs on goods from Sri Lanka ($26 million) than from all of Scandinavia ($15 million), although the value of Scandinavian goods is higher.
• The U.S. and other rich countries charge higher tariffs on processed goods, such as chocolate and shirts, than on primary goods, such as cocoa and cotton. For example, the U.S. does not have a tariff for cocoa beans, but imposes a tax of more than 25¢ a pound for certain kinds of chocolate. This makes it hard for poor countries to generate income by producing and selling higher value goods—such as by processing cocoa beans into chocolate.

The U.S. government gives subsidies to American agricultural producers, allowing them to sell their goods for less than it costs to produce them. U.S. Department of Agriculture subsidies to American producers topped $150 billion from 1995 to 2005, and the majority of these funds went to big agribusiness firms. These subsidies, along with tariffs on agricultural imports, make it hard for the world’s poor—70% of whom live in rural areas and rely on agriculture for their livelihoods—to compete in world markets with cheaper American (and European) agricultural products. For example:

• From 1995 to 2005, U.S. Department of Agriculture subsidies to American producers totaled more than $150 billion. The majority went to big agribusiness firms despite the fact that smaller farmers constitute roughly 90% of producers.
• The 2002 Farm Bill gave $12 billion in subsidies, 80% of which went to large producers—those with more than 500 acres of land. Seventy-eight agribusiness firms received more than $1 million each. The top recipient received $110 million.
• The U.S. cotton sector received $3.2 billion in subsidies in 2004. Of this amount, nearly 80% went to the top 10 % of recipients, or about 13,000 cotton producers. By comparison, these subsidies make it hard for the more than 10 million cotton farmers in West and Central Africa to sell their products on world markets.

While the U.S. gives more than $390 million per year specifically to help increase agricultural productivity in developing countries, this development assistance is dwarfed by the negative impacts of agricultural subsidies and tariffs. For example, U.S. tariffs on imports from India, Indonesia, Sri Lanka, and Thailand brought in $2.06 billion in 2005—twice what the U.S. committed to these countries for tsunami relief the same year.

No. Government support of producers in all rich countries (through subsidies and tariffs) amounts to almost four times the value of global development assistance. And if rich countries fully opened their markets to products from poor countries, the value in increased income would be almost double that of development assistance.

U.S. tariffs are highest on certain food products, clothing, and shoes—items that make up a larger share of low-income Americans’ expenses and are produced in poor developing countries. For example, an American worker earning $15,000 a year spends proportionately more of his income on highly protected goods and has to work an extra week to earn the amount he pays in tariffs each year. A single mother earning $25,000 a year has to work an extra 3 days.

The North American Free Trade Agreement (NAFTA), which governs trade between the U.S., Canada, and Mexico, has had mixed effects for the people of Mexico:

• It is estimated that without NAFTA, Mexico would have had 40% less foreign direct investment and its exports would have been 25% lower. This would have meant fewer jobs, and average personal income in 2002 would have been 4%–5% lower.
• Imports of computers assembled abroad lower U.S. prices and spur investment in sectors that rely on computers. Partly for this reason, U.S. job growth in the 1990s increased in the information technology sector to twice that in other sectors.

• Trade in goods has grown from about 6% to 20% of the U.S. economy over the past 40 years. This means that more U.S. jobs are linked to trade, not only in the manufacture of exports but also in related service-sector industries such as trucking and shipping as well as retail employment in stores.
• Blue-collar workers in U.S. plants that export goods earn 13% more on average than those in non-exporting plants; white-collar workers earn 18% more on average. The value of employee benefits such as health insurance and paid leave is 37% higher on average in exporting plants.
• Imports of computers assembled abroad lower U.S. prices and spur investment in sectors that rely on computers. Partly for this reason, U.S. job growth in the 1990s was twice as high in the information technology sector as in other sectors.

They change the distribution of jobs across sectors and create losers as well as winners.

• Between 1984 and 2004 more than 30 million U.S. workers lost their jobs, mostly in high import-competing manufacturing industries such as clothing, autos, and electronics. These industries account for only 30% of all manufacturing jobs in the U.S., but 38% of manufacturing job loss.
• Of the workers displaced—both in high import-competing and other manufacturing jobs—about one in three moved into new jobs with equal or better incomes, but one in four suffered earnings losses of more than 30%.
• Recent trends in globalization, like the economic growth of China and India, have increased the number of U.S. jobs “outsourced” to other countries. One estimate puts the number of white-collar job losses at 3.3 million by 2015.
• Nearly 70% of Americans who have health insurance get their coverage through employers, so losing a job can be extremely costly to families, with lost health coverage as well as lost wages

With the Trade Adjustment Assistance (TAA) program, the U.S. government provides aid to certain workers who are certified as having lost their job because of trade or because their employer moved offshore. TAA includes:

• Retraining and income support after unemployment insurance runs out
• “Wage insurance” for some workers over age 55 that replaces up to 50% of the wage difference for up to 2 years when a worker takes a new job at a lower wage (capped at $10,000)
• A refundable tax credit to pay up to 65% of the cost of maintaining health insurance for up to two years for displaced workers
  For more information on the TAA program, visit www.taacoalition.com.

• Lower prices: An average single-parent family in the U.S. today pays an extra $200 on clothes and $70 on shoes each year as a result of trade barriers.
• Greater variety: U.S. trade with Chile, New Zealand, South Africa, Thailand, and other countries allows Americans to purchase affordable fruits and vegetables year-round. And it goes both ways—exports of U.S. oranges to China grew from 0.3 million kilos in 1999 to 23.3 million kilos in 2001.
>Higher quality: In the 1970s and 1980s, foreign competition forced the “Big Three” U.S. auto makers to be more responsive to consumers and to improve the quality of their product.

• Improved basic education and more accessible college education: College graduates are 22%–26% more likely to be reemployed if displaced than high school graduates, and their earnings losses are 7%–9% lower.
• Lifelong training: Workers who receive regular on-the-job training are better equipped to adapt to changing conditions in the global economy.
• Access to health care: With health care and insurance tied to jobs, the costs of dislocation are higher, anxiety about job loss is higher, and there are fewer incentives to adjust to economic change.

The private sector in the United States contributes to the strength of the U.S. economy, which helps poor countries by providing a strong market for their goods and services.

The private sector can support development through Foreign Direct Investment (FDI). From 1995 to 2004, an average of $28 billion a year of FDI flowed from the U.S. to developing countries. American firms directed FDI to a variety of activities, including building factories for manufacturing, opening banks to offer financial services, and exploring for oil. U.S. companies also invest in innovative technologies such as agricultural techniques, communications systems, and medicines that can be used to support development abroad.

• Over half (53%) of Americans support the growth of global trade in principle, but are not satisfied with the way the U.S. government is dealing with the effects of trade on American jobs, the poor in other countries, and the environment.
• Two-thirds (67%) of Americans agree that the U.S. should lower its barriers to other countries’ products if those countries are willing to lower their barriers to products from the U.S.
• More than three-quarters (77%) of Americans (and 81% of those in farm states) are in favor of the U.S. government giving subsidies to small farmers who own less than 500 acres, but only 31% (and the same proportion in farm states) are in favor of subsidies for large farming businesses.
• 53% support increased trade but are not satisfied with how the U.S. government is “dealing with the effects of trade on American jobs, the poor in other countries, and the environment.”
• 87% would support increased trade if assured that “we were making major efforts to educate and retrain Americans to be competitive in the global economy.”
• 93% believe that countries that are party to trade agreements should be required to maintain minimum labor standards.

In 1998, the International Labor Organization (ILO) identified four standards as “fundamental principles and rights at work” that all countries should promote, whatever their level of development. They are:

• Freedom of association and the right to organize
• Freedom from forced labor
• Elimination of child labor that is harmful to the child or interferes with schooling
• Nondiscrimination in employment

Some labor standards, such as wage rates and health and safety regulations, must vary with the country’s level of development and local living standards. Setting such standards too high can raise labor costs to a point where production is uncompetitive, thereby limiting employment.

Advocates argue that including labor standards in trade agreements would prevent producers worldwide from cutting costs at the expense of worker rights. Opponents fear that labor standards would undermine job creation in some countries by increasing the cost of production or by serving as an excuse for protectionism in the U.S.

Core labor standards are essential to well-functioning democracies and market economies; they allow workers to negotiate standards in other areas.

There is no evidence that higher core standards affect developing countries’ ability to compete or that countries with lower labor standards create more jobs, attract more foreign direct investment, or grow faster. However, in some developing countries, governments, employers, and multinational buyers try to compete by ignoring labor and other laws. For example, some countries restrict core labor standards in “export processing zones,” and some ignore the illegal firing of workers who were let go for trying to organize unions.

Eight legally binding ILO conventions are related to the core labor standards, and 99 ILO member countries have ratified all eight.

• The U.S. has ratified two conventions—one on the abolition of forced labor and one on the elimination of the “worst forms” of child labor.
• The U.S. has not ratified two broader conventions on forced and child labor or any of the conventions related to freedom of association or nondiscrimination in employment, partly because many U.S. labor laws are made at the state level.
• Nine countries have ratified three or fewer of these conventions: Afghanistan, Armenia, Burma, China, Laos, Oman, Qatar, Solomon Islands, Somalia, and the United States.

We live in a country founded on the ideals of life, liberty, and the pursuit of happiness. In today’s interconnected world, we have a responsibility to demonstrate these values in our foreign policy by supporting global health, human rights, education, economic opportunity and democracy.

U.S. "development assistance" refers to the transfer of resources from the United States to developing countries and to some strategic allies. It is delivered in the form of money (via loans or grants), contributions of goods (such as food aid), and technical assistance. The U.S. gives assistance to other countries for a variety of reasons, not all of them having directly to do with development:

• National security and foreign policy interests—for example, to Uzbekistan and Pakistan in exchange for use of their territory for military operations in Afghanistan
• Political development and stability—for conflict prevention, to build peace after conflict, and to strengthen failing states
• Humanitarian crises—to countries and people suffering famine, recovering from a natural disaster, or displaced by conflict.
• Long-term development purposes—to help countries fight poverty, build roads, educate children, fight health crises, create small businesses, and spur economic growth

• The largest recipients have historically been strategic allies such as Egypt, Israel, and Turkey. Russia has become a large recipient of aid in recent years. Most recently, Afghanistan, Iraq, and Pakistan have also received substantial assistance.
• Less than half goes to the poorest countries where people earn less than $2 a day. This amounts to $3 of assistance each year per citizen of these countries.
• Countries in which people earn up to $30 per day, such as South Africa, Brazil, and Thailand, receive similar amounts.
• Israel is the richest country to receive U.S. assistance—about $77 a year per Israeli. In comparison, Bangladesh receives only 65 cents per person.

Many Americans vastly overestimate the amount of development assistance the U.S. gives to other countries. They think we give far more than we do. The facts are:

• America is the richest country in the world. But according to the Commitment Development Index (CDI), which ranks 21 rich countries in their commitment to global development, we rank 14th.
• In 2005, the U.S. gave $27.5 billion in development assistance to other countries, $10 billion of which was for aid in Iraq and Afghanistan.
• The U.S. is the largest donor in terms of dollars spent, but it is one of the least generous based on its capacity to help—that is, in terms of the amount it spends as a share of its national income.
• The U.S. devotes less than 1% of the federal budget to development assistance, which amounts to $92 a year, or 25¢ a day, for each American. This is less than half of what the average American spends on carbonated soft drinks every year—$224.
• U.S. private charitable contributions to poor countries amount to about $10.6 billion a year, which represents an additional $36 a year, or 10¢ a day, for each American.

• Americans tend to think that the U.S. spends 24% of its budget on development assistance, and that they would prefer that only 10% be spent in this way. But it turns out that the U.S. spends far less than that! The U.S. budget dedicates less than 1% of total federal spending to development assistance. It’s just a small slice of the pie, much smaller than most people think.
• A majority (59%) of Americans believe that it is most important to give assistance to the poorest countries; 23% say that it is best to give assistance to countries that are important to U.S. security.
• More than three-quarters (78%) of Americans favor helping poor countries develop their economies as a way to fight terrorism.

Yes! The past 50 years have seen dramatic improvements in income, health, and education in poor countries. The U.S. has contributed to this trend by helping people around the world help themselves out of poverty and by responding to humanitarian crises. Working with other bilateral and multilateral development institutions, we can make a difference.

Because of U.S. laws governing development assistance, 70% of these funds must be spent on U.S. contractors and goods. This “tied aid” may be good for the U.S. economy, but it reduces the value of U.S. assistance by up to 25%, because poor countries are not permitted to purchase less expensive goods and services of equal quality elsewhere.

While this makes it easier to track U.S. aid dollars, a country might end up with three new schools when what it really needs is 3,000 teachers who are better trained.

The Bush administration has proposed two new initiatives:

• The Millennium Challenge Account, designed to increase assistance by $5 billion a year to a set number of poor countries committed to policies that promote development; in 2006 the U.S. will allocate $1.75 billion for the initiative.
• The President’s Emergency Plan for AIDS Relief (PEPFAR) was designed to increase funding by $15 billion over five years for HIV/AIDS prevention, treatment, and care, in the most affected countries; in 2005, the U.S. budget provided some $1.4 billion for PEPFAR.

These initiatives represent an important commitment of additional assistance to the poorest countries. But even if these two programs are fully funded with “new” (i.e., additional) money, and even taking private charitable giving into account, the U.S. will remain last among the rich nations in terms of how much of its economy is dedicated to development assistance.

The Commitment to Development Index (CDI) ranks the 21 richest countries on their commitment to policies that benefit poor nations.

These 21 countries are the richest, most developed countries in the world, leaving out tiny nations such as Iceland and Luxembourg. Along with Luxembourg, they constitute the full membership of the Organization for Economic Cooperation and Development's Development Assistance Committee (OECD-DAC), which is the official organization of aid donors.

The CDI is maintained by the Center for Global Development and published in Foreign Policy magazine each year. CGD staff and outside collaborators designed and collected data for the seven individual components. David Roodman is manager and chief architect. He also designed the aid component and, in 2005, revised the trade component, building on the work of CGD Senior Fellow William Cline.

Helping poor countries is about more than aid. We chose major policy areas that support the development of poorer countries and for which reasonable data was available. The list of policy areas is:

• Aid, which funds initiatives such as childhood immunization; new roads;
• Trade, which gives industries in poor countries access to larger markets and creates jobs;
• Investment, which can be a source of capital and good management practices;
• Migration, which lets workers seek higher-paying jobs in rich countries and send earnings back home;
• Environment, which underscores the point that rich and poor nations are tied together by the shared use of resources;
• Security, which is a prerequisite for development; and
• Technology, since innovation is a critical factor in development.

Yes and no. The CDI is intended to inspire a race to the top, so "winners" should be proud of their achievements. Yet there is room for improvement in all rich countries. Almost all countries score below average in at least one area and most are below average in at least three.

It is difficult to know whether a one-point increase in a country's aid score would be better for development than a one-point increase in its trade score. And the potential benefits--perhaps a new school in Malawi, or more jobs for wheat farmers in Argentina--are hard to compare to one another. Therefore, we chose equal weighting. All seven areas matter.

The Index assesses policy effort rather than impact. The United States and Japan give more aid in absolute terms, but they are among the least generous once the size of their economies is taken into account. The top-scoring countries give a lot of aid in proportion to their gross domestic product and their population, and/or have relatively low trade barriers and/or generate relatively little pollution, and so on.

Each component of the CDI combines many numbers into a single score, placing that score on a standard scale, so that 5 represents average performance by the standards of the first index year, 2003. This makes it easy to see that Japan's policies, for instance, are above-average on investment (with a 5.6 in 2006), but not as strong on security (2.8) by the standards of Japan's peers. If a country is twice as good as average, it scores a 10, and if it's more than twice as good, it scores above 10. That happened to Austria on migration. The opposite is true for the environment and trade components. Scores on environmental pollution and trade barriers start at 10 (no emissions or barriers) and go down from there. A country may be able to power through the 10-point ceiling by giving more aid or admitting more immigrants, but it could fall to zero when it comes to its ranking for the excessive amount of pollution it emits or for the high tariffs it imposes.

Most of the data come from official sources such as the United Nations, the World Bank, the Organization for Economic Co-operation and Development (OECD), and the United Nations, or from academic researchers. CGD and its collaborators also collect information country by country for parts of the aid, migration, investment components.

As a relatively objective way to decide which military interventions should be counted, the security component of the CDI only includes contributions to interventions approved by international bodies such as the U.N. Security Council, NATO, and African Union. Since the U.S.-led invasion of Iraq had no such mandate, it is not counted.