The Global Development Index
Each year the Centre for Global Development (CDI) publishes a Commitment To Development Index which ranks 40 of the world’s most powerful countries on their dedication to policies that affect more than five billion people who are living in poor and developing nations.
The index takes into account factors such as development finance, which is measured according to the 50-year-old United Nations resolution by rich countries to spend 0.7% of national income on development assistance (only a handful of countries are meeting this target). It also gives heavy weighting to countries that provide international public goods from which developing nations yield benefits, such as technology, security and the environment.
In 2020 Sweden came top of the CDO Commitment To Development Index, followed by France, Norway and the United Kingdom. Not all of those countries at the top of the index score well across all metrics. The United Kingdom scores highly for investment in development finance (second behind Canada) and its contribution to global security (ranking top at number 1), but scores very poorly for ‘technology’ (rank of 21) and ‘migration’. At the bottom of the overall index is the UAE, Saudi Arabia, Israel, India and Russia.
One key area that the CDI index looks at is ‘exchange’. This is a measure of the way in which countries manage their international flows of capital, goods, services, ideas and people. Borders and tariffs in rich countries impede the economic and technology exchanges that could otherwise accelerate development and growth in poorer nations. So quickly spreading technology and technological knowledge could be a fast way to reduce poverty.
It’s because of the potential for technology to reduce poverty that measuring the propensity of individual countries to spread knowledge and ideas is important. The major economies play a major role in both new technology creation and its diffusion worldwide. Their technologies can reduce the prices of goods and services, making them more accessible to all (in rich and poor countries) through the process of ‘demonetisation’ that I discuss in more detail in my blog about the Six D’s. Put very simply: technological advances in areas such as medicines, sustainable energy and agricultural typically raise the quality of life of everyone worldwide.
Technology And Inequality
If you have read Charles Kenny’s book Getting Better you will know about the huge gains in health across the world because of the spread of germ theory (ideas), hand-washing (norms), and antibiotics (technology) in the 20th century. But that same century was also characterised by historically high economic inequality between nations.
Data from the World Bank suggests that this high degree of economic inequality is now being reversed at last. It suggests that between 1988 and 2008 we may have witnessed the first decline in global inequality between nations since the Industrial Revolution. However the World Bank also claims that this decline can only be sustained if countries’ average incomes continue to converge and if ’within-country’ inequalities are kept in check.
Technology transfer is also an effective way to generate new wealth and to spread it across nations. Technology therefore holds great potential to improve the health and livelihoods of people living in poorer countries. The Commitment to Development Index ranks Luxembourg top for technology transfer, closely followed by Australia, South Korea, France and South Africa. Also high on the list are Saudi Arabia and Russia, despite low total rankings.
International Commitment To Technology Transfer
The efforts of countries like Australia and South Korea likely reflect the World Trade Organisations’ 1994 Trade Related Intellectual Property Rights (TRIPS) Agreement, which obliges all developed countries to support technological advancement by helping to spread technologies to developing countries in return for global enforcement of intellectual property rights.
Article 66.2 states:
Developed country Members shall provide incentives to enterprises and institutions in their territories for the purpose of promoting and encouraging technology transfer to least-developed country Members in order to enable them to create a sound and viable technological base.
Under the TRIPS agreement countries are required to report on their compliance with Article 66.2, but studies suggest that the monitoring of these commitments has been wholly inadequate. For starters there is no widely accepted definition of ‘technology transfer’, so it should be of no surprise that technology transfer is hard to measure.
Some European countries have never submitted a report about their technology transfer, and others do so only occasionally. And whilst some reports provide detailed information about the implemented interventions, some countries only list them very briefly. Developing countries’ institutions often do not have the capacity to even read the reports, let alone assess whether the intervention has contributed to their technological development.
Overall, more than 25 years later, we simply do not know if countries are living up to their 1994 commitment to improve technology transfer. This also means that it is impossible to know whether the fall in inter-country inequality during the period equates with technology transfer — or not.
How To Improve Technology Transfer
It is inevitable that measuring a multidimensional concept like technology transfer is difficult. But that is also true of lots of things that we do manage to measure, such as learning. Therefore it would not be impossible to design indicators of technology transfer based entirely on the relatively widespread consensus about what is needed.
The basis of this is surely very simple: that we want modern, up-to-date technologies to spread to the developing world at affordable prices. We want indigenous firms to receive licensing contracts on reasonable terms to manufacture high-value goods. We want subsidiaries of foreign firms to hire and train employees to perform high-value production in least developed world, and their Governments to provide the incentive and support those firms’ needs, such as financing and insurance.
Perhaps more alarming is the sentiment amongst some populist politicians that developing countries — especially the emerging economies — are competitors. This perception, which is reinforced by talk of a “global race”, dampens the interest of policymakers in finding ways to share technologies to enable poorer countries to catch up.
In my view global economic growth is win-win, not zero-sum; and consumption of knowledge is non-rival. So I believe it would be a significant missed opportunity if this view reduces efforts to ensure that everyone, everywhere, can take advantage of technological progress.