HOW SHOULD AID BE DELIVERED?

We move on from talking about the impact of aid to the process of how it is delivered.

Over the past decade, some of the major donors have begun changing the way they deliver aid, by, for example:
1. Making their programmes more complementary (Harmonization)
2. Strengthening the ownership and systems of recipient countries (Alignment).
3. Opening up tenders for aid projects to companies outside the donor country (Untying).

Check out the the Paris Declaration for more on this.

These changes are a direct response to some of the criticisms of aid we have been discussing.

Those of you who work in development would hear a lot about mechanisms like Sector-Wide Approaches and Direct Budget Support, which aim to bring donors together to direct aid through countries own systems and according to their priorities.

Interestingly, Australia's Aid Program has been moving in the opposite direction.

Having little to show after years of budget support to Papua New Guinea, Australia abandoned the strategy in the late 90s and moved to project aid. The bad experience in PNG seems to have shaped Australia's approach across the Pacific, where project aid is also the dominant form of assistance, according to the OECD.

This brings us to one of big 'chicken and egg' dilemmas in aid delivery - how can you strengthen countries' own systems when they are so corrupt or inefficient that resources are likely to be wasted?

A related question: is Australia's PNG experience directly applicable to the rest of the Pacific?

Over to you...

IS AID EFFECTIVE?

What do you think?

To link this discussion with our previous one - how much do you think perceptions of effectiveness/ineffectiveness shape people's attitudes to giving aid (privately and/or as a taxpayer)?

Aid effectiveness is a very hot topic at the moment, with a big meeting (High Level Forum) on the topic having concluded in Ghana earlier this month.

Two of the key issues surrounding aid effectiveness are:
(a) what impact does aid have on development?
(b) what are the most effective ways of delivering aid?

The impact of aid on development

Depending on what you think development is all about, you might measure the effectiveness of aid by looking at its impact on economic growth broadly, or specifically povery reduction, or progress in meeting the Millenium Development Goals.

Of course, even with a clear goal in mind, showing a causal link between aid and any 'effect' (good or bad) can be difficult. Examples of people who have come to varying conclusions on the matter include:

1. Helen Hughes, an Australian economist who has argued that 'Aid has failed the Pacific'
2. Jeffrey Sachs, who believes aid works and should be upscaled to reduce poverty.
3. Rajan and Subramanian, who studied the link between aid and growth since 1960 and showed little correlation.
4. Tarp - his conclusion is somewhat more nuanced and positive.

Next post: Is aid effective? p2 - effective ways of delivering aid

Over to you...

should rich countries give to poor ones?

This may seem like an obvious question and it is - but the answer isn't simple or unanimous.

While there is a lot of talk about making development 'country-led', the reality is that many countries will continue to rely on aid from rich countries to foot the bills for basic services and infrastructure.

In order for aid to be given consistently and accountably there needs to be both public support and scrutiny in rich countries. Polls suggest that 58% of Australian's strongly support overseas aid.

So what do you think - should your hard-earned tax $$ be sent overseas??

And if so:
- what areas should aid focus on?
- what, if any conditions should be placed on developing countries who recieve aid?

Or are there better alternatives?

Over to you...

UPDATE 18/9

Thanks so much for your thought-provoking posts, guys. For me, your discussion on climate change refugees has brought out a lot of the core issues relating to development: developing country ownership; donor country national interest vs altruism; and public attitudes to aid.

The comparison between climate change refugees and seasonal worker schemes (both non-traditional forms of 'aid') is an interesting one.

In the case of the latter being implemented in Australia, there was:

• clear economic benefit for the 'donor' country,
• advocacy by the World Bank,
• adoption of a similar scheme by New Zealand, and
• support from unions and farmers

...yet it still took several years and a change of government before a pared-down version of the scheme was launched last month.

In the case of the former (climate change refugees), I share both nicole's view that it makes good humanitarian sense and iamagloworm's skepticism about how it would work. In Kiribati, at least, there is definately country ownership of the problem and advocacy of the migration solution. In my view, what is missing at the moment is a coalition of credible advocates in Australia who can advance a pro-resettlement argument that captures the imagination of both policy makers and the general public (nicole, you have work to do :-).

How the politics plays out will ultimately determine the outcome.

Intro to development

For those, who like me, haven't been around the development scene for ages, here is some reading material that I've found really useful in bringing me up to speed on the issues.

For an easy read, try Jeffrey Sach's 'The End of Poverty' which is an impassioned (and some would say naive) appeal to the developed world to increase its aid (or 'development assistance') to poor countries.

For something a bit meatier, check out Nobel Prize Winner Amartya Sen's 'Development as Freedom', which has been very influential in shaping the 'human development' concept championed by the United Nations Development Programme and their annual Human Development Report.

If you like history and a bit of old fashioned straight talking, invest in a copy of 'The Wealth and Poverty of Nations' by David Landes. Landes is an economic historian whose central thesis is that culture matters in shaping economic development, and this explains the dominance of Western Europe over the last 300-500 years.

Finally, for something a bit closer to home, browse through 'The Bipolar Pacific', a recent analysis by the Centre for Independent Studies (a right-leaning/libertarian think tank) on the development situation in some of Australia's closest neighbours.

philricho's musings on development and governance

Hi All

Welcome to my new blog, which is basically designed to stimulate thought and discussion around development and governance, two of my favourite subjects.

I hope to find a few other kindred spirits out there who enjoy a good debate on these very topical and contentious issues. I've left the subject matter deliberately broad so as not to limit ourselves!

cheers
philricho