Comments

Thank you Professor. Thank you very very much for elaborating the issue. Whew!!! I do not know what is going through the PM's mind. We need immediate change now!!! I wish PNG was Egypt. He would have been out by now....

Robin and Michelle – Thanks a lot for your effort on this, and congratulations to the Centre on a remarkably accurate forecast for total aid in 2012! I wonder if you might be planning to do this exercise earlier in the year next time? If so we would be happy to reference your estimates in our annual press release on the preliminary ODA numbers, which as you say come out in April. Otherwise, we will bear your research in mind when considering projections. Your point that CPA estimates have not proven good guides to the following year’s ODA numbers is well taken. We may need to re-think how we present the CPA numbers in the press release, and check where the forecasts are going off-track. However, we still think CPA forward estimates should be of more use to developing country governments than ODA estimates. CPA focuses on resources over which developing countries have some control, leaving out debt relief and some in-donor costs. Our Forward Spending Survey provides a lot more detail about planned CPA numbers than we can put in the press release, including estimates of spending by multilateral agencies. Overall, I find your estimates for 2013 ODA very plausible, and can only admire your boldness in specifying your prediction to within a $1 billion range. Let’s see how it pans out, but a pause on the way down seems right, given that most donors will be trimming but the UK ODA will surge. By the way we saw a similar “dead cat bounce” in total DAC ODA after the last major global downturn in the early 90s, with aid falling sharply in 1993, but rising slightly in 1994 before dropping again for another three years. On the processes behind the fall, I would urge attention not only to recession but to its impact on revenue. For me the budget balance is the middle term between recession and aid cuts. It also explains the “amplification factor”: being discretionary spending, aid is prone to larger cuts than other items in fiscal consolidation exercises, as I mentioned in my talk at the Centre in July [https://devpolicy.org/in-brief/simon-scott-does-development-assistance-have-a-future/]. All the best to your and your colleagues – you are doing a marvellous job of covering the development scene! Simon Scott, Head, Statistics and Development Finance Division, OECD

My favourite quote from Behind the Beautiful Forevers: "What appeared to be indifference to other people's suffering had little to do with reincarnation, and less to do with being born brutish. I believe it had a good deal to do with conditions that had sabotaged their innate capacity for moral action. In places where government priorities and market imperatives create a world so capricious that to help a neighbor is to risk your ability to feed your family, and sometimes even your own liberty, the idea of a mutually supportive poor community is demolished"

Hi Ashlee. I agree - very interesting that aid wasn't mentioned in Varghese's recent speech, especially given its focus on soft power. Thanks for pointing it out. For me, it further confirms that development assistance is not being connected to the bigger picture of Australia's foreign policy. Another example is the lack of attention paid to the role of development assistance in the Australia in the Asian Century White Paper. And just to pick one small issue, surely the attention paid to affixing Australian logos to aid-funded infrastructure implies development assistance is relevant to public diplomacy?

Thanks Latitude. I agree with you that development professionals have long been aware of the importance of economically driven initiatives such as labor mobility, access to markets, trade regulation etc. However, the fact that states like Australia, the Netherlands and Canada no longer feel they need to centre their development policies on poverty reduction, and are instead actively promoting more self-interested economic objectives of aid, is the norm that I see as shifting. This has happened quite quickly. Only a couple of years ago, these states made sure they were at least seen to be 'good global citizens', which entailed having development programs focused on poverty reduction. Now, as Jean-Michel Severino and Olivier Ray predicted, the reality is that 'Global Policy Finance', seems to be a better term for ODA. Their Working Paper, 'The End of ODA: Death and Rebirth of a Global Public Policy', can be found here: http://international.cgdev.org/publication/end-oda-death-and-rebirth-global-public-policy-working-paper-167

A few thoughts to get the ball rolling.... • Social Development Remittance Scheme: Remittances more than double official ODA funding flows globally. Remittances are not only the lifeblood of many Pacific families, but also a source of foreign exchange and tax revenue for governments. Remittances can contribute to poverty alleviation, provide a stable income, increase savings, investment and education, and lead to better housing, health care and nutrition. Aid can further leverage this funding through concessions, subsidies and schemes to direct remittances to savings accounts that can only be used for health care, including maternity services (as an example). • Development Impact Bonds: use private investment flows to provide upfront rosk capital for development programs, only calling on donor funding to pay the capital (plus a potential return) once clearly defined development outcomes are achieved • FDI leveraging – investing in building the trade capacity of a country so that it is better able to engage in firstly regional trade which has been shown to correlate with economic capacity development. • The Enterprise Challenge Fund, an aid initiative begun under former foreign minister Alexander Downer, which offered incentives to businesses, on a matching basis, to extend their operations in ways that benefited the poor. The fund's pilot phase began in 2007 and it ends later this year. For the most part, it has been evaluated favorably. It, or something like it, would be a good candidate for adoption by the Coalition if it wants to signal its intent to shift the aid program in the direction of focusing on the private sector and growth. • The The Business Innovation Facility (BIF) is funded by the UK Department for International Development and was designed as a 3-year project (2010 to 2013) to pilot this new approach to supporting the role of business in the development of low-income countries. The Business Innovation Facility (BIF) helps the development and uptake of inclusive business models by companies in developing countries. The term ‘inclusive business’ refers to profitable core business activity that has high development impacts; creating jobs, integrating local farmers and entrepreneurs in international supply chains and providing quality and affordable services to low-income consumers. • Public Private Integrated Partnership: A Public Private Integrated Partnership (PPIP) is an innovative PPP in which the government enters into a long-term contract with a private operator to build, design, operate and deliver a full range of clinical services to a population. This model harnesses private capital and management expertise, while retaining public ownership and oversight of health services. An evaluation report by Boston University, (the Final report for the “Endline Study for Queen Mamohato Hospital Public Private Partnership,” September 2013), shows substantial improvements in clinical quality, use and patient satisfaction compared to the baseline. The death rate fell by 41%, the maternity death rate fell by 10%, the paediatric pneumonuia death rate fell by 65% and the patient satisfaction rate grew by 22%. Access to health services improved significantly. Inpatient admissions were 51% higher, as were outpatient visits, including filter clinics (126%) and hospital deliveries (45%). The report provides a demonstration of how transformational in quality and access a PPIP arrangement can be in a low income setting. • Private Health Sector Development: The informal economy is often a ‘survival economy’ where millions of people and their families live in poverty. There has been a dramatic spread of informal health markets over the past couple of decades, through which the poor obtain a large proportion of their medical care and that reach into all but the most remote areas. These are dynamic market driven services. Investment in practical programs geared to improving the quality of the informal health sector and making the markets work better has the potential for significant health returns. • Demand-side mechanisms Bangladesh’s maternal health voucher and cash transfer program (providing vouchers for ANC, facility or home delivery, as well as transport subsidies and cash upon delivery); FP voucher program in Madagascar that reimburses providers through mobile money. Population Council is conducting a five-year prospective evaluation of RH voucher programs in 5 countries (Bangladesh, Cambodia, Kenya, Tanzania, and Uganda) – will end in late 2013. • Medical Savings Accounts (MSA) build on the concept of commitment savings, which encourage low-income households to save for a specific health purpose or goal. One of the most innovative MSA products is offered by RCPB, a microfinance institution in Burkina Faso. Two key examples of schemes that have piloted MSA-insurance hybrid products include Medisave in India and the New Cooperative Medical Scheme in China. Abt’s study of Kenya-based Changamka identifies a number of factors to improve the efficiency of this IT-based medical savings account platform.

Fascinating post Ben. On the 'don't mention aid' topic, I <a href="http://www.dfat.gov.au/media/speeches/department/131017-bruce-allen-memorial-lecture.html" rel="nofollow">noted a speech</a> on the DFAT website last week from Secretary Peter Varghese on soft power. Interestingly, Australian aid wasn't mentioned in it at all, even though the speech touched on topics like the success of the Marshall Plan... so basically, how the US has used aid as a tool of soft power. It didn't dare use the word 'aid' to describe this though. It also talked about Chinese soft power without once mentioning China's development financing and aid program, which to me seemed like an oversight. I'm sure for people in the Pacific, for example, Chinese aid projects have shaped their views of that country more strongly than the Beijing Olympics. From the Varghese speech, it doesn't sound like Australian aid is being considered or viewed as a tool of soft power. And from your post, it doesn't sound like it will be softly leveraged if it is going to meet these big economic diplomacy and trade goals. So I very much agree with your final point--if we are going to see hard-nosed change, it's a bit of a worry that we are still so soft on detail.

That's what happens where you hold two portfolios--Minister for Foreign Affairs and Minister for Development. You tend to remember that foreign strategic policy comes first.

Ben, An interesting post. I don't however agree with the assertion that this is proof of shifting norms underpinning aid. Most serious development professionals including AusAID practitioners have long advocated for greater use of the aid program to stimulate and support initiatives such as labor mobility, access to markets and trade deregulation, not as you say just simply 'provide aid'. However those who push the Japan style approach to Aid are also the same who support protectionist and nationalistic approaches to trade and labor issues. For the government to get serious on this issue it would need to implement its election promises on aid for trade and labor mobility as a start.

Hi James, Check out the <a href="https://devpolicy.org/rising-aid-dependency-in-the-pacific-20130917/" rel="nofollow">second part</a> of this blog series where I discuss aid dependency, which includes the graphs you suggest. Regards, Jonathan

Thanks Jane. I agree 100%. Like you say, our government has clearly signalled this change, so the development community’s responsibility is to “contribute to the thinking about how aid will mesh with Bishop’s ‘economic diplomacy first’ agenda” while still generating development outcomes. The Coalition did raise a couple of ideas in their 2013 Election Policy. They promised to build on an earlier commitment to the OECD ‘Aid for Trade’ initiative and to examine the Pacific Island guest worker program. But right now most of these these ideas (including the few I suggested) are largely in thought-bubble form and not practically thought through for application in our context. Given that, I think your suggestion of having broader discussions is a great idea.

The graphs should have aid as percentage of GDP rather than just raw figures to make more sense in terms of relative volume of aid per country.