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Thanks Stephen - going to be a very interesting evening tomorrow. But I would have to say that a nearly $500m increase in the aid budget is a good outcome (and one that I was not expecting). I'm sure most commentators will protest the delay in reaching 0.5% rather than noting the huge increase in overall spending. Will be a big challenge for AusAID to spend an additional $500m (though I guess it depends on what the asylum seeker costs are capped at). Thanks as always to you and your team for helping to decipher all of this. Joel

Recently, we <a href="http://scholar.google.com/citations?view_op=view_citation&hl=fr&user=qwQSRdAAAAAJ&citation_for_view=qwQSRdAAAAAJ:d1gkVwhDpl0C" rel="nofollow">argue</a> the existence of negative relationship between aid and governance. Stephen knack thinks that aid has diminishing returns on governance, because it creates corruption opportunities. But, with the advent of threshold theory in economic and econometric methodologies, we found that aid has negative impact on governance in excess of fixed level, that make up the absorption ability of the country.

Based on the work of Samoan consultants that was commissioned by ADB for the Capacity Development study a few years ago and my own discussions and visits to Samoa, I understand the land reform process in Samoa to have been largely funded by external agencies but fully lead and participated in by Samoans. However, I think the best person to comment on this would be Hinauri Petana.

Whilst I agree entirely that Australia ought facilitate better access to employment opportunities in Australia, the opportunities will only ever directly benefit a very small percentage of the population. Currently over three quarters of the population are directly dependent upon agriculture for their livelihood. Strategies that focus on improving agricultural production, diversifying and value adding (eg through making tofu/tempeh from locally grown soybean) timber production with rural based timber and bamboo milling and local furniture making, more intensive cattle production, mini dams to capture wet season water to use for year round vegetable crop production are a few examples of the ways in which the long term employment and prosperity of Timorese can be grown in country. I also think it is fanciful to imagine that the Australian horticultural Industry that lobbied for years to get better access to the labour market would be at all grateful if the incentives for backpackers to work in agriculture were to be removed. I agree entirely with the other reforms to the seasonal worker scheme suggested. It's a powerful disincentive for potential employers if they have to front for an airfare for sight unseen workers , especially given that Timorese workers generally have poor english language skills and close to zero experience in modern commercial horticulture. The existing demands for pastoral care put a further impost on potential employers.

Great article and while I support 100% that participatory processes are key to successful projects in SIDS. I disagree with your mention of "land reform in Samoa" being a good example. I beg to differ and ask this: Participation for whose benefit? In most cases, it is for the development partner's and for economic development that overlooks the holistic and the overarching concerns of the indigenous person/locals/culture. These participatory processes are therefore very rarely for the sake of the locals who have been summoned to "participate".

Thanks for this post. I remain unconvinced that aid will be a significant issue in terms of the forthcoming election in Australia but it is good to see the Greens doing their bit to get it on the agenda. As for the Cameron government's activities in the UK... it is something of a good news bad news story. Whilst it is fair to say that making the commitment to the money is more important than debating legislative language it's important to remember that enshrining the 0.7% commitment in legislation was part of the commitment. Plus, and possibly more importantly, if <a href="http://www.newstatesman.com/politics/2013/03/cutting-aid-budget-and-skipping-meetings-cameron-still-global-leader" rel="nofollow">this item</a> from the New Statesman is correct, then the devil really is in the detail

Both examples Dan Moulton cites illustrate 'Campbell’s Law'. This states: “The more any quantitative social indicator is used for social decision-making, the more subject it will be to corruption pressures and the more apt it will be to distort and corrupt the social processes it is intended to monitor”. In the case of Indonesia, I led a study of the national examinations in late 2009 (available <a href="http://inovasipendidikan.net/research/An%20Exploratory%20Study%20of%20the%20Ujian%20Nasional%20in%20Indonesia%202010.pdf" rel="nofollow">here</a> [pdf]) That study found extremely serious weakness and argued that the quality of examinations was undermined by four factors: 1, A weak foundation of professional knowledge about student assessment across the education workforce; 2, Poor professional and ethical standards with widespread, systemic and entrenched malpractice; 3, Educational and technical weaknesses in assessment design; and 4, Unacceptable educational risk from high stakes testing. Recognising that it was most unlikely that even such a poor system would be abandoned, the study made specific recommendation for reform based on four factors targeting 1: A professional, integrated and aligned national examination system; 2: An ethical education system; 3: A better quality, credible and flexible credential at the end of schooling. Strategies to lower the stakes for schools and children should yield positive benefits. Your comment about school based tests could help with this but also, unfortunately, reduce test reliability. Well-intentioned suggestions by some for more and external assessments will likely make a poor system even worse. Hence my repeated calls for caution.

This topic is most timely for Indonesia where a major controversy about the national exams is taking place. Passing rate is nearly 100% and there is always some leakage. Is there an alternative to high stakes national testing for a country like Indonesia? Would school based performance evaluation be any more valid as a determinant of passing or failing? In USA where local control of education is sacred, my state of Massachusetts introduced a high stakes state wide exam as a final determinant for graduation from high school. In the first year of the exam a principal was caught giving out answers so that her school would not look bad in the final results. It seems high stakes always is an opportunity for fraud. Would a national low-stakes exam be useful for Indonesia for determining overall performance if held on a sampling basis and the student name and school is somehow made anonymous to prevent cheating?

Are people ‘better off’ after so called development takes place? There is a common thread that seems to insidiously entwine itself around the concept people in so called developed nations seem to view the aspirations of those in so called under developed nations. To those in our ‘café latte’ societies that occasionally spare a thought and a few coins in favour of those in the ‘developing world’, it would seem impossible to consider that those who are viewed as being less fortunate could possibly be happy the way they are. Available statistics on health and education are easily translated into dramatic comparisons and emotive arguments by those who wish to fund overseas aid packages. Yet the undeniable evidence seems to point to the conclusion that many may end up being better off in the eye of the distant beholder. Are those in our consumer society actually happier than those in the villages of a developing nation? The more we accumulate in material goods, the more unhappy many become. Salary and wages are always insufficient to purchase a larger house that costs more to run or a more modern, but gas guzzling SUV. There doesn’t seem to be a happy medium whereby people can aspire to a better life through education and improved health without the ever present corollary of increased material expectations. Mining companies are created by those who have the relevant training and a passion for extracting mineral resources to make a profit. Given that most developed countries have now discovered where their own mineral resources are, the obvious place to search for new deposits is in underdeveloped countries. Yet the discovery of economically viable mineral deposits raises many questions. Primarily, the biggest question is: Who gets the benefits and who suffers any damages, permanent or temporary, to their environment? Clearly, mineral extraction in a developing country does not in any way affect the environment of those who reside in the developed country that provides the capital and know how to extract the minerals. That can often lead to an: ‘Out of sight, out of mind’ mentality. But what might happen if the mineral resources were underneath the backyard in the developed nation? In Australia currently, it’s a case of NIMBY – Not in my back yard! Touring the Mid West of the US recently, I asked a local farmer about how he felt about the numerous oil wells and gas ‘fracking’ sites around his farm. “Wal”, he reflected, “ Ah like drivin’ mah pickerp!” Given that the US believes that it is on the road to creating self sufficiency in oil and gas, what effect might that have on the philanthropic potential of mining companies in the future? Similarly, if a mining company wants to extract minerals in a developing country, will future concerns lead to a surcharge on the extracted resources to pay for the health and education of those who claim ownership of the resources? What happens if this creates a clear disparity between the haves (who are lucky enough to be sitting on the resource), and those who have not? Western concepts dictate that the state owns all resources under the ground and the state allots a fair share of the benefits to all citizens. In practice in most developing countries, this notion is usually only given lip service. Locally, those Australian farmers lucky enough to have coal under their properties may reap a financial benefit in the sale of their property to a mining company. Their neighbours will not be so lucky however and will inevitably wind up with the dust and tailings and a degraded environment with plummeting land values. The difference between Australia and a developing country is that we have (mostly) responsible governments that are able to be influenced by the majority of electors. Most developing nations do not have that opportunity. What’s the answer? If we by persuasion or legislation, force mining companies to accept what in so called developed countries is the role of government, doesn’t this merely allow the government of the developing nation the opportunity to continue to reap the accrued benefits without being held accountable by their electors? Mining companies are not set up to govern a nation or a region. If by default, they have to perform this activity, have they been effectively trained and are they then to be held accountable and if so, by whom and how? The film 'Avatar' encapsulates the problem most eloquently.

Hi Kylie I agree the framework you've developed does align with the 'cultural capacity' concept I had in mind, I like very much the areas you've delineated. Yes I'd be happy to talk further on this because I think it's a very important area and I also think that if it were possible to develop some tools or methodologies to assist corporations to develop these capacities then maybe this could be something our part of the world could share with countries elsewhere. It seems to me that there may be a potential linkage here with the work Margaret & Robin are doing about engaging business in development and it would be good to explore that also... Bye for now Tess

<a href="http://www.concertcambodia.org" rel="nofollow">ConCERT Cambodia</a> is a great source of information, both online and in person, for information about what to do and how to respond to the issues of poverty in Cambodia. There is a main office and a drop-in centre at the Sister Srey Cafe on the riverside near the Old Market in Siem Reap.

Hello Margaret and Tess, Thank you very much for engaging with my ideas. Tess, I like the term 'cultural capacity building' that you have used in your post. I developed a framework in my thesis which I called Interdependent Engagement which I think has a lot in common with the points you raise. However the strength of your post is that you do raise the issue of regulatory capacity which was a gap in my research. It was unfortunately beyond the scope of the public debate earlier this year to outline the logic and framework of Interdependent Engagement (as we only had 5minutes), but in that framework I put forward a methodology to help 'navigate' eight crucial areas where corporations need to develop this kind of 'capacity'. These being: historical injustice; the denial of customary land rights, regional inequality and contests over resource wealth; cultural, political and economic marginalisation; human rights violations; community disruption: environmental damage; and aspirations to define the future. At least, these were the core areas I identified in the Bougainville and Papuan resource conflicts. As to regulatory capacity, yes- indeed. There has to be a role for States in developing this kind of engagement. But corporations also need to widen their responsiveness to States primarily, to communities affected by resource development. But this too has risks and limitations... happy to chat further.