DP87 Why are aid projects less effective in the Pacific?

Development Policy Centre Discussion Paper No. 87

By Terence Wood, Sabit Otor and Matthew Dornan

May 2020

On average, appraisals find aid projects to be less effective in the Pacific than elsewhere in the developing world. In this study, we use a new multi-donor data set to study why aid projects are less effective in the region. We find the clearest impediments to effectiveness in the Pacific are remoteness and small population size. The relatively politically free nature of many Pacific states also appears to be associated with lower project effectiveness. The impact of remoteness and population makes sense — both traits make aid logistics harder. Our study is not the first to find aid is less effective in freer countries, yet the finding for the Pacific is puzzling, a matter we take up in the discussion section of the paper. We also study which types of projects are least likely to work in the Pacific. In doing this we are impeded by data constraints. However, we find clear evidence that humanitarian projects tend to be less effective in the Pacific than in other countries.

Wood, T., Otor, S. & Dornan M. 2020, ‘Why are aid projects less effective in the Pacific?’, Discussion Paper No. 87, Development Policy Centre, Crawford School of Public Policy, Australian National University, Canberra.

Terence Wood

Terence Wood is a research fellow at the Development Policy Centre. His research focuses on political governance in Western Melanesia, and Australian and New Zealand aid.

Sabit Otor

Sabit Otor is an Associate at the Development Policy Centre. His research focuses on aid effectiveness, aid for trade, macroeconomic determinants of aid graduation, and developing countries. He holds a Bachelor Degree of Science and Education from Alexandria University (Egypt), a Bachelor Degree and Graduate Diploma of Economics from ANU and a Master of International and Development Economics from ANU.

Matthew Dornan

Matthew Dornan was formerly Deputy Director at the Development Policy Centre and is currently a Senior Economist at The World Bank.