Why Are Aid Projects Less Effective in the Pacific?

Abstract

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.

Keywords: Aid Projects, Aid Effectiveness, Evaluation, Pacific Island Countries, Australian Aid Program

JEL Classification: F35, O1