Benchmarking Against Progress: An Assessment of Australia’s Aid Effectiveness

Laurence Chandy


Is Australia’s aid program effective? Measuring the effectiveness of aid is no easy feat. For a start, there is uncertainty about what aid is trying to achieve. Even seemingly straightforward objectives, like poverty reduction, throw up a range of questions as to what precisely ought to be measured. For instance, how should one balance the provision of temporary relief to those in need with catalyzing permanent transformation in people’s lives (Barder, 2009)? Second, it is notoriously difficult to isolate the effect of a single aid program from other factors. Aid is delivered in an environment of enormous complexity where all manner of other events shape outcomes, including actions by recipient governments, aid from other countries, non-aid flows, and the performance of the global economy. To accurately attribute impact to aid therefore requires a thorough understanding of the setting in which aid is given. Third, the effects of aid are not always immediate or straightforward. For instance, improvements in people’s skills or the performance of institutions may manifest gradually. Measurements of what aid achieves must be sensitive to the different ways change is brought about (Woolcock et al., 2009).

A solution is to focus on Australia’s approach to giving aid and see how it stacks up against international best practice. International best practice is defined here by what is known to work well in aid, either because it has been demonstrated through research, identified by aid recipients, or agreed through consensus within the aid community. The latter is captured in the Paris Declaration on Aid Effectiveness and the Accra Agenda for Action—two statements of intent by ministers of developed and developing countries and heads of donor agencies, pledging improvements in the way aid is managed and delivered. As a member of the Organization for Economic Cooperation and Development’s Development Assistance Committee (OECD DAC), Australia is a signatory to both agreements.

While adherence with best practice principles cannot guarantee that Australia’s aid will always deliver its intended results, it increases the likelihood that those results will be achieved. And unlike the results of aid, adherence to best practice is fully within Australia’s control. Australia’s performance against best practice standards therefore serves as a touchstone of its commitment to greater aid effectiveness.

Introducing QuODA

A useful tool to assess Australia’s aid program is the Quality of Official Development Assistance (QuODA) assessment, developed jointly by the Brookings Institution and the Center for Global Development (Birdsall and Kharas, 2010; Birdsall et al., 2011). QuODA appraises donor performance along four separate dimensions, each representing distinct components of best aid practice: maximizing efficiency, fostering institutions, reducing the burden on recipients, and promoting transparency and learning. Each dimension is comprised of a collection of indicators against which donor countries are scored. Examining performance against the four different dimensions provides a basis for identifying donors’ strengths, weaknesses and areas for reform. The recent release of the 2011 QuoDA update provides an opportunity to assess Australia’s aid effectiveness based on the latest available evidence.

QuODA is used to assess Australia’s aid program in three ways. First, the aid program is appraised on its own based on Australia’s performance on the different dimensions and indicators. These results are then corroborated using other performance indexes. Second, Australia is judged against a “benchmark” donor of equivalent size, which is involved in similar development work. Third, other donor countries and multilateral agencies active in Australia’s region are assessed. These are donors with whom Australia has the option to partner or to delegate the delivery of its aid, and whose performance is therefore also relevant to assessing how effectively Australia’s aid budget is spent.

A Fragile States Lens

To help shape the analysis, particular attention is paid to the role Australia plays in providing assistance to fragile states. The term “fragility” captures a range of different country conditions, but in each case there is a failure of the state to perform some of its most basic functions, due either to a lack of political will, capacity, or a combination of the two, creating significant challenges for development. These failures are typically observed in terms of one or more persistent deficiencies of the state: its authority, its legitimacy as perceived by the country’s citizens, or its provision of services (Stewart and Brown, 2010).

Australia’s focus on fragile states is a defining feature of its aid program: 50 percent of its aid goes to countries that are considered fragile. This focus on fragile states is a reflection of Australia’s region where fragility is commonplace. Among the countries that are not fragile, many still face related challenges associated with weak governance.

Why is fragility important to this analysis? It is broadly recognized that promoting development is much harder in fragile states than in other countries. The reason for this is straightforward: governments cannot be relied upon to support the development process in fragile states, and in some instances may serve to undermine economic and social progress. This has important implications for aid. Aid delivery tends to be both a more costly and more complex task in fragile settings. Part of the complexity lies in understanding how to apply good practice aid principles. While the principles of effective aid remain just as relevant in fragile states, they cannot always be implemented in the same way as they can in other countries (Chandy, 2011).

While delivering aid in fragile states—and doing so effectively—undoubtedly presents a challenge, many donor countries are tasked to do exactly that. Australia’s region obliges it to take on this type of work. Furthermore, there is a growing consensus within the development community that helping fragile states represents one of the core challenges of global development both now and in the future. Helping fragile states has become inseparable from a commitment to fighting poverty reduction, achieving the Millennium Development Goals (MDGs), and assisting low-income countries:

  • Fragile states account for a growing share of the world’s poor. As global poverty levels fall, driven by progress in more stable developing countries, the share of the world’s poor living in fragile states has doubled from 20 percent in 2005 to 40 percent today. More than half the world’s poor are expected to live in fragile states by 2015 (Chandy and Gertz, 2011).
  • No fragile country has yet achieved a single MDG. Fragile states are home to half of all children not in primary school and half of all children who die before reaching their fifth birthday (DFID, 2009). The remarkable success of many stable developing countries in achieving the MDGs has drawn attention to the lagging performance of fragile states.
  • Two-thirds of low-income countries are fragile. The past decade has seen a wave of 30 (mostly stable) countries graduate out of low-income status. Of the 35 countries still classified as low-income, less than a dozen are stable.

Understanding how to deliver aid effectively in fragile states is, therefore, a vital question for the aid community over the coming years and one Australia can help to answer.