May 2014: aid indices, reading, and condolences

Last week a team of Australian academics and development practitioners launched The Pacific Index, an endeavour — modelled on the Center for Global Development’s Commitment to Development Index — which attempts to measure and rank the extent to which the countries of the OECD contribute to development outcomes in the Pacific. Each OECD country’s score on the index is a combination of measures of its contributions to global public goods (such as attempting to tackle climate change) and its more direct contributions to the Pacific (particularly its level of trade with the Pacific, the number of migrants from the Pacific it is home to, and the quality and quantity of aid it gives to the region). Gathering data of this sort is hard work, and the dataset alone will be useful when it is released, so the team involved deserve to be congratulated for what they’ve achieved.

A two page summary of the index is here, while a somewhat longer report is here. Media reports on the index are here and here. As you can see from looking at the results chart on page 2 of the report, New Zealand ranks highest on the combined index, which in part reflects our very commendable efforts in areas such as migration and our Pacific focus as a country more generally.

New Zealand also scores higher than any other country on the individual aid component of the index. While technical details on the formulas which drive the index scores have not been released, I exchanged emails with one of the authors of the index over the week. From what he was able to tell me I think it would be a mistake to conclude the index suggests New Zealand’s gives better quality aid to the Pacific than other donors do.

From the email correspondence it appears that the aid score on the index is based on 4 attributes:
1. The amount of aid the country gives to countries of the Pacific as a percentage of the donor country’s gross national income.
2. Tied aid — the aid to GNI score is scaled down somewhat if the aid given to the Pacific is registered as tied aid in the OECD’s aid dataset.
3. Selectivity — aid is scoredĀ more highly if it goes to either countries with low incomes per capita (presumably GDP/capita as income data based on individual or family incomes for the Pacific are still quite scarce) or to countries with good governance.
4. Proliferation/governance quality — the aid score is also weighted on the basis of a calculation interacting the number of aid projects a donor has in a country and the quality of that country’s governance, with donors being penalised when they have a lot of projects in a poorly governed country.

Several points should be noted about this.

First, according to the correspondence I received from one of the creators of the index, the foremost driver in the differences between the scores of the different aid donors is the ‘aid to the Pacific /donor GNI’ factor. New Zealand, as a donor focused heavily on the Pacific, rightfully does well on this; however this is a score of aid quantity not aid quality.

Second, like all of the indices available to quantify the quality of aid, this one misses out many of the most important elements of aid quality. Australia’s score, for example, won’t change one bit as a result of the subsuming of its aid programme into its Foreign Ministry. And the ongoing shambles of New Zealand’s contestable NGO funding systems won’t register in the index either.

Third, tied aid is a very legitimate indicator of aid quality; however, countries’ reporting of tied aid to the OECD is notoriously inconsistent, and so the scores that emerge from this data are of limited use.

Fourth, selectivity is an important measure of something approximating aid quality. However, if the score in this attribute is based on interacting GDP/capita and quality of governance, Australia will have been penalised for the large amounts of aid it gives to Papua New Guinea, which does not seem fair given that PNG – whilst being of quite high GDP thanks to its natural resources – is still one of the countries with the most acute poverty in the region.

Fifth, the OECD CRS aid project data that are the source of the proliferation scores in the index are not comprehensive for all donors in all recipient countries, which means that it is possible that a donor country might be being scored down here simply because it has been more transparent in its reporting and as a result listed more projects. To be clear we do not know if this has impacted significantly on the scores in this index, but it is a potential problem. Also, the compilers of the index use as their measure of proliferation a simple count of the number of projects as opposed to something like a fragmentation index. This penalises donors who give larger absolute amounts of money (i.e. Australia) as more money will usually mean more projects (which is true, up to a point, even if the average project is larger reflecting the donor’s attempts to reduce proliferation). The interaction of the project count and a score of governance is, once again, likely particularly harsh on Australia as a result of its large engagement with PNG.

In noting all this I do not mean to criticise the creators of the index, who deserve to be commended for their hard work in bringing potentially very useful data together. Rather, I just want to emphasise the importance of interpreting development indices with considerable care.

Interesting Reading
Meanwhile, safely away from indices and back in the world of words, the Guardian has an excellent article on the re-integrations of the Australian and Canadian aid programmes. The Boston Review has an interesting article on how the Trans-Pacific Partnership could potentially empower tobacco companies. Gordon Campbell says more or less everything thing that needs to be said about Shane Jones being lured (presumably with aid money?) to become an “economic ambassador” in the Pacific. Jo has a post up on the Devpolicy blog on end of life care and development, and I have a post up on the Devpolicy blog looking at the latest evidence on an age old question of development: does democracy promote growth?

Finally we wanted to offer our condolences to the family and friends of Nicki Wrighton who passed away in late March. Oxfam has a short note on her passing here. Nicki was well known throughout the region for her passion for development. She made a great contribution to aid work. She was a friendly, engaging person, and will be sadly missed.

Terence for NZADDs admin.

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