AusAID technical assistance: Not sexy but still attractive

Author: Aaron Batten

The Blogoshpere has made a number of insightful comments about AusAIDs first Annual Review of Development Effectiveness Report (ARDE) report. On the whole commentators appear to be happy with the frankness of the report providing quite an honest assessment of the constraints facing the aid program. (See Andrew Leigh (ANU) and Jenny Hayward-Jones (Lowy)).

Amongst some of the more interesting findings of the report was that at approximately 50 per cent of its expenditure Australia gives more aid in the form of technical assistance than any other donor – the majority of which goes to the Pacific. This is hardly ground breaking news but it does raise some interesting questions.

Some people have argued that such a large focus on technical assistance is a bad thing. Critics suggest for example that Australia is ignoring the poor by spending our aid money on sending technical advisers and Australian government bureaucrats to the Pacific – rather than building roads and providing health care and education. Undoubtedly technical assistance creates problems. As the ARDE quotes:

“… the high volume of support personnel and the enthusiasm they have brought has resulted,
at national level, in a perception that … there has been too much technical assistance,
resulting in at best duplication of effort, and at worst, suppression of activity and adverse
consequences for ownership and optimism.”

Should Australia place less of a focus on technical assistance?

For the most part, the high proportion of Australian technical assistance can be explained by the high proportion of our aid which is given to fragile states – PNG, Solomon Islands, Nauru etc. Donors such as Australia like giving technical assistance to fragile states. Depending which perspective you take, this is because fragile states generally lack a functioning bureaucracy capable of delivering services (hence the need for technical assistance) or alternatively because there is a much less chance of misuse of aid funds when it is spent on wages. Probably both contribute.

Work by AusAIDs new chief economist, Mark McGillivray, has shown that unless they have some particular strategic motivation (read: security threat or colonial heritage) donors have typically tended to ignore fragile states – leading to the creation of aid orphans. The World Bank for example has in the past been especially guilty of this – but has been making moves to correct the imbalance. Giving foreign aid to fragile states is tough because it is notoriously ineffective (although establishing a counter-factual is problematic). Australia hasn’t followed this trend. This should be commended rather than criticised. Although, it probably has more to do with geography than any greater sense of altruism on our behalf.

Some of my recent research has shown that (on aggregate) technical assistance has actually been much more effective at improving policy performance than other types of aid delivery such as service delivery based aid. In fact, in some instance, it appears that service delivery aid has actually undermined policy performance. These effects are particularly pronounced in small states such as those of the Pacific, where the fixed costs of aid delivery are highest. These results hark back to the arguments of academic legends such as Lord Peter Bauer who spent much of his spare time publicly arguing with the then, World Bank Chief Nick Stern over the distorting effects of aid delivery (a similar argument can now be found between Sachs and Easterly).

Providing technical assistance is not a sexy way of giving aid. Photos of Treasury officials calculating budget forecasts don’t make the best promotional tools. But whilst it is hard to trace, one good policy decision taken by a PNG Minister can change the lives of thousands. Likewise one bad decision can rob huge populations of income earning opportunities.

Recipient country ownership of Australian assistance efforts is a key to its success, but complaints by recipient governments must be balanced against the fact that recipient politicians often dislike TA because it can expose their deficiencies or remove opportunities for rent seeking.

I believe that there is more evidence to support the idea that we should focus on how to make our technical assistance to these countries more effective, rather than doing away with it all together.