Conclusion for my Major Research Paper

Canada’s Compliance with Aid Effectiveness Principles 

Major Research Paper

© Marje Aksli, Ottawa, Canada 2013

Conclusion

My major research paper at the University of Ottawa on aid effectiveness was undertaken as a learning experience to exercise a more deliberate and slower mode of thought in Canadian aid effectiveness studies with an attempt to start a conversation on what institutional qualities relate to donor aid effectiveness outcomes. The paper’s main goal was to fill a quantitative knowledge gap in aid effectiveness scholarship by analysing Canada’s relative position among its peers through the use of measurements of aid effectiveness indicators.

The paper was composed of two parts: Part One sought empirical evidence to support the claim often made that Canada has low performance levels and is exhibiting a continual decline in aid effectiveness. Part Two looked at the contributing factors to aid effectiveness.

Part One was stimulated by recent media headlines that suggest Canada’s aid performance compares poorly to that of other donors.  Headlines such as “New aid policies eroding Canada's image: Partnerships with mining industry raise concerns about international development priorities”, “Does cutting foreign aid threaten Canada's reputation in the world”, and “CIDA is Breaking Canada's Promise to the World” indicate that there seem to be two major trends in Canadian aid conduct: Namely, the authors refer to a decline in aid performance over time and to Canada’s loss of international reputation as a result. These headlines also seem to suggest that when compared to other donors, Canada is performing much worse.

In addition to critical media articles, the most recent and thoroughly researched book on aid effectiveness entitled, “Struggling for Effectiveness. CIDA and Canadian Foreign Aid” also concludes – in the words of its editor Stephen Brown of University of Ottawa – that “all the chapters point to the important deficiencies” and that “the portrait of CIDA that emerges is one of profound mediocrity”. Hunter McGill goes further in claiming: “the effectiveness of Canadian aid has been eroded” and “as a result, Canada’s visibility and influence in foreign policy and aid spheres has ebbed considerably”. Despite these claims, my analysis could not determine what empirical data the authors are relying on to make these claims.

The analysis of OECD DAC data provided in the 2011 Survey on Monitoring the Paris Declaration suggests that among 22 donors, the top performing country in aid effectiveness is Ireland and the least performing country is either the U.S. or Korea, while Canada performs largely mid-range. Depending on the type of recipient countries of Canadian aid, Canada’s rankings change accordingly. For example, Canada performs slightly better when its aid is allocated to the least developed countries (32-country data set), than when the middle-income countries are included in the group (global snapshot). Overall, Canada has improved its aid effectiveness results by 34 per cent since 2005.

The first two sections of Part One compared and contrasted Canada’s relative position to other DAC donors. The central argument of the comparison results was that while there are certainly ways that Canada could improve its record, there is no need to lament about the loss of face internationally – global donor compliance with aid effectiveness principles varies quite significantly. Compared to 22 donors on average, Canada’s aid is more effective by four percentage points across the indicators measured in percentages.

Among the ten Paris Declaration indicators, Canada’s results are mixed. In two indicators (3 and 4) Canada has actually backslid during the five-year period, over 20 per cent in each case. Further, the data suggest that compared to other donors on average, Canada performs relatively better in the ‘alignment’ principle; aligning its aid policies according to the national development strategies of recipient countries. The same cannot be claimed of Canada’s performance in relation to the ‘harmonisation’ principle, which requires foreign aid donors to coordinate their aid programs with each other.

Specifically, Canada’s ‘alignment’ indicators show higher results by 13 percentage points than that of donors on average and in the ‘harmonisation’ indicators Canada’s average score lags behind by three percentage points compared to the donors’ average. 

While Canada made progress towards more effective aid compared to the 2005 baseline, it did not meet the targets set for the donor countries. Only three donors reached the set targets out of 22 indicating that missing the international targets is a norm rather than an exception. Canada’s gap in meeting the targets was smaller than the donor average in the 32-country data set, and slightly wider in the global snapshot (or when all the recipient countries are included). Compared to the average performance gap across the donors, Canada does not seem to stand out.

Part Two of the research paper then attempted to explain what could possibly explain the high aid effectiveness performance. It described the recent aid effectiveness campaign as a tension between donors’ institutional incrementalism and a global pressure to ensure more altruistic aid, free from politics. Rooted in institutional theory, the research viewed aid effectiveness as a struggle between donors’ business-as-usual (where their aid policies are closely linked with foreign policy interests on one hand and idealist campaigns to be more generous on the other) and globalism, which – in the form of the Paris Declaration – acted to divert donors from their path dependency and attempted to ensure altruism and transparency in aid policies.

The aim of Part Two was to estimate what would possibly explain the good aid effectiveness performance. The research used correlations between the average scores of aid effectiveness and four proxy measures for path-dependency and globalism. The aim was to see which of the measures offers the strongest correlation coefficient, and can therefore explain the outcome the best.

Based on a literature review, two proxy measures for donor institutional path-dependency were chosen, including realist (measured as ideology on the scale of ten) and idealist attitudes to aid (measured as generosity of aid budget from GNI). On the other hand, two proxies were used for globalism, as well, which was – in the aid effectiveness context – conceptualised through altruism (the amount of aid to the LDCs) and transparency measures (transparency and learning ranks by CGDev).

The main suggestion arising from this analysis is that – while countries made progress in aid effectiveness indicators – the outcomes do not seem to be related to donor altruism or transparency (as Paris Declaration was conceptualised in this paper). Instead, the variables of the institutional qualities, which offered the strongest correlation coefficients with the aid effectiveness scores were the idealist / realist tendencies, associated with donor’s path dependency or institutional incrementalism.

For example, the share of ODA/GNI (idealist approach to aid) offered the highest correlation coefficient to aid effectiveness scores across 22 donors, while being statistically significant. The second highest aid effectiveness correlation coefficient with conservative ideology (realist approach to aid) suggests that donors might progress in aid effectiveness while being ideologically rather conservative.

As explained earlier, the Canadian government, which can be considered as one of the most ideologically conservative among the DAC donors at present, is argued to be viewing aid through an efficiency lens. The Conservative Party of Canada tends to emphasise a more narrow understanding of aid effectiveness: the efficiency or the “more bang for the buck”, attempting to achieve maximum productivity with minimum wasted effort or expense.

Considering the positive and medium-strong correlation coefficients between the conservative ideology and aid effectiveness outcomes, the narrow productivity-lens on aid effectiveness might be in use among other DAC donors, as well. But further research would be needed to shed more light to this possible attitude towards aid effectiveness across DAC donors.

The very low correlation coefficient of transparency variable seems to suggest that the Paris Declaration ‘mutual accountability’ principle or the international peer pressure, which can take place due to donors’ openness, has not been significant force enough to ensure the change. DAC donors’ aid institutions achieved only moderate change towards this global initiative while remaining largely path-dependent.

This conclusion can be supported by the fact that the overwhelming majority of donors did not meet their targets. Only three donors met their respective aid effectiveness targets, suggesting that while the progress towards more effective aid was made, it was not far-reaching enough.

Ultimately, though, further research is required about what institutional qualities correlate well (and can therefore explain) a donor’s foreign aid policy in terms of its effectiveness. Perhaps other theories and other proxy measurements, e.g. inclusion of variable about aid agencies’ subordination to foreign affairs and trade departments, offer stronger correlations (negative or positive) for being able to tell a more convincing story of donor aid effectiveness.