Follow the money: how foreign aid spending tells of Pacific priorities

The Pacific, when measured by aid inflows as a proportion of GDP, is the most aid-dependent region in the world. Geographic remoteness, exposure to frequent natural disasters and vulnerability to climate change are several of the causes that make the region vulnerable. Because of this vulnerability, the Pacific receives a significant amount of aid from the international community – between 2011 and 2016, an average of US$2 billion in foreign aid each year, which was equal to about 6.5% of the region’s GDP, according to the Lowy Institute Pacific Aid Map. When removing PNG and Fiji of the regional GDP (which take up respectively 70% and 14% of the region’s GDP), the average Pacific economy receives official financing flows equal to about 31% of its GDP during the period. When only looking at foreign aid (known in development jargon as Overseas Development Assistance, or ODA), the Pacific Aid Map reveals that Australia is the leading donor to the region, with 45 percent of the total amount of aid given over the period, followed by New Zealand (9%), China (8 percent), the U.S. (8 percent) and Japan (6 percent). The Asian Development Bank and the World Bank respectively account for 5 percent and 4 percent of the ODA distributed to the Pacific. This great concentration has an impact on the sectorial distribution of aid to the region. Foreign aid can be used for a great many things in developing countries. From responding to humanitarian disasters, building roads, providing scholarships, investing in agricultural research, vaccinating kids – there’s more things aid can be used for than it cannot. An analysis of the sectoral distribution of aid flows provides some insights into what the perceived challenges are facing the region, what donors’ priorities are, and how specialised certain donors can be. Project reporting doesn’t follow a clear set of rules. Donors have their own reporting mechanism, which might not align with one another. For example, Australia groups its aid program into four broad categories. The Organisation of Economic Cooperation and Development uses 23 categories (with dozens of additional sub-sectors). To harmonize the 13,000 projects collected, the Pacific Aid Map uses a condensed version of the OECD Sector list (by downloading the dataset directly from the Pacific Aid Map website, users can dig down to the full sub-sectors level to cut the data into even narrower sectors). When looking at the sectorial distribution of aid to the Pacific, Governance (defined by the OECD as “the exercise