Aid and the dependent development of pacific Island states

Abstract

development opportunities, by augmenting domestic supplies of people, money and goods at concessional rather than market rates. The test of success for such resource transfers is whether or not they decline, as the development which they assist makes them redundant. This paper argues that most Pacific Island states will fail this test; that aid will tend to create the need for more aid, leading to a condition of permanent aid dependence; and that this is the only available entry into 'developed' consumer society. The stark alternative for most Pacific societies is the austere independence of a 'Zen economy'? zero economic growth ?which few islanders or foreigners would prefer. This judgement rests on my reading, experience in the Pacific, and discussions with project officers from the region. To begin with some basic facts: the small-country bias in aid allocation is well documented. De Vries's data suggest that countries whose populations are less then five million receive about three times the aid per head received by larger countries with similar income levels.1 The bias towards countries with populations under one million is even greater, as is shown by the 1977 data in Table 1. And the bias is persistent. Whereas real aid flows have stagnated overall during the recent world recession,2 aid to Pacific economies has continued to expand, on the evidence presented in Table 2, and allowing for inflation. Aid receipts in the South Pacific averaged more than A$200 per head in 1980. It would be naive to contend that aid needs explain the unequal distribution of aid funds. Aid 'is best seen, like war, as an extension of politics through other means';3 and bilateral aid flows are best explained in terms of the donors' interests, rather than in terms of the recipients' resource shortfalls.4 Table 3 establishes the relevance of this point for the Pacific: 93% of 1980 aid was bilateral; French and United States dependencies absorbed 55% of the total, but accounted for only 15% of the popula tion. Ninety-two per cent of Australia's aid went to Papua New Guinea: in this case, and in the pattern of aid from the United Kingdom and New Zealand, past and present political ties are vividly reflected. Donor perceptions of a growing Soviet threat in the region, among other political and strategic factors, explain the aid expansion which is documented in Table 2 ?not a suddenly perceived need for additional aid.5 It has also been observed that strategic and political benefits can be obtained most effectively by concentrating aid in small countries.6 Taken together, these perceptions reveal why aid

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