Foreign Assistance: Lessons Learned From Donors' Experiences in the Pacific Region

Australia, Japan, New Zealand, the United Kingdom, and the United States have been the major providers of bilateral development assistance to the Pacific Island nations since 1987. The Asian Development Bank and the European Union have been the major multilateral donors. The donors' main development objectives, according to the planning documents, have been to alleviate poverty and to set the Pacific Island nations on the path to economic self-sufficiency. To achieve these objectives, these donors focus their assistance in key areas, such as education, policy reform, and infrastructure. The United States could draw several lessons from the donors' experiences for providing assistance as well as the strategies and approaches the donors have adopted. These lessons could provide valuable insights for the United States as it negotiates additional economic assistance to the Federal States of Micronesia and the Republic of the Marshall Islands. On the basis of the donors' experiences, GAO observed that (1) assistance strategies may involve trade-offs in expectations of aid effectiveness if other objectives for providing assistance take priority over development objectives; (2) assistance strategies may involve trade-offs between effectiveness and accountability, on the one hand, and administrative costs, on the other hand; (3) effective assistance depends on a good policy environment in the recipient country to create the conditions for sustainable development; (4) strategies tailored to the individual needs of the recipient country might have greater chances of succeeding because they offer recipients opportunities for stronger ownership of the program; (5) flexible strategies enable donors to adapt their assistance to changing circumstances and provide incentives for development achievements; (6) well-designed trust funds can provide sustainable sources of assistance to Pacific Island nations with limited growth options; and (7) sectorwide approaches, although generally untested in the Pacific, depend on recipient government commitment and ability.