Comments

Indeed, I think this is a rather long winded way of saying what we already know and that is good people make for good projects. It would be interesting to see how flexibility and changes to frameworks have changed over time and how that may have affected outcomes,

Farley and Catherine, I'm interested in your support for bulk procurement of drugs. As you point out, it isn't a new initiative, having been the subject of many meetings/discussions in the 1990s and 2000s. A proposal for bulk procurement of drugs prepared by WHO was actually rejected by Pacific island Health Ministers at the 2009 Madang meeting, on the grounds that there was limited evidence regarding its benefits. My understanding was that one of the barriers to bulk procurement of drugs in the region is that PICs already purchase drugs at low prices, meaning that the economy of scale benefits of bulk procurement, in terms of price reductions, would be limited. That argument was made by a 2009 WHO study into bulk drug procurement – “Feasibility study on pooled procurement for Pacific island countries” – which found that “current prices (in PICs) are quite competitive and already very low”. It also cited previous work that had found prices for a basket of pharmaceutical products in Solomon Islands and Vanuatu were competitive with international prices, being 90% those paid in the eastern Caribbean (where a bulk procurement scheme is operated by the Organization of the Eastern Caribbean States). The report was still supportive of bulk procurement, but on the ground of quality assurance and reduced administration costs, rather than discounts achieved through bulk procurement. I'd be interested in your views. Do you consider non-financial benefits from bulk procurement as more important than cost savings associated with economies of scale? Do you know of any more recent work that has examined the cost-benefits of bulk procurement in the Pacific?

Hi Garth, Good questions - but I don't have good answers! Looking at that annex, I am not qualified to assess validity of their model but I suppose with enough assumptions you can get any model to say whatever you want... Some earlier (2004) peer-reviewed analytic work (see <a href="http://pubs.aeaweb.org/doi/pdfplus/10.1257/002205104773558056" rel="nofollow">here</a>) is a bit less sanguine. But to my mind, whether or not the $8 figure (or the $20 figure the OECD also cites) is correct, the issue is whether trade has any benefit for the poor. The $8 figure signifies an increase in exports - which is nice - but that figure does not address to whom the benefit of that $8 is accrued. I accept that in the long-term, increase in exports and trade are likely to have an overall economy-wide impact that will likely help some of the poor. But those links to me need more analysis and explicit strategy to make real. Joel

Thank you Joel for starting this discussion about Aid For Trade. Given the importance of maximising aid effectiveness and the return on tax payer funds, has anyone seen clear evidence that aid for trade does generate economic growth and jobs in developing countries? I notice that the Foreign Minister recently stated in her opening address to the ANU development policy workshop that "For every single dollar invested in Aid for Trade, an estimated $8 in additional exports will be created in developing countries". How confident can we be that the econometric study underlying this statement (see Annex F of OECD 2013 Aid for Trade at a Glance) is adequate to make this sort of statement? I thought that donors had been giving aid for trade in the Pacific for many years - have the returns been this high?

Thank you Bronwyn. I think the PHAMA program is a good example of regional cooperation to help producers in island states take advantage of potential commercial opportunities. I note with interest the development of national 'Market Access Working Groups'. I think the philosophy behind them is sound; as a mechanism allowing the domestic private sector to drive market access priorities, and as a means of stimulating a working relationship between growers and government. I look forward to reading further on the Working Groups. It seems to me that the work of the Secretariat of the Pacific Community (SPC) "to provide support for biosecurity related market access issues at the regional level" is a regional public good that should be supported on an ongoing basis. On the face of it, pooling the highly specialised expertise needed to help island states maintain compliance with quarantine measures in destination markets (in areas such as entomology and plant pathology for example) makes a lot of sense.

Thank you Linda. I am wholly in agreement more can be done to link smallholder agriculture with the tourism sector in Pacific island countries - particularly in Fiji, Vanuatu, Samoa and the Solomon Islands. I note that a fair bit of work is going on in Fiji at the moment trying to link vegetable growers in the Sigatoka Valley with hotels on the Coral Coast and elsewhere. This work is supported by the Pacific Agribusiness Research for Development Initiative (PARDI).

I share the consensus that in the long run trade (and I would add investment) reduces poverty. I am sure that a genuinely independent assessment of the relative benefits of increased trade and aid, would score the former higher. Much depends, of course, on national policy and administrative capacity as well as physical infrastructure in recipient countries and I suggest that support in these three areas are a vital comconmitant for aid for trade programs.

Joel, thanks for the post. I share your concerns regarding the unclear link between the ‘aid for trade’ agenda and poverty reduction (which is also very difficult to measure). That said, I feel that in many areas the impact of pursuing aid for trade will be limited. In regards to infrastructure development for example, ‘aid for trade’ really does appear to be a case of rebranding existing development assistance for road construction etc. Time will tell, of course, as this government’s definition/interpretation of aid for trade becomes clearer. One issue that I think does warrant greater attention, given Bishop’s emphasis on aid for trade in the Pacific, is the scope for development of exports in smaller Pacific island countries (microstates, like Tuvalu). I would argue that there is very limited scope for exports from microstates to ever be able to compete in international markets. Winters and Martins have argued along similar lines (as in their 2004 paper, available here). Even in niche industries, which Wesley Morgan argues are an avenue that should be pursued by PICs, I can’t see microstates competing with the likes of Fiji or Samoa. Instead, it is in other areas that fall outside the aid for trade agenda, like labour mobility, where these countries have better prospects. The most effective way to facilitate labour mobility from such countries is through changes to Australia’s migration laws; a focus on aid for trade in our aid program would seem to miss the point.

Joel, I think you've been a little misleading with your quote from the OECD. Your quote is a statement of its position on global trade, not a definition of Aid for Trade. A little further down on the page it says: The global Aid-for-Trade Initiative interlocks aid and trade policies in pursuit of raising living standards and reducing poverty. It seeks to complement trade reforms and promote more equitable distribution of global benefits across and within developing countries. It has been designed to help ensure that the benefits of trade policies do materialise, particularly when trade policy reforms on their own are insufficient to deliver the expected benefits from trade expansion. Which might be a more suitable quote to characterise the OECD's approach to Aid for Trade. I'd also note that the OECD-DAC, working with the WTO on the Aid for Trade Initiative, has developed a definition of Aid for Trade, but you've quoted from a presentation - the presentation paraphrases and seems to miss category #5, "other trade-related needs if identified as development priorities in partner countries’ national development strategies." I'm not sure Aid for Trade is terribly hard to define or nebulous, but perhaps I've just read the documentation a little more carefully.

Is the survey for all aid and development workers, or just those involved in humanitarian work? The questions imply the latter.

Sounds like an interesting project will look forward to seeing what eventuates. You might like to link up with Prof Veronica Taylor at ANU (REGnet) who has been doing some similar work with a particular focus on people who work on law and justice within the Australian aid programme.

You've not mentioned the opportunities at home, although Tess alludes to them (I'd note that Carnival is procuring bottled water from Vanuatu and is negotiating on other commodities including coffee and chocolate). Far simpler and more cost effective than exporting agricultural product would be to supply to existing industries, particualrly the tourism industry. However, the quality of produce and regularity of supply invariably means that hotel chains import from Australia. This is a domestic issue to address, and clearly a challenging one - years of aid-funded agricultural strengthening programs don't seem to have had a significant impact on the quality or consistency of supply. Aid for trade isn't, and shouldn't be, just about exports. More can be done to ensure that there is no need for imports from Australia and New Zealand where domestic production is possible - we need to satisfactorily meet demand at home before focusing too strongly on highly competitive and cost-sensitive export markets.