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Just because other donors have struggled to lend successfully in the Pacific does not mean Australia is destined to fail. But the track record of loans in the region provides cause for caution.
In 1986, Mosely first drew attention to an apparent paradox in the performance of international aid. Microeconomic data from evaluations of aid financed projects showed a majority of projects were successful, whereas macroeconomic data from regressions of aid on growth were discouraging. The paradox, if...