Aid fragmentation and volatility in the Pacific.

Abstract

In this article we comprehensively document aid volatility (short‐term changes in aid flows) and aid fragmentation in the Pacific. We study two types of fragmentation: fragmentation across countries and fragmentation across projects. Our research draws on a new dataset compiled by the Lowy Institute. The dataset includes aid flows to the Pacific from non‐traditional donors such as China. This allows us to undertake the first‐ever study of Pacific aid volatility and fragmentation factoring in non‐traditional donors. We contrast the Pacific with other regions, finding that while fragmentation across donors is less in the Pacific, project fragmentation is worse, as is aid volatility. We find fragmentation across donors is increasing in the Pacific. We find a similar trend for fragmentation across projects. We find no evidence that non‐traditional donors such as China are driving these trends. However, we find some evidence that non‐traditional donors give more volatile aid.