The impact of independence on reported aid performance

In this paper we test whether the reported performance of aid projects changes when the process of producing project appraisals is made more independent. We do this using a dataset of Australian aid appraisals and take advantage of a change that occurred when a more independent process involving the central aid evaluation unit of the Department of Foreign Affairs and Trade (DFAT) and external contractors was put in place to review appraisals of recently completed projects. Using difference-in-differences and contrasting assessments of ongoing projects, which the appraisal process was not changed for, and completed projects, where the process was changed, we show that introducing more independence led to a substantial fall in how successful projects were deemed to be. We also show that the change probably led to more accurate recording of COVID-19′s impact on Australian aid, as well as more accurate assessments of the quality of Australia’s aid to Papua New Guinea, its largest aid partner. As we do this, we take care to demonstrate that our findings are robust to the types of methodological issues that can affect difference-in-differences studies.