Australian economist Andrew Leigh wonders aloud whether his country’s aid agency, AusAid, should keep its focus on Pacific nations.

If aid only works when policies and institutions are strong, should we keep giving around one-third of our aid to Papua New Guinea and the Pacific? Ethically, it would be tough to justify withholding charity from some of the world’s neediest people. And given that they are on our doorstep, it is difficult to imagine excluding ‘fragile states’ from the Australian aid program.

Yet the research suggests that despite all the hard work that is being done by aid workers in these countries, there is little chance living standards will take off any time soon.

In an effort to be more effective, and hopefully demonstrate results, more and more small nations are tightly focusing their aid. The U.S., France and China are probably too big and rich to deny some countries their largesse. The Canadas, Swedens, and Australias of the world don’t have to meet such pressures and expectations, however, and can afford to focus their aid on a smaller number of nations.

This strikes me as exactly the right approach to aid. It offers a government a long term partner, a more knowledgeable and sophisticated donor, and (hopefully) steadier and more predictable aid flows.

Also, small aid agencies like CIDA and AusAid will have an opportunity to build local expertise. Who knows? We might even reach the point where donor staff actually speak the local language. These, to me at least, are the keys to effective giving.

It means, however, that agencies like AusAid will have to resist the fads of the moment–the African AIDS crisis and fragile states–and focus on the slow, boring march towards higher incomes and life expectancies in one’s usual backyard. I’m cautiously optimistic.