Making aid effective: the case for diagnostics

Unprecedented cuts in aid budgets in the last few months have forced a reconsideration of the role of aid – and a resurgence of the ‘humanitarian vs. development aid’ arguments of old. How to do more with less, value-for-taxpayer money and ultimately, how to have meaningful development impact have arguably always been the prime concerns of funders the world over, but these rhetorics have been thrown into sharp relief with the recent dismantling of USAID and the diversion of UK aid money towards defence spending. 

In an increasingly conflict-ridden world, it's no surprise that attention has pivoted to humanitarian work and addressing crises as they occur. 

Even outside of this current climate it may seem counter-intuitive to argue for a largely research-driven approach to development. Not only does such an approach provide no immediate relief in an increasingly fractured world, It’s also not something that can produce tangible, easily measurable outputs – like schools and medical facilities.

I would argue however that such an approach – specifically, diagnostics – is exactly where governments should be investing some of their diminishing aid budgets.

What is it? 

Diagnostics represent a basis for policy that is specific to context, distinguishing between different sets of initial conditions and arriving at differential diagnoses; provide a systematic way of analysing causality and change; and the process of doing a diagnostic can effectively engage key stakeholders enabling empowerment and accountability.

In development terms, a diagnostic involves a systematic analysis of a country's underlying issues, identifying symptoms and root causes to inform preventative, rather than purely curative, measures. This approach, while not a perfect medical analogy, emphasises understanding the complex interplay of factors that hinder or promote development.

Much of development policy has been premised on the opposite assumption – that ‘best-practice’ solutions can be applied in a top-down and technocratic manner to different situations, with little or no sensitivity for local conditions. Such one-size-fits-all approaches typically emphasise targets, for example, macroeconomic stability or school enrolments, which may well be desirable in general, but which derive from very different underlying causes.

How is it done?

At its most basic, a diagnostic approach need not rely heavily on new data generation but can instead assemble secondary information, for example about a country's economic and social structures. It could begin by gathering economic data on the nature of production, efficiency and productivity, and firm and technical capabilities, on the one hand and further data on  social structure and political settlements on the other. This latter set of features focuses on identifying key political actors, their interests, and how power is maintained, as well as critical social norms and their impacts.

Sifting through this evidence and considering the interactions and feedback loops between the layers allows long ‘chains of causality’ to emerge, which help describe not just causes of growth, but also the underlying causes of these causes.

Demystifying change

Essentially, diagnostics is about understanding change and what drives or prevents it. 

There’s a widespread acceptance that strong institutions and sustained economic growth are related. But the nature of the causal relationship between the two is far from clear. Do  ‘good’ institutions enable  development and growth or is it the other way around. 

Empirically, there are enough examples of countries with ‘bad’ institutions that nevertheless experienced strong growth (at least for a period) to know that this is not straightforward. At the very least we need to question our notions of what constitutes ‘good’ and ‘bad’ institutions. It may be that when we say a country has ‘bad’ or ‘weak’ institutions, we are overly focused on formal institutions – those which can be codified, like laws, and which apply consistently from one place to another – when we should really be trying to understand informal institutions – those unwritten rules which depend on particular contexts and relationships between actors. 

For example, Bangladesh presents a compelling case for diagnostic studies due to its paradoxical nature, exhibiting both robust economic growth and poverty reduction over a prolonged period, accompanied by important and often progressive social change, yet at the same time consistently scoring amongst the worst countries of the world on many indicators of institutions. 

Within each of these stories lie further contradictions : economic growth has been driven by the quite extraordinary success of the ready-made garment (RMG) sector, which has grown from almost nothing to make Bangladesh a global competitor; yet accompanying that transition has been the persistent failure to diversify export production – other sectors have failed to grow under the shadow of RMG. 

While significant poverty reduction has occurred, marginalised groups, including minorities, disabled individuals, and specific urban populations, remain excluded. And while positive incremental social change and a vibrant civil society have also been distinctive aspects of Bangladesh’s story, as witnessed, for example by increased women's employment and education, accompanied by decreased fertility rates, (at the time of Independence, the highest in South Asia but are now among the lowest) – the political situation has steadily deteriorated. After a long period of fragile and volatile democratic politics throughout the 1990s and 2000s (‘competitive clientelism’), the country then experienced an increasingly autocratic period of rule over the last 15 years, which came to a violent climax in the student-led uprisings of July 2024, the brutal government reaction,  the military coup of August 5th 2025, and then, a day later, the establishment of the civilian Interim Government of Muhammad Yunus. 

Against this dramatic context, the questions of why events unfolded the way they did and what needs to be done now are inescapably institutional.  There is no other way to make sense of the complex interactions between political, social, and the economic factors and no credible pathway to reform that does not address how the problems in one domain constrain the possibility of change in the others.

Grand claims?

It might be argued that there simply isn’t the time – or resources - to carry out such an in-depth piece of research into a country. But the reality is that much of the information needed to carry out a diagnostic is already there. It is less a question of obtaining information than of synthesising it. 

That does not mean no investigation is needed. Done well, diagnostics should be conceptually innovative and yet also practical. Most of all they should deliver impact. But to deliver impact requires engagement with key stakeholders, an understanding of demand and a sense of political feasibility – There are no short cuts to this kind of engagement, nor should there be.

A crucial prerequisite for changing any system is an understanding of why that system has arisen in the first place and why it is stable now. Without such an understanding, it’s far less likely that development interventions will be effective or sustainable. 

Moreover, a country-level diagnostic, once conducted, provides a framework that can be repeatedly applied, allowing for updates and anticipating future challenges in an adaptable and cost-effective way.

Development as disaster prevention

Importantly, in a world increasingly vulnerable to shocks, adopting a preventative approach to development, akin to preventative medicine, offers a pathway to ultimately reducing the long-term reliance on humanitarian aid. This shift necessitates moving beyond reactive crisis management towards proactive strategies grounded in a deep understanding of the underlying drivers of conflict, poverty, and other systemic challenges. 

Instead of merely applying "sticking plaster" solutions to immediate symptoms, a diagnostic approach encourages investment in comprehensive analyses that reveal the root causes of instability. This involves scrutinizing factors like governance structures, social inequalities, and economic vulnerabilities, allowing for the design of targeted interventions that build resilience and mitigate potential crises before they escalate. 

As Baroness Ashton emphasised in her recent Antcliffe Lecture at the University of Cambridge, investing in development is arguably the most cost-effective means of achieving defence and security objectives. Conflict resolution, for example, proves significantly more effective when informed by rigorous political and economic analyses.

Diagnostic studies, by mapping the complex interplay of factors contributing to conflict, enable the design of interventions that address not just the immediate triggers but also the deeper structural issues that fuel instability. This holistic perspective acknowledges that security is not solely a military concern but also a product of social and economic well-being – a point echoed by former head of the British Army, Lord Richard Dannatt, who described the cuts as a ‘strategic mistake’.

Organisations like the FCDO, with their multifaceted policy agendas, are well-positioned to adopt such diagnostic frameworks. Poverty reduction, climate change adaptation, conflict management, and migration are not isolated issues but rather intertwined aspects of a complex system, where interventions in one area can have cascading effects on others.

Understanding the intricate causal relationships between these factors, including the nuances of how they play out over time and across different groups within diverse national contexts, is crucial for effective policy interventions. A diagnostic lens allows for the identification of critical feedback loops and reinforcing mechanisms that perpetuate cycles of vulnerability and instability. For example, climate change-induced displacement can exacerbate existing social tensions, leading to conflict and further hindering development progress. By mapping these complex interactions, policymakers can design interventions that address multiple dimensions of vulnerability simultaneously, building resilience and reducing the likelihood of future crises.

Building resilience

In an era of diminishing aid budgets and escalating global crises, the argument for investing in diagnostic studies becomes compelling. While the urgency of humanitarian response is paramount, a strategic shift towards diagnostics offers a long-term solution to reduce the need for such interventions. By meticulously analysing a country's economic, social, and political landscape, diagnostics illuminate the root causes of instability and vulnerability, enabling the design of preventative measures that are more likely to work. 

Though seemingly abstract, this approach ultimately allows for a more efficient allocation of scarce resources, targeting the fundamental drivers of conflict and poverty rather than merely treating their symptoms. 

A country-level diagnostic, acting as a dynamic framework, can adapt to changing circumstances, ensuring that development efforts remain relevant and cost-effective. Essentially, by investing in diagnostics, we invest in a future where shocks are pre-empted, not just reacted to, increasing resilience and diminishing the long-term reliance on humanitarian aid.