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Prime Minister Stephen Harper is expected to announce a $320-million increase in aid in today's budget. Added to the previous government's commitments, this makes Canada's $3.6-billion aid program one of the fastest growing federal spending items. Earlier this month, Mr. Harper also promised "a more effective use of Canadian aid dollars." But if aid is to be more effective, Canadians need to think harder - much harder - about development policy.

Consider the difficulties. Organizing effective primary schools is perhaps the most important task for government in any of the low-income countries that the Canadian International Development Agency (CIDA) has targeted for development aid. Take the case of schools in Bangladesh.

CIDA has for many years undertaken education projects in the country. Historically, it is among the top recipients of CIDA aid.

In a 2000 survey of governance in the Bangladesh education sector, Transparency International noted "major irregularities." Students were required to make unauthorized payments for admission into the school (such as fees to sit exams). Focus groups reported bribe-taking by many regional education officers.

Corruption and weak school management are deeply entrenched and hard to dislodge, and education outcomes are predictably dismal. According to the latest report of the Campaign for Popular Education (the major organization monitoring school outcomes in Bangladesh), one out of five children does not enroll in primary school; one out of three of those enrolled drops out before completing primary education; one out of three who completes five years of primary schooling still remains non-.or semi-literate. Almost half of children - even those from very poor peasant families - must resort to private tutoring due to low quality of in-school teaching and lack of adequate school facilities. Often, the tutors are the students' own teachers, who thereby supplement very low salaries.

Without improvements in all levels of school governance, Canadian aid investments in Bangladesh schools are unlikely to improve educational outcomes. These challenges illustrate just how difficult it is to achieve "a more effective use of Canadian aid dollars."

While there are no magic bullets for effective aid, there is no reason to abandon aid altogether. Success requires focusing aid on a few countries, realistic country-by-country assessments, flexibility in program response, openness to feedback, and an ability to draw on relevant experience and research. In our opinion, CIDA is not doing enough of any of this and is, therefore, less effective than it could be.

The agency could do much better. The Scandinavian countries, the Netherlands and the United Kingdom all offer examples of relatively successful aid agencies that are more focused and more open to feedback and external research than is CIDA.

These donors have also decentralized their personnel and delegated authority to the field, recognizing that aid effectiveness depends on country-specific knowledge. By contrast, more than 80 per cent of CIDA staff are in Ottawa, where most programs are designed and managed. As a result, CIDA's administrative costs as a share of aid are the highest in the OECD.

These other agencies also encourage policy debate and invest in strategic aid research. CIDA has just cancelled its policy journal -after one issue. The agency invests little in strategic research and fails to draw effectively on external research or feedback.

By dispersing its aid across more than 160 countries, Canada is a relatively insignificant donor, even in its top recipient countries. In 2005, CIDA promised to focus two-thirds of aid in 25 targeted countries by 2010.

This is not much of a change from the status quo. Canada continues to announce new aid spending to countries that are not part of the 25, and the country's aid is still more geographically dispersed than its OECD counterparts.

Despite evidence that tied aid is less effective, CIDA also lags international practice by tying almost half of its aid to purchases from Canadian suppliers.

Historically, CIDA has been led by junior ministers with little influence at the cabinet table. The first step to improving CIDA's relative performance is probably to appoint as minister a senior politician with full cabinet rank. Here are modest suggestions for his or her agenda:

Further pare the list of 25 targeted countries, and increase the targeted countries' share of CIDA's budget;

Partner with Canadian provincial governments in designing better-managed health and education projects;

Put half of CIDA staff in the field, giving them the authority to design aid programs with due attention to host-country governance;

Develop a strategic research capacity and encourage policy debate, aid critiques, and outside aid research;

Continue to devote a large share of aid to multilateral agencies with a strong analytic capacity;

Untie aid from the requirement that Canadian firms provide it;

Follow other OECD countries in imposing more effective corruption guidelines on firms investing in developing countries.

With tempered expectations about what aid can accomplish, and a willingness to learn from relatively successful aid agencies, "a more effective use of Canadian aid dollars" becomes a realistic goal.

John Richards wrote Can Aid Work? Thinking about Development Strategy. Danielle Goldfarb wrote How Canada Can Improve Its Development Aid: Lessons from Other Aid Agencies (with Steven Tapp). Both papers were just published by the C.D. Howe Institute and are available at www.cdhowe.org.