In Foreign Aid and Its Unintended Consequences, Dirk-Jan Koch examines the unintended effects of development efforts, covering issues such as conflicts, migration, inequality and environmental degradation. Ruerd Ruben finds the book an original and detailed analysis that can help development policymakers and practitioners to better anticipate these consequences and build adaptive programmes.

Foreign Aid and Its Unintended Consequences. Dirk-Jan Koch. Routledge. 2023.

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Dirk-Jan Koch’s Foreign Aid and its Unintended Consequences offers a rich discussion on the unintended consequences of development efforts, including effects on conflicts, migration and inequality and changes in commodity prices, human behaviour, institutions and environmental degradation. The book explains how different perceptions of donors and recipients lead to quite opposite strategies (eg, for managing the Haiti earthquake), whereas in other settings aid programmes can even intensify local conflicts or spur deforestation.

Koch devotes due attention to the aggregate impact of development activities through so-called backlash effects, negative spillovers and positive ripple effects.

Koch devotes due attention to the aggregate impact of development activities through so-called backlash effects, negative spillovers and positive ripple effects. Many of these effects also occur in Western countries, where they are commonly labelled as crowding-in and -out, linkages and leakages, and substitution effects. Each chapter includes real-life examples (mostly cases from sub-Saharan Africa), ranging from due diligence legislation on conflict minerals in DR Congo to the experiences of the author’s parents with the Fairtrade shop in the tiny Dutch village of Achterveld.

Koch consistently argues that the analysis of unintended effects is helpful to unravel the complexities of development cooperation and enables better identification of incentives that allow for more adaptive planning. This is a welcome contribution, since it provides a common language for better communication between development agents.

Everyone involved in development programmes is invited by this book to reflect on their own experiences with unintended consequences. I still remember the shock when an external review of a large integrated rural development programme in Southern Nicaragua revealed that most funds were spent at the local gasoline station and car repair workshop for maintenance of the project vehicles. My original enthusiasm for Fairtrade certification of coffee and cocoa cooperatives was substantially reduced when I became aware that price support enabled farmers to maintain their income with less production and therefore increased inequality within rural communities.

Koch consistently shows that it is important and possible to disentangle each of these possible or likely side effects and to act to combat them.

The systematic overview of unintended consequences of foreign aid gives an initial impression that development cooperation is a system beyond repair. This is, however, far from the truth. Koch consistently shows that it is important and possible to disentangle each of these possible or likely side effects and to act to combat them. That requires an open mind and thorough knowledge of responses by different types of agents and institutions.

The analysis falls short, however, in showing that several types of unintended consequences are likely to interact (such as price and marginalisation effects, or conflict and migration effects). Other consequences may partially overlap or perhaps compensate for each other. Moreover, there is likely to be a certain ”hierarchy” in the underlying mechanisms, where behavioural effects, governance effects and price effects crowd out several other consequences. In addition, a further analysis of the development context and the influence of norms and values might be helpful to better understand why certain effects occur, or not.

There is likely to be a certain ‘hierarchy’ in the underlying mechanisms, where behavioural effects, governance effects and price effects crowd out several other consequences

Koch argues that unintended consequences are frequently overlooked due to “linear thinking” in international development. He probably refers to the dominance of logical frameworks in traditional development planning and the recent requirement for presenting a Theory of Change with different impact pathways for development programmes. Since links and feedback loops between activities are already widely acknowledged, Koch seems to merge “linearity” with “causality”. For responsible development policies and programmes, we need better insight into the cause-effect relationship, recognising that differentiated outcomes may occur and that side effects are likely to be registered.

The absence of linear response mechanisms has been part of development thinking since its foundation by development economist and Nobel-prize winner Jan Tinbergen. His work (and my PhD thesis) heavily relied on linear programming, which is still considered as an extremely useful approach for showing that an intervention can generate multiple outcomes and that policymakers need some insights into alternative scenarios before they start to act. Impact analysis through different (quantitative and qualitative) methods digs deeper into the adaptive behaviour of development agents in response to a wide variety of incentives (ranging from financial support and legal rules to knowledge diffusion and information exchange). Our attention should be focused on understanding how non-linearity as occasioned by the involvement of multiple agents with different interests (and power) in development programmes leads to multiple – and sometimes opposing – outcomes from interventions.

Our attention should be focused on understanding how non-linearity […] in development programmes leads to multiple – and sometimes opposing – outcomes from interventions.

Koch’s analysis is based on a wide variety of case studies and testimonies, enriched with secondary research on the gender effects of microfinance, the occurrence of exchange rate disturbances (Dutch Disease), and the effectiveness of incentives to encourage natural resource conservation (Payments for Ecosystem Services). In a few cases, it makes use of more systematic impact reviews made by the International Initiative for Impact Evaluation (3ie) and Campbell Collaboration. Information about the size and relative importance of the unintended consequences is notably absent.

The reliance on illustrative case studies and dense description challenges the academic rigor of the book. It may hinder our understanding about the underlying causes and mechanisms behind these effects: are they generated by the development intervention themselves, or are they due to the context in which the programme is implemented, or the types of stakeholders involved in its implementation? A more comparative approach could be helpful to better understand, for instance, why microfinance was accompanied by an increase in domestic violence in certain parts of India, but not in others. Comparing different ways of designing and organising microfinance would provide clearer insights into the causes of variation in outcomes.

Opening up for such an interactive engagement with development activities asks for an institutional re-design of international development cooperation, permitting projects with a substantially longer duration (eight to ten years), closing the gap between policy and practice and accepting a political commitment for learning from mistakes. Moreover, dealing with unintended consequences requires that far more aid is channelled through embassies and local organisations that have direct insights into local possibilities and needs.

Social and community service programmes for basic education and primary healthcare tend to deliver the most tangible positive effects on incomes, nutrition, behaviour, women’s participation and income distribution.

Furthermore, focusing on adaptive planning and learning trajectories may also imply that policy priorities for foreign aid need to change. Social and community service programmes for basic education and primary healthcare tend to deliver the most tangible positive effects on incomes, nutrition, behaviour, women’s participation and income distribution. The development record of programmes for trade promotion is far more doubtful and still heavily relies on (unproven) trickle-down reasoning. Particular attention should be given to budget support and cash transfers as aid modalities with the least strings attached that show a high impact on critical poverty indicators. Contrary to these findings, several years ago the Dutch parliament stopped budget support and eliminated primary education as a key policy priority.

While the author concludes by focusing on the need to act on side effects and further professionalisation of international development programmes, more concrete leverage points could be identified. First, many of the registered effects tend to be related to cross-cutting structural differences in resources and voice, and therefore programmes that start with improving asset ownership and women’s empowerment are likely to yield simultaneous changes in different areas. Second, a stronger focus on systems analysis (beyond complexity theory) can be helpful to identify inherent conflicts and tensions in development programmes that could be the subject of political negotiation. Unravelling potential trade-offs then becomes a key component of development planning. Third, more space could have been devoted to the role of experiments in the practice of development cooperation. Policymakers expect a high level of certainty and face difficulties to become engaged in more adaptive programming. Accepting deliberate risk-taking may be helpful to improve aid effectiveness.

Policymakers expect a high level of certainty and face difficulties to become engaged in more adaptive programming. Accepting deliberate risk-taking may be helpful to improve aid effectiveness.

These reservations aside, Foreign Aid and its Unintended Consequences is a welcome and original contribution to the debate on development effectiveness. Koch offers a systematic conceptual and empirical analysis of ten types of unintended effects from international development activities, and its recommendations on how these effects can be tackled in practice will be useful for policymakers, practitioners and evaluators.

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