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Dirk-Jan Koch presented his latest book, Foreign Aid and its Unintended Consequences at Institut de Barcelona d’Afers Internacionals (IBEI), where he explores the ten most prevalent kinds of unintended effects of foreign aid: backlash effects, conflict effects, migration and resettlement effects, price effects, marginalization effects, behavioural effects, negative spillover effects, governance effects, environmental effects, and ripple effects. He is the Netherlands Ministry of Foreign Affairs Chief Science Officer and Special Professor of International Trade and Development Cooperation at Radboud University (Netherlands). Iñigo Macías, Economist, Research Coordinator at Oxfam Intermon and Associate Professor at IBEI, was the discussant and Fulya Apaydın, Associate Professor at IBEI, chaired the discussion.
In the literature on the effects of foreign aid, there are two approaches or positions regarding whether foreign aid is beneficial. On the one side, Jeffrey Sachs argues that aid is key to overcoming poverty in ‘underdeveloped’ countries. He departs from the assumption that such countries are caught in a so-called poverty trap. In this way, aid provides incentives and creates certain conditions that can stimulate development in the countries where it is lacking.
On the other side, there are academics such as William Easterly, who argue that aid does more harm than good. Aware of this polarization, Koch’s book aims to contribute to the debate by analysing the various unintended effects of aid and suggesting ways to address them. This should help policymakers, policy evaluators, and practitioners to maximise the positive unintended effects of aid and minimise the negative ones. In this, Koch is closer to Sachs in arguing that the unintended effects of aid should not be underestimated, while recognising that aid itself is not sufficient or transformative enough to, for example, ‘lift’ countries out of poverty. Koch is aware of the limits of aid.
At the IBEI, Koch began by explaining why more attention should be paid to unintended consequences of aid. He explained how it can help prevent avoidable damage to human lives and make the debate on aid effectiveness and efficiency more honest. He continued his speech with five myths about the unintended effects of aid, some of which were that these effects are negative, objective and unpredictable. This was followed by two cases of unintended effects selected by the audience: migration and resettlement effects and marginalization effects. He then suggested what to do (and not to do) when working in the development sector, based on his experience in the Democratic Republic of Congo. His emphasis was on the importance of development as an end in itself. Despite the obviousness of this affirmation, there are indeed actors in the sector whose goal is clearly not development. This only contributes to undermining the development sector. Koch then encouraged us to push the boundaries of learning within an organisation and challenge ourselves to think critically in our work.
Finally, Iñigo Macías, the discussant, insisted on the value of what is explained and how it is explained in the book, which contributes to improving the aid sector. He defined it as an ambitious undertaking to stop following a linear colonial thinking when working in the development aid sector. At the same time, however, he felt that two things were missing from it. Firstly, the link between what was explained and the aid effectiveness agenda; and secondly, the impact of other policies beyond aid on the sector.
To know more about foreign aid’s effects:
Easterly, W. (2003) “Can Foreign Aid Buy Growth?” Journal of Economic Perspectives, 17 (3): 23-48. Available at: https://www.aeaweb.org/articles?id=10.1257/089533003769204344
John, A., & Storr, V. H. (2009). Can the West Help the Rest? A Review Essay of Sachs’ The End of Poverty and Easterly’s The White Man’s Burden. The Journal of Private Enterprise, 25(1), 125-140. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1711277
Sachs, J. (2014). The case for aid. Foreign policy, 21, 2014. Available at: https://foreignpolicy.com/2014/01/21/the-case-for-aid/