Cost - Benefit analysis of aid links

The benefits of foreign aid:

1/ For the recipient country:

• Economic growth
• Better living standards through improved health and education services and infrastructure.
• The promotion of greater political stability through democracy, freedom and human rights.
• Sustainable development.
• Improved social justice and equity.

2/ For the donor country:

Strengthens economic, political, strategic and cultural ties between countries.

Economic advantages:

• Provides job opportunities for Australians, increases export sales and helps Australian companies access new and future markets.
• Preferential treatment in access to natural resources like oil and minerals.

Geopolitical and strategic advantages:

• By addressing poverty and other development issues, civil unrest, refugees and terrorism may be reduce.
• Donor countries give aid in return for access to military bases and to solidify alliances.
• Strengthen diplomatic ties.

The costs for recipient nations:

• Environmental – Aid is often given to develop large-scale projects such as mines and plantations so it gives negative impacts in the environment.
• Social and cultural – It promotes the donor country's economic interests more than the local communities, making the recipients over-dependent on aid.
• Economic – when aid is given to the recipients, competition is reduced, prices going up and aid money is wasted.
• Geopolitical – It leads to the corruption in a country because aid usually given through the government and it doesn't reach to the people who really need it.

Cost for Donor countries:

• Giving aid to the poverty and developing countries also means that they remain dependent on Australian annual budget.