Study Shows Foreign Aid Spending is Good for Australian Exports
New economic modelling from The Australian National University (ANU) has found that every additional $1 spent on Australian foreign aid in Asia has resulted in $7.10 in Australian exports.
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Monday, 23rd October 2017
at 4:26 pm
Lina Caneva, Editor

The study, described as the first of its kind in Australia, also found the results were consistent, irrespective of whether Australian aid was “tied” to Australian contractors or not.

Co-author of the research Dr Matthew Dornan, the deputy director of the ANU Development Policy Centre, said the modelling clearly showed that foreign aid had resulted in economic benefits for Australia, in addition to its already established impacts on poverty alleviation.

“They’re impressive numbers,” Dornan said.

“It’s clear Australian aid is serving our national interests through growing economies in our neighbourhood, which then provides benefits to Australian exporters.

“We conclude that calls to ‘tie’ aid [to Australian contractors] are, at best, a distraction, with aid increasing exports more significantly through other (non-tying) channels.”

The study looked at Australian export data in relation to foreign aid spending between 1980 and 2013. Australia untied its aid program in 2006, allowing the researchers to examine the impact of that policy change.

“We wanted to see whether the shift away from tied aid has had any impact on Australian exporters,” Dornan said.

“The results showed the shift away from tied aid has had no impact on exports.

“In a context where the national interest has been given greater emphasis by the Australian government, our results show that the tying debate is at best a ‘distraction’.”

In a speech at the ANU in February this year, Minister for Foreign Affairs Julie Bishop highlighted the need for the Australian international aid sector to better explain why it was in the national interest to support developing countries.

The senior economic development policy advisor at World Vision Australia Dane Moores told Pro Bono News this research strengthened the case for the Australian government to increase the aid budget.

“[The research] shows that Australian aid has had positive and significant impacts on Australian exports, in this case in Asia,” Moores said.

“There are commercial co-benefits for Australia from increasing aid to developing countries. In addition to empowering communities and helping families lift themselves out of poverty, Australian aid can strengthen the enabling environment for business and trade to thrive.

“Australian aid makes economic sense. The study confirms that Australian aid is highly effective and generates a large return on its investment, although we should not forget that the most important return is reducing poverty and empowering local communities.”

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It worked in China. People used to complain about child labourers there. Now they have a nation of spoilt princes.

Gnads wrote on May 26^th, 2018 at 6:42pm:


Australia is not that generous that it gives money to countries that cannot give Australia a return on its money.

Australia gives aid to Indonesia because it makes a return on that aid.

One of the principal reasons to give aid to developing countries is to foster their economic and social development so that their people are less likely to want to indulge in illegal emigration.

Consent or jellyfishing?  Just a little backwater - no need to get excited over the civil rights and right to life of 100,000+ non-Indonesians....

freediver wrote on May 27^th, 2018 at 8:33am:



Yes - but they copped a massive infusion of heavy and tertiary industries from the West as part of the 'cultural assimilation' process - making over a Communist nation into a capitalist one - and the outcome is there to see.

For example, while China may beat the drum a little over North Korea and its' brotherly independence' etc - there is no way China, or rather its new capitalist elite ruling class, is going to risk its new found mega-fortune on some silly haircut boy from the neighbourhood.

That is why Trump is getting a virtual free hand to handle the lad...

Anyway - providing opportunities for a massive expansion, as in China, even though it benefits the ruling elite most, is not quite the same as simply offering a chance to make shirts in Srindia - where with a heavy industry etc base on the mega-scale there is a level of 'flow-down' and that is in itself a primary promoter of an upward push by the working classes for more and more.  In a limited manufacturing market without initial production, there is little to no real flow-down to the shirt workers.... and little to no chance of their expecting or gaining a better deal.

China, as I've said many times before, is currently in the throes of adjusting to Western values, based on its capitalism, and that means that the factory workers are gradually gaining higher and higher wages, and this causes a rise in farm production prices etc, and a general demand for a better standard of income and of living.  China will one day find itself in the exact same situation as the West - its wages will be non-competitive compared to the trashed wages of the West, and thus the cycle will be reversed.

In Srindia, without that basic production capability and only on-sewing of already produced materials, there is no such thing happening, and the possibility of the working masses gaining a better standard of living and income is remote.

The funny thing is that costs of living and wages go hand in hand,  and when you pay some a higher rate of pay, that unbalances the market for COL/income, and creates forces for rises in other areas, followed by a demand for yet another rise in the (in the case of China) wages of the CHIMP (Chinese Industrial and Marketing Person)..... and so it goes on and on until one day all will be equal and all markets will be stagnant.