What is 'foreign aid'?

'Foreign aid' is best defined as financial or material assistance provided by one country to another for development or humanitarian purposes. This means that it involves the transfer of resources—from money to goods or services—aimed at helping the recipient country foster economic growth, improve living standards, and respond to emergencies or humanitarian crises.

When countries provide foreign aid, it typically serves several objectives, such as reducing poverty, addressing health and educational needs, and supporting infrastructure development. This assistance can come from government sources, international organizations, or non-governmental organizations, and it can take various forms, including grants, loans, or in-kind contributions.

The other options do not capture the essence of foreign aid. For instance, while economic support to strengthen armed forces does occur, it does not reflect the broader scope of foreign aid aimed at development and humanitarian goals. Similarly, investment in foreign markets for profit is primarily a commercial interest rather than the altruistic motive often associated with foreign aid. Lastly, trade agreements between countries focus on the terms of trade and economic relationships rather than the direct provision of aid, which is essential for developmental assistance.