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Inequality

Mapping the Global Flow of Foreign Aid

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Global flow of foreign aid by country

flow of foreign aid by country

Mapping the Global Flow of Foreign Aid

Billions of dollars routinely flow between countries for a number of reasons that go beyond simply helping people in less wealthy nations.

Extending foreign aid can be a tool to help strengthen relationships with allies, to help bolster a military presence in a key area, or even to project a positive image at home and abroad. Of course, aid also helps less wealthy nations do all kinds of things, from constructing new infrastructure to recovering from humanitarian crises or natural disasters.

Today’s infographic, from Wristband Resources, is a comprehensive look at the flow of foreign aid funds around the world in 2017.

The visualization raises a number of questions. For example:

  • Why does Japan send so much foreign aid to places like India and Vietnam?
  • Why does Turkey—one of the top 20 economies in the world—receive so much foreign aid?
  • And why did Ethiopia receive over $1 billion in aid from the United States?

Below we’ll answer key questions about foreign aid, while examining some of the more interesting relationships in detail.

What Constitutes Foreign Aid?

In simple terms, foreign aid is the voluntary transfer of resources from one country to another country—typically capital. Here are the six types of foreign aid:

    1. Bilateral Aid: Direct government-to-government assistance
    2. Multilateral Aid: When multiple governments pool resources in cooperation with organizations like the World Bank, the IMF, and the UN
    3. Tied Aid: The receiving country accepts aid with the expectation that it is spent in the lending country
    4. Voluntary Aid: A charitable donation, particularly when countries are facing a humanitarian crisis
    5. Project Aid: When aid is used to finance a specific project
    6. Military Aid: Similar to tied aid, but specific to weapons and military supplies

Note: The graphic above measures official development assistance (ODA), as defined by the OECD. ODA excludes military aid and the “promotion of donors’ security interests” as well as transactions that have primarily commercial objectives.

Which Countries Give the Most Foreign Aid?

Every country’s budget is different, and priorities can change as the economic and political cycles progress. As of 2018, here are the countries that contributed the most foreign aid as a portion of their Gross National Income (GNI).

foreign aid by country

In a 1970 resolution, the UN challenged countries to spend 0.7% of their GNI on foreign aid. Today, only four countries—Sweden, Luxembourg, Norway, and Denmark—surpassed the United Nations’ official development assistance target.

Using this measure, all top 10 countries are located in Europe. That said, in absolute terms, countries like Japan and the United States are still major contributors of aid around the world.

Below are a few real world examples of foreign aid flow, and more context around why money is flowing between the countries.

Japan → India

India is the top recipient of foreign aid, with the majority of funds coming from Japan. The country received close to $2.4 billion from Japan in 2017.

In recent years, the growth of Japan-India relations is viewed as a counter to China’s expanding economic and political influence across the Asian continent. As China’s national banks continue to fund megaprojects around the world, Japan is helping to fill a similar role in India.

One major project currently under construction is the Mumbai–Ahmedabad High Speed Rail Corridor. To move the $22 billion project forward, Japan offered India a 50-year loan at a 0.1% interest rate, covering 80% of the project cost.

European Union → Turkey

European institutions contributed nearly $2.6 billion to Turkey in 2017. On the surface this may seem confusing, as Turkey is more developed than most nations receiving foreign aid—however, much of this funding stems from the migration crisis. In 2016, the EU struck a deal with Turkey to reroute any migrant arriving in Europe via the Aegean Sea back to Turkey. In exchange, the EU agreed to fast-track Turkey’s EU membership bid.

Turkey has been bearing the brunt of caring for refugees, and the EU has contributed significant funds to the effort. For example, funding for the Emergency Social Safety Net (ESSN) program in Turkey has reached $1.2 billion.

In 2019, EU-Turkey relations took a chilly turn as European Parliament voted to suspend Turkey’s EU membership bid, expressing concern over creeping authoritarianism and human rights violations.

United States → Ethiopia

In 2017, Ethiopia was under a state of emergency as the African country faced a third straight year of drought, and security forces and anti-government protesters clashed in the streets. Though the U.S. does provide plenty of military and security-oriented aid, this is an example of humanitarian aid in the face of a crisis.

The United States was also the top source by far for aid flowing into other countries in the region, including Kenya, Tanzania, and South Sudan.

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Cities

Visualizing the Footprint of Highways in American Cities

Highways improved mobility for the average American, ingraining the automobile into the urban fabric of American cities, for better and worse.

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The Impact of Highways

Footprint of Highways in American Cities

Visualizing the Footprint of Highways in American Cities

Driving on the open road is a defining feature of the American experience, made possible by coast-to-coast highways. It defined a generation of life and ingrained the automobile into the urban fabric of American cities, for better and worse.

Today’s animations show how highways reshaped the downtown cores of six American cities and created new patterns of urban life. But first, some background information on the creation of the interstate system.

The Interstate Highway System

The U.S. Interstate System was created on June 29, 1956, when Dwight Eisenhower signed the Federal-Aid Highway Act. It would eventually run 46,876 miles, cost $521 billion and take 36 years to complete.

Map of the US Interstate System

From San Diego to Bangor, the interstate highway system connected Americans and opened up the country to commerce and geographic mobility like never before, but for all its benefits, this new transportation network ripped through established patterns of urban and town life, creating a new era of urban development.

The Legacy of Highways: The Suburbs and Inner Cities

The vast geography of continental America helped to entrench personal mobility and freedom into American society. Highways and automobiles accelerated this lifestyle and even changed the shape of entire cities.

According to Prof. Nathaniel Baum-Snow of the University of Toronto, between 1950 and 1990, the population of central cities in the U.S. declined by 17% despite a population growth of 72% in larger metropolitan areas during the same period. Baum-Snow posits that, had the interstate highway system not been built, central cities’ populations would have increased 8%.

Firms followed the workers to the suburbs, but the highways system also created additional benefits for these firms. Cross-country road access freed manufacturing from ports and downtown rail hubs, while allowing economies to operate across larger distances, altering the dynamics of typical urban economies.

Faced with this new reality, inner cities struggled in years to come.

Inner Cities

The introduction of highways created an increase in the supply of land for development through faster commutes to outlying areas. In 1950, half of all jobs were located in central cities. By 1990, less than one-third of urban jobs were located in the core of American cities.

“Not TV or illegal drugs but the automobile has been the chief destroyer of American communities.” Jane Jacobs, Author The Death and Life of Great American Cities

Benefits of new development accrued to the outer areas while the construction of the highways in inner cities displaced largely low-income communities, segregated neighborhoods, increased the amount of air and noise pollution, devalued surrounding properties, and removed access to jobs for those without a car, further concentrating poverty.

Before and After: Six American Cities

A bird’s eye view of six American cities reveals what was and what is now. By overlaying existing highways over the neighborhoods they replaced, it becomes clear how much interstate construction drastically altered America’s urban landscape.

Oakland
Public opposition to the construction of I-980 was so strong that developers abandoned the project in 1971, only to complete it over a decade later.

Miami Highway
The I-95 carved through Miami’s largely black Overtown neighborhood. The construction of a single highway cloverleaf resulted in 20 square blocks being demolished, displacing over 10,000 people in that community.

Providence Highway
The I-95 comprised unconnected segments between 1957 and 1965 through the densest urban areas in a deliberate effort to prevent premature suburbanization and to revitalize the downtown core.

Cincinnati Highway
The I-71 cuts downtown Cincinnati off from its waterfront and a massive freeway interchange forced the destruction of dozens of blocks west of downtown.

Detroit highway construction
Freeway construction transformed Detroit between 1951 and 2010. Previously, its downtown had been surrounded by a high-density street grid. Today, it’s totally encircled by freeways.

Rochester Highway
Rochester is one of many cities opting to undertake freeway removal projects.

As the dotted line above shows, the “moat” surrounding downtown is slowly being removed. The city used reclaimed land from the Inner Loop freeway to construct three mixed-use developments that include below-market-rate units.

The Future of Urban Living: Do Highways Matter?

A new era of living is reconsidering the impacts of these highways on urban centers. As property values rise and existing housing stock is pressured, there are growing concerns over the environmental impacts of suburban life. As a result, urban planners and residents are looking to revitalize city cores and re-purpose land occupied by burdensome slabs of highway concrete.

Since 1987, there have been more than 20 urban highway segments removed from downtown cores, neighborhoods and waterfronts, mostly in North America. The pace of removals has picked up significantly and an additional 10 highways are now planned for removal in the United States.

During the COVID-19 pandemic, American cities have seen their traffic plummet. Rush-hour trips into cities are taking nearly half the time while some are not even commuting at all.

While this situation is likely temporary, it is offering a moment for reflection of how cities operate and whether the car should be at the center of urban planning.

*Hat tip to Shane Hampton, whose 60 Years of Urban Change compilation served as inspiration for this article. Visit that page for many more examples of highway impact on cities.

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Finance

Visualizing Unequal State Tax Burdens Across America

Poor families pay a higher share of their income towards state and local taxes than wealthy families. These maps show the inequitable tax burdens.

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unequal us tax burdens

Visualizing Unequal State Tax Burdens Across America

What percentage of your income goes into Uncle Sam’s pocket?

Your answer will vary depending on how much you earn. Data shows that low and middle-income families pay a much greater share of their income towards state and local taxes than wealthy families.

Today’s visualization uses data from the Institute on Taxation and Economic Policy (ITEP) to map the effective tax rates—or taxes paid as a share of family income—across income groups at the state and local level.

Crunching the Numbers

The data reflects the effect of tax changes enacted through September 10, 2018, using 2015 income levels (the latest year for available, detailed income data). Both single and married tax filers are included, while elderly taxpayers, dependent filers, and those with negative incomes are excluded.

Taxes Included
The report includes the state and local taxes for all 50 states and the District of Columbia. Taxes are broken into 3 broad groups:

  • Consumption taxes – general sales taxes and specialized excise taxes
  • Property taxes – including taxes on homes, businesses, and motor vehicles
  • Income taxes – paid by individuals and businesses

Federal taxes are not considered.

Editor’s note: It’s worth noting that federal personal income tax has progressive rates, with the lowest earning bracket at 10% and the highest earning bracket at 37% in 2019. At a national level, property taxes are not charged and there is a very low reliance on excise taxes—both of which tend to be regressive as outlined below.

Income Included
The report includes both taxable and tax-exempt income such as worker’s compensation benefits. It also includes estimates for the amount of unreported income.

Which States Have the Most Unequal Tax Burdens?

Across the U.S., there is a wide disparity in how taxes affect different income groups. Here’s how it all breaks down, ranked in order of tax system inequality*:

Total State and Local Taxes As a Share of Income
By State and Income Group

RANKSTATELOWEST 20%MIDDLE 60%TOP 1%
1Washington17.8%10.4%3.0%
2Texas13.0%9.4%3.1%
3Florida12.7%7.7%2.3%
4South Dakota11.2%8.4%2.5%
5Nevada10.2%7.1%1.9%
6Tennessee10.5%8.1%2.8%
7Pennsylvania13.8%10.8%6.0%
8Illinois14.4%12.2%7.4%
9Oklahoma13.2%10.3%6.2%
10Wyoming9.6%6.9%2.6%
11Arizona13.0%9.3%5.9%
12Indiana12.8%10.4%6.8%
13Ohio12.3%10.6%6.5%
14Louisiana11.9%9.8%6.2%
15Hawaii15.0%11.5%8.9%
16New Hampshire9.1%7.1%3.0%
17North Dakota10.3%7.7%4.5%
18Alabama9.9%8.6%5.0%
19New Mexico10.6%10.0%6.0%
20Arkansas11.3%10.4%6.9%
21Iowa12.4%10.5%7.7%
22Michigan10.4%9.2%6.2%
23Kansas11.4%10.4%7.4%
24Mississippi10.2%9.8%6.7%
25Kentucky9.5%10.5%6.7%
26Alaska7.0%4.3%2.5%
27Georgia10.7%9.5%7.0%
28Missouri9.9%9.1%6.2%
29Connecticut11.5%11.6%8.1%
30Massachusetts10.0%9.3%6.5%
31North Carolina9.5%9.1%6.4%
32Rhode Island12.1%9.3%7.9%
33Virginia9.8%9.3%7.0%
34Wisconsin10.1%10.4%7.7%
35Colorado8.7%8.6%6.5%
36Nebraska11.1%10.2%8.7%
37West Virginia9.4%8.8%7.4%
38Idaho9.2%8.4%7.2%
39South Carolina8.3%8.3%6.8%
40Utah7.5%8.4%6.7%
41Oregon10.1%8.8%8.1%
42Maryland9.8%10.6%9.0%
43Montana7.9%6.7%6.5%
44New York11.4%12.5%11.3%
45Maine8.7%9.3%8.6%
46New Jersey8.7%10.2%9.8%
47Minnesota8.7%9.8%10.1%
48Delaware5.5%5.8%6.5%
49Vermont8.7%9.4%10.4%
50District of Columbia6.3%9.8%9.5%
51California10.5%8.9%12.4%

* The ITEP Tax Inequality Index measures the effects of each state’s tax structure on income inequality. In states that rank high for inequality, incomes are less equal after state and local taxes are applied than before. On the flip side, states with the most equality are those where incomes are at least somewhat more equal after state and local taxes are levied than before.

Washington has the most unequal tax burdens. Proportional to their income, Washington taxpayers in the bottom 20% pay almost 6x more than those in the top 1%.

At the other end of the scale, California has the most equal tax system. As a share of their income, the state’s poorest families pay only 0.84x what the wealthiest families pay.

Overall, however, the vast majority of tax systems are regressive.

effective us state and local tax rates

On average, the lowest 20% of income earners pay 1.54x more of their income in taxes compared to the top 1%.

The Main Causes

Two main factors drive a tax system’s (lack of) equality: how the state designs each tax, and the state’s reliance on different tax sources.

To better explain how this works, let’s take a closer look at each type of tax.

Sales & Excise Taxes

These taxes apply only to spent income, and exempt saved income. Since families with a higher household income are able to save a much larger percentage of their income, and the poorest families can barely save at all, the tax is regressive by nature.

The particular types of items that are taxed affect fairness as well. Quite a few states include food in their sales tax base, and low-income families spend the majority of their income on groceries and other necessities.

Not only that, excise taxes are levied on a small subset of goods that typically have a practical per-person maximum. For example, one person can only use so much fuel. As a wealthy family’s income increases, they generally do not continue to increase their spending on these goods.

States rely on these taxes more than any other tax source, which only exacerbates the problem.

Property Taxes

For the average household, the home makes up the majority of their total wealth—meaning most of their wealth is taxed. However, the wealth composition of richer families skews much more heavily towards stock portfolios, business equity, and other assets, which are exempt from property taxes.

While these types of assets are subject to taxes like capital gains and dividends, the distinction is that these taxes are levied only on earned gains. In contrast, property taxes are owed simply as a result of owning the asset.

What about those who don’t own homes? Landlords generally pass on the cost of property tax to renters in the form of higher rent. Since rent comprises a much higher share of expenses for poorer families, this makes property tax even more inequitable.

Income Taxes

State income taxes are typically progressive. This means effective tax rates go up as income goes up. Here’s how the U.S. averages break down:

  • Low-income families: 0.04%
  • Middle-income families: 2.1%
  • Top 1%: 4.6%

However, certain policy choices can turn this on its head. Some states have a flat rate for all income levels, a lack of deductions and credits for low-income taxpayers, or tax loopholes that can be beneficial for wealthier income groups.

Nine states charge no income tax at all, garnering reputations as “low tax” states—but this is true only for high-income families. In order to make up for the lost revenue, states rely more heavily on tax sources that disproportionately affect the lowest earners.

equality and personal income tax

Evidently, states with personal income taxes have more equitable effective tax burdens.

Tackling Systemic Issues

Regressive state tax systems negatively impact the after-tax income of low and middle-income families. This means they have less to spend on daily expenses, or to save for the future.

Not only that, because wealthier families aren’t contributing a proportional share of tax dollars, state revenues grow more slowly.

For states looking to create a more equitable tax system, states with progressive systems offer some guidance:

  • Graduated income tax rates
  • Additional tax over a high-income threshold (e.g $1 million)
  • Limits on tax breaks for upper-income taxpayers
  • Targeted low-income tax credits
  • Lower reliance on regressive consumption taxes

By implementing such policies, governments may see more tax equality—and more tax dollars for programs and services.

Hat tip to reddit user prikhodkop, whose visualization introduced us to this data.

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