Mapping the Global Flow of Foreign Aid - Visual Capitalist
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Mapping the Global Flow of Foreign Aid

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Global 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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Technology

33 Problems With Media in One Chart

In this infographic, we catalog 33 problems with the social and mass media ecosystem.

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problems with media

33 Problems With Media in One Chart

One of the hallmarks of democratic society is a healthy, free-flowing media ecosystem.

In times past, that media ecosystem would include various mass media outlets, from newspapers to cable TV networks. Today, the internet and social media platforms have greatly expanded the scope and reach of communication within society.

Of course, journalism plays a key role within that ecosystem. High quality journalism and the unprecedented transparency of social media keeps power structures in check—and sometimes, these forces can drive genuine societal change. Reporters bring us news from the front lines of conflict, and uncover hard truths through investigative journalism.

That said, these positive impacts are sometimes overshadowed by harmful practices and negative externalities occurring in the media ecosystem.

The graphic above is an attempt to catalog problems within the media ecosystem as a basis for discussion. Many of the problems are easy to understand once they’re identified. However, in some cases, there is an interplay between these issues that is worth digging into. Below are a few of those instances.

Editor’s note: For a full list of sources, please go to the end of this article. If we missed a problem, let us know!

Explicit Bias vs. Implicit Bias

Broadly speaking, bias in media breaks down into two types: explicit and implicit.

Publishers with explicit biases will overtly dictate the types of stories that are covered in their publications and control the framing of those stories. They usually have a political or ideological leaning, and these outlets will use narrative fallacies or false balance in an effort to push their own agenda.

Unintentional filtering or skewing of information is referred to as implicit bias, and this can manifest in a few different ways. For example, a publication may turn a blind eye to a topic or issue because it would paint an advertiser in a bad light. These are called no fly zones, and given the financial struggles of the news industry, these no fly zones are becoming increasingly treacherous territory.

Misinformation vs. Disinformation

Both of these terms imply that information being shared is not factually sound. The key difference is that misinformation is unintentional, and disinformation is deliberately created to deceive people.

Fake news stories, and concepts like deepfakes, fall into the latter category. We broke down the entire spectrum of fake news and how to spot it, in a previous infographic.

Simplify, Simplify

Mass media and social feeds are the ultimate Darwinistic scenario for ideas.

Through social media, stories are shared widely by many participants, and the most compelling framing usually wins out. More often than not, it’s the pithy, provocative posts that spread the furthest. This process strips context away from an idea, potentially warping its meaning.

Video clips shared on social platforms are a prime example of context stripping in action. An (often shocking) event occurs, and it generates a massive amount of discussion despite the complete lack of context.

This unintentionally encourages viewers to stereotype the persons in the video and bring our own preconceived ideas to the table to help fill in the gaps.

Members of the media are also looking for punchy story angles to capture attention and prove the point they’re making in an article. This can lead to cherrypicking facts and ideas. Cherrypicking is especially problematic because the facts are often correct, so they make sense at face value, however, they lack important context.

Simplified models of the world make for compelling narratives, like good-vs-evil, but situations are often far more complex than what meets the eye.

The News Media Squeeze

It’s no secret that journalism is facing lean times. Newsrooms are operating with much smaller teams and budgets, and one result is ‘churnalism’. This term refers to the practice of publishing articles directly from wire services and public relations releases.

Churnalism not only replaces more rigorous forms of reporting—but also acts as an avenue for advertising and propaganda that is harder to distinguish from the news.

The increased sense of urgency to drive revenue is causing other problems as well. High-quality content is increasingly being hidden behind paywalls.

The end result is a two-tiered system, with subscribers receiving thoughtful, high-quality news, and everyone else accessing shallow or sensationalized content. That everyone else isn’t just people with lower incomes, it also largely includes younger people. The average age of today’s paid news subscriber is 50 years old, raising questions about the future of the subscription business model.

For outlets that rely on advertising, desperate times have called for desperate measures. User experience has taken a backseat to ad impressions, with ad clutter (e.g. auto-play videos, pop-ups, and prompts) interrupting content at every turn. Meanwhile, in the background, third-party trackers are still watching your every digital move, despite all the privacy opt-in prompts.

How Can We Fix the Problems with Media?

With great influence comes great responsibility. There is no easy fix to the issues that plague news and social media. But the first step is identifying these issues, and talking about them.

The more media literate we collectively become, the better equipped we will be to reform these broken systems, and push for accuracy and transparency in the communication channels that bind society together.

Sources and further reading:

Veils of Distortion: How the News Media Warps our Minds by John Zada
Hate Inc. by Matt Taibbi
The Truth Matters: A Citizen’s Guide to Separating Facts from Lies and Stopping Fake News in its Tracks by Bruce Bartlett
Active Measures: The Secret History of Disinformation and Political Warfare by Thomas Rid
The Twittering Machine by Richard Seymour
After the Fact by Nathan Bomey
Ten Arguments for Deleting Your Social Media Accounts Right Now by Jaron Lanier
Zucked by Roger McNamee
Antisocial: Online Extremists, Techno-Utopians, and the Highjacking of the American Conversation by Andrew Marantz
Social media is broken by Sara Brown
The U.S. Media’s Problems Are Much Bigger than Fake News and Filter Bubbles by Bharat N. Anand
What’s Wrong With the News? by FAIR
Is the Media Doomed? by Politico
The Implied Truth Effect by Gordon Pennycook, Adam Bear, Evan T. Collins, David G. Rand

 

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Markets

News Explainer: The Economic Crisis in Sri Lanka

Sri Lanka is currently in an economic crisis with over $50 billion in debt and consumer inflation at 39%. So how did they get here?

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sri lanka economic crisis

Explained: the Economic Crisis in Sri Lanka

Sri Lanka is currently in an economic and political crisis of mass proportions, recently culminating in a default on its debt payments. The country is also nearly at empty on their foreign currency reserves, decreasing the ability to purchase imports and driving up domestic prices for goods.

There are several reasons for this crisis and the economic turmoil has sparked mass protests and violence across the country. This visual breaks down some of the elements that led to Sri Lanka’s current situation.

A Timeline of Events

The ongoing problems in Sri Lanka have bubbled up after years of economic mismanagement. Here’s a brief timeline looking at just some of the recent factors.

2009

In 2009, a decades-long civil war in the country ended and the government’s focus turned inward towards domestic production. However, a stress on local production and sales, instead of exports, increased the reliance on foreign goods.

2019

Unprompted cuts were introduced on income tax in 2019, leading to significant losses in government revenue, draining an already cash-strapped country.

2020

The COVID-19 pandemic hit the world causing border closures globally and stifling one of Sri Lanka’s most lucrative industries. Prior to the pandemic, in 2018, tourism contributed nearly 5% of the country’s GDP and generated over 388,000 jobs. In 2020, tourism’s share of GDP had dropped to 0.8%, with over 40,000 jobs lost to that point.

2021

Recently, the Sri Lankan government introduced a ban on foreign-made chemical fertilizers. The ban was meant to counter the depletion of the country’s foreign currency reserves.

However, with only local, organic fertilizers available to farmers, a massive crop failure occurred and Sri Lankans were subsequently forced to rely even more heavily on imports, further depleting reserves.

April 2022

In early April this year, massive protests calling for President Gotabaya Rajapaksa’s resignation, sparked in Sri Lanka’s capital city, Colombo.

May 2022

In May, pro-government supporters brutally attacked protesters. Subsequently, Prime Minister Mahinda Rajapaksa, brother of President Rajapaksa, stepped down and was replaced with former PM, Ranil Wickremesinghe.

June 2022

Recently, the government approved a four-day work week to allow citizens an extra day to grow food, as prices continue to shoot up. Food inflation increased over 57% in May.

Additionally, the increasing prices on grain caused by the war in Ukraine and rising fuel prices globally have played into an already dire situation in Sri Lanka.

The Key Information

“Our economy has completely collapsed.”
Prime minister Ranil Wickremesinghe to Parliament last week.

One of the main causes of the economic crisis in Sri Lanka is the reliance on imports and the amount spent on them. Let’s take a look at the numbers:

  • 2021 total imports = $20.6 billion USD
  • 2022 total imports (to March) = $5.7 billion USD

In contrast, the most recent reported foreign currency reserve levels in the country were at an abysmal $50 million, having plummeted an astounding 99%, from $7.6 billion in 2019.

Some of the top imports in 2021, according to the country’s central bank were:

  • Refined petroleum = $2.8 billion
  • Textiles = $3.1 billion
  • Chemical products = $1.1 billion
  • Food & beverage = $1.7 billion

Of course, without the cash to purchase these goods from abroad, Sri Lankans face an increasingly drastic situation.

Additionally, the debt Sri Lanka has incurred is huge, further hampering their ability to boost their reserves. Recently, they defaulted on a $78 million loan from international creditors, and in total, they’ve borrowed $50.7 billion.

The largest source of their debt is by far due to market borrowings, followed closely by loans taken from the Asian Development Bank, China, and Japan, among others.

What it Means

Sri Lanka is home to more than 22 million people who are rapidly losing the ability to purchase everyday goods. Consumer inflation reached 39% at the end of May.

Due to power outages meant to save energy and fuel, schools are currently shuttered and children have nowhere to go during the day. Protesters calling for the president’s resignation have been camped in the capital for months, facing tear gas from police and backlash from president Rajapaksa’s supporters, but many have also responded violently to pushback.

India and China have agreed to send help to the country and the the International Monetary Fund recently arrived in the country to discuss a bailout. Additionally, the government has sent ministers to Russia to discuss a deal for discounted oil imports.

A Foreshadowing for Low Income Countries

Governments need foreign currency in order to purchase goods from abroad. Without the ability to purchase or borrow foreign currency, the Sri Lankan government cannot buy desperately needed imports, including food staples and fuel, causing domestic prices to rise.

Furthermore, defaults on loan payments discourage foreign direct investment and devalue the national currency, making future borrowing more difficult.

What’s happening in Sri Lanka may be an ominous preview of what’s to come in other low and middle-income countries, as the risk of debt distress continues to rise globally.

The Debt Service Suspension Initiative (DSSI) was implemented by G20 countries, suspending nearly $13 billion in debt from the start of the pandemic until late 2021.

Sri Lanka Economic Crisis - countries by level of debt distress

ℹ️ This visual reveals the share of DSSI countries that are also low income (LIC) and have had their debt sustainability analyzed, finding that the share close to debt distress is rising over time.

Some DSSI and LIC countries facing a high risk of debt distress include Zambia, Ethiopia, and Tajikistan, to name a few.

Going forward, Sri Lanka’s next steps in managing this situation will either serve as a useful example for other countries at risk or a warning worth heeding.

Note: The debt breakdown in the above visual represents total outstanding external debt owed to foreign creditors rather total debt.

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