Dirty money losses 10 times more than aid

Developing countries lost almost a trillion dollars through illicit transfers to the developed world in 2011, according to the Global Financial Integrity Institute (GFI).

So maybe we shouldn't be surprised that a bunch of international economists have urged steps to curb illicit financial flows.

But as Bjorn Lomberg points out in an article at Project Syndicate, this means 20 African countries have lost sums amounting to more than 10% of their GDP every year since 1980.

"In a sense, this makes Africa a net creditor to the world, though it cannot expect to be repaid," he notes. "Some $85 billion flowed illegally out of India in 2011."

Lomberg's Copenhagen Consensus Center asked 62 teams of top economists to determine where limited resources could do the most good by 2030. "Some of the targets that they identified — such as increased food security, expanded educational opportunity, and improved health care — were unsurprising."

One legal mechanism for such financial flows: tax avoidance, Lomberg points out. *It is common among major multinational companies, including Amazon, Starbucks, and Google," he adds. "Another method for moving capital between countries is the mis-invoicing of trade. A recent GFI study indicated that, from 2002 to 2011, $60.8 billion moved illegally into or out of Ghana, Kenya, Mozambique, Tanzania, and Uganda in this way."

"Taken together, illicit financial flows currently amount to nearly ten times the total sum of international aid."

Sources

Project Sydicate »