Tuesday, December 09, 2008

Illicit flows rob developing countries of $900bn a year

From a recent story in The Observer (which we didn't report because TJN bloggers were travelling):

"The world's poorest countries lose $900bn each year - nearly 10 times greater than the global aid budget - through illicit flows of capital, new research shows. Illicit capital is defined as money extracted from bribery and corruption, the illegal pricing of goods to avoid taxes, and outright tax evasion by individuals and companies.

A study by US think-tank Global Financial Integrity found that the volume of capital flight from developing countries is increasing by 18 per cent each year. Its director Raymond Baker said: 'Illicit financial flows siphon revenue out of poor countries, robbing them of much needed assets and stunting economic development.'"

We will bring you more details in due course - it seems the final report isn't available quite yet.

This follows the statements from the OECD such as this one (which may be measuring different things:)

"Tax havens have a bigger impact on developing countries than on developed countries," Jeffrey Owens, director of the Centre for Tax Policy Administration at the Organisation for Economic Cooperation and Development, told Reuters.

"There is an enormous drainage of revenues to tax havens. This is equivalent to around 7 to 8 percent of gross domestic product for the African continent and a multiple of the aid it gets from developed countries."

Almost nobody has measured this stuff before. Things are starting to change.

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