Despite Global Financial Crisis, Illicit Financial Outflows from Developing World Remain High, Finds New Report

Another release from Global Financial Integrity:

Over US$900 Billion Illicitly Drained from Developing Countries in 2009, Says Annual GFI Study

Report Finds Developing World Lost US$8.44 Trillion over the Decade 2000-2009

WASHINGTON, DC – Developing countries lost US$903 billion in illicit financial outflows in 2009 despite the massive slowdown in economic activity which rocked world markets in late 2008, finds a new study by Global Financial Integrity (GFI), a Washington-based research and advocacy organization.

“Illicit Financial Flows from Developing Countries over the Decade Ending 2009,” which estimates the developing world lost US$8.44 trillion over the decade ending in 2009, is GFI’s annual update on the amount of money flowing out of developing economies via crime, corruption and tax evasion, and it is the first of GFI’s reports to include data for the year 2009.

“This is a breathtakingly large sum at a time when developing and developed countries alike are struggling to make ends meet,” said GFI Director Raymond Baker. “This report should be a wake-up call to world leaders that more must be done to address these harmful outflows.”

While US$903 billion marks a drop from the US$1.55 trillion1 that illicitly flowed out of the developing world in 2008, the study finds the decrease is almost entirely attributable to the global financial crisis rather than any governance improvements or economic reforms.

The study, which was co-authored by GFI Lead Economist Dev Kar and GFI Economist Sarah Freitas, tracks the amount of illegal capital flowing out of 157 different developing countries over the 10-year period from 2000 through 2009, and it ranks the countries by magnitude of illicit outflows. According to the report, the 20 biggest victims of illicit financial flows over the decade are:

China ............................................. $2.74 trillion
Mexico ............................................ $504 billion
Russia ............................................ $501 billion
Saudi Arabia ................................. $380 billion
Malaysia ........................................ $350 billion
United Arab Emirates................... $296 billion
Kuwait ............................................ $271 billion
Nigeria ........................................... $182 billion
Venezuela ..................................... $179 billion
Qatar .............................................. $175 billion
Poland ............................................ $162 billion
Indonesia ....................................... $145 billion
Philippines .................................... $142 billion
Kazakhstan ................................... $131 billion
India ................................................ $128 billion
Chile .............................................. $97.5 billion
Ukraine ......................................... $95.8 billion
Argentina ...................................... $95.8 billion
South Africa .................................. $85.5 billion
Turkey............................................ $79.1 billion
For a complete ranking of average annual illicit financial outflows over the decade by country, please refer to Table 5 of the report’s appendix.

The report also reveals the top victims of illegal capital flight in 2009. The top 20 countries suffering the highest illicit outflows in 2009 were:

China ............................................. $291 billion
Saudi Arabia ................................. $82.3 billion
Poland ........................................... $66.3 billion
Malaysia ....................................... $46.8 billion
Mexico .......................................... $34.6 billion
Nigeria ......................................... $33.4 billion
Russia ........................................... $23.4 billion
Indonesia ...................................... $20.5 billion
United Arab Emirates .................. $19.5 billion
Venezuela ..................................... $18.8 billion
Iran .............................................. $18.1 billion
Azerbaijan .................................... $14.3 billion
Chile ............................................. $13.1 billion
South Africa ................................. $12.9 billion
Vietnam ....................................... $12.5 billion
Philippines .................................... $12.1 billion
Argentina ..................................... $11.7 billion
Thailand ....................................... $10.8 billion
Romania ...................................... $10.0 billion
Ukraine ........................................ $9.8 billion
To schedule an interview with GFI spokespersons on this report, contact Clark Gascoigne at +1 202 293 0740, ext. 222 or cgascoigne@gfintegrity.org. On-camera spokespersons are available in Washington, DC.

For more information on the report, visit here.

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Footnotes:

GFI’s previous annual study of illicit financial flows out of developing countries, “Illicit Financial Flows from Developing Countries: 2000-2009,” published in January 2011, found that US$1.44 trillion had flown out of developing economies in 2008. Due to revised/improved World Bank and IMF data, GFI’s new report estimates that US$1.55 trillion is a more accurate measurement of illicit financial outflows in 2008.
Notes to Editors:

The full embargoed report can be downloaded here [PDF 2.90 MB].
A tip-sheet for journalists can be downloaded here [PDF 155 KB].
Contact:

Clark Gascoigne
cgascoigne (at) gfintegrity.org
+1 202 293 0740, ext. 222

Global Financial Integrity (GFI) is a Washington, DC-based research and advocacy organization which promotes transparency in the international financial system.