Friday, September 18, 2009

Illicit financial flows and capital flight

Global Financial Integrity defines illicit money as

"money that is illegally earned, transferred, or utilised. If it breaks laws in its origin, movement, or use it merits the label."

And GFI is rightly keen to use this term, in preference to the more common term "capital flight" (which usually is taken to measure something slightly different.) As they explain:

"Capital flight is an expression that places virtually the whole of the problem upon the developing countries out of which the money comes. It suggests, without quite saying so, that it is almost entirely their responsibility to address and resolve the concern. The expression illicit financial flows does a better job of clarifying that this phenomenon is a two-way street."

It's something important to remember. It helps us remember that there are countries that receive those flows, not to mention a pinstripe infrastructure that encourages and facilitates those flows.


Blogger Physiocrat said...

Pity nobody looks at immoral financial flows.

11:26 pm  

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