draining development.pdf - Khazar University

16 Draining Developmentare unlikely to be the source of substantial illicit flows out of developingcountries because most of the value added is in rich countries, and muchof it that is earned by developing county nationals is repatriated home.It also argues that, whatever the problems with existing IFF estimates,the phenomenon is large enough to command serious attention. Illicitflows is a coherent concept in policy terms; what links the internationaloutflows from tax evasion, corruption, and drug markets is the fact thatthey can all, in principle, be stopped by the same set of policies and laws.A central question is whether there is a set of measures that has the prospectof making a substantial difference to these flows. The alternativeview is that these outflows are much less of a problem than the underlyingphenomena that generate them and that the debate on outflows mayactually divert attention from these phenomena. The chapter suggests aresearch path for clarifying this issue. Illicit financial flows have complexorigins and varied consequences and present difficult policy options.The research program appropriate to study them will also be complex,varied, and difficult.Notes1. For an early critique, see Reuter (1996). For a much more detailed analysis publishedafter 2005, see Kilmer and Pacula (2009).2. See http://www.gfip.org/.3. A 2010 paper written for the United Nations Department of Economic andSocial Affairs by a well-known development economist does make extensive useof Baker (see FitzGerald 2010).4. The odd feature was that the item was withdrawn within a few hours of appearingon the website. Even in that brief period, it captured public attention. See,for example, Chen and Pansey (2011). Apparently, the report, “Investigation onthe Asset Transfer Routes Used by Corrupt Officials and the Corresponding SurveillanceMethods,” was given a Bank of China award for the quality of theresearch but was never intended to be made public. The translated report can befound on the website of this volume, http://go.worldbank.org/N2HMRB4G20.5. See Norway, Minister of the Environment and International Development,2009, Tax Havens and Development: Status, Analyses and Measures, Oslo: GovernmentCommission on Capital Flight from Poor Countries, http://www.regjeringen.no/upload/UD/Vedlegg/Utvikling/tax_report.pdf.6. See Task Force on Financial Integrity and Economic Development, Washington,DC, http://www.financialtaskforce.org/.