draining development.pdf - Khazar University

354 Draining Development?the various impacts of economic and financial links between secrecyjurisdictions and developing countries. (This is explored in greater detailin the following sections.) Potentially, this would allow the assessmentnot only of revenue effects, but, for example, also of the impact on theextent of redistribution, channels of political representation, standardsof governance, and so on.An additional reason to consider broader impacts, even if the focus isrevenue, is a point stressed by the Norwegian commission: tax treatiesbetween havens and developing countries are typically negotiated withthe former in a position of strength, and, as a result, the havens receive atransfer of taxing rights from the developing countries, which hope thatgreater investment (and subsequent economic benefits) will follow.The three hypotheses that make up this argument should be the subjectof empirical scrutiny. First, do revenue patterns reflect such effects asa result of newly signed treaties? Second, do investment patterns respondas predicted? Third, does such investment deliver economic benefits? (Ifso, it would be interesting to consider whether the benefits are sufficientto offset any revenue losses discovered in the shorter term.)GovernanceWe will not revisit the range of arguments on the importance of effectivetaxation for improvements in governance and channels of political representation(see Christian Aid 2008 and chapter 3, by Everest-Phillips, inthis volume for more details, including considerable empirical evidence).Nor do we consider the generic arguments about the contribution ofillicit flows to making crime pay (see chapters 6 and 12, by Kopp andLevi, respectively, on aspects of money laundering and crime). The specificrole of tax havens with regard to the laundering of the proceeds ofcrime is relatively well explored, not least because it has been the focus ofsome of the more effective international coordination efforts; for example,see Hampton and Christensen (2002) for a discussion of the establishment,in 1989, of the intergovernmental Financial Action Task Forceand its subsequent impact in terms of promoting anti–money launderinglegislation at least in havens. 14There is, however, little academic analysis of the links between theopportunities provided by havens and the damage done to developingcountries. Perhaps the main innovation offered by the Norwegian com-