draining development.pdf - Khazar University

366 Draining Development?ConclusionThis chapter has drawn together the literature on the impact of taxhavens on development and considered the need for further research inthis neglected area.It is clear that the data on bilateral trade and financial flows, whilefrustratingly limited in some areas, do provide a sufficient basis on whichto draw quite clear conclusions about the relative exposure of developingcountries to tax havens or secrecy jurisdictions, specifically: in general,developing countries do not appear to be any less exposed than high-incomeOECD countries to secrecy jurisdictions, and, in some cases, they are muchmore highly exposed. Therefore, the G-20 and others are correct indemanding that developing countries be included in any mechanism torequire increased transparency from secrecy jurisdictions.In addition, there are clearly important differences in the exposure ofdeveloping countries across different income groups and regions. Thiswarrants further investigation and analysis, which is likely, ultimately, tolead to the identification of distinct policy recommendations.Although this brief summary of the state of research makes clear thatthere are more questions than answers, there can be no doubt thatsecrecy jurisdictions are an important issue for developing countries andthat the damage done by them to development is also potentially large.For researchers, research funders, and policy makers, this is an area ofwork that must be given an increasingly greater priority.Notes1. See, respectively, Owens (2009, 2); Gordon Brown, quoted in Christian Aid(2010, 22); and Declaration on Strengthening the Financial System, G-20 LondonSummit, April 2, 2009, 4–5, http://www.g20.org/Documents/Fin_Deps_Fin_Reg_Annex_020409_-_1615_final.pdf.2. The second criteria is related to the characteristic that the OECD’s Towards aLevel Playing Field Initiative seeks to measure through the consistent assessmentof jurisdictions on a range of legal and regulatory features (OECD 2006).3. See Christian Aid (2008) for a discussion of how this process of regulatory arbitragecaused secrecy jurisdictions to play an important role in the unfolding ofthe financial crisis.4. The table may be found on the website of this volume, http://go.worldbank.org/N2HMRB4G20.