draining development.pdf - Khazar University

14The Practical Political Economyof Illicit FlowsMick MooreAbstractAspects of late 20th-century globalization—growing internationalincome inequality, the financialization of the economy, the rise of taxhavens, increasing rents from exports of energy and mineral resources,and the large international drug economy—have interacted to reshapethe political economies of many of the poorest countries and left themparticularly vulnerable to the adverse economic and political effects ofillicit capital flows. The increasing scope for the illicit expatriation ofcapital exacerbates problems of corruption, low investment, the unequalsharing of tax burdens across different parts of the private sector, thelack of legitimacy of private enterprise, and relatively authoritarian andexclusionary governance. The international community is already developinga range of interlocking tools to deal with the nexus of problemsaround illicit capital flows, capital flight, corruption, money laundering,tax avoidance, tax havens, and transfer mispricing. Improvements in thedesign of these tools and greater vigor in their implementation shouldhave especially beneficial effects within many of the poorest countries,notably, in increasing private investment and economic growth, reducingthe popular mistrust of private enterprise, and providing more space457