UNDP-Commissioned Report from Global Financial Integrity, “Illicit Financial Flows from the Least Developed Countries: 1990-2008,” Now Available
May 12, 2011. 48 Poorest Countries Lost US$197 Billion From 1990-2008; Serious Impediment to Development Efforts
ISTANBUL,
Turkey – A United
Nations Development Program (UNDP) commissioned report from Global Financial
Integrity (GFI) on illicit financial flows from the Least Developed
Countries (LDCs) was presented for discussion yesterday at the United
Nations IV Conference on Least Developed Countries hosted by the Republic of
Turkey.
Written by
GFI Lead Economist DevKar, the report, Illicit Financial Flows from the
Least Developed Countries: 1990-2008 (PDF | 1.75 MB), examines how
structural characteristics of Least Developed
Countries could be facilitating the cross-border transfer of illicit funds,
discusses methodological issues underlying estimates of illicit flows, presents
an analysis of the magnitude of such flows, and makes policy recommendations
for the curtailment of these illicit flows.
In her opening
remarks for the UNDP Conference yesterday, UNDP Administrator Helen Clark
said, “Illicit flows seriously impede LDCs’ efforts to raise resources for
social and economic development. These flows are often absorbed into banks, tax
havens, and offshore financial centers in developed countries.”
Key findings
of the report include:
Illicit flows divert resources
needed for poverty alleviation and economic development.
Approximately US$197 billion
flowed out of the 48 poorest developing countries and into mainly
developed countries, on a net basis over the period 1990-2008.
The top ten exporters of illicit
capital account for 63 percent of total outflows, while the top 20 account
for nearly 83 percent.
Based on available data, African
LDCs accounted for 69 percent of total illicit flows, followed by Asia
(29 percent) and Latin America (2 percent).
Trade mispricing accounts
for the bulk (65-70 percent) of illicit outflows from LDCs, and the
propensity for mispricing has increased along with increasing external
trade.
The top exporters of illicit
capital (cumulative outflows) are:
Bangladesh, US$34.8 billion,
Angola, US$34.0 billion
Lesotho, US$16.8 billion
Chad , US$15.4 billion
Yemen, Republic of, US$12.0
billion
Nepal , US$9.1 billion
Uganda, US$8.8 billion
Myanmar, US$8.5 billion
Ethiopia, US$8.4 billion
Zambia, US$6.8 billion
The factors that drive illicit
flows from LDCs may be broadly classified into three
categories—macroeconomic, structural, and governance-related. It is likely
that structural and governance issues are driving the bulk of illicit
outflows, but this needs to be examined on a case-by-case basis.
The GFI
report on LDCs was commissioned by UNDP as a contribution to the United Nations
IV High Level Conference on the Least Developed Countries in 2011. Read the
UNDP press release on the report here .
The full
report is available for download on the UNDP website here (PDF | 1.75 MB).
Click here for more information
on the report’s author, Dr. Kar.
