llicit Financial Flows - The illusion of a common denominator

Johnny Flentø and Leonardo Santos Simao
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Johnny Flentø: Development Economics Research Group, University of Copenhagen
Leonardo Santos Simao: Former Minister of Health, Former Minister of Foreign Affairs & Cooperation, Government of Mozambique

No 22-15, DERG working paper series from University of Copenhagen. Department of Economics. Development Economics Research Group (DERG)

Abstract: Illicit financial flows (IFFs) grew significantly with the accelerated liberalization of financial markets during the 1980s and 1990s. In Africa, IFFs out of the continent are believed to equal combined official development assistance and direct foreign investment into the continent. Work to conceptualize and measure IFFs is progressing and many methods for estimating them are being tested. Such methods are inherently crude, and some are questionable. A more fundamental question is whether the concept of IFFs as sometimes used is useful for analytical purposes. The definition adopted by the United Nations in 2020 includes a host of different flows and transactions that have very little in common other than that they are deemed illicit, primarily according to western norms, and are not based on the development effects of flows. The term “illicit financial flows” contains very many and too different types of things, which in combination with the challenges in estimating such flows makes the concept prone to instrumentalization. Defining what is illicit is ultimately a political choice. The world should take care that the work to create an institutional framework for reducing IFFs is not reduced to a platform for the most powerful alliance of governments to impose their version of what is illicit on the rest of the world.

Keywords: Illicit Flows; Crime; International Economics and Cooperation; Tax Evasion; Drug Trafficking (search for similar items in EconPapers)
JEL-codes: F02 F51 F52 F53 F54 K34 (search for similar items in EconPapers)
Pages: 25
Date: 2022-08-07
New Economics Papers: this item is included in nep-law and nep-pay
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