Open AccessIllicit Financial Flows and their Developmental Impacts: An Overview
Author(s) -
Marc Herkenrath
Publication year - 2014
Publication title -
international development policy/revue internationale de politique de développement
Language(s) - English
Resource type - Journals
eISSN - 1663-9383
pISSN - 1663-9375
DOI - 10.4000/poldev.1863
Subject(s) - language change , developing country , finance , business , capital flows , politics , secrecy , investment (military) , financial intermediary , state (computer science) , money laundering , economics , financial system , market economy , economic growth , political science , art , liberalization , literature , algorithm , computer science , law
Illicit financial flows — cross-border capital movements for the purposes of concealing illegal activities and evading taxes — pose major challenges to developing countries. They deprive the country concerned of urgently needed resources for private and public investment, thereby hampering infrastructure building and economic growth. This research overview shows that illicit financial flows also favour political changes that go hand in hand with the weakening of state institutions and growing corruption and rent-seeking. As yet, there are no empirical quantitative findings as to the exact functioning and significance of these effects. What is clear, however, is that approaches to problem-solving must come not only from the countries where illicit financial flows originate but also from the recipient countries — offshore financial centres with a high level of financial secrecy