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Illicit Financial Flows to and from the Philippines: A Study in Dynamic Simulation, 1960-2011

Dev Kar and Brian LeBlanc

Global Financial Integrity

February 2014

 

The Philippine economy lost at least US$132.9 billion in illicit financial outflows from 1960 to 2011. These outflows represent the proceeds of crime, corruption, and tax evasion, and have serious negative consequences for the Philippines. Outflows were found to significantly decrease domestic savings. A 10% decrease in illicit outflows was found to increase the amount of domestic savings of between 1.3% and 1.9%.

 

The report is the fourth country case study by Global Financial Integrity, and the first to incorporate re-exporting data from Hong Kong, and to estimate tax revenue loss from illicit inflows and outflows.

 

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Illicit Financial Flows from Developing Countries: 2002-2011

Dev Kar and Brian LeBlanc

Global Financial Integrity

December 2013

 

This December 2013 report from Global Financial Integrity, “Illicit Financial Flows from the Developing World: 2002-2011,” finds that the developing world lost US$5.9 trillion in illicit financial flows from 2002-2011, with illicit outflows alarmingly increasing at an average rate of more than 10 percent per year.

 

The report is the fourth update of Global Financial Integrity's groundbreaking report, Illicit Financial Flows from Developing Countries 2002-2006. For the first time, this year’s report incorporates re-exporting data from Hong Kong and uses disaggregated—as opposed to aggregated—bilateral trade data for those countries which report it.

 

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Illicit Financial Flows and the Problem of Net Resource Transfers from Africa: 1980-2009

Global Financial Integrity and the African Development Bank

May 2013

 

A new report jointly produced by Global Financial Integrity and the African Development Bank finds that developing countries lost $1.4 trillion in net resource transfers, which are comprised of both licit and illicit flows, including investment, remittances, debt relief, and illicit financial flows, from 1980-2009.

 

The implications of this report are broad. Despite foreign aid, natural resource exports, and other transfers, developed countries still take away more resources than they give to Africa.

 

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Russia: Illicit Financial Flows and the Role of the Underground Economy

Dev Kar and Sarah Freitas

Global Financial Integrity

February 2013

 

This February 2013 report from Global Financial Integrity, “Russia: Illicit Financial Flows and the Role of the Underground Economy,” finds that Russia lost at least US$211.5 billion in illicit outflows from 1994-2011.

 

The report also estimates the size of the Russian underground economy, looks a the Russia-Cyprus money laundering relationship, analyzes connections between capital flight and the price of oil, and much more.

 

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Illicit Financial Flows from Developing Countries 2001-2010

Dev Kar and Sarah Freitas

Global Financial Integrity

December 2012

 

This December 2012 report from Global Financial Integrity, “Illicit Financial Flows from the Developing World 2001-2010,” finds that the developing world lost $5.86 trillion in illicit financial flows from 2001-2010.

 

The report is the fourth update of Global Financial Integrity's groundbreaking report, Illicit Financial Flows from Developing Countries 2002-2006. It debuts a new methodology for estimating illicit financial flows, which represent the proceeds of crime, corruption, and tax evasion.

 

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Illicit Financial Flows from China and the Role of Trade Misinvoicing

Dev Kar and Sarah Freitas

Global Financial Integrity

October 2012

 

This October 2012 report from Global Financial Integrity, “Illicit Financial Flows from China and the Role of Trade Misinvoicing,” finds that China lost $3.79 trillion in illicit financial flows from 2000-2011.

 

The report examines trade misinvoicing as a method for Chinese illicit financial flows. It looks at specific commodity groupings most susceptible to trade misvoicing. The report analyzes trade misinvoicing between China and the United States and Chinese assets held abroad in tax havens.

 

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Mexico: Illicit Financial Flows, Macroeconomic Imbalances, and the Underground Economy

Dev Kar

Global Financial Integrity

January 2012

 

This January 2012 report from Global Financial Integrity, “Mexico: Illicit Financial Flows, Macroeconomic Imbalances, and the Underground Economy,” finds that Mexico lost $872 billion in illicit financial flows from 1970-2010.

 

The report finds that trade mispricing is the dominant source of illicit flows out of Mexico, and may have been accelerated by the North American Free Trade Agreement (NAFTA) with the United States and Canada. Illicit financial flows are also found to be a major driver of the Mexican underground economy.

 

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Illicit Financial Flows from the Developing World Over the Decade Ending 2009

Dev Kar and Sarah Freitas

Global Financial Integrity

December 2011

 

This December 2011 report from Global Financial Integrity, “Illicit Financial Flows from the Developing World Over the Decade Ending 2009,” finds that despite the tremendous drop in global trade following the global financial crisis in late 2008, the developing world still lost US$903 billion in 2009.

 

The report finds that from 2000-2009, the developing countries lost US$8.44 trillion to illicit financial flows, a sum which outweighs foreign aid by a ratio of 10-to-1. The top five sources of illicit financial flows over that period were China, Mexico, Russia, Saudi Arabia, and Malaysia.

 

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Illicit Financial Flows from the Least Developed Countries 1990-2008

Dev Kar

Global Financial Integrity, commissioned by UNDP 

May 2011

 

This February 2011 report from Global Financial Integrity, “Illicit Financial Flows from the Least Developed Countries: 1990-2008,” commissioned by the United Nations Development Program (UNDP), 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.”

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Transnational Crime in the Developing World

Jeremy Haken

Global Financial Integrity

February 2011

 

This February 2011 report from Global Financial Integrity, “Transnational Crime in the Developing World,” finds that the illicit trade in “goods, guns, people, and natural resources” is a $650 billion enterprise, which most negatively impacts the developing world.  The study evaluates the overall size of criminal markets in 12 categories: drugs, humans, wildlife, counterfeit goods and currencies, human organs, small arms, diamonds and other gems, oil, timber, fish, art and cultural property, and gold.

 

Of the 12 illicit activities studied, trade in drugs ($320 billion per year) and counterfeiting ($250 billion per year) were ranked first and second in terms of illicit funds generated. Another key finding of the report was that profits from illicit markets are making their way to transnational crime syndicates through vast international trade networks. The report also emphasizes a link between transnational crime and economic “underdevelopment.”

 

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Illicit Financial Flows from Developing Countries: 2000-2009

Dev Kar and Karly Curcio

Global Financial Integrity

January 2011

 

This January 2011 report from Global Financial Integrity, “Illicit Financial Flows from Developing Countries 2000-2009,” finds that approximately US$6.5 trillion was removed from the developing world from 2000 through 2008. The report also examines illicit flows from Asia, which produced the largest portion of total outflows.

 

The report ranks countries according to magnitude of outflows with China ranking 1, Russia 2, Mexico 3, Saudi Arabia 4, and Malaysia 5. The report also shows the annual outflows for each country and breaks outflows down into two categories of drivers: trade mispricing and “other,” which includes kickbacks, bribes, embezzlement, and other forms of official corruption.

 

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The Drivers & Dynamics of Illicit Financial Flows from India: 1948-2008

Dev Kar

Global Financial Integrity

November 2010

 

“The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008,” released in November 2010 by Global Financial Integrity (GFI), estimates that tax evasion, crime, and corruption have removed gross illicit assets from India worth US $462 billion.  The report also finds that the faster rates of economic growth since economic reform started in 1991 led to a deterioration of income distribution which led to more illicit flows from the country. Moreover, the report finds that the poor state of governance is reflected in a growing underground economy which in turn has fueled more transfers of illicit capital from India. This analysis is cast in terms of a pre- and a post-reform period spanning a total of 61 years since independence.

 

“This report puts into stark terms the financial cost of tax evasion, corruption, and other illicit financial practices in India,” said Global Financial Integrity director Raymond Baker.  “It also shows that these illicit outflows contribute to stagnating levels of poverty and an ever widening gap between India’s rich and poor.”

 

“In this report we clearly demonstrate how India’s underground economy is closely tied to illicit financial outflows,” said GFI lead economist and report author, Dr. Dev Kar. “The total present value of India’s illicit assets held abroad accounts for approximately 72 percent of India’s underground economy.  This means that almost three-quarters of the illicit assets comprising India’s underground economy—which has been estimated to account for 50 percent of India’s GDP (approximately US $640 billion at the end of 2008)—ends up outside of the country.  We also find that there is a statistical correlation between larger volumes of illicit flows and deteriorating income distribution.”

 

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The Absorption of Illicit Financial Flows from Developing Countries: 2002-2006

Dev Kar, Devon Cartwright-Smith and Ann Hollingshead

Global Financial Integrity

May 2010

 

WASHINGTON, D.C.—A May 2010 report from Global Financial Integrity (GFI) examines where trillions of dollars in illicit finances—the proceeds of crime, corruption, and tax evasion—are being deposited.

 

The report, The Absorption of Illicit Financial Flows from Developing Countries: 2002-2006, rounds-out the groundbreaking analysis put forward in GFI’s 2008 report Illicit Financial Flows from Developing Countries: 2002-2006, which estimated that the developing world was losing $1 trillion per year to illicit financial practices.

 

Report findings include:

 

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Illicit Financial Flows from Africa: Hidden Resource for Development

Dev Kar & Devon Cartwright-Smith

Global Financial Integrity

March 2010

 

Africa lost $854 billion in illicit financial outflows from 1970 through 2008, according to this new report from Global Financial Integrity (GFI).  Illicit Financial Flows from Africa: Hidden Resource for Development debuts new estimates for volume and patterns of illicit financial outflows from Africa, building upon GFI's ground-breaking 2009 report, Illicit Financial Flows from Developing Countries: 2002-2006, which estimated that developing countries were losing as much as $1 trillion every year in illicit outflows. The new Africa illicit flows report is expected to feature prominently at the 3rd Annual Conference of African finance ministers in Malawi, which is currently underway.

 

"The amount of money that has been drained out of Africa-hundreds of billions decade after decade-is far in excess of the official development assistance going into African countries," said GFI director Raymond Baker.  "Staunching this devastating outflow of much-needed capital is essential to achieving economic development and poverty alleviation goals in these countries."


 

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Privately Held, Non-Resident Deposits in Secrecy Jurisdictions

Ann Hollingshead

Global Financial Integrity

March 2010

 

This report from Global Financial Integrity (GFI) on private, non-resident deposits in secrecy jurisdictions finds that the United States, United Kingdom, and the Cayman Islands are the most popular destinations for financial deposits by non-residents. Switzerland, Luxembourg, and Hong Kong also make the top 10 list of destinations.

 

Privately Held, Non-Resident Deposits in Secrecy Jurisdictions analyzes data from the Bank of International Settlements and the International Monetary Fund to measure total deposits by non-residents in areas considered secrecy jurisdictions under the definition established by the Tax Justice Network.

 


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The Implied Tax Revenue Loss from Trade Mispricing

Public Citizen Report
Ann Hollingshead
Global Financial Integrity
February 2010

 

A new Global Financial Integrity report estimates the developing world is losing roughly US$100 billion per year in tax revenue loss from illicit financial flows.

 

Download the Report (PDF)...

 

 
Illicit Financial Flows from Developing Countries: 2002-2006

Dev Kar & Devon Cartwright-Smith

Global Financial Integrity

December 2008

 

A new report by Global Financial Integrity,"Illicit Financial Flows from Developing Countries: 2002-2006," shows that the developing world is losing an increasing amount of money through illicit capital flight each year. 

 

Economist Version (Contains detailed statistical appendix)

 

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