/PRNewswire-USNewswire/ -- Global Financial Integrity (GFI) released today a study estimating the annual value of illicit financial flows from all poor nations at approximately $900 million. Titled "Illicit Financial Flows From Developing Countries: 2002 - 2006," (http://www.gfip.org/) the ground-breaking report shows that the developing world is losing an increasing amount of money through illicit capital flight each year. Moreover, the value of the illicit flows surpasses the amount of Official Development Assistance (ODA) entering those countries by an order of magnitude.
"Illicit financial flows siphon revenue out of poor countries, robbing them of much-needed assets and forestalling economic development," said GFI director Raymond Baker. "These new figures reveal that illicit financial flows outpace ODA by a ratio of nearly 10 to 1. This is critical to understanding global poverty and developing effective poverty alleviation and economic development strategies," Baker said.
Primary findings of the report include:
-- Total capital flight exiting the developing world may be as much as $1
trillion per year,
-- The volume of capital flight is increasing at an average of 18.2% a
-- Over the five-year period of this study, illicit financial flows grew
at the fastest pace in the Middle East and North Africa region (49.4
percent) followed by Europe (25.4 percent), Asia (15.7 percent), and
the Western Hemisphere (2.8 percent). Flows from Africa declined (-2.9
percent) but this is more the result of incomplete data than
supportive economic or political factors.
Illicit financial flows refer to money that is illegal in its origin, transfer or use and reflect the proceeds of corruption, crime and tax evasion. Corporate avoidance of customs duties, VAT and income taxes constitute an estimated 60% of the total outflow. The findings were based on macroeconomic trade and external debt data maintained by the International Monetary Fund and the World Bank.
"The magnitude of the flows indicates there is much the international community must do to tackle this systemic and destructive problem," Baker said.
Global Financial Integrity promotes national and multilateral policies, safeguards, and agreements aimed at curtailing the cross-border flow of illegal money in order to enhance global development and security.