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llicit Financial Flows - The illusion of a common denominator

Author

Listed:
  • 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)

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.

Suggested Citation

  • Johnny Flentø & Leonardo Santos Simao, 2022. "llicit Financial Flows - The illusion of a common denominator," DERG working paper series 22-15, University of Copenhagen. Department of Economics. Development Economics Research Group (DERG).
    • Handle: RePEc:kud:kuderg:2215
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    File URL: https://www.econ.ku.dk/derg/wps/15-2022.pdf
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    References listed on IDEAS

    as
    1. Kasper Brandt, 2020. "Illicit financial flows and the Global South: A review of methods and evidence," WIDER Working Paper Series wp-2020-169, World Institute for Development Economic Research (UNU-WIDER).
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    More about this item

    Keywords

    Illicit Flows; Crime; International Economics and Cooperation; Tax Evasion; Drug Trafficking;
    All these keywords.

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions
    • F52 - International Economics - - International Relations, National Security, and International Political Economy - - - National Security; Economic Nationalism
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • F54 - International Economics - - International Relations, National Security, and International Political Economy - - - Colonialism; Imperialism; Postcolonialism
    • K34 - Law and Economics - - Other Substantive Areas of Law - - - Tax Law

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