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Trillion Dollar Estimate: Illicit Financial Flows from Developing Countries

Nitsch, Volker (2015):
Trillion Dollar Estimate: Illicit Financial Flows from Developing Countries.
Darmstadt, In: Darmstadt Discussion Papers in Economics, [Online-Edition: http://tuprints.ulb.tu-darmstadt.de/5437],
[Report]

Abstract

Recent estimates suggest that developing countries lose about 1 trillion US dollars each year due to illicit financial flows. This paper reviews the empirical methodology that underlies those estimates. Various critical aspects of the analytical approach are highlighted, focusing in particular on deficiencies in the use of mirror trade statistics to quantify the extent of capital outflows due to trade misinvoicing. Serious issues in the empirical analysis include, among others, arbitrary assumptions, mixed methodologies and skewed sampling. As a result, it is argued that the quantitative results obtained from those exercises have no substantive meaning. The trillion-dollar estimate of illicit financial flows from developing countries, therefore, lacks evidence and is uncorroborated.

Item Type: Report
Erschienen: 2015
Creators: Nitsch, Volker
Title: Trillion Dollar Estimate: Illicit Financial Flows from Developing Countries
Language: English
Abstract:

Recent estimates suggest that developing countries lose about 1 trillion US dollars each year due to illicit financial flows. This paper reviews the empirical methodology that underlies those estimates. Various critical aspects of the analytical approach are highlighted, focusing in particular on deficiencies in the use of mirror trade statistics to quantify the extent of capital outflows due to trade misinvoicing. Serious issues in the empirical analysis include, among others, arbitrary assumptions, mixed methodologies and skewed sampling. As a result, it is argued that the quantitative results obtained from those exercises have no substantive meaning. The trillion-dollar estimate of illicit financial flows from developing countries, therefore, lacks evidence and is uncorroborated.

Series Name: Darmstadt Discussion Papers in Economics
Volume: 227
Place of Publication: Darmstadt
Uncontrolled Keywords: misinvoicing, mispricing, capital flight
Divisions: 01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete
01 Department of Law and Economics > Volkswirtschaftliche Fachgebiete > International Economics
01 Department of Law and Economics
Date Deposited: 01 May 2016 19:55
Official URL: http://tuprints.ulb.tu-darmstadt.de/5437
URN: urn:nbn:de:tuda-tuprints-54379
Additional Information:

JEL Code: F14; F38

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