19 December 2012

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Full Report 123$ Billion Black Money India Lost $6 Trillion Stolen from Poor Countries in Decade

Full Report 123$ Billion Black Money India Lost $6 Trillion Stolen from Poor Countries in Decade

WASHINGTON, DC – Crime, corruption, and tax evasion cost the developing world $858.8 billion in 2010, just below the all-time high of $871.3 billion set in 2008—the year preceding the global financial crisis.  The findings are part of a new study released today by Global Financial Integrity (GFI), a Washington-based research and advocacy organization.

 The report, “Illicit Financial Flows from Developing Countries: 2001-2010,” is GFI’s annual update on the amount of money flowing out of developing economies via crime, corruption and tax evasion, and it is the first of GFI’s reports to include data for the year 2010.

 Co-authored by GFI Lead Economist Dev Kar and GFI Economist Sarah Freitas, the study is the first by GFI to incorporate a new, more conservative, estimate of illicit financial flows, facilitating comparisons with previous estimates from GFI updates.

Astronomical sums of dirty money continue to flow out of the developing world and into offshore tax havens and developed country banks,” said GFI Director Raymond Baker.  “Regardless of the methodology, it’s clear: developing economies are hemorrhaging more and more money at a time when rich and poor nations alike are struggling to spur economic growth. This report should be a wake-up call to world leaders that more must be done to address these harmful outflows.”


Methodology

 As developing countries begin to loosen capital controls, the possibility exists that the methodology utilized in previous GFI reports—known as the World Bank Residual Plus Trade Mispricing method—could increasingly pick-up some licit capital flows.  The methodology introduced in this report— the Hot Money Narrow Plus Trade Mispricing method—ensures that all flow estimates are strictly illicit moving forward, but may omit some illicit financial flows detected in the previous methodology.


“The estimates provided by either methodology are still likely to be extremely conservative as they do not include trade mispricing in services, same-invoice trade mispricing, hawala transactions, and dealings conducted in bulk cash,” explained Dr. Kar, who previously served as a senior economist at the International Monetary Fund.  “This means that much of the proceeds of drug trafficking, human smuggling, and other criminal activities, which are often settled in cash, are not included in these estimates.”

 Findings

 The $858.8 billion of illicit outflows lost in 2010 is a significant uptick from 2009, which saw developing countries lose $776.0 billion under the new methodology.  The study estimates the developing world lost a total of $5.86 trillion over the decade spanning 2001 through 2010.1

 “This has very big consequences for developing economies,” explained Ms. Freitas, a co-author of the report.  “Poor countries lost nearly a trillion dollars that could have been used to invest in healthcare, education, and infrastructure.  It’s nearly a trillion dollars that could have been used to pull people out of poverty and save lives.”

 Dr. Kar and Ms. Freitas’ research tracks the amount of illegal capital flowing out of 150 different developing countries over the 10-year period from 2001 through 2010, and it ranks the countries by magnitude of illicit outflows.

According to the report, the 20 biggest exporters of illicit financial flows over the decade are:



1)    China ....................... $274 billion average ($2.74 trillion cumulative)

2)Mexico ..................................... $47.6 billion avg. ($476 billion cum.)

3)Malaysia .................................. $28.5 billion avg. ($285 billion cum.)

4)Saudi Arabia ........................... $21.0 billion avg.  ($210 billion cum.)

5)Russia ....................................... $15.2 billion avg. ($152 billion cum.)

6)Philippines ............................... $13.8 billion avg. ($138 billion cum.)

7)Nigeria ...................................... $12.9 billion avg. ($129 billion cum.)

8)India ......................................... $12.3 billion avg. ($123 billion cum.)

9)Indonesia ................................. $10.9 billion avg. ($109 billion cum.)

10)United Arab Emirates .............. $10.7 billion avg. ($107 billion cum.)

11)Iraq ......................................... $10.6 billion avg. ($63.6 billion cum.)

12)South Africa ........................... $8.39 billion avg. ($83.9 billion cum.)

13)Thailand ................................. $6.43 billion avg. ($64.3 billion cum.)

14)Costa Rica ............................... $6.37 billion avg. ($63.7 billion cum.)

15)Qatar ........................................ $5.61 billion avg. ($56.1 billion cum.)

16)Serbia ....................................... $5.14 billion avg. ($51.4 billion cum.)

17)Poland .................................... $4.08 billion avg. ($40.8 billion cum.)

18)Panama ................................... $3.99 billion avg. ($39.9 billion cum.)

19)Venezuela ................................ $3.79 billion avg. ($37.9 billion cum.)

20)Brunei ..................................... $3.70 billion avg. ($37.0 billion cum.)


Also revealed are the top exporters of illegal capital in 2010, which were:

 1)China ..................................................... $420.36 billion

2)Malaysia .................................................. $64.38 billion

3)Mexico ...................................................... $51.17 billion

4)Russia ...................................................... $43.64 billion

5)Saudi Arabia ............................................ $38.30 billion

6)Iraq........................................................... $22.21 billion

7)Nigeria ..................................................... $19.66 billion

8)Costa Rica.................................................. $17.51 billion

9)Philippines ............................................... $16.62 billion

10)Thailand.................................................... $12.37 billion

11)Qatar ........................................................ $12.36 billion

12)Poland ...................................................... $10.46 billion

13)Sudan ......................................................... $8.58 billion

14)United Arab Emirates ................................ $7.60 billion

15)Ethiopia ..................................................... $5.64 billion

16)Panama ...................................................... $5.34 billion

17)Indonesia .................................................... $5.21 billion

18)Dominican Republic ................................... $5.03 billion

19)Trinidad and Tobago .................................. $4.33 billion

20)Brazil ........................................................... $4.29 billion


 China, the largest cumulative exporter of illegal capital flight, as well as the largest victim in 2010, was the topic of an October 2012 country-specific report by GFI’s Kar and Freitas.  Using the older methodology, “Illicit Financial Flows from China and the Role of Trade Misinvoicing,” found that the Chinese economy suffered $3.79 trillion in illicit financial outflows between 2000 and 2011.

 “Our reports continue to demonstrate that the Chinese economy is a ticking time bomb,” said Dr. Kar. “The social, political, and economic order in that country is not sustainable in the long-run given such massive illicit outflows.”

 Mexico, the second-largest cumulative exporter of illicit capital over the decade, was also the topic of a January 2011 GFI report by Dr. Kar.  The study, “Mexico: Illicit Financial Flows, Macroeconomic Imbalances, and the Underground Economy,” found that Mexico lost a total of $872 billion in illicit financial flows over the 41-year period from 1970 to 2010.  Moreover, illicit outflows were found to drive Mexico’s domestic underground economy, which includes—among other things—drug smuggling, arms trafficking and human trafficking.

Read Complete Report
Illicit Financial Flows from Developing Countries: 2001-2010
A December 2012 Report from Global Financial Integrity
The report for the first time includes a special analysis of sovereign wealth funds and their relationship to illicit financial flows.

Black Money Report

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Wednesday, December 19, 2012

Tags -  Black Money  Full GFI Report

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6 comments:

Arti December 19, 2012  

Thats a huge amount!! Thanks for another informative post sm :)

cookingvarieties December 19, 2012  

hi sm, wow ! that's news to me...malaysia? how on earth did that happen.. thanks for sharing

MEcoy December 19, 2012  

it is a shame to see our country in both list

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