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Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
Cornell University
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
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Global Financial Integrity (GFI)

Illicit Financial Flows from Developing Countries Over the Decade Ending 2009 [15 December 2011]

by Dev Kar and Sarah Freitas1

http://iffdec2011.gfintegrity.org/

or

http://www.gfintegrity.org/storage/gfip/documents/reports/IFFDec2011/illicit_financial_flows_from_developing_countries_over_the_decade_ending_2009.pdf
[full-text, 100 pages]

Press Release 15 December 2011
Despite Global Financial Crisis, Illicit Financial Outflows from Developing World Remain High, Finds New Report
Over US$900 Billion Illicitly Drained from Developing Countries in 2009, Says Annual GFI Study
Report Finds Developing World Lost US$8.44 Trillion over the Decade 2000-2009
http://www.gfintegrity.org/content/view/486/70/

WASHINGTON, DC – Developing countries lost US$903 billion in illicit financial outflows in 2009 despite the massive slowdown in economic activity which rocked world markets in late 2008, finds a new study by Global Financial Integrity (GFI), a Washington-based research and advocacy organization.

“Illicit Financial Flows from Developing Countries over the Decade Ending 2009,” which estimates the developing world lost US$8.44 trillion over the decade ending in 2009, 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 2009.

“This is a breathtakingly large sum at a time when developing and developed countries alike are struggling to make ends meet,” said GFI Director Raymond Baker.  “This report should be a wake-up call to world leaders that more must be done to address these harmful outflows.”

While US$903 billion marks a drop from the US$1.55 trillion¹ that illicitly flowed out of the developing world in 2008, the study finds the decrease is almost entirely attributable to the global financial crisis rather than any governance improvements or economic reforms.

The study, which was co-authored by GFI Lead Economist Dev Kar and GFI Economist Sarah Freitas, tracks the amount of illegal capital flowing out of 157 different developing countries over the 10-year period from 2000 through 2009, and it ranks the countries by magnitude of illicit outflows. According to the report, the 20 biggest victims of illicit financial flows over the decade are:

1. China ............................................. $2.74 trillion
2. Mexico ............................................ $504 billion
3. Russia ............................................ $501 billion
4. Saudi Arabia ................................. $380 billion
5. Malaysia ........................................ $350 billion
6. United Arab Emirates................... $296 billion
7. Kuwait ............................................ $271 billion
8. Nigeria ........................................... $182 billion
9. Venezuela ..................................... $179 billion
10. Qatar .............................................. $175 billion
11. Poland ............................................ $162 billion
12. Indonesia ....................................... $145 billion
13. Philippines .................................... $142 billion
14. Kazakhstan ................................... $131 billion
15. India ................................................ $128 billion
16. Chile .............................................. $97.5 billion
17. Ukraine ......................................... $95.8 billion
18. Argentina ...................................... $95.8 billion
19. South Africa .................................. $85.5 billion
20. Turkey............................................ $79.1 billion

For a complete ranking of average annual illicit financial outflows over the decade by country, please refer to Table 5 of the report’s appendix.

The report also reveals the top victims of illegal capital flight in 2009.  The top 20 countries suffering the highest illicit outflows in 2009 were:

1. China ............................................. $291 billion
2. Saudi Arabia ................................. $82.3 billion
3. Poland ........................................... $66.3 billion
4. Malaysia ....................................... $46.8 billion
5. Mexico .......................................... $34.6 billion
6. Nigeria ......................................... $33.4 billion
7. Russia ........................................... $23.4 billion
8. Indonesia ...................................... $20.5 billion
9. United Arab Emirates .................. $19.5 billion
10. Venezuela ..................................... $18.8 billion
11. Iran .............................................. $18.1 billion
12. Azerbaijan .................................... $14.3 billion
13. Chile ............................................. $13.1 billion
14. South Africa ................................. $12.9 billion
15. Vietnam ....................................... $12.5 billion
16. Philippines .................................... $12.1 billion
17. Argentina ..................................... $11.7 billion
18. Thailand ....................................... $10.8 billion
19. Romania ...................................... $10.0 billion
20. Ukraine ........................................ $9.8 billion

To schedule an interview with GFI spokespersons on this report, contact Clark Gascoigne at +1 202 293 0740, ext. 222 or cgascoigne@gfintegrity.org. On-camera spokespersons are available in Washington, DC.

For more information on the report, visit http://iffdec2011.gfintegrity.org.

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Footnotes:

1. GFI’s previous annual study of illicit financial flows out of developing countries, “Illicit Financial Flows from Developing Countries: 2000-2009,” published in January 2011, found that US$1.44 trillion had flown out of developing economies in 2008.  Due to revised/improved World Bank and IMF data, GFI’s new report estimates that US$1.55 trillion is a more accurate measurement of illicit financial outflows in 2008.

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