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Views From The Center Blog

 

The Proposed SDG Indicator on Illicit Financial Flows Risks Conflating Ordinary Business and Dirty Money

“Illicit financial flows” means dirty money crossing borders. It is an umbrella term which covers diverse actors including organised crime groups, business people making bribes, political leaders engaging in grand corruption, and major tax evaders hiding undeclared wealth. What they all have in common is that what they are doing is illegal (although they may be getting away with it), and they often use opaque international networks of legal entities, bank accounts, and property holdings to facilitate and store ill-gotten gains. There is a clear development case for rich countries to act to prevent their financial systems being used as havens for illicit financial flows that harm developing countries.

Fighting Corruption is Dangerous, but Necessary

CGD and Brookings recently co-hosted Former Finance Minister of Nigeria and Distinguished Fellow Ngozi Okonjo-Iweala to discuss her new bookFighting Corruption is Dangerous: The Story Behind the Headlines. The book is part memoir, part how-to, as she draws on her years of experience as Nigeria’s Finance Minister to describe the dangers of fighting corruption and how best to do it. I drew four main takeaways from our conversation.

Pinning Down Illicit Financial Flows: Why Definitions Matter

The SDGs include a target to “significantly reduce illicit financial and arms flows, strengthen the recovery and return of stolen assets and combat all forms of organised crime”. However, there is no globally agreed upon definition for “illicit financial flows.” My new CGD paper looks at why there is so much disagreement and confusion over this term.

It’s Time for a Code of Conduct on Transparency for Financiers Backing PPPs

Public-Private Partnership models continue to proliferate, backed by multilateral development banks old and new. But the volume of PPPs in developing countries has stagnated since the global financial crisis, and they won’t deliver unless they are designed and implemented well. Making more and better public-private investments will take a far greater commitment to transparency from participants in the deals. Financiers—MDBs in particular—should take the lead.

Seven Ways the International Community Can Help Zimbabwe through Tough Times

Events are in tremendous flux in Zimbabwe after the non-coup committed by the military last week and the resignation of President Robert Mugabe on November 21. It’s not too early for the international community to start considering constructive steps to help the country get through the inevitable transition and back on a path to democracy and prosperity.

How Big Is the Transfer Pricing Prize for Development?

It is often stated that developing countries are “haemorrhaging billions of dollars” of tax revenues through companies abusing transfer pricing, in particular by mispricing commodities.There is no doubt that companies can take advantage of weak regulations and enforcement, but new studies based on microdata from revenue authorities suggest the scale of revenues that might be recovered is unlikely to match up to heightened popular expectations.

Why Do People Think Nigeria Might Be Losing $1 Trillion to Corporate Tax Evasion?

Misunderstandings about the scale of multinational tax avoidance are common. The origin story for an erroneous $1 trillion figure is a case of bad lip reading, but its proliferation reflects the belief that there are absolutely huge sums of money for development at stake from cracking down on multinational tax avoidance. The figure itself may be ridiculous but these myths are serious—they undermine both trust in revenue authorities and businesses, overheat disputes, and make it harder to judge practical progress on improving tax systems and compliance.

Do Weak Governments Doom Developing Countries to Poverty?

When you read what economists have to say about development, it is easy to be disheartened about the prospects for poor countries. One big reason is that slow changing institutional factors are seen as key to development prospects. I’ve just published a CGD book that’s a little more optimistic: Results Not Receipts: Counting the Right Things in Aid and Corruption.

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