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Repost :: Illegal Capital Flight Handicaps Asian Economies

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Written by Philip Bowring Friday, 21 December 2012

But report by Global Financial Integrity may be misstating the case

The recent report by Global Financial Integrity, a US-based group aimed at improving governance, contains some mind-boggling data about the prevalence of illicit money transfers costing developing countries hundreds of billions of dollars.

The bottom line, the report says, is that over the past 10 years these countries have lost a total of US$5.8 trillion. Of this, Asia has accounted for nearly half, with China leading the field by a long way and Malaysia, Philippines, Indonesia and India all appearing in the top ten list of losers, who together account for 75 percent of the global total.

However, although the numbers are useful indicators of the extent of evasion of currency regulations and taxes, they can be criticized as greatly over-stating national as opposed to purely government revenue losses.

The figures comprise two principal components. Primarily they are the sum of discrepancies between export and import data of the countries concerned with the comparable data of their trading partners. Thus export values are understated in order to accumulate funds offshore and […]