News Americas, WASHINGTON, D.C., Mon. June 8, 2015: Dirty money flows are “pervasive and pernicious in the developing world” and one Caribbean nation has cracked the top 25 list globally, seeing a high illicit financial outflows compared to total trade.
The Washington, DC-based research and advisory organization Global Financial Integrity (GFI) lists Guyana as the only Caribbean country to make the list. In a report titled “Illicit Financial Flows and Development Indices: 2008–2012” and released last week, the GFI included Guyana in the list along with a number of African, Pacific and Central American nations.
The report said Guyana’s illicit outflows reached 17.3 percent between 2008 to 2012; and 16.4 percent of its trade. Dirty money is also reportedly responsible for 193.2 percent of Foreign Direct Investment in Guyana.
The GFI says Illicit financial flows (IFFs), stemming from crime, corruption, and tax evasion, have an outsized impact on the world’s poorest countries, including Guyana. The authors found a disturbing correlation between illicit financial flows and 1) higher levels of poverty, 2) higher levels of economic inequality, 3) and lower levels of human development, as measured by the United Nations’ annual Human Development Index.
This means the more illicit finance flowing out of a country relative to its output, the higher its levels of poverty and economic inequality and the lower its development,
Authored by GFI Junior Economist Joseph Spanjers and GFI Economics Fellow Håkon Frede Foss, the report compares illicit outflows from the world’s poorest economies to some traditional indicators of development—including GDP, total trade, official development assistance plus foreign direct investment, public expenditures on education and health services, and total tax revenue, among others—for the years 2008–2012, the most recent five-year period for which data are currently available.
The authors analyzed data from 2008 to 2012, from 82 countries that are highly indebted and less developed.
“This study highlights that illicit financial flows are pervasive and pernicious in the developing world,” said Tom Cardamone, GFI managing director.
At the G7 summit this week, the leaders of Germany, the United States, Britain, France, Canada, Italy and Japan will discuss tax evasion. Anti-poverty groups are calling for a crackdown on tax evasion.