Looting the developing countries

Global Financial Integrity (GFI) has revealed how developing countries lost about $16.3 trillion to leakages in the balance of payments, trade mis-invoicing, and recorded financial transfers between 1980 and 2012.

“GFI’s estimates show that, over the past decade, an average of more than $1 trillion per year, have flowed out of developing countries unrecorded. Viewed another way, for every dollar of development assistance received by developing countries, more than ten dollars disappear from these countries,” the report noted.

As of 2011, about $2.6 trillion of developing countries’ private wealth and over half of the $4.4 trillion of total assets were held in tax havens alone.

“There is perhaps no greater driver of inequality within developing countries than the combination of illicit financial flows and offshore tax havens,” lamented GFI President, Raymond Baker.

According to the report, a total of about $3 trillion in recorded transfers (about $90 billion per annum on average) flowed out of those developing countries, depending on available statistics. Further details of the study showed that developing countries lost $13.4 trillion dollars ($10.6 trillion, excluding China) through broad leakages in the balance of payments and trade mis-invoicing. Also, total portfolio investment and foreign direct investment of developing country residents in tax havens increased from $0.9 trillion at end 2009 to $1.3 trillion at the end of 2012.