THE PRICE OF OFFSHORE REVISITED APPENDIX 111- KEY CHARTS

James S. Henry Tax Justice Network July 2012

7/1/12

(c) JSH, TJN 2012

1

H

Unrecorded Ca ital Flows Models Offshore Wealth Models

rJ

Triangulating on the offshore black hole ....
Unrecorded Capital Flows and Stocks
( 139/154 developing countries)

~ 41 BIS Countries -- Reporting banks Be neflcial Accts FidueiaJ Accounts Assets (Loans) Liab. (Deposits) Assets (Loans) Liab. (Deposits) ~ 217 Countries ~AII Nonbanks IAiI Banks

~ ~
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41 Individ. BIS Countries IAII Nonban ks ~AII Banks ~ 176 Countries All Nonbanks All Banks 176 lndivld Countries IAII Nonbanks ~AII Banks

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... So we're forced to rely on ....

41 BIS Countries -- Reporting banks --FiduciarAccount-s -Be neficial Accts Assets (Loans) Liab. (Deposits) Assets (Loans) Liab. (Deposits) E 217 Countries IAII Nonbanks IAiI Banks

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41 Individ. BIS Countries

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E 176 Countries All Nonbanks All Banks 176 Individ. Countries rAil Nonbanks LAII Banks

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Approach: Get out of the bloody armchair

!I

Plausibility counts: case-based + inferential

Get out of the armchair, go out in the field

aBut I want tenure ... and I like my armchair ...." (aAbstract empiricism")

c JSHjTJN

Inti 2011

E'HE NOT

ROKE

,Gilloballl !1!IIBig' lUiIIII:s;'!I! Outstalndiing' "''"'' IE:!iJlflOS, Swii:SiS FlrallnCS and U~S~ 2002, ..20:1'1 (I=$l.S Triillllii,oln 2,10 1,1)
j
1

POIIiJJlnd!i,

$~,600 ...--------------------------------------

,

I

$l"croo

s
SSM
$LOO '

.$-

zoos

(c)JSHI T IN Inti 2011

13

Early clues ....

World Current Deficit Discrepancy Key Components ($95 Billions)

$225 $150 $75 $0 -$75 -$150 -$225 1974 1978 1982 1986 1990
-r-

Jln.n ,_

~~Ull

-

r- -

-

1994

1998 2002

DWorld Trade Gap DWorld Income Gap .Total
Source: IMF(200S) data. author's

World CA Gap

{c)JSH/ TJN Inti 2011

analysis

14

CF estimates' long history

Capital Flight Estimation Russia Example
Debt Flows ($B) Net Foreign Investment ($B) Total Sources ($6) Reported CA Deficit Ch in Reserves Total Observed Uses ($6) AnnualCF Estimate ($B current) AnnualCF Estimate ($6 US 95)

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003
Total

-5.8 2.1 7.1 5.4 46.3 0.7 -12.6 -3.3 -5.6 28.6

0.4 1.5 3.7 3.0 2.2 0.8 -0.4 0.7 2.6 -1.4

-5.4 3.5 10.8 8.4 48.5 1.5 -13.0 -2.6 -2.9 27.3

7.8 7.0 10.8 -0.1 0.2 24.6 46.8 33.8 29.1 35.8

3.4 -4.9 6.1 -0.4 10.5 -5.4 -18.9 -12.0 -12.8 -27.2 .L$-.:§1&

11.3 2.1 16.9 -0.5 10.7 19.2 27.9 21.8 16.3 8.6

5.9 5.6 27.7 7.9 59.2 20.7 14.9 19.1 13.4 35.9

6.0 5.6 27.2 7.6 56.3 19.4 13.7 17.1 11.9 31.2

$~

$fl.2

$--Z§.J!

$196.0

'$134.4

'$210.4

'$195.9

Source: data from IMF/World Bank (2008), JSH analysis

(c)JSH/ TJN Inti 2011

17

Key ingredients - capital flow estimates
• •
Combines "sources'-' +'-'uses'-'(CA account, changes in reserves, foreign debt, investment) ata rom WBIIMF, central bank

Key ingredients - "flight weallhn analysis
• CF wealth stock analysis - key assumptions, base case
o

Unrecorded flows are pre-tax (else why conceal?) 'Rationar'-' inve~stors Conservative -> nominal 6 mos. US CD yield before taxes over

Q

u

AMIEIR ICAJN IDEST' CFUSIIS1 .AC c'~51 "1 ~I n 'clll ~':.:i;a OJ n'Ui ,..~....,t E' ',,,)i'~rn.... ,~'Jj''ir.i c. NJ I ln1~'-7', "',OO,A1 ft' ";t"i;,.,' " ~'- ~.... .Ji 111I~ _' ..... ;t"i; I,m 111-I];oO;j; a bt LM U ::II! ,""Z!II.iI!!IJ!I;:'
rNI
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21

... Meanwhile ...

Heavily Indebted Rich Countries (HIRCs)

(c)JSH/

TJN Inti 2012

22

Huge debt- and oil-financed real flight flows by region ...

Unrecorded Capital Outflows from Latin America, 1970-2010
(Real Value of Cumulative Net Outflows by Period, $2000 Billions)

$320 L=$278.2 $270 L=$263.5 L=$259.3

$220

$170

$120 L=$82.4 $70

$20

-$30

101970-8001981-90.1991-200002001-10

1

(c) JSH 2008, 2011

**30 other Latin American and Caribbean countries

Source: data from World Bank! IMF (1979-2008); JSH analysis

(c)JSH/ TJN Intl2011

23

TOP 8 LATIN AMERICAN SOURCE COUNTRIES: CF vs. NFl: % of Real $GNI
5.~

~.~+--------------....,...--~r___-----~.~ +---------------1
3.~ 3.~ 2 ..s£t%
2.100'%

.,...-----------------------

+-------------+-------------+--------------1
+-ooor--~~--___1

i.~ i.~ O.5®'%
D.~

• Real Cj; % of ~eal i!1iN I

Period

6

Real CIf::J Real NFl $176.4 $214.2 $430.7 $520.8

6 Real $GDP 6
$9,089 $9,781 $16,044 $22,674

CF% 1.94% 2.19% 2.68% 2.30%

6

NFl

%6

1970-80 1981-90 1991-2000 2001-2010

$84.9 $104.5 $730.9 $581.9

0.93% 1.07% 4.56% 2.57%

Source: World Bank/IMF 2012 data,

JSH analysis

24

UNRECORDED CAPITAL FLOWS, OFFSHORE ASSETS, AND OFFSHORE EARNINGS, 1970·2010 Latin American and Caribbean Region
FOREIGN DEBT ADJUSTED FOR CURRENCY CHANGES, RESCHEDULINGS, AND ARREARS
(Nominal and Real

$2000 Billions)

(40 countries
Original Outflows I Real #B Offshore Earnings (I$B.)

in region - 33 with data) Offshore Earnings % Outflows %

Country

I 1970-2010 1970-2010 1970-2010 1970-2010 1970-2010
Brazil Argentina Mexico Venezuela All Others (29)

Nom

$B.

,.

($2000) $362.6 $259.3 $263.5 $278.2 $211.9

,.

CF /GNI CF/Sources Period Medians

Flight Stock

External Debt

($B 2010)
(Nominal)

($B 2010)
(Nominal)

CF Stockl Ext. Debt

($2000) $247.3 $272.8 $299.1 $202.0 $169.1

% 1.7% 3.4% 1.8% 5.7% 1.7%

% 43% 68% 36% 82% 41.5%

% 160% 308% 224% 728% 100%

$345.0 $213.9 $221.7 $269.1 $205.1

$519.5 $399.1 $417.5 $405.8 $316.4

$324.5 $129.6 $186.4 $55.7 $317.3

68% 105% 113% 73% 87%

LAC TOTAL

$1,254.8

$1,375.5
75% Reinvestment

$1,190.3
Rate; Ave Yield

2.5%

51%

$2,058.3

$1,013.4

203%
©JSH

Source: World Bank/lMFI UNicentral bank/CIA(data); JSH analysis Adjusted for Currency Composition of Debt;

2012

= SUS 6 mos CD rate

(c)JSHI TIN Inti 2012

25

Latin America -- Earnings from Unrecorded Offshore Assets 1970-2010
(Real Value by Period, $2000 Billions)

All Other

LAC**i $169.1

**29 other Latin American and Caribbean states

Source: World Bank, IMF, central banks (data), JSH analysis

(c)JSH/ TJN Inti 2012

26

g.of; ..,------------------------------8.of:.

-1----------------------------------1

\--_

.

.l.D~.

-2.D% ....~----------------------------------,.l

Source:

Project data models, JSH analysis

(c)JSHI TIN Inti 2012

27

mifAil NET' UIN'RIECOIRIDED ·CAP'iTAll ,C)dUTFlOWS, IPLU.5 IESTIMATED
,O'FIFS,HO'IRIE .EAR,NIING:S ...% OIF .$iGiiN I, l'910",2,'()09 !KIEVCO'UNTRIIES, ILA'C IR'E,GiIIOIN
1

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LO

LATIN AMERICA -- LARGEST "SOURCE" COUNTRIES
Key Investment and Capital Outflow Ratios
(Medians, Real Ratios, 1970-2010)

Median Country Brazil Argentina Mexico Venezuela Big Four NFDI/GNI % 0.9% 1.0% 1.5% 0.1% 1.4%

-

Median
'--

Median CFI/GNI%
r--

~ShO"

Eam;ngJ
%GNI

Net %GNI -1.7% -6.1% -1.6% -10.9% -2.8%

Port I/GNI% 0.1% 0.1% 0.5% 0.1% 0.3%

-

1.7% 3.4% 1.8% 5.7% 2.2%

-

1.0% 3.8% 1.7% 5.4% 2.3%

Chile Colombia Panama Trinidad Uruguay Dom Rep Ecuador Peru EI Salvador Bolivia

2.0% 1.3% 5.3% 4.0% 0.7% 1.8% 1.5% 0.5% 0.6% 1.9%

-

0.0% 0.0% 0.0% 0.0% 0.6% 0.0% 0.0% 0.0% 0.0%

r--

0.9% 0.9% 9.9% 5.4% 1.0% 1.4% 2.1% 1.7% 1.9% 5.2%

-

0.5% 0.6% 11.5% 2.6% 0.8% 0.3% 3.1% 0.5% 1.2%

0.6% -0.2% -16.1% -4.0% -0.5% 0.1% -3.7% -1.6% -2.5% -8.3%

-

0.0%
'--

-

5.0%

Source: World BankllMFI UNIcentral banklCIA(data);

JSH analysis

©JSH 2012

7/1/12

(c) JSH, TJN 2012

29

UNRECORDED CAPITAL FLOWS OFFSHORE ASSETS AND OFFSHORE EARNINGS 1970-2010 Latin American and Caribbean Region FOREIGN DEBT ADJUSTED FOR CURRENCY CHANGES, RESCHEDULINGS, AND ARREARS
(Nominal and Real $2000 Billions) (40 countries in region - 33 with data)

Original Unrecorded Outflows

I Nom
Periods 1970-2010 1970-2010 1970-2010 1970-2010 Country Brazil Argentina Mexico Venezuela Big Four

$B.

,.

I Real #B
($2000) $362.6 $259.3 $263.5 $278.2 $1,163.6

I.

r

Offshore Earnings (I$B.) ($2000) $247.3 $272.8 $299.1 $202.0 $1,021.2

CF IGNI

CF/Sources

Flight Stock ($B 2010) (Nominal) $519.5 $399.1 $417.5 $405.8 $1,741.9

Period Medians % 1.7% 3.4% 1.8% 5.7% % 43% 68% 36% 82%

External Debt ($B 2010) (Nominal) $324.5 $129.6 $186.4 $55.7 $696.1

I

CF Stockl Ext. Debt % 160% 308% 224% 728% 250%

Real Offshore Earnings % Orig Outflow
%

$345.0 $213.9 $221.7 $269.1 $1,049.7

68% 105% 113%
73%

1975-2010 1970-2010 1970-2010 1970-2010 1970-2010 1970-2010 1970-2010 1970-2010 1970-2010 1970-2010

Chile Colombia Panama Trinidad Uruguay Dom Rep Ecuador Peru EI Salvador Bolivia

$94.5 $32.4 $14.3 $44.3 $9.6 $7.9 $6.3 $1.7 $8.1 $9.5 $228.6

$82.4 $33.7 $23.3 $39.8 $9.4 $7.9 $11.5 $3.3 $8.5 $11.7 $231.6

$14.4 $21.4 $37.6 $11.6

0.9% 0.9% 9.9% 5.4% 1.0% 1.4% 2.1% 1.68% 1.9% 5.2%

43.4% 29.7% 73.0% 80.3% 41.5% 34.8% 57.1% 37.2% 39.4% 63.6%

$105.0 $47.9 $37.6 $53.0 $13.3 $10.2 $21.6 $8.1 $11.2 $18.4 $326.3

$86.4 $63.0 $11.4 $4.0 $12.9 $13.1 $14.8 $36.1 $10.1 $5.3 $257.0

122% 76% 330% 1314% 103% 78% 146% 22% 110%

17% 63% 161% 29% 55% 39% 205% 353% 64% 122%

,.

$5.2 $3.1 $23.6 $11.7 $5.5 $14.3 $148.3

I

Next 10 All Other LAC (n=26)

,.

349% 127% -17% 203% ©JSH 2012

[

LAC TOTAL

,.

-$23.5

$1,255

,.

-$19.7

$1,376

,.

$20.8

-0.6%

9.1%

$1,190

2.5%

51%

,.

-$9.9

$2,058

,.

$60.2

$1,013

Source: World BankllMFI UNicentral banklCIA(data); JSH analysis Adjusted for Currency Composition of Debt; 75% Reinvestment Rate; Ave Yield = $US 6 mos CD rate

7/1/12

(c) JSH, TJN 2012

30

UNRECORDED CAPITAL FLOWS, OFFSHORE ASSETS, AND OFFSHORE EARNINGS, 1970-2010 Latin American and Caribbean Region
FOREIGN DEBT ADJUSTED FOR CURRENCY CHANGES, RESCHEDULINGS,
NINETEEN OTHER INDIVIDUAL
(Nominal

AND ARREARS

LAC COUNTRIES

QUANTIFIED**

and Real $2000 Billions)

Original

Unrecorded

Outflows

L
Periods 1984-2010 1976-2010 1977-2010 1977-2010 1975-2010 1970-2010 1977-2010 1990-2010 1977-2010 1977-2010 1977-2010 1971-2010 1976-2010 1970-2010 1970-2010 1977-2010 1981-2010 1978-2010 1980-2010 CountIY.

Nom $B,

(Nominal)

,.

L Real

#B

($2000)

r

I.

Offshore Earnings (HB,) ($2000)

CF /GNI

CF/Sources

Flight

Stock

External

Debt

CF Stockl Ext. Debt % 36.0% -11.3% -32.7% 43.7% -1.9% -36.9% -22.4% 2.1% -197.2% 90.4% -98.6% -139.8% 22.6% -481.6% 12.4% -261.3% -161.2% -136.1% -6.1% -16,5% ©JSH 2012

Period Medians %
0/0

($B 2010) (Nominal) $1.01 -S1.00 -S4.69 $1.83 -SO.09 -$1.8 -$0.11 $0.01 -S1.28 $1.22 -SO.57 -SO.69 $3.15 -S5.78 $0.24 -SO.50 -SO.55 -SO.36 -SO.01 -$9,95 US Virgin Islands

($B 2010) (Nominal) $1.05 $8.88 $14.34 $4.19 $4.87 $4.80 $0.50 $0.48 $0.65 $1.35 $0.58 $0.50 $13.94 $1.20 $1.93 $0.19 $0.34 $0.26 $0.18 $60,24

3.5% 40.2% Belize $0.77 $0.76 $0.31 0.22% 9.4% -$1.72 -$1.70 $1.40 Costa Rica Guatemala -$5.65 -$5.35 $1.91 -1.24% -20.2% Honduras $0.05 $0.63 $2.74 0.1% 9.1% -$0.94 -$1.69 -0.59% Paraguay $0.00 5.2% Nicaragua -$7.2 -$4.0 $9.06 0.0% 32.3% -$0.14 -$0.16 -2.0% -6.6% Antigua $0.03 -$0.04 -$0.05 Aruba $0.05 -0.3% 25.3% Suriname -$1.30 -$1.52 $0.02 -2.0% 15.4% Guyana $0.39 $0.61 $1.32 1.3% 37.1% -$0.58 -$0.51 -7.0% -41.6% Grenada $0.025 -$1.05 -$0.69 Haiti $0.69 0.10% 41.1% Jamaica $0.77 $0.97 $2.73 -0.1% 47.6% -$5.50 -$5.46 -4.8% -39.2% Bahamas $0.18 -$0.34 -2.1% Barbados $0.07 $0.26 16.3% Dominica -$0.50 -$0.46 $0.00 -4.8% -44.6% st. Lucia -$0.56 -$0.49 $0.02 -0.5% -1.4% -$0.36 -$0.31 -2.1% -22.0% St. Vincents $0.003 -$0.04 -1.7% -11.8% St. Kitts $0.09 $0.04 -$23,48 -$19,72 $20,79 -0,6% 9,1% Total 20 Other .. * * Countries for which data IS missing: British West Indies, Cayman Islands, Cuba, Curacao, Sint Maarten, Turks&Calcos, Source: World Bank; IMF; UN; central banks; CIA factbooks; JSH analysis Adjusted for Currency Composition of Debt; 75% Reinvestment Rate; Ave Yield = SUS 6 mos CD rate

,.

7/1/12

(c) JSH, TJN 2012

31

Original Unrecorded Capital Outflows From FSUj Central Asia

1972-2010
($2000 Billions)

RUSS\O
$700 $600 $500 $400 $300 $200 $100 $0
$630.4

Source: data from IMF, World Bank (2012);

JSH analysis

(c)JSH/ TJN Inti 2012

34

UNRECORDED

CAPITAL FLOWS, OFFSHORE ASSETS, AND EARNINGS, CENTRAL EUROPEI EURASIA

19705-2010

DEBT ADJUSTED FOR CURRENCY CHANGES, ARREARS, AND RESCHEDULINGS
(Estimates for 26/27 countries in region)
(Nominal and Real $2000 Billions, 2010)

Original

Outflows

L
Period 1994-2010 1994-2010 1995-2010 1995-2010 1993-2010 1993-2010 1994-2010 1993-2010 1993-2010 1997-2010 1993-2010 1993-2010 1985-2010 1982-2010 1996-2010 1992-2010 1972-2010 1993-2010 1993-2010 1980-2010 1992-2010 1993-2010 1996-2010 RUSSIA OTHERFSU Ukraine Kazakhstan Azerbaijan Uzbekistan Tajikistan Moldovia Armenia Kyrgyz Rep Georgia Belarus Turkmenistan "NEW EUROPE" Poland Hungary Estonia Slovenia Romania Croatia Slovakia Bulgaria Latvia Lithuania Macedonia Other FSU/EE (n-4)-

Nom $B.

L

Real $B.

t

Offshore (nB.)

J

CF /GNI Period

CF/Sources Medians ('!o)

Flight

Stock

External

Debt

CF Stockl Ex. Debt ('!o)

Earnings

($B 2010)

($B 2010)

$681.6 $366.1
$152.2 $126.3 $47.09 $21.4 $2.3 $1.60 $2.163 $0.638 $4.0 $6.11 $2.28

$630.4 $313.4
$131.6 $109.2 $38.1 $18.2 $1.9 $1.5 $1.7 $0.636 $3.2 $4.9 $2.4

$163.1 $36.1
$16.9 $13.7 $0.90 $1.8 $0.2 $0.5 $0.06 $0.3 $0.1 $0.2 $1.4

6% 3%
9% 11% 3% 4% 2% 1% 4% 3% 0% 0% 1%

53% 22%
73% 73% -8% 87% 55% 18% 22% 21% 0% 8% 25%

$797.9 $396.9
$166.8 $138.2 $47.9 $23.0 $2.4 $2.0 $2.2 $0.9 $4.1 $5.89 $3.44

$385.1 $300.3
$115.9 $117.0 $7.0 $7.3 $3.0 $4.6 $6.1 $3.9 $9.3 $25.8 $0.4

207% 132%
144% 118% 684% 313% 82% 43% 36% 23% 44% 23% 835%

$623.7
$140.22 $207.0 $10.0 $46.1 $69.5 $43.4 $37.8 $29.46 $23.6 $14.4 $2.2 -$8.7

$567.5
$129.0 $186.6 $9.2 $41.2 $64.7 $39.0 $32.8 $29.79 $21.0 $12.4 $1.6 -$1.4

$153.8
$29.9 $42.9

4%
2% 5% 5% 4% 2% 5% 4% 5% 8% 1% 1% -2%

50%
48% 78% 44% 83% 25% 58% 50% 60% 51% 20% 37% -14%

$742.3
$164.7 $241.7 $11.7 $52.9 $91.1 $49.6 $41.7 $43.8 $27.1 $15.7 $2.2 -$7.8

$930.3
$264.6 $209 $22.0 $54.4 $126.2 $62.6 $66.4 $49.0 $39.6 $31 $6.0 $46.4

80%
62% 116% 53% 97% 72% 79% 63% 89% 68% 51% 37% -17%

$2.0
$8.2 $32.6 $7.2 $4.5

$20.9
$4.1 $1.4

$0.1
$1.1

GRAND TOTAL
Source: Adjusted Data: WB/IMF,central for Currency

$1,663
banks; JSH Composition

$1,510
analysis

$354
Rate; Ave Yield

$1,929

$1,662

116%
©JSH 2012

of Debt; 75% Reinvestment

= $US

6 mos CD rate

7/1/12

(c) JSH, TJN 2012

35

CE:NTRAl IEl.!lR;OIP;El!EIJRASII,A

", UNIRIE'COIR,DED INET ,OUTFl,OWS VS. AA ""'[i1ili'ilinA. IB:-V"IRIE''''''I''O:'I-N'•. 1iJ ,II~ rn.O,:··S<S·-'ID'n·R'D-·'-EID ft,rUI'IiI " ·1 ,11'\, IE'AiDii<Ji-II·IN-r.!!S'l ~:I··';;;;.LI!jJIIU;'t ,Uc _~, '2" _., -, ,1'IiOlII,·_ ' H1fO""I-E'ii<JI 'i!l..n,,:',-C!u'
I

(Rea,1 $2000 Bi~ U.on~}1
:$i!,/:l[)O ..,...-----------------------------

$t_.:ljIJO

+--------------------------~II;T.'""'>::"-

:~j.i,2[)()! +--------------------------

!!! o~I~1 NtiL. oUilf'l.oW5 II!

lHiDiiJE:N i:ftJtNINus
TO'TAL.

$611lE $6Uo

+---------'

ORIG OUTFLOWS VS.HIDDEN EARNINGS
CENTRAL EUROPEI EURASIA, 1992-2009
BASE CASE Real $2000 Billions -- Yearly Averages Orig Outflows RUSSIA OTHER FSU NEW EUROPE TOTAL Offshore Earnings % OY $41.8

Ave $8. Per Year

$35.9
$11.7 $42.0 $89.8

$5.9 $1.9 $13.7 $24.9

$13.6 $55.7 $114.7

21.7%

Unrecorded Capital Outflows From Sub-Saharan Africa, 1970-2010
(Real $2000 Billions)
South Africa Cote d'ivoire

Nigeria

Sudan

Angola*

Gabon

Ethiopia
~I~: =$361J,1

All Others

$250 $200 $150 $100 $50 $0 -$50

-

233.9 I

SUB-SAHARAN AFRICA

1970-2012

29.8
I

I

I

f ·'1
6

(O.~
I I

22.~

I

115.4

I
I

f2.4

L$19.51

Source: data from World Bank! IMF (2012); JSH analysis

UNRECORDED CAPITAL FLOWS, OFFSHORE ASSETS, AND OFFSHORE INTEREST, 1970-2010

Sub-Saharan Africa Region
(Estimates for 43/48 countries in region)

DEBT ADJUSTED Capital Flight Nominal $B. Period 1970-10 1970-10 1970-10 1970-10 1989-10 1970-10 1981-10 1970-10 1970-10 1970-10 1970-10 1999-10 1970-10 1977-10 1970-10 1981-10 1970-10 1977-10 1977-10 1976-10 1984-10 1974-10 1970-10 1998-10 1981-10 1970-10 1982-10 1974-10 1977-10 1977-10 1975-10 1986-10 1976-10 1986-10 1970-10 1970-10 1970-10 1970-10 1970-10 1974-10 1976-10 1974-10 1970-10 Country Nigeria
Cote D'lvoire

FOR CURRENCY

CHANGES,

RESCHEDULING

AND ARREARS

(Nominal and Real $2000 Billions)

I

Real $2000 B.

CFOfo/GNI

CF/Sources

Flight Stock ($B 2010) $306.2 $141.0 $60.3 $53.9 $41.8 $36.1 $25.5 $11.4 $8.0 $6.8 $6.4 $5.5 $5.4 $5.0 $4.7 $3.6 $1.9 $1.7 $1.3 $1.3 $0.8 $0.8 $0.8 $0.7 $0.7 $0.4 $0.2 $0.2 $0.0 $0.0 -$0.5 -$0.8 -$0.8 -$0.9 -$1.7 -$1.8 -$1.9 -$3.1 -$3.1 -$3.6 -$5.0 -$5.7 -$20.2 $683.3

External

Debt

(Period Total) $259.6 $8.3 $10.5 $26.8 $30.6 $19.6 $12.2 $3.2 $8.0 -$4.0 -$0.8 -$3.2 $1.5 $5.0 $0.0 $2.8 $1.0 -$3.6 $0.5 $1.0 -$1.3 $0.5 -$3.4 $0.7 $0.6 -$0.7 $0.2 -$1.3 -$0.1 -$0.4 -$0.80 -$1.2 -$1.2 -$0.9 -$3.3 -$2.1 -$2.2 -$3.2 -$2.9 -$3.5 -$5.1 -$6.3 -$20.2 $320.9 $233.9 $12.4 $29.8 $36.1 $30.7 $22.9 $15.4 $6.0 $7.9 $1.2 $2.9 -$2.2 $2.8 $2.7 $1.9 $2.5 $0.8 -$0.8 $0.7 $1.1 $0.1 $0.6 -$3.2 $0.6 $0.5 $0.3 $0.1 -$0.4 $0.0 -$0.2 -$0.5 -$0.9 -$0.6 -$0.5 -$1.7 -$1.7 -$2.2 -$2.5 -$2.5 -$3.3 -$4.5 -$5.7 -$18.8 $361.7 JSH analysis

Period Medians (%) 8.0% 2.8% 0.5% 3.9% 13.1% 12.2% 6.5% 1.5% 9.6% -1.6% 1.0% 52.0% 1.3% 0.8% 1.5% 1.5% 9.3% -0.8% 2.3% 0.0% -0.7% 2.5% -0.2% 2.5% 3.0% 0.2% 4.2% -0.1% -26.1% -2.4% 0.0% -1.2%. -0.4% -1.7% -1.3% 0.1% -12.0% -1.5% -1.7% -4.3% -2.4% -3.2% -1.6% 0.2% 106.4% 71.0% 11.6% 83.3% 96.8% 100.6% 91.7% 51.8% 66.7% -25.3% 66.5% 133.5% 12.3% 0.0% 46.0% 13.6% 104.3% 50.0% 94.8% 53.1% 12.7% 60.4% 38.3% 90.9% 57.0% 35.7% 67.7% 32.7% -57.9% 28.6% 0.0% 30.3% 12.5% 0.0% 23.80% 0.00% -10.0% 3.30% 19.5% 0.0%
-5.3%

($B 2010) $7.9 $11.7 $45.5 $21.7 $18.7 $2.4 $7.2 $3.7 $3.8 $8.6 $5.7 $0.2 $3.0 $1.7 $8.4 $1.0 $0.5 $3.0 $0.7 $2.4 $4.0 $0.6 $4.5 $2.9 $1.6 $1.7 $1.0 $1.7 $0.2 $0.8 $0.5 $2.9 $0.8 $0.1 $2.3 $2.1 $1.2 $0.9 $2.3 $1.1 $1.1 $3.7 $8.4 $204.2

CF Siock! Ex. Debt (%) 38760/, 1205'/, 133% 248% 224% 1504'/, 354% 308% 211% 79% 112% 2750'/, 180% 294% 56% 360% 380% 57% 186% 54% 20% 133% 18%
24% 44%

~Offshore Interest L:($2000) $60.3 $22.2 $72.9 $49.9 $14.4 $25.6 $19.23 $13.18 $0.49 $19.80 $10.99 $1.90 $5.83 $0.04 $7.24 $0.9 $0.97 $8.2 $1.11 $1.05 $3.63 $0.44 $0.82 $0.11 $0.15 $2.10 $0.07 $2.70 $0.23 $0.58 $0.4 $0.52 $0.46 $0.06 $2.95 $0.4 $0.4 $0.19 $0.05 $0.03 $0.12 $1.19 $0.88 2.8% 1.4% 0.08% 0.11% 7.5% 2.1%
0.3%

2 3 4 5 6
7

South Africa Sudan Angola Gabon Ethiopia
Zambia

8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43

Congo Rep Tanzania Congo Dem Rep
Liberia

Uganda
Botswana

Ghana
Eq.Guinea

Gambia Cameroon Lesotho Mauritania
Mozambique

2.1% 2.6% 1.9% 0.6% 27.6% 0.30% 2.6% 1.0% 14.7% 2.8% 0.7%
2.4%

Swaziland
Zimbabwe Namibia

Seychelles Chad
Guinea Bissau

24%
20%

T090
Sao Tome

Sierra Leone
Burundi Guinea

Rwanda Cape Verde
Madagascar Burkina Faso

Benin Malawi Mali Niger
Mauritius

Senegal Kenya SUBTOTAL

-3.4% 40.7% 35.7%

12% na 0% na na na na na na na na na na na na na 133.0%

1.10% 2.3% 3.4% 0.4% 5.0% 5.9% 1.0% 0.0% 1.3% 16.1% 1.1% 0.0% 0.7% 0.6% 2.5% 0.40% 0.1% 3.6% 1.3% 0.3% 0.6% 0.6% 0.8% 0.4% 1.1% JSH 2012

8.0% 2.8% 0.5% 3.9% 13.1% 12.2% 6.5% 1.5% 9.6% -1.6% 1.0% 52.0% 1.3% 0.8% 1.5% 1.5% 9.3% -0.8% 2.3% 0.0% -0.7% 2.5% -0.2% 2.5% 3.0% 0.2% 4.2% -0.1% -26.1% -2.4% 0.0% -1.2% -0.4% -1.7% -1.3% 0.1% -12.0% -1.5% -1.7% -4.3%
-2.4%

-3.2% -1.6% 0.2%

I

$354.7

Source:

2012 data from World Bank; IMF country reports;

UNRECORDED CAPITAL FLOWS, OFFSHORE ASSETS, AND OFFSHORE INTEREST, 1970·2010 Sub-Saharan Africa Region •• Top Flight Countries
(Nominal and Real $2000 Billions) DEBT ADJUSTED FOR CURRENCY CHANGES, RESCHEDULING AND ARREARS Callital Flight Nominal $B. Period 1989·10 1970·10 1977-10 1970·10 1975·10 1977-10 1986·10 1970·10 1981·10 1970·10 1970·10 1970·10 1970·10 Country Angola Benin Botswana Burkina Faso Burundi Cameroon Cape Verde Cote D'ivoire Eq.Guinea Gabon Nigeria South Africa Sudan

II Real $2000 B.
$30.7 -$2.2 $2.7 -$1.7 -$0.5 -$O.B -$0.5 $12.4 $2.5 $22.9 $233.9 $29.B $36.1 $365.3

CF /GNI

CF/Sources

Flight Stock ($B 2010) $41.B ·$1.9 $5.0 ·$1.B ·$0.5 $1.7 ·$0.9 $141.0 $3.6 $36.1 $306.2 $60.3 $53.9 $644.5

External Debt ($B 2010) $1B.7 $1.2 $1.7 $2.1 $0.5 $3.0 $0.1 $11.7 $1.0 $2.4 $7.9 $45.5 $21.7 $117.5

(Period Total) $30.6 ·$2.2 $5.0 ·$2.1 ·$0.80 ·$3.6 ·$0.9 $B.3 $2.B $19.6 $259.6 $10.5 $26.8 $353.6

Period Medians (%) 13.1% ·12.0% 0.8% 0.1% 0.0% ·0.8% ·1.7% 2.8% 1.5% 12.2% 8.0% 0.5% 3.9% 0.7% 96.8% ·10.0% 0.0% 0.00% 0.0% 50.0% 0.0% 71.0% 13.6% 100.6% 106.4% 11.6% 83.3% 12.6%

CF Stock! Ex.Debt (%) 224% na 294% na na 57% na 1205% 360% 1504% 3876% 133% 248% 294% ©JSH 2012

Offshore Interest NFDI/GNI % Period Medians (%) I($2000) $14.4 $0.4 $0.04 $0.4 $0.4 $8.2 $0.06 $22.2 $0.9 $25.6 $60.3 $72.9 $49.9 7.5% 3.6% 2.6% 0.1% 0.0% 0.7% 2.5% 1.4% 14.7% 2.1% 2.8% 0.08% 0.11%

CF /GNI

SUBTOTAL

,.

,.

l

13.1% ·12.0% 0.8% 0.1% 0.0% ·0.8% ·1.7% 2.8% 1.5% 12.2% 8.0% 0.5% 3.9%

$255.7

Source: 2012 data from World Bank,IMF central banks, CIA factbook; my analysis

IDDLE EAST/ NORTH AFRICA

Middle East Unrecorded Capital Outflows,

1976-2010
($2000 Billions)
Saudi Arabia

Kuwait

Turkey

Iran

Egypt

Israel

Algeria

Syria

Libya

Oman Lebanon All Other

$350 $300 $250 $200 $150 $100 $50 $' 'OA $232.2

$297.8

$89.2 $74.5 ~60.3 -$0.2
©JSH 2012

$0 --r--------'--r~-___'__r'_--'-T--~,'___-~--"__,'_-~_r__-____'__r_'_'..P_~9_.J~1-&5r"""==-~-----, -$50
Source: data from IMFjWorid Bank (2012); JSH analysis

43

UNRECORDED CAPITAL FLOWS, OFFSHORE ASSETS, AND OFFSHORE EARNINGS, 1970-2010

Middle East and North Africa
(Estimates for 17 of 18 countries in the region)

FOREIGN

DEBT ADJUSTED

FOR CURRENCY

CHANGES,

RESCHEDULINGS,

AND ARREARS

(Nominal and Real $2000 Billions)

L Capital
Period 1975-2010 1975-2010 1976-2010 1970- 2010 1976-2010 1971-2010 1976-2010 1977-2010 1972-2010 1976-2010 1977-2010 1996-2010 1976-2010 1975-2010 1990-2010 1991-2010 1976-2010 Country Kuwait Turkey Iran Israel Egypt Saudi Arabia Algeria Syria Jordan Oman Libya Lebanon Tunisia Morocco Yemen Djibouti Bahrain Nominal $ $237.8 $95.1 $74.9 $52.3 $59.5 $232.2 $38.0 $23.8 ·$2.6 $16.4 $25.0 ·$27.6 $6.6

Flight Real $2000 B $297.8 $110.4 $89.2 $62.3 $74.5 $215.6 $48.1 $34.4 ·$0.5 $18.5 $19.1 ·$23.1 $7.5

CF/GNI

CFI Sources
%)

'-light Stock ($B 2010) $496.1 $158.2 $147.4 $95.9 $133.3 $307.8 $76.7 $59.0 $1.7 $41.1 $27.8 ·$27.6 $11.2

External

Debt

I: Slock/Debl

2 3

4 5
6 7

8
9 10 11 12 13 14 15

(Median 16.4% 1.9% 1.2% 1.7% 3.2% 2.2% 1.6% 6.1% 0.7% 3.6% 2.3% -0.1% 1.4%

nm 47.8% 26.1% 36.5% 65.4% -5.7% 39.3% 108.0% 22.3% 94.3% 4.0% ·0.3% 16.8%

($B 2010) $79.6 $288.6 $12.9 $106.7 $34.95

...

$5.4 $4.7 $7.7 $8.3 $6.5 $24.4 $21.7

$4.3
·$3.2 $1.0 $8.1

$7.0
·$2.3 $0.9 $3.9

0.3%
·1.1% 7.8% ·15.5%

39.0%
80.2% 116.9% 105.4%

$13.4
·$2.6 $1.2 $8.3

$27.5
$6.3 $0.8 $14.9

16
17

REGIONAL TOTAL
7/1/12

$841.6

.,.-

624% 55% 1146% 90% 381% na 1420% 1253% 22% 497% 430% ·113% 51% 49% ·41% 160% 56%

Real Offshore Interest ($2000) $402.3 $84.8 $118.4 $65.5 $112.4 $132.1 $58.7 $51.3 $6.8 $15.8 $2.4 $0.0 $6.9 $13.8 $0.9 $0.3 $0.36

$963.2

1.7%
(c) JSH, TJN 2012

39.2%

$1,548.9

$650.7

238%

$1,072.6
©JSH 2012

Source: Data World Bank (WDI), IMF,CIA2012;

my analysis

44

~ND OFFSHORE WE~~LTH

~S~

Unrecorded Capital Outflows From Key East Asian Countries, 1970-2010
(Real $2000 Billions)

Korea

*

Indonesia

Malaysia

Singapore Philippines Thailand

Myanmar

Vietnam

All Other

$700 $600 $500 $400 $300 $200 $100 $0
$13.9 $13.6 $9.3 (c) JSH 2012

** Insufficient data for Fiji, French Polynesia, Guam, Kiribati, DRK, Samoa, Solomon Islands, Tonga, Vanuatu
Source: data from IMFjWorid Bank (2012): JSH analysis

Chino's apparent flight is exaggerated, due to round tripping ... "Apparent" Capital Flight From China, Hong Kong SAR and Macao SAR, 1982-2010
(Real $2000 Billions)
China (Mainland) Hong Kong SAR* Macao SAR

$800 $700 $600 $500 $400 $300 $200 $100 $0
_L___'-----------'--_,

$8.6

*HK, Macao data: 1998-2010;

(c) JSH 2008

Source: World Bank/IMF data (2012); JSH analysis

Annual Flight Flows**
(1982-2007,

- All China
Revised 10-08

$2000 Billions)

-$200 $150 $100 $50 $0 1982 -$50

Total China/HK/Macao CF --

Total Foreign Capital Sources

1985

1988

1991

1994

1997

2000

2006

J

**

"Sources and uses residual" CF measure for China Mainland, HK SAR, and Macao SAR. Includes "roundtripping" through offshore havens. Source: World Bank/ IMF data (2008); JSH analysis

'------

UNRECORDED CAPITAL FLOWS, OFFSHORE ASSETS, AND OFFSHORE INTEREST, 1970-2010

East Asia Region
(14/14 countries reporting) FOREIGN DEBT ADJUSTED FOR CURRENCY CHANGES, RESCHEDULINGS, AND ARREARS
(Nominal and Real $2000 Billions)

Capital Flight
Nominal $B. Period 1982-10 1998-10 1998-10 Country Mainland China HK Macao Period Total $770.9 $119.9 $9.5

II Real $2000 B.
$742.1 $125.9 $8.6

CF /GNI

CF/Sources

Flight Stock External Debt
($B 2010) $994.2 $163.0 $32.1 ($B 2010) $547.7 $0.0 $0.0

CF Stockl
Ex.Debt (%) 182% na na

Offshore Interest
Real $2000 B. $285.5 $51.8 $1.7

Period Medians (%) 2.0% 8.2% 22.2% 56.7% 25.2% 124.0%

.__

1

1982-10
1970-10 1970-10 1976-10 1972-10 1996-10 1975-10 1977-10 1990-10 1977-10 1984-10 1977-10 1992-10 1977-10

CHINA-TOTAL
Korea Indonesia Malaysia Singapore Vietnam Thailand Philippines Myanmar PNG Laos Mongolia Cambodia Samoa

$900.3
$603.4 $193.6 $211.4 $143.6 $18.6 $42.1 $59.8 $14.58 $2.48 $5.0 $3.2 $1.7 ·$0.1

$876.7
$573.0 $221.2 $204.3 $121.7 $13.6 $43.7 $64.8 $13.9 $3.5 $1.3 $2.8 $1.8 -$0.2

3.1%
3.5% 3.1% 6.4% 0.4% 3.1% 0.0% 1.1% 5.2% 1.5% 3.7% 7.3% 3.1% -1.3%

49.5%
68.2% 62.1% 57.4% -14.0% 86.5% 16.1% 49.6% 118.6% 70.0% 57.5% 70.3% 55.1% 76.2%

$1,189.3
$779.3 $331.1 $283.4 $169.5 $18.8 $66.3 $96.9 $18.7 $5.6 $6.8 $4.4 $2.4 -$0.1

$547.7
$360.0 $175.8 $80.9 $21.8 $34.4 $68.7 $70.8 $6.2 $1.5 $5.5 $2.4 $4.6 $0.3

217%
216% 188% 351% 777% 55% 96% 137% 300% 375% 123% 185% 52% na

$339.0
$243.7 $205.1 $105.2 $31.1 $0.1 $30.8 $55.9 $5.4 $4.4 $1.8 $0.9 $0.90 $0.00

2
3

4
5

6 7
8

,..

9 10
11

12 13 14

NON CHINA TOTAL

$1,299.4

$1,265.5

3.1%
my analysis

59.8%

$1,783.3

$832.6

186%

$685.3
©JSH 2012

Source: 2012 data from World Bank,IMF central banks, CIA factbook;

7/1/12

(c) JSH, TJN 2012

49

EAST ASIA - LARGEST "SOURCE" COUNTRIES
KEY INVESTMENT AND CAPITAL OUTFLOW RATIOS Period Medians, Available Years FDNI/GNI% Port II GNI% CF/GNI% Offshore IntlGNI% Net (% ofGNI) Mainland China HK Macao 2.8% 0.0% 15.9% 0.1% -17.7% -8.9% 2.00% 8.2% 22.2% 0.8% 2.3% 0.9% 0.1% -28.1% -16.1%

CHINA TOTAL Korea Indonesia Malaysia Singapore Vietnam Thailand Philippines Myanmar PNG Laos Mongolia Cambodia Samoa

2.4% 0.0% 0.7% 2.8% 6.0% 5.0% 0.9% 0.8% 3.1% 2.6% 1.4% 4.7% 5.2% 1.1%

0.05% 0.1% 0.2% 0.0% -1.6% 0.0% 0.2% 0.1% 0.0% 0.0% 0.0% 0.0% -0.1% 0.0%

1.8% 3.5% 3.1% 6.4% 0.4% 3.1% 0.02% 1.1% 5.2% 1.5% 3.7% 7.3% 3.1% -1.3%

0.7% 1.7% 3.2% 3.3% 0.3% 0.0% 0.03% 1.7% 3.20% 2.1% 2.5% 2.7% 0.9% 0.0%

0.0%
-5.2% -5.4% -6.9% 3.7% 1.9% 1.0% -2.0% -5.3% -0.9% -4.8% -5.3% 1.2% 2.4% ©JSH 2012

".

".

Source: 2012 data from World Bank,IMF, central banks, CIA; JSH ana (c) JSH, TJN 2012

7/1/12

50

'----

UNRECORDED CAPITAL FLOWS, OFFSHORE ASSETS, AND OFFSHORE INTEREST, 1970-2010

South Asia
(6 of 7 countries reporting)

DEBT ADJUSTED

FOR CURRENCY
(Nominal

CHANGES, ARREARS,
and Real $2000 Billions)

AND RESCHEDULINGS

Capital Flight
Nominal Period Country $B. Period Total

II Real $2000

B.

CF /GNI
Period

CF/Sources
Medians (%)

Flight Stock External Debt CF Stockl
($B 2010) ($B 2010) Ex.Debt (%)

Offshore Interest
Real $2000 B.

1970-10 1976-10 1970-10 1978-10 1976-10 1976-10 1990-10 Source:

Afghanistan Bangladesh India Maldives Nepal Pakistan Sri Lanka $19.0 $36.7 -$1.4 -$2.0 $3.8 $0.6 $18.1 $41.7 -$1.2 -$2.2 $3.4 $0.8 1.1% 0.2% -3.9% -0.6% 0.5% 0.7% 57.8% 13.2% -30.6% 26.7% 36.6% 28.8% $24.7 $72.7 -$1.3 -$1.9 $7.2 $1.9 $25.0 $287.4 $1.2 $3.7 $56.2 $20.1 99% 25% -109% -52% 13% 9% $7.6 $57.1 $0.0 $0.2 $5.4 $2.4

TOTAL
2012 data from World Bank,IMF

$56.7
central banks,

$60.7
CIA factbook;

0.3%
my analysis

r

...

27.8%

$103.2

$393.6

11%

$72.7
©JSH 2012

7/1/12

(c) JSH, TJN 2012

51

SOUTH ASIA -- LARGEST "SOURCE" COUNTRIES
Key Investment and Capital Outflow Ratios
(Medians, Real Ratios, 1970-2010) Net FOil GNI% PortlGNI% CF/GNI% Offshore InUGNI% 0.01% 0.00% 1.1% 0.5% 0.2% 0.0% 0.2% 0.48% 3.0% 0.0% -3.9% 0.00% 0.0% 0.0% -0.6% 0.0% 0.6% 0.0% 0.5% 0.2% 1.1% 0.0% 0.7% 0.4% Source: 2012 data from WB, etc.; JSH analysis Net -1.6% -0.5% 6.9% 0.6% -0.1% 0.0% © JSH 2012

Bangladesh India Maldives Nepal Pakistan Sri Lanka

7/1/12

(c) JSH, TJN 2012

52

(By Region, 1970-2010)

L
Offshore

Real $2000 B. ital Outflows Ratio 86.5% 23.5% 98.1 % 111.40/0 36.40/0 119.7% 60.6%

Earnin

LA
FSU/Casia SSA Mena Easia SAsia

$1,190.3 $354.1 $354.7 $1,072.6 $685.3 $72.7

$1,375.5 $1,509.9 $361.7 $963.2 $1,881.7 $60.7

'Lbte D'filalire; $1.::!1 1'!!JJkey,: Poland! ; $i'b5 Ka 2 alkh&ta n,; Iro;in;$14'

:5i~~

$iS~

L 139 countries =

$ 9.4 Trillion

Ukr..a me:
SlngapGT,e; ti I!II'I~rv; $,L4'l Mala\tffi3;

~l,f;i'

siss

$lS~

Global Flight Wealth Key Countries, Including China ($2010 Billions)
[C)JSH :20 1:2

55

Cumulative Flight by Region (1977-2003, $95 Billions)

$0
1977 1979 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003

**Excluding Kuwait and Saudi Arabia

Source: data from IMF (2005), World Bank (2005); JSH analysis

© JSH 2005

{c)JSH/ TJN Inti 2012

56

Global Flight Wealth, Vs. All Developing Country Debt** (1975-2003) (Billions US $Current)
$3,500 .,......--------: $3,000 $2,500 $2,000 $1,500 $1,000 $500
First crossover: 1989-90

ight ealth W "Surplus"--------------,

1975

1977

1979

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

**Including China
Source: data from IMF (2005), World Bank (2005); JSH analysis

© JSH 2008

External Debt Vs. Estimated Flight Wealth, By Key Country - ( 2007 $Billions)

-$500

-$400

-$300

-$200

-$100

$0

$100

$200

$300

$400

$500

$600

© JSH 2008

I.External

Debt • Flight Wealth I

Source: data from IMF/World Bank (2008); JSH analysis

Debt Relief Metrics
$2005 NPV Billions

Low Income

Middle Income

Total

Source:

World Bank (2006)

da

© JS Henry, 2006

(C)JSH 2008

59

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