Illicit Financial Flows From Developing Countries: 2000-2009 Update With A Focus On Asia

Illicit Financial Flows from Developing Countries: 2000-2009
Update with a Focus on Asia
Dev Kar and Karly Curcio

January 2011

Update with a Focus on Asia
Dev Kar and Karly Curcio1
January 2011
Global Financial Integrity Wishes to Thank The Ford Foundation for Supporting this Project
Dev Kar, formerly a Senior Economist at the International Monetary Fund (IMF), is Lead Economist at Global Financial Integrity (GFI) at the Center for International Policy and Karly Curcio is an Economist at GFI. The authors would like to thank interns, Katarina Lackner and Michael Murphy, for assistance with data research as well as Raymond Baker and other staff at GFI for helpful comments. Any errors that remain are the authors responsibility.
Our 2008 report, Illicit Financial Flows from Developing Countries: 2002 2006, produced the startling conclusion that some US$1 trillion a year of illegally generated or transferred money is escaping from poorer countries into richer countries. Updating the earlier report, we are pleased to present here our analysis Illicit Financial Flows From Developing Countries: 2000 2009. The latest complete year, 2008, shows such outflows rising to some US$1.26 trillion. Skyrocketing prices for oil, other minerals, and foodstuffs, generated funds which easily escaped abroad. We regard our figures as conservative, since they do not include smuggling, some forms of trade mispricing, and asset swaps. There was a noticeable change in the composition of these unrecorded flows during 2007 and 2008. Whereas in earlier years trade mispricing accounted for the bulk of such transfers, in the two latest years drainages through balance of payments accounts were higher. Specifically, from 2006 to 2008, trade mispricing grew by 30 percent, but over the same period disappearances from balance of payments accounts grew by 46 percent. This suggests that a growing proportion of hidden transfers is occurring out of government coffers, perhaps consistent with the huge run up in revenues generated in oil producing countries. As world trade recovers, it would not be surprising to see these two channels for illicit flows reverse again, returning trade mispricing to the dominant means of moving unrecorded funds. Asia continues to produce the largest portion of illicit flows, almost a half-trillion dollars in 2008 alone. Across the nine years from 2000 to 2008, selected cumulative figures are: China US$2.2 trillion; Malaysia US$291 billion; Philippines US$109 billion; and Indonesia and India both US$104 billion. In this report we venture an estimate for 2009, based on incomplete data. We anticipate that the rate of growth of illicit financial outflows will slow to 2.9 percent above the preceding year, yet still amass to a volume of US$1.3 trillion. We will note in our next report whether this projection was reasonably accurate. Global Financial Integrity thanks Dev Kar and Karly Curcio for their excellent work in producing this analysis. We are especially pleased to find that our reportsfor all developing countries and for individual developing countriesare receiving considerable attention.
Raymond W. Baker Director, Global Financial Integrity
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Global Financial Integrity
Contents
Abstract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Executive Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii I. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 II. Estimating Illicit Flows: Summary of Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 (i) Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 (ii) Process of Normalization: Generating a Conservative Estimate . . . . . . . . . . . . . . . . . . . . . . . . 6 (iii) Limitations of the Model. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 III. Trends in Illicit Outflows from Developing Countries and Regions. . . . . . . . . . . . . . . . . . . . . . . . . 9 IV. Projections for 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 V. Focus on Asia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 VI. Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Charts and Tables within Report

Chart 1 Volume of Illicit Financial Flows from All Developing Countries 2000-2008 (billions of U.S. dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Table 1 Illicit Financial Flows from Developing Countries: 2000-2009 (millions of U.S. dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 Table 2 Illicit Financial Flows from Developing Countries: 2000-2009 (millions of U.S. dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Chart 2 Real Rates of Growth in IFFs by Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Chart 3 Normalized Illicit Flow Regional Shares of Developing World Total: 2000-2008 . . . . . . . 15 Chart 4 Regional IFFs Broken into CED (Balance of Payments) and GER (Trade Mispricing) Shares of Each Regional Total, 2000-2008 . . . . . . . . . . . . . . . . . . . . . 15 Chart 5 Top 20 Countries Cumulative Illicit Flows, 2000-2008 (billions of U.S. dollars) . . . . . . . . 16 Chart 6 Top 10 Countries (as percent of Developing World total) . . . . . . . . . . . . . . . . . . . . . . . . . 17 Table 3 Total Normalized Illicit Financial Flows from the Top 10 Developing Countries (billions of U.S. dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 Chart 7 Illicit Financial Flows from Developing Countries, 2000-2009 (millions of U.S. dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Table 4 Total Normalized Illicit Financial Flows from Top 5 Asian Countries 2000-2008 (billions of U.S. dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Chart 8 Top Five Asian Countries (as percent of total Asia region) . . . . . . . . . . . . . . . . . . . . . . . . 25
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Abstract
In December 2008, Global Financial Integrity (GFI) published a report entitled Illicit Financial Flows from Developing Countries: 2002-2006 (referred to as the 2008 IFF report). The 2010 IFF report is an update of the first with the added value of a focus on Asia. This study analyzes outflows from Asia in somewhat greater depth with particular reference to outflows from the top five Asian exporters of illicit capital. In response to several requests for more up-to-date analysis of illicit flows, the present update also estimates the volume and pattern of illicit flows in 2009 based on macroeconomic projections and assumptions underlying the IMFs latest World Economic Outlook. In the process, the 2010 IFF Report seeks to gauge the impact of the current global economic crisis on the volume and pattern of illicit flows from developing countries.
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Executive Summary
The present study is an update to the 2008 GFI report Illicit Financial Flows from Developing Countries: 2002-2006 which found that developing countries lost US$859 billion to US$1.06 trillion in 2006. These figures correspond respectively to a conservative (normalized) and a larger, more robust (non-normalized) estimate. On the same basis, this report finds that illicit outflows have increased to a range of US$1.26 trillion to US$1.44 trillion in 2008 and that, on average, developing countries lost between US$725 billion to US$810 billion per year over the nine-year period 20002008. Illicit flows increased in current dollar terms by 18.0 percent per annum from US$369.3 billion at the start of the decade to US$1.26 trillion in 2008. When adjusted for inflation, the real growth of such outflows was 12.7 percent. Real growth of illicit flows by regions over the nine years is as follows: Middle East and North Africa (MENA) (24.3 percent), developing Europe (23.1 percent), Africa (21.9 percent), Asia (7.85), and Western Hemisphere (5.18 percent). (See Table 2) Asia accounted for 44.4 percent of total illicit flows from the developing world followed by MENA (17.9 percent), developing Europe (17.8 percent), Western Hemisphere (15.4 percent), and Africa (4.5 percent). (See Table 1). The ten countries with the largest transfer of illicit capital are spread across these regions. The largest ten countries cumulative illicit outflows during 2000-2008 in declining order of magnitude are China ($2.18 trillion), Russia ($427 billion), Mexico ($416 billon), Saudi Arabia ($302 billion), Malaysia ($291 billion), United Arab Emirates ($276 billion), Kuwait ($242 billion), Venezuela ($157 billion), Qatar ($138 billion), and Nigeria ($130 billion) (See Table 4). On average, these ten countries account for 70 percent of the illicit outflows from all developing countries over the period 2000-2008. There are significant variations in how individual country shares of illicit financial flows move over time. For instance, China continues to be the largest exporter of illicit capital by far. However, Chinas role diminished considerably with its share of all-developing-world outflows falling from 46 percent in 2000 to 27 percent in 2008. In contrast, Russia, the United Arab Emirates, Kuwait, and Nigeriaall oil exportersare now becoming more important as sources of illicit capital. (See Table 3) The methodology for estimating illicit financial flows used in this study is based on the World Bank Residual model (using the change in external debt or CED) adjusted for trade mispricing (using the Gross Excluding Reversals method or GER). Unrecorded capital leakages through the balance of payments (CED component) capture illicit transfers of the proceeds of bribery, theft, kickbacks, and tax evasion. The GER method captures the outflow of unrecorded transfers due to trade mispricing. Apart from differences in the extent to which major exporters of illicit capital drive such flows from
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developing countries, the methods for the transfer of these funds also vary. For instance, while trade mispricing is the major channel for the transfer of illicit capital from China, the balance of payments (captured by the CED) is the major conduit for the unrecorded transfer of capital from the major exporters of oil such as Kuwait, Nigeria, Qatar, Russia, Saudi Arabia, the United Arab Emirates, and Venezuela. Mexico is the only oil exporter where trade mispricing is the preferred method of transferring illicit capital abroad while Malaysia is the only country in this group where both channels, CED and GER, are used in roughly comparable portions to transfer such capital. Trade mispricing accounts for an average of 54.7 percent of cumulative illicit flows from developing countries over the period 2000-2008. The GER share has been falling since 2004 when it was 60.6 percent. Unrecorded leakages through the balance of payments (CED component) have been increasing relative to trade mispricingon average they accounted for 45.3 percent of cumulative transfers of illicit capital during the nine-year period. (See Table 1) GFI projects that in 2009, illicit flows from developing countries will grow by just 2.9 percent to US$1.30 trillion from US$1.26 trillion the year before (See Table 1). This represents a significant slowdown from the 18.0 percent rate of growth over the period 2000-2008 based on the slope of the logarithmic trend line. This projected slowdown of illicit financial outflows is expected mainly due to a decline in trade mispricing resulting from a slowdown in world trade in the wake of the global financial crisis. The implication is that, ceteris paribus, lower imports and exports of goods generate fewer opportunities to misprice merchandise trade. Although illicit flows from Asia are projected to increase by a little over 23 percent in 2009, a sharper decline in outflows from developing Europe (27.6 percent) and smaller declines from Africa and MENA (7.5 percent and 2.1 percent respectively) are responsible for the leveling off of illicit outflows from developing countries as a whole. (See Table 1) Huge outflows of illicit capital from China account for Asias dominance in illicit transfers. According to the conservative (normalized) estimates, illicit flows from Asia increased from US$200.1 billion in 2000 to US$495.1 billion in 2008, a rate of 12.9 percent per annum (See Tables 1 and 3). Over time, the preferred method of making illicit transfers of capital out of Asia seems to be unrecorded flows from trade mispricing (GER) rather than from the balance of payments (CED). This is concomitant with growing Asian trade volumes, particularly those of China. The five Asian countries with the largest total illegal capital flight during 2000-2008 are: China ($ 2.18 trillion), Malaysia ($291 billion), Philippines ($109 billion), Indonesia ($104 billion), and India ($104 billion). On average these five countries account for 96.5 percent of total illicit flows from Asia and 44.9 percent of flows out of all developing countries. These (Asia region compared to total developing world) shares have been declining; the top five Asian countries transferred 36.9 percent of illicit flows from all developing countries in 2008, down from 53.3 percent in 2000.
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I. Introduction
1. In December 2008, Global Financial Integrity (GFI) published its flagship report Illicit Financial Flows from Developing Countries: 2002-2006, the first such report on the subject covering all developing countries and regions of the world (henceforth the 2008 IFF Report). The terminology illicit financial flows rather than illegal capital flight has since been used in official documents by international organizations and governments around the world to bring attention to the serious issue of illicit flows which heighten poverty, cancel investments, and thwart economic development. 2. GFIs 2008 IFF Report provides an annual assessment of the overall volume of illicit flows from developing countries together with estimates of outflows by country and geographic region, ranking countries by the magnitude of illicit outflows. Subsequent updates to that report including this one will focus on major shifts in regional exports of illicit capital as well as significant changes in country rankings in the context of macroeconomic developments, changes in governance and other factors. In doing so, the annual IFF Report will provide analysis of the issues and trends underlying illicit flows from developing countries and regions, thereby filling an existing gap in information for policymakers, academics, and international organizations concerned with external aid and its effectiveness.
II. Estimating Illicit Flows: Summary of Methodology

3. This section provides a summary of the methodology used to estimate illicit financial flows from developing countries referencing earlier GFI publications. 2 Illicit flows involve capital that is illegally earned, transferred, or utilized and covers all unrecorded private financial outflows that drive the accumulation of foreign assets by residents in contravention of applicable capital controls and regulatory frameworks. Hence, illicit flows may involve capital earned through legitimate means such as the profits of a legitimate business. It is the transfer abroad of that profit in violation of applicable laws (such as non-payment of applicable corporate taxes or breaking of exchange control regulations) that makes the outflows illicit. 4. GFIs original 2008 IFF Report and subsequent updates fill an important gap in the global monitoring of illicit flows, which provide fodder for the worlds shadow financial system. The gap that existed prior to the GFI reports mainly resulted from outdated studies and estimates of illicit financial flows from developing countries and regions. For instance, a study carried out at the World Banks International Economics Department (cited by Kant, 1996), found that in 1992, capital flight from all developing countries amounted to about US$377 billion (using the Dooley method). 5. It would be difficult to compare the World Banks 1992 estimates with those found in the 2008 IFF Report for two reasons. First, the extrapolation would merely convert the 1992 estimates to current dollars and could not take account of the growth of world trade and economy as well as increasing globalizationall of which may well have driven actual capital flight much higher. Second, the World Banks sample of developing countries is smaller than the IMF definition used in the 2008 IFF Report. The only other recent study of illicit flows from developing countries, based on a survey of key officials in major businesses, government regulatory agencies, and international organizations, was carried out by Baker (2005). The extensive survey results indicated that cross-border illicit financial flows from developing countries ranged between US$539 to US$778 billion in 2005. Using completely different methodologies, these two independent studies estimated that total illicit flows from developing countries were within acceptable margins of error both at the conservative and robust end of a range of values.
For a more detailed explanation see, Illicit Financial Flows from Developing Countries: 2002-2006, Dev Kar and Devon Cartwright-Smith, Global Financial Integrity, Washington DC, December, 2008, or Dev Kar, The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008, Global Financial Integrity, Washington DC, December 2010.
(i) Methodology
6. The 2008 IFF Report used two well-established economic models to estimate such outflows. The World Bank Residual model has been widely used by economists to measure unrecorded flows. The model is intuitively appealingsource of funds exceeding recorded use of funds reflect unrecorded outflows. Source of funds includes increases in net external indebtedness of the public sector and the net flow of foreign direct investment. Use of funds includes financing a current account deficit and additions to reserves. In this broad macroeconomic framework, illicit outflows (inflows) exist when the source of funds exceeds (falls short of) the uses of funds. A variant of this model uses the net debt flows instead of changes in the countrys stock of external debt. We use the change in external debt (CED) rather than net debt flows because of the wider availability of the series for most developing countries. Thus: Source of Funds Minus Use of Funds [CA Balance + Reserves]

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= [ External Debt + FDI (net)]
The second model estimates trade mispricing which has been long recognized as a major conduit for capital flight. The underlying rationale is that residents can acquire foreign assets illicitly by overinvoicing imports and underinvoicing exports. In order to capture such illegal transactions, a developing countrys exports to the world (valued free-on-board, or exports f.o.b. in U.S. dollars) are compared to what the world reports as having imported from that country, after adjusting for the cost of transportation and insurance. Similarly, a countrys imports from the world after adjusting for freight and insurance costs are compared to what the world reports as having exported to that country. In transferring money abroad, the importer declares a higher import value to the customs department than the value of goods recorded by the exporting partner country. Similarly, an exporter would understate the value of goods actually exported (in relation to the imports recorded in the importing partner country) and keep the balance of funds abroad. Therefore, discrepancies in partner country trade data implying overinvoicing of imports and/or underinvoicing of exports indicate the transfer of illicit capital abroad. The world figures for exports to and imports from a particular country are derived based on partner-country trade data reported to the IMF by its member countries for publication in its Direction of Trade Statistics (DOTS).
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Note that comparisons based on bilateral trade data may well indicate export overstatement and/or import understatement. That is, the discrepancies could imply illicit inflows. While economists have tended to net out illicit inflows from outflows, GFIs estimates of trade mispricing are based on the gross excluding reversals (GER) method according to which only periods with export underinvoicing and import overinvoicing are considered to be illicit outflows. Estimates indicating export overinvoicing and import underinvoicing are
set to zero. The rationale for rejecting the Traditional method (of netting out illicit inflows from outflows) is discussed in detail in the 2010 GFI report The Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008. 9. We now present the case against the Traditional method. First, neither the World Bank Residual model nor the adjustment for trade mispricing can capture genuine reversals of capital flight as both provide estimates of unrecorded flows only. If inflows are also unrecorded, they are not likely to be licit. 10. Second, if illicit flows are being repatriated as a genuine return of flight capital, they are more likely to be reflected in recorded FDI or recorded portfolio capital. An investor would not smuggle in capital from abroad if that capital, in fact, represents a genuine return of flight capital. Investors would like to take advantage of the governments special tax holidays and exemptions for investing in certain sectors, or gain access to concessional financing, etc. They can only take advantage of the inflows if they are recorded in official balance of payments statistics. So while outward transfers of illicit capital could come back to a country through a process known as round tripping, as the Indian and Chinese experience shows, these inflows would not be captured by the Traditional models and methods used by economists. Instead, round tripping would show up as an uptick in recorded FDI. While intuitively it may make sense to net out the return of flight capital from outflows, it would be practically impossible to implement because we cannot apportion recorded aggregate inflows between new investments and the return of flight capital. 11. Third, because the inflows that are indicated by models of illicit flows are unrecorded, they cannot be taxed or utilized for economic development. Often, these so-called inflows are themselves driven by illicit activities such as smuggling to evade import duties or value-added tax (VAT). Hence, illicit flows are harmful in both directionsoutflows represent a near-permanent loss of scarce capital while inflows stimulate growth of the underground economy. So it is erroneous to imply that illicit inflows represent a return of flight capital such that a subsequent gain in capital offsets the original loss. 12. Finally, the recent Euro zone crisis raises a number of questions on how illicit flows are estimated using economic models. Estimates of capital flight according to the Traditional method (World Bank Residual model adjusted for trade misinvoicing and netting out inflows from outflows) indicate that Greece and other Club Med countries have received huge illicit inflows running into billions of dollars. Yet, the governments could not tap these so-called inflows to stave off the financial crises they were facing. While there is nothing new about the flight of capital from countries that are politically unstable, poorly governed or badly managed, the Traditional method appears to be quixotic in treating illicit inflows as if they benefit the country.
(ii) Process of Normalization: Generating a Conservative Estimate

13. As both the CED and the GER models yield estimates of illicit inflows as well as outflows, the GFI study uses two conditional filters in order to capture likely cases of illicit financial outflows. This process of filtering, or normalization, yields a conservative estimate of illicit outflows from a country, while estimates that are not subjected to the filters provide the robust end of the range of possible values. The first filter excludes countries with the wrong signs (i.e., illicit inflows reflected as negative numbers) in a majority of the nineyear period. So if model estimates indicate outflows of illicit capital from a country in just four years during 2000-2008, that country is identified as a less-likely exporter of illicit capital, and all years are dropped to zero. Once the first filter accepts a country as a likely exporter of illicit capital, the second filter subjects estimates to a threshold test (illicit outflows must be greater than or equal to 10 percent of that countrys exports valued free on board or f.o.b. for that year) in order to rule out spurious data issues. 14. Normalization of estimates must be weighed against the fact that even the best models rely on official statistics which do not capture illicit transfers of capital occurring through smuggling, same-invoice faking, and hawala-style swap transactions to name a few. Under the circumstances, normalization of illicit financial flow estimates using a restrictive two-stage filtration process may further compound the downward bias in estimates that is inherent in the use of stylized models presented here. Nevertheless, the paper includes the conservative (normalized) range of illicit flow estimates for purposes of comparison although the truth may lie much closer to the upper (non-normalized) end of the range.
(iii) Limitations of the Model

15. It is important to bear in mind that economic models cannot capture all channels through which illicit capital may leave a country. For example, investors can engage in hawala-style swap arrangements that are impossible to trace using official statistics. Such arrangements can be used to illegally send money out of the country. In a hawala transaction, a resident of developing country (X) asks a foreign contact (Y) to deposit U.S. dollars in a foreign bank against the payment of local currency to Ys local contact or deposit an agreed-upon amount of local currency in a bank account in X. The cross-border smuggling of goods is another important channel through which capital from a country can be transferred illegally without such outflows ever being captured in official trade statistics. Smuggled goods, of course, are not recorded by the customs of the exporting country from which the goods are being smuggled nor in the importing country where the goods end up.
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Illicit outflows are also generated through a lack of governance and political instability. Corruption often involves government officials ignoring their responsibilities or acting in violation of them for some personal, material gain. Thus, corruption also involves bribe-taking, specifically whereby government officials and others (including those in the private sector) are bribed to encourage or facilitate their action to arrive at a speedier or more favorable outcome to the agent or individual offering the bribe. These factors, along with grassroots corruption in the private sector (involving individuals, private households, and enterprises) drive the extensive corruption that can permeate in the society. Grassroots corruption fuels growth of the underground economy, from which the government is unable to raise taxes. Finally, transactions in black markets are seldom recorded and are carried out at prices that deviate sharply from the arms length prices prevailing in free markets. As the revenue generated from such commercial, corrupt, and criminal activities are seldom reflected in official statistics, stylized models using official data are likely to seriously underestimate the magnitude of illicit capital leaving the country in a clandestine manner.
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There are also limitations of the trade mispricing model to capture illicit outflows. After all, not all mispriced trade results in a difference between export and import values. Where the mispricing occurs within the same invoice due to a previous agreement between buyer and seller, no difference between export and import values occurs on reported customs documents. This is the case in much of abusive transfer pricing by multinational corporations, which vary invoices as needed to shift profits and capital across borders. In fact, transactions that are completely faked without any underlying reality have become common and are especially difficult to estimate. Asset swaps, yet another conduit for illicit flows, which are also difficult to estimate with confidence, have become common with Russian entrepreneurs, Latin American businesspeople, and Chinese state-owned enterprises. In fact, such swaps are increasingly used to shift assets out of developing countries and into Western economies.
III. Trends in Illicit Outflows from Developing Countries and Regions

18. It should be noted that because underlying Balance of Payments (BoP) data and Direction of Trade Statistics (DOTS) (largely the 2006 data) were revised for many developing countries, estimates of illicit outflows shown in this report may differ significantly for some countries from those published in the 2008 IFF Report. In fact, we notice that certain large countries tend to make revisions to key macroeconomic data for the latest year which then lead to sharp revisions to the most current IFF estimates. Users are therefore alerted that estimates of illicit outflows from developing countries and regions for the most recent period may be subject to substantial revisions in subsequent IFF Reports as countries revise the underlying data reported to the IMF. We now discuss the major developments in the overall volume and distribution of gross illicit flows from developing countries. As estimates of normalized and non-normalized illicit flows do not differ significantly, the analysis of regional trends is mostly confined to the former, more conservative method. 19. On average, developing countries lost between US$725 billion - US$810 billion per annum over the 2000 to 2008 period (See Table 1 as well as Appendix Table 1). The lower figure corresponds to the normalized or conservative end of the range while the higher figure corresponds to the more robust or non-normalized end as discussed in Section II (ii). In current dollar, or nominal, terms, illicit flows increased by at least 18.0 percent per annum from US$369.3 billion at the start of the decade to US$1.26 trillion in 2008 (Table 1). The only year to buck the upward trend was 2002 when illicit outflows declined by 5.9 percent due to the dampening impact on economic activity of the terrorist attacks on the United States in September 2001. It is clear that the process of normalization, which operates by filtering out countries according to the two criteria discussed above, does not reduce illicit outflows significantly (see Chart 1).
Chart 1. Volume of Illicit Financial Flows from All Developing Countries 2000-2008 (billions of U.S. dollars)
Table 1. Illicit Financial Flows from Developing Countries: 2000-2009 1/ Normalized and in Current Dollars (millions of U.S. dollars)
CED (Change in External Debt, Balance of Payments component) 2000 Africa Asia Europe MENA Western Hemisphere All Developing Countries 8,526.89 52,448.58 31,094.99 44,536.85 24,331.45 160,938.76 2001 4,248.22 58,229.55 38,970.08 34,644.15 33,229.37 169,321.37 2002 11,253.31 6,292.70 51,602.08 29,639.19 43,324.84 142,112.11 2003 22,410.78 14,101.48 87,250.98 100,305.62 53,585.71 277,654.56 2004 22,610.11 4,310.12 104,319.56 111,921.56 33,027.90 276,189.23 2005 21,729.51 37,571.06 86,825.18 143,509.58 35,853.79 325,489.13
GER (Gross Excluding Reversals, Trade Mispricing component) 2000 Africa Asia Europe MENA Western Hemisphere All Developing Countries 2,317.42 147,671.43 4,348.01 2,785.29 51,234.89 208,357.04 2001 6,332.70 170,063.21 11,917.45 2,843.96 50,419.22 241,576.54 2002 3,257.51 183,568.45 7,271.01 2,609.91 47,937.34 244,644.23 2003 3,376.20 236,129.28 8,530.67 2,624.64 50,500.43 301,161.23 2004 10,309.60 325,568.00 16,272.73 16,397.09 55,793.00 424,340.42 2005 10,693.43 365,657.43 6,843.31 7,974.77 66,179.97 457,348.91
Total CED + GER 2000 Africa Asia Europe MENA Western Hemisphere All Developing Countries CED Percent of Total GER Percent of Total 10,844.31 200,120.01 35,443.00 47,322.14 75,566.34 369,295.80 43.6 56.4 2001 10,580.92 228,292.76 50,887.53 37,488.11 83,648.59 410,897.91 41.2 58.8 2002 14,510.83 189,861.15 58,873.10 32,249.10 91,262.18 386,756.35 36.7 63.3 2003 25,786.98 250,230.77 95,781.64 102,930.26 104,086.14 578,815.79 48.0 52.0 2004 32,919.71 329,878.11 120,592.29 128,318.65 88,820.89 700,529.65 39.4 60.6 2005 32,422.94 403,228.49 93,668.50 151,484.35 102,033.76 782,838.05 41.6 58.4
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2006 19,417.39 31,948.74 136,458.30 219,639.62 48,696.54 456,160.60
2007 42,219.77 27,825.02 242,142.88 187,986.20 106,362.27 606,536.14
2008 38,909.20 49,288.40 287,259.03 239,956.18 51,752.32 667,165.13
Proj. 2009 40,220.34 163,970.14 206,113.94 232,723.12 88,686.82 731,714.37
Share of Region in Total 2/ 6.2% 9.2% 34.6% 36.1% 14.0% 100.0%
Logarithmic Growth 2000-2008 26.33 2.99 31.24 30.94 11.15 22.16
Percent Change 2008-2009 3.37 232.67 -28.25 -3.01 71.37 9.68
2006 17,886.61 346,223.57 15,990.68 8,097.68 70,325.73 458,524.27
2007 23,236.05 391,472.67 8,975.68 5,688.26 81,374.46 510,747.13
2008 24,876.49 445,820.86 16,164.65 7,534.50 102,780.90 597,177.40
Proj. 2009 18,767.83 447,008.20 13,458.67 9,547.75 80,486.36 569,268.81
Percent Change 2008-2009 -24.56 0.27 -16.74 26.72 -21.69 -4.67
2006 37,304.00 378,172.31 152,448.98 227,737.30 119,022.27 914,684.86 49.9 50.1
2007 65,455.82 419,297.70 251,118.56 193,674.46 187,736.73 1,117,283.26 54.3 45.7
2008 63,785.69 495,109.26 303,423.68 247,490.68 154,533.22 1,264,342.54 52.8 47.2
Proj. 2009 58,988.17 610,978.34 219,572.62 242,270.88 169,173.18 1,300,983.18 56.2 43.8
Percent Change 2008-2009 -7.52 23.40 -27.63 -2.11 9.47 2.90 45.3 54.7
Ave. CED % (2000-2008) Ave. GER % (2000-2008)
1/ GFI Staff estimates for 2009 are based on underlying macroeconomic projections and assumptions in the IMFs 2010 World Economic Outlook. 2/ Based on cumulative outflows from the region in total outflows from developing countries over the period 2000-2008.
11
Table 2. Illicit Financial Flows from Developing Countries: 2000-2009 1/ Normalized and in Constant Dollars (millions of U.S. dollars, base 2005=100)
CED (Change in External Debt, Balance of Payments component) 2000 Africa Asia Europe MENA Western Hemisphere All Developing Countries 101.12 622.00 368.76 528.17 288.55 1,908.60 2001 49.83 683.00 457.10 406.36 389.76 1,986.06 2002 135.09 75.54 619.46 355.80 520.09 1,705.99 2003 255.38 160.69 994.27 1,143.03 610.64 3,164.01 2004 242.65 46.26 1,119.54 1,201.12 354.45 2,964.01 2005 217.30 375.71 868.25 1,435.10 358.54 3,254.89
GER (Gross Excluding Reversals, Trade Mispricing component) 2000 Africa Asia Europe MENA Western Hemisphere All Developing Countries Total CED + GER 2000 Africa Asia Europe MENA Western Hemisphere All Developing Countries CED Percent of Total GER Percent of Total 128.60 2,373.26 420.32 561.20 896.15 4,379.54 43.6 56.4 2001 124.11 2,677.76 596.89 439.72 981.16 4,819.63 41.2 58.8 2002 174.20 2,279.19 706.74 387.13 1,095.56 4,642.82 36.7 63.3 2003 293.86 2,851.50 1,091.48 1,172.94 1,186.11 6,595.89 48.0 52.0 2004 353.29 3,540.19 1,294.17 1,377.09 953.21 7,517.95 39.4 60.6 2005 324.23 4,032.28 936.68 1,514.84 1,020.34 7,828.38 41.6 58.4 27.48 1,751.26 51.56 33.03 607.60 2,470.94 2001 74.28 1,994.76 139.79 33.36 591.39 2,833.58 2002 39.10 2,203.65 87.28 31.33 575.46 2,936.84 2003 38.47 2,690.81 97.21 29.91 575.48 3,431.88 2004 110.64 3,493.93 174.64 175.97 598.76 4,553.94 2005 106.93 3,656.57 68.43 79.75 661.80 4,573.49
12
2006 185.51 305.23 1,303.70 2,098.40 465.24 4,358.08
2007 384.89 253.66 2,207.44 1,713.73 969.63 5,529.35
2008 323.03 409.20 2,384.84 1,992.13 429.65 5,538.85
Proj. 2009 366.13 1,492.63 1,876.27 2,118.50 807.32 6,660.85
Logarithmic Growth 2000-2008 20.63 -1.66 25.32 25.03 6.13 16.64
Percent Change 2008-2009 13.34 264.77 -21.33 6.34 87.90 20.26
2006 170.89 3,307.76 152.77 77.36 671.88 4,380.67
2007 211.83 3,568.77 81.82 51.86 741.83 4,656.11
2008 206.53 3,701.23 134.20 62.55 853.29 4,957.80
Proj. 2009 170.84 4,069.15 122.52 86.91 732.67 5,182.10
Percent Change 2008-2009 -17.28 9.94 -8.71 38.95 -14.14 4.52
2006 356.40 3,613.00 1,456.47 2,175.76 1,137.12 8,738.75 49.9 50.1
2007 596.71 3,822.43 2,289.26 1,765.59 1,711.46 10,185.45 54.3 45.7
2008 529.55 4,110.43 2,519.04 2,054.68 1,282.94 10,496.65 52.8 47.2
Proj. 2009 536.97 5,561.78 1,998.79 2,205.41 1,540.00 11,842.95 56.2 43.8
Percent Change 2008-2009 1.40 35.31 -20.65 7.34 20.04 12.83 45.3 54.7
Ave. CED % (2000-2008) Ave. GER % (2000-2008)
1/ Current dollar estimates are deflated by the U.S. Producer Price Index (IFS line 11163ZF) base 2005. 2/ Based on cumulative outflows from the region in total outflows from developing countries over the period 2000-2008.
13
20.
In constant, or real dollar terms (i.e., adjusting for inflation), illicit outflows from developing countries grew by at least 12.7 percent over the period 2000-2008, with outflows from MENA (24.3 percent) growing faster than from developing Europe (23.1 percent), Africa (21.9 percent), or other regions (See Chart 2). The rapid growth in illicit flows from MENA was mainly driven by the oil exporting countries in that region, while Russia, Poland, Kazakhstan, and Ukraine led the growth in outflows from developing Europe. Over this period, illicit transfers from the balance of payments grew faster in real terms (16.6 percent per annum on average) than through trade mispricing (9.4 percent per annum).
Chart 2. Real Rates of Growth of IFFs by Region 1/
Chart 2. Real Rates of Growth in IFFs by Region 1/

24.3
MENA
Europe
23.1
Region
Africa
21.9
Asia
7.8
Western Hemisphere
5.2
10
Percent growth
15
20
25
30
1/ Real rates of growth are calculated as the slope of the logarithmic trend over the observed period 2000-2008.
1/ Real rates of growth are calculated as the slope of the logarithmic trend over the observed period 2000-2008.
21.
On this basis, and as noted in the 2008 IFF Report, Asia continues to dominate illicit flows from developing countriesthe region accounted for 44.4 percent of all such flows from the developing world during this period (Chart 3). Again, the huge outflows of illicit capital from China account for Asias dominance in such flows. This is followed by a clustering of regional shares in cumulative illicit outflows from developing countries with the MENA region at 17.9 percent, developing Europe at 17.8 percent, and Western Hemisphere at 15.4 percent.
14
Chart 3. Normalized Illicit Flows 2000-2008; Regional Shares Chart 3. Normalized Illicit Flows 2000-2008; Regional Shares of of Developing World Total 1/ Developing World Total 1/
4.5% 15.4% Africa 4.5% Asia 44.4% 17.9% 44.4% Europe 17.8% MENA 17.9% 17.8% Western Hemisphere 15.4%
umulaBve ouDlows f1/ Based on cumulative outflows from the region in total outflows from developing countries over the period 2000-2008. rom the region in total ouDlows from developing countries over the period 2000-2008.
22. While trade mispricing accounts for an annual average of 54.7 percent of the cumulative illicit flows from developing countries over the period 2000-2008, this share has been falling since 2004 when the share was 60.6 percent (Chart 4 and Table 1). Relative to 2006, the role of trade mispricing as a conduit for illicit flows declined significantly in 2007-2008 mainly as a result of the decline in trade volumes following the global economic crisis. Leakages, or missing unrecorded money, through the balance of payments as a result of the illicit transfer of the proceeds of bribery, theft, kickbacks, and tax evasion has been increasing relative to trade mispricing. On average they accounted for 45.3 percent of cumulative transfers of illicit capital during this nine-year period.
Chart 4. Regional Illicit Flows 2000-2008; Shares Related to

Chart 4. Regional Illicit Flows 2000-2008; Shares Related to CED and GER Components (average CED and GER Components (average shares over 9 years) shares over 9 years)
All Developing Countries
45.3%
54.7% CED (Balance of Payments) Share of Total 5.7%
Western Hemisphere
41.6%
58.4%
MENA
94.3%
Europe 10.7%
89.2%
10.8% GER (Gross Trade Mispricing OuRlow) Share of Total 89.3%
Asia
Africa 0.0% 10.0% 20.0%
66.3%
33.7%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
90.0%
100.0%
Note: See Appendix Table 11 for complete calculaWons.
Note: See Appendix Table 12 for complete calculations
15
23.
In real terms, illicit outflows through trade mispricing grew faster in the case of Africa (28.8 percent per annum) than from anywhere else easily outpacing corresponding outflows from Asia (10.3 percent), Europe (5.1 percent), and other regions (See Table 2). These relative ranking of regions (in the pace with which they export illicit capital through trade mispricing) remains intact in current dollar terms. The faster pace of illicit outflows from Africa through trade mispricing can perhaps be attributed to weaker customs monitoring and enforcement regimes. Given that customs revenues are an important source of government tax revenues in Africa, the faster pace of trade mispricing calls for strengthening the role of customs in African countries to curtail the mispricing of trade.
24.
Appendix Tables 3 and 4 show all developing country exporters of illicit capital in declining order of average annual outflows; estimates are based on a conservative (normalized) and a robust (non-normalized) method. As the rankings do not vary much between the two methods, we discuss the main changes in the rankings since the 2008 IFF Report with regard to the normalized estimates only. The top five exporters of illicit capital, which account for more than 55 percent of cumulative outflows of illicit capital from developing countries over 2000-2008, remain unchanged between the 2008 IFF Report and the present update except for minor changes. While China continues to be the top exporter of illicit capital by far, Saudi Arabia and Russia which recorded the second and fourth highest average outflows in the 2008 IFF Report, now switch ranks (See Chart 5).
Chart 5. Top 20 Countries Cumulative Illicit Flows; 2000-2008 2000-2008 (billion U.S. dollars) (billion U.S. dollars)
China,P.R.: Mainland Russia Mexico Saudi Arabia Malaysia United Arab Emirates Kuwait Venezuela, Rep. Bol. Qatar Nigeria Kazakhstan Philippines Poland Indonesia India Argen6na Ukraine Turkey Chile Czech Republic 157 138 130 126 109 106 104 104 90 82 77 70 66 302 291 276 242 427 416
Chart 5. Top 20 Countries' Cumula6ve Illicit Flows;
2,176
16
25. India, which was the fifth largest exporter of illicit capital in the 2008 IFF Report is now ranked 15th among developing countries. There are three main reasons why average illicit flows from India slipped in the country rankings and they have nothing to do with policies and conditions required for the curtailment of such outflows. For one, illicit outflows from several oil producers such as the United Arab Emirates, Kuwait, Venezuela, Qatar, Nigeria, Kazakhstan, and Indonesia (in that order) now outpace those from India. For another, there were substantial inflows of illicit capital into India (mostly through the balance of payments but also through trade mispricing) that were set to zero under the gross outflows method. As we have argued elsewhere, traditional economists commit a serious mistake when they net out unrecorded illicit inflows from outflows as if such inflows somehow benefit a country or can be used by a government for productive purposes. Finally, the United Arab Emirates and Qatar, which have the sixth and ninth highest average illicit outflows respectively, were excluded from the 2008 IFF Report because of lack of balance of payments and debt data. These two countries were included in this update after we were able to obtain the requisite macroeconomic data from published IMF country reports. 26. Table 3 shows that the top ten exporters of illicit capital (China, Russia, Mexico, Saudi Arabia, Malaysia, United Arab Emirates, Kuwait, Venezuela, Qatar, and Nigeria in declining order of magnitude), account for an average of 70 percent of cumulative illicit outflows from developing countries over the period 2000-2008. The groups share in total illicit outflows from developing countries which was 80 percent in 2000 declined to 66 percent in 2006-07 before increasing the next year to 76 percent (See Table 3 and Chart 6). There are significant variations in how individual country shares move over time. For instance, while Chinas role in driving illicit flows from developing countries diminished considerably with its share falling from 46 percent in 2000 to 27 percent in 2008, estimates in Table 3 show that Russia, the United Arab Emirates, Kuwait, and Nigeria, all of which are exporters of oil, are now becoming more important as exporters of illicit capital. Further research needs to be carried out on whether there is a link between oil prices and illicit flows from oil exporters. A few recent researchers such as Almounsor (2005) have conducted such studies.
17
Chart 6. Top Ten Countries (as percent of Developing World total)
Chart 6. Top Ten Countries (as percent of Developing World total)
2000 2001 China 2002 Russia Mexico Malaysia Kuwait Qatar Nigeria
2003 g World total) 2004 2005 2006 2007 2008 0.0%
Saudi Arabi
United Arab
Venezuela,
tal)
China Russia Mexico

10.0% Saudi Arabia 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0%
Malaysia China Russia Mexico Saudi Arabia Malaysia Kuwait 70.0% Venezuela, Rep. Bol. 80.0% Qatar Nigeria United Arab Emirates Kuwait Venezuela, Rep. Bol. Qatar Nigeria
United Arab Emirates
80.0%
18
Table 3. Total Normalized Illicit Financial Flows from the Top Ten Developing Countries (billions of U.S. dollars)
Total Illicit Outflows 2,175.99 87.36 2,088.64 33% 427.30 427.30 0.00 7% 416.15 30.66 385.49 6% 301.51 301.51 0.00 5% 291.32 119.74 171.58 4% 275.90 267.58 8.32 4% 242.16 242.16 0.00 4% 157.10 152.39 4.71 2% 137.68 137.27 0.41 2% 130.40 127.48 2.92 2% 4,555.51 70% 6,525.44 725.05 506.17 14.49 14.16 0.32 15.30 15.25 0.05 17.46 16.93 0.52 26.91 26.91 0.00 30.66 29.73 0.92 32.37 13.30 19.06 33.50 33.50 0.00 46.24 3.41 42.83 47.48 47.48 0.00 Average of Outflows 241.78 9.71 232.07
Country/Region China,P.R.: Mainland Normalized CED Normalized GER Chinas Percent of all country IFF Russia Normalized CED Normalized GER Russias percent of all country IFF Mexico Normalized CED Normalized GER Mexicos percent of All Country IFF Saudia Arabia Normalized CED Normalized GER Saudia Arabias Percent of all country IFF Malaysia Normalized CED Normalized GER Malaysias percent of all country IFF United Arab Emirates Normalized CED Normalized GER United Arab Emirates Percent of all country IFF Kuwait Normalized CED Normalized GER Kuwaits percent of all country IFF Venezuela, Rep. Bol. Normalized CED Normalized GER Venezuela, Rep. Bol.s percent of all country IFF Qatar Normalized CED Normalized GER Qatars Percent of all country IFF Nigeria Normalized CED Normalized GER Nigerias percent of All Country IFF Total of top 10 Countries Top 10 Countries percent of all country IFFs Developing World total
2000 169.13 40.95 128.18 46% 15.61 15.61 0.00 4% 34.40 0.00 34.40 9% 9.07 9.07 0.00 2% 22.21 11.23 10.98 6% 10.21 10.21 0.00 3% 12.85 12.85 0.00 3% 14.24 11.87 2.37 4% 0.03 0.00 0.03 0% 6.34 6.34 0.00 2% 294.08 80% 369.30
2001 183.62 46.40 137.22 45% 18.44 18.44 0.00 4% 32.84 0.00 32.84 8% 8.18 8.18 0.00 2% 21.01 9.79 11.23 5% 6.34 6.34 0.00 2% 8.41 8.41 0.00 2% 6.64 4.30 2.34 2% 5.30 4.92 0.38 1% 5.76 2.85 2.92 1% 296.55 72% 410.90
2002 153.85 0.00 153.85 40% 12.55 12.55 0.00 3% 34.80 0.00 34.80 9% 0.00 0.00 0.00 0% 12.15 0.00 12.15 3% 0.00 0.00 0.00 0% 6.18 6.18 0.00 2% 9.33 9.33 0.00 2% 4.11 4.11 0.00 1% 5.14 5.14 0.00 1% 238.10 62% 386.76
2003 183.27 0.00 183.27 32% 35.58 35.58 0.00 6% 34.01 0.00 34.01 6% 34.91 34.91 0.00 6% 17.73 0.00 17.73 3% 14.56 14.56 0.00 3% 16.15 16.15 0.00 3% 8.53 8.53 0.00 1% 4.54 4.54 0.00 1% 9.75 9.75 0.00 2% 359.01 62% 578.82
2004 251.47 0.00 251.47 36% 37.05 37.05 0.00 5% 36.42 0.00 36.42 5% 50.74 50.74 0.00 7% 19.58 0.00 19.58 3% 27.60 27.04 0.56 4% 15.53 15.53 0.00 2% 14.84 14.84 0.00 2% 9.77 9.77 0.00 1% 12.33 12.33 0.00 2% 475.34 68% 700.53
2005 277.05 0.00 277.05 35% 56.39 56.39 0.00 7% 44.25 0.00 44.25 6% 47.39 47.39 0.00 6% 38.78 17.18 21.60 5% 47.58 46.68 0.90 6% 29.29 29.29 0.00 4% 27.22 27.22 0.00 3% 15.38 15.38 0.00 2% 15.16 15.16 0.00 2% 598.49 76% 782.84
2006 288.55 0.00 288.55 32% 0.00 0.00 0.00 0% 48.37 0.00 48.37 5% 52.31 52.31 0.00 6% 44.38 22.43 21.94 5% 72.16 70.99 1.17 8% 44.31 44.31 0.00 5% 18.39 18.39 0.00 2% 23.26 23.26 0.00 3% 10.41 10.41 0.00 1% 602.13 66% 914.68
2007 324.75 0.00 324.75 29% 55.33 55.33 0.00 5% 89.53 30.66 58.87 8% 59.03 59.03 0.00 5% 47.24 19.95 27.28 4% 20.18 18.79 1.39 2% 55.99 55.99 0.00 5% 26.50 26.50 0.00 2% 27.67 27.67 0.00 2% 28.50 28.50 0.00 3% 734.71 66% 1,117.28
2008 344.31 0.00 344.31 27% 196.37 196.37 0.00 16% 61.54 0.00 61.54 5% 39.88 39.88 0.00 3% 68.24 39.15 29.09 5% 77.26 72.96 4.30 6% 53.46 53.46 0.00 4% 31.41 31.41 0.00 2% 47.62 47.62 0.00 4% 37.01 37.01 0.00 3% 957.10 76% 1,264.34
19
27.
Apart from differences in the extent to which major exporters of illicit capital drive such flows from developing countries, the conduit for the transfer of these funds also varies. For instance, while trade mispricing is the major channel for the transfer of illicit capital from China, the balance of payments (captured by the World Bank Residual or CED model) is the major conduit for the unrecorded transfer of capital from the major exporters of oil such as Kuwait, Nigeria, Qatar, Russia, Saudi Arabia, the United Arab Emirates, and Venezuela. Mexico is the only oil exporter where trade mispricing is the preferred method of transferring illicit capital abroad while Malaysia is the only country in this group where both channels, CED and GER, are used in roughly comparable portions to transfer such capital.
20
IV. Projections for 2009

28. In this edition of our illicit flows study, we present projections of illicit flows for 2009 with the caveat that such forecasts are approximate due to the fact that the preliminary data on illicit flows are inherently imprecise. A successful projection will entail a deviation of projected values that are within five percent of corresponding estimates based on official balance of payments, trade, and debt data reported by member countries to the IMF. 29. GFI projects that in 2009, illicit flows from developing countries will grow by just 2.9 percent to US$1.30 trillion from US$1.26 trillion the year before (Chart 7). This represents a significant slowdown from the 18.0 percent rate of growth (based on the slope of the logarithmic trend line) in total illicit flows that developing countries registered over the period 2000-2008. Notwithstanding the fact that we forecast illicit flows from Asia to increase by a little over 23 percent in 2009, the main reason for the slowdown in illicit outflows from the group as a whole are the projected sharp decline of 27.6 percent in such flows from developing Europe and smaller declines in outflows from Africa and MENA (7.5 percent and 2.1 percent respectively (Table 1).
Chart 7. Illicit Financial Flows from Developing Countries, 2000-2009 (millions of U.S. dollars)
30.
The projected decline in the rate of growth in illicit outflows from developing countries in 2009 can be separated into the CED (balance of payments) and trade mispricing (GER) components (See Table 1). The slowdown in illicit outflows last year can be better understood as an asymmetrical response of the CED and GER components to the global financial crisis. Trade mispricing, as captured by the GER model, is projected to decline by 4.7 percent over 2008 mainly due to the sharp drop in export and import volumes. The implication here is that, all things being equal, lower imports and exports of goods provide lesser opportunities to misprice trade leading to lower GER estimates. As overall outflows from developing countries still increase in 2009 (albeit at a much lower pace of 2.9 percent over the
Illicit Financial Flows from Developing Countries: 2000-2009 21
previous year), the CED component is projected to increase by 9.7 percent. The main reasons for an increase in the share of unrecorded outflows through the balance of payments in 2009 are the continuing increase in external debt (albeit at a slower pace), a slower accumulation of reserves (which peaked in 2007), and lower current account surpluses. 31. The significant decline in illicit flows from developing Europe was principally due to the decline in GER commensurate with the decline in trading volumes. Import and export volumes were projected by the IMF to fall sharply across developing Europe in 2009 (by 18 percent and 11 percent respectively for Central and Eastern Europe and 27 percent and 10.6 percent respectively for the Commonwealth of Independent States). The sharper fall in trading volumes is expected to reduce GER estimates for the region by 16.7 percent in 2009 from the previous year commensurate with our assumption that trade mispricing varies proportionately with the volume of trade. At the same time, balance of payments leakages from developing Europe are expected to decline in 2009 due primarily to a slowdown in the accumulation and availability of external debt as well as reduced inflows of foreign direct investments into the region. (See Table 1)
22
V. Focus on Asia
32. On a conservative basis, total illicit financial flows from Asia increased from US$200.1 billion in 2000 to US$495.1 billion in 2008 at a trend rate of 12.9 percent per annum. Over this nine-year period for Asia, 89.3 percent on average of total illicit flows were transferred abroad through trade mispricing, while unrecorded transfers through the balance of payments were responsible for shifting the remaining 10.7 percent (Appendix Table 12). Over time, the preferred method of making illicit transfers of capital out of Asia seems to be the unrecorded flows from trade mispricing (GER) rather than from the balance of payments (CED). This is concomitant with growing Asian trade volumes, particularly those of China. 33. Table 4 shows the normalized illicit flows from the top five Asian exporters of illicit capitalChina, Malaysia, Philippines, Indonesia, and Indiawhich on average account for 96.5 percent of total illicit flows from Asia and 44.9 percent of such flows out of all developing countries during the period 2000-2008. As estimates presented in the table show, these shares have been declining. For instance, the top five transferred 36.9 percent of illicit flows from all developing countries in 2008, down from 53.3 percent in 2000. The relative decline in illicit flows from Asia was more than offset globally by larger flight of capital from the oil exporters (mostly in MENA) and from developing Europe led by Russia, Poland, and Kazakhstan.
23
Table 4. Total Normalized Illicit Financial Flows from Top Five Asian Countries, 2000-2008 (billions of U.S. dollars)
Total Illicit Outflows 2,175.99 87.36 2,088.64 75% 291.32 119.74 171.58 10% 109.28 0.00 109.28 4% 104.47 24.29 80.18 4% 104.12 0.00 104.12 4% 2,785.18 96.23 2,894.19 6,525.44 42.7% 44.4% 309.46 96.45 321.58 0.73 44.9% 46.5% 11.57 0.00 11.57 11.61 2.70 8.91 12.14 0.00 12.14 32.37 13.30 19.06 Average of outflows 241.78 9.71 232.07
Country/Region China,P.R.: Mainland Normalized CED Normalized GER China's Percent of Asia's Total IFF Malaysia Normalized CED Normalized GER Percent of Malaysia's IFF to Asia Total Philippines Normalized CED Normalized GER Percent of Philippines's IFF to Asia Total Indonesia Normalized CED Normalized GER Percent of Indonesia's IFF to Asia Total India Normalized CED Normalized GER Percent of India's IFF to Asia Total Total of top 5 Asian Countries Percent of top 5 IFFs to all Asia Asia region (30-country) total Developing World Total Top 5 Asian Countries as Percent of Developing World Total Asia region total share of Developing World Total
2000 169.13 40.95 128.18 85% 22.21 11.23 10.98 11% 5.67 0.00 5.67 3% 0.00 0.00 0.00 0% 0.00 0.00 0.00 0% 197.01 98.44 200.12 369.30 53.3% 54.2%
2001 183.62 46.40 137.22 80% 21.01 9.79 11.23 9% 6.54 0.00 6.54 3% 0.00 0.00 0.00 0% 11.88 0.00 11.88 5% 223.07 97.71 228.29 410.90 54.3% 55.6%
2002 153.85 0.00 153.85 81% 12.15 0.00 12.15 6% 7.09 0.00 7.09 4% 0.00 0.00 0.00 0% 8.09 0.00 8.09 4% 181.18 95.43 189.86 386.76 46.8% 49.1%
2003 183.27 0.00 183.27 73% 17.73 0.00 17.73 7% 10.29 0.00 10.29 4% 20.52 8.91 11.61 8% 9.42 0.00 9.42 4% 241.22 96.40 250.23 578.82 41.7% 43.2%
2004 251.47 0.00 251.47 76% 19.58 0.00 19.58 6% 11.97 0.00 11.97 4% 14.55 0.00 14.55 4% 22.66 0.00 22.66 7% 320.22 97.07 329.88 700.53 45.7% 47.1%
2005 277.05 0.00 277.05 69% 38.78 17.18 21.60 10% 15.66 0.00 15.66 4% 26.49 15.38 11.11 7% 30.61 0.00 30.61 8% 388.58 96.37 403.23 782.84 49.6% 51.5%
2006 288.55 0.00 288.55 76% 44.38 22.43 21.94 12% 15.80 0.00 15.80 4% 12.61 0.00 12.61 3% 0.00 0.00 0.00 0% 361.34 95.55 378.17 914.68 39.5% 41.3%
2007 324.75 0.00 324.75 77% 47.24 19.95 27.28 11% 19.84 0.00 19.84 5% 13.86 0.00 13.86 3% 0.00 0.00 0.00 0% 405.69 96.75 419.30 1,117.28 36.3% 37.5%
2008 344.31 0.00 344.31 70% 68.24 39.15 29.09 14% 16.42 0.00 16.42 3% 16.45 0.00 16.45 3% 21.45 0.00 21.45 4% 466.87 94.30 495.11 1,264.34 36.9% 39.2%
24
34.
While Chinas share of flight capital from Asia has been falling steadily from 85 percent in 2000 to 70 percent in 2008, those from Malaysia, the Philippines, and Indonesia have been increasing (Chart 8). Chinas foreign exchange regulator has issued new rules to tighten controls on import payments to crack down on illegal capital flows. A recent paper by Cheung and Qian (2009) notes that gradual policy changes that make it easier for both Chinese and foreign corporations to move foreign exchange abroad may reduce the motivation for the transfer of illicit capital. However, they do not expect Chinese policymakers to implement dramatic measures to curtail capital controls and open up the capital account further, which might end up appreciating the renminbi at a faster pace than Chinese policymakers would like.
Chart 8. Top Five Asian Countries Chart 8. Top Five Asian Countries (as percent of total Asia region) (as percent of total Asia region)
2000 2001 2002
Asian Countries 2003 otal Asia r2004 egion)

2005 2006 2007 2008 0.0%
China Malaysia 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% Philippines Indonesia India
China Malaysia Philippines Indonesia India
untries egion)
70.0%
80.0%
90.0% 100.0%
China Malaysia Philippines Indonesia 70.0% 80.0% India 90.0% 100.0%
0.0%
0.0%
90.0% 100.0%
25
35.
Estimates presented in Table 4 show that illicit financial flows from Malaysia have more than tripled from US$22.2 billion in 2000 to US$68.2 billion in 2008, a scale seen in few Asian countries (Table 4 and Chart 8). It is difficult to point out the reasons behind this massive outflow of illicit capital without carrying out an in-depth country case study which is outside the scope of the present update. It is clear however that significant governance issues affecting both the public and private sectors have been playing a key role in the cross-border transfer of illicit capital from the country. For instance, there are reports in the Malaysian media3 that large state-owned enterprises such as Petronas could probably be driving illicit flows. GFIs research also indicates that political instability, rising income inequality, and pervasive corruption are some of the structural and governance issues that could be driving illicit capital from many developing countries. In the case of Malaysia, the additional factor could well be the significant discrimination in labor markets which move people and unrecorded capital out of the country. As a result of some of these factors, the volume of illegal capital flight from Malaysia has come to dwarf legitimate capital inflows into the country in recent years.
36.
There has been extensive research on capital flight from the Philippines. For instance, Beja (2006) finds that capital flight from the Philippines was US$16 billion in the 1970s, US$36 billion in the 1980s, and US$43 billion in the 1990s which has led to a hollowing out of the economy. As large as these outflows are, they are based on the Traditional method used by economists according to which illicit inflows are netted out from outflows. Based on the gross outflow method used in this and other GFI studies (which sets all illicit inflows to zero), we estimate that the Philippines lost an estimated US$109 billion in illicit outflows through both the balance of payments and trade mispricing over the nine-year period 2000-2008. Le and Zak (2006), in a study of 45 developing countries including the Philippines, find that interest differentials and various risks to capital stemming from economic and political instability have a statistically significant impact on capital flight. They found that political instability was an important factor in driving illicit flows particularly in the case of the Philippines.
37.
Illicit outflows almost bankrupted Indonesia in the throes of the Asian financial crisis in 1997/98. The loss of much-needed capital has been the bane of its development policies since then. Today, any discussion of capital controls makes foreign investors looking to invest in Indonesia quite nervous. But the significant link between external debt and capital flight that researchers such as Boyce, Beja, and others find also worries Indonesian policymakers. A recent study in an Indonesian economic journal (original article in Indonesian) finds that for every US$1.00 that had been lent to Indonesia, some 90 cents was transferred abroad in
Correspondent, Asia Sentenial. Malaysias Disastrous Capital Flight . January 11, 2010. http://www.asiasentinel.com/index. php?option=com_content&task=view&id=2234&Itemid=229 (accessed November 30, 2010). 4 Reference, Capital Flight and Economic Crisis in Indonesia, Majalah Ekonomi, Vol. 2, No. 2, August 2003, Airlangga University, Indonesia.
3
26
unrecorded flows4. Estimates presented in Table 4 show that trade mispricing is the major conduit for the massive cross-border transfer of illicit capital which cumulated to US$104.5 billion over the nine year period ending 2008. There is no question that poor public and corporate governance is a major driver of illicit financial flows from Indonesia. 38. The World Banks Investment Climate Surveys have tended to rate Indonesias investment climate worse than that of Malaysia or the Philippines. Policy uncertainty, corruption and the lack of confidence in the courts to uphold property rights are some of the major factors responsible for such an outcome. Indonesian policymakers are, doubtless, aware that economic and regulatory policy uncertainty is probably the dominant concern among foreign investors. Yet, at least in a recent World Bank survey, a high percentage of responding firms rated policy uncertainty in Indonesia as a dominant concern. Foreign firms also say that the problem of corruption is a bigger constraint on investment in Indonesia than in other countries. Lack of implementation of the law in a fair and timely manner is also a significant deterrent to major investments in the country according to recent World Bank investment climate surveys (e.g., 2005 and 2006). 39. Cumulative illicit flows from India totaled US$104.1 billion during the period 20002008, almost equaling those out of Indonesia (Table 4). A recent GFI study (Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008, Global Financial Integrity, Washington DC, 2010) found that macroeconomic conditions as reflected in central government budget deficits and inflation policy did not appear to drive such outflows of capital. However, this finding is subject to two limitations. First, a more comprehensive measure of fiscal imbalances (including the deteriorating finances of the state and local governments) available for the entire sample period of that case study, 1948-2008, could have better captured the significance of fiscal deficits in driving illicit flows. Second, the wholesale price index (WPI) used as a measure of inflation in that study may not be reliable enough to capture the link between inflation and illicit outflows posited in the economic literature. The most important finding of the GFI study on India is that while economic reform can be largely credited for driving faster economic growth, large sections of the population could not benefit from the growth, and income distribution became more skewed. The resulting proliferation of high net worth individuals drove illicit flows in the absence of an improvement in public and corporate governance. Moreover, another by-product of reform namely, trade liberalization, spurred an expansion of the traded sector relative to GDP. The resulting trade openness provided more opportunities for related and unrelated parties to misprice trade and shift billions of dollars in illicit capital from the country.
27
28
VI. Conclusion
40. Over the period 2000-2008, developing countries lost between US$725 billion- US$810 billion per annum, the lower and upper figure corresponding to the conservative and more robust method of estimation, respectively. For the sake of brevity and without losing significant detail, one can only look at the conservative estimates and draw certain conclusions. In current dollar terms, illicit flows increased by at least 18.0 percent per annum from US$369.3 billion at the start of the decade to US$1.3 trillion in 2008 (See Table 1). After adjusting for inflation, illegal flight capital grew by at least 12.7 percent over this period (See Table 2). 41. In real terms, outflows from MENA region (24.3 percent) grew faster than developing Europe (23.1 percent), Africa (21.9 percent), or other regions. The rapid growth in illicit flows from developing Europe was mainly driven by Russia, Eastern European countries such as Poland, and countries in Central Asia including Kazakhstan and the Ukraine. Over this period, illicit transfers from the balance of payments grew faster in real terms (16.6 percent per annum on average) than through trade mispricing (9.4 percent per annum) (See Table 2). 42. As noted in the 2008 IFF Report, Asia continues to dominate illicit flows from developing countriesthe region accounted for 44.4 percent on average of such flows from the developing world during this period. Huge outflows of illicit capital from China account for Asias dominance in such flows which is followed by a clustering of regional shares in cumulative illicit outflows from developing countries with MENA region at 17.9 percent, developing Europe at 17.8 percent, and Western Hemisphere at 15.4 percent. Illicit outflows from MENA increased faster (30.2 percent per annum) than developing Europe at nearly 29.0 percent, Africa at 27.7 percent per annum, or any other region. Asias already high levels of illicit outflows slowed down to 12.9 percent per annum on average (See Table 1). 43. While trade mispricing accounts for an average of 54.7 percent of illicit flows from developing countries over the period 2000-2008, this share has been falling since 2004 when the share was 60.6 percent. Relative to 2006, the role of trade mispricing as a conduit for illicit flows declined significantly in 2007-2008 mainly as a result of the decline in trade volumes following the global economic crisis. Leakages through the balance of payments (CED component) as a result of the illicit transfer of the proceeds of bribery, theft, kickbacks, and tax evasion has been increasing relative to trade mispricingon average they accounted for 45.3 percent of cumulative transfers of illicit capital during this nine-year period (See Table 1). 44. In real terms, illicit outflows through trade mispricing grew faster in the case of Africa (28.8 percent per annum) than from anywhere else easily outpacing corresponding outflows from Asia (10.2 percent), or Europe (5.1 percent rate) (Table 2). The relative
29
ranking of regions (in the pace with which they export illicit capital through trade mispricing) remains unchanged in current dollar terms. The faster pace of illicit outflows from Africa through trade mispricing can perhaps be attributed to weaker customs monitoring and enforcement regimes. Given that customs revenues are an important source of government tax revenues in Africa, the faster pace of trade mispricing calls for strengthening the role of customs in African countries to curtail the mispricing of trade. 45. The top 10 exporters of illicit capital (China, Russia, Mexico, Saudi Arabia, Malaysia, United Arab Emirates, Kuwait, Venezuela, Qatar, and Nigeria in declining order of magnitude), on average account for more than 70 percent of total outflows of illicit capital from developing countries. While China continues to be the top exporter of illicit capital by far, Saudi Arabia and Russia which recorded the second and fourth highest average outflows in the 2008 IFF Report, now switch ranks. The groups share in total illicit outflows from developing countries was 80 percent in 2000, declined to 66 percent in 2006-07, and increased the next year to 76 percent. There are significant variations in how individual country shares move over time. 46. Apart from differences in the extent to which major exporters of illicit capital drive such flows from developing countries, the conduit for the transfer of these funds also varies. For instance, while trade mispricing is the major channel for the transfer of illicit capital from China, the balance of payments (captured by the World Bank Residual or CED change in external debtmodel) is the major conduit for the unrecorded transfer of capital from the major exporters of oil such as Kuwait, Nigeria, Qatar, Russia, Saudi Arabia, the United Arab Emirates, and Venezuela. Mexico is the only oil exporter where trade mispricing is the preferred method of transferring illicit capital abroad while Malaysia is the only country where the corrupt use roughly comparable portions of both channels (CED and GER) to transfer such capital. 47. Overall, we expect a slowdown in the rate of growth of illicit flows from developing countries in 2009 to just 2.9 percent year-on-year (compared to a the trend rate of growth of 18 percent per annum over 2000-2008), largely driven by a sharp drop in trading volumes, which squeeze or decrease opportunities to misprice trade. In addition, a large decline in balance of payments leakages mainly from the European regions developing countries , which is due to contracting of external debt and reduced inflows of foreign direct investment as a result of the global economic crisis, is expected to dampen illicit outflows from developing countries as a whole. 48. On a conservative basis, total illicit financial flows from Asia increased from US$200.1 billion in 2000 to US$495.1 billion in 2008 or at a trend growth rate of 12.9 percent per annum. Over this nine-year period for Asia, 89.3 percent on average of total illicit flows were transferred abroad through trade mispricing, while unrecorded transfers through the balance
30 Global Financial Integrity
of payments were responsible for shifting the balance (10.7 percent). Over time, the preferred method of making illicit transfers of capital out of Asia seems to be the unrecorded flows from trade mispricing (GER) rather than from the balance of payments (CED). This is concomitant with growing Asian trade volumes, particularly those of China. 49. The top five Asian exporters of illicit capitalChina, Malaysia, Philippines, Indonesia, and Indiaon average account for 96.5 percent of total illicit flows from Asia and on average 44.9 percent of such flows from all developing countries per annum during the period 2000-2008. As estimates presented in Table 4 show, these shares have been declining. In 2008, the top five transferred 36.9 percent of illicit flows from all developing countries, down from 53.3 percent in 2000. The relative decline in illicit flows from Asia was more than offset globally by larger flight capital from the oil exporters (mostly in MENA) and from developing Europe led by Russia, Poland, and Kazakhstan. 50. While Chinas share of flight capital from Asia has been falling steadily from 85 percent in 2000 to 70 percent in 2008, those from Malaysia, the Philippines, and Indonesia have been increasing. Illicit flows from Malaysia have more than tripled from US$22.2 billion in 2000 to US$68.2 billion in 2008, a scale seen in few Asian countries. It is clear however that significant governance issues affecting both the public and private sectors have been playing a key role in the cross-border transfer of illicit capital from the country. 51. There has been extensive research on capital flight from the Philippines. For instance, Beja (2006) finds that capital flight from the Philippines was US$16 billion in the 1970s, US$36 billion in the 1980s, and US$43 billion in the 1990s which has led to a hollowing out of the economy. As large as these outflows are, there are strong reasons to believe that they may be understating the actual impact of illicit flows on developing countries by giving undue credit (through netting out) to illicit inflows as if they somehow benefit an economy. Based on the gross outflow method used in this and other GFI studies (which sets all illicit inflows to zero), we estimate that the Philippines lost an estimated US$109 billion in illicit outflows through both the balance of payments and trade mispricing over the nine-year period 2000-2008. 52. Illicit outflows almost bankrupted Indonesia in the throes of the Asian financial crisis in 1997/98. The loss of much-needed capital has been the bane of its development policies since then. Estimates presented in this report show that trade mispricing is the major conduit for the massive cross-border transfer of illicit capital which cumulated to US$104.5 billion over the nine-year period ending 2008. There is no question that poor public and corporate governance is a major driver of illicit financial flows from Indonesia. The World Banks Investment Climate Surveys have tended to rate Indonesias investment climate
31
worse than that of Malaysia or the Philippines. Policy uncertainty, corruption, and the lack of confidence in the courts to uphold property rights are some of the major factors responsible for such an outcome. 53. Cumulative illicit flows from India totaled US$104.1 billion during the period 2000-2008, almost equaling those out of Indonesia. A recent GFI study (Drivers and Dynamics of Illicit Financial Flows from India: 1948-2008, Global Financial Integrity, Washington DC, 2010) found that macroeconomic conditions as reflected in central government budget deficits and inflation policy did not appear to drive such outflows of capital. Instead, the GFI study found that while economic reform can be largely credited for driving faster economic growth, growth itself has not been inclusive and income distribution has become more skewed. The resulting proliferation of high net worth individuals drove illicit flows in the absence of an improvement in public and corporate governance. Moreover, another by-product of reform namely, trade liberalization spurred an expansion of the traded sector relative to GDP. The resulting trade openness provided more opportunities for related and unrelated parties to misprice trade and shift billions of dollars in illicit capital from the country.
32
References
Albalkin, A., and Whalley J. The Problem of Capital Flight from Russia. The World Economy 22, no. 3 May 1999: 412-444. Almounsor, Abdullah. A Development Comparative Approach to Capital Flight: The Case of the Middle East and North Africa, 1970-2002. In Capital Flight and Capital Controls in Developling Countries, by Gerald A. Epstein (ed.), 234-261. Cheltenham, UK: Edward Elgar, 2005. Baker, Raymond. Capitalisms Achilles Heel: Dirty Money and How to Renew the Free Market System. Hoboken, NJ: John Wiley & Sons, 2005. Beja, Edsel. Capital Flight and the Hollowing Out of the Philippine Economy in the Neoliberal Regime. Philippine Journal of Third World Studies 21, no. 1 2006: 55-74. Cerra, Valerie, Meenakshi Rishis, and Sweta Saxena. Robbing the Riches: Capital Flight, Institutions and Instability. IMF Working Paper 199, October 2005. Dooley, Michael P., and Kenneth M. Kletzer. Capital Flight, External Debt and Domestic Policies. NBER Working Paper (National Bureau of Economic Research), no. 4793 1994. Dornbusch, Rudiger. Capital Flight: Theory, Measurement and Policy Issues. IADB Working Paper, no. 2 1990. Gunter, Frank R. Capital Flight from China. China Economic Review 15, 2004: 63-85. International Monetary Fund. Annual Report on Exchange Arrangements and Exchange Restrictions. Washington DC: IMF, 2010. Kant, Chander. Foreign Direct Investment and Capital Flight. Princeton Studies in International Finance 80, 1996. Kar, Dev, and Devon Cartwrigh-Smith. Illicit Financial Flows from Africa: Hidden Resource for Development. Washington DC: Global Financial Integrity, 2010. Kar, Dev, and Devon Cartwright-Smith. Illicit Financial Flows from Developing Countries: 2002-2006. Washington DC: Global Financial Integrity, 2008. Kar, Dev, Devon Cartwright-Smith, and Ann Hollingshead. The Absorption of Illicit Financial Flows from Developing Countries: 2002-2006. Washington, DC: Global Financial Integrity, 2010 Khan, Mohsin S., and Nadeem Ul Haque. Foreign Borrowing and Capital Flight: A Formal Analysis. IMF Staff Papers 32, December 1985. Le, Quan V., and Paul J. Zak. Political Risk and Capital Flight. Journal of International Money and Finance 20, no. 4 2006: 308-329. Le, Quan, and Rishi Meenakshi. Corruption and Capital Flight: An Empirical Assessment. International Economic Journal 20, no. 4 December 2006: 534-540. Loungani, Prakash, and Paulo Mauro. Capital Flight from Russia. Conference on Post-Election Strategy. Moscow, 2000. Moghadam, Mashaallah Rahnama, Hedayeh Samavati, and David A. Dilts. An Examination of Capital Flight from East Asian Emerging Economies: Paradise Lost. Journal of Asia-Pacific Business 45, no. 1 November 2003: 33-49. Ndikumana, Leonce, and James, K. Boyce. New Estimates of Capital Flight from sub-Saharan African Countries: Linkages with External Borrowing and Policy Options. Working Paper (University of Massachussets), April 2008. Ndungu, Njuguna. Keynote Address By Governor, Central Bank of Kenya. Senior Policy Seminar on Implications of Capital Flight for Macroeconomic Management and Growth in sub-Saharan Africa. Pretoria, South Africa, October 2007.
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NGO Documents for the Earth Summit. Treaty 15: Capital Flight and Corruption. Non-governmental Organization Alternative Treaties at the Global Forum, 1992. Schneider, Benu. Measuring Capital Flight: Estimates and Interpretations. Overseas Development Institute Working Paper, no. 194 1997. Thee, Kian Wie. Policies for Private Sector Development in Asia. ADB Institute Discussion Paper 46, March 2006. Zhu, Andong, Chunxiang Li, and Gerald Epstein. Capital Flight from China, 1982-2001. In Capital Flight and Capital Controls in Developing Countries, by Gerald A. (ed.) Epstein, 262-285. Cheltenham, UK: Edward Elgar,2005.
34
Appendix
Table 1. Non-Normalized Illicit Financial Flows Non-Normalized and in Current Dollars broken down by region (in millions of U.S. dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Table 2. Non-Normalized Illicit Financial Flows Estimates Broken Down by Region Non-Normalized and in Constant Dollars (millions of U.S. dollars, base 2005=100) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Table 3. Country Rankings: by Largest Average Normalized (Conservative) IFF Estimates 2000-2008 (in millions of U.S. dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Table 4. Country Rankings: by Largest Average Non-Normalized (High-End) IFF Estimates 2000-2008 (millions of U.S. dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Table 5. CED (Change in External Debt- Balance of Payments) Non-Normalized (drops inflows (negative numbers) as well as missing data to zero) (in millions of U.S. dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 (drops inflows (negative numbers) as well as missing data to zero) (millions of U.S. dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48 Table 7. Cumulative Normalized and Non-Normalized Illicit Financial Flows by Country 2000-2008 (millions of U.S. dollars). . . . . . . . . . . . . . . . . . . . . 52 Table 8. CED (Change in External Debt- Balance of Payments) Normalized (millions of U.S. dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54 Table 9. GER (Gross Excluding Reversals-Trade Mispricing) Normalized (millions of U.S. dollars) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Table 10. Countries for which estimation of illicit flows could not be completed due to missing data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62 Table 11. Countries Dropped to Zero Due to Normalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63 Table 12. CED and GER Components in Total Illicit Flows from Developing Countries and Regions . (millions of U.S. dollars and percent, 2000-2008) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64 Table 6. GER (Gross Excluding Reversals-Trade Mispricing) Non-Normalized
35
Table 1. Non-Normalized Illicit Financial Flows broken down by region Non-Normalized and in Current Dollars (in millions of U.S. dollars)
CED (Change in External Debt, Balance of Payments component) Non-Normalized (in current dollars) Region/Year Africa Asia Europe MENA Western Hemisphere All Developing Countries 2000 9,870.89 52,456.21 33,007.71 45,984.33 26,196.24 167,515.38 2001 15,136.53 59,841.72 40,714.19 36,367.96 46,596.50 198,656.91 2002 19,216.85 29,676.53 52,974.25 39,522.54 47,063.96 188,454.13 2003 27,393.72 27,782.59 90,246.48 104,568.63 60,124.14 310,115.56 2004 25,440.20 18,385.64 105,571.21 115,757.01 51,459.55 316,613.61
GER (Gross Excluding Reversals, Trade Mispricing component) Non-Normalized (in current dollars) Region/Year Africa Asia Europe MENA Western Hemisphere All Developing Countries 2000 3,217.47 149,811.78 5,986.81 3,545.98 53,735.64 216,297.68 2001 7,174.04 170,615.43 32,366.36 5,080.61 52,721.42 267,957.87 2002 3,491.42 185,113.04 9,519.97 3,646.84 52,134.35 253,905.61 2003 4,334.51 236,183.15 12,830.85 3,623.05 52,893.96 309,865.52 2004 14,025.83 325,646.20 33,174.78 18,415.55 63,024.03 454,286.39
Total CED + GER Non-Normalized (in current dollars) Region/Year Africa Asia Europe MENA Western Hemisphere All Developing Countries CED Percent of Total GER Percent of Total 2000 13,088.36 202,267.99 38,994.52 49,530.31 79,931.87 383,813.06 43.6 56.4 2001 22,310.57 230,457.15 73,080.55 41,448.58 99,317.92 466,614.77 42.6 57.4 2002 22,708.27 214,789.57 62,494.22 43,169.38 99,198.31 442,359.75 42.6 57.4 2003 31,728.23 263,965.74 103,077.33 108,191.68 113,018.10 619,981.08 50.0 50.0 2004 39,466.03 344,031.84 138,745.99 134,172.56 114,483.57 770,900.00 41.1 58.9
36
2005 21,973.67 54,855.73 93,617.10 146,600.58 39,437.70 356,484.78
2006 22,700.68 104,404.92 151,695.08 230,652.99 57,292.82 566,746.48
2007 43,948.57 136,222.31 249,886.75 194,661.75 108,305.96 733,025.33
2008 42,561.22 132,797.28 306,860.82 241,278.45 81,769.20 805,266.97
Totals 228,242.32 616,422.93 1,124,573.60 1,155,394.24 518,246.06 3,642,879.15
Average 25,360.26 68,491.44 124,952.62 128,377.14 57,582.90 404,764.35
Logarithmic Growth 16.49 16.92 31.66 29.54 12.48 23.24
2005 15,018.13 366,193.68 7,654.49 9,866.95 73,358.28 472,091.53
2006 22,952.54 357,839.32 22,183.23 9,827.06 71,908.29 484,710.44
2007 31,947.85 397,152.71 25,876.47 7,419.37 89,497.67 551,894.08
2008 35,210.88 449,005.33 24,416.68 15,694.17 110,573.01 634,900.07
Totals 137,372.67 2,637,560.64 174,009.65 77,119.59 619,846.65 3,645,909.20
Average 15,263.63 293,062.29 19,334.41 8,568.84 68,871.85 405,101.02
2005 36,991.80 421,049.40 101,271.59 156,467.53 112,795.99 828,576.31 43.0 57.0
2006 45,653.21 462,244.25 173,878.31 240,480.05 129,201.11 1,051,456.93 53.9 46.1
2007 75,896.42 533,375.02 275,763.22 202,081.13 197,803.63 1,284,919.41 57.0 43.0
2008 77,772.11 581,802.62 331,277.51 256,972.61 192,342.20 1,440,167.04 55.9 44.1
Totals 365,614.99 3,253,983.58 1,298,583.24 1,232,513.83 1,138,092.71 7,288,788.35 50.0 50.0
Average 40,623.89 361,553.73 144,287.03 136,945.98 126,454.75 809,865.37 47.8 52.2
Source: Staff estimates, Global Financial Integrity, based on official balance of payments and trade data reported to the IMF by member countries and external debt data reported to the World Bank by those countries.
37
Table 2. Non-Normalized Illicit Financial Flows Estimates Broken Down by Region Non-Normalized and in Constant Dollars (millions of U.S. dollars, base 2005=100)
CED (Change in External Debt, Balance of Payments component) Region/Year Africa Asia Europe MENA Western Hemisphere All Developing Countries 2000 117.06 622.09 391.44 545.34 310.67 1,986.59 2001 177.54 701.91 477.56 426.58 546.55 2,330.15 2002 230.69 356.25 635.93 474.45 564.98 2,262.30 2003 312.16 316.60 1,028.40 1,191.61 685.14 3,533.92 2004 273.02 197.31 1,132.97 1,242.28 552.25 3,397.83
GER (Gross Excluding Reversals, Trade Mispricing component) Region/Year Africa Asia Europe MENA Western Hemisphere All Developing Countries 2000 38.16 1,776.64 71.00 42.05 637.26 2,565.11 2001 84.15 2,001.24 379.64 59.59 618.40 3,143.02 2002 41.91 2,222.19 114.28 43.78 625.85 3,048.01 2003 49.39 2,691.42 146.21 41.29 602.75 3,531.07 2004 150.52 3,494.77 356.03 197.63 676.36 4,875.31
Total CED + GER Region/Year Africa Asia Europe MENA Western Hemisphere All Developing Countries CED Percent of Total GER Percent of Total 2000 155.22 2,398.73 462.44 587.39 947.92 4,551.70 43.6 56.4 2001 261.69 2,703.15 857.20 486.17 1,164.95 5,473.17 42.6 57.4 2002 272.60 2,578.44 750.21 518.23 1,190.83 5,310.31 42.6 57.4 2003 361.56 3,008.02 1,174.62 1,232.90 1,287.90 7,064.99 50.0 50.0 2004 423.54 3,692.08 1,488.99 1,439.91 1,228.61 8,273.15 41.1 58.9
38
2005 219.74 548.56 936.17 1,466.01 394.38 3,564.85
2006 216.88 997.47 1,449.27 2,203.62 547.37 5,414.60
2007 400.65 1,241.84 2,278.03 1,774.59 987.35 6,682.46
2008 353.35 1,102.49 2,547.58 2,003.11 678.85 6,685.38
Totals 2,301.09 6,084.52 10,877.36 11,327.58 5,267.54 35,858.08
Average 255.68 676.06 1,208.60 1,258.62 585.28 3,984.23
2005 150.18 3,661.94 76.54 98.67 733.58 4,720.92
2006 219.28 3,418.74 211.93 93.89 687.00 4,630.84
2007 291.25 3,620.55 235.90 67.64 815.88 5,031.21
2008 292.32 3,727.67 202.71 130.29 917.98 5,270.98
Totals 1,317.17 26,615.16 1,794.25 774.83 6,315.07 36,816.47
Average 146.35 2,957.24 199.36 86.09 701.67 4,090.72
2005 369.92 4,210.49 1,012.72 1,564.68 1,127.96 8,285.76 43.0 57.0
2006 436.16 4,416.21 1,661.20 2,297.51 1,234.37 10,045.45 53.9 46.1
2007 691.89 4,862.39 2,513.93 1,842.23 1,803.23 11,713.67 57.0 43.0
2008 645.67 4,830.16 2,750.29 2,133.40 1,596.84 11,956.36 55.9 44.1
Totals 3,618.25 32,699.68 12,671.60 12,102.41 11,582.61 72,674.55 49.3 50.7
Average 402.03 3,633.30 1,407.96 1,344.71 1,286.96 8,074.95 47.8 52.2
39
Table 3. Country Rankings: by Largest Average Normalized (Conservative) IFF Estimates 2000-2008 (in millions of U.S. dollars)
Rank 1 2 3 4 5 6 7 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 Russia Mexico Saudi Arabia Malaysia United Arab Emirates Kuwait Venezuela, Rep. Bol. Qatar Nigeria Kazakhstan Philippines Poland Indonesia India Argentina Ukraine Turkey Chile Czech Republic Egypt South Africa Iran, I.R. of Thailand Slovenia Costa Rica Panama Romania Belarus Brunei Darussalam Syrian Arab Republic Latvia Country China,P.R.: Mainland Average of all years 241,777 47,478 46,239 33,501 32,369 30,655 26,907 17,455 15,298 14,489 14,001 12,142 11,832 11,608 11,569 10,019 9,151 8,539 7,775 7,335 6,357 6,092 5,279 5,140 4,494 4,359 3,940 3,678 3,558 3,488 3,372 2,876 Rank 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 Honduras Aruba Brazil Azerbaijan, Rep. of Trinidad & Tobago Bulgaria Croatia Oman Colombia Angola Cyprus Israel Estonia Bangladesh Ecuador Dominican Republic Slovak Republic Guatemala Congo, Republic of Lithuania Lebanon Cte DIvoire Bahrain, Kingdom of El Salvador Tunisia Uruguay Nicaragua Congo, Dem. Rep. of Jamaica Namibia Ethiopia Malta Country Average of all years 2,828 2,725 2,614 2,298 2,236 2,176 2,143 2,110 2,076 2,030 2,028 1,689 1,670 1,581 1,545 1,517 1,362 1,354 1,327 1,249 1,233 1,095 1,076 1,027 971 837 774 740 706 701 680 592
40
Rank 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 Bolivia Mali Gabon Nepal Armenia Guinea Algeria Paraguay
Country
Average of all years 590 590 583 563 557 527 516 476 458 456 444 423 412 406 381 381 375 375 336 333 317 311 276 263 223 214 198 179 169 163 143 141
Rank 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125
Country Bahamas, The Yemen, Republic of Mongolia Djibouti Mauritania Rwanda Papua New Guinea Swaziland Lesotho Albania Burkina Faso Mozambique Central African Rep. Belize Gambia, The Samoa Niger Grenada Solomon Islands Burundi Cape Verde Antigua & Barbuda St. Kitts Vanuatu Guinea-Bissau Iraq St. Lucia Comoros Dominica
Average of all years 121 119 116 115 112 101 89 79 70 66 63 58 56 43 43 38 31 28 27 25 19 16 16 13 13 13 9 8 6
Zimbabwe Georgia Sudan Equatorial Guinea Madagascar Macedonia, FYR Morocco Jordan Zambia Moldova Botswana Lao Peoples Dem.Rep Myanmar Peru Turkmenistan Cambodia Tajikistan Barbados Seychelles Serbia & Montenegro Togo Liberia Maldives Bosnia & Herzegovina
41
Table 4. Country Rankings: by Largest Average Non-Normalized (High-End) IFF Estimates 2000-2008 (millions of U.S. dollars)
Rank 1 2 3 4 5 6 7 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 Russia Mexico Saudi Arabia Malaysia United Arab Emirates Kuwait Venezuela, Rep. Bol. Nigeria Poland Indonesia Qatar Philippines India Kazakhstan Argentina Ukraine Chile Turkey Thailand South Africa Czech Republic Brazil Iran, I.R. of Egypt Slovenia Azerbaijan, Rep. of Costa Rica Syrian Arab Republic Romania Panama Belarus Serbia Brunei Darussalam Colombia Israel Slovak Republic Latvia Country China,P.R.: Mainland Average of positive outflows only 266,840 53,141 51,378 34,422 33,769 31,139 27,114 17,781 16,987 16,887 16,792 15,838 14,452 14,278 14,096 12,164 10,757 9,192 8,885 8,234 7,944 7,335 7,317 6,892 6,357 5,834 4,490 4,470 4,215 4,209 3,942 3,858 3,502 3,488 3,084 3,011 2,999 2,940 Rank 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 Honduras Bulgaria Aruba Angola Pakistan Oman Croatia Lithuania Algeria Trinidad & Tobago Cyprus Ecuador Estonia Guatemala Bangladesh Dominican Republic Bahrain, Kingdom of Peru Morocco Lebanon Cte D'Ivoire Congo, Republic of Tunisia El Salvador Ethiopia Sudan Uruguay Namibia Malta Nicaragua Congo, Dem. Rep. of Vietnam Jamaica Serbia & Montenegro Gabon Zambia Cameroon Bolivia Country Average of positive outflows only 2,867 2,749 2,725 2,685 2,532 2,510 2,403 2,387 2,267 2,261 2,028 1,913 1,857 1,850 1,744 1,706 1,637 1,625 1,479 1,388 1,365 1,354 1,164 1,072 920 870 855 811 780 774 773 757 724 693 664 623 607 604
42
Rank 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 Mali Guinea Paraguay Jordan Nepal Armenia
Country
Average of positive outflows only 596 582 582 577 566 557 534 521 515 509 474 459 449 437 434 401 401 391 359 280 276 262 253 227 217 200 185 185 182 182 180 175 151 150 147 127 126 121
Rank 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 Djibouti Rwanda Ghana Mauritius Somalia
Country
Average of positive outflows only 115 104 96 90 72 68 68 63 56 54 53 51 50 50 48 47 44 43 34 34 34 33 32 32 31 30 29 29 27 27 20 17 14 13 8 7 3 1
Kyrgyz Republic Benin Burkina Faso Central African Rep. Haiti Burundi Belize Niger Chad Libya Sierra Leone Samoa Gambia, The Guyana Iraq St. Lucia Senegal Grenada Eritrea Antigua & Barbuda Solomon Islands Guinea-Bissau Fiji Cape Verde Montenegro St. Kitts Vanuatu Dominica Suriname Comoros Afghanistan, I.R. of Malawi Tonga
Macedonia, FYR Sri Lanka Zimbabwe Uganda Georgia Equatorial Guinea Madagascar Tanzania Botswana Moldova Myanmar Cambodia Lao People's Dem.Rep Turkmenistan Bosnia & Herzegovina Barbados Yemen, Republic of Tajikistan Kenya Seychelles Liberia Mongolia Mozambique Swaziland Togo Mauritania St. Vincent & Grens. Papua New Guinea Maldives Bahamas, The Lesotho Albania
43
Table 5. CED (Change in External Debt- Balance of Payments) Non-Normalized (drops inflows (negative numbers) as well as missing data to zero) (in millions of U.S. dollars)
Total of outflow (positives) only 244 10,163 23,796 154 83,075 1,752 1,324 20,764 0 9,824 10,703 403 2,528 263 120 4,377 1,214 3,472 37,984 31,093 20,311 0 196 755 1,186 70 347 75,930 312,920 18,177 47 6,917 6,102 997 5,834 19,287 8,781 57,508 650 Average of outflow years only 122 2,033 2,644 31 11,868 250 265 2,966 0 1,637 1,784 202 632 44 120 729 607 434 7,597 3,887 2,539 0 65 94 593 17 347 8,437 44,703 2,272 9 988 1,017 199 1,167 2,755 1,463 6,390 81
Country Afghanistan, I.R. of Albania Algeria Angola Antigua & Barbuda Argentina Armenia Aruba Azerbaijan, Rep. of Bahamas, The Bahrain, Kingdom of Bangladesh Barbados Belarus Belize Benin Bhutan Bolivia Bosnia & Herzegovina Botswana Brazil Brunei Darussalam Bulgaria Burkina Faso Burundi Cambodia Cameroon Cape Verde Central African Rep. Chad Chile China,P.R.: Mainland Colombia Comoros Congo, Dem. Rep. of Congo, Republic of Costa Rica Cte DIvoire Croatia Cyprus Czech Republic Djibouti
2000 206 -628 152 15 1,510 -179 375 -58 -367 984 -751 -198 -418 29 -208 563 70 181 5,978 79 -426 -64 8 -544 -24 -116 2,126 40,955 1,570 2 348 488 339 -1,128 1,018 -182 304 -23
2001 -120 -761 207 47 17,984 225 -3 80 -540 -33 -708 -186 -105 -25 -111 -631 -1,501 26 -14,344 2,019 -992 -243 -52 59 -1,275 3 -116 3,430 46,404 2,555 5 366 -207 28 -728 1,029 385 797 17
2002 -279 1,943 2,155 5 12,366 182 52 505 -299 -57 2,179 348 581 7 120 938 -332 571 8,056 1,945 953 87 146 314 -15 -943 4,029 8,305 -3,184 19 -1,334 1,032 -217 591 1,127 1,337 1,964 94
2003 38 2,699 2,455 -51 20,898 155 -46 496 -331 -68 1,241 -292 92 43 -296 914 -128 528 9,490 2,585 1,991 81 86 872 3 -271 3,880 -22,034 3,794 11 2,340 1,202 -82 1,696 -6,747 2,085 3,535 89
2004 -256 1,127 1,987 -31 3,479 306 283 -273 -322 143 873 -179 -489 -116 -4 663 -234 768 2,878 2,925 1,676 28 123 -1,058 -77 347 8,860 -28,810 413 10 678 1,483 -33 1,298 2,913 2,492 8,811 77
2005 -179 -26 4,257 -33 -37,258 -108 82 589 -50 1,093 -257 -507 906 32 -368 604 -1,065 499 -9,859 4,271 276 -108 66 -3,510 -3 -150 6,211 13,971 1,790 -19 -569 67 304 -787 -624 1,427 6,848 37
2006 -110 1,959 2,707 77 -1,718 129 532 1,656 -623 3,300 2,457 -122 -481 49 -1,362 -800 -32 655 -20,285 5,271 5,085 -62 90 -4,400 38 -162 12,318 66,825 3,146 -1 1,240 1,829 -175 1,335 475 1,054 11,122 106
2007 -273 2,436 7,417 9 11,057 459 -227 3,247 -560 1,579 1,460 -267 949 103 -405 -789 1,144 244 -14,459 4,944 9,345 -127 177 -719 -37 -200 29,122 81,114 3,107 -19 1,686 -675 187 915 4,301 -7,049 21,109 217
2008 -965 -481 2,458 -202 15,781 296 -151 14,191 -333 2,725 2,492 55 -153 -28 -345 694 -2,000 -445 11,582 7,133 905 -329 -337 -971 26 -463 5,954 55,346 1,801 -45 259 -233 139 -271 8,423 -11,398 3,019 12
44
Country Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Ethiopia Fiji Gabon Gambia, The Georgia Ghana Grenada Guatemala Guinea Guinea-Bissau Guyana Haiti Honduras India Indonesia Iran, I.R. of Iraq Israel Jamaica Jordan Kazakhstan Kenya Kiribati Kuwait Kyrgyz Republic Lao Peoples Dem.Rep Latvia Lebanon Lesotho Liberia Libya Lithuania Macedonia, FYR Madagascar
2000 7 -148 -2,155 -350 571 -46 32 -344 -157 -104 678 11 -133 -180 8 -1,390 -201 -87 -60 -149 -6,427 -9,730 9,805 -8,291 325 -482 7,819 -530 12,847 -13 -41 831 1,624 -56 305 -123 -107 -261
2001 11 414 747 -427 1,131 412 309 -4 -18 115 60 -58 -89 -12 -836 -193 -62 -55 -50 -729 -4,810 -6,007 3,309 578 -422 663 3,541 -1,111 8,406 -148 -60 -378 1,901 -222 193 110 151 -567
2002 -27 1,764 1,679 1,686 639 23 215 1,141 91 375 91 19 369 24 -1,002 73 55 30 -39 215 -1,674 -298 2,649 7,686 -288 393 3,698 508 6,183 66 501 1,139 775 121 320 430 62 -90
2003 34 2,392 743 4,308 1,582 75 1,738 687 -25 1,159 73 62 54 -33 -809 103 52 37 84 130 -1,947 8,908 6,991 1,059 433 802 5,193 540 16,148 112 -786 1,259 -6,400 92 325 -356 75 93
2004 -9 2,062 419 6,257 123 -354 1,994 -751 -17 1,370 32 81 -1,268 8 3,121 -96 34 -69 -141 -58 -14,562 4,395 -762 -3,586 178 605 11,820 -75 15,530 82 109 2,274 1,974 105 137 1,918 790 -1,886
2005 -102 -364 60 -418 355 -288 2,994 -1,431 -103 1,667 -3 -433 -1,415 -121 256 -281 -191 27 -890 -22,573 15,380 2,725 366 -643 -1,004 13,669 -1,012 29,291 -159 51 -134 -1,079 -158 -14 -891 -327 -777
2006 -58 1,334 2,027 8,618 384 1,598 1,455 -5,361 5 282 55 -367 -4,323 -63 103 209 -178 145 -1,015 -9,298 -7,609 4,367 7,511 775 962 24,342 -969 44,312 64 674 3,279 2,208 -23 110 3,961 334 -2,338
2007 -9 440 766 9,328 -385 1,797 5,031 278 -181 -1,434 32 -385 -458 -88 981 110 -401 -144 -1,137 -29,336 10,166 11,871 868 1,284 -802 24,789 -454 55,988 -188 1,247 11,088 2,012 111 -573 5,360 828 -123
2008 -63 -1,198 616 4,191 -613 195 1,817 -1,817 -113 -717 -235 -441 -175 -126 -48 -239 -2 -75 -936 7,344 13,676 12,884 -18,675 -1,627 -2,293 30,122 -1,387 53,459 -485 471 -148 -9,374 199 -1,324 -786 -55 -626
Total of outflow (positives) only 52 8,406 7,056 34,389 4,786 4,100 32 15,552 2,106 96 5,646 354 161 423 41 4,462 494 142 68 257 345 7,344 52,526 54,600 18,069 2,994 3,425 124,993 1,048 242,164 324 3,052 19,868 10,492 628 1,390 11,779 2,238 93
Average of outflow years only 17 1,401 882 5,731 684 683 32 1,944 702 48 807 51 54 211 14 1,116 124 47 34 86 173 7,344 10,505 6,825 3,011 599 685 13,888 524 26,907 81 509 3,311 1,749 126 232 2,356 373 93
Cont. on next page
45
Table 5. (cont.)
Total of outflow (positives) only 2 132,340 12 57 569 207 76,909 1,090 1,083 53 8,048 369 3,136 6,488 1,044 0 165 127,482 19,380 11,514 6,006 1,114 931 5,875 20,789 117,157 137,266 35,458 441,908 26 5 1 305,633 74 2,436 2,551 904 195 23,575 Average of outflow years only 2 16,543 12 57 285 104 9,614 182 217 53 2,012 369 627 811 209 0 83 14,165 2,422 2,879 1,201 223 233 1,469 2,970 16,737 17,158 4,432 49,101 13 5 1 33,959 74 1,218 2,551 151 65 3,368
Country Malawi Malaysia Maldives Mali Malta Marshall Islands Mauritania Mauritius Mexico Micronesia Moldova Mongolia Montenegro Morocco Mozambique Myanmar Namibia Nepal Nicaragua Niger Nigeria Oman Pakistan Palau Panama Papua New Guinea Paraguay Peru Philippines Poland Qatar Romania Russia Rwanda Samoa So Tom & Prncipe Saudi Arabia Senegal Serbia Serbia & Montenegro Seychelles Sierra Leone Slovak Republic
2000 -175 11,229 -47 -450 -132 -340 -19,343 654 -27 -1,953 -673 -6 359 -575 -606 -134 6,336 948 -889 -203 230 -148 -922 -58 -1,779 918 15,607 -159 -33 9,071 -630 -169 4 -142 639
2001 -86 9,789 12 -262 -65 199 13,328 15 -46 -1,387 -2,755 -381 349 -304 -982 -187 2,846 1,073 -1,612 875 67 -430 -1,510 -1,930 1,230 4,923 -1,054 18,443 -119 -24 8,182 -248 -651 -70 -87 -562
2002 2 8,015 -26 -148 -3 -13 1,830 201 35 478 -461 1,116 276 532 -556 60 5,135 1,741 2,055 14 -207 378 893 3,104 8,608 4,108 1,852 12,546 5 1 4,123 74 -3,353 -18 55 -424
2003 4,589 -21 -69 483 9 4,611 66 325 2,451 -1,813 893 1,369 149 -100 105 9,751 752 3,240 874 171 76 1,566 3,515 14,776 4,537 3,291 35,579 22 -22 34,905 -126 2,551 83 115 3,425
2004 -809 -81 57 -37 -158 10,344 -42 283 -1,389 369 120 1,330 116 -2,320 -286 12,333 85 1,769 1,157 -103 375 749 1,757 12,363 9,771 920 37,046 -4 -24 -9 50,744 -1,048 -2,434 11 24 3,349
2005 17,179 -223 -434 -39 -304 1,122 -56 171 -424 -838 162 178 -193 -583 -309 15,164 3,673 -4,003 -362 570 -465 -360 2,717 -2,057 15,382 519 56,387 -278 -38 -110 47,390 -705 -1,304 106 -158 2,340
2006 22,434 -238 -1,730 -484 -521 5,418 91 269 2,352 -2,185 845 1,715 27 -1,431 -1,505 10,409 4,867 -1,138 3,086 -256 101 2,667 3,854 29,706 23,255 6,829 14,606 -1,285 5 -10 52,314 -2,603 -1,428 365 -322 4,410
2007 19,953 -408 -178 -316 -551 30,658 63 53 2,766 -562 912 220 -1,475 -298 28,497 -784 -410 -392 -223 -99 -3,209 3,576 41,033 27,672 10,487 55,327 -11 -15 -235 59,027 -529 1,839 334 -1,051 3,696
2008 39,153 -158 -729 86 -863 9,599 -142 -205 -791 -307 -58 -14 -781 -359 37,012 6,241 4,450 -376 76 -8 -2,377 2,266 9,441 47,618 10,641 196,367 -111 -40 39,877 -1,120 597 -145 -101 5,717
46
Country Slovenia Solomon Islands Somalia South Africa Sri Lanka St. Kitts St. Lucia St. Vincent & Grens. Sudan Suriname Swaziland Syrian Arab Republic Tajikistan Tanzania Thailand Timor-Leste Togo Tonga Trinidad & Tobago Tunisia Turkey Turkmenistan Uganda Ukraine United Arab Emirates Uruguay Uzbekistan Vanuatu Venezuela, Rep. Bol. Vietnam Yemen, Republic of Zambia Zimbabwe Yearly Totals of outflows only Data not available
2000 -415 -57 975 -1,082 54 -17 1 -357 -173 -87 499 -280 -953 -2,740 -219 850 -380 4,862 -244 -86 10,206 -5 35 11,873 -8,070 -1,204 -852 167,515
2001 -361 -76 10,339 -711 31 -31 -25 -547 -239 -21 -124 -32 -864 -4,096 -114 1,389 917 5,500 -117 8,899 6,343 327 18 4,300 1,475 73 -134 198,657
2002 1,411 -48 4,138 513 -9 -26 -21 221 -121 250 698 104 597 -4,181 68 660 2,476 11,964 200 4,011 4,351 3,809 20 9,329 1,119 234 72 188,454
2003 3,566 -25 1,148 205 14 -16 -2 1,084 -316 154 13,027 -3 -143 1,805 29 -1 -1,333 2,327 5,628 513 4,534 14,561 -254 1 8,527 68 -82 -108 310,116
2004 3,920 27 -13,980 357 -27 -17 -32 1,002 -253 152 2,257 58 1,011 3,625 -137 -31 874 224 169 257 12,589 27,041 632 5 14,839 1,902 -73 540 316,614
2005 4,877 -66 -4,714 -779 13 25 -32 -2,099 -131 -107 -10,855 34 -346 -5,482 -141 -15 1,337 -2,150 -22,488 -86 2,751 46,680 -422 -69 27,219 317 -502 -2,403 356,485
2006 5,002 -16 -19,115 -741 6 -96 -30 -239 -141 48 2,207 261 -4,980 1,649 -124 -18 6,574 1,301 19,124 -3,358 18,710 70,993 161 -19 18,390 -1,128 130 -2,618 566,746
2007 15,135 -43 -15,467 834 -2 -25 -100 341 -333 303 605 12 -412 12,530 0 -3 2,692 1,717 15,913 -138 18,680 18,793 1,395 1 26,504 -6,884 -214 756 733,025
2008 6,539 -17 -12,212 -933 -33 186 -58 1,687 86 -187 1,322 907 -708 -14,174 -765 -57 3,868 -447 2,942 533 14,939 72,961 -1,692 39 31,409 351 -92 94 805,267
Total of outflow (positives) only 40,450 27 16,600 1,909 118 211 1 4,335 86 908 20,615 1,377 1,608 19,608 97 0 18,245 8,962 66,103 1,503 85,113 271,930 6,325 119 152,391 5,232 437 1,462 3,642,879
Average of outflow years only 5,779 27 4,150 477 24 105 1 867 86 182 2,945 229 804 4,902 32 0 2,281 1,494 8,263 376 10,639 30,214 1,265 17 16,932 872 146 365 404,764
Note: Negative (inflow) years are shown in the table for the purpose of providing more information to the reader. However, the negative inflow years are NOT used in any of the non-normalized calcuations. The yearly totals are summations of the outflow (positive number) years only, and for non-normalized estimates, the averages are of positive year figures only (i.e., not including zero outflow years). Since publication of the 2008 IFF Report, the IMF has classified Hungary as a developed country, and hence it was excluded from this study. Serbia and Montenegro seperated into two independent countries; they began reporting official data in 2007. We estimated illicit outflows from Serbia and Montenegro as a whole for 2000-2006 and as separate countries for 2007 and 2008. Source: Staff estimates, Global Financial Integrity, based on official balance of payments and trade data reported to the IMF by member countries and external debt data reported to the World Bank by those countries.
47
Table 6. GER (Gross Excluding Reversals-Trade Mispricing) Non-Normalized (drops inflows (negative numbers) as well as missing data to zero) (millions of U.S. dollars)
Total of outflow (positives) only 5 107 0 83 8,605 1,207 4,804 0 240 0 624 1 5,229 0 0 5 410 5,430 5 1,136 101 27 9 0 30 90 0 0 288,546 0 4 0 39 5,962 950 0 2,284 0 50 0 0 324,750 0 5 7 42 6,133 573 0 2,605 0 60 102 1 0 344,313 2,698 8 6 61 7,091 412 0 2,028 0 87 7 499 3,450 32 471 124 27 0 0 35 504 1 6,801 2,088,636 9,584 29 39 6,082 39,235 5,089 2,344 9,467 8,502 384 1,062 1,272 13,231 297 4,428 571 225 2,375 1,244 172 56 0 1,134 232,071 1,369 3 5 760 4,359 727 391 1,052 1,700 43 61 727 3,439 367 14,241 3,259 23,200 10,667 1,147 0 4,996 1,955 32,197 148 151 118 141 2,646 37 553 63 32 297 311 19 Average of outflow years only 7 91 688 41 2,034 362 2,578 3,556 127 0 714 217 5,366 19 50
Country Afghanistan, I.R. of Albania Algeria Angola Antigua & Barbuda Argentina Armenia Aruba Azerbaijan, Rep. of Bahamas, The Bahrain, Kingdom of Bangladesh Barbados Belarus Belize Benin Bhutan Bolivia Bosnia & Herzegovina Botswana Brazil Brunei Darussalam Bulgaria Burkina Faso Burundi Cambodia Cameroon Cape Verde Central African Rep. Chad Chile China,P.R.: Mainland Colombia Comoros Congo, Dem. Rep. of Congo, Republic of Costa Rica Cte D'Ivoire Croatia Cyprus Czech Republic Djibouti
2000 1 105 0 110 1,034 299 1,752 0 57 0 969 153 173 113 59 341 0 0 235 194 30 13 221 518 8 26 0 1,022 128,175 133 1 3 844 1,915 0 477 381 759 23
2001 1 14 1,643 1 831 269 1,255 175 64 0 679 26 5,195 20 0 161 0 0 4 532 32 0 253 334 6 29 0 1,102 137,220 1,313 2 3 1,161 1,914 81 466 343 1,569 25
2002 1 0 498 1 597 169 803 0 75 0 391 294 0 1 0 212 1 0 3 440 33 6 280 112 16 32 0 1,042 153,846 916 2 4 0 2,368 0 357 344 1,681 26
2003 1 4 24 1 0 247 1,224 0 87 0 960 323 0 3 0 222 2 1,070 0 670 45 3 327 280 13 40 0 1,098 183,266 1,496 2 4 918 3,422 608 592 543 2,751 32
2004 10 10 754 170 1,172 105 2,188 0 130 0 921 567 10,587 2 54 17 30 1,473 11 437 59 0 403 0 18 54 0 1,378 251,472 1,701 3 4 2,982 4,683 948 308 546 1,743 39
2005 1 79 0 0 766 316 3,548 0 132 0 452 533 1,660 3 38 93 16 1,809 3 548 67 30 387 0 21 59 0 1,160 277,048 1,327 3 8 34 5,747 1,515 143 394 0 42
2006 1 101 521 0 0 204 3,712 2,174 160 0 0 54 9,354 1 0 4 314 0 4 0 81 119 494 0 26 73
2007 41 307 0 0 1,235 443 3,914 8,317 202 0 0 4 0 6 0
2008
48
Country Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Ethiopia Fiji Gabon Gambia, The Georgia Ghana Grenada Guatemala Guinea Guinea-Bissau Guyana Haiti Honduras India Indonesia Iran, I.R. of Iraq Israel Jamaica Jordan Kazakhstan Kenya Kiribati Kuwait Kyrgyz Republic Lao People's Dem.Rep Latvia Lebanon Lesotho Liberia Libya Lithuania Macedonia, FYR Madagascar
2000 33 911 869 1,322 150 5 549 63 7 18 2 208 25 34 1,740 250 8 0 0 2,326 2,008 0 0 0 0 387 332 0 28 183 0 10 1,040 491 72 73 0 0 21
2001 17 1,091 970 1,311 133 0 0 679 8 22 2 248 26 18 1,999 301 8 0 0 2,524 11,885 512 0 6 0 235 0 421 78 132 0 11 837 112 1 27 0 0 24
2002 1 527 304 1,492 512 0 0 324 8 24 2 248 28 20 1,332 3 9 0 0 2,679 8,091 1,113 0 0 0 297 0 1,014 0 125 0 12 649 96 1 18 0 167 128
2003 1 337 29 1,216 550 4 0 100 11 29 3 380 36 23 1,301 161 11 1 0 2,723 9,424 11,609 0 0 0 428 0 166 37 140 0 15 761 123 2 42 0 247 66
2004 0 0 865 3,072 729 17 610 56 14 36 3 450 79 26 1,419 452 16 0 0 2,921 22,659 14,546 0 4 0 413 161 0 138 149 0 18 1,193 161 6 17 0 381 796
2005 2 0 1,293 2,576 587 0 0 794 16 41 3 402 53 28 1,548 529 17 0 2 2,992 30,606 11,106 0 0 0 817 0 52 72 193 17 22 771 184 3 47 0 474 459
2006 2 736 631 4,351 370 1 0 1,144 20 47 5 957 67 30 794 772 21 0 2 3,025 10,660 12,613 0 104 0 205 0 60 90 231 0 27 767 226 3 52 0 287 1,643
2007 2 386 481 4,296 932 5 0 1,333 24 56 6 379 84 33 991 1,019 26 0 2 3,050 4,375 13,858 0 0 0 160 0 66 110 273 0 34 571 280 4 60 0 225 124
2008 2 1,258 4,717 3,185 901 0 0 1,684 55 62 5 834 43 36 1,064 1,260 4 0 7 3,215 21,452 16,451 532 56 0 580 121 91 355 441 0 32 4 324 0 99 2,541 257 684
Total of outflow (positives) only 62 5,245 10,158 22,821 4,864 31 1,159 6,176 162 333 31 4,107 443 248 12,189 4,746 121 1 14 25,454 121,160 81,807 532 170 0 3,521 614 1,869 907 1,866 17 181 6,593 1,998 91 434 2,541 2,038 3,945
Average of outflow years only 8 749 1,129 2,536 540 4 580 686 18 37 3 456 49 28 1,354 527 13 1 4 2,828 13,462 10,226 532 34 0 391 205 267 113 207 17 20 733 222 11 48 2,541 291 438
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49
Table 6. (cont.)
Total of outflow (positives) only 8 29,085 8 839 2,403 207 161 61,540 474 0 13 36 0 21 507 1,299 1 6,899 0 1,683 5,712 53 1,663 1,495 16,416 0 4,696 0 0 91 3 0 1,561 0 3,471 122 52 0 22 171,583 1,313 5,307 5,463 1,007 333 385,494 2,518 27 27 5,266 724 69 4,046 6,968 284 25,404 3,207 3,679 29,468 239 4,307 8,752 109,278 1,050 5,279 2,427 36,362 906 343 2 4,166 23 11,573 1,607 896 229 3,415 Average of outflow years only 2 19,065 146 590 780 112 55 42,833 280 27 9 658 145 9 450 774 41 4,234 534 1,226 3,274 27 538 972 12,142 350 1,056 1,214 12,121 101 43 0 1,042 12 2,893 268 100 25 683
2000 2 10,983 835 398 0 52 6 34,400 293 27 0 133 0 3 567 378 144 0 38 0 1,582 13 132 718 5,666 0 32 0 0 51 2 0 0 0 0 194 44 12 722
2001 0 11,225 102 430 0 57 16 32,839 209 0 0 361 4 4 255 441 49 2,916 0 0 1,722 13 169 1,140 6,543 0 380 13 19,358 58 2 0 0 11 0 185 82 13 1,073
2002 0 12,152 148 458 133 62 1 34,798 108 0 0 157 192 4 457 443 0 0 143 0 2,216 15 308 705 7,091 320 0 0 0 63 0 0 0 0 0 217 210 14 998
2003 1 17,725 103 512 296 79 111 34,008 226 0 0 306 69 7 356 525 0 0 332 0 2,377 19 159 940 10,288 104 0 0 2,485 80 2 1 0 0 0 263 149 18 278
2004 2 19,582 68 576 389 105 38 36,425 337 0 0 706 0 8 422 649 88 2,658 70 0 2,723 22 0 845 11,966 625 0 0 14,518 104 2 0 0 0 0 348 55 22 344
2005 7 21,601 36 624 472 118 0 44,246 238 0 0 3,427 0 13 499 944 1 3,373 0 0 3,555 28 24 1,204 15,665 0 0 0 0 119 325 0 1,469 13 0 399 63 26 0
2006 2 21,945 6 694 725 145 0 48,370 189 0 2 0 330 8 682 1,119 1 4,166 2,471 855 4,553 34 1,213 926 15,801 0 133 0 0 158 3 0 544 0 3,949 77 32 0
2007 0 27,285 8 776 1,045 181 0 58,868 445 0 11 141 129 0 301 1,170 1 5,392 153 1,141 5,028 43 640 778 19,842 0 39 2,414 0 183 4 0 593 0 4,153 95 40 0
2008
50
Country Slovenia Solomon Islands Somalia South Africa Sri Lanka St. Kitts St. Lucia St. Vincent & Grens. Sudan Suriname Swaziland Syrian Arab Republic Tajikistan Tanzania Thailand Timor-Leste Togo Tonga Trinidad & Tobago Tunisia Turkey Turkmenistan Uganda Ukraine United Arab Emirates Uruguay Uzbekistan Vanuatu Venezuela, Rep. Bol. Vietnam Yemen, Republic of Zambia Zimbabwe Yearly Totals of outflows only Data not available
2000 0 16 33 0 0 25 39 105 0 1 940 85 0 0 9 0 825 2 0 507 60 0 0 193 0 3 2,370 70 0 0 279 216,298
2001 0 17 36 72 0 3 3 142 0 0 1,035 106 0 1,877 153 0 62 0 661 691 19 0 0 192 0 4 2,336 0 74 102 344 267,958
2002 0 19 39 962 0 3 3 170 0 0 1,118 168 0 1,482 76 0 1,052 0 1,821 685 6 0 0 0 0 2 455 0 0 0 657 253,906
2003 0 21 49 0 0 4 3 153 0 26 1,409 117 110 2,048 236 0 5 0 2,098 600 140 0 0 357 0 3 0 0 32 386 0 309,866
2004 43 23 65 3,052 0 4 4 281 0 1 12,761 150 135 3,493 78 4 6 0 14 8 238 0 560 350 0 3 2,052 0 0 583 300 454,286
2005 0 26 73 4,443 0 5 4 351 139 0 2 43 81 8,356 193 0 8 0 1,623 8 361 0 902 206 0 4 425 0 1,068 1,269 326 472,092
2006 0 29 90 9,246 0 5 5 0 72 0 5 0 0 6,108 131 0 11 0 808 8 456 0 1,168 17 0 5 0 0 23 466 1,752 484,710
2007 0 32 112 18,222 0 6 6 0 1,109 0 6 0 248 5,395 198 0 13 156 3,342 8 675 0 1,386 21 0 6 0 0 36 673 213 551,894
2008 343 57 150 18,904 694 7 27 0 431 0 45 0 440 17,505 445 4 125 191 3,490 8 1,122 946 4,304 31 0 5 0 0 104 44 251 634,900
Total of outflow (positives) only 386 240 646 54,900 694 63 94 1,203 1,752 27 17,322 669 1,014 46,264 1,519 8 2,107 349 13,858 2,522 3,077 946 8,319 1,366 1 35 7,638 70 1,338 3,523 4,123 3,645,909
Average of outflow years only 193 27 72 7,843 694 7 10 150 438 3 1,925 112 203 5,783 169 1 234 116 1,732 280 342 946 1,664 152 0 4 1,528 70 223 503 515 405,101
Note: The yearly totals are summations of the outflow (positive number) years only, and for non-normalized estimates, the averages are of positive year figures only (i.e., not including zero outflow years). Since publication of the 2008 IFF Report, the IMF has classified Hungary as a developed country, and hence it was excluded from this study. Serbia and Montenegro seperated into two independent countries; they began reporting official data in 2007. We estimated illicit outflows from Serbia and Montenegro as a whole for 2000-2006 and as separate countries for 2007 and 2008. Source: Staff estimates, Global Financial Integrity, based on official balance of payments and trade data reported to the IMF by member countries and external debt data reported to the World Bank by those countries.
51
Table 7. Cumulative Normalized and Non-Normalized Illicit Financial Flows by Country 2000-2008 (millions of U.S. dollars)
Cumulative Normalized (conservative) IFFs 2000-2008 3 592 4,642 18,271 145 90,170 5,011 24,524 20,684 1,091 9,681 14,231 1,924 32,024 389 0 0 5,313 1,272 3,021 23,525 31,390 19,583 571 223 2,366 0 172 504 0 69,976 2,175,995 18,683 70 6,657 11,941 39,235 9,856 19,288 18,248 66,011 Cumulative NonNormalized (high-end) IFFs 2000-2008 61 972 13,603 24,162 154 97,315 5,011 24,524 31,431 1,147 9,824 15,699 2,358 34,725 411 271 0 5,438 2,486 3,472 51,216 31,390 24,738 571 421 3,130 2,430 242 504 348 82,731 2,401,556 27,760 76 6,956 12,183 40,231 10,923 21,630 18,248 66,011 Cumulative Normalized (conservative) IFFs 2000-2008 1,034 51 13,651 13,909 57,209 9,243 3,807 0 15,028 6,120 0 5,249 385 4,107 0 248 12,189 4,743 117 0 0 25,454 0 104,117 104,471 47,508 114 15,197 6,355 3,425 126,007 0 0 242,164 0 3,001 25,886 11,096 628 1,465 0 Cumulative NonNormalized (high-end) IFFs 2000-2008 1,034 114 13,651 17,215 57,209 9,649 4,132 32 16,711 8,282 258 5,979 385 4,267 866 289 16,651 5,240 263 69 271 25,799 0 128,505 134,333 55,132 170 18,069 6,515 4,039 126,862 1,955 0 244,030 342 3,233 26,461 12,490 628 1,481 434
Country Afghanistan, I.R. Of Albania Algeria Angola Antigua & Barbuda Argentina Armenia Aruba Azerbaijan, Rep. Of Bahamas, The Bahrain, Kingdom Of Bangladesh Barbados Belarus Belize Benin Bhutan Bolivia Bosnia & Herzegovina Botswana Brazil Brunei Darussalam Bulgaria Burkina Faso Burundi Cambodia Cameroon Cape Verde Central African Rep. Chad Chile China,P.R.: Mainland Colombia Comoros Congo, Dem. Rep. Of Congo, Republic Of Costa Rica Cte D'Ivoire Croatia Cyprus Czech Republic
Country Djibouti Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Ethiopia Fiji Gabon Gambia, The Georgia Ghana Grenada Guatemala Guinea Guinea-Bissau Guyana Haiti Honduras Hungary India Indonesia Iran, I.R. Of Iraq Israel Jamaica Jordan Kazakhstan Kenya Kiribati Kuwait Kyrgyz Republic Lao People's Dem.Rep Latvia Lebanon Lesotho Liberia Libya
52
Country Lithuania Macedonia, Fyr Madagascar Malawi Malaysia Maldives Mali Malta Marshall Islands Mauritania Mauritius Mexico Micronesia Moldova Mongolia Montenegro Morocco Mozambique Myanmar Namibia Nepal Nicaragua Niger Nigeria Oman Pakistan Palau Panama Papua New Guinea Paraguay Peru Philippines Poland Qatar Romania Russia Rwanda Samoa So Tom & Prncipe Saudi Arabia Senegal
Cumulative Normalized (conservative) IFFs 2000-2008 11,239 3,657 3,710 0 291,319 1,291 5,307 5,331 0 1,007 0 416,152 0 3,373 1,047 0 3,427 522 2,853 6,310 5,063 6,968 281 130,398 18,992 0 0 35,460 800 4,284 2,798 109,278 106,486 137,678 33,100 427,301 906 343 1 301,510 0
Cumulative NonNormalized (high-end) IFFs 2000-2008 14,319 4,276 4,037 24 303,923 1,325 5,364 5,463 0 1,576 540 462,403 0 3,608 1,110 80 13,314 1,093 3,205 6,488 5,090 6,968 450 152,886 22,586 15,193 0 35,474 1,353 5,238 14,626 130,067 118,207 142,545 37,885 478,269 932 348 3 309,799 98 Serbia
Country Serbia & Montenegro Seychelles Sierra Leone Slovak Republic Slovenia Solomon Islands Somalia South Africa Sri Lanka St. Kitts St. Lucia St. Vincent & Grens. Sudan Suriname Swaziland Syrian Arab Republic Tajikistan Tanzania Thailand Timor-Leste Togo Tonga Trinidad & Tobago Tunisia Turkey Turkmenistan Uganda Ukraine United Arab Emirates Uruguay Uzbekistan Vanuatu Venezuela, Rep. Bol. Vietnam Yemen, Republic Of Zambia Zimbabwe All Developing Countries
Cumulative Normalized (conservative) IFFs 2000-2008 0 1,607 1,785 0 12,256 40,450 240 0 54,828 0 143 85 0 3,993 0 707 30,348 2,003 0 46,264 0 1,519 0 20,122 8,738 76,850 2,483 0 82,363 275,898 7,529 0 118 157,096 0 1,068 3,377 4,123 6,525,444
Cumulative NonNormalized (high-end) IFFs 2000-2008 14,008 4,158 1,800 424 26,990 40,836 267 646 71,499 2,603 180 305 1,204 6,087 114 908 37,936 2,046 2,622 65,872 0 1,616 8 20,352 9,311 79,961 2,522 4,580 86,059 280,248 7,691 1 154 160,028 5,302 1,774 4,985 4,123 7,288,788
53
Table 8. CED (Change in External Debt- Balance of Payments) Normalized (millions of U.S. dollars)
Average of all Years (outflow and zeros) 0 516 2,030 16 9,063 195 147 2,298 0 1,076 1,189 0 0 28 0 486 0 336 2,614 3,887 2,117 0 0 0 0 0 0 69,976 87,359 14,173 47 6,657 6,035 0 5,834 18,811 8,781 57,508 650 0 7,775 9,707 1,575 5 740 671 0 648 2,090 976 6,390 72 0 3,021 23,525 31,093 19,051 0 0 0 0 0 0 29,122 0 3,107 0 1,686 0 0 915 4,301 0 21,109 217 0 0 0 0 0 0 0 0 0 8,423 0 3,019 12 0 0 0 0
Country Afghanistan, I.R. Of Albania Algeria Angola Antigua & Barbuda Argentina Armenia Aruba Azerbaijan, Rep. Of Bahamas, The Bahrain, Kingdom Of Bangladesh Barbados Belarus Belize Benin Bhutan Bolivia Bosnia & Herzegovina Botswana Brazil Brunei Darussalam Bulgaria Burkina Faso Burundi Cambodia Cameroon Cape Verde Central African Rep. Chad Chile China,P.R.: Mainland Colombia Comoros Congo, Dem. Rep. Of Congo, Republic Of Costa Rica Cte D'Ivoire Croatia Cyprus Czech Republic Djibouti
2000 0 0 0 15 0 0 375 0 0 984 0 0 0 29 0 563 0 0 5,978 0 0 0 0 0 0 0 2,126 40,955 1,570 2 348 488 0 0 1,018 0 304 0
2001 0 0 0 47 17,984 225 0 0 0 0 0 0 0 0 0 0 0 0 0 2,019 0 0 0 0 0 0 0 3,430 46,404 2,555 5 366 0 0 0 1,029 385 797 17
2002 0 1,943 2,155 5 12,366 182 52 505 0 0 2,179 0 0 0 0 938 0 571 8,056 1,945 953 0 0 0 0 0 4,029 0 0 19 0 1,032 0 591 1,127 1,337 1,964 94
2003 0 2,699 2,455 0 20,898 155 0 496 0 0 1,241 0 0 43 0 914 0 528 9,490 2,585 1,991 0 0 0 0 0 3,880 0 3,794 11 2,340 1,202 0 1,696 0 2,085 3,535 89
2004 0 0 1,987 0 3,479 306 283 0 0 0 873 0 0 0 0 663 0 768 0 2,925 1,676 0 0 0 0 0 8,860 0 0 10 678 1,483 0 1,298 2,913 2,492 8,811 77
2005 0 0 4,257 0 0 0 82 589 0 1,093 0 0 0 32 0 604 0 499 0 4,271 0 0 0 0 0 0 6,211 0 0 0 0 0 0 0 0 1,427 6,848 37
2006 0 0 0 77 0 129 532 1,656 0 3,300 2,457 0 0 49 0 0 0 655 0 5,271 5,085 0 0 0 0 0 12,318 0 3,146 0 1,240 1,829 0 1,335 0 1,054 11,122 106
2007 0 0 7,417 0 11,057 459 0 3,247 0 1,579 1,460 0 0 103 0 0 0 0 0 4,944 9,345 0 0 0 0
2008 0 0 0 0 15,781 296 0 14,191 0 2,725 2,492 0 0 0 0 694 0 0 0 7,133 0
Total of outflow (positives) only 0 4,642 18,271 145 81,565 1,752 1,324 20,684 0 9,681 10,703 0 0 256 0 4,377
54
Country Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Ethiopia Fiji Gabon Gambia, The Georgia Ghana Grenada Guatemala Guinea Guinea-Bissau Guyana Haiti Honduras India Indonesia Iran, I.R. Of Iraq Israel Jamaica Jordan Kazakhstan Kenya Kiribati Kuwait Kyrgyz Republic Lao People's Dem.Rep Latvia Lebanon Lesotho Liberia Libya Lithuania Macedonia, Fyr Madagascar
2000 0 0 0 0 571 0 0 0 0 0 678 11 0 0 0 0 0 0 0 0 0 0 9,805 0 325 0 7,819 0 12,847 0 0 831 1,624 0 305 0 0 0
2001 0 414 747 0 1,131 412 0 0 0 0 60 0 0 0 0 0 0 0 0 0 0 0 3,309 0 0 663 3,541 0 8,406 0 0 0 1,901 0 193 0 151 0
2002 0 1,764 1,679 1,686 639 0 0 0 0 375 91 0 0 0 0 0 0 0 0 0 0 0 2,649 7,686 0 393 3,698 0 6,183 0 501 1,139 775 121 320 0 0 0
2003 0 2,392 743 4,308 1,582 0 1,738 0 0 1,159 73 0 0 0 0 0 0 0 0 0 0 8,908 6,991 0 433 802 5,193 0 16,148 0 0 1,259 0 92 325 0 0 0
2004 0 2,062 0 6,257 0 0 1,994 0 0 1,370 32 0 0 0 0 0 0 0 0 0 0 0 0 0 178 605 11,820 0 15,530 0 109 2,274 1,974 105 137 1,918 790 0
2005 0 0 0 0 355 0 2,994 0 0 1,667 0 0 0 0 0 0 0 0 0 0 15,380 0 0 0 0 13,669 0 29,291 0 0 0 0 0 0 0 0 0
2006 0 1,334 2,027 8,618 384 1,598 1,455 0 0 0 55 0 0 0 0 0 0 0 0 0 0 0 7,511 775 962 24,342 0 44,312 0 674 3,279 2,208 0 110 3,961 334 0
2007 0 440 0 9,328 0 1,797 5,031 0 0 0 32 0 0 0 0 0 0 0 0 0 0 11,871 0 1,284 0 24,789 0 55,988 0 1,247 11,088 2,012 111 0 5,360 828 0
2008 0 0 0 4,191 0 0 1,817 0 0 0 0 0 0 0 0 0 0 0 0 0 0 12,884 0 0 0 30,122 0 53,459 0 471 0 0 199 0 0 0 0
Total of outflow (positives) only 0 8,406 5,195 34,389 4,662 3,807 0 15,028 0 0 5,249 354 0 0 0 0 0 0 0 0 0 0 24,288 47,508 15,197 2,994 3,425 124,993 0 242,164 0 3,001 19,868 10,492 628 1,390 11,239 2,101 0
Average of all Years (outflow and zeros) 0 934 577 3,821 518 423 0 1,670 0 0 583 39 0 0 0 0 0 0 0 0 0 0 2,699 5,279 1,689 333 381 13,888 0 26,907 0 333 2,208 1,166 70 154 1,249 233 0
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55
Table 8. (cont.)
Average of all Years (outflow and zeros) 0 13,304 0 0 0 0 3,406 95 150 0 0 0 408 701 113 0 0 14,165 1,836 0 666 89 0 0 0 11,832 17,158 3,678 47,478 0 0 0 33,501 0 0 0 99 0 1,243
2000 0 11,229 0 0 0 0 0 654 0 0 0 0 359 0 0 0 6,336 0 0 0 230 0 0 0 0 0 15,607 0 0 9,071 0 0 0 0 0
2001 0 9,789 0 0 0 0 0 0 0 0 0 0 349 0 0 0 2,846 0 0 875 0 0 0 0 0 4,923 0 18,443 0 0 8,182 0 0 0 0 0
2002 0 0 0 0 0 0 0 201 0 0 0 1,116 276 532 0 0 5,135 1,741 0 0 0 0 0 0 8,608 4,108 1,852 12,546 0 0 0 0 0 0 0 0
2003 0 0 0 0 0 0 0 325 0 0 893 1,369 149 0 0 9,751 0 0 874 0 0 0 0 14,776 4,537 3,291 35,579 0 0 34,905 0 0 83 0 3,425
2004 0 0 0 0 0 0 0 283 0 0 0 1,330 116 0 0 12,333 0 0 1,157 0 0 0 0 12,363 9,771 0 37,046 0 0 0 50,744 0 0 0 0 3,349
2005 17,179 0 0 0 0 0 0 171 0 0 0 0 0 0 0 15,164 3,673 0 0 570 0 0 0 0 15,382 0 56,387 0 0 0 47,390 0 0 106 0 0
2006 22,434 0 0 0 0 0 0 269 0 0 845 1,715 0 0 0 10,409 4,867 0 3,086 0 0 0 0 29,706 23,255 6,829 0 0 0 0 52,314 0 0 365 0 4,410
2007 19,953 0 0 0 0 30,658 0 0 0 0 912 220 0 0 28,497 0 0 0 0 0 0 0 41,033 27,672 10,487 55,327 0 0 0 59,027 0 0 334 0 0
2008 39,153 0 0 0 0 0 0 0 0 0 0 0 0 0 37,012 6,241 0 0 0 0 0 0 0 47,618 10,641 196,367 0 0 39,877 0 0 0 0 0
Total of outflow (positives) only 0 119,736 0 0 0 0 30,658 855 1,047 0 0 0 2,853 6,310 1,017 0 0 127,482 16,522 0 5,992 800 0 0 0 106,486 137,266 33,100 427,301 0 0 0 301,510 0 0 0 889 0 11,183
56
Country Slovenia Solomon Islands Somalia South Africa Sri Lanka St. Kitts St. Lucia St. Vincent & Grens. Sudan Suriname Swaziland Syrian Arab Republic Tajikistan Tanzania Thailand Timor-Leste Togo Tonga Trinidad & Tobago Tunisia Turkey Turkmenistan Uganda Ukraine United Arab Emirates Uruguay Uzbekistan Vanuatu Venezuela, Rep. Bol. Vietnam Yemen, Republic Of Zambia Zimbabwe Yearly Totals of outflows only Data not available
2000 0 0 0 0 54 0 0 0 0 0 0 0 0 0 0 850 0 4,862 0 0 10,206 0 35 11,873 0 0 0 160,939
2001 0 0 0 0 31 0 0 0 0 0 0 0 0 0 0 1,389 917 5,500 0 8,899 6,343 327 18 4,300 0 0 0 169,321
2002 1,411 0 0 0 0 0 0 221 0 250 0 104 0 0 0 660 2,476 11,964 0 4,011 0 3,809 20 9,329 0 0 0 142,112
2003 3,566 0 0 0 14 0 0 1,084 0 154 13,027 0 0 0 0 0 0 2,327 5,628 0 4,534 14,561 0 0 8,527 0 0 0 277,655
2004 3,920 0 0 0 0 0 0 1,002 0 0 0 58 0 0 0 0 874 0 0 0 12,589 27,041 632 5 14,839 0 0 0 276,189
2005 4,877 0 0 0 13 0 0 0 0 0 0 34 0 0 0 0 1,337 0 0 0 0 46,680 0 0 27,219 0 0 0 325,489
2006 5,002 0 0 0 6 0 0 0 0 0 0 261 0 0 0 0 6,574 1,301 19,124 0 18,710 70,993 0 0 18,390 0 0 0 456,161
2007 15,135 0 0 0 0 0 0 0 0 303 0 12 0 0 0 0 2,692 1,717 15,913 0 18,680 18,793 1,395 0 26,504 0 0 0 606,536
2008 6,539 0 0 0 0 0 0 1,687 0 0 0 907 0 0 0 0 3,868 0 0 0 14,939 72,961 0 39 31,409 0 0 0 667,165
Total of outflow (positives) only 40,450 0 0 0 118 0 0 3,993 0 707 13,027 1,377 0 0 0 0 18,245 8,738 62,992 0 82,363 267,579 6,163 118 152,391 0 0 0 3,081,567
Average of all Years (outflow and zeros) 4,494 0 0 0 13 0 0 444 0 79 1,447 153 0 0 0 0 2,027 971 6,999 0 9,151 29,731 685 13 16,932 0 0 0 344,858
Note: Zeros indicate years that dropped through normalization or were inflow (negative) years. For list of Countries dropped through normalization see Appendix Table 10, and to see inflow amounts see Appendix Table 5. The yearly totals are summations of the outflow (positive number) years only, and for normalized estimates, the averages are a simple average over all years (i.e., including zero outflow years). Since publication of the 2008 IFF Report, the IMF has classified Hungary as a developed country, and hence it was excluded from this study. Serbia and Montenegro seperated into two independent countries; they began reporting official data in 2007. We estimated illicit outflows from Serbia and Montenegro as a whole for 2000-2006 and as separate countries for 2007 and 2008. Source: Staff estimates, Global Financial Integrity, based on official balance of payments and trade data reported to the IMF by member countries and external debt data reported to the World Bank by those countries.
57
Table 9. GER (Gross Excluding Reversals-Trade Mispricing) Normalized (millions of U.S. dollars)
Average of all Years (outflow and zeros) 0 66 0 0 956 362 2,578 0 121 0 392 214 3,558 15 0 104 141 0 33 59 63 25 263 0 19 56 0 0 2,088,636 4,510 24 0 5,905 39,235 4,022 477 9,467 8,502 384 0 0 232,071 501 3 0 656 4,359 447 53 1,052 945 43
Country Afghanistan, I.R. of Albania Algeria Angola Antigua & Barbuda Argentina Armenia Aruba Azerbaijan, Rep. of Bahamas, The Bahrain, Kingdom of Bangladesh Barbados Belarus Belize Benin Bhutan Bolivia Bosnia & Herzegovina Botswana Brazil Brunei Darussalam Bulgaria Burkina Faso Burundi Cambodia Cameroon Cape Verde Central African Rep. Chad Chile China,P.R.: Mainland Colombia Comoros Congo, Dem. Rep. of Congo, Republic of Costa Rica Cte D'Ivoire Croatia Cyprus Czech Republic Djibouti
2000 1 105 0 0 0 299 1,752 0 0 0 969 153 0 113 0 341 0 0 235 0 30 13 221 0 8 26 0 0 128,175 0 1 0 844 1,915 0 477 381 759 23
2001 1 0 0 0 0 269 1,255 0 64 0 679 0 5,195 20 0 161 0 0 4 532 32 0 253 0 6 29 0 0 137,220 1,313 0 0 1,161 1,914 0 0 343 1,569 25
2002 1 0 0 0 0 169 803 0 75 0 0 294 0 0 0 212 1 0 3 0 33 6 280 0 16 32 0 0 153,846 0 0 0 0 2,368 0 0 344 1,681 26
2003 1 0 0 0 0 247 1,224 0 87 0 960 323 0 0 0 222 2 0 0 0 45 0 327 0 13 40 0 0 183,266 1,496 0 0 918 3,422 608 0 543 2,751 32
2004 0 0 0 0 0 105 2,188 0 130 0 921 567 10,587 0 0 0 30 0 11 0 59 0 403 0 18 54 0 0 251,472 1,701 3 0 2,982 4,683 948 0 546 1,743 39
2005 0 79 0 0 0 316 3,548 0 132 0 0 533 1,660 0 0 0 16 0 3 0 67 30 387 0 21 59 0 0 277,048 0 3 0 0 5,747 1,515 0 394 0 42
2006 0 101 0 0 0 204 3,712 0 160 0 0 54 9,354 0 0 0 314 0 4 0 81 119 494 0 26 73 0 0 288,546 0 4 0 0 5,962 950 0 2,284 0 50
2007 0 307 0 0 0 443 3,914 0 202 0 0 0 0 0 0 0 410 0 5 0 101 27 0 0 30 90 0 0 324,750 0 5 0 0 6,133 0 0 2,605 0 60
2008 0 0 0 0 8,605 1,207 4,804 0 240 0 0 0 5,229 0 0 0 499 0 32 0 124 27 0 0 35 102 0 0 344,313 0 8 0 0 7,091 0 0 2,028 0 87
Total of outflow (positives) only 3 592 0 0 8,605 3,259 23,200 0 1,091 0 3,529 1,924 32,024 133 0 936 1,272 0 297 532 571 223 2,366 0 172 504
58
Country Dominica Dominican Republic Ecuador Egypt El Salvador Equatorial Guinea Eritrea Estonia Ethiopia Fiji Gabon Gambia, The Georgia Ghana Grenada Guatemala Guinea Guinea-Bissau Guyana Haiti Honduras India Indonesia Iran, I.R. of Iraq Israel Jamaica Jordan Kazakhstan Kenya Kiribati Kuwait Kyrgyz Republic Lao People's Dem.Rep Latvia Lebanon Lesotho Liberia Libya Lithuania Macedonia, FYR Madagascar
2000 33 911 869 1,322 0 0 0 63 0 0 2 208 0 34 1,740 250 8 0 0 2,326 0 0 0 0 0 387 0 0 0 0 0 0 1,040 491 72 0 0 0 0
2001 17 1,091 970 1,311 0 0 0 679 0 0 2 248 0 18 1,999 301 8 0 0 2,524 11,885 0 0 6 0 235 0 0 0 0 0 0 837 112 1 0 0 0 0
2002 0 527 0 1,492 512 0 0 324 0 0 2 248 0 20 1,332 0 9 0 0 2,679 8,091 0 0 0 0 297 0 1,014 0 0 0 0 649 0 1 0 0 167 128
2003 0 337 0 1,216 550 0 0 100 0 0 3 380 0 23 1,301 161 11 0 0 2,723 9,424 11,609 0 0 0 428 0 0 0 0 0 0 761 0 2 0 0 247 0
2004 0 0 865 3,072 729 0 0 0 0 0 3 450 0 26 1,419 452 16 0 0 2,921 22,659 14,546 0 4 0 413 0 0 0 0 0 0 1,193 0 0 0 0 381 796
2005 0 0 1,293 2,576 587 0 0 794 0 0 3 402 0 28 1,548 529 17 0 0 2,992 30,606 11,106 0 0 0 817 0 0 0 0 0 0 771 0 0 0 0 474 459
2006 0 736 0 4,351 370 0 0 1,144 0 0 5 957 0 30 794 772 21 0 0 3,025 0 12,613 0 104 0 205 0 0 0 0 0 0 767 0 0 0 0 287 1,643
2007 0 386 0 4,296 932 0 0 1,333 0 0 6 379 0 33 991 1,019 26 0 0 3,050 0 13,858 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0
2008 0 1,258 4,717 3,185 901 0 0 1,684 0 0 5 834 0 36 1,064 1,260 0 0 0 3,215 21,452 16,451 0 0 0 580 0 0 0 0 0 0 0 0 0 0 0 0 684
Total of outflow (positives) only 51 5,245 8,714 22,821 4,580 0 0 6,120 0 0 31 4,107 0 248 12,189 4,743 117 0 0 25,454 104,117 80,183 0 114 0 3,361 0 1,014 0 0 0 0 6,018 603 75 0 0 1,555 3,710
Average of all Years (outflow and zeros) 6 583 968 2,536 509 0 0 680 0 0 3 456 0 28 1,354 527 13 0 0 2,828 11,569 8,909 0 13 0 373 0 113 0 0 0 0 669 67 8 0 0 173 412
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59
Table 9. (cont.)
Average of all Years (outflow and zeros) 0 19,065 143 590 592 112 0 42,833 280 0 0 381 58 0 450 774 31 324 275 0 3,274 0 476 311 12,142 0 46 0 0 101 38 0 0 0 0 268 100 0
Country Malawi Malaysia Maldives Mali Malta Marshall Islands Mauritania Mauritius Mexico Micronesia Moldova Mongolia Montenegro Morocco Mozambique Myanmar Namibia Nepal Nicaragua Niger Nigeria Oman Pakistan Palau Panama Papua New Guinea Paraguay Peru Philippines Poland Qatar Romania Russia Rwanda Samoa So Tom & Prncipe Saudi Arabia Senegal Serbia Serbia & Montenegro Seychelles Sierra Leone
2000 0 10,983 835 398 0 52 0 34,400 293 0 0 0 0 0 567 378 144 0 0 0 1,582 0 132 718 5,666 0 32 0 0 51 2 0 0 0 0 194 44 0
2001 0 11,225 102 430 0 57 0 32,839 209 0 0 0 0 0 255 441 49 2,916 0 0 1,722 0 169 1,140 6,543 0 380 0 0 58 2 0 0 0 0 185 82 0
2002 0 12,152 148 458 0 62 0 34,798 108 0 0 0 192 0 457 443 0 0 0 0 2,216 0 308 0 7,091 0 0 0 0 63 0 0 0 0 0 217 210 0
2003 0 17,725 103 512 296 79 0 34,008 226 0 0 0 0 0 356 525 0 0 0 0 2,377 0 159 940 10,288 0 0 0 0 80 2 1 0 0 0 263 149 0
2004 0 19,582 68 576 389 105 0 36,425 337 0 0 0 0 0 422 649 88 0 0 0 2,723 0 0 0 11,966 0 0 0 0 104 2 0 0 0 0 348 55 0
2005 0 21,601 36 624 472 118 0 44,246 238 0 0 3,427 0 0 499 944 0 0 0 0 3,555 0 0 0 15,665 0 0 0 0 119 325 0 0 0 0 399 63 0
2006 0 21,945 0 694 725 145 0 48,370 189 0 0 0 330 0 682 1,119 0 0 2,471 0 4,553 0 1,213 0 15,801 0 0 0 0 158 3 0 0 0 0 77 0
2007 0 27,285 0 776 1,045 181 0 58,868 445 0 0 0 0 0 301 1,170 0 0 0 0 5,028 0 640 0 19,842 0 0 0 0 183 4 0 0 0 0 95 0
2008 0 29,085 0 839 2,403 207 0 61,540 474 0 0 0 0 0 507 1,299 0 0 0 0 5,712 0 1,663 0 16,416 0 0 0 0 91 3 0 0 0 0 122 0
Total of outflow (positives) only 0 171,583 1,291 5,307 5,331 1,007 0 385,494 2,518 0 0 3,427 522 0 4,046 6,968 281 2,916 2,471 0 29,468 0 4,284 2,798 109,278 0 412 0 0 906 343 1 0 0 0 1,607 896 0
60
Country Slovak Republic Slovenia Solomon Islands Somalia South Africa Sri Lanka St. Kitts St. Lucia St. Vincent & Grens. Sudan Suriname Swaziland Syrian Arab Republic Tajikistan Tanzania Thailand Timor-Leste Togo Tonga Trinidad & Tobago Tunisia Turkey Turkmenistan Uganda Ukraine United Arab Emirates Uruguay Uzbekistan Vanuatu Venezuela, Rep. Bol. Vietnam Yemen, Republic of Zambia Zimbabwe Yearly Totals of outflows only Data not available
2000 0 0 16 0 0 0 25 39 0 0 0 940 85 0 0 9 0 825 0 0 507 0 0 0 193 0 0 2,370 0 0 0 279 208,357
2001 1,073 0 17 0 0 0 0 0 0 0 0 1,035 106 0 1,877 153 0 0 0 661 691 0 0 0 192 0 0 2,336 0 0 0 344 241,577
2002 0 0 19 0 962 0 0 0 0 0 0 1,118 168 0 1,482 76 0 1,052 0 1,821 685 0 0 0 0 0 0 0 0 0 0 657 244,644
2003 0 0 21 0 0 0 0 0 0 0 0 1,409 117 0 2,048 236 0 0 0 2,098 600 0 0 0 357 0 0 0 0 0 386 0 301,161
2004 0 0 23 0 3,052 0 0 4 0 0 0 12,761 150 0 3,493 78 0 0 0 14 0 0 0 560 350 0 0 0 0 0 583 300 424,340
2005 0 0 26 0 4,443 0 0 4 0 0 0 2 0 0 8,356 193 0 0 0 1,623 0 0 0 902 206 0 0 0 0 1,068 1,269 326 457,349
2006 0 0 29 0 9,246 0 0 5 0 0 0 5 0 0 6,108 131 0 0 0 808 0 0 0 1,168 17 0 0 0 0 0 466 1,752 458,524
2007 0 0 32 0 18,222 0 0 6 0 0 0 6 0 0 5,395 198 0 0 0 3,342 0 0 0 1,386 21 0 0 0 0 0 673 213 510,747
2008 0 0 57 0 18,904 0 0 27 0 0 0 45 0 0 17,505 445 0 0 0 3,490 0 0 0 4,304 31 0 0 0 0 0 0 251 597,177
Total of outflow (positives) only 1,073 0 240 0 54,828 0 25 85 0 0 0 17,322 626 0 46,264 1,519 0 1,877 0 13,858 2,483 0 0 8,319 1,366 0 0 4,705 0 1,068 3,377 4,123 3,443,877
Average of all Years (outflow and zeros) 119 0 27 0 6,092 0 3 9 0 0 0 1,925 70 0 5,140 169 0 209 0 1,540 276 0 0 924 152 0 0 523 0 119 375 458 382,742
Note: The yearly totals are summations of the outflow (positive number) years only, and for normalized estimates, the averages are a simple average over all years (i.e., including zero outflow years). Since publication of the 2008 IFF Report, the IMF has classified Hungary as a developed country, and hence it was excluded from this study. Serbia and Montenegro seperated into two independent countries; they began reporting official data in 2007. We estimated illicit outflows from Serbia and Montenegro as a whole for 2000-2006 and as separate countries for 2007 and 2008. Source: Staff estimates, Global Financial Integrity, based on official balance of payments and trade data reported to the IMF by member countries and external debt data reported to the World Bank by those countries.
61
Table 10. Countries for which estimation of illicit flows could not be completed due to missing data
CED Countries Afghanistan I.R. of Antiqua & Barbuda Bhutan Botswana Burkina Faso Central African Rep. Eritrea Guinea Bissou Iraq Kiribati Lesotho Libya Malawi Malta Marshall Islands Micronesia Mongolia Myanmar Namibia Palau Samoa Somalia Swaziland Timor-Lest Tonga Turkemistan Uzbekistan Zimbabwe x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x Current Account x Reserves Assets x Net FDI x External Debt x x x x GER DOTS Country Afghanistan I.R. of Antiqua & Barbuda Bhutan Botswana Burkina Faso Central African Rep. Eritrea Guinea Bissou Iraq Kiribati Lesotho Libya Malawi Malta Marshall Islands Micronesia Mongolia Myanmar Namibia Palau Samoa Somalia Swaziland Timor-Lest Tonga Turkemistan Uzbekistan Zimbabwe x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x CED x x x x GER
An X indicates missing data in each specified category for some or all years over the period 2000-2008.
62
Table 11. Countries Dropped to Zero Due to Normalization

CED (Change in External DebtBalance of Payments) x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x GER (Gross Excluding ReversalsTrade Mispricing) India Iran, I.R. of Iraq Israel Jordan Kenya Kiribati Kuwait Kyrgyz Republic Lao People's Dem.Rep Lesotho Libya Lithuania Madagascar Malawi Maldives Mali Malta Marshall Islands Mauritania Mauritius Micronesia Mongolia Montenegro Morocco Mozambique Myanmar Namibia Nicaragua Niger Pakistan Palau Papua New Guinea Paraguay Peru Philippines Poland Romania Russia Rwanda Samoa x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x CED (Change in External DebtBalance of Payments) x x GER (Gross Excluding ReversalsTrade Mispricing) CED (Change in External DebtBalance of Payments) x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x x GER (Gross Excluding ReversalsTrade Mispricing)
Country Afghanistan, I.R. of Albania Algeria Angola Antigua & Barbuda Azerbaijan, Rep. of Bahamas, The Bahrain, Kingdom of Barbados Belarus Benin Bhutan Bosnia & Herzegovina Botswana Brazil Burkina Faso Burundi Cambodia Cameroon Cape Verde Central African Rep. Chad Chile Congo, Dem. Rep. of Costa Rica Dominica Equatorial Guinea Eritrea Estonia Ethiopia Fiji Gabon Georgia Ghana Grenada Guatemala Guinea Guinea-Bissau Guyana Haiti Honduras
Country
Country So Tom & Prncipe Saudi Arabia Senegal Serbia Serbia & Montenegro Sierra Leone Slovenia Solomon Islands Somalia South Africa Sri Lanka St. Lucia St. Vincent & Grens. Sudan Suriname Swaziland Tanzania Thailand Timor-Leste Togo Tonga Tunisia Turkmenistan Uganda Ukraine Uzbekistan Vanuatu Vietnam Yemen, Republic of Zambia Zimbabwe
An X indicates in which component of the model a country dropped to zero either for some or all years over the period 2000-2008.
63
Table 12. CED and GER Components in Total Illicit Flows from Developing Countries and Regions (millions of U.S. dollars and percent, 2000-2008)
Region Africa-CED Africa-GER CED Percent of Total GER Percent of Total Asia-CED Asia-GER CED Percent of Total GER Percent of Total Europe-CED Europe-GER CED Percent of Total GER Percent of Total MENA-CED MENA-GER CED Percent of Total GER Percent of Total Western HemisphereCED Western HemisphereGER CED Percent of Total GER Percent of Total 2000 8,526.89 2,317.42 78.6 21.4 52,448.58 147,671.43 26.2 73.8 31,094.99 4,348.01 87.7 12.3 44,536.85 2,785.29 94.1 5.9 2001 4,248.22 6,332.70 40.1 59.9 58,229.55 170,063.21 25.5 74.5 38,970.08 11,917.45 76.6 23.4 34,644.15 2,843.96 92.4 7.6 2002 11,253.31 3,257.51 77.6 22.4 6,292.70 183,568.45 3.3 96.7 51,602.08 7,271.01 87.6 12.4 29,639.19 2,609.91 91.9 8.1 2003 22,410.78 3,376.20 86.9 13.1 14,101.48 236,129.28 5.6 94.4 87,250.98 8,530.67 91.1 8.9 100,305.62 2,624.64 97.5 2.5 2004 22,610.11 10,309.60 68.7 31.3 4,310.12 325,568.00 1.3 98.7 104,319.56 16,272.73 86.5 13.5 111,921.56 16,397.09 87.2 12.8 2005 21,729.51 10,693.43 67.0 33.0 37,571.06 365,657.43 9.3 90.7 86,825.18 6,843.31 92.7 7.3 143,509.58 7,974.77 94.7 5.3 2006 19,417.39 17,886.61 52.1 47.9 31,948.74 346,223.57 8.4 91.6 136,458.30 15,990.68 89.5 10.5 219,639.62 8,097.68 96.4 3.6 2007 42,219.77 23,236.05 64.5 35.5 27,825.02 391,472.67 6.6 93.4 242,142.88 8,975.68 96.4 3.6 187,986.20 5,688.26 97.1 2.9 2008 38,909.20 24,876.49 61.0 39.0 49,288.40 445,820.86 10.0 90.0 287,259.03 16,164.65 94.7 5.3 239,956.18 7,534.50 97.0 3.0 Average 21,258.35 11,365.11 66.3 33.7 31,335.07 290,241.66 10.7 89.3 118,435.90 10,701.58 89.2 10.8 123,570.99 6,284.01 94.3 5.7
24,331.45
33,229.37
43,324.84
53,585.71
33,027.90
35,853.79
48,696.54
106,362.27
51,752.32
47,796.02
51,234.89 32.2 67.8
50,419.22 39.7 60.3
47,937.34 47.5 52.5
50,500.43 51.5 48.5
55,793.00 37.2 62.8
66,179.97 35.1 64.9
70,325.73 40.9 59.1
81,374.46 56.7 43.3
102,780.90 33.5 66.5
64,060.66 41.6 58.4
64
A Program of the Center for International Policy

1319 18th Street, NW, Suite 200 | Washington, DC | 20036 Tel. +1 (202) 293-0740 | Fax. +1 (202) 293-1720 | www.gfip.org Director: Raymond Baker, Managing Director: Tom Cardamone Advisory Board: Lord Daniel Brennan (Co-Chair), Krishen Mehta (Co-Chair), Jack Blum, Francis Fukuyama, John Heimann, Ken Jensen, Eva Joly, David Landes, Robert Morgenthau, Moiss Nam, Ngozi Okonjo-Iweala, Thomas Pogge, John Whitehead

Illicit Financial Flows From Developing Countries: 2000-2009 Update With A Focus On Asia

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Illicit Financial Flows from Developing Countries: 2000-2009

Update with a Focus on Asia

Dev Kar and Karly Curcio