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GTAP Resources: Resource Display

GTAP Resource #4192

"Illicit Financial Flows from Africa through Trade Mispricing and assessing their incidence on African economies"
by Mevel, Simon, Siope Vakataki 'Ofa and Stephen Karingi

Capital flights from developing countries have increased tremendously in the last decade and a large portion of these flows occurs via illicit means.

Illicit financial flows (IFF) can usually be broken down into three main components: 1) Corruption, which is the proceeds from theft and bribery by government officials; 2) Proceeds from criminal activities, including drug trading, racketeering, counterfeiting, contraband, and terrorist financing; 3) Proceeds from commercial tax evasion mainly through trade mis-pricing and laundered commercial transactions by multinational corporations (MNCs) (UNECA, 2012).

This presentation presents a revisited methodology to estimate IFF through trade mis-pricing from Africa at the sector level. Detailed results from the application of the methodology are also provided and discussed. These are complemented by a Computable General Equilibrium analysis aiming at assessing the economic impacts on African economies from a possible return of IFF losses into Africa.
Results indicate that the massive amount of financial resources illegally lost by Africa are in fact highly concentrated in a few countries and sectors –essentially extractive and mining industries– and benefit to a handful of countries. Moreover, losses associated to IFF seem hardly reversible suggesting the adopting of effective frameworks to prevent them in the first place.

Keywords: Illicit financial flows, Trade mis-pricing, Under-invoicing, Over-invoicing, International Income Transfer, Computable General Equilibrium model, African trade policies

Resource Details (Export Citation) GTAP Keywords
Category: 2013 Conference Paper
Status: Published
By/In: Presented at the 16th Annual Conference on Global Economic Analysis, Shanghai, China
Date: 2013
Created: Mevel, S. (4/15/2013)
Updated: Batta, G. (6/24/2013)
Visits: 1,335
- Dynamic modeling
- Economic development
- Domestic policy analysis
- Other data bases and data issues
- The GTAP Data Base and extensions
- Africa (Central)
- Africa (East)
- Africa (North)
- Africa (Southern)
- Africa (West)

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