Two economists closely involved in the process to develop UN indicators of illicit financial flows (IFFs) have written a critical survey of the existing data and methodologies for estimating IFFs, identifying the most promising avenues for future improvement and setting out their own proposals.
Estimating Illicit Financial Flows: A Critical Guide to the Data, Methodologies, and Findings by Alex Cobham and Petr Janský is published with open access by Oxford University Press.
Three part book
The book comprises three parts, the first discussing the rise and evolution of IFFs, the differences between tax-abusive and market-abusive IFFs and the difficulties of tracking financial flows that are deliberately hidden from view.
The second part provides a survey of the extensive literature on estimation and measurement of illicit flows, which the authors say as well as underpinning their proposals, is intended to provide a standing resource for researchers, students, policymakers and activists on the relative merits and reliability of different approaches to key elements of IFFs.
In the third part the authors look beyond the current estimates of IFFs and set out various alternatives, including their proposed new, direct measures of scale for use as Sustainable Development Goal (SDG) indicators.
Alternative IFF indicators
The authors consider alternative IFF indicators and evaluate the exposure of different countries to IFF-facilitating secrecy elsewhere.
No method is perfect because, by definition, tax evaded cannot be counted the authors conclude.
It is partly for that reason they say that policymakers are sometimes reluctant to take action and instead blame methodological difficulties for criticising estimates.
Estimating Illicit Financial Flows: A Critical Guide to the Data, Methodologies, and Findings is published online here.
Categories: Trade Based Financial crimes News