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In this exclusive interview, we speak to Raymond Baker (Director of the Task Force on Financial Integrity and Economic Development). We discuss the true scale of the global illicit economy and understand…
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For the societies themselves, this activity drains hard currency reserves, heightens inflation, reduces tax collection, curtails government service and undermines investment. There is no good accomplished by this massive outflow of resources.
— Raymond BakerWe estimate that in talking about the cross-border flows of illicit money the component that is due to corruption- i.e. bribery and theft by government officials, is around 3-5% of the global total. It is very much the smaller part of the equation.
— Raymond BakerWe measure these flows entirely based on data filed by governments at the World Bank and the IMF. We apply two very established economic models. One is the World Bank's residual method, and the other is the IMF Direction of Trade statistical approach. These models have been used by economists for decades but we were the first group to apply these models to all developing countries.
— Raymond BakerWe're talking about massive amounts of money that have been shifted from poorer countries to richer ones. Almost all of this constitutes a permanent outward transfer. In our estimate, only about 10-20% of global illicit money ever finds its way back into the country of origin.
— Raymond BakerIf you look at the decade which ended in 2009, our estimate is around US$8 trillion. As previously mentioned, we believe this is a very conservative estimate because there are major parts of illicit flows that are not included in that figure.
— Raymond BakerWe measure these flows entirely based on data filed by governments at the World Bank and the IMF. We apply two very established economic models. One is the World Bank's residual method, and the other is the IMF Direction of Trade statistical approach. These models have been used by economists for decades but we were the first group to apply these models to all developing countries.
— Raymond BakerThese models depend entirely on government statistics. They automatically leave out many forms of illicit money such as drug trading, human trafficking, some forms of trade mispricing and so forth. That is why we feel our estimates are very conservative.
— Raymond BakerMore conversations
