Illicit Financial Flows: Another Road Block to Human Development in Low- and Middle-Income Countries.

Abstract

This article analysed the relationship between illicit inancial lows (IFFs) and human development, as measured with the United Nations Human Development Index (HDI), using data for 56 low- and middle-income countries for the period 2002–2013. The main result was that, in the cluster of the most corrupt countries, the total efect of an annual 10% point increase in the ratio of IFFs to total trade would imply a 21.7 points decrease in the HDI level as a long-run efect. Although apparently small, this estimated long-run efect is three times greater than the annual average increase observed in the HDI over the period for the entire sample of countries.