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

Author

Listed:
  • Bienvenido Ortega

    (Universidad de Málaga)

  • Jesús Sanjuán

    (Universidad de Málaga)

  • Antonio Casquero

    (Universidad de Málaga)

Abstract

This article analysed the relationship between illicit financial flows (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 effect 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 effect. Although apparently small, this estimated long-run effect is three times greater than the annual average increase observed in the HDI over the period for the entire sample of countries.

Suggested Citation

  • Bienvenido Ortega & Jesús Sanjuán & Antonio Casquero, 2019. "Illicit Financial Flows: Another Road Block to Human Development in Low- and Middle-Income Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 142(3), pages 1231-1253, April.
    • Handle: RePEc:spr:soinre:v:142:y:2019:i:3:d:10.1007_s11205-018-1942-z
    DOI: 10.1007/s11205-018-1942-z
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    More about this item

    Keywords

    Illicit financial flows; Human Development Index; Low- and middle-income countries; Panel data analysis;
    All these keywords.

    JEL classification:

    • F65 - International Economics - - Economic Impacts of Globalization - - - Finance
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration

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