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How Dirty Money Thwarts Capitalism’s True Course

Jennifer Nordin
Raymond Baker

If smuggling drugs across borders is bad, is smuggling profits across borders through abusive transfer pricing also bad? If tax evasion out of one country is harmful, is the inflow of tax-evading money into another also harmful? If money laundering by terrorists is dangerous, is the use of similar techniques by companies also dangerous?

More than at any time in capitalism’s history, our economic system is beset by the tension between what is legal, what is ethical and what serves the common good. This tension points to a fundamental question: which should come first for the global capitalist – maximising profits or pursuing lawful and just business transactions?

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How Dirty Money Binds the Poor

Jennifer Nordin
Raymond Baker

The World Bank in its 2005 World Development Report issued last month calls for governments to promote a “better investment climate” in the developing world and implores the international community to remove trade barriers and offer more aid. “A good investment climate”, it declares, “plays a central role in growth and poverty reduction.” All nice words, but the bank overlooks the shadowy underside of the global economy that conspires to keep poor countries in their place.

For more than 50 years, the World Bank has committed billions of dollars and the brain power of some of the brightest economists to fighting poverty, and yet outright success has been elusive. Even among World Bank staffers, there is a sense that something is missing that might explain the mystery of why so much development aid has done so little good.

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