Legal loop-holes of financial transactions cause substantial losses of revenues for the developing countries

Illicit financial flows in commodity trading across borders cause significant harm to national economies across the world. Developing countries should earn a fair amount for their natural resources. Opaque transfers of capital reduce the prospects of a sustainable development in resource-rich countries.

Researchers detected abnormal under-evaluation of coffee exported from Laos. Estimates for underprized coffee exports range around 20 percent. The example of Ghanaian gold shows that exports are not assayed correctly. The comparison of globally aggregated export data with import data into Switzerland from the Swiss customs show substantial differences. New estimation techniques on transaction level data now allows for a more explicit quantification of illicit financial flows.Specialised training to customs authorities is recommended as a way to curb illicit financial flows.

The r4d project Illicit Financial Flows (IFFs) draws on economics, law and political science to analyse how curbing commodity-trade related flows can be reduced. The main focus lies on trade mispricing and abusive transfer pricing. These IFF channels have been highlighted as a major cause of tax-base erosion in developing countries whose budgets largely depend on commodity export revenue.

This video-clip was produced as part of the r4d Digital Storytellers synthesis project. Its contents were filmed and selected by Siddhant Marur, Angela Alu and Vanxay Sayavong, Graduate Institute Geneva and Geneva Academy, Switzerland, in collaboration with local partners in Laos and Ghana. The digital storytelling process was accompanied and supported by Paititi Lab.Watch on YouTube.