Viewpoint: Dirty Money and Development
Thursday, January 8, 2015
The world has made enormous progress in recent decades in the fight against poverty. But, as 2014 ended, one billion people—one in seven—still lived on less than $1.25 a day.
It will take a global effort to end poverty—and to find the resources to do so. At first glance, the price tag is staggering. We know that development aid will not be sufficient to end poverty. It will take private sector investment, taxes collected in developing countries, and other sources of finance to do the job.
The truth is that there is enough money in the world to get it done. One unexpected source of wealth that could play a large role is the world’s huge supply of dirty money: multinational companies’ undeclared profits, the proceeds of corruption, and the earnings of traffickers of drugs, weapons, and people—all of which is stashed away in offshore bank accounts, companies, and trusts.
Reliable numbers about the amount of dirty money around the world are difficult to come by. But according to an estimate by the non profit Global Financial Integrity group, $1 trillion vanishes from the developing world’s economies every year. That is money that is badly needed for development.
This is also roughly the amount needed to fill the vast infrastructure gap that is preventing the world from addressing critical developmental challenges—from rapid urbanization to climate change and job creation. Today, developing and emerging countries invest about $1 trillion a year in infrastructure. They need an additional $1 trillion a year to close the gap, a necessary step to ending extreme poverty by 2030.