THIS ISSUE OF Finance & Development reminds me of a Su parable. A
woman sees a mystic searc hing for something outside his door. “What
have you lost?” she asks. “My key,” he responds. So they both kneel down
to look for it. “Where exactly did you drop it?” she ask s. “In my house,”
he replies. “en why are you looking here?” “Becau se there is more light.”
e lesson: we all search for a nswers where it is easiest to look.
at is why we decided to shine a spotlight on the da rk web of secret
transactions t hat enable tax evasion and avoidance, money laundering,
illicit nancial ows, and corruption.
Consider these estimates: bribes to the tune of $1.5–$2 trillion change
hands every yea r. Tax evasion costs governments more than $3 trillion a
year, and countless more is lost through other il licit activities. is is money
that could go for health ca re, education, and infrast ructure for millions
worldwide. But the cost to society is far g reater: corruption distorts incen-
tives and undermines public trust in institutions. It is the root of many
economic injustices young men and women suer ever y day.
e best disinfectant is sunlight. Paolo Mauro and others explore how
countries can put in place accountable institutions, improve government
budget transparenc y, and exchange nancial in formation across borders.
Jay Purcell and Ivana Rossi propose ways to resolve the tension bet ween the
need for transparency a nd the right to privacy. And Aditi Kumar and Eric
Rosenbach argue for closer cooperation a mong law enforcement, nancial
institutions, and regulators.
ese hidden transactions are not one nation’s problem nor within one
nation’s power to resolve. Tackling the problem requires strong domestic
policies and cross-border collaboration. e payo wil l be myriad other
political, economic, and socia l benets, not least reducing inequality.
All the more reason to shed lig ht on the dark corners of the world economy.
GITA BHATT, editor-in-chief
ON THE COVER
Vast sums are diverted to tax shelters, corrupt officials, and criminal enterprises, but we
have only a vague notion of how this plays out. September’s cover features illustrator
John Cuneo’s take on the funneling of money to the global economy’s hidden corners.
2 FINANCE & DEVELOPMENT | September 2019
FINANCE & DEVELOPMENT
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