Working Paper
Capital flight and development

This paper offers a critical review of the methods used to estimate the extent of capital flight and illicit financial flows from developing countries.

The largest estimates in the literature are based on imperfect methods with a great margin for error. Emerging new studies have built on approaches that successfully isolate missing capital flows and wealth and attempt to address the causal impact of tax rates on capital flows.

The results from these studies indicate that the extent of capital flight from developing countries, while smaller than in earlier estimates, is still a cause for concern.