The Dark Side of the Global Economy – IMF F&D
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Bibliographic details
- Authors: DAVID LIPTON
- Published: September 1, 2019
Overview
- Acting IMF Managing Director David Lipton discusses the dark side of the global economy and argues that bringing money out of the shadows requires improving governance.
- Global GDP last year was $87 trillion, up from just $11 trillion in 1980.
- The piece highlights how hidden wealth and illicit flows undermine public revenues, trust in government, and the ability to address inequality and poverty.
Key statistics and figures
- $87 trillion — Global GDP last year.
- $11 trillion — Global GDP in 1980.
- $7 trillion — Amount of private wealth estimated to be hidden in offshore financial centers; described as equal to 8 percent of global GDP.
- 8 percent — Share of global GDP represented by the $7 trillion hidden private wealth.
- $1 trillion — The gain in government revenue, by one calculation, that could be achieved by reducing corruption around the world by one-third.
- one-third — Among low-income countries, the share of the budget dedicated to education and health is one-third lower in more corrupt countries.
- nearly two decades — The period over which the IMF has worked closely with national authorities, multilateral bodies, and the private sector to combat money laundering and the financing of terrorism.
- last year — The IMF adopted a comprehensive framework for enhanced engagement on governance (as referenced in the text).
Impacts of hidden wealth and illicit activity
- Drains trillions of dollars from public coffers that could improve people’s lives.
- Reduces government revenues, weakening the capacity to boost growth in advanced economies, build infrastructure in emerging markets, and improve health and education in developing countries.
- Contributes to weakening of trust in government and undermines the ability to address key economic problems like inequality and poverty.
- Increases regulatory and enforcement challenges in the face of digital finance, crypto assets, cybercrime, and the dark web.
IMF response and policy directions
- The IMF has worked to combat money laundering and the financing of terrorism, strengthen fiscal transparency, and confront corruption.
- Emphasis on governance: how countries define and implement economic policies and adhere to the rule of law.
- The IMF adopted a comprehensive framework for enhanced engagement on governance that encompasses functions most relevant to the economy, including:
- tax collection,
- central banking,
- financial sector oversight and market regulation.
- Improving governance requires sustained, long-term effort and joint action among countries and institutions.
Author perspective and conclusion
- The IMF cannot ensure a revival of international cooperation on its own but must prepare for the possibility that countries will rediscover the importance of cooperation; if they do, the Fund can be an invaluable instrument.
- Improving governance is framed as both morally right and practically beneficial, delivering tangible benefits to millions of people.
Acting IMF Managing Director David Lipton, F&D Magazine – September 2019
Content in this bundle
- إجلاء الظلمة
- The Dark Side of the Global Economy – IMF F&D
- Sacar a la luz ● Finanzas y Desarrollo ● Septiembre de 2019
- Mise en lumière
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