- Title
- The primacy of illicit financial flows (IFFs) in developing countries: a comparative study analysis of South Africa and China
- Creator
- Mahlaba, Asande Cikizwa
- ThesisAdvisor
- Fryer, David
- Subject
- Money -- Developing countries
- Subject
- Transfer pricing -- South Africa
- Subject
- Developing countries -- Economic conditions
- Subject
- Tax evasion -- China
- Subject
- Tax evasion -- South Africa
- Date
- 2020
- Type
- text
- Type
- Thesis
- Type
- Masters
- Type
- MCom
- Identifier
- http://hdl.handle.net/10962/147435
- Identifier
- vital:38636
- Description
- The main objective of this study was to question and investigate the primacy of illicit financial flows (IFFs) in developing countries, specifically focused on two countries namely China and South Africa. Africa is estimated to have lost approximately $1 trillion to IFFs over the last 50 years, which exceeds the financial assistance that these nations needed over the same period. For years. Africa has been the feeding ground for exploitation and resource plunder, and the narrative has always been Africa is underdeveloped because of this crime. Although this statement holds true in most African countries, what this paper seeks to do is to question whether capital flight, IFFs and more specifically tax evasion and tax haven activity are the reason for the deterioration of African economies or are IFFs perpetuated by economies with unsustainable growth paths. IFFs are an important factor when it comes to obstacles of economic growth. But are they the cause or effect? A very strong case can be made that they are the latter however, it is beyond the scope of this article to resolve this question. Its purpose is merely to assert that the question is a valid one and that presuming the answer could divert attention from the real question of economic development. This study contextualized the way in which IFFs are currently viewed in the world economic system according to the two approaches to development finance, and discussed modern monetary theory as an extension off these theories. Due to the nature of the study, the methodology employed is a case study approach between China and South Africa by means of extensive numerical and document analysis. Upon conducting this analysis on the primacy of illicit financial flows in developing countries there was difficulty in measuring IFFs. The reason for this is because IFFs have a range of estimates so it was very difficult to produce precise and accurate results. The key findings of this paper were that there seems to be some kind of parallel between developing countries with large volumes of illicit financial outflows, and a dependency these countries have on external debt. This means it seems that weak economies, that are highly dependent on external debt and have large amounts of this debt, seem to have the largest volumes of illicit financial outflows. Weak regulation, high levels of debt and liberalised trade markets seem to be contributing factors to the degree to which companies evade taxes and partake in tax haven activity in these regions. Another key finding was that in 2012, despite China being ranked number one in the the countries which have the largest amounts of outflows on average, it still managed to achieve large amounts growth in the last 20 years. Indicating that there is some form of indication that IFFs could be viewed as symptomatic of weak financial systems and weak economies, instead of IFFs being the core of the problem.
- Format
- 83 pages, pdf
- Publisher
- Rhodes University, Faculty of Commerce, Economics and Economic History
- Language
- English
- Rights
- Mahlaba, Asande Cikizwa
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| Thumbnail | File | Description | Size | Format | |||
|---|---|---|---|---|---|---|---|
| View Details | SOURCE1 | MAHLABA-MCOM-TR20-369.pdf | 771 KB | Adobe Acrobat PDF | View Details |