Draining Development? Controlling Flows of Illicit Funds from Developing Countries
Peter Reuter, editor.
(Washington, DC: World Bank, 2012), 531 pages.

News breaks that a developing nation’s budget seems to contain statistical anomalies, with large funds reported missing or unaccounted for. The government’s official position is inconsistent, and high-ranking officials are suspected of corruption. The international community takes notice but lacks the mechanisms required for corrective justice. The country and its people limp towards progress. Even if this is a story all too familiar in the back pages of the Wall Street Journal it is still a phenomenon that has received too little academic attention.

Draining Development? seeks to fill this void by representing a significant collection of analytic papers on illicit financial flows. Commissioned by the World Bank at the request of the Norwegian government and edited by Peter Reuter, the book compiles new empirical and conceptual insights on the composition of illicit monetary flows, the processes that generate them, the sustaining and facilitating role played by tax havens, and the effectiveness of attempts made at prevention and recovery. Substantively, papers in the book cover government corruption, tax evasion and havens, cross border profit sharing, money laundering, human trafficking, transfer price manipulation, and antimoney laundering regulatory schemes.

While books that rely on academic compilations can often feel disjointed, here the editor does a tremendous job of presenting the material in ways that allow consistent themes to develop in the reader’s mind. Taken in its totality, Draining Development? echoes a consistent, persuasive argument: the phenomenon of illicit capital flows is impeding developing and transitional nations and, consequently, the welfare of their people. Furthermore, the international community has yet to successfully deploy the organization and interlocking tools necessary to fully combat the causes and effects of such illicit flows.

But which area poses a greater problem, the flows themselves or the social and political structures that created them? Which areas should laws and policies primarily target? The editor suggests a research path to clarify these complex questions. In doing so, Draining Development? serves as the cornerstone of much needed attention and discourse on this subject.