Assorted- mostly economics
The work is the fruits of three economists. Two — Jørgen Juel Andersen of BI Norwegian Business School and Niels Johannesen of the University of Copenhagen and CEBI — have in recent years looked at where oil wealth goes (surprise: usually into bank accounts in financial havens). The final contributor is the World Bank’s Bob Rijkers.
The paper indicates that aid may well flow in the same way as petrodollars — into the pockets of the elites in the recipient country and not to those that it is meant to help. Ironically, this finding is reached through the use of the World Bank’s project database.
The research uses quarterly information on aid disbursements from the World Bank, covering the 22 most aid-dependent countries, in combination with Bank for International Settlements banking statistics, which cover the flows between the country receiving the aid and havens such as Switzerland, Luxembourg, the Cayman Islands and Singapore, where secrecy and asset protection are paramount. For comparison, the research also looks at flows between the recipient country and Germany, France and Sweden — places not as vaunted for their banking secrecy. Scenarios that you would expect to lead to higher inflows and outflows, such as wars or financial crises, are excluded.
In a quarter where a country receives aid equivalent to 1 per cent of GDP, its deposits in havens increase by more than 3 per cent relative to a country receiving no aid; there is no increase in deposits held in non-havens. This, on average, means 7.5 per cent of aid is “leaked”.
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