Using three different methodologies to calculate the cost of corruption, all three measures indicated that the loss was either $1 trillion or $2 trillion.
In what is called a “trillion dollar scandal,” corrupt business practices, “anonymous shell companies, money laundering and illegal tax evasion” all serve to severely reduce the effectiveness of poverty relief efforts.
While extreme poverty has been reduced to half its original level over the past 20 years and has the potential to be completely eradicated by 2030, corruption is putting much of that progress at risk.
While corruption is damaging in almost all countries, it is especially dangerous in poorer and developing countries and mostly affects children. It is estimated that millions of deaths could be avoided if corruption was combated and recovered funds were reinvested in essential fields.
Furthermore, the money that is siphoned out of poor countries is not from international development aid, which has helped make a considerable improvement, but rather directly from businesses in these countries. The money is generated by domestic businesses and illegally extracted out of the country. The largest source of financial drain is the illegal manipulation of cross-border trade.
The organization found that even recovering a small amount of the money lost to corruption could dramatically affect development. In Sub-Saharan Africa, a small amount of recovered funds could provide an education to an additional 10 million children each year; pay for an additional 500,000 primary school teachers; provide antiretroviral drugs for more 11 million people with HIV/AIDS and buy nearly 165 million vaccines.
The report stresses action that serves to end the secrecy that allows corruption to thrive. If specific policies were implemented that increased transparency and combated corruption in the four areas of “natural resource deals, the use of phantom firms, tax evasion and money laundering,” developing countries could considerably stem the financial drain.
Natural resources in particular can provide a vital source of funds that could greatly increase economic growth in many developing countries. Corruption concerning natural resources is particularly bad, with approximately 20 countries in Sub-Saharan Africa rich in natural resources but receiving few benefits from these reserves.
Specifically, One calls for mandatory reporting laws for the natural resource sectors and publish open data so citizens are able to track where travels from and to, ensuring that the funds are not lost to corruption.
Published in anticipation of the G20 meeting in Brisbane, Australia in November, the organization stresses the importance for the G20 nations to address the issue. Now that the cost of corruption has been defined in real terms, the fight against corruption can become more directed and effective.
— William Ying