Achieving the Sustainable Development Goals (SDGs) by 2030 requires developing countries to mobilize greater domestic resources to finance and implement the Goals. A promising avenue to strengthen their tax base is to effectively reduce illicit financial flows (IFFs). ‘Guesstimates’ tend to highlight that the volume of IFFs from developing countries is considerable. Yet, there is a significant lack of rigorous scientific studies on IFFs. Research to date – conducted primarily by think tanks and advocacy groups – suffers from various data and methodological flaws.
Even if the available data does not allow to measure the phenomenon in a rigorous manner, the few scholarly work to date highlight that trade mispricing and abusive transfer pricing account for a majority of IFFs. Identifying and addressing the specific incentives and regulatory dynamics that influence trade-related IFFs is thus critical to address tax base erosion, which is a precondition to generate additional resources that can be channeled to finance the SDGs.
In this context, the project awarded to Prof. Carbonnier seeks to improve our collective knowledge and understanding of commodity trade-related IFFs, and to design and promote ways to effectively address this under-researched phenomenon both from a scientific and policy perspective. This interdisciplinary research project is conducted in the framework of a North-South research partnership, further supported by an international group of policymakers and experts with in-depth knowledge of commodity trading and IFFs.