The global economy for illicit goods and services is growing at an “unprecedented” rate, one that poses a risk to worldwide economic growth, new research says.
The illicit economy, which includes drug and sex trafficking, as well as the counterfeiting of money, grew from $650 billion in 2011 to $1.77 trillion in 2015, according to the World Economic Forum.
And that doesn’t even take into account money taken from the legitimate economy by corrupt governments, Sarah Chayes, a senior associate of Carnegie Endowment for International Peace, told VOA Khmer.
“One category that often gets missed is corrupt government officials,” she said. “There is a huge amount of money that is being pillaged from countries by their own governing officials, and that money often isn’t included in the listing of illicit financial flow,” she added.
In its “State of the Illicit Economy” report, released in October 2015, the World Economic Forum ranks human trafficking as the third most profitable illicit economy.
Every year, more than 20 million people are trafficked for labor and sexual exploitation, Chum Phally, a labor trafficking technical advisory at Winrock, told VOA Khmer. “In Cambodia alone, the scope of human trafficking is huge, given increasing population migration for work abroad, in most cases illegally,” he said. The risks associated with illegal migration often leads to human trafficking, he said.
There are also growing numbers of companies that are registered in the names of people who are not really the beneficiary of those companies, and also those who carry “trade misinvoicing” allowing illicit capital to flow out of the country of origin.
Fighting the illicit economy is “a work in progress,” Chayes said. “What you have seen the last couple years has been a tightening of banking regulation in a lot of countries,” she said, though money laundering still remains a major problem.
The World Economic Forum report recommends strategies to build an international regulatory regime, law enforcement of international protocols and agreements in trade, and harnessing technology to eradicate the illicit economy.