PhD defence Nibontenin Yeo

 
Nibontenin Yeo 
CERDI, Université Clermont Auvergne
Ministère du Budget et du Portefeuille de l'État (MBPE), Côte d'Ivoire

Examiners

Michaël Goujon, Professor, Université Clermont Auvergne
Delphine Lahet, Professor, Université de Bordeaux
Yao Séraphin Prao, Associate Professor, Université Alassane Ouattara
Bernard Salome, Docteur, Université Paris-Sorbonne
N’Galadjo Bamba Lambert, Associate Professor, Université Felix Houphouët Boigny
Emmanuel Aka Brou, Professor, Université Félix Houphouët Boigny

Abstract

The 2030 Agenda for Sustainable Development, in its Target 16.4 call for significant curbing in illicit financial flows and arms flows, as well as the recovery of stolen assets and combating organized crime[1]. Over the years, developing countries have been suffering loss of a large amount of resources compromising their economic performance and the financing of key investments programs. Therefore, efforts have been made at both the global and domestic level to significantly reduce financial crime and better control their adverse effects in the developing world.

The thesis set out to scrutinize the effectiveness of anti-illicit financial flows (IFFs) policies in fostering economic stability and mobilizing resources in developing countries. Spanning several policy frameworks and tools, from international agreements to national regulations, the study aimed to unearth the multifaceted impacts these policies have on curbing IFFs.

Chapter 1 revisits the effectiveness of blacklisting as a policy tool for enhancing cooperation and compliance with anti-money laundering and counter-financing of terrorism (AML/CFT) standards. It examines the changes in illicit financial activities following blacklisting efforts. Tax evasion and money laundering have emerged as significant contributors to illicit financial flows (IFFs) in developing countries. Shell corporations often channel foreign capital flows, driven by harmful tax practices rather than genuine economic activities, resulting in revenue losses for these countries. Despite the implementation of coercive measures, such as the blacklisting of non-cooperative jurisdictions, illicit financial activities continue to erode the tax base in developing countries. This chapter applies a propensity score matching (PSM) strategy to a sample of 118 developing jurisdictions over the period from 2009 to 2017 to assess changes in illicit financial activities post-blacklisting. Contrary to expectations, financial restrictions have often resulted in an inverse effect, exacerbating financial crime activities—a phenomenon known as the boomerang effect. The illicit share in capital inflows has increased on average by six percentage points and by 0.7% of GDP following blacklisting. These findings are consistent across alternative matching methods and account for potential hidden biases. We discuss three main points: firstly, blacklists may inadvertently inform tax evaders and money launderers about the most favorable destinations for their activities; secondly, blacklisting can weaken jurisdictions lacking robust regulatory infrastructures, increasing their vulnerability to IFFs; finally, we recommend that the global financial community enhance cooperation with blacklisted countries by providing technical assistance in tax administration, resource mobilization, and technology updates to meet FATF’s AML/CFT standards.

Chapter 2 assesses the effect of bilateral information exchange agreements on illicit financial outflows. Despite increased cooperation among jurisdictions to combat IFFs, these flows have intensified and become a major concern, particularly for developing countries experiencing significant outflows. Using a novel non-parametric Difference-in-Differences approach with multiple time periods and controlling for correlates of IFFs, we evaluate the causal effect of these agreements on illicit financial outflows in a sample of 88 developing countries from 2004 to 2013. Our findings indicate that cooperation effectively reduces illicit outflows, but this effect only materializes after at least three years of implementation.

Chapter 3 explores the dual effects of digitalization on financial crimes and resource mobilization in Africa. By analyzing data from 30 African countries over the period from 1995 to 2018, this study provides valuable insights into how IFFs affect the dynamics of tax revenue mobilization, conditional on information and communication technology (ICT) development. Using a panel data methodology, we find that tax revenue is negatively impacted by IFFs. However, the integration of digital technology mitigates the adverse effects of financial crimes on tax revenue collection. For instance, in scenarios excluding digital technology, capital flight negatively impacts corporate income tax (CIT), which drops by -0.046. Conversely, with technological advancements, the combined effects of ICT and capital flight on CIT turn positive, reaching 0.224. We argue that high digital penetration could serve as a viable alternative to combat illicit capital outflows and thereby enhance tax revenue mobilization.

Chapter 4 revisits the role of capital controls and institutional quality in mitigating the impact of capital flight on key macroeconomic variables. We employ an interacted panel VAR methodology to address several technical issues, including endogeneity, and to capture the effects of shocks and varying stances of capital account policies and governance quality simultaneously. The results suggest that while capital controls have a limited ability to reduce the shocks of capital flight and promote macroeconomic stability, they yield better results when the institutional framework is strong. This highlights the catalytic role of governance in enhancing the effectiveness of capital controls. The implications of these results are twofold: first, they validate the use of capital controls as a stabilizer against the spillover effects of capital flight that undermine the domestic macroeconomic framework; second, they suggest that developing countries should combine capital controls with improved institutional quality to achieve more effective capital account policies.

theses.fr/s363667