Illicit Activity and Money Laundering from an Economic Growth Perspective : A Model and an Application to Colombia

Villa, Edgar ; Misas, Martha A. ; Loayza, Norman V.

World Bank, Washington, DC

关键词: RISKS;    CAPITAL MARKETS;    UNEMPLOYMENT RATES;    TOTAL INVESTMENT;    FOREIGN CAPITAL;   

DOI  :  10.1596/1813-9450-7578
RP-ID  :  WPS7578

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

This paper contributes to the economicanalysis of illicit activities and money laundering. First,it presents a theoretical model of long-run growth thatexplicitly considers illicit workers, activities, andincome, alongside a licit private sector and a functioninggovernment. Second, it generates estimates of the size ofillicit income and provides simulated and econometricestimates of the volume of laundered assets in the Colombianeconomy. In the model, the licit sector operates in aperfectly competitive environment and produces a licit goodthrough a standard neoclassical production function. Theillicit sector operates in an imperfectly competitiveenvironment and is composed of two different activities: Thefirst activity produces an illicit good that nonetheless isvaluable in the market (for example illicit drugs); thesecond does not add value to the economy but onlyredistributes wealth (for example robbery, kidnapping, andfraud). The paper provides a series of comparative staticsexercises to assess the effects of changes in governmentefficiency, licit sector productivity, and illicit drugprices. From the model, the analysis derives a set ofestimable macroeconometric equations to measure the size oflaundered assets in the Colombian economy in the period 1985to 2013. The paper assembles a data set whose key componentsare estimates of illicit income from drug trafficking andcommon crime. Illicit incomes increased drastically until2001, reaching a peak of nearly 12 percent of gross domesticproduct and then decreasing to less than 2 percent by 2013.The decline overlaps not only in a period of high economicgrowth, but also after the implementation of Plan Colombia.The data set is used to estimate the volume of launderedassets in the economy by applying the Kalman filter for theestimation of unobserved dynamic variables onto the derivedmacroeconometric equations from the model. The findings showthat the volume of laundered assets increased from about 8percent of gross domestic product in the mid-1980s to a peakof 14 percent by 2002, and declined to 8 percent in 2013.