Literature review on the linkages between illicit economy and corruption

This Anti-Corruption Helpdesk brief was produced in response to a query from a U4 Partner Agency. The U4 Helpdesk is operated by Transparency International in collaboration with the U4 Anti-Corruption Resource Centre based at the Chr. Michelsen Institute.

Query

Can you please provide a review of the literature on the linkages between illicit economic activity (specifically: people trafficking, narcotics, illicit financial flows, and illicit trade in minerals and manufactured goods) and corruption/institutional weakness?

Content

1. Shadow economy and corruption
2. Illicit financial flows and corruption
3. Organised crime, trafficking and corruption
4. Illegal natural resource exploitation and corruption

Summary

There is consensus in the literature on the reciprocal causality of illicit economic activities and corruption. The prevalence of an underground economy and illicit financial flows and the intrinsic opacity of such activities create a fertile ground for corruption to thrive. Corruption is in turn an enabling factor for illicit
economic activities. This becomes a vicious cycle, with illicit trade damaging the state structure and legitimate economy, then using these conditions to facilitate more trafficking and laundering of dirty money.

This helpdesk answer presents a selection of recent publications examining the linkages between corruption and the shadow economy, illicit financial flows, organised crime and trafficking as well as illicit exploitation of natural resources.

Authors

Reviewers

Date

01/11/2013

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