Transnational Crime and the Developing World

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For many developing countries, the abundance of natural resources, such as minerals, crude oil, and/ or timber, is impeding development and increasing income inequality, due in part to high levels of corruption and weak rule of law. These are public goods that should benefit the many, yet they are being stolen for the private gain of a few. The control of natural resources, such as diamonds, timber, or narcotics, can lead to conflict when illicit networks perceive potential financial benefit. 433 Very rarely do the revenues from transnational crime have any long-term benefit to citizens, communities, or economies of developing countries. It is time to take the fight against the criminals and these illicit networks to their wallets and bank accounts. 433 Paul Collier and Anke Hoeffler, “Greed and Grievance in Civil War,” Oxford Economic Papers 56 (2004): 587–89. Global Financial Integrity 100
Appendix: Methodology This appendix is intended to provide both an explanation of methodology for calculations as well as sources that did not fit into their respective chapters. The appendix contains information for six transnational criminal markets: drug trafficking, trafficking of small arms and light weapons (SALW), the illegal organ trade, trafficking in cultural property, the illegal wildlife trade, and illegal, unreported, and unregulated fishing. For all goods, the appropriate rates of exchange for prices not originally quoted in U.S. dollars (US$) are calculated based on the date the source was published using the International Monetary Fund’s (IMF) Exchange Rate Archives. 434 If the currency is not provided by the IMF, then exchange rate data from the country’s central bank is used. A. Drug Trafficking This section outlines the methodology for calculating the global market and submarket values for drug trafficking. Two methods were used to arrive at these market values, one working forward and the other backward. Both methods use simple economic techniques and do not take into account market factors such as changes in demand and supply. 1. Global Drug Market Values: Rate of Inflation Working forward, the rate of inflation was applied to the last submarket estimates produced by the United Nations Office on Drugs and Crime (UNODC), the sum of which provided the updated global market value. Appendix Table A. Inflation Adjusted Value of Global Drug Market, 2014 (US$) Submarket Last Estimate 2014 Estimate Year Value Inflation Value Rounded Cannabis 435 2003 $141.9 billion 28.66% $182,569,773,913 $183 billion Cocaine 436 2009 $85 billion 10.35% $93,795,289,391 $94 billion Opiates 437 2009 $68 billion 10.35% $75,036,289,391 $75 billion ATS 438 2006 $63.4 billion 17.43% $74,449,714,286 $74 billion Total . . . $426 billion Sources: UNODC; US Inflation Calculator 439 2. Global Drug Market Values: Global GDP Working backward, the value of the global illicit drug market to world gross domestic product (GDP) was used. The UNODC estimated that the global drug market was worth US$320 billion in 2003, equivalent to approximately 0.8 percent of global GDP. 440 Assuming that the global market still represents the same percentage of global GDP, the illicit global drug market would be worth US$651 billion in 2014. 441 The individual submarket values were determined by assuming that these markets grew at the same rate as 434 If the exact date is not listed in the archives, then the closest prior date is used. “Exchange Rate Archives by Month,” International Monetary Fund, accessed February 21, 2017, https://www.imf.org/external/np/fin/data/param_rms_mth.aspx. 435 United Nations Office on Drugs and Crime, World Drug Report 2005 (Vienna: United Nations Office on Drugs and Crime, 2005), 17, http://www. unodc.org/pdf/WDR_2005/volume_1_web.pdf. 436 United Nations Office on Drugs and Crime, World Drug Report 2011 (Vienna: United Nations Office on Drugs and Crime, 2011), 17, http://www. unodc.org/documents/data-and-analysis/WDR2011/World_Drug_Report_2011_ebook.pdf. 437 Ibid., 16. 438 United Nations Office on Drugs and Crime, Amphetamines and Ecstasy: 2008 Global ATS Assessment (Vienna: United Nations Office on Drugs and Crime, 2008), 12, https://www.unodc.org/documents/scientific/ATS/Global-ATS-Assessment-2008-Web.pdf. 439 “Consumer Price Index Data from 1913 to 2016,” US Inflation Calculator, September 16, 2016, http://www.usinflationcalculator.com/inflation/ consumer-price-index-and-annual-percent-changes-from-1913-to-2008/. 440 The UNODC’s World Drug Report 2005 states that the global illicit drug market is worth 0.9 percent of global GDP at the retail level, however updated GDP figures from the World Bank show it to actually be 0.83 percent. United Nations Office on Drugs and Crime, World Drug Report 2005, 127. 441 The value of the global illicit drug market in 2014 (US$651 billion) based on the rate of growth does not match the total value shown in Table B due to rounding of the individual submarket values. Transnational Crime and the Developing World 101
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Transnational Crime and the Develop
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Transnational Crime and the Develop
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Global Financial Integrity is pleas
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Contents Glossary..................
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Appendix Table E. Estimated Value o
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Glossary ACT AML ATS Avg. BACRIM BP
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Executive Summary Overview Transnat
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Illegal, Unreported, and Unregulate
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I. Introduction The aim of this rep
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II. Drug Trafficking A. Overview Th
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done throughout the year, increasin
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market is primarily supplied domest
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legitimate work. Money laundering i
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easily accessible, with some being
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III. Trafficking of Small Arms and
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Table E. Price vs. Distance: The We
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on Drugs and Crime (UNODC) show tha
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eactivated handgun that had been so
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IV. Human Trafficking A. Overview H
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Human trafficking and human smuggli
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up deposits) to avoid currency repo
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and it has used some others as suic
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V. Illegal Organ Trade A. Overview
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developed countries is US$20,000, w
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E. Recent Developments The consider
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VI. The Illicit Trade in Cultural P
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or illicit transactions can get bur
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trafficking transactions, providing
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Paying ransom demands, as well as t
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VII. Counterfeit and Pirated Goods
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and pirated goods come from China.
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Box 2. Pharmaceutical Crime Counter
Page 65 and 66: Figure IV. Terrorist Financing and
Page 67 and 68: F. Summary With an estimated US$923
Page 69 and 70: VIII. Illegal Wildlife Trade A. Ove
Page 71 and 72: Table R. Poacher vs. Consumer Price
Page 73 and 74: Community-based ecotourism is a pow
Page 75 and 76: was traditionally seen as a conserv
Page 77 and 78: IX. Illegal, Unreported, and Unregu
Page 79 and 80: IUU fishing particularly flourishes
Page 81 and 82: Figure V. Trade Misinvoicing to Lau
Page 83 and 84: E. Recent Developments The fishing
Page 85 and 86: X. Illegal Logging A. Overview Ille
Page 87 and 88: C. Dynamics Illegal logging, like o
Page 89 and 90: illion in revenues and taxes annual
Page 91 and 92: XI. Illegal Mining A. Overview Mine
Page 93 and 94: C. Dynamics The discussion of confl
Page 95 and 96: damages that can affect generations
Page 97 and 98: Figure VIII. Illegal Mining, Trade
Page 99 and 100: XII. Crude Oil Theft A. Overview Cr
Page 101 and 102: estimate places the daily loss of c
Page 103 and 104: Figure IX. Pipelines and Drug Traff
Page 105 and 106: Small-scale oil theft and refining
Page 107 and 108: F. Summary The theft of crude oil r
Page 109 and 110: XIII. Policy Recommendations Overvi
Page 111 and 112: on the lack of oversight secrecy ju
Page 113 and 114: at the top levels, and authorized c
Page 115: XIV. Conclusion Transnational crime
Page 119 and 120: 2. The Average Cost of an AK-47 The
Page 121 and 122: Japan 502 $80,000 Low $14,000 High
Page 123 and 124: 519 Appendix Table I. Price Range o
Page 125 and 126: D. Trafficking in Cultural Property
Page 127 and 128: E. The Illegal Wildlife Trade This
Page 129 and 130: Appendix Table P. Source vs. Market
Page 131 and 132: Appendix Table R. Estimated Illegal
Page 133 and 134: Bibliography “7 Nabbed for Intern
Page 135 and 136: Cat Skin Trade. London: Environment
Page 137 and 138: Chugh, Nishtha. “Need a Kidney? I
Page 139 and 140: Dunlevy, Sue. “Australians Turn t
Page 141 and 142: Federation. Accessed September 12,
Page 143 and 144: Gupta, Sanjay. “Unintended Conseq
Page 145 and 146: “International Plan of Action to
Page 147 and 148: Lerner, Maura. “U.S. Man Defies D
Page 149 and 150: the Wildlife TRAPS Project. Cambrid
Page 151 and 152: ence 13, no. 3 (September 2014): 31
Page 153 and 154: Schmidle, Nicholas. “Disarming Vi
Page 155 and 156: Strobel, Warren, Jonathan Landay, a
Page 157 and 158: Quartz, August 12, 2016. http://qz.
Page 159 and 160: “Update on Rhino Poaching Statist
Page 161 and 162: Intelligence, September 6, 2013. ht
Page 163 and 164: About Global Financial Integrity Fo
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