CAPITALISM'S ACHILLES HEEL Dirty Money and How to

Notes 415
of Trade database. . . .” (Peter J. Quirk, “Money Laundering Muddying
the Macroeconomy,” Finance & Development, March 1997,
www.worldbank.org/fandd/english/0397/articles/0110397.htm). This
statement is incorrect. Differences in domestic trade data and partnercountry
trade data only reveal reinvoicing, that is, that part of price
manipulation that occurs when a transaction is reinvoiced through a
third party, as explained in the Dirty-Money User Manual. It does not
reveal that part of price manipulation that occurs within the same invoice
that goes straight from exporter to importer. That part is hidden
from view and is not shown by cross-country trade data comparisons.
2. Galal Amin, Professor of Economics, American University in Cairo, interview
by the author, Cairo, Egypt, February 24, 1997.
3. Interview by the author with a Swiss banker, Zurich, Switzerland, not
for attribution.
4. Interview by the author with a Turkish central banker, Ankara, Turkey,
not for attribution.
5. W.W. Rostow, The Stages of Economic Growth: A Non-Communist Manifesto
(New York: Cambridge University Press, 1960).
6. World Bank, World Development Indicators 2004 (Washington, D.C.:
World Bank, 2004), 305.
7. Published data on flight capital are sparse and incomplete. None of what
is available shows very much, if any, of the invisible portion of flight capital
that is absent from national accounts. Nevertheless, using data from
the IMF and the World Bank, the linkage between capital flight and
poverty can be demonstrated for Latin America and Sub-Saharan Africa,
two areas for which data are reasonably usable. Jennifer Nordin has plotted
capital flight data against poverty data for these two regions, which
show a positive correlation. These data are in no way definitive, and leave
ample room for further research. We would be pleased to share these data
with economic scholars. More accurate correlations of capital flight and
poverty depend on the development of better estimates of illegal financial
flows from developing and transitional economies.
Another method for estimating flight capital takes the black market
exchange rate premium as a proxy for flight capital. Data on black
market premiums are available for 1993–1995 from World Currency
Yearbook, 27th edition, 1990–93, ed. Philip P. Cowitt (Brooklyn, NY:
Currency Data & Intelligence, Inc., 1996).