ROSE-ACKERMAN Susan, PALIFKA Bonnie J. Corruption and government : causes, consequences, and reform Cambridge : Cambridge University Press, 2016, XXIII-618 p. ISBN 978-1-107-44109-5 MOND 723 Resume editeur : The second edition of Corruption and Government updates Susan Rose-Ackerman's 1999 book to address emerging issues and to rethink old questions in light of new data. The book analyzes the research explosion that accompanied the fall of the Berlin Wall, the founding of Transparency Intern...

Corruption and government : causes, consequences, and reform

textabstractIn Dutch: Naar een Nieuwe Wereldeconomie: voorstellen voor een internationaal economisch beleid, Rotterdam University Press, Rotterdam, 1965, XV + 335 p.\nIn Spanish: Hacia Una Economia Mundial: sugerencias para una politica economica internacional, Series Biblioteca de Economia No.7, Orbis, Barcelona, 1985, 242 p.

Shaping the World Economy. Suggestions for an International Economic Policy. By Jan Tinbergen. New York: The Twentieth Century Fund, 1962. pp. xvii, 330. Index. 4.00, cloth.

Methods of Multivariate Analysis

The momentum of urbanization and its impacts are so massive that we must face up to this trend. In view of the existing cognitive, technical, economic and institutional path dependencies, a policy of business as usual – i.e. an unstructured, quasi-automatic urbanization – would lead to a non-sustainable ‘world cities society’. Only if cities and urban societies are sufficiently empowered can they make use of the opportunities for sustainability and successfully follow the urban transformation pathways. The success or failure of the Great Transformation will be decided in the cities. The WBGU discusses the relevant conditions for the success of this transformation in this report.

Humanity on the move: Unlocking the transformative power of cities

We contribute to the debate on how to assess the size of the underground (or shadow) economy by proposing a reinterpretation of the traditional Currency Demand Approach (CDA) a la Tanzi. In particular, we introduce three main innovations. First, we take a direct measure of the value of cash transactions - the flow of cash withdrawn from bank accounts relative to total non‐cash payments - as the dependent variable in the money demand equation. This allows us to avoid unrealistic assumptions on the velocity of money and the absence of any irregular transaction in a given year, overcoming two severe critiques to the traditional CDA. Second, in place of the tax burden level, usually intended as the main motivation for non‐compliance, we include among the covariates two direct indicators of detected tax evasion. Finally, we control also for the role of illegal production considering crimes like drug dealing and prostitution, which - jointly with the shadow economy - contributes to the larger aggregate of the non‐observed economy and represents a significant component of total cash payments. We propose then an application of this “modified CDA” to a panel of 91 Italian provinces for the years 2005–08.

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Measuring the Underground Economy with the Currency Demand Approach: A Reinterpretation of the Methodology, with an Application to Italy

Anti-money laundering policy has become a major issue in the Western world, especially in the United States after 9-11. Basically all countries in the world are more or less forced to cooperate in the global fight against money laundering. In this paper, the criminalization of money laundering is modelled, assuming rational behaviour of criminals, following the law and economics strand of the literature which is described as the economics of crime. The theoretical model shows that a) the probability to be caught for money laundering, b) the sentence for money laundering, c) the probability to be convicted for the predicate crime and d) the transaction costs of money laundering are negatively related to the amount of crime. Under the assumption that these factors are all positively influenced by a stricter anti-money laundering policy, the hypothesis empirically tested in this paper is that anti-money laundering policy deters potential criminals from illegal behavior and therefore lowers the crime rate. Since the data on anti-money laundering policy, used in the literature so far, is not all-embracing, a new unique indicator is constructed by using all the information from the mutual evaluation reports on money laundering of the FATF, IMF and World Bank. This unique dataset is used in an empirical estimation based on a Mundlak specification to test the effect of antimoney laundering policy on the crime rate. Among the four policy areas measured – the role of laws, the institutional framework, the duties of the private sector in law enforcement, and international cooperation, the latter turned out to be the most important policy area for reducing crime. This should be an extra incentive for countries and international organizations to continue their efforts to promote and develop international cooperation in the fight against money laundering.

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The Economics of Crime and Money Laundering: Does Anti-Money Laundering Policy Reduce Crime?

Red flags are widely used to minimize the risk of various forms of economic misconduct, among which corruption in public procurement. Drawing on criminal investigations, the literature has developed several indicators of corruption in public procurements and has put them forward as viable risk indicators. But are they genuinely viable, if only corrupt procurements are analysed? Using a dataset of 192 public procurements — with 96 cases where corruption was detected and 96 cases where corruption was not detected — this paper addresses the identification of significant risk indicators of corruption. We find that only some indicators significantly relate to corruption and that eight of them (e.g. large tenders, lack of transparency and collusion of bidders) can best predict the occurrence of corruption in public procurements. With this paper we successfully tap into one of the most vulnerable areas of criminological research — selecting the right sample — and consequently, our results can help increase the detection of corruption, increase investigation effectiveness and minimize corruption opportunities.

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Corruption in Public Procurement: Finding the Right Indicators

Identifying and Reducing Corruption in Public Procurement in the EU

Several attempts have been made in the economics literature to measure money laundering. However, the adequacy of these models is difficult to assess, as money laundering takes place secretly and, hence, goes unobserved. An exception is trade-based money laundering (TBML), a special form of trade abuse that has been discovered only recently. TBML refers to criminal proceeds that are transferred around the world using fake invoices that under- or overvalue imports and exports. This article is a first attempt to test well-known prototype models proposed by Walker and Unger to predict illicit money laundering flows and to apply traditional gravity models borrowed from international trade theory. To do so, we use a dataset of Zdanowicz of TBML flows from the US to 199 countries. Our test rejects the specifications of the Walker and Unger prototype models, at least for TBML. The traditional gravity model that we present here can indeed explain TBML flows worldwide in a plausible manner. An important determinant is licit trade, the mass in which TBML is hidden. Furthermore, our results suggest that criminals use TBML in order to escape the stricter anti moneylaundering regulations of financial markets.

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Gravity Models of Trade-Based Money Laundering

Contents: 1. Introduction and Operationalization 2. Threat of Money Laundering 3. Harmonization of Substantive Norms 4. Implementing International Conventions and the Third EU Directive 5. Supervisory Architectures in the Preventive AML Policy 6. Definitions of Money Laundering in Practice 7. FIU's in the European Union - Facts and Figures, Functions and Facilities 8. Information Flows and Repressive Enforcement 9. International Cooperation 10. Collection of Statistics 11. Effectiveness: Threat and Corresponding Policy Response 12. Cost - Benefit Analysis 13. Summary and Conclusions

Joras Ferwerda

Papers

The Economics of Crime and Money Laundering: Does Anti-Money Laundering Policy Reduce Crime?

Corruption in Public Procurement: Finding the Right Indicators

Identifying and Reducing Corruption in Public Procurement in the EU

Gravity Models of Trade-Based Money Laundering

The economic and legal effectiveness of the European Union's anti-money laundering policy