The Single Fact That Shows How the Global Financial System Fails Developing Countries
Jesse Griffiths, Guest Blogger
Jesse Griffiths is Director of the European Network on Debt and Development (Eurodad).
This will make you angry. After six months crunching all the best data from international institutions, here’s what we found: for every dollar developing countries have earned since 2008, they have lost $2.07. In fact, lost resources have averaged over 10% of their Gross Domestic Product (GDP).
We’re not talking about all flows of money out of developing countries, just the lost resources: money that should have been invested to support their development, but instead was drained out. Twice as much is leaking—or rather flooding—out than the combined inflows of aid, investment, charitable donations and migrant remittances.
The graphic above shows the proportionate losses of resources compared to one dollar of inflows. The figures are in U.S. cents, and are based on the average inflows and losses between 2008 and 2011. The four main lost resources shown in the graphic point to the problems, but also the solutions. Read the rest of this entry »