Better Policies for Development 2014

Policy Coherence and Illicit Financial Flows

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This edition of Better Policies for Development focuses on illicit financial flows and their detrimental effects on development and growth. Every year, huge sums of money are transferred out of developing countries illegally. The numbers are disputed, but illicit financial flows are often cited as outstripping official development aid and inward investment. These flows strip resources from developing countries that could be used to finance much-needed public services, such as health care and education.

This report defines policy coherence for development as a global tool for creating enabling environments for development in a post-2015 context. It shows that coherent policies in OECD countries in areas such as tax evasion, anti-bribery and money laundering can contribute to reducing illicit financial flows from developing countries. It also provides an update on OECD efforts to develop a monitoring matrix for policy coherence for development, based upon existing OECD indicators of ‘policy effort’. The report also includes contributions from member states. Most illustrate national processes to deal with policy coherence for development beyond 2015.


Monitoring policy coherence for development

Policy coherence for development presents particular challenges for assessing impacts and identifying results chains. Policy coherence for development often concerns an unspecified number of policy areas and the causeand- effect relationships are blurred. Another challenge relates to time lags: the actual effects of incoherent policies emerge at various times – as do actions to remedy such policies. This chapter suggests an alternative way to assess policy coherence for development It considers the factors that may contribute to or hinder a certain development outcome, as opposed to the impacts that can be attributed to a particular policy or policy change. The post-2015 deliberations refer to these factors as “enablers” or “disablers” for development.


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