2016 Chapters (Layout Features)

Overcoming the Shadow Economy

Stiglitz, Joseph E.; Pieth, Mark

There is a growing global consensus that the secrecy-havens—jurisdictions which undermine global standards for corporate and financial transparency—pose a global problem: they facilitate both money laundering and tax avoidance and evasion, contributing to crime and unacceptably high levels of global wealth inequality. Over the years, the global problems posed by secrecy and lack of transparency have increased, and, not surprisingly, this growth has been accompanied by growth in attempts to curb it and the resulting abuses of the global corporate and financial system. This Report attempts to address aspects of secrecy and provide recommendations for overcoming the shadow economy and ultimately, closing it down. Section II explores the global phenomenon of secrecy-havens, the structures through which illicit funds escape detection, and the risks involved in that opacity. Section III describes the ongoing international efforts and emerging standards to reign in the shadow economy. In Section IV, we offer recommendations for all countries for closing the global channels of secrecy, and Section V concludes with a perspective on why such measures are necessary for the survival of globalization.