SOGEI website background

Topsy-turvy world: net transfer of resources from poor to rich countries

The crisis stemming from the coronavirus disease (COVID-19) has turned a spotlight on financial vulnerabilities in developing countries and the limitations they face in mobilizing domestic financial resources to respond to the pandemic at the required scale. This brief takes a step back from the COVID-19 crisis to highlight a longer-standing trend which is adding to the troubles facing developing countries. For the past two decades, net financial resource transfers between developed and developing countries have typically favoured the former and disadvantaged the latter. Overall, more financial resources have gone from developing to developed countries than have been returned. The policy brief looks at the main drivers of this net financial resource transfer to the developed world, including illicit financial flows from developing countries, and offers some policy proposals to address this problem.