Title: Taxes, institutions, and illicit financial flows in Africa

Authors: Isaac Bentum-Ennin; Samuel Mensah; Evans Kulu

Addresses: Department of Economic Studies, University of Cape Coast, Cape Coast, Ghana ' Department of Economic Studies, University of Cape Coast, Cape Coast, Ghana ' Department of Industrial Mathematics, C.K. Tedam University of Technology and Applied Sciences, Navrongo, Ghana

Abstract: This study investigates the effects of taxes and quality institutions on illicit financial flows (IFFs) in Africa. An annual panel data from 30 countries for the period, 2008 to 2017, was employed. The estimated general method of moments models revealed that increases in taxes on international trade provide an incentive for IFFs but this effect is ameliorated or rendered insignificant in the presence of quality institutions, especially, control of corruption, voice and accountability, rule of law, and regulatory quality. There is a need for governments in African countries to strengthen these institutions while minimising international trade taxes in the quest to reduce IFFs.

Keywords: general method of moments; illicit financial flow; IFF; institutional quality; tax; Africa.

DOI: 10.1504/GBER.2024.139318

Global Business and Economics Review, 2024 Vol.31 No.1, pp.118 - 135

Received: 02 Sep 2022
Accepted: 17 Feb 2023
Published online: 01 Jul 2024 *

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