Mechanism of Capital Flight Control in Developed and Developing Countries (Case Study of France and Mexico)

Nowadays, as a result of globalization, export of capital in huge quantities from developed and developing countries, including the one performed in contravention of currency and customs law and illicit financial flows, is going on. Legal and illegal forms of capital export (capital flight) in the midst of financial uncertainty are in the focus of research interest because such movements of capital have a negative impact on the economic capacity of the country and result in severe macroeconomic, political and social consequences. This issue appears relevant as a mechanism of capital flight control in developed and developing countries needs to be studied for the purpose of which cases of France and Mexico have been considered. It is noted that in developed counties illicit financial flows fall under the jurisdiction of special federal agencies such as Tracfin, a service of the French Ministry of Finance. The paper presents an analysis of Tracfin's control of illicit financial flows in France. The amount of capital flight from France is estimated by such balance of payment item as the net errors and omissions. Analysis of capital flight from developing countries is performed by Global Financial Integrity (GFI). Thus, a correlation between the amount of illegal financial outflows from Mexico and macroeconomic crises was identified on the basis of data on Mexico.