Impact of economic crimes on the financing of development: Case of developing countries

In the recent years, many studies have showed that weak institutions and the extent of economic crimes in developing countries are one of the deep causes of their poor economic performances. Debt crises which are among other consequences of a low of public levies are accentuated in developing countries, in particular with the development of what is generally known as shadow economy. This research aims to study the potential link existing between economic crimes and the financing of development in developing countries. The economic crimes sector, which is an essential component of the underground economy has a negative effect on the tax mobilization, by cons, the quality of governance is a positive factor in favor of state budgets. This sector is an important fiscal centre which unfortunately for both social and political reasons, sometimes bears fiscal charges beyond its real contributory capacities. This study aims in particularly to investigate the impact of economic crimes on Financing for Development in approximately one hundred developing countries through the channel of public resource mobilization. The main results of empirical analyses using data covering the period 1996-2012 confirm that, it is better for developing countries to fight against economic crimes playing on improving the quality of institutional governance to ensure economic growth sustainability.