Paper short abstract:

The paper analyses the challenges of the multilateral order focusing on global financial governance. We argue that Illicit Financial Flows are a subproduct of inefficient International policies and multilateral regulatory frameworks.

Paper long abstract:

The aim of this paper is to analyse the challenges of the multilateral order, with the issue of global financial governance is at its centre. The idea is to show the dimensions behind Illicit Financial Flows (IFFs), which affects the quality of the multilateral order and promotes new forms of interdependence between North and the Global South. We argue that IFFs are a subproduct of inefficient International policies and multilateral regulatory frameworks, which have decreased the scope of action of nation states and reduce the incentives for coordination in certain areas of financial markets and global governance, such as international cooperation on tax and IFFs. Through the use of multivariate techniques (the complementary use of factor and cluster analysis methods) the paper examines the multidimensionality of IFFs. Factor analysis reveals three factors behind this global problem: governance issues, multinational tax avoidance and financial crime. Clustering hierarchical solution is composed by four clusters of developing countries, which reveals the heterogeneous composition of the Global South, and similar shortcomings provided by the contemporary global order. These results may be used for the purpose of designing and implementing tailored actions to promote a more effective system of global governance that has the potential to curb IFFs.