More reason to increase the number of local commodity exchanges. Alex Cobham writes in CGDEV:
More here...Commodities such as copper, gold, and oil are sold to traders in Switzerland at prices below the world market. The traders then re-sell these commodities at a steep mark-up. In most cases the goods never pass through Switzerland, nor are they processed in any way that would justify the mark-up. The traders and whomever they are in business with are thus able to reap massive profits, skimming off capital that would otherwise have gone to the original exporter.
Image courtesy of Futures Mag
Estimating the size of these secret flows is tricky. In our paper we use four methods that involve various means of comparing initial Swiss purchase price, the re-export price, and prevailing global prices. Our most conservative estimate is that developing countries lose at least $8 billion a year in illicit flows to Switzerland – more than twice the Swiss aid budget. Our highest estimate is that losses from developing countries to Switzerland exceed $100 billion a year, a number that begins to approach total annual Official Development Assistance (ODA) of about $125 billion. Furthermore we find evidence of even larger illicit flows from Switzerland to other OECD countries, potentially in excess of $500 billion a year.
