Illicit financial flows (IFFs) constitute a major challenge for development in low‐income countries, as domestic resource mobilization is imperative for providing crucial public services. The current paper focuses exclusively on the economic dimension of IFFs, thereby excluding topics as drugs trade, money laundering, and human trafficking. While several methods offer to measure the magnitude of IFFs, each has its benefits and drawbacks. Critically, methods based on the balance of payments identity may capture licit as well as illicit flows, and a method based on macroeconomic trade discrepancies suffers from doubtful assumptions. The most convincing estimate to date demonstrates that individuals hold financial assets worth around 10% of global GDP in tax havens. Evidence further indicates that developing countries are more exposed to individuals and multinational enterprises illicitly transferring money out of the country.

Growth, Structural Transformation, and Rural Change in Viet Nam UNU World Institute for Development Economics Research (UNU-WIDER) was established by the United Nations University as its first research and training centre and started work in Helsinki, Finland, in 1985. The mandate of the institute is to undertake applied research and policy analysis on structural changes affecting developing and transitional economies, to provide a forum for the advocacy of policies leading to robust, equitable, and environmentally sustainable growth, and to promote capacity strengthening and training in the field of economic and social policy-making. Its work is carried out by staff researchers and visiting scholars in Helsinki and via networks of collaborating scholars and institutions around the world.

Illicit financial flows (IFFs) constitute a major challenge for development in the Global South, as domestic resource mobilization is imperative for providing crucial public services. While several methods offer to measure the extent of IFFs, each has its benefits and drawbacks. Critically, methods based on the balance of payments identity may capture licit as well as illicit flows, and a method based on macroeconomic trade discrepancies suffers from doubtful assumptions. The most convincing estimate to date demonstrates that individuals hold financial assets worth around ten per cent of global GDP in tax havens. Evidence further indicates that countries in the Global South are more exposed to individuals and multinational enterprises illicitly transferring money out of the country. Further research is warranted on profit shifting out of countries in the Global South and the effectiveness of anti-IFF policies in countries outside Europe and the United States.

This paper explores the link between entrepreneurship and child human capital development. We specifically examine how operating a non-farm enterprise (NFE) as opposed to working in agriculture relates to child labour and schooling outcomes. Accounting for timeinvariant unobservable characteristics in an estimation with individual fixed effects, we find a negative correlation between NFE ownership and child labour, especially in households with relatively higher levels of consumption expenditure. We find differentiated impacts by child gender and the type of enterprise: a lower incidence of child labour for boys and NFEs without employees and a lower incidence of child labour for girls and NFEs that hire at least one employee. Fatherowned NFEs correlate negatively with child labour for boys, both at the extensive and at the intensive margin, and positively with a higher likelihood for school attendance for girls. Given these findings, it appears that household entrepreneurship may contribute to decreasing the severe child labour problem in Tanzania, but resolving the problem of low school attendance rates will require a different strategy.

In January 2016, Tanzania implemented a fee-free secondary school reform. Using variation in district and cohort exposure to the reform, we employ a difference-indifferences strategy to estimate the short-term impacts of the reform. Despite a relatively small drop in user costs, the reform substantially increased enrolment into secondary education. While these enrolment effects were predominantly driven by an increase in public school enrolment, there was also a delayed positive effect on private school enrolment. Districts most exposed to the reform experienced a significant drop in exam scores relative to less-exposed districts, which cannot be explained by academic abilities of new students. These findings are in line with a theoretical school choice model, where fee elimination loosens enrolment constraints, and increased enrolment harms the quality of public education. (JEL I21, I24, I28) * We wish to thank Youdi Schipper, Sam Jones, Thomas Markussen, Patricia Justino, and Lant Pritchett for providing excellent comments on the paper. Further thanks go to the National Examinations Council of Tanzania for providing public access to a large and useful database on student exam records.