Globalization is breaking down frontiers around the world. For the first time in centuries, freedom is a reality for most people in most countries. But freedom -- both political and economic -- can only serve all citizens when exercised responsibly and fairly. Disappearing borders for business, in an environment where law-enforcement systems are mostly still anchored in national territories, enable powerful players to seek advantage by abusing freedom to the disadvantage of others.
One of governments' most urgent tasks in the 21st century is to create a framework that will allow economic and political freedom to flourish in a climate of fairness. The stakes are high, and so are the temptations to resort to dirty practices. Over a recent five-year period, according to evidence submitted by U.S. companies to the U.S. government, rival foreign firms attempted to bribe their way to success in nearly 300 different competitive tenders for international contracts worth a total $145 billion. In the developing world, some $50 billion a year in tax revenues is lost to tax havens, according to estimates by Oxfam, an international development agency.
This is the dark side of globalization. Abuses of free markets create a multibillion dollar drain on the global economy, distorting world trade and the allocation of capital and services. By undermining the ability of democratically elected governments to raise money through taxation, tax abusers shift financing burdens unfairly onto the shoulders of honest taxpayers. Deprived of legitimate tax revenues, governments are either forced to cut back on social and infrastructure projects that their citizens have voted for or to raise extra taxes to pay for them.