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Estimating the magnitude of capital flight due to abnormal pricing in international trade: The Russia–USA case

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  • Maria E. de Boyrie
  • Simon J. Pak
  • John S. Zdanowicz

Abstract

Governmental and international lending agencies, as well as private sector firms, who engage in international trade, have long been concerned with detecting and determining the magnitude of abnormal pricing in international trade. To detect such abnormal pricings, we present a framework analyzing millions of import/export transactions between the U.S. and Russia. The objectives of this study are to estimate the economic impact of over-invoiced/under-invoiced Russian imports/exports from/to the U.S. and to determine if capital movement/capital flight through trade is due to money laundering, tax evasion or some sort of portfolio consideration. Our results lead us to conclude that capital movement through trade in this case can be attributed to either money laundering and/or tax evasion.

Suggested Citation

  • Maria E. de Boyrie & Simon J. Pak & John S. Zdanowicz, 2005. "Estimating the magnitude of capital flight due to abnormal pricing in international trade: The Russia–USA case," Accounting Forum, Taylor & Francis Journals, vol. 29(3), pages 249-270, September.
    • Handle: RePEc:taf:accfor:v:29:y:2005:i:3:p:249-270
    DOI: 10.1016/j.accfor.2005.03.004
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    Cited by:

    1. Nitsch, Volker, 2011. "Trade Mispricing and Illicit Flows," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 54540, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    2. Perez, M. Fabricio & Brada, Josef C. & Drabek, Zdenek, 2012. "Illicit money flows as motives for FDI," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 108-126.
    3. Niels Johannesen & Jukka Pirttilä, 2016. "Capital flight and development: An overview of concepts, methods, and data sources," WIDER Working Paper Series wp-2016-95, World Institute for Development Economic Research (UNU-WIDER).
    4. Edsel L. Beja, 2008. "Estimating Trade Mis‐invoicing from China: 2000–2005," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 16(2), pages 82-92, March.

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