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Gotcha! A Profile of Smuggling in International Trade

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  • Helge Berger
  • Volker Nitsch

Abstract

This paper explores official trade data to identify patterns of smuggling in international trade. Our main measure of interest is the difference in matched partner trade statistics, i.e., the extent to which the recorded export value in the source country deviates from the reportedimport value in the destination country. Analyzing 4-digit product level data for the world’s five largest importers for the period from 2002-2006, we find that the reporting gaps are highly correlated with the level of corruption in both partner countries. This finding supports the hypothesis that trade gaps partly represent smuggling activities.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2008/wp-cesifo-2008-11/cesifo1_wp2475.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2475.

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Date of creation: 2008
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Handle: RePEc:ces:ceswps:_2475

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Keywords: corruption; illicit; illegal; trade; statistics; tariffs;

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References

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  1. David Hummels & Volodymyr Lugovskyy, 2006. "Are Matched Partner Trade Statistics a Usable Measure of Transportation Costs?," Review of International Economics, Wiley Blackwell, vol. 14(1), pages 69-86, 02.
  2. Raymond Fisman & Shang-Jin Wei, 2007. "The Smuggling of Art, and the Art of Smuggling: Uncovering the Illicit Trade in Cultural Property and Antiques," NBER Working Papers 13446, National Bureau of Economic Research, Inc.
  3. Deardorff, A.V. & Stolper, W.F., 1988. "Effects Of Smuggling Under African Conditions: A Factual, Institutional And Analytic Discussion," Working Papers, Research Seminar in International Economics, University of Michigan 230, Research Seminar in International Economics, University of Michigan.
  4. Dabla-Norris, Era & Gradstein, Mark & Inchauste, Gabriela, 2008. "What causes firms to hide output? The determinants of informality," Journal of Development Economics, Elsevier, Elsevier, vol. 85(1-2), pages 1-27, February.
  5. Bhagwati, Jagdish N & Hansen, Bent, 1973. "A Theoretical Analysis of Smuggling," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 87(2), pages 172-87, May.
  6. Yeats, Alexander J, 1978. "On the Accuracy of Partner Country Trade Statistics," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 40(4), pages 341-61, November.
  7. Rozanski, Jerzy & Yeats, Alexander, 1994. "On the (in)accuracy of economic observations: An assessment of trends in the reliability of international trade statistics," Journal of Development Economics, Elsevier, Elsevier, vol. 44(1), pages 103-130, June.
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Citations

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Cited by:
  1. Olaf J. de Groot & Anja Shortland, 2010. "Gov-arrrgh-nance: Jolly Rogers and Dodgy Rulers," Economics of Security Working Paper Series 39, DIW Berlin, German Institute for Economic Research.
  2. Pierre-Louis Vezina, 2014. "Illegal Trade in Natural Resources: Evidence from missing exports," OxCarre Working Papers, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford 139, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
  3. Helmut Herwartz & Henning Weber, 2008. "When, How Fast and by How Much do Trade Costs change in the Euro Area?," SFB 649 Discussion Papers SFB649DP2008-065, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
  4. Mohammad Reza Farzanegan, 2008. "Illegal Trade in the Iranian Economy: Evidence from a Structural Model," Working Papers, Economic Research Forum 409, Economic Research Forum, revised Jun 2008.
  5. Nitsch, Volker, 2011. "Trade Mispricing and Illicit Flows," Darmstadt Discussion Papers in Economics, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL) 54540, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute of Economics (VWL).
  6. de Groot, Olaf J. & Rablen, Matthew D. & Shortland, Anja, 2011. "Gov-Aargh-Nance – “Even Criminals Need Law And Order”," NEPS Working Papers, Network of European Peace Scientists 7/2011, Network of European Peace Scientists.
  7. Pierre-Louis Vézina; Lorenzo Rotunno, 2010. "Chinese networks and tariff evasion," IHEID Working Papers, Economics Section, The Graduate Institute of International Studies 20-2010, Economics Section, The Graduate Institute of International Studies, revised Nov 2010.

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