Trade Mispricing and Illicit Flows
A potential vehicle to move capital unrecorded out of a country is the misinvoicing of international trade transactions. Exporters may understate the export revenue on their invoices and importers may overstate import expenditures, while their trading partners are instructed to deposit the balance for their benefit in a foreign account. Aiming to quantify the extent of trade mispricing, studies have analyzed asymmetries in matched partner trade statistics or examined price anomalies in transaction level price data. This paper critically reviews these empirical approaches and briefly describes an alternative methodology. Overall, the accuracy and reliability of estimates of illicit financial flows based on trade mispricing are questioned. In particular, it is argued that estimates of trade mispricing are critically dependent on assumptions on how to interpret observed asymmetries in trade statistics. For instance, various reasons for discrepancies in bilateral trade statistics are discussed, and incentives for faking trade invoices other than capital flight are highlighted. Also, aggregate trade data may mask considerable variation in trade discrepancies at the transaction level. Most notably, the importance of trade mispricing as a method for the unrecorded cross-border transfer of capital is generally unclear.
|Date of creation:||15 Sep 2011|
|Date of revision:|
|Publication status:||Published in Darmstadt Discussion Papers in Economics . 206 (2011-09-15)|
|Note:||for complete metadata visit http://tubiblio.ulb.tu-darmstadt.de/54540/|
|Contact details of provider:|| Postal: |
Phone: ++49 (0)6151 16-2701
Fax: ++49 (0)6151 16-6508
Web page: http://www.wi.tu-darmstadt.de/fachgebiete/fachgebiete_4/volkswirtschaftlichefachgebiete.de.jsp
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Javorcik, Beata S. & Narciso, Gaia, 2008.
"Differentiated products and evasion of import tariffs,"
Journal of International Economics,
Elsevier, vol. 76(2), pages 208-222, December.
- Javorcik, Beata S. & Narciso, Gaia, 2007. "Differentiated products and evasion of import tariffs," Policy Research Working Paper Series 4123, The World Bank.
- Javorcik, Beata & Narciso, Gaia, 2008. "Differentiated Products and Evasion of Import Tariffs," CEPR Discussion Papers 6804, C.E.P.R. Discussion Papers.
- 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, vol. 44(1), pages 103-130, June.
- Maria de Boyrie & Simon Pak & John Zdanowicz, 2005. "The impact of Switzerland's money laundering law on capital flows through abnormal pricing in international trade," Applied Financial Economics, Taylor & Francis Journals, vol. 15(4), pages 217-230.
- Clemens Fuest & Nadine Riedel, 2010. "Tax Evasion and Tax Avoidance in Developing Countries: The Role of International Profit Shifting," Working Papers 1012, Oxford University Centre for Business Taxation.
- Susan M. Collins & Won-Am Park, 1989. "Introduction to "External Debt and Macroeconomic Performance in South Korea"," NBER Chapters, in: Developing Country Debt and Economic Performance, Volume 3: Country Studies - Indonesia, Korea, Philippines, Turkey, pages 153-158 National Bureau of Economic Research, Inc.
- Dean Yang, 2008.
"Can Enforcement Backfire? Crime Displacement in the Context of Customs Reform in the Philippines,"
The Review of Economics and Statistics,
MIT Press, vol. 90(1), pages 1-14, February.
- Dean Yang, 2004. "Can Enforcement Backfire? Crime Displacement in the Context of Customs Reform in the Philippines," Working Papers 520, Research Seminar in International Economics, University of Michigan.
- Helge Berger & Volker Nitsch, 2008.
"Gotcha! A Profile of Smuggling in International Trade,"
DEGIT Conference Papers
c013_026, DEGIT, Dynamics, Economic Growth, and International Trade.
- Berger, Helge & Nitsch, Volker, 2008. "Gotcha! A profile of smuggling in international trade," Discussion Papers 2008/6, Free University Berlin, School of Business & Economics.
- Helge Berger & Volker Nitsch, 2008. "Gotcha! A Profile of Smuggling in International Trade," CESifo Working Paper Series 2475, CESifo Group Munich.
- Gabriela Inchauste & Mark Gradstein & Era Dabla-Norris, 2005.
"What Causes Firms to Hide Output? the Determinants of Informality,"
IMF Working Papers
05/160, International Monetary Fund.
- Dabla-Norris, Era & Gradstein, Mark & Inchauste, Gabriela, 2008. "What causes firms to hide output? The determinants of informality," Journal of Development Economics, Elsevier, vol. 85(1-2), pages 1-27, February.
- Jagdish N. Bhagwati, 1978. "Appendix to "Anatomy and Consequences of Exchange Control Regimes"," NBER Chapters, in: Anatomy and Consequences of Exchange Control Regimes, pages 219-221 National Bureau of Economic Research, Inc.
- 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.
- Jagdish N. Bhagwati, 1978. "Anatomy and Consequences of Exchange Control Regimes," NBER Books, National Bureau of Economic Research, Inc, number bhag78-1, August.
- Robert S. Dohner & Ponciano Intal, Jr., 1989. "Introduction to "The Marcos Legacy: Economic Policy and Foreign Debt in the Philippines"," NBER Chapters, in: Developing Country Debt and Economic Performance, Volume 3: Country Studies - Indonesia, Korea, Philippines, Turkey, pages 373-400 National Bureau of Economic Research, Inc.
When requesting a correction, please mention this item's handle: RePEc:dar:ddpeco:54540. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dekanatssekretariat)
If references are entirely missing, you can add them using this form.