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
References listed on IDEAS
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.:
- Dean Yang, 2004.
"Can Enforcement Backfire? Crime Displacement in the Context of Customs Reform in the Philippines,"
520, Research Seminar in International Economics, University of Michigan.
- 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.
- 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.
- Berger, Helge & Nitsch, Volker, 2008.
"Gotcha! A profile of smuggling in international trade,"
2008/6, Free University Berlin, School of Business & Economics.
- 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.
- 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.
- Javorcik, Beata S. & Narciso, Gaia, 2007.
"Differentiated products and evasion of import tariffs,"
Policy Research Working Paper Series
4123, The World Bank.
- 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 & Narciso, Gaia, 2008. "Differentiated Products and Evasion of Import Tariffs," CEPR Discussion Papers 6804, C.E.P.R. Discussion Papers.
- 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.
- 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.
- Helge Berger & Volker Nitsch, 2008. "Gotcha! A Profile of Smuggling in International Trade," CESifo Working Paper Series 2475, CESifo Group Munich.
- 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.
- 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.
- 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.
- Jagdish N. Bhagwati, 1978. "Anatomy and Consequences of Exchange Control Regimes," NBER Books, National Bureau of Economic Research, Inc, number bhag78-1.
- 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.
- 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.
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 you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.