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Gotcha! A Profile of Smuggling in International Trade

Author

Listed:
  • 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 reported import 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.

Suggested Citation

  • 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.
    • Handle: RePEc:deg:conpap:c013_026
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    File URL: http://degit.sam.sdu.dk/papers/degit_13/c013_026.pdf
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    Cited by:

    1. Mianshan Lai & Jia Hou, 2023. "Let us misinvoice more? The effect of de jure capital controls on trade misinvoicing," The World Economy, Wiley Blackwell, vol. 46(7), pages 2157-2186, July.
    2. Piotr Lukaszuk, 2021. "You can smuggle but you can't hide: Sanction evasion during the Ukraine crisis," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 71(01), pages 73-125, December.
    3. Olaf J. de Groot & Matthew D. Rablen & Anja Shortland, 2011. "Gov-aargh-nance - "even criminals need law and order"," CEDI Discussion Paper Series 11-01, Centre for Economic Development and Institutions(CEDI), Brunel University.
    4. Carton, Christine & Slim, Sadri, 2018. "Trade misinvoicing in OECD countries: what can we learn from bilateral trade intensity indices?," MPRA Paper 85703, University Library of Munich, Germany.
    5. Ndoricimpa, Arcade, 2024. "The ugly side of the Africa-UAE (United Arab Emirates) gold trade: Gold export misreporting and smuggling," Resources Policy, Elsevier, vol. 91(C).
    6. Herwartz, Helmut & Weber, Henning, 2008. "When, how fast and by how much do trade costs change in the euro area?," Economics Working Papers 2008-17, Christian-Albrechts-University of Kiel, Department of Economics.
    7. Andreas Buehn & Mohammad Reza Farzanegan, 2012. "Smuggling around the world: evidence from a structural equation model," Applied Economics, Taylor & Francis Journals, vol. 44(23), pages 3047-3064, August.
    8. Yalta, A. Yasemin & Demir, Ishak, 2010. "The Extent of Trade Mis-Invoicing in Turkey: Did Post-1990 Policies Matter?," MPRA Paper 30186, University Library of Munich, Germany.
    9. Rafat MAHMOOD & Eatzaz AHMAD, 2015. "Measurement Of Import Smuggling In Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 25(2), pages 135-159.
    10. Lemi, Adugna, 2019. "Catch Me If You Can: Trade Mis-invoicing and Capital Flight in Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 28(02), October.
    11. Nitsch, Volker, 2016. "Trillion Dollar Estimate: Illicit Financial Flows from Developing Countries," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 80589, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    12. 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.
    13. Mario Gara & Michele Giammatteo & Enrico Tosti, 2018. "Magic mirror in my hand�. how trade mirror statistics can help us detect illegal financial flows," Questioni di Economia e Finanza (Occasional Papers) 445, Bank of Italy, Economic Research and International Relations Area.
    14. Dujava, Daniel & Siranova, Maria, 2022. "Is it me or you? A deeper insight into profile of misreporting economies," The Quarterly Review of Economics and Finance, Elsevier, vol. 83(C), pages 10-25.
    15. Nitsch, Volker, 2011. "Trade mispricing and illicit flows," Darmstadt Discussion Papers in Economics 206, Darmstadt University of Technology, Department of Law and Economics.
    16. Lemi, Adugna, 2019. "Catch Me If You Can: Trade Mis-invoicing and Capital Flight in Ethiopia," Ethiopian Journal of Economics, Ethiopian Economics Association, vol. 28(01), April.
    17. Temesgen Worku & Juan P. Mendoza & Jacco L. Wielhouwer, 2016. "Tariff evasion in sub-Saharan Africa: the influence of corruption in importing and exporting countries," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(4), pages 741-761, August.
    18. Daniel Dujava & Maria Siranova, 2017. "Getting the Measures of Trade Misinvoicing Right: Bilateral Panel Data Approach," Working Papers wp98, Institute of Economic Research, Slovak Academy of Sciences, revised 20 Dec 2017.
    19. Pierre-Louis Vézina, 2015. "Illegal trade in natural resources: Evidence from missing exports," International Economics, CEPII research center, issue 142, pages 152-160.
    20. Mehdi Abid, 2019. "Estimating the Size of the Informal Trade Across the World: Evidence from a MIMIC Approach," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 10(2), pages 618-669, June.
    21. Farzanegan, Mohammad Reza, 2009. "Illegal trade in the Iranian economy: Evidence from a structural model," European Journal of Political Economy, Elsevier, vol. 25(4), pages 489-507, December.
    22. repec:oxf:wpaper:oxcarre-research-paper-139 is not listed on IDEAS
    23. Olaf J. de Groot & Matthew D. Rablen & Anja Shortland, 2011. "Gov-Aargh-Nance – “even Criminals Need Law And Order”," NEPS Working Papers 7/2011, Network of European Peace Scientists.
    24. Lorenzo Rotunno & Pierre-Louis Vézina, 2012. "Chinese Networks and Tariff Evasion," The World Economy, Wiley Blackwell, vol. 35(12), pages 1772-1794, December.

    More about this item

    Keywords

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    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F19 - International Economics - - Trade - - - Other
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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