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The Extent of Trade Mis-Invoicing in Turkey: Did Post-1990 Policies Matter?

  • Yalta, A. Yasemin
  • Demir, Ishak

We analyze the extent and the direction of trade misinvoicing in the context of the new policy environment that has affected the Turkish economy in the post 1990 period. Utilizing bilateral partner country statistics between Turkey and its major trading partners, we observe persisting export overinvoicing and an oscillating pattern of import misinvoicing at the aggregate level. Country-specific data reveal different patterns. As opposed to the general trend in misinvoicing, exports to China are underinvoiced and imports are overinvoiced. We also analyze how the liberalization policies and the customs union agreement with the European Union countries affect trade misinvoicing. We find that, with trade liberalization policies, import misinvoicing has decreased at the aggregate level. However, contrary to the expectations, customs union agreement did not help decrease the extent of trade misinvoicing in Turkey.

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File URL: https://mpra.ub.uni-muenchen.de/30186/1/MPRA_paper_30186.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 30186.

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Date of creation: 15 Apr 2010
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Publication status: Published in Journal of Economic Cooperation and Development 3.31(2010): pp. 41-66
Handle: RePEc:pra:mprapa:30186
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  1. Mohammad Reza Farzanegan, 2008. "Illegal Trade in the Iranian Economy: Evidence from a Structural Model," Working Papers 409, Economic Research Forum, revised Jun 2008.
  2. Sule Ozler & Kamil Yilmaz, 2009. "Productivity response to reduction in trade barriers: evidence from Turkish manufacturing plants," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(2), pages 339-360, July.
  3. Pitt, Mark M., 1981. "Smuggling and price disparity," Journal of International Economics, Elsevier, vol. 11(4), pages 447-458, November.
  4. Fisman, Raymond & Wei, Shang-Jin, 2001. "Tax Rates and Tax Evasion: Evidence from 'Missing Imports' in China," CEPR Discussion Papers 3089, C.E.P.R. Discussion Papers.
  5. Amit Biswas & Sugata Marjit, 2005. "Mis-invoicing and Trade Policy," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 8(3), pages 189-205.
  6. Glenn W. Harrison & Thomas F. Rutherford & David G. Tarr, 2014. "Economic implications for Turkey of a Customs Union with the European Union," World Scientific Book Chapters, in: APPLIED TRADE POLICY MODELING IN 16 COUNTRIES Insights and Impacts from World Bank CGE Based Projects, chapter 16, pages 395-404 World Scientific Publishing Co. Pte. Ltd..
  7. Chang-Tai Hsieh & Enrico Moretti, 2006. "Did Iraq Cheat the United Nations? Underpricing, Bribes, and the Oil for Food Program," The Quarterly Journal of Economics, Oxford University Press, vol. 121(4), pages 1211-1248.
  8. Donogh C. McDonald, 1985. "Trade Data Discrepancies and the Incentive to Smuggle: An Empirical Analysis (Divergences dans les données sur les échanges commerciaux et attrait de la contrebande: analyse empirique) (Discrepancia," IMF Staff Papers, Palgrave Macmillan, vol. 32(4), pages 668-692, December.
  9. Pitt, Mark M., 1984. "Smuggling and the black market for foreign exchange," Journal of International Economics, Elsevier, vol. 16(3-4), pages 243-257, May.
  10. Kamil Yilmaz & Umit Izmen, 2009. "Turkey's Recent Trade and Foreign Direct Investment Performance," Koç University-TUSIAD Economic Research Forum Working Papers 0902, Koc University-TUSIAD Economic Research Forum.
  11. De Wulf, Luc, 1981. "Statistical analysis of under- and overinvoicing of imports," Journal of Development Economics, Elsevier, vol. 8(3), pages 303-323, June.
  12. Andreas Buehn & Stefan Eichler, 2011. "Trade Misinvoicing: The Dark Side of World Trade," The World Economy, Wiley Blackwell, vol. 34(8), pages 1263-1287, 08.
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