Trade Misinvoicing: What can we measure?

Suranjali Tandon and R. Kavita Rao

Working Papers from eSocialSciences

Abstract: The existing studies on trade misinvoicing have focussed on the discrepancy in reported trade statistics between developing and developed countries. The estimates based on such methods rely on the assumption that developed countries report their trade statistics correctly. This paper provides evidence that trade misinvoicing between developed countries is in fact large and any estimate based on such method may not provide an accurate representation of the dimensions of trade misinvoicing in the world. Further, there is need to develop a methodology by which one can attribute the misinvoicing to one or the other trade partner. To address this problem, the paper offers an alternative methodology. Since the exports of a country are necessarily imports of another country which uses domestic factors to predict the export and import misinvoicing for a sample of large misinvoicers for the period 1990 to 2014. Such estimates allow us to establish whether the discrepancy can be attributed to the export or the import side for all countries. The paper finds that the domestic factors better explain the export side, therefore, allowing us to estimate illicit flows through trade misinvocing using the export misinvoicing by all countries.

Keywords: illicit financial flows; misinvoicing; developing countries; corruption; tariffs; capital controls; illicit flows; trade statistics; trade partners; domestic factors; export; import; Global Financial Integrity (GFI); poor nations. (search for similar items in EconPapers)
Date: 2017-10
Note: Institutional Papers
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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