Bridging the Gap in Trade Reporting: Insights from the Discrepancy Index

Sonja Mitikj and Siddhesh Vishwanath Kaushik

No 10792, Policy Research Working Paper Series from The World Bank

Abstract: Accurate trade data remain central for empirical investigations of international trade and informed formulation of trade policies. However, discrepancies in trade reporting, stemming from reasons such as logistics to deliberate misclassification, pose challenges to obtaining an accurate representation of trade activities. This paper provides a systematic examination of these discrepancies by using the Discrepancy Index, a measure of bilateral asymmetry in trade reporting. First, the paper proposes a rich set of country- and product-level indicators that capture both the frequency of misreporting and its impact on the overall recorded trade value. Second, it demonstrates how the Discrepancy Index database can aid analysis and resolve data reliability issues in international trade. This comprehensive data set is used to analyze the general trends in trade data reporting and its reliability, providing empirical insights into the nature and extent of reporting discrepancies. Finally, the paper demonstrates the practical application of the developed discrepancy database and aggregate indicators through case studies of Senegal and the trade relationship between Madagascar and France, shedding light on reporter-specific instances. The paper seeks to equip trade analysts and researchers with tools and resources to make informed decisions on the use of reported trade data and their mirror. In doing so, the study contributes to the broader endeavor of enhancing the reliability of international trade data, thereby contributing to a more accurate empirical investigation of global trade patterns and their policy ramifications.

Date: 2024-06-04
New Economics Papers: this item is included in nep-int
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