Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/247393 
Year of Publication: 
2021
Series/Report no.: 
IES Working Paper No. 26/2021
Publisher: 
Charles University in Prague, Institute of Economic Studies (IES), Prague
Abstract: 
Despite a Sustainable Development Goals target to reduce trade mispricing and other illicit financial flows, it is not clear how to measure trade mispricing over time for countries worldwide. We aim to combine a broad coverage of countries by using UN Comtrade data and robustness by developing a new methodology that sheds new light on a potential scale of trade mispricing for many countries worldwide. Specifically, we provide new estimates of the trade reporting gap and, for the first time, we decompose it into seven individual components. Our explorative analysis reveals three main findings. We show, first, that trade reporting gap is large, in absolute values as well as relative to the overall trade. Second, conceptually well-defined components such as product and country misclassifications account only for a small share of trade reporting gap. The large remaining residual hints at the degree of imprecision in international trade reporting and calls for a significant improvement in data quality. Third, the low-income countries' trade reporting gap has the highest ratio relative to their GDP, which is consistent with existing literature that shows low-income countries to be more vulnerable to a variety of illicit financial flows.
Subjects: 
international trade
trade reporting gap
trade mispricing
illicit financial flows
low-income countries
global development
JEL: 
F13
F14
H26
Document Type: 
Working Paper

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