https://www.econstor.eu/bitstream/10419/26442/1/577843214.PDF

Illegal trade in the Iranian economy: Evidence from a structural model

This paper presents a survey of alternative definitions of capital flight and empirical estimates of capital flight utilizing a common database. At the conceptual level, we argue that the definition of capital flight requires a somewhat arbitrary distinction between normal capital flows and those representing capital flight. At the empirical level, our results illustrate the range of estimates of capital flight that are possible and how alternative definitions or databases contribute to the dispersion of estimates. Our results show that for some countries, differences in definitions or databases may have substantial effects, causing some estimates of capital flight to be positive and others negative. We argue that an appropriate definition of capital flight is one that is consistent with the kinds of economic questions under consideration. In theory, capital flight should be viewed within the context of a general equilibrium model. When this is done, capital flight will appear to be a symptom of underlying economic forces rather than a cause of national welfare losses.

/pdf/on-the-definition-and-magnitude-of-recent-capital-flight-162wdrfo3e.pdf

On the Definition and Magnitude of Recent Capital Flight

Capital flight from the People's Republic of China: 1984–1994

Can governments improve bureaucratic performance by “hiring integrity” from the private sector? In the past 2 decades, a number of developing countries have hired private firms to conduct preshipment inspections of imports, generating independent data on the value and tariff classification of incoming shipments. I find that countries implementing such inspection programs subsequently experience large increases in import duty collections. By contrast, the growth rate of other tax revenues does not change appreciably. Additional evidence suggests that declines in falsification of import documentation are behind the import duty improvements; the programs also lead to declines in undervaluation and misreporting of goods classifications. Historically, this hired integrity appears to have been cost‐effective, with improvements in import duty collections in the first 5 years of a typical inspection program amounting to 2.6 times the program's costs.

/pdf/integrity-for-hire-an-analysis-of-a-widespread-customs-1vt0zug9eb.pdf

Integrity for Hire: An Analysis of a Widespread Customs Reform

This study investigates the main causes and consequences of import and export smuggling and estimates the relative index of smuggling in Iran from 1970 to 2002. The Multiple Indicators - Multiple Causes (MIMIC) econometric modelling is used for a comprehensive analysis of the latent variable of smuggling. The main results of this paper indicate that the rate of fine for smuggling and the general level of education reduce smuggling, while the tariff burden increases the incentives for illegal trade. More trade openness accompanies more illegal trade for the case of Iran. On average, the relative size of smuggling is about 13% of the total trade in Iran. The absolute amount of smuggling per year is about $3 billion.

Illegal Trade in the Iranian Economy: Evidence from a Structural Model

Among available economic data of less developed countries, foreign trade statistics are known to be most reliable and are used extensively. This paper, concentrating on Southeast Asian countries, examines the extent and variation of discrepancy in export and import recordings of their own and of their trading partners. The ratio of corresponding trade records exhibit varying heights and irregular patterns suggesting a larger degree of inaccuracy than generally assumed. Inter-Asian trade of Southeast Asian countries show a greater discrepancy than that of their trade with developed countries, and the trade ratio variance of the former is significantly larger than that of the latter at the 5% level. The rank coefficient of correlation between the level of discrepancy and the absolute size of trade value is found to be insignificant for most countries. Also the adjustment of trade figures by exchange rate overvaluation does not narrow the inconsistency in the bilateral trade recordings. The recordin...

Theodore Morgan

Papers

The Accuracy of International Trade Data: The Case of Southeast Asian Countries