Trade value gaps clocks $8.7 billion – GFI 10 year study reveals

The Global Financial Integrity (GFI) report of 2020 has said value gaps between the 135 developing countries and the 36 advanced nations over a 10-year period spanning 2008-2017 sums up to $8.7 billion.

The report copied to the Ghana News Agency explained that value gaps or mismatches occurs when trade receipts between two countries differ.

The report however examines the latest government trade data reported to the United Nations to estimate the magnitude of trade misinvoicing, one of the largest components of measurable Illicit Financial Flows (IFFS).

It said trade misinvoicing takes place when imports and exports deliberately falsify the stated prices on the invoices for goods they were importing or exporting as a way to illicitly transfer value across international borders, evade taxes and or custom duties, launder the proceeds of criminal activity, circumvent currency controls and hide profits offshore.

 It said the 2020 report only focused on trade misinvoicing or trade-related aspects of Illicit Financial Flows (IFFs).

It said countries included in the report were based on the International Monetary Fund (IMF) classification system, including 148 developing countries and 36 advanced economies with 13 of the remaining countries from developing nations failing to generate enough trade data to warrant inclusion in this study.

It indicated value gap methodology was adopted by GFI to analyse data submitted by governments each year to the UN Comtrade database and applying a series of filters to ensure unmatched trades were omitted.

 GFI then uses partner-country analysis to compare and contrast the differences between any set of two countries in order to identify value gaps in the reported data.

 The sum of the value gaps identified in trade between 135 developing countries and 36 advanced economies in 2017, the most recent year for which comprehensive data were available.

This analysis adds to what GFI had provided in previous annual reports.

Developing countries with the largest annual average value gaps (in US dollars) in their bilateral trade with 36 advanced economies over the ten-year period 2008-2017 stood at China – US$323.8 billion, Mexico – US$62.9 billion, Russia – US$56.8 billion, Poland – US$40.9 billion and Malaysia- US$36.7 billion.

The report said developing countries with the largest value gaps as a per cent of their total bilateral trade with the 36 advanced economies over the ten-year period include  Gambia – 37.3 per cent, Togo – 30.2 per cent,  Maldives – 27.4 per cent, Malawi – 26.8 per cent, Bahamas – 26.6 per cent.

 By contrast, China ranked 80th out of the 135 developing countries analysed, with an average value gap of 18.8 per cent of its total bilateral trade with the 36 advanced economies over the same period.

 It said developing countries with the largest average value gaps as a per cent of total trade between the 135 developing countries and all trading partners over 2008-2017 are The Gambia – 46.8 per cent, Seychelles – 38.3 per cent, Paraguay-27.1 per cent, Ghana – 26.5 per cent and The Bahamas – 25.9 per cent.

The three largest value gaps (in US dollars) by harmonised system (HS) chapter between the 135 developing countries and 36 advanced economies over 2008- 2017 are the Electrical Machinery (HS 85) – US$153.7 billion, Mineral Fuels (HS 27) – US$113.2 billion, Machinery (HS 84) – US$111.7 billion. GNA

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