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Industry Papers on Shadow economy

Brian Sturgess on Steven D. Levitt & Stephen J. Dubner: Superfreakonomics

World Economics, September 2010
There is no summary available for this paper.
Keywords: Crime, Data, Econometrics, Sex     Download Paper
Brian Sturgess on Raymond Fisman and Edward Miguel: Economic Gangsters

World Economics, December 2009
There is no summary available for this paper.
Understanding Crime, Political Uncertainty and Stock Market Returns: A case study of the Colombian stock market
Juan Carlos Franco Laverde, Maria Estela Varua & Arlene Garces-Ozanne, World Economics, June 2009
Colombia’s economy has experienced positive growth over the past few years despite the incidence of serious armed conflict in the region. However, the Colombia of today still faces a significant degree of sociopolitical instability as a result of organised crime associated with drug trafficking, the leftist guerrilla attacks and the right-wing paramilitary group. This paper examines the significance of organised crime and political uncertainty for the amalgamated Colombian Stock Exchange. Empirical evidence indicates that organised crime and political uncertainty negatively affect stock market returns and volatility.
Endangering the War on Terror by the War on Drugs
Deepak Lal, World Economics, September 2008
The century-old US War on Drugs based on supply control measures is endangering its War on Terror in Afghanistan. With opium poppy cultivation the most profitable crop available to Afghan farmers, the Taliban has been able to use the illegal profits from the trade to buy arms and recruit farmers by offering protection from US led aerial spraying of the crops. These supply control measures are not warranted by welfare economics, classical liberal social ethics, or the actual outcomes of the US War on Drugs. The best policy to deal with US drug addiction would be to legalize drugs, concentrating on enforced treatment of chronic drug users. A successful War on Terror requires an end to aerial spraying, the buying up of Afghan opium and its conversion into morphine, for which there is excess demand in the Third World.
The Opium Economy: A Possible Approach to Reform
Jeremy Berkoff, World Economics, December 2007
This paper reviews options for reform of the opium economy within a holistic world context, emphasising the economic forces at work at each stage of the marketing chain. Rather than choosing between prohibition and legalisation, the paper proposes an incremental approach that would move steadily from a prohibitionist framework to one that was increasingly liberalised. The approach focuses on squeezing-and ideally eliminating-the profits earned in the illicit trade. It would do this by: diverting trade from illicit traffickers to public agencies; enhancing illicit costs by continued active interdiction; and, in due course, adopting forms of predatory pricing to further squeeze illicit profits. As the illicit trade withered, local markets in consuming countries might become feasible, which-as in the case of alcohol and tobacco-could be regulated and taxed with the aim of minimising harm, suppressing demand and promoting appropriate treatment and education.
The Nature of Corruption in Forest Management
Charles Palmer, World Economics, June 2005
Corruption is a well-documented and common feature of natural resource management in the developing world. This article investigates the nature of corruption and whether or not there is such a thing as a ‘tolerable’ level of corruption, particularly where there is an established culture of patronage. Using the log trade in Indonesia as a study in rent-seeking transactions, this article shows that a failure to account for the incentives underlying rent-seeking undermines forest policy. Also, attempts to eliminate corruption are doomed to failure. Instead, policymakers should seek to understand the nature of corruption in seeking to move from rent creation to wealth creation.
An Economic Analysis of the Mafia
David Maddison & Marilena Pollicino, World Economics, June 2003
This paper reviews the current economic thinking on the Mafia phenomenon. It distinguishes the Mafia from ordinary criminal gangs by the desire of the former for the exclusive right to commit criminal acts. The existence of the Mafia in particular locations at particular times is explained by the abdication of power or by the state’s unwitting creation of illegal markets. The Mafia’s involvement in the supply of illicit goods is due to its ability to prey on common criminals, while its involvement in the supply of legal goods is in order to police anti-competitive agreements amongst businessmen. Contrary to common belief, there may even be instances in which the Mafia promotes public welfare. More research is required to explain the continuing popularity of the Mafia and to identify the social costs that make it worthwhile tackling the Mafia.
Measuring Global Drug Markets: How good are the numbers and why should we care about them?
Peter Reuter & Victoria Greenfield , World Economics, December 2001
The continuing demand for measures of the size of global drug revenues has produced a supply of numbers that consistently overstate international financial flows. This paper shows that, rather than $500 billion, the annual figure in trade terms may be about $25 billion. As with many refined agricultural products, most of the revenues go to distributors rather than to primary producing countries. The authors explore the need for estimates of the global drug markets, address the difficulties of obtaining ‘good’ numbers, and describe opportunities for developing better estimates of flows and revenues. There are at least three reasons for caring about the numbers: they can help to improve understanding of the drug production and consumption problem and identify appropriate policy responses.
Prohibition and the Market for Illegal Drugs: An overview of recent history
Suren Basov , Mireille Jacobson & Jeffrey A. Miron, World Economics, December 2001
Over the past 25 years in the United States, enforcement of drug prohibition has expanded dramatically. Over the same period, however, the trends in drug production and consumption have been essentially flat, and the real, purityadjusted prices of both cocaine and heroin have more than halved. This combination of facts raises questions about the effectiveness of prohibition enforcement, and it constitutes a puzzle that is interesting to explain. In this paper the authors document these facts and explore possible explanations. They do not claim to provide a complete answer, but shed light on which explanations are likely to be important.
What Do We Know About the Shadow Economy?: Evidence from 21 OECD countries
Friedrich Schneider, World Economics, December 2001
Estimates of the size of the shadow economy in 21 OECD countries are presented. The average size of the shadow economy (as a percentage of ‘official’ GDP) over 1999/2000 in these countries is 16.7%. The author concludes that it is the increasing burden of taxation and social security contributions, combined with rising state regulatory activities, that are the driving forces for the recent growth in size of the shadow economy in the countries concerned.
The Black Economy - Benefit frauds or tax evaders?
Jim Thomas, World Economics, March 2000
One answer to the question "How Rich are We?" is to compare levels of National Income either across countries or for a single country over time. However, the relevance of this approach depends on how accurately National Income measures the output of goods and services of a country. While it is difficult to measure, the Black Economy represents the output of goods and services that is not generally captured in the National Income Accounts. This article discusses the problems of measuring the size of the Black Economy and speculates on the questions of who is involved and how. The relative importance of Tax Evasion versus Benefit Fraud is discussed.