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India ranked 3rd in trade-related illicit financial flow globally, China tops: GFI Report

In accordance with the report titled “Trade-Related Illicit Financial Flows in 135 Developing Countries: 2008-2017” by US-based think tank Global Financial Integrity (GFI), India has the third-highest trade-related illicit financial flow among over 135 countries in 2017 with USD 83.5 billion while China has topped the report with USD 457.7 billion. As an average of 2008-2017, India ranked fourth among 135 countries and China stood at first.Before heading further, let’s go through the key terms used in the following content:

  • Illicit Financial Flows (IFFs): It includes many types of activities, such as trade misinvoicing, smuggling, tax evasion, illegal earning etc. across an international border. But this report only focuses on trade misinvoicing, and the trade-related aspects of IFFs.
  • Trade misinvoicing: It is a method of hiding illicit financial flows within the international commercial trade system.
  • Value Gap: The amount of trade that was not properly taxed.

Table showing Top 5 Largest Value Gaps Identified in 135 Developing Countries’ Trade with all Global Trade Partners in 2017:

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Rank Country Amount (USD)
1 China 457.7 billion
2 Mexico 85.3 billion
3 India 83.5 billion
4 Russia 74.8 billion
5 Poland 66.3 billion

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The Top 5 Largest Value Gaps Identified in 135 Developing Countries’ Trade with all Global Trade Partners as Averages over 2008-2017:

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Rank Country Amount (USD)
1 China 482.4 billion
2 Russia 92.6 billion
3 Mexico 81.5 billion
4 India 78.0 billion
5 Malaysia 64.1 billion

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  • The sum of the value gaps identified in trade between 135 developing countries and 36 advanced economies over the ten-year period 2008-2017 is US$8.8 trillion.
  • The sum of the value gaps identified in trade between 135 developing countries and 36 advanced economies in 2017 is US$817.6 billion.
  • In terms of illicit financial flow between 135 developing economies and 36 advanced economies in 2017 and as an average of 2008-2017 , India ranked 6th while China remains at 1st.

Table showing Top 6 Largest Value Gaps Identified in 135 Developing Countries’ Trade with 36 Advanced Economies in 2017:

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Rank Country Amount (USD)
1 China 296.0 billion
2 Mexico 64.5 billion
3 Poland 52.0 billion
4 Russia 42.9 billion
5 Malaysia 41.0 billion
6 India 40.9 billion

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Table showing Top 6 Largest Value Gaps Identified in 135 Developing Countries’ Trade with 36 Advanced Economies as Averages over 2008-2017:

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Rank Country Amount (USD)
1 China 323.8 billion
2 Mexico 62.9 billion
3 Russia 56.8 billion
4 Poland 40.9 billion
5 Malaysia 36.7billion
6 India 36.1 billion

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Key Points:

-The three largest value gaps (in US dollars) between the 135 developing countries and 36 advanced economies were identified in electrical machinery (USD 153.7 billion), mineral fuels (USD 113.2 billion) and machinery (USD 111.7 billion).

Asia topped the list in terms of total value gaps identified in 135 developing countries’ trade with 36 advanced economies in 2017 and as averages over 2008-2017. Asia is followed by Europe, and Middle East & North Africa.

Global Financial Integrity:
Established– 2006
Headquarter– Washington, DC, USA (United States of America)

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