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The global shadow economy is believed to be worth more than the GDP of most countries. Illicit trade can involve legal goods that have nonetheless violated regulations during transit - based on how they were sourced or produced, or through theft, diversion, or misrepresentation. The financial flows generated by illicit trade appear to be growing. A working paper published by the International Monetary Fund in 2018 presented data on 158 countries showing that the average size of their shadow economy relative to GDP between 1991 and 2015 was 31.9% (the largest was Bolivia, at 62.3%, and the smallest was Switzerland, at 7.2%). The revenues generated by transnational crime are estimated to be worth as much as $2.2 trillion annually, according to a report published in 2017 by the think tank Global Financial Integrity. According to the report, counterfeiting brings in as much as $1.1 trillion annually, drug trafficking earns as much as $652 billion, and organ trafficking earns as much as $1.7 billion. Frontier Economics, a research firm, has estimated that the value of digitally-pirated films may reach $622 billion in 2022, up from $160 billion in 2013, while the value of digitally-pirated music may grow to $117 billion from $29 billion over the same period. The negative effects of illicit trade are far-reaching and dramatic. An estimated one in 10 medical products circulating in low- and middle-income countries is either sub-standard or falsified, according to a report published in 2017 by the World Health Organization. As many as 169,000 children may be dying every year from pneumonia due to sub-standard and falsified antibiotics, according to the report, while in sub-Saharan Africa, sub-standard and falsified antimalarials are responsible for as many as 158,000 deaths and $38.5 million in unnecessary health care costs annually. Companies, governments, and non-governmental organizations are all demonstrating an increased awareness of this problem and are cooperating to address it - though successful partnership models have yet to emerge. Through the World Trade Organization's Bali Package, passed in 2013, governments have affirmed their commitments to a secure trade facilitation agenda, and both the G20 and the B20 (a summit of business leaders from G20 countries) have highlighted a need to address illicit trade issues.

Illicit Trade and Financial Flows

KEY TRENDS

Illicit Economy