Quantifying missing and hidden trade: an economic perspective

Smuggling is an economic activity that is inherently challenging to measure. It has been more than 50 years since the seminal work by Bhagwati (1964) who introduced the widely used trade gap quantitative method to detect border tax evasion. A renewed interest emerged in recent years to detect smuggling with greater nuance, embracing the fact that smuggling occurs not only at customs but also in informal – and sometimes highly visible – border crossings. This chapter highlights efforts by both governments and researchers to detect the many shades of informal trade.