Open Economies Review

, Volume 23, Issue 5, pp 891–910 | Cite as

Determinants of Trade Misinvoicing

  • Ila PatnaikEmail author
  • Abhijit Sen Gupta
  • Ajay Shah


Trade misinvoicing should be seen as an element of de facto capital account openness. Traditional explanations for trade misinvoicing—high custom duties and weak domestic economies—are less persuasive in a world of high growth emerging markets that have low trade barriers. We construct a 53-country data set over a 26 year span, covering both industrialized and developing countries, to study the phenomena of export and import misinvoicing. Capital account openness, differentials in interest rates, political stability, corruption, indebtedness and the exchange rate regime are identified as factors related to misinvoicing.


Trade Misinvoicing Capital controls Capital account openness Political stability Custom duties 

JEL codes

F14 F32 F41 F43 



This study has been done under the National Institute of Public Finance and Policy-Department of Economic Affairs (NIPFP-DEA) Research Program. The authors are grateful to Sandhya Krishnan for excellent research assistance.


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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.National Institute of Public Finance and PolicyNew DelhiIndia
  2. 2.Jawaharlal Nehru UniversityNew DelhiIndia

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