Measuring illegal activities

1. Agenda item 1a Measuring illegal activities Joint UNECE/Eurostat/OECD Meeting on National Accounts and Working Group on the Impact of Globalisation on National Accounts (Geneva, 21-24 April 2008) Anders Nordin

2. Illegal activities: Illegal alcohol Alcohol production not covered by the regular statistical observations: • not registered production at the legal enterprises; • illegal production in underground enterprises; • household production for own consumption; • household production for sale.

3. Illegal activities: Drugs Illegal production activities related to drugs include drugs production inside the country and activities of their delivery and sales to users.

4. Illegal activities: Drugs • Value of drug operations can be estimated both by the production and expenditure method. • Data are needed on the volume of the domestic production and expenditure, export, import of the drugs, and also wholesale, retail, import and export prices of the drugs. • Estimations to be done separately for every kind drug.

5. Illegal activities: Drugs Intermediate consumption is estimated for each activity: production of drugs and trade. For the trade activity the value of intermediate consumption is very low.

6. Illegal activities: Drugs • Volume of consumption of drugs is estimated on the basis of confiscated drugs and the average share of discovered cases. • Value of consumption by the number of drugs users, average daily drug dose by type of drugs, number of days of the year in which the drug is used and the average price per dose and kind of drugs.

7. Conclusions - drugs Important to identify all possible data sources to estimate the production and distribution of drugs: data and information from ministries, studies from research institutes or done by different experts, information from non-government organisations etc.

8. Illegal activities: Illegal alcohol Non registered production at the legal enterprises is regarded as shadow but not as illegal production and not included into the evaluation of the illegal production activities.

9. Illegal activities: Illegal alocohol Illegal alcohol production is undertaken by underground enterprises and by households for own consumption and for sale.

10. Illegal activities: Illegal alcohol • Illegal alcohol production and consumption estimated by the balance method as difference between registered resources and alcohol consumption volumes by the population.

11. Illegal activities: Illegal alcohol The output of the forged alcohol is estimated as physical volume multiplied by price of the forged production (the price is estimated on the basis of expert evaluations and usually should be lower than the price for the legal products).

12. Illegal activities: Prostitution For national accounts purposes, the relevant aggregates are output (value of services provided by domestic prostitutes), imports (value of services provided by non-residents), export services and consumption.

13. Illegal activities: Prostitution Normally the most reliable method on the identification of the output of prostitution services is its definition from the supply side (resources), on the basis of the data on the number of employed in this kind of activity in the country and their average income.

14. Illegal activities: Prostitution The estimation of prostitution services should be done by the categories of the prostitutes, as the prices for services and also size and structure of the intermediate consumption for different categories are sufficiently different (street…….elite prostitution)

15. Illegal activities: Prostitution The estimation of the value of output of prostitution is made using data from the police and other institutions active in this field with respect to the number of prostitutes, months worked per year and the average monthly income.

16. Illegal activities: Prostitution The output of prostitution services can be estimated on the basis of the data on the number of the prostitutes and the average value of the service for every category.

17. Illegal activities: Prostitution • Intermediate consumption of the prostitution should be related to: • • Rent paid by prostitute for the flat to receive clients, intimate salons, massage salons, etc.; • Expenditures for clothes, cosmetics, protection measures, transportation, equipment and advertising (ads in the newspapers. • 15 -20% from the value of output.

18. Illegal activities: Prostitution For estimation of the export of the prostitution services it is necessary to define the number of the persons providing services abroad.

19. Illegal activities: Smuggling Any infringements of the customs regulations are considered to be smuggling. These include transportation of the prohibited goods, transportation of goods under wrong labels, lowering the value of the goods, etc.

20. Illegal activities: Smuggling Smuggled import and export of goods can be defined by the balance method as difference between registered resources and consumption of goods.

21. Illegal activities: Smuggling On the basis of customs statistics and expert evaluations we can define the relation of the margin to the value of the good in the prices of import. Therefore, it is better to have division of the smuggled goods into several categories depending on the level of margin. For example, differentiate categories as household equipment and electronics, motor vehicles, alcohol beverages, tobacco, and other goods.

22. Illegal activities: Smuggling The trade output of the smuggled goods is defined as the sum of the imported smuggled goods multiplied by the relevant trade margin.

23. Illegal activities: Smuggling Intermediate consumption of the trade of smuggled goods is estimated as a percentage from output.