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On Overinvoicing of Exports in Pakistan

Author

Listed:
  • Zafar Mahmood

    (Institute for Scientific Research.)

  • Mohammad Azhar

    (Pakistan Institute of Development Economics, Islamabad.)

Abstract

Whereas the policy incentives were designed to promote exports from Pakistan, the incentive system instead led to illicit export practices, i.e., export overinvoicing due to the weaknesses of implementation. Such practices resulted in a significant financial loss to the country and undermined the effectiveness of the export-promoting policy. This paper has determined the presence of overinvoicing of exports in Pakistan and the geographic and product-wise patterns in export overinvoicing. The paper has applied the ‘partner-country data comparison’ technique. Empirical findings confirm the strong presence of export overinvoicing across trading partner countries and products. This conclusion is further supported by the evidence of a significant difference between the duty-drawback rate and the premium on foreign exchange in the kerb market. Convincing presence of export overinvoicing is the basis for a set of policy recommendations made in the paper.

Suggested Citation

  • Zafar Mahmood & Mohammad Azhar, 2001. "On Overinvoicing of Exports in Pakistan," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 40(3), pages 173-185.
    • Handle: RePEc:pid:journl:v:40:y:2001:i:3:p:173-185
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    File URL: http://www.pide.org.pk/pdf/PDR/2001/Volume3/173-185.pdf
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    References listed on IDEAS

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    1. Mahmood, Zafar & Nazli, Hina, 1999. "Estimates of Unrecorded Private Capital Movements," Economia Internazionale / International Economics, Camera di Commercio Industria Artigianato Agricoltura di Genova, vol. 52(1), pages 79-90.
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    Cited by:

    1. Shaar, Karam & Baharumshah, Ahmad Zubaidi, 2016. "US-China trade: Who is telling the truth?," Working Paper Series 19470, Victoria University of Wellington, School of Economics and Finance.
    2. Arcade Ndoricimpa & Eduardo Araral, 2024. "Determinants of illicit capital movement in China‐Africa trade: Evidence of trade misinvoicing," African Development Review, African Development Bank, vol. 36(2), pages 334-349, June.
    3. Shintaro Hamanaka & Aiken Tafgar, 2010. "Usable Data for Economic Policymaking and Research? The Case of Lao PDR's Trade Statistics," Working Papers 8710, Asia-Pacific Research and Training Network on Trade (ARTNeT), an initiative of UNESCAP and IDRC, Canada..
    4. Nadeem Ul Haque, 2007. "Impact of Export Subsidies on Pakistan’s Exports," Trade Working Papers 22191, East Asian Bureau of Economic Research.
    5. Elena Ianchovichina, 2007. "Are duty drawbacks on exports worth the hassle?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 40(3), pages 881-913, August.
    6. Rafat MAHMOOD & Eatzaz AHMAD, 2015. "Measurement Of Import Smuggling In Pakistan," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 25(2), pages 135-159.
    7. Hamanaka, Shintaro, 2011. "Utilizing the Multiple Mirror Technique to Assess the Quality of Cambodian Trade Statistics," Working Papers on Regional Economic Integration 88, Asian Development Bank.
    8. Shaar, Karam & Baharumshah, Ahmad Zubaidi, 2016. "US-China trade: Who is telling the truth?," Working Paper Series 5146, Victoria University of Wellington, School of Economics and Finance.
    9. Qureshi, Tehseen Ahmed & Mahmood, Zafar, 2015. "The Size of Trade Misinvoicing in Pakistan," MPRA Paper 65801, University Library of Munich, Germany.
    10. Tehseen Ahmed Qureshi & Zafar Mahmood, 2016. "The Magnitude of Trade Misinvoicing and Resulting Revenue Loss in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 21(2), pages 1-30, July-Dec.
    11. Rasta-Pide, 2023. "The State Of Commerce In Pakistan: International & Domestic," PIDE Research Report 2023:15, Pakistan Institute of Development Economics.

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