How to Understand the Impact of Illicit Trade on Business Around the World
Globally, an increasing number of goods and brands are affected by illicit trade, from consumer products like electronics, apparel, pharmaceuticals and alcoholic beverages to other industries such as vehicle lubricants and auto parts. The global value of illicit trade and transnational activities is estimated at between 8% and 15% of global GDP, according to the World Economic Forum, potentially reaching as high as US$12 trillion in 2014 which is approximately the size of China’s total economic output in that same year.
Because of their nature, illicit trade activities continue to become increasingly complex and sophisticated and can have serious negative impacts on consumers, governments and licit companies. For example, in 2013 the volume of illicit cigarettes consumed in the world was approximately 570 billion sticks with an estimated value of US$39 billion, which was nearly identical to the value of revenues not collected in taxes if the products were sold in the licit market. This means governments from around the world lost US$40 billion in tax revenue that could have been spent on improving their countries.