Counterfeiting and piracy alone will cost the global economy an estimated US$1.77 trillion in 2015, which is nearly 10% of the global trade in merchandise, according to a new paper by the World Economic Forum (WEF) Meta-Council on the Illicit Economy.
And, with technological advancements and the international nature of trade in the world today, this value is expected to continue to rise, according to the WEF.
Released at the WEF Summit on the Global Agenda in Abu Dhabi earlier this week, the paper points out that the scale of illicit trade, because of its secret and illegal nature, is difficult to accurately quantify.
“But even if precise assessments are elusive, it is nonetheless important to understand the magnitude in order to broadly assess impact and to improve the effectiveness and targeting of policy,” said Jean-Luc Vez, managing director and head of public security policy and security affairs, at the World Economic Forum.
While the overall impact is hard to measure, another WEF report estimates the value of the so-called “shadow economy” at US$650 billion, a figure that rises to $2 trillion when money laundering is included.
The US$650-billion figure is drawn from WEF’s Global Financial Integrity 2011 study, which assessed 12 types of illicit trade to arrive at the aggregate figure.
Chinese state-owned banks have been named as “conduits” for counterfeiters, while big US banks such as Bank of America, JP Morgan Chase and Wells Fargo have been cited as “financial conduits” for the human smuggling industry, the report says.
The illicit economy is formed from the proceeds of illicit trade which is, in turn, largely rooted in organised crime, explained Vez. “Whether it is human trafficking, arms trafficking, the illegal wildlife trade, counterfeiting or money laundering, these activities are incredibly lucrative and fuel the magnitude of the illicit economy.”
