Page 47 - Volume 2_CHANGES_merged_with links

Some Key Terms

Changes!

***
Broadly, there are four primary reasons to misinvoice trade:

• Money laundering – Criminals or public officials may seek to launder the proceeds from

crime or corruption.

• Directly Evading Taxes and Customs Duties – By under-reporting the value of goods,
importers are able to immediately evade substantial customs duties or other taxes.

• Claiming Tax Incentives – Many countries offer generous tax incentives to domestic

exporters selling their goods and services abroad. Criminals may seek to abuse these
tax incentives by over-reporting their exports.

• Dodging Capital Controls – Many developing countries have restrictions on the amount

of capital that a person or business can bring in or out of their economies. Investors
attempting to break these capital controls often misinvoice trade transactions as an

illegal alternative to getting money in or out of the country.

"Trade Misinvoicing"
Global Financial Integrity.

77
Transition Economy (In 2000 IMF listed Botswana as a Transition Economy)
A transition economy or transitional economy is an economy which is changing from a
centrally planned economy to a market economy. Transition economies undergo a set of

structural transformations intended to develop market-based institutions. These include
economic liberalization, where prices are set by market forces rather than by a central
planning organization. In addition to this trade barriers are removed, there is a push to

privatize state-owned enterprises and resources, state and collectively run enterprises
are restructured as businesses, and a financial sector is created to facilitate

macroeconomic stabilization and the movement of private capital.

***
The impacts of the conventional transition strategies proved to be de-stabilizing in the
short-term and left the population impoverished in the long-term. Economic output

declined much more than expected. The decline in output lasted until 1992-96 for all
transition economies. By 1994, economic output had declined across all transition

economies by 41 percent compared to its 1989 level.

***