Illegal Activities
NOE Meeting
OECD, Paris, January 2006
Production Boundary
• If there is consent between the two parties
to a transaction, the SNA regards it as a
productive transaction even if it is unlawful
• Commonest examples:
– Prostitution
– Production and trade in narcotics
– Trade in stolen goods
Prostitution
• Number of sex workers by type times
• Number of clients per head and per year times
• Average fee equals gross output
• minus Intermediate consumption equals value
added
Narcotics
• Annual consumption of each type of drug
– Numbers of users and consumption per head
– Drug seizures by police and customs (x10?)
• Average prices
– Point of production
– Place of import
– Sale to consumer
Trade in stolen goods
• The original theft is non-productive
because no consent
• If the stolen goods are sold to a third party
who then resells it, the margin is gross
output of a trading activity
• Motor cars are most commonly involved
• Insurance records and police statistics
Production of counterfeits
• Software, CDs, DVDs, Brand-name
clothing, accessories, etc
• Manufacturing process like any other
• Trade activity like any other
Current practices
• All EU Member countries are supposed to
include illegal activities at some future
date yet to be decided
• Estimates are regularly made in a few
countries:
– Estonia, Poland, Czech Republic
• Increase GDP by around 1%