Bridging the Gap in Trade Reporting: Insights from the Discrepancy Index

Accurate trade data remains central for empirical investigations of international trade and informed formulation of trade policies. However, discrepancies in trade reporting, stemming from reasons such as logistics all the way to deliberate misclassification, pose challenges to obtaining an accurate representation of trade activities. This study provides a systematic examination of these discrepancies by using the Discrepancy Index (DI), a measure of bilateral asymmetry in trade reporting. First, we propose a rich set of country- and product-level indicators that capture both the frequency of misreporting and its impact on the overall recorded trade value. Second, we demonstrate how the discrepancy index database can aid analysis and resolve data reliability issues in international trade. Using this comprehensive dataset, we analyze the general trends in trade data reporting and its reliability, providing empirical insights into the nature and extent of reporting discrepancies. Finally, we demonstrate the practical application of the developed discrepancy database and aggregate indicators through case studies for Senegal, and the Madagascar– France trade relationship, shedding light on reporter-specific instances. This paper seeks to equip trade analysts and researchers with tools and resources to make informed decisions concerning the use of reported trade data and its mirror. In doing so, this study contributes to the broader endeavor of enhancing the reliability of international trade data, thereby contributing to a more accurate empirical investigation of global trade patterns and their policy ramifications.