HomeNewsBriefStudy Finds Paraguay's Illegal Economy Equal to 40% of GDP
BRIEF

Study Finds Paraguay's Illegal Economy Equal to 40% of GDP

CONTRABAND / 22 NOV 2016 BY TRISTAN CLAVEL EN

A new study estimates that Paraguay's illegal economy was equal to 40 percent of the country's GDP last year, a huge number that points to how pervasive a wide range of illicit activities are in this Southern Cone nation. 

A report (pdf) published by Pro Desarrollo Paraguay in partnership with the National University of Asunción found that the value of the country's illegal economy was equal to $11.1 billion in 2015, or 40 percent of the gross domestic product. The size of the illegal economy actually decreased slightly from 2014 when it stood at $12 billion, according to Pro Desarrollo, but it has more than quadrupled since 2002. The association points to a similar expansion of the GDP as the main explanation behind the growth of the black market.

The illegal economy as defined by the report's authors encompasses a vast array of illicit transactions, from minor bribes to more serious offenses such as drug trafficking and money laundering.

The study also concluded that the state lost $1.1 billion in revenue last year due to untaxed goods and services. Pro Desarrollo says that this loss is due to the combination of large corruption or criminal schemes and the sum of many small-scale informal or illegal transactions. The authors point to a general acceptance and normalization of these small-scale fraud operations. 

Pro Desarrollo is an association founded in 2012 to study and find solutions to contraband and tax evasion.

InSight Crime Analysis

An illegal economy equal to 40 percent of a country's GDP certainly raises eyebrows, especially for Paraguay, which is not considered to be on the same level of criminal magnitude as other Latin American countries like Colombia or Mexico. While Paraguay's relatively small GDP plays an important role, the 40 percent figure calls attention to the country's booming marijuana production industry, the largest in South America. In 2014, InSight Crime estimated, based on figures from the country's anti-drug czar at the time, that drug trafficking groups could earn up to $1 billion per year from the marijuana trade alone. Officials have also called the smuggling of otherwise legal items such as sugar and motor vehicles an "uncontrollable avalanche."

In addition, Paraguay was rocked by a series of "narco-corruption" scandals last year, after several congressman and high-level security officials were linked to drug trafficking. 

SEE ALSO: Coverage of Paraguay

It's possible that the numbers are an over-estimation, especially considering Pro Desarrollo is comprised of both local and multinational firms that have financial interests in cutting down on illicit activities such as contraband. Still, some of the study's estimates are not too far off from those provided by international institutions such as the Inter-American Development Bank (IDB). The IDB estimated that Paraguay lost more than $1 billion from untaxed goods in 2014, similar to Pro Desarrollo's recent findings for 2015.  

share icon icon icon

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

What are your thoughts? Click here to send InSight Crime your comments.

We encourage readers to copy and distribute our work for non-commercial purposes, with attribution to InSight Crime in the byline and links to the original at both the top and bottom of the article. Check the Creative Commons website for more details of how to share our work, and please send us an email if you use an article.

Was this content helpful?

We want to sustain Latin America’s largest organized crime database, but in order to do so, we need resources.

DONATE

Related Content

CHILE / 8 JAN 2013

Groups behind a string of arson attacks in southern Chile have had contact with Colombian Marxist rebel group the…

EPP / 3 JUN 2013

The murder of a well-known cattle farmer in Paraguay has put the activities of left-wing guerrillas in the country…

COLOMBIA / 8 JUN 2022

New details have emerged about the assassination of Paraguayan prosecutor Marcelo Pecci, including that the hit was methodically planned in…

About InSight Crime

THE ORGANIZATION

Who Are Memo Fantasma and Sergio Roberto de Carvalho?

24 JUN 2022

Inside the criminal career of Memo Fantasma  In March 2020, InSight Crime revealed the identity and whereabouts of Memo Fantasma, a paramilitary commander and drug trafficker living in…

THE ORGANIZATION

Environmental and Academic Praise

17 JUN 2022

InSight Crime’s six-part series on the plunder of the Peruvian Amazon continues to inform the debate on environmental security in the region. Our Environmental Crimes Project Manager, María Fernanda Ramírez,…

LA ORGANIZACIÓN

Series on Plunder of Peru’s Amazon Makes Headlines

10 JUN 2022

Since launching on June 2, InSight Crime’s six-part series on environmental crime in Peru’s Amazon has been well-received. Detailing the shocking impunity enjoyed by those plundering the rainforest, the investigation…

THE ORGANIZATION

Duarte’s Death Makes Waves

3 JUN 2022

The announcement of the death of Gentil Duarte, one of the top dissident commanders of the defunct Revolutionary Armed Forces of Colombia (FARC), continues to reverberate in Venezuela and Colombia.

THE ORGANIZATION

Cattle Trafficking Acclaim, Investigation into Peru’s Amazon 

27 MAY 2022

On May 18, InSight Crime launched its most recent investigation into cattle trafficking between Central America and Mexico. It showed precisely how beef, illicitly produced in Honduras, Guatemala…