National intelligence and illicit trade: a cross-country study
| Date | 09 May 2023 |
| Pages | 1243-1263 |
| DOI | https://doi.org/10.1108/JFC-05-2022-0108 |
| Published date | 09 May 2023 |
| Subject Matter | Accounting & finance,Financial risk/company failure,Financial crime |
| Author | Kais Baatour,Khalfaoui Hamdi,Hassen Guenichi |
National intelligence and illicit
trade: a cross-country study
Kais Baatour
Department of Accounting and Finance, Institut Superieur d’Informatique et de
Gestion de Kairouan, Universite de Kairouan, Kairouan, Tunisia; Business
Analytics and Decision Making Laboratory (BADEM), Tunis Business School,
University of Tunis, Tunis, Tunisia and IGDORE, Gothenburg, Sweden
Khalfaoui Hamdi
Institut Superieur d’Informatique et de Gestion de Kairouan, Universite de Kairouan,
Kairouan, Tunisia and PS2D Laboratory, Faculte des Sciences Economiques et de
Gestion de Tunis, Universite de Tunis El Manar, Tunis, Tunisia,and
Hassen Guenichi
Institut Superieur d’Informatique et de Gestion de Kairouan,
Universite de Kairouan, Kairouan, Tunisia
Abstract
Purpose –Illicit trade is pervasive in many nations and may be influenced by the levelo fna tional IQ. The current
interdisciplinary paper aims to study the association between national intelligence and illicit trade across nations.
Design/methodology/approach –The illicit trade index scores for 84 countries, developed by the
Economics Intelligence Unit, are used to measure the dependent variable. The independent variable is national
intelligence, while economic development, unemployment and Hofstede’sculturaldimensionsarethecontrol
variables. Two-levelhierarchical linear models (HLMs) are used to empirically test the above-mentioned association.
Findings –The empirical resultssuggest that the higher the degree of national intelligence, the lower is the
degree of illicit tradeacross nations. In addition, economic development,unemployment and national culture
play an importantrole in explaining cross-country differencesin illicit trade.
Practical implications –Regulatory authorities should find the results of this cross-national research
useful in evaluatingthe likelihood of illicit trade from a cognitive perspective,and in implementing reforms to
curb this typeof economic crimes.
Originality/value –This interdisciplinary studymakes novel contributions to the literature on economic and
financial crimes. First, for the first time to the best of the authors’knowledge, an association between national
JEL classification –I31, O57, Z10
The authors would like to thank the Editor Ms Angela Futter and two anonymous reviewers for their
numerous helpful and constructive comments on three earlier versions of this paper.
Funding: The authors received no funding for this research.
Conflicts of interest: The authors declare no conflict of interest.
Availability of data: The data can be obtained via request from the corresponding author.
Expression of concern: The publisher of the Journal of Financial Crime is issuing an Expression of
concern for the following article by Kais Baatour, Khalfaoui Hamdi and Hassen Guenichi (2023),
“National intelligence and illicit trade: a cross-country study”, published in the Journal of Financial
Crime, Vol. 30, No. 5, pp. 1243-1263, https://doi.org/10.1108/JFC-05-2022-0108. Concerns were raised
regarding the use of Lynn and Vanhanen’s (2012) National IQ dataset within the article and the
vulnerability of that data to bias, which enabled conclusions to be drawn for countries where there
was little or no data. An investigation is ongoing and is currently unresolved. The authors of this
article would like to note that they do not agree with the content of this notice. Further information
will be provided by the Journal of Financial Crime as it becomes available.
National
intelligence
1243
Journalof Financial Crime
Vol.30 No. 5, 2023
pp. 1243-1263
© Emerald Publishing Limited
1359-0790
DOI 10.1108/JFC-05-2022-0108
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/1359-0790.htm
intelligence and illicit trade is examined. A second original contributionof this study compared to earlier research
is related to the use of two-level HLMs. Third, the investigation of the association between intelligence and illicit
trade takes a new control variable into consideration, i.e. unemployment, a variable which is found to have a
significant effect on illicit trade and that hasnot been used directly in relationship with illicit trade so far.
Keywords Illicit trade, National intelligence, Global illicit trade environment index,
Cross-national study
Paper type Research paper
1. Introduction
Fighting illicit trade is at the core of the international community concerns. Naturally, illicit
trade has severe negative consequences on societies as it has been shown to damage the global
economy, public health and the environment (Mashiri and Sebele-Mpofu, 2015). In particular, it
has been linked to numerous criminal activities, such as corruption, money laundering and
terrorism (see, e.g. Shelley, 2020). Therefore, understanding the determinants of illicit trade has
been an important area of investigation, particularly during the past decade.
While recent studies indicate that cultural and economic factors make a significant influence
on illicit trade (DiRienzo and Das, 2020), we consider an explanatory variable which has not
obtained the attention we believe it merits in the study of cross-country variations in illicit
trade, namely, average national IQ. With the publication of Lynn and Vanhanen’s (2012)
national IQ data, some scholars (Salahodjaev, 2015;Achim et al., 2020) began to investigate the
role played by average national IQ with regard to corruption, money laundering and shadow
economy. At the same time, the findings of these scholars seem to provide support to the idea
that national IQ impacts the above-mentioned variables, the association between national IQ
and illicit trade is another promising avenue of investigation.
As a central aim of our cross-nationalstudy, we intend to empirically test whether there
is an association betweenintelligence and illicit trade at the country level.
To attain our aim, we use an indexof illicit trade developed by the Economist Intelligence
Unit (EIU, 2018), which is available for 84 countries around the world. We run hierarchical
multiple regressions in which we examine the effect of average national IQ on the level of
illicit trade (controlling for variablesuch as economic development, unemployment rate and
individualism). Our empirical findingsindicate that the higher the level of average national
IQ, the lower is the level of illicit trade across countries. In addition,economic development,
unemployment and Hofstede’s cultural dimensions of individualism and power distance
play an important rolein explaining cross-country differences in illicittrade.
The current cross-national study makes novel and important contributions to the literature
on economic and financial crimes. To start with, to the best of our knowledge, we are the first to
study the association between national IQ and illicit trade. A second original contribution
of this study compared to earlier research is related to the use of two-level hierarchical linear
models (HLMs). According to Bryk and Raudenbush (1992),House et al. (1995),Rowe (1999) and
Bame-Aldred (2013), these models are suitable for cross-level data sets. Third, the investigation
of the association between intelligence and illicit trade takes a new control variable into
consideration, i.e. unemployment, a variable which is found to have a significant effect on illicit
trade and that has not been used directly in relationship with illicit trade until now.
The remainder of the paper is organized as follows. Section 2 reviews the literature and
develops hypothesis.Section 3 presents data and methodology. Section 4 discussesthe main
results. Section 5 presents the robustness checks. Section 6 concludes and presents the
implications of the study. Section 7 summarizesthe contributions of the current work to the
literature. The last sectionpresents the limitations and suggestions for future research.
JFC
30,5
1244
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