ROMANIA: Goods: Illegal Drugs in the International Accounts/Illegal Drugs; Illicit Cigarette/Tobacco Market; Smuggling of Alcohol; and Services: Prostitution

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Canonical URL: ROMANIA: Goods: Illegal Drugs in the International Accounts/Illegal Drugs; Illicit Cigarette/Tobacco Market; Smuggling of Alcohol; and Services: Prostitution

In Romanian national accounts, only estimates for illegal activities have relevance in the external sector statistics.
The estimates for illegal activities are performed for:
- smuggling of tobacco and alcohol products
- prostitution
- consumption and trafficking of drugs (including: heroin; cocaine; marijuana; hashish; amphetamine; ecstasy)
The aggregates included in the external sector statistics for illegal activities are:
- Imports of goods – for smuggling tobacco and alcohol, trafficking of drugs
- Exports of services – for prostitution

Purpose: improve the exhaustiveness of national accounts, as required by ESA 2010 Regulation, GNI Regulation 1287/2003 and GNI Committee Recommendations.
Non-exhaustiveness adjustments in Romanian national accounts are addressed by seven types (N1-N7), with illegal activities included in type N2.
Compilation hypotheses by activity:
- Smuggling tobacco and alcohol: identified imports, no exports, no domestic output
- Prostitution: identified internal production, no imports and some exports
- Trafficking and consumption of drugs: identified only imports, no production, no exports
Methods applied:
- supply method for smuggling tobacco and alcohol products
- supply method for prostitution
- demand methods for drugs

Data sources:
- Romanian Border Police (seizures by border regions, used to identify the origin markets)
- market research studies (sale prices on legal market and percentage of smuggled goods in total sales)
- national media articles (total sales on legal market, prices on origin markets and illegal internal market and payments associated to intermediate consumption)
Estimation approach:
- Repartition by regions of seizures of tobacco products is used to estimate repartition of total smuggling and hence the value of smuggling, taking into account different prices on origin markets and on internal market.
- Seizures of alcohol products are the starting point in calculation of total smuggling, using the percentage of smuggled products in total sales on illegal market and the prices on origin market and on internal market.

Data sources:
- Yearly Report of Ministry of Internal Affairs - National Anti-Drug Agency of Romania (ANA)
- statistical data on population from National Institute of Statistics
Key assumptions and steps:
- Romania is treated mainly as an area of import and consumption; estimations focus on these components.
- First step: estimate the number of drug users based on ANA Report data for Bucharest, with estimates for the rest of the country based on the last year (12 months) prevalence rate.
- Consumption pattern is deduced by distinguishing regular and occasional users following other EU countries’ model.
- Different prices (at wholesale and in street) are applied, using information from yearly Report of ANA.
- Quantities of drugs imported are obtained as the ratio of quantities of drugs consumed in the street and coefficient of dilution (obtained as the ratio of purity of imported drugs and purity of drugs sold on street).

Data sources:
- press reports and yearly reports of a Romanian non-profit organization
Stratification and pricing:
- Stratification by street, home, hotels, clubs, other
- Tariffs are indexed with the index of euro-lei exchange rate
Exports (prostitution services to foreigners):
- Compiled based on number of arrivals of foreign tourists in hotels in the main cities of Romania, of which a percentage is considered to access prostitution services

Methodology developed within non-exhaustiveness adjustments for national accounts, with impact on Gross domestic product/ Gross national income.
Estimates are incorporated in external sector statistics by adding to the Balance of payments the imports and exports obtained for illegal activities in the national accounts framework.

Main challenges for compilation of illegal activities:
- very few data sources from public authorities with tendency to lessen
- used media sources are very irregular and could not be captured up-to-date
- a part of the used hypotheses considered in the estimates could not be verified in practice
Practical limitations:
- It is almost impossible to run a statistical survey on illegal activities due to limited resources of National Institute of Statistics of Romania and the high risk for the persons performing inquiries

Documentation on illegal activities for statistical users is available in Romanian language at: http://www.insse.ro/cms/files/impact%20esa/metodologie%20activitati%20ilegale.pdf