Sex, drugs and smuggling would increase Swedish GDP by 3.7 billion if it was included in the national accounts calculations.
The National Accounts at Statistics Sweden has by commission of Eurostat, the statistical office of the European Union, made a first attempt to calculate the economic value of illegal transactions. The results reached so far indicates that the total effect on Swedish GDP is very small, and would if they were included in the GDP-figures mean an increase by 0,15 per cent. The GDP figure for 2004 is estimated to 2 543 billion Swedish kronor.
Great practical difficulties are encountered while estimating illegal activities. Very few reliable sources can be found. Consequently these experimental calculations are based on a very uncertain ground. In order to calulate a value many assumptions have had to be made. Therefore we are thankfull for any comments and viewpoints that could improve the estimates presented here.
The reason why illegal activities have to be calculated has to do with the principles laid down in Council Regulation 2223/96, also known as the European System of Accounts, ESA 95. This regulation has three main aims, that the national accounts should be internationally comparable - methodologically and numerically - reliable and exhaustive.
To be included in the national accounts, an economic flow, legal or illegal, must satisfy the definition of a transaction which presupposes a mutual agreement between the units involved (ESA 95, paragraph 1.33 and 1.42) and must fall within the production boundary (ESA 95, paragragh 3.07 to 3.08).
ESA 95 explicitly states that production forbidden by law should also be included, see notably paragraph 1.13g of ESA 95. Therefore, Member States will have to make estimates of illegal activities and include them in their ESA 95-based national accounts estimates. However, there are big difficulties because of the problems of collecting suitable and reasonably reliable data on the main activities customarily referred to as illegal. Another problem in relation to the registration of illegal activities is also the fact that what is illegal in one country may be legal in another country. Also problematic is that part of illegal activities may be included implicitly in the national accounts data.