# Does any developed country other than the UK include illegal activities in its GDP calculations?

> Items like imputed rent, legal fees and R&D are now all included in GDP. The UK went hog wild with both illegal drugs and prostitution as now part of their GDP because… hey, why not? UNSNA’s 2008 guidelines explicitly recommend that illegal market activity should be included in GDP.

https://asiatimes.com/2024/06/whats-the-real-size-of-chinas-economy/

Does any developed country other than the UK include illegal activities in its GDP calculations? The article says that the UK now include illegal activities in its GDP calculations. Is there any other developed country doing the same? By developed country, I mean a country that's considered to be industrialized economically.

Yes, since 2014 (pdf), consistently with the 2010 European System of National and Regional Accounts (ESA 2010), all European Union countries are required to include prostitution (whether legal or not) and drug smuggling and trafficking (whether legal or not) in the GDP calculation they send to Eurostat.

> The 2010 European System of National and Regional Accounts (ESA 2010) establishes a methodology for measuring wealth which requires EU Member States to include parts of the illegal economy (prostitution, drug trafficking and smuggling) in their calculations of GDP.

> However, Regulation (EU) No 549/2013 stipulates that only economic activities in which both parties are willing participants should count, i.e. when the transaction between client and consumer is one of consent.

As a consequence, many illegal activities, like murder or theft, are not included in GDP.

It is important that the scope is the same EU-wise because the GDP is the basis for calculating each country's financial contribution to the EU. Some countries, including France, also publish another version of GDP with a different, legal-activities-only definition, for domestic statistics.

Well, economists do sometimes, e.g. for the US:

> By category, illegal drugs add $111 billion to measured nominal GDP in 2017, illegal prostitution adds $10 billion, illegal gambling adds $4 billion, and theft from businesses adds $109 billion.

IDK what the US official standards are. (See also my comment about theft under the other answer, which mentioned it.) But **they are a UN standard** , not just EU, it seems:

> The internationally agreed guidelines for national economic accounts, _System of National Accounts 2008_ (hereafter referred to as SNA 2008) (United Nations Statistics Division 2008), explicitly recommend that illegal market activity should be included in the measured economy.

FWTW, that 2017 paper continues that

> This recommendation is not currently implemented by the U.S. Bureau of Economic Analysis (BEA) because of challenges inherent in identifying suitable source data and differences in conceptual traditions.

IDK if anything's changed since then in that (US) regard. By 2020, nothing changed in the US official stats, in that respect. It's also worth pointing out that these [illegal activity] figures, besides being somewhat unreliable, do not actually do that much for a big economy (FT):

> On a macro level, the implications of this experimental exercise are not earth-shattering: if illegal activities were included, it seems total GDP would be about 1 percent bigger. Judging from Eurostat figures, this suggests that the illegal sector is slightly larger in the US than in some European countries, but not by that much.

North Korea, Myanmar, etc., might be a different issue. For example, Wikipedia cites some unofficial sources that in Thailand prostitution might account for 10% of GDP. However, it's generally difficult to get up-to-date data on such matters.

Besides the UN, the IMF also agrees they should be included in trade at least:

> The official guidelines for international transactions, _Balance of Payments and International Investment Position Manual_ (International Monetary Fund 2009), also recommend that illegal market activity should be included in measured trade.