Illicit shadows: the cultural goods trade gap for Italy

Abstract The paper investigates how discrepancies in trade data can signal illicit flows of cultural goods. Focusing on Italy, a country highly endowed with cultural heritage and exposed to the risk of illicit trafficking countered by a specialized law enforcement unit, the presence of a consistent gap between the value of cultural goods exported from the country and the value reported by its trading partners over three decades is documented and analyzed. The paper offers two main contributions. First, we estimate a gravity model of trade gaps in four separate categories of cultural goods, each subject to varying degrees of legal protection and vulnerability to illicit trade, incorporating a novel indicator of cultural salience and corruption indicators. Second, we evaluate international policies aimed at curbing illicit trade in cultural goods in terms of their ability to reduce trade gaps. Our findings provide empirical evidence on the relationship between trade gaps and illicit markets for cultural objects, and confirm the role of interest in Italian heritage as a driving factor. Archaeological property is further analyzed separately before and after 2010 to show that the apparent increase of Italian trade may partly result from the Arab Springs’ consequences on destruction and looting of cultural heritage. Institutional enforcement through the UNESCO and UNIDROIT conventions is partially effective in reducing illicit trade.