LAUSR

Purpose Illicit trade is pervasive in many nations and may be influenced by the level of national 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’s cultural dimensions are the control variables. Two-level hierarchical linear models (HLMs) are used to empirically test the above-mentioned association. Findings The empirical results suggest that the higher the degree of national intelligence, the lower is the degree of illicit trade across nations. In addition, economic development, unemployment and national culture play an important role in explaining cross-country differences in illicit trade. Practical implications Regulatory authorities should find the results of this cross-national research useful in evaluating the likelihood of illicit trade from a cognitive perspective, and in implementing reforms to curb this type of economic crimes. Originality/value This interdisciplinary study makes 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 intelligence and illicit trade is examined. A second original contribution of 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 has not been used directly in relationship with illicit trade so far.