Illicit trade is a sever affliction, usually faced by less developed countries. It not only mis-invoices the trade statistics but also hurts the society morally. Moreover, researchers may avoid the topic, owing to its sensitive and explosive nature. The present study provides the quantitative estimates of import smuggling as well as export smuggling for Pakistan by using a specific form of structural equation model i.e. Multiple Indicators Multiple Causes (MIMIC). Using annual data for the fiscal years 1972-73 to 2010-11, the results show an increasing trend in import smuggling as a percentage of imports in the early period of analysis but it declines afterwards. However, a rising trend has been observed for export smuggling as a percentage of exports throughout the considered period. It is found that in the case of Pakistan imports are underinvoiced and exports are over-invoiced. Supervisor:- Dr. Eatzaz Ahmad