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Tariff Evasion and Customs Corruption: Does PSI Help?

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  • Cadot, Olivier
  • Olarreaga, Marcelo
  • Anson, José

Abstract

This Paper provides a new approach to the evaluation of pre-shipment inspection (PSI) programs as ways of improving tariff-revenue collection and reducing fraud when customs administrations are corrupt. We build a model highlighting the contribution of surveillance firms to the generation of information and describing how incentives for fraud and collusive behaviour between importers and customs are affected by the introduction of PSI. It is shown theoretically that the introduction of PSI has an ambiguous effect on the level of customs fraud. Empirically, our econometric results suggest that PSI reduced fraud in the Philippines; it increased it in Argentina and had no significant impact in Indonesia.

Suggested Citation

  • Cadot, Olivier & Olarreaga, Marcelo & Anson, José, 2003. "Tariff Evasion and Customs Corruption: Does PSI Help?," CEPR Discussion Papers 4167, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:4167
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    References listed on IDEAS

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    7. Gordon H. Hanson & Robert C. Feenstra, 2000. "Aggregation Bias in the Factor Content of Trade: Evidence from U.S. Manufacturing," American Economic Review, American Economic Association, vol. 90(2), pages 155-160, May.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Mtiraoui, Abderraouf, 2015. "Corruption et développement économique: Application aux secteurs de l’éducation et de la santé dans la zone MENA [Corruption and Economic Development: Application to the sectors of education and he," MPRA Paper 64306, University Library of Munich, Germany.
    2. Vaqar, Ahmed & Ghulam, Samad, 2011. "Trade facilitation for economic corridors in South Asia: the perspective of Pakistan," MPRA Paper 31368, University Library of Munich, Germany.
    3. Michael, Bryane & Popov, Maja, 2012. "Do Customs Trade Facilitation Programmes Help Reduce Customs-Related Corruption?," EconStor Preprints 109021, ZBW - Leibniz Information Centre for Economics.

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    More about this item

    Keywords

    Trade; Tariff revenue; Corruption; Pre-shipment inspection;
    All these keywords.

    JEL classification:

    • F10 - International Economics - - Trade - - - General
    • F11 - International Economics - - Trade - - - Neoclassical Models of Trade
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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