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Border Delays and Trade Liberalization

In: International Trade in East Asia, NBER-East Asia Seminar on Economics, Volume 14

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  • Edgar Cudmore
  • John Whalley

Abstract

Delays at the border for customs clearance are seemingly a central feature of the trade regime in the CIS states. Here, we argue that with queuing costs being endogenously determined in such circumstances tariff liberalization (even in the small economy case) can be welfare worsening since tariff revenues are replaced by resource using queuing costs. On the other hand, corruption can be welfare improving if queuing costs are replaced by resource transferring bribes. We also show how added distortions between perishable and non-perishable, or between light and heavy goods can also arise. We show these outcomes using a simple general equilibrium model, and explore the numerical implications using Russian data. The orders of magnitude are both significant and opposite in sign to conventional analyses.

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This chapter was published in:

  • Takatoshi Ito & Andrew K. Rose, 2005. "International Trade in East Asia, NBER-East Asia Seminar on Economics, Volume 14," NBER Books, National Bureau of Economic Research, Inc, number ito_05-1.
    This item is provided by National Bureau of Economic Research, Inc in its series NBER Chapters with number 10140.

    Handle: RePEc:nbr:nberch:10140

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    1. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550, October.
    2. Emine Gürgen & Thomas A. Wolf, 2000. "Improving Governance and Fighting Corruption in the Baltic and CIS Countries," IMF Working Papers 00/1, International Monetary Fund.
    3. Hélène Erkel-Rousse & Daniel Mirza, 2002. "Import price elasticities: reconsidering the evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 35(2), pages 282-306, May.
    4. Paul G. Hare, 2000. "Trade Policy during the Transition. Lessons from the 1990s," CERT Discussion Papers 0006, Centre for Economic Reform and Transformation, Heriot Watt University.
    5. Lui, Francis T, 1985. "An Equilibrium Queuing Model of Bribery," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 760-81, August.
    6. Lisandro Abrego & Raymond Riezman & John Whalley, 2001. "How Reasonable Are Assumptions Used in Theoretical Models?: Computational Evidence on the Likelihood of Trade Pattern Changes," NBER Working Papers 8169, National Bureau of Economic Research, Inc.
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    Cited by:
    1. Das, Samantak & Pohit, Sanjib, . "Quantifying transport, regulatory and other costs of India–Bangladesh trade," Working Papers 92, National Council of Applied Economic Research.
    2. Levkovych, Inna, 2011. "Der ukrainische Außenhandel mit Produkten der Agrar- und Ernährungswirtschaft: Eine quantitative Analyse aus Sicht traditioneller und neuer Außenhandelstheorien," Studies on the Agricultural and Food Sector in Central and Eastern Europe, Leib­niz Institute of Agricultural Development in Central and Eastern Europe (IAMO), volume 59, number 109520.
    3. Hui Huang & John Whalley, 2006. "Baumol-Tobin and the Welfare Costs of National Security Border Delays," NBER Working Papers 12296, National Bureau of Economic Research, Inc.
    4. Whalley, John, 2005. "Pitfalls in the Use of Ad valorem Equivalent Representations of the Trade Impacts of Domestic Policies," Commissioned Papers 24164, Canadian Agricultural Trade Policy Research Network.
    5. Liu, Xiaoyun & Xin, Xian, 2011. "Transportation uncertainty and international trade," Transport Policy, Elsevier, vol. 18(1), pages 156-162, January.
    6. Amitrajeet A. Batabyal & Seung Jick Yoo, 2007. "Corruption, Bribery, and Wait Times in the Public Allocation of Goods in Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 11(3), pages 507-517, 08.

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