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Integrity for Hire: An Analysis of a Widespread Customs Reform


  • Dean Yang


Can governments improve bureaucratic performance by "hiring integrity" from the private sector? In the past 2 decades, a number of developing countries have hired private firms to conduct preshipment inspections of imports, generating independent data on the value and tariff classification of incoming shipments. I find that countries implementing such inspection programs subsequently experience large increases in import duty collections. By contrast, the growth rate of other tax revenues does not change appreciably. Additional evidence suggests that declines in falsification of import documentation are behind the import duty improvements; the programs also lead to declines in undervaluation and misreporting of goods classifications. Historically, this hired integrity appears to have been cost-effective, with improvements in import duty collections in the first 5 years of a typical inspection program amounting to 2.6 times the program's costs. (c) 2008 by The University of Chicago. All rights reserved.

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  • Dean Yang, 2008. "Integrity for Hire: An Analysis of a Widespread Customs Reform," Journal of Law and Economics, University of Chicago Press, vol. 51(1), pages 25-57, February.
  • Handle: RePEc:ucp:jlawec:v:51:y:2008:i:1:p:25-57

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    1. Hoekman, Bernard, 2014. "The Bali Trade Facilitation Agreement and Rulemaking in the WTO: Milestone, Mistake or Mirage?," CEPR Discussion Papers 10212, C.E.P.R. Discussion Papers.
    2. Bernard Gauthier & Jonathan Goyette, 2016. "Fiscal policy and corruption," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 46(1), pages 57-79, January.
    3. Jonathan Goyette, 2012. "Optimal tax threshold: the consequences on efficiency of official vs. effective enforcement," Cahiers de recherche 12-07, Departement d'Economique de l'École de gestion à l'Université de Sherbrooke.
    4. Benjamin A. Olken & Rohini Pande, 2012. "Corruption in Developing Countries," Annual Review of Economics, Annual Reviews, vol. 4(1), pages 479-509, July.
    5. Lorenzo Casaburi & Ugo Troiano, 2016. "Ghost-House Busters: The Electoral Response to a Large Anti–Tax Evasion Program," The Quarterly Journal of Economics, Oxford University Press, vol. 131(1), pages 273-314.
    6. Sequeira, Sandra, 2016. "Corruption, trade costs, and gains from tariff liberalization: evidence from Southern Africa," LSE Research Online Documents on Economics 68286, London School of Economics and Political Science, LSE Library.
    7. Dequiedt, V. & Geourjon, A.-M. & Rota-Graziosi, G., 2012. "Mutual supervision in preshipment inspection programs," Journal of Development Economics, Elsevier, vol. 99(2), pages 282-291.
    8. Velea, Irina & Cadot, Olivier & Wilson, John S., 2010. "Do private inspection programs affect trade facilitation ?," Policy Research Working Paper Series 5515, The World Bank.
    9. Saenger, Christoph & Torero, Maximo & Qaim, Matin, 2016. "Impact of third-party enforcement of contracts in agricultural markets—A field experiment in Vietnam," IFPRI book chapters,in: Innovation for inclusive value-chain development: Successes and challenges, chapter 11, pages 343-374 International Food Policy Research Institute (IFPRI).
    10. Jenny D. Balboa & Shinji Takenaka, 2010. "Corruption and Development, Revisited," Development Economics Working Papers 23088, East Asian Bureau of Economic Research.
    11. Randall Holcombe & Christopher Boudreaux, 2013. "Institutional quality and the tenure of autocrats," Public Choice, Springer, vol. 156(3), pages 409-421, September.
    12. Patricia Sourdin & Richard Pomfret, 2012. "Trade Facilitation," Books, Edward Elgar Publishing, number 14596.
    13. Mishra, Prachi & Subramanian, Arvind & Topalova, Petia, 2008. "Tariffs, enforcement, and customs evasion: Evidence from India," Journal of Public Economics, Elsevier, vol. 92(10-11), pages 1907-1925, October.
    14. Raballand, Gael & Marteau, Jean-François & Mjekiqi, Edmond & Cantens, Thomas, 2009. "Could a well-designed customs reforms remove the trade-off between revenue collection and trade facilitation?," Proceedings of the German Development Economics Conference, Frankfurt a.M. 2009 28, Verein für Socialpolitik, Research Committee Development Economics.
    15. Karthik Muralidharan & Paul Niehaus & Sandip Sukhtankar, 2016. "Building State Capacity: Evidence from Biometric Smartcards in India," American Economic Review, American Economic Association, vol. 106(10), pages 2895-2929, October.
    16. Sequeira, Sandra & Djankov, Simeon, 2010. "An Empirical Study of Corruption in Ports," MPRA Paper 21791, University Library of Munich, Germany.

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