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The Costs of Bureaucracy and Corruption at Customs: Evidence from the Computerization of Imports in Colombia

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  • Rachid Laajaj
  • Marcela Eslava
  • Tidiane Kinda

Abstract

Customs face a difficult tradeoff between, on one side, collecting tariff revenues and preventing smuggling, and on the other side, avoiding creating additional barriers to trade. They also tend to concentrate discretionary power in the hands of officials whose decisions can bear high costs for the firms, creating room for rent extraction. In this context, information technologies can limit direct interactions, reduce transaction costs and allow local businesses to better take of the benefits of international trade. We assess the effects of the computerization of import transactions on plants’ growth in Colombia. The reform occurred sequentially in the different customs between 2000 and 2005, allowing us to use a triple-difference strategy, comparing the change in outcome variables of plants that were importing before the beginning of the reform, to the one of firms that were not importing (less likely to be affected by changes at customs). We find that the computerization of imports led to an increase of 6 log points in the firms’ value added along with consequent increases in employment, productivity and tax collection. However, it generated winners (importing firms) and losers (non-importing firms). Our investigation of the channels reveals a reduction in corruption judiciary cases at treated customs, as well as a reduction of time to clear customs and its unpredictability. Our results support growing evidence of the high potential of proper use of information technologies to improve efficiency and tackle corruption in public administration with important consequences for the economy.

Suggested Citation

  • Rachid Laajaj & Marcela Eslava & Tidiane Kinda, 2019. "The Costs of Bureaucracy and Corruption at Customs: Evidence from the Computerization of Imports in Colombia," Documentos CEDE 17173, Universidad de los Andes, Facultad de Economía, CEDE.
  • Handle: RePEc:col:000089:017173
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    Cited by:

    1. Chalendard,Cyril Romain & Fernandes,Ana Margarida & Raballand,Gael J. R. F. & Rijkers,Bob, 2021. "Corruption in Customs," Policy Research Working Paper Series 9802, The World Bank.
    2. Jerónimo Carballo & Alejandro Graziano & Georg Schaur & Christian Volpe Martincus, 2021. "The Effects of Transit Systems on International Trade," CESifo Working Paper Series 9353, CESifo.
    3. Chalendard,Cyril Romain & Duhaut,Alice & Fernandes,Ana Margarida & Mattoo,Aaditya & Raballand,Gael J. R. F. & Rijkers,Bob, 2020. "Does Better Information Curb Customs Fraud?," Policy Research Working Paper Series 9254, The World Bank.
    4. Jade Siu, 2020. "Formalising informal cross-border trade: Evidence from One-Stop-Border-Posts in Uganda," Discussion Papers 20-08, Department of Economics, University of Birmingham.
    5. Berniell, Lucila & Caccianini, Antonella & Sanguinetti, Ignacio, . "Digitalizacio\x{0301}n de las licencias me\x{0301}dicas en el sistema educativo pu\x{0301}blico de la Provincia de Buenos Aires: Modernizacio\x{0301}n del Estado para una mejor educacio\x{0301}n," Books, CAF Development Bank Of Latinamerica, number 1548.

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    More about this item

    Keywords

    imports; customs; firm; corruption bureaucracy;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • F61 - International Economics - - Economic Impacts of Globalization - - - Microeconomic Impacts
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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