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Trade barriers and informality of trade: evidence from Benin's borders

Author

Listed:
  • Sami Bensassi

    (University of Birmingham)

  • Joachim Jarreau

    (Université Paris-Dauphine, PSL Research University, IRD, LEDa, DIAL)

  • Cristina Mitaritonna

    (CEPII, Paris, France)

Abstract

Informal cross-border trade is large, ubiquitous, and persistent in Africa. This paper studies the role of trade barriers in this state of affairs. We use a unique survey of informal transactions across Benin's land borders, which provides the first direct and comprehensive account of trade volumes and product coverage for this type of trade. We combine this data with official trade records and exploit variation across products and countries to measure the impact of tariff and non-tariffs barriers to trade on informality. Increasing tariffs on a given product by 10% makes it 12% to 14% more likely that this product is imported informally rather than formally. Non-tariff measures also increase informality. Our results also suggest that compliance costs, aside from tariffs and regulations, contribute to explain informality.

Suggested Citation

  • Sami Bensassi & Joachim Jarreau & Cristina Mitaritonna, 2017. "Trade barriers and informality of trade: evidence from Benin's borders," Working Papers DT/2017/11, DIAL (Développement, Institutions et Mondialisation).
    • Handle: RePEc:dia:wpaper:dt201711
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Informal trade; Regional Integration; Trade facilitation; Evasion; Africa.;
    All these keywords.

    JEL classification:

    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
    • F15 - International Economics - - Trade - - - Economic Integration
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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