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Smuggling around the World: Evidence from a Structural Equation Model

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  • Andreas Buehn

    (Faculty of Business and Economics - TU Dresden - Technische Universität Dresden = Dresden University of Technology)

  • Mohammad Reza Farzanegan

    (Faculty of Business and Economics - TU Dresden - Technische Universität Dresden = Dresden University of Technology)

Abstract

This paper uses a Multiple Indicators Multiple Causes (MIMIC) model to analyze the determinants of smuggling. The analysis reveals that higher corruption and a lower rule of law encourage smuggling. Tariffs and trade restrictions are important push factors, while a higher black market premium (BMP) discourages smugglers. Based on the MIMIC estimates, we calculate an index of smuggling which provides a ranking for 54 countries. We find that smuggling is rampant in Cameroon, Pakistan, and Kenya while it is least prevalent in Switzerland, Finland, and Sweden.

Suggested Citation

  • Andreas Buehn & Mohammad Reza Farzanegan, 2011. "Smuggling around the World: Evidence from a Structural Equation Model," Post-Print hal-00710057, HAL.
    • Handle: RePEc:hal:journl:hal-00710057
    DOI: 10.1080/00036846.2011.570715
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-00710057
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    Cited by:

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    3. Chih-Hao Wen & Ping-Yu Hsu & Ming-Shien Cheng, 2017. "Applying intelligent methods in detecting maritime smuggling," Maritime Economics & Logistics, Palgrave Macmillan;International Association of Maritime Economists (IAME), vol. 19(3), pages 573-599, August.
    4. Omid Zamani & Mohammad Reza Farzanegan & Jens-Peter Loy & Majid Einian, 2021. "The Impacts of Energy Sanctions on the Black-Market Premium: Evidence from Iran," Economics Bulletin, AccessEcon, vol. 41(2), pages 432-443.
    5. Aziz N. Berdiev & James W. Saunoris & Friedrich Schneider, 2018. "Give Me Liberty, or I Will Produce Underground: Effects of Economic Freedom on the Shadow Economy," Southern Economic Journal, John Wiley & Sons, vol. 85(2), pages 537-562, October.
    6. Mohammad Reza Farzanegan & Stefan Witthuhn, 2014. "Demographic Transition and Political Stability: Does Corruption Matter?," CESifo Working Paper Series 5133, CESifo.
    7. Buehn, Andreas & Farzanegan, Mohammad Reza, 2013. "Hold your breath: A new index of air pollution," Energy Economics, Elsevier, vol. 37(C), pages 104-113.
    8. Ling Zhou & Huazhen Lin & Yi-Chen Lin, 2016. "Education, Intelligence, and Well-Being: Evidence from a Semiparametric Latent Variable Transformation Model for Multiple Outcomes of Mixed Types," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(3), pages 1011-1033, February.
    9. Sena Kimm Gnangnon, 2023. "Effect of the Shadow Economy on Tax Reform in Developing Countries," Economies, MDPI, vol. 11(3), pages 1-49, March.
    10. Biswas, Amit K. & Farzanegan, Mohammad Reza & Thum, Marcel, 2012. "Pollution, shadow economy and corruption: Theory and evidence," Ecological Economics, Elsevier, vol. 75(C), pages 114-125.
    11. Farzanegan, Mohammad Reza, 2009. "Illegal trade in the Iranian economy: Evidence from a structural model," European Journal of Political Economy, Elsevier, vol. 25(4), pages 489-507, December.
    12. A. Bühn & M.R. Farzanega, 2011. "Hold Your Breath: A New Index of Air Quality," Working Papers 11-24, Utrecht School of Economics.
    13. Mohammad Hossien Pourkazemi & Mohammad Naser Sherafat & Zahra Delfan Azari, 2013. "A Fuzzy Logic Approach to Estimate the Import of Smuggling in Iran," Iranian Economic Review (IER), Faculty of Economics,University of Tehran.Tehran,Iran, vol. 18(2), pages 107-129, spring.
    14. Niklas Potrafke, 2015. "The Evidence on Globalisation," The World Economy, Wiley Blackwell, vol. 38(3), pages 509-552, March.
    15. Ishak, Phoebe W. & Farzanegan, Mohammad Reza, 2020. "The impact of declining oil rents on tax revenues: Does the shadow economy matter?," Energy Economics, Elsevier, vol. 92(C).
    16. Mohammad Reza Farzanegan, 2021. "The Effect of Public Corruption on Covid-19 Fatality Rate: A Cross-Country Examination," CESifo Working Paper Series 8938, CESifo.
    17. Mohammad Reza Farzanegan & Mehdi Feizi & Hassan F. Gholipour, 2021. "Globalization and the Outbreak of COVID-19: An Empirical Analysis," JRFM, MDPI, vol. 14(3), pages 1-10, March.
    18. Aziz N. Berdiev & James W. Saunoris, 2019. "Globalization and Informal Entrepreneurship: A Cross-Country Analysis," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 47(1), pages 65-80, March.
    19. Farzanegan, Mohammad Reza & Hassan, Mai & Badreldin, Ahmed Mohamed, 2020. "Economic liberalization in Egypt: A way to reduce the shadow economy?," Journal of Policy Modeling, Elsevier, vol. 42(2), pages 307-327.
    20. Mohammad Reza Farzanegan & Mai Hassan, 2017. "The Impact of Economic Globalization on the Shadow Economy in Egypt," CESifo Working Paper Series 6424, CESifo.
    21. Fawzi Banao & Bertrand Laporte, 2022. "Terrorism, Customs and fraudulent Gold exports in Africa," CERDI Working papers hal-03889094, HAL.

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