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Smuggling around the World: Evidence from a Structural Equation Model

Author

Listed:
  • 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.science/hal-00710057
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