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Corruption in Customs

Author

Listed:
  • Cyril Chalendard

    (International Trade Centre)

  • Ana M Fernandes

    (WBG = GBM - World Bank Group = Groupe Banque Mondiale)

  • Gael Raballand

    (CERDI - Centre d'Études et de Recherches sur le Développement International - IRD - Institut de Recherche pour le Développement - CNRS - Centre National de la Recherche Scientifique - UCA - Université Clermont Auvergne, WBG = GBM - World Bank Group = Groupe Banque Mondiale)

  • Bob Rijkers

    (WBG = GBM - World Bank Group = Groupe Banque Mondiale)

Abstract

This article presents a new methodology to detect corruption in customs and applies it to Madagascar's main port. Manipulation of assignment of import declarations to inspectors is identified by measuring deviations from random assignment prescribed by official rules. Deviant declarations are more at risk of tax evasion, yet less likely to be deemed fraudulent by inspectors, who also clear them faster. An intervention in which inspector assignment was delegated to a third party validates our approach, but also triggered a novel manifestation of manipulation that rejuvenated systemic corruption. Tax revenue losses associated with the corruption scheme are approximately 3% of total taxes collected and are highly concentrated among a select few inspectors and brokers.

Suggested Citation

  • Cyril Chalendard & Ana M Fernandes & Gael Raballand & Bob Rijkers, 2023. "Corruption in Customs," Post-Print hal-03934230, HAL.
    • Handle: RePEc:hal:journl:hal-03934230
    DOI: 10.1093/qje/qjac032
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    Cited by:

    1. Fang, Chao, 2025. "Taxation with information: Impacts of customs data exchange on tax evasion in Pakistan," Economic Systems, Elsevier, vol. 49(1).
    2. Che, Yi & Lin, Donglin & Zhang, Yan, 2025. "Pains or gains: Trade war, trade deficit, and tariff evasion," Journal of International Economics, Elsevier, vol. 155(C).
    3. Okunogbe, Oyebola M. & Tourek,Gabriel, 2023. "How Can Lower-Income Countries Collect More Taxes ? The Role of Technology, Tax Agents, and Politics," Policy Research Working Paper Series 10655, The World Bank.
    4. Kaufmann,Daniel & Kraay, Aart C., 2024. "The Worldwide Governance Indicators : Methodology and 2024 Update," Policy Research Working Paper Series 10952, The World Bank.
    5. Fang, Chao & Ma, Shuzhong, 2024. "Taxing the online haven: Impacts of the EU VAT reform on cross-border e-commerce," Journal of Public Economics, Elsevier, vol. 239(C).

    More about this item

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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