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Border Delays and Trade Liberalization

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  • Edgar Cudmore
  • John Whalley

Abstract

Delays at the border for customs clearance are seemingly a central feature of the trade regime in the CIS states. Here, we argue that with queuing costs being endogenously determined in such circumstances tariff liberalization (even in the small economy case) can be welfare worsening since tariff revenues are replaced by resource using queuing costs. On the other hand, corruption can be welfare improving if queuing costs are replaced by resource transferring bribes. We also show how added distortions between perishable and non-perishable, or between light and heavy goods can also arise. We show these outcomes using a simple general equilibrium model, and explore the numerical implications using Russian data. The orders of magnitude are both significant and opposite in sign to conventional analyses.

Suggested Citation

  • Edgar Cudmore & John Whalley, 2003. "Border Delays and Trade Liberalization," NBER Working Papers 9485, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:9485
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    1. Emine Gürgen & Mr. Thomas A. Wolf, 2000. "Improving Governance and Fighting Corruption in the Baltic and CIS Countries: The Role of the IMF," IMF Working Papers 2000/001, International Monetary Fund.
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    6. Francis T. Lui, 1996. "Three Aspects Of Corruption," Contemporary Economic Policy, Western Economic Association International, vol. 14(3), pages 26-29, July.
    7. Lui, Francis T, 1985. "An Equilibrium Queuing Model of Bribery," Journal of Political Economy, University of Chicago Press, vol. 93(4), pages 760-781, August.
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    Cited by:

    1. Liu, Xiaoyun & Xin, Xian, 2011. "Transportation uncertainty and international trade," Transport Policy, Elsevier, vol. 18(1), pages 156-162, January.
    2. Huang, Hui & Whalley, John, 2008. "Baumol-Tobin and the welfare costs of national security border delays," Economics Letters, Elsevier, vol. 99(2), pages 290-292, May.
    3. Amitrajeet A. Batabyal & Seung Jick Yoo, 2007. "Corruption, Bribery, and Wait Times in the Public Allocation of Goods in Developing Countries," Review of Development Economics, Wiley Blackwell, vol. 11(3), pages 507-517, August.
    4. Samantak Das & Sanjib Pohit, 2006. "Quantifying Transport, Regulatory and Other Costs of Indian Overland Exports to Bangladesh," The World Economy, Wiley Blackwell, vol. 29(9), pages 1227-1242, September.
    5. Sandra Sequeira, 2016. "Corruption, Trade Costs, and Gains from Tariff Liberalization: Evidence from Southern Africa," American Economic Review, American Economic Association, vol. 106(10), pages 3029-3063, October.
    6. World Bank, 2004. "Stabilization and Fiscal Empowerment : The Twin Challenges Facing India's States, Volume 2. Detailed Report," World Bank Publications - Reports 16775, The World Bank Group.
    7. Arindam Das-Gupta, 2006. "Internal Trade Barriers in India," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 7(2), pages 231-254, September.
    8. Levkovych, Inna, 2011. "Der ukrainische Außenhandel mit Produkten der Agrar- und Ernährungswirtschaft: Eine quantitative Analyse aus Sicht traditioneller und neuer Außenhandelstheorien," Studies on the Agricultural and Food Sector in Transition Economies, Leibniz Institute of Agricultural Development in Transition Economies (IAMO), volume 59, number 109520.
    9. John Whalley, 2005. "Pitfalls in the Use of Ad valorem Equivalent Representations of the Trade Impacts of Domestic Policies," CESifo Working Paper Series 1480, CESifo.
    10. Hongshik Lee & Innwon Park, 2007. "In Search of Optimised Regional Trade Agreements and Applications to East Asia," The World Economy, Wiley Blackwell, vol. 30(5), pages 783-806, May.
    11. Pohit, Sanjib, 2007. "Lacuna in Trade Facilitation & Informalisation of Trade: Lesson from India-Bangladesh Trade," MPRA Paper 94964, University Library of Munich, Germany.
    12. Cen Song & Jun Zhuang, 2017. "Two-stage security screening strategies in the face of strategic applicants, congestions and screening errors," Annals of Operations Research, Springer, vol. 258(2), pages 237-262, November.

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    JEL classification:

    • F1 - International Economics - - Trade
    • D5 - Microeconomics - - General Equilibrium and Disequilibrium

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