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Border Delays and Trade Liberalization

Author

Listed:
  • 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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    References listed on IDEAS

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    1. Emine Gürgen & Thomas A. Wolf, 2000. "Improving Governance and Fighting Corruption in the Baltic and CIS Countries; The Role of the IMF," IMF Working Papers 00/1, International Monetary Fund.
    2. Hélène Erkel-Rousse & Daniel Mirza, 2002. "Import price elasticities: reconsidering the evidence," Canadian Journal of Economics, Canadian Economics Association, vol. 35(2), pages 282-306, May.
    3. Shoven,John B. & Whalley,John, 1992. "Applying General Equilibrium," Cambridge Books, Cambridge University Press, number 9780521266550.
    4. Paul Hare, 2001. "Trade Policy During the Transition: Lessons from the 1990s," The World Economy, Wiley Blackwell, vol. 24(4), pages 482-512, April.
    5. Lisandro Abrego & Raymond Riezman & John Whalley, 2001. "How Reasonable Are Assumptions Used in Theoretical Models?: Computational Evidence on the Likelihood of Trade Pattern Changes," NBER Working Papers 8169, National Bureau of Economic Research, Inc.
    6. 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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    Citations

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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. Sequeira, Sandra, 2016. "Corruption, trade costs, and gains from tariff liberalization: evidence from Southern Africa," LSE Research Online Documents on Economics 68286, London School of Economics and Political Science, LSE Library.
    5. 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.
    6. Whalley, John, 2005. "Pitfalls in the Use of Ad valorem Equivalent Representations of the Trade Impacts of Domestic Policies," Commissioned Papers 24164, Canadian Agricultural Trade Policy Research Network.
    7. World Bank, 2004. "Stabilization and Fiscal Empowerment : The Twin Challenges Facing India's States, Volume 2. Detailed Report," World Bank Other Operational Studies 16775, The World Bank.
    8. 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.
    9. 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.
    10. repec:spr:annopr:v:258:y:2017:i:2:d:10.1007_s10479-015-2043-x is not listed on IDEAS
    11. 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.

    More about this item

    JEL classification:

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

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