Risk management in border inspection
Bilgehan Karabay and
Journal of Development Economics, 2022, vol. 154, issue C
As part of their commitments under the WTO’s Agreement on Trade Facilitation, many developing countries will adopt risk management, a strategy for selecting import shipments for inspection. In this paper we formalize key enforcement issues related to risk management. We argue that the complexities of international trade oversight mean that inspecting agencies lack certainty about the conditional probability that a given shipment will comply with import regulations. Ambiguity of this sort is likely to be important in developing countries that lack the sophisticated information technology (IT) used in advanced risk management. We show empirically that infrequent shipments have conditionally higher inspection rates, a finding that is consistent with our ambiguity hypothesis. We formalize a role for ambiguity in a theoretical model of border inspection. We calibrate the model and shock the ambiguity parameters to illustrate the consequences of an IT-driven improvement in risk management capabilities for search and compliance.
Keywords: Trade Facilitation; Risk management; Border inspection; Ambiguity; Choquet Expected Utility (search for similar items in EconPapers)
JEL-codes: D73 D81 F18 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
Working Paper: Risk Management in Border Inspection (2020)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:154:y:2022:i:c:s0304387821001152
Access Statistics for this article
Journal of Development Economics is currently edited by M. R. Rosenzweig
More articles in Journal of Development Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().