Smuggling around the world: evidence from a structural equation model

Andreas Buehn and Mohammad Reza Farzanegan ()

Applied Economics, 2012, vol. 44, issue 23, 3047-3064

Abstract: This article uses a Multiple Indicators Multiple Causes (MIMIC) model to analyse 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.

Date: 2012
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Working Paper: Smuggling around the World: Evidence from a Structural Equation Model (2011)
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DOI: 10.1080/00036846.2011.570715

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