Trade barriers and informality of trade: evidence from Benin's borders

Sami Bensassi (), Joachim Jarreau and Cristina Mitaritonna ()

No DT/2017/11, Working Papers from DIAL (Développement, Institutions et Mondialisation)

Abstract: Informal cross-border trade is large, ubiquitous, and persistent in Africa. This paper studies the role of trade barriers in this state of affairs. We use a unique survey of informal transactions across Benin's land borders, which provides the first direct and comprehensive account of trade volumes and product coverage for this type of trade. We combine this data with official trade records and exploit variation across products and countries to measure the impact of tariff and non-tariffs barriers to trade on informality. Increasing tariffs on a given product by 10% makes it 12% to 14% more likely that this product is imported informally rather than formally. Non-tariff measures also increase informality. Our results also suggest that compliance costs, aside from tariffs and regulations, contribute to explain informality.

Keywords: Informal trade; Regional Integration; Trade facilitation; Evasion; Africa. (search for similar items in EconPapers)
JEL-codes: F15 H26 O17 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2017-10
New Economics Papers: this item is included in nep-dev, nep-int and nep-iue
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https://dial.ird.fr/wp-content/uploads/2021/10/201 ... m-Benins-borders.pdf First version, 2017 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:dia:wpaper:dt201711

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