IFPRI country programs: Lessons from case study successes

Frank M. Place and Peter B.R. Hazell
Authors registered in the RePEc Author Service: Antoine Bouët

No 1737, IFPRI discussion papers from International Food Policy Research Institute (IFPRI)

Abstract: Does smuggling improve economic welfare? This paper provides a theoretical model of illegal trade and determines the impact of smuggling on economic welfare. We focus on Costa Rica's recent prohibition of avocados imported from Mexico. Using unique data on trade, production, and the price of Costa Rican and Mexican avocados, we find that the quantity of avocados smuggled into Costa Rica on an annual basis ranges from 4,668 to 10,232 metric tons, representing up to four times the quantity of locally produced avocados. Furthermore, we demonstrate that smuggling is necessarily welfare-improving compared to the ``no-smuggling situation''. Compared to the ``free-trade situation'', smuggling does not always compensate for the negative effects arising from the restrictive trade measure. In most cases, welfare is lower after the prohibition and smuggling than prior to the implementation of the prohibition. In some cases, however, smuggling results in a gain in terms of trade that offsets the harmful effects associated with the trading cost of smuggling. We find that such situations occur when the trading cost of smuggling is low, and thus when enforcement of the prohibition by public authorities is weak.

Keywords: economic development; policies; case studies; capacity development; research; research programmes; food security; policy analysis; impact assessment (search for similar items in EconPapers)
Date: 2018
References: Add references at CitEc
Citations:

Downloads: (external link)
https://hdl.handle.net/10568/147165

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fpr:ifprid:1737

Access Statistics for this paper

More papers in IFPRI discussion papers from International Food Policy Research Institute (IFPRI) Contact information at EDIRC.
Bibliographic data for series maintained by ().