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Estimating Informal Trade Across Tunisia's Land Borders

35 Pages Posted: 20 Apr 2016  

Lotfi Ayadi

Consultant

Nancy Benjamin

World Bank; U.S. Department of Agriculture (USDA)

Sami Bensassi

Université Paris X Nanterre - Department of Economics

Gaël Raballand

World Bank; Université Paris I Panthéon-Sorbonne

Date Written: December 1, 2013

Abstract

This paper uses mirror statistics and research in the field to estimate the magnitude of Tunisia's informal trade with Libya and Algeria. The aim is to assess the scale of this trade and to evaluate the amount lost in taxes and duties as a result as well as to assess the local impact in terms of income generation. The main findings show that within Tunisian trade as a whole, informal trade accounts for only a small share (5 percent of total imports). However, informal trade represents an important part of the Tunisia's bilateral trade with Libya and Algeria, accounting for more than half the official trade with Libya and more than total official trade with Algeria. The main reasons behind this large-scale informal trade are differences in the levels of subsidies on either side of the border as well as the varying tax regimes. Tackling informal trade is not simply a question of stepping up the number of controls and sanctions, because differences in prices lead to informal trade (and to an increase in corruption levels among border officials) even in cases where the sanctions are severe. As local populations depend on cross-border trade for income generation, they worry about local authorities taking action against cross-border trade. At the same time, customs officials are concerned about the risk of local protests if they strictly enforce the tariff regimes in place. This issue will become even more significant if fuel prices in Tunisia rise again as a result of a reduction in the levels of domestic subsidies.

Keywords: Transport Economics Policy & Planning, Trade Law, Economic Theory & Research, Trade Policy, Emerging Markets

Suggested Citation

Ayadi, Lotfi and Benjamin, Nancy and Bensassi, Sami and Raballand, Gaël, Estimating Informal Trade Across Tunisia's Land Borders (December 1, 2013). World Bank Policy Research Working Paper No. 6731. Available at SSRN: https://ssrn.com/abstract=2371504

Nancy Benjamin

U.S. Department of Agriculture (USDA)

1800 M. Street NW
Room N5142
Washington, DC 20036-5831
United States

World Bank

1818 H Street, N.W.
Washington, DC 20433
United States

Sami Bensassi

Université Paris X Nanterre - Department of Economics ( email )

Nanterre Cedex, 92001
France

HOME PAGE: http://economix.u-paris10.fr/fr/axes/remi/membres/?contact=152

Gael Raballand

World Bank ( email )

701 18th street N.W.
Washington, DC 20433
United States

Université Paris I Panthéon-Sorbonne ( email )

17, rue de la Sorbonne
Paris, IL 75005
France

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