Trade Effects of Customs Reform: Evidence from Albania

53 Pages Posted: 20 Apr 2016 Last revised: 30 Apr 2018

See all articles by Ana M. Fernandes

Ana M. Fernandes

World Bank - International Trade Division; World Bank

Russell H. Hillberry

University of Melbourne - Department of Economics; World Bank - Development Research Group (DECRG)

Alejandra Mendoza Alcantara

World Bank - Trade and Competitiveness Global Practice

Russell Henry Hillberry

Purdue University

Date Written: March 10, 2015

Abstract

Despite enormous academic interest in international trade costs and keen policy interest in efforts to mitigate them, so far there is very little hard evidence on the impacts of trade facilitation efforts. This paper exploits a dramatic reduction in the rate of physical inspections by Albanian customs to estimate the effects of fewer inspection-related delays on the level and composition of imports. In this setting, the paper finds evidence that the expected median number of days spent in Albanian customs falls by 7 percent when the probability that a shipment is inspected falls from 50 percent or more to under 50 percent. In turn, this reduction in time produces a 7 percent increase in import value. The paper finds evidence that the reforms favored imports from preferential trading partners, especially the European Union. There are also reform-induced changes in the composition of trade, including increases in average quantities and unit prices, the number of shipments, and the number of importing firms per product-country pair and the number of countries per firm-product pair. A back-of-the-envelope calculation suggests that the estimate of 7 percent import growth along an intensive margin is roughly consistent with a 0.36 percentage point reduction in average tariff equivalent trade costs. Applying this figure to the value of Albania's non-oil imports produces a reform-induced trade cost savings estimate of approximately US$12 million in 2012.

Keywords: International Trade and Trade Rules, Trade Facilitation, Rules of Origin, Trade Policy, Trade and Multilateral Issues, Trade and Services

Suggested Citation

Fernandes, Ana Margarida and Hillberry, Russell H. and Mendoza Alcantara, Alejandra and Hillberry, Russell Henry, Trade Effects of Customs Reform: Evidence from Albania (March 10, 2015). World Bank Policy Research Working Paper No. 7210, Available at SSRN: https://ssrn.com/abstract=2576526

Ana Margarida Fernandes (Contact Author)

World Bank - International Trade Division

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

World Bank ( email )

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

HOME PAGE: http://econ.worldbank.org/staff/afernandes

Russell H. Hillberry

University of Melbourne - Department of Economics ( email )

Melbourne, 3010
Australia

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Alejandra Mendoza Alcantara

World Bank - Trade and Competitiveness Global Practice ( email )

Washington, DC
United States

Russell Henry Hillberry

Purdue University ( email )

610 Purdue Mall
West Lafayette, IN 47907
United States

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