Evolve to survive: Firm adjustment to customs-driven administrative barriers

23  October 2017    3:00 pm

Evgenii Monastyrenko, Paris School of Economics

In cooperation with:
Research Centre International Economics (FIW) 

Venue

wiiw, Rahlgasse 3, 1060 Vienna

Description

The presentation is based on a paper co-authored with Cristina Daniela Herghelegiu (Paris School of Economics).

Over the last decades, tariffs have been substantially reduced through multilateral and regional negotiations. The research and policy agendas have shifted towards less standard trade barriers. Exporters all over the world must comply with complex regulations, prepare the necessary paperwork, have their shipments inspected and be subject to lengthy customs clearance. Uncertainty associated with the time delays induced by customs clearance and uncertainty in delivery conditions may negatively affect trade.

Evgenii Monastyrenko

This paper explores the role of uncertainty in trade associated with both customs-specific time delays and delivery conditions. We employ a highly detailed dataset on the export from Russia, over the 2011-2015 period. By exploiting the customs clearance process in Russia, we identify the causal impact of customs-driven administrative barriers on the extensive and intensive margins of export flows. We show that time delays induced by customs clearance negatively affect exports, even after controlling for other potentially confounding factors. Overall, we observe significant heterogeneity in stringency of customs-related administrative barriers across customs control points at the border. We further explore the role of Incoterms, which are used as a tool to delimit the risks associated with transportation and delivery of goods. We show that the more risks are passed to the buyers, the higher the export value is. Meanwhile, in the cases where exporters take full control over export clearance, the export margins are significantly higher.

Paper and Powerpoint presentation, as far as available, are posted on this page after the seminar.

Keywords: Customs, Administrative barriers, Uncertainty, Export margins

JEL classification: F10, F13, F14


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