Smuggling around the World: Evidence from a Structural Equation Model

Andreas Buehn (1) , Mohammad Reza Farzanegan (2)

1 Faculty of Business and Economics
2 Faculty of Business and Economics

This paper uses a Multiple Indicators Multiple Causes (MIMIC) model to analyze the determinants of smuggling. The analysis reveals that higher corruption and a lower rule of law encourage smuggling. Tariffs and trade restrictions are important push factors, while a higher black market premium (BMP) discourages smugglers. Based on the MIMIC estimates, we calculate an index of smuggling which provides a ranking for 54 countries. We find that smuggling is rampant in Cameroon, Pakistan, and Kenya while it is least prevalent in Switzerland, Finland, and Sweden.

Mots clés: Social Sciences & Humanities

Domaines: Économie et finance quantitative [q-fin]

Andreas Buehn, Mohammad Reza Farzanegan. Smuggling around the World: Evidence from a Structural Equation Model. Applied Economics, 2011, pp.1. ⟨10.1080/00036846.2011.570715⟩. ⟨hal-00710057⟩