Risk Management in Border Inspection
As part of their commitments under the World Trade Organization’s Agreement on Trade Facilitation, many developing countries are set to adopt risk management, a strategy for selecting import shipments for inspection. This paper formalizes key enforcement issues related to risk management. It ar...
| Main Authors: | , , |
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| Language: | English |
| Published: |
World Bank, Washington, DC
2020
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/816841602688697224/Risk-Management-in-Border-Inspection http://hdl.handle.net/10986/34633 |
| Summary: | As part of their commitments under the World Trade
Organization’s Agreement on Trade Facilitation, many
developing countries are set to adopt risk management, a
strategy for selecting import shipments for inspection. This
paper formalizes key enforcement issues related to risk management.
It argues that the complexities of international
trade oversight mean that inspecting agencies lack certainty
about the conditional probability that a given shipment
will not comply with import regulations. Ambiguity of this
sort is likely to be important in developing countries that
lack the sophisticated information technology (IT) used
in advanced risk management systems. This paper show
empirically that infrequent shipments have conditionally
higher inspection rates, a finding that is consistent with the
ambiguity hypothesis. This paper formalizes a role for ambiguity
in a theoretical model of border inspection. Finally,
the paper calibrates the model and shock the ambiguity
parameters to illustrate the consequences of an IT -driven
improvement in risk management capabilities for search
and compliance. |
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