[gov3009-l] Sequeira on the Efficiency Cost of Corruption

Justin Grimmer jgrimmer at fas.harvard.edu
Tue Apr 7 17:39:03 EDT 2009


Dear Applied Statistics Workshop,

The workshop will meet tomorrow, when Sandra Sequeira, a PhD candidate in
public policy, will present her work on the efficiency cost of corruption,
work that is joint with Simeon Djankov.  Sandra provided the following
abstract for her talk:

This paper estimates the efficiency cost of corruption. We generate an
original dataset on bribe payments at ports in Southern Africa that allows
us to take an unusually close look into the black box of corruption,
observing how bureaucrats set bribes and measuring their economic costs on
firms and on the broader economy. We find that bribes are product-specific,
frequent and substantial. Bribes can represent up to a 14\% increase in
total shipping costs for a standard 20ft container and a 600\% increase in
the monthly salary of a port official. Bribes are paid primarily to evade
tariffs, protect cargo on the docks and avoid costly storage. We further
identify three systemic effects associated with this type of corruption: a
``diversion effect" where firms go the long way around to avoid the most
corrupt port; a ``revenue effect" as bribes reduce overall tariff revenue;
and a ``congestion effect" as the re-routing of firms increases congestion
and transport costs by causing imbalanced cargo flows in the transport
network. The evidence supports the theory that bribe payments at ports
represent a significant distortionary tax on trade, as opposed to just a
transfer between shippers and port officials that greases slow-moving
clearing queues.


The Applied Statistics Workshop meets each Wednesday at 12 noon in K-354
CGIS-Knafel (1737 Cambridge St).  The workshop begins with a light lunch and
presentations usually start around 1215 and last until about 130 pm.

Apologies for the late notice and I hope you'll be able to attend,
Justin Grimmer
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