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Machinery Production Networks and Tariff Evasion

Author

Listed:
  • Mateus Silva Chang

    (Graduate School of Economics, Keio University)

  • Chin-Ho Lin

    (Graduate School of Economics, Keio University)

Abstract
In this paper we followed Fisman and Wei's (2004) approach to estimate the effects of import tariff rates on import tariff evasion. We focus on East Asian countries import of machinery products. Our main objective is to test if the trade realized inside production networks (intra-regional) is less prone to import tariff evasion than imports from countries outside it (inter-regional). In this study we considered the differences in tariff evasion between intra and inter-regional imports; parts and components and final products; and the heterogeneity between electric machinery and transport equipment. The data provide evidences that intra-regional imports are less prone to tariff evasion than inter-regional imports. Besides this, we identify differences in the channels employed to evade tariff. The results suggest that underreport of quantities was the main channel employed in intraregional imports tariff evasion, while inter-regional import tariffs were evaded through unit price misreport.

Suggested Citation

  • Mateus Silva Chang & Chin-Ho Lin, 2017. "Machinery Production Networks and Tariff Evasion," Keio-IES Discussion Paper Series 2017-023, Institute for Economics Studies, Keio University.
    • Handle: RePEc:keo:dpaper:2017-023
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    File URL: https://ies.keio.ac.jp/upload/pdf/en/DP2017-023.pdf
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    More about this item

    Keywords

    Tariff evasion; Import tariff; Machinery Production Networks; East Asia;
    All these keywords.

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance

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