Ana Margarida Fernandes

Custom Inspector/Broker Collusion

Who evades taxes and to what extent is such evasion facilitated by bureaucrats? Ana Margarida Fernandes offers a new methodology to detect the prevalence and costs of collusion between brokers and customs inspectors based on deviations from the official rules in the allocation of import declarations to inspectors, using unique customs transaction data from Madagascar. Application of this methodology in Madagascar’s main port reveals that the allocation of at least 10 percent of declarations deviates from official rules. These deviant declarations are associated with a significantly increased risk of tax evasion; they have higher risk scores, are more likely to be recommended for physical inspection and valuation advice and exhibit lower pre-inspection unit prices. Moreover, inspectors clear the declarations of the brokers with whom they may be colluding significantly faster, prioritise them over other declarations, are less likely to impose penalties or to adjust their value and tax amount upwards, thus exacerbating potential tax revenue losses. This differential treatment is especially pronounced for goods subject to high tariffs, and is not an artefact of inspector specialisation or congestion. These patterns attest to widespread collusion between different arms of the customs administration and brokers.

Ana Margarida Fernandes’ research interests include the consequences of openness to trade and FDI for firm-level outcomes such as productivity, innovation, quality upgrading and more broadly the determinants of firm performance, including the role of the business environment. She has also worked on professional services in Africa. Recently her work has been focusing on the impact evaluation of trade-related policy interventions – such as export promotion and customs reforms.

Ms Fernandes’ research agenda while at the ifo Institute will cover a new study with Gabriel Felbermayr and Feodora Teti on the impact of preferential trade agreements on exporter dynamics using novel firm-level customs data for exports for forty countries. Her agenda may also cover the revision of a paper on the impact of customs risk management reforms on time to trade, uncertainty and trade in Albania.

Ana Margarida Fernandes is a senior economist in the Trade and International Integration Unit of the Development Research Group at the World Bank. She holds a BA from Universidade Nova de Lisboa, Portugal and an MA and a PhD in Economics from Yale University. She joined the World Bank as a Young Economist in 2002. Since 2011 she has been managing the Exporter Dynamics Database project and working on the link between exporter growth and dynamics, development and policies. Her research has been published in the Review of Economics and Statistics, the Journal of International Economics, the Journal of Development Economics, the World Bank Economic Review, among other scholarly publications.