REDUCING THE FLOW OF ILLICIT GOODS ENTERING THROUGH CUSTOMS: AN ECONOMETRIC MODELLING APPROACH TO ECONOMIC ANALYSIS

Abstract

This paper develops and applies an econometric modelling framework to analyse and propose measures to reduce the flow of illicit goods entering a country through customs. Using panel-style microdata (border-post × month) and aggregated national indicators, the study identifies economic, operational, and enforcement drivers of illicit import flows and simulates policy interventions. Results show that strengthening risk-based targeting, increasing inspection intensity at high-risk nodes, improving information sharing, and raising expected penalties are associated with statistically and economically significant reductions in estimated illicit flows. The paper offers practical policy recommendations for customs authorities and outlines robustness checks and data-collection needs for sustained evaluation.