Fostering Official Trade

Last registered on July 30, 2024

Pre-Trial

Trial Information

General Information

Title
Fostering Official Trade
RCT ID
AEARCTR-0013919
Initial registration date
July 30, 2024

Initial registration date is when the trial was registered.

It corresponds to when the registration was submitted to the Registry to be reviewed for publication.

First published
July 30, 2024, 10:21 AM EDT

First published corresponds to when the trial was first made public on the Registry after being reviewed.

Locations

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Primary Investigator

Affiliation
U.C. Berkeley

Other Primary Investigator(s)

PI Affiliation
University of Naples
PI Affiliation
University of Copenhagen

Additional Trial Information

Status
On going
Start date
2023-11-01
End date
2025-03-31
Secondary IDs
Prior work
This trial does not extend or rely on any prior RCTs.
Abstract
In much of the developing world, a large fraction of cross-border trade is conducted by small-scale traders who are often unregistered (informal) or on the verge of informality. These traders face a common question: whether to choose official or unofficial routes when crossing the border. When they use unofficial crossings, they can avoid paying tariffs and limit delays due to official procedures, but they incur significant risks as trading unofficially may result in fines, confiscation of goods, and arrest, or in having to pay bribes to the police to avoid getting caught. The choice between formality and informality is affected by information frictions (knowing the costs and benefits of the different options) and credit constraints (having resources to pay the costs of trading formally). This project will implement two interventions to test for the role of these two constraints. Using a sample of traders who commonly engage in cross-border trading between Kenya and Uganda and through an RCT, we will estimate (i) the impact of receiving a subsidy to (partly) pay for the cost of trading formally and (ii) the additional impact of receiving up to date information about the relative risks and benefits of choosing official vs unofficial crossings; on traders' choice of border crossing (i.e. formalization), and firm performance. We will also investigate the persistence of behavior change for both treatment arms.
External Link(s)

Registration Citation

Citation
Falco, Paolo , Mattea Stein and Eleanor Wiseman . 2024. "Fostering Official Trade." AEA RCT Registry. July 30. https://doi.org/10.1257/rct.13919-1.0
Experimental Details

Interventions

Intervention(s)
The intervention includes two treatment groups and one control group.

- TREATMENT 1 - CASH: Traders receive incentives in the form of cash conditional on using official border crossings.
- TREATMENT 2 - CASH + INFORMATION: Traders receive incentives in the form of cash conditional on using official border crossings AND information about the risks of crossing the border officially vs unofficially.
- CONTROL: Traders do not receive any treatment.
Intervention Start Date
2024-08-05
Intervention End Date
2024-10-31

Primary Outcomes

Primary Outcomes (end points)
- Number of cross-border trading trips;
- Number of cross-border trading trips through official border crossings;
- Number of cross-border trading trips through unofficial border crossings;
- Business performance (e.g., volume of trade, number of employees, revenue, profit);
- Incidence of key risks (bribe-paying, harassment, confiscation of goods, arrest) at the official and unofficial border;
- Beliefs about key risks (bribe-paying, harassment, confiscation of goods, arrest) at the official and unofficial border;

These outcomes will be measured through a high-frequency phone survey and an in-person endline survey.
Primary Outcomes (explanation)

Secondary Outcomes

Secondary Outcomes (end points)
- Types of goods traded;
- Monetary Cost of crossing the border (including official costs, and unofficial costs, e.g. bribes).
Secondary Outcomes (explanation)

Experimental Design

Experimental Design
The design of the RCT includes a baseline, an intervention, high-frequency follow-up phone calls, and an endline in-person survey.

We will randomize a sample of traders who commonly engage in cross-border trading between Kenya and Uganda into three experimental groups. Treatment 1 - CASH will consist of cash payments conditional on conducting trading trips through official border crossings. Treatment 2 - CASH + INFORMATION will combine Treatment 1 with information from our baseline survey on the relative risks of conducting cross-border trade through official and unofficial border crossings. Control subjects will not receive any treatment.
Experimental Design Details
Not available
Randomization Method
The randomization will be carried out using software that will assign participants to the different treatment groups.
Randomization Unit
Individual trader
Was the treatment clustered?
No

Experiment Characteristics

Sample size: planned number of clusters
464
Sample size: planned number of observations
464
Sample size (or number of clusters) by treatment arms
179 traders CONTROL, 178 traders CASH treatment, 107 traders INFORMATION + CASH treatment
Minimum detectable effect size for main outcomes (accounting for sample design and clustering)
IRB

Institutional Review Boards (IRBs)

IRB Name
Research Ethics Committee at the Department of Economics at University of Copenhagen
IRB Approval Date
2024-07-30
IRB Approval Number
N/A