Border Barriers and Illicit Trade Flows.

This article examines the impact of border wall construction on illicit trade flows, focusing on how walls influence smuggling through legal ports of entry. Using over five decades of detailed product-level trade data and a novel measure based on concentrated discrepancies in mirrored trade statistics, the authors find that border walls increase illicit trade at official crossings by diverting smuggling from unpermitted border points. This effect is particularly pronounced for differentiated goods, which are more susceptible to misinvoicing due to price variability and reliance on interpersonal networks. The study also shows that walls combined with low-capacity border filtering infrastructure exacerbate illicit flows at ports of entry, challenging the common justification that walls effectively reduce illicit trade. The findings suggest that border walls may be costly and of limited effectiveness in curbing illicit goods, highlighting the need for further research on their broader impacts on illicit flows and migration.