both the inspection of documents and the physical examination of goods.<sup>25</sup> The yellow channel implies an inspection of documents alone. The rarely used blue channel indicates that goods are cleared without inspection, but there remains a possibility of a post-clearance audit. The focus of our attention is the red channel, an indicator for physical inspection.

The Albanian customs transaction data are recorded at the 8-digit of the Harmonized System (HS) classification using different revisions of that classification (HS2002 for data in 2007-2008, HS2007 for data in 2009-2011, and HS2012 for data in 2012). To obtain a consistent product classification over time, which is crucial for our analysis, we first aggregate the raw transaction data to the HS 6-digit level and concord the HS2012 product codes to HS2007 product codes using a concordance table provided by WITS/COMTRADE. Then we concord these (HS2002 or HS2007) codes to a set of ‘consolidated’ HS 6-digit codes consistent over time and described in Cebeci _et al._ (2012).<sup>26</sup> At its most disaggregated level, the raw import data set includes 3,097,103 observations covering 5 types of imports – final imports for consumption, in transit, re-imports, warehouse, and other – but our analysis will focus on the 2,694,837 observations (87%) that are final imports for consumption.<sup>27</sup> Note that our data are comprehensive, covering the universe of Albanian formal import transactions.<sup>28</sup> Different parts of our analysis will rely on different aggregations of the raw import transaction data set: (i) the descriptive statistics in Section 3.2 will mostly employ data at the import declaration level while (ii) the econometric analysis that will estimate the effects of customs clearance time on trade growth will rely on an aggregation of the raw import transaction data to the importing firm-HS 6-digit product-origin country-year level. Each firmHS 6-digit product-origin country-year cell is based on the set of import shipments made by that particular firm, of that same product, from that same country over the course of the year.

> 25 The intensity of physical inspection can vary substantially, in some cases the truck is simply opened and inspected visually from the back, and in other cases the goods must be physically unpacked for inspection. Some goods are even sampled for testing in laboratories.  Unfortunately our data do not distinguish among types of physical inspections, they only indicate the presence of a red channel.

> 26 The principles behind this consolidation are to combine all the codes existing under the different HS classifications into a list of unique HS 6-digit codes then the basic principle of ‘consolidation’ is to identify the HS codes related to each other (e.g., codes that were split or merged with the modifications introduced by HS2002 or HS2007) and to replace them with a single code for the entire period. Cebeci (2012) provides additional details.

> 27 By observation (often designated as transaction or shipment) we refer to each item registered per import declaration.

> 28 The sum of import values across the 5 types of imports from our raw import dataset matches closely the total import values reported for Albania by WITS/COMTRADE over the period 2007-2012.

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