The decline in strength of the link between inspections and delays in the first-stage may be attributable to improvements in customs that complemented the reduction in inspections. One might expect that a customs agency that was willing to adopt new inspection procedures to facilitate trade might also take other steps aimed at facilitating trade, conditional on inspection. For example, electronic systems that allowed more effective communication of inspectors from different agencies or faster payment of fines associated with infractions would weaken the link between inspections and delays. Weaker links between inspections and time in customs might also arise if the declining number of inspections led to less congestion at the border.<sup>46</sup> As a different exercise we allow for longer-term effects of reduced inspections on import values by limiting the sample to observations in 2007 and 2012 that occur in both years and reestimating by 2SLS-IV Eqs. (2)-(3) over the long-differences defined in this way. Our baseline specification in first-differences exploits contemporaneous variation in inspections, time and import flows, but one might expect firms to have longer-run responses to the reforms that are not observable at this frequency.<sup>47</sup> Estimating over long-differences is one way to observe longer run responses. Naturally, the sample size used for such specifications is much smaller since it covers only firm-HS 6-digit product-origin country import flows observed at the beginning and the end of the sample period and it is well known that trade flows have low survival rates.<sup>48</sup> Our identification assumption for the 2SLS-IV framework is that the very rich vector of fixed effects included in Eqs. (2)-(3) account for the risk model used by Albanian customs when determining whether declarations are allocated to the red channel for physical inspection. However, as described in Section 2, our sample period was characterized by substantial reforms and it is possible that the risk model of the customs agency changed during the period. As such, it is not entirely clear what fixed effects should be included in the long-difference specifications.

> 46 The length of time goods spend in customs is not solely dependent on the customs office, but also depends on the products and firms in question.  Delays may occur because firms do not quickly pay their fines, for example.  Firms might also simply prepare goods in ways that allow inspections to occur more quickly (because they are more obviously compliant, for example).  It could therefore be that changing firm behavior (which might be endogenous to the efficiency of customs) also contributed to the weaker link between inspections and delays as reform proceeded.

> 47 In particular one might expect firms to reorganize their supply chains, which might bring greater efficiency. Some reorganizations might not be possible within a year’s time.  Moreover larger changes might not be warranted unless the reforms seem credible.  Because the reforms were deep and sustained over our sample period, it is particularly valuable to investigate longer run responses here.

> 48 See for example Cadot, Brenton, and Pierola (2012) for evidence focused on Africa.

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