Organized Crime, Foreign Investment and Economic Growth
AbstractLatin America has been seen over the years as a violent region. Organized crime has been a major factor contributing to that perception. Crime not only makes daily life more dangerous for citizens of a country, but can even challenge the viability of governments. Crime fighting efforts drain state resources, threaten the delivery of public services, and might have a negative influence on institutional stability and business environment. The purpose of this paper is to extend the empirical framework of Bengoa and Sánchez-Robles (2002) to cover the relationship between organized crime, foreign direct investment (FDI) and growth. Although the relationship between organized crime and FDI is not widely discussed in the literature, it can be argued that there is a very important channel through which this relationship may exist: institutional instability of states and viability of governments. The paper finds that there is no significant correlation between organized crime and FDI flows. The results also show that there is a negative relationship between FDI and growth. The relationship between FDI and growth was explored cautiously because the economic literature suggests that there is a two-way causal link between these two variables. That possible source of endogeneity in the analysis is addressed econometrically in this paper using the Two Stage Least Squares (2SLS) technique. The use of 2SLS was not originally considered by Bengoa and Sánchez-Robles (2002), and therefore it is an additional contribution of this paper to the literature.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by UNIVERSIDAD TECNOLÓGICA DE BOLÍVAR in its journal REVISTA ECONOMÍA & REGIÓN.
Volume (Year): (2012)
Issue (Month): ()
Contact details of provider:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Eduardo Borensztein & Jose De Gregorio & Jong-Wha Lee, 1995.
"How Does Foreign Direct Investment Affect Economic Growth?,"
NBER Working Papers
5057, National Bureau of Economic Research, Inc.
- Borensztein, E. & De Gregorio, J. & Lee, J-W., 1998. "How does foreign direct investment affect economic growth?1," Journal of International Economics, Elsevier, vol. 45(1), pages 115-135, June.
- Vittorio, Daniele & Ugo, Marani, 2008.
"Organized Crime and Foreign Direct Investment: the Italian Case,"
7217, University Library of Munich, Germany.
- Vittorio Daniele & Ugo Marani, 2008. "Organized Crime and Foreign Direct Investment: The Italian Case," CESifo Working Paper Series 2416, CESifo Group Munich.
- Vittorio, Daniele & Ugo, Marani, 2008. "Organized Crime and Foreign Direct Investment: the Italian Case," MPRA Paper 7279, University Library of Munich, Germany.
- Miguel D. Ramirez, 2010. "Economic and Institutional Determinants of FDI Flows to Latin America: A Panel Study," Working Papers 1003, Trinity College, Department of Economics.
- Luiz de Mello, 1997. "Foreign direct investment in developing countries and growth: A selective survey," Journal of Development Studies, Taylor & Francis Journals, vol. 34(1), pages 1-34.
- Hsiao,Cheng, 2003.
"Analysis of Panel Data,"
Cambridge University Press, number 9780521522717, December.
- Bhagwati, Jagdish, 1994. "Free Trade: Old and New Challenges," Economic Journal, Royal Economic Society, vol. 104(423), pages 231-46, March.
- Bengoa, Marta & Sanchez-Robles, Blanca, 2003. "Foreign direct investment, economic freedom and growth: new evidence from Latin America," European Journal of Political Economy, Elsevier, vol. 19(3), pages 529-545, September.
- Jamuna Agarwal, 1980. "Determinants of foreign direct investment: A survey," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 116(4), pages 739-773, December.
- Boyd, John H. & Smith, Bruce D., 1992. "Intermediation and the equilibrium allocation of investment capital : Implications for economic development," Journal of Monetary Economics, Elsevier, vol. 30(3), pages 409-432, December.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Roberto Fortich).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.