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Captive Markets: the Impact of Kidnappings on Corporate Investment in Colombia

Author

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  • Rony Pshisva
  • Gustavo A. Suárez F.

Abstract

Este estudio explota la variación de los secuestros ocurridos en Colombia durante el periodo 1996-2002 para medir el impacto del crimen sobre la inversión privada. El resultado principal es que las empresas invierten menos cuando los secuestros están dirigidos directamente contra su capital humano. Además, se encuentra que formas de crimen más amplias -homicidios, ataques guerrilleros y secuestros en general- no tienen un impacto significativo sobre la inversión. Este hallazgo permite descartar la posibilidad de que el resultado principal del estudio sea producto de variables no observadas que expliquen, al mismo tiempo, la actividad criminal general y la inversión. Adicionalmente, los secuestros dirigidos contra las empresas no sólo reducen la inversión de las empresas con ventas en el mercado local, sino también la inversión de las empresas con ventas en los mercados externos. Por esta razón, es improbable que el impacto negativo de los secuestros sobre la inversión sea resultado de una correlación no observada entre condiciones de demanda adversas y actividad criminal. Por último, los resultados son consistentes con la hipótesis de que los gerentes de las empresas se resisten a invertir cuando su libertad y su vida están en riesgo; aunque no es del todo posible descartar explicaciones alternativas.

Suggested Citation

  • Rony Pshisva & Gustavo A. Suárez F., 2006. "Captive Markets: the Impact of Kidnappings on Corporate Investment in Colombia," Coyuntura Económica, Fedesarrollo, June.
    • Handle: RePEc:col:000438:013356
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    File URL: http://hdl.handle.net/11445/949
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    3. Bernal, Carolina & Prem, Mounu & Vargas, Juan F. & Ortiz, Mónica, 2024. "Peaceful entry: Entrepreneurship dynamics during Colombia’s peace agreement," Journal of Development Economics, Elsevier, vol. 166(C).
    4. Adriana Camacho & Catherine Rodriguez, 2013. "Firm Exit and Armed Conflict in Colombia," Journal of Conflict Resolution, Peace Science Society (International), vol. 57(1), pages 89-116, February.
    5. Alexander Fink & Mark Pingle, 2014. "Kidnap insurance and its impact on kidnapping outcomes," Public Choice, Springer, vol. 160(3), pages 481-499, September.
    6. De Mello Joao M & Zilberman Eduardo, 2008. "Does Crime Affect Economic Decisions? An Empirical Investigation of Savings in a High-Crime Environment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 8(1), pages 1-28, December.
    7. Abadie, Alberto & Gardeazabal, Javier, 2008. "Terrorism and the world economy," European Economic Review, Elsevier, vol. 52(1), pages 1-27, January.
    8. Kumiko Kawachi, 2018. "Managing Safety and Security Management for International Volunteers: A Case Study of Japan Overseas Cooperation Volunteers in Colombia during the War on Drugs," Working Papers 171, JICA Research Institute.
    9. Gavious, Ilanit, 2022. "The economic consequences of violence against civilians: Developing economic resilience to violence," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 76(C).
    10. Bernales, Alejandro & Beuermann, Diether W. & Cumming, Douglas & Olid, Christian, 2023. "Blue-Collar Crime and Finance," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 83(C).
    11. Adriana Camacho, 2007. "Stress and birth outcomes: evidence from terrorist attacks in Colombia," Documentos CEDE 4014, Universidad de los Andes, Facultad de Economía, CEDE.
    12. Rozo, Sandra V., 2020. "Unintended effects of illegal economic activities: Illegal gold mining and malaria," World Development, Elsevier, vol. 136(C).
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    14. Catalina Gómez Toro, 2014. "La relación virtuosa de la seguridad y la inversión extranjera directa en Colombia (1994-2013)," Ensayos de Política Económica, Departamento de Investigación Francisco Valsecchi, Facultad de Ciencias Económicas, Pontificia Universidad Católica Argentina., vol. 2(2), pages 62-87, Octubre.
    15. Adriana Camacho & Catherine Rodriguez, 2013. "Firm Exit and Armed Conflict in Colombia," Journal of Conflict Resolution, Peace Science Society (International), vol. 57(1), pages 89-116, February.
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    19. Loureiro, Paulo R. A. & Silva, Emilson Caputo Delfino, 2010. "Does Violence Deter Investment, Hinder Economic Growth?," Brazilian Review of Econometrics, Sociedade Brasileira de Econometria - SBE, vol. 30(1), October.

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    More about this item

    Keywords

    Crimen; Secuestro; Inversiones; Colombia;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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