IDEAS home Printed from https://ideas.repec.org/a/eee/poleco/v65y2020ics0176268020300811.html
   My bibliography  Save this article

Policy tolerance of economic crime? An empirical analysis of the effect of counterfeiting on Italian trade

Author

Listed:
  • Beqiraj, Elton
  • Fedeli, Silvia
  • Giuriato, Luisa

Abstract

Some governments seem ambivalent towards economic crime because, on the one hand, there are adverse effects on competition and legal businesses; on the other hand, there are benefits through (shadow) employment and income in less-developed areas, as well as benefits through relations of political clientage. We focus on counterfeiting and its economic effects on trade in Italy during the economic crisis. Using a newly built regional dataset and a dynamic panel model, we find evidence of the dual impact of counterfeiting. The production (and exchange) of fake goods depresses the legal market that relies on intellectual property rights but supports shadow-economic activities for the benefit of illegal workers, criminal organisations, and political clientele. We show that the negative effects outweigh the positive effects.

Suggested Citation

  • Beqiraj, Elton & Fedeli, Silvia & Giuriato, Luisa, 2020. "Policy tolerance of economic crime? An empirical analysis of the effect of counterfeiting on Italian trade," European Journal of Political Economy, Elsevier, vol. 65(C).
    • Handle: RePEc:eee:poleco:v:65:y:2020:i:c:s0176268020300811
    DOI: 10.1016/j.ejpoleco.2020.101933
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0176268020300811
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.ejpoleco.2020.101933?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Werner Antweiler & Daniel Trefler, 2002. "Increasing Returns and All That: A View from Trade," American Economic Review, American Economic Association, vol. 92(1), pages 93-119, March.
    2. Robert C. Feenstra, 1998. "Integration of Trade and Disintegration of Production in the Global Economy," Journal of Economic Perspectives, American Economic Association, vol. 12(4), pages 31-50, Fall.
    3. Maskus, Keith E. & Penubarti, Mohan, 1995. "How trade-related are intellectual property rights?," Journal of International Economics, Elsevier, vol. 39(3-4), pages 227-248, November.
    4. Marianne Baxter & Michael A. Kouparitsas, 2005. "What determines bilateral trade flows?," Working Paper Series WP-05-11, Federal Reserve Bank of Chicago.
    5. Scognamiglio, Annalisa, 2018. "When the mafia comes to town," European Journal of Political Economy, Elsevier, vol. 55(C), pages 573-590.
    6. Silvia Fedeli & Vitantonio Mariella & Marco Onofri, 2018. "Determinants of Joblessness During the Economic Crisis: Impact of Criminality in the Italian Labour Market," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 139(2), pages 559-588, September.
    7. Aitken, Brian & Hanson, Gordon H. & Harrison, Ann E., 1997. "Spillovers, foreign investment, and export behavior," Journal of International Economics, Elsevier, vol. 43(1-2), pages 103-132, August.
    8. Glick, Reuven & Rose, Andrew K., 2002. "Does a currency union affect trade? The time-series evidence," European Economic Review, Elsevier, vol. 46(6), pages 1125-1151, June.
    9. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, February.
    10. Donald R. Davis & David E. Weinstein, 2001. "An Account of Global Factor Trade," American Economic Review, American Economic Association, vol. 91(5), pages 1423-1453, December.
    11. Stephen Bond & Anke Hoeffler, 2001. "GMM Estimation of Empirical Growth Models," Economics Series Working Papers 2001-W21, University of Oxford, Department of Economics.
    12. Christopher F Baum & Mark E. Schaffer & Steven Stillman, 2007. "Enhanced routines for instrumental variables/generalized method of moments estimation and testing," Stata Journal, StataCorp LP, vol. 7(4), pages 465-506, December.
    13. Michelle R. Garfinkel & Stergios Skaperdas & Constantinos Syropoulos, 2009. "International Trade and Transnational Insecurity: How Comparative Advantage and Power are Jointly Determined," Working Papers 080921, University of California-Irvine, Department of Economics.
    14. Alan Zimmerman & Peggy Chaudhry, 2009. "The Economics of Counterfeit Trade," Springer Books, Springer, number 978-3-540-77835-6, November.
    15. David Roodman, 2009. "How to do xtabond2: An introduction to difference and system GMM in Stata," Stata Journal, StataCorp LP, vol. 9(1), pages 86-136, March.
    16. Stergios Skaperdas, 2001. "The political economy of organized crime: providing protection when the state does not," Economics of Governance, Springer, vol. 2(3), pages 173-202, November.
    17. Angela K. Dills & Jeffrey A. Miron & Garrett Summers, 2010. "What Do Economists Know about Crime?," NBER Chapters, in: The Economics of Crime: Lessons For and From Latin America, pages 269-302, National Bureau of Economic Research, Inc.
    18. Benjamin Powell & G.P. Manish & Malavika Nair, 2010. "Corruption, Crime and Economic Growth," Chapters, in: Bruce L. Benson & Paul R. Zimmerman (ed.), Handbook on the Economics of Crime, chapter 13, Edward Elgar Publishing.
    19. Grossman, Gene M & Shapiro, Carl, 1988. "Counterfeit-Product Trade," American Economic Review, American Economic Association, vol. 78(1), pages 59-75, March.
    20. James E. Anderson & Eric van Wincoop, 2004. "Trade Costs," Journal of Economic Literature, American Economic Association, vol. 42(3), pages 691-751, September.
    21. James E. Anderson & Eric van Wincoop, 2003. "Gravity with Gravitas: A Solution to the Border Puzzle," American Economic Review, American Economic Association, vol. 93(1), pages 170-192, March.
    22. Baldwin, Richard, 2007. "Trade Effects of the Euro: a Comparison of Estimators," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 22, pages 780-818.
    23. Giovanni Peri, 2004. "Social Variables and Economics Success: The Case of Italian Industrial Development," Working Papers 42, University of California, Davis, Department of Economics.
    24. Banerjee, Dyuti S., 2006. "Lobbying and commercial software piracy," European Journal of Political Economy, Elsevier, vol. 22(1), pages 139-155, March.
    25. Staake, Thorsten & Thiesse, Frédéric & Fleisch, Elgar, 2012. "Business strategies in the counterfeit market," Journal of Business Research, Elsevier, vol. 65(5), pages 658-665.
    26. Yi Qian, 2008. "Impacts of Entry by Counterfeiters," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(4), pages 1577-1609.
    27. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    28. Baier, Scott L. & Bergstrand, Jeffrey H., 2001. "The growth of world trade: tariffs, transport costs, and income similarity," Journal of International Economics, Elsevier, vol. 53(1), pages 1-27, February.
    29. Feinberg, Robert M & Rousslang, Donald J, 1990. "The Economic Effects of Intellectual Property Right Infringements," The Journal of Business, University of Chicago Press, vol. 63(1), pages 79-90, January.
    30. Anderson, T. W. & Hsiao, Cheng, 1982. "Formulation and estimation of dynamic models using panel data," Journal of Econometrics, Elsevier, vol. 18(1), pages 47-82, January.
    31. Yi Qian, 2014. "Brand Management and Strategies Against Counterfeits," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(2), pages 317-343, June.
    32. Stephen Bond & Anke Hoeffler & Jonathan Temple, 2001. "GMM Estimation of Empirical Growth Models," Economics Papers 2001-W21, Economics Group, Nuffield College, University of Oxford.
    33. Jen-Te Yao, 2005. "How a Luxury Monopolist Might Benefit from a Stringent Counterfeit Monitoring Regime," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 4(3), pages 177-192, December.
    34. Anderson, James E. & Bandiera, Oriana, 2005. "Private enforcement and social efficiency," Journal of Development Economics, Elsevier, vol. 77(2), pages 341-366, August.
    35. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    36. Daniele, Vittorio & Marani, Ugo, 2011. "Organized crime, the quality of local institutions and FDI in Italy: A panel data analysis," European Journal of Political Economy, Elsevier, vol. 27(1), pages 132-142, March.
    37. Wickramasekera, Nyantara & Wright, Judy & Elsey, Helen & Murray, Jenni & Tubeuf, Sandy, 2015. "Cost of crime: A systematic review," Journal of Criminal Justice, Elsevier, vol. 43(3), pages 218-228.
    38. James E. Anderson, 2006. "Commercial Policy in a Predatory World," NBER Working Papers 12576, National Bureau of Economic Research, Inc.
    39. James E. Anderson & Douglas Marcouiller, 2002. "Insecurity And The Pattern Of Trade: An Empirical Investigation," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 342-352, May.
    40. Attilio Scaglione, 2016. "Cosa Nostra and Camorra: illegal activities and organisational structures," Global Crime, Taylor & Francis Journals, vol. 17(1), pages 60-78, January.
    41. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-1426, November.
    42. Giovanni Peri, 2004. "Social Variables and Economics Success: The Case of Italian Industrial Development," Working Papers 95, University of California, Davis, Department of Economics.
    43. Douhou, Salima & Magnus, Jan R. & van Soest, Arthur, 2011. "The perception of small crime," European Journal of Political Economy, Elsevier, vol. 27(4), pages 749-763.
    44. Samuel Bazzi & Michael A. Clemens, 2013. "Blunt Instruments: Avoiding Common Pitfalls in Identifying the Causes of Economic Growth," American Economic Journal: Macroeconomics, American Economic Association, vol. 5(2), pages 152-186, April.
    45. Kevin D. Hoover & Stephen J. Perez, 1999. "Reply to our discussants," Econometrics Journal, Royal Economic Society, vol. 2(2), pages 244-247.
    46. Bruce L. Benson & Paul R. Zimmerman (ed.), 2010. "Handbook on the Economics of Crime," Books, Edward Elgar Publishing, number 13180.
    47. Paolo Pinotti, 2015. "The Economic Costs of Organised Crime: Evidence from Southern Italy," Economic Journal, Royal Economic Society, vol. 125(586), pages 203-232, August.
    48. Smith, Pamela J., 2001. "How do foreign patent rights affect U.S. exports, affiliate sales, and licenses?," Journal of International Economics, Elsevier, vol. 55(2), pages 411-439, December.
    49. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    50. Yi Qian, 2011. "Counterfeiters: Foes or Friends? How Do Counterfeits Affect Different Product Quality Tiers?," NBER Working Papers 16785, National Bureau of Economic Research, Inc.
    51. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Dewey, Matías & Woll, Cornelia & Ronconi, Lucas, 2021. "The political economy of law enforcement," MaxPo Discussion Paper Series 21/1, Max Planck Sciences Po Center on Coping with Instability in Market Societies (MaxPo).
    2. Matías Dewey & Donato Di Carlo, 2022. "Governing through non‐enforcement: Regulatory forbearance as industrial policy in advanced economies," Regulation & Governance, John Wiley & Sons, vol. 16(3), pages 930-950, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Elton Beqiraj & Silvia Fedeli & Luisa Giuriato, 2019. "How do organized crime and counterfeit interact in Italian trading firms? An empirical analysis of their effects on trade," Working Papers in Public Economics 187, University of Rome La Sapienza, Department of Economics and Law.
    2. Mindaugas Butkus & Janina Seputiene, 2018. "Growth Effect of Public Debt: The Role of Government Effectiveness and Trade Balance," Economies, MDPI, vol. 6(4), pages 1-27, November.
    3. Braunfels, Elias, 2014. "How do Political and Economic Institutions Affect Each Other?," Discussion Paper Series in Economics 19/2014, Norwegian School of Economics, Department of Economics.
    4. Gründler, Klaus & Scheuermeyer, Philipp, 2015. "Income inequality, economic growth, and the effect of redistribution," W.E.P. - Würzburg Economic Papers 95, University of Würzburg, Department of Economics.
    5. Gründler, Klaus & Scheuermeyer, Philipp, 2018. "Growth effects of inequality and redistribution: What are the transmission channels?," Journal of Macroeconomics, Elsevier, vol. 55(C), pages 293-313.
    6. Zheng, Xinye & Li, Fanghua & Song, Shunfeng & Yu, Yihua, 2013. "Central government's infrastructure investment across Chinese regions: A dynamic spatial panel data approach," China Economic Review, Elsevier, vol. 27(C), pages 264-276.
    7. Ekrame Boubtane & Jean-Christophe Dumont & Christophe Rault, 2013. "Immigration and economic growth in the OECD countries 1986-2006," Post-Print halshs-00800617, HAL.
    8. Martin Andersson & Hans Lööf, 2011. "Agglomeration and productivity: evidence from firm-level data," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 46(3), pages 601-620, June.
    9. Ekrame Boubtane & Jean-Christophe Dumont & Christophe Rault, 2016. "Immigration and economic growth in the OECD countries 1986–2006," Oxford Economic Papers, Oxford University Press, vol. 68(2), pages 340-360.
    10. Ekrame Boubtane & Jean-Christophe Dumont & Christophe Rault, 2016. "Immigration and economic growth in the OECD countries 1986–2006," Oxford Economic Papers, Oxford University Press, vol. 68(2), pages 340-360.
    11. Gründler, Klaus & Krieger, Tommy, 2016. "Democracy and growth: Evidence from a machine learning indicator," European Journal of Political Economy, Elsevier, vol. 45(S), pages 85-107.
    12. Boukhatem, Jamel, 2016. "Assessing the direct effect of financial development on poverty reduction in a panel of low- and middle-income countries," Research in International Business and Finance, Elsevier, vol. 37(C), pages 214-230.
    13. Berk, Istemi & Kasman, Adnan & Kılınç, Dilara, 2020. "Towards a common renewable future: The System-GMM approach to assess the convergence in renewable energy consumption of EU countries," Energy Economics, Elsevier, vol. 87(C).
    14. Gründler, Klaus, 2015. "The vanishing effect of finance on growth," Discussion Paper Series 133, Julius Maximilian University of Würzburg, Chair of Economic Order and Social Policy.
    15. Stef, Nicolae, 2022. "How does legal design affect the initiation of a firm's bankruptcy?," Economic Modelling, Elsevier, vol. 114(C).
    16. Ekrame BOUBTANE & Jean-Christophe DUMONT & Christophe RAULT, 2015. "Immigration and Economic Growth in the OECD Countries 1986-2006," LEO Working Papers / DR LEO 2235, Orleans Economics Laboratory / Laboratoire d'Economie d'Orleans (LEO), University of Orleans.
    17. DELL'ANNO, Roberto & VILLA, Stefania, 2012. "Growth in Transition Countries: Big Bang versus Gradualism," CELPE Discussion Papers 122, CELPE - CEnter for Labor and Political Economics, University of Salerno, Italy.
    18. Yerrabati, Sridevi, 2022. "Does vulnerable employment alleviate poverty in developing countries?," Economic Modelling, Elsevier, vol. 116(C).
    19. Sèna Kimm Gnangnon, 2022. "Financial development and tax revenue in developing countries: investigating the international trade channel," SN Business & Economics, Springer, vol. 2(1), pages 1-26, January.
    20. Fagiolo, Giorgio & Santoni, Gianluca, 2015. "Human-mobility networks, country income, and labor productivity," Network Science, Cambridge University Press, vol. 3(3), pages 377-407, September.

    More about this item

    Keywords

    Trade openness; Export; Economic crime; Counterfeiting; Italy; Public policy ambiguity;
    All these keywords.

    JEL classification:

    • E26 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • F19 - International Economics - - Trade - - - Other
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • K14 - Law and Economics - - Basic Areas of Law - - - Criminal Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:poleco:v:65:y:2020:i:c:s0176268020300811. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/505544 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.