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

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  • 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
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    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.

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    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

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