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The effect of organized crime on foreign investments: an empirical analysis for the Italian Provinces

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  • V. Daniele
  • U. Marani

Abstract

This paper estimates the effects of organized crime on FDI inflows in 103 Italian Provinces in the period 2004-06. The incidence of organized crime at a provincial level is quantified by means of several indicators, based on different data for each kind of crime: extortion; criminal associations, including mafia (Art. 416 and 416-bis of the Italian Penal Code); attempts; arson. Several control variables are used, included a proxy for (financial) investment incentives provided by public sectors. Estimation suggests that FDI inflows are influenced by different variables. Our results show that the extent of extortion and the number of persons denounced for "criminal association" are significantly and negatively correlated to FDI inflows. Finally, our analysis suggests the presence of the organized crime is a strong disincentive for foreign investors, particularly in the least developed Italian Provinces.

Suggested Citation

  • V. Daniele & U. Marani, 2008. "The effect of organized crime on foreign investments: an empirical analysis for the Italian Provinces," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 1, pages 189-218.
    • Handle: RePEc:mul:jqyfkm:doi:10.1432/27152:y:2008:i:1:p:189-218
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    Cited by:

    1. Capuano, Carlo & Purificato, Francesco, 2012. "The macroeconomic impact of organized crime: a neo-Kaleckian perspective," MPRA Paper 40077, University Library of Munich, Germany.
    2. Ferdinando Ofria, 2009. "L'approccio Kaldor-Verdoorn: una verifica empirica per il Centro-Nord e il Mezzogiorno d'Italia (anni 1951-2006)," Rivista di Politica Economica, SIPI Spa, issue 1, pages 179-207, January-M.
    3. M. Centorrino & F. Ofria & D. Farinella, 2010. "Convergence and divergence processes between the Mezzogiorno and the Centre- North ten years after the adoption of the EMU," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 3, pages 453-486.
    4. 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.

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