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A theory of organized crime, corruption and economic growth

Author

Listed:
  • Keith Blackburn

    (University of Manchester)

  • Kyriakos C. Neanidis

    () (University of Manchester)

  • Maria Paola Rana

    (University of Manchester)

Abstract

We develop a framework for studying the interactions between organized crime and corruption, together with the individual and combined effects of these phenomena on economic growth. Criminal organizations co-exist with law-abiding productive agents and potentially corrupt law enforcers. The crime syndicate obstructs the economic activities of agents through extortion, and may pay bribes to law enforcers in return for their compliance in this. We show how organized crime has a negative effect on growth, and how this effect may be either enhanced or mitigated in the presence of corruption. The outcome depends critically on a trade-off generated when corruption exists, that between a lower supply of crimes and the probability these crimes are more likely to be successful.

Suggested Citation

  • Keith Blackburn & Kyriakos C. Neanidis & Maria Paola Rana, 2017. "A theory of organized crime, corruption and economic growth," Economic Theory Bulletin, Springer;Society for the Advancement of Economic Theory (SAET), vol. 5(2), pages 227-245, October.
  • Handle: RePEc:spr:etbull:v:5:y:2017:i:2:d:10.1007_s40505-017-0116-5
    DOI: 10.1007/s40505-017-0116-5
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    References listed on IDEAS

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    Cited by:

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    2. King Yoong Lim & Pengfei Jia, 2019. "Police spending and economic stabilization in a monetary economy with crime and differential human capital," NBS Discussion Papers in Economics 2019/02, Economics, Nottingham Business School, Nottingham Trent University.
    3. King Yoong Lim & Diego Morris, 2019. "Modeling the drugs and guns trade in a two-country model with endogenous growth," NBS Discussion Papers in Economics 2019/01, Economics, Nottingham Business School, Nottingham Trent University.
    4. Alessio Russo & Giuseppe T. Cirella, 2020. "Edible Green Infrastructure for Urban Regeneration and Food Security: Case Studies from the Campania Region," Agriculture, MDPI, Open Access Journal, vol. 10(8), pages 1-14, August.
    5. Leighton Vaughan Williams & Chunping Liu & Hannah Gerrard, 2019. "How well do Elo-based ratings predict professional tennis matches?," NBS Discussion Papers in Economics 2019/03, Economics, Nottingham Business School, Nottingham Trent University.
    6. Lim, King Yoong & Morris, Diego, 2020. "The economics of the illicit drugs-for-guns trade and growth," Economic Modelling, Elsevier, vol. 91(C), pages 218-232.

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    More about this item

    Keywords

    Corruption; Economic growth; Organized crime;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • K49 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Other
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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