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Economic Liberalization and Violent Crime

  • Kislaya Prasad

I study the effect of economic liberalization on violent crime. The particular emphasis is on the case of India, where, in the years following 1991, there was a virtual dismantling of controls on entry and production in registered manufacturing. This was accompanied by a significant reduction in impediments to foreign trade and access to foreign exchange. Economic controls create an incentive for illegal trade, and a frequent by-product of illegal trade is violent crime. Consequently, violent crimes such as murders would be expected to decline following market-based reforms. Analysis of aggregate all-India data, as well as data at the state level, suggests that economic reforms did indeed lead to a reduction in violent crime. I extend the analysis to a panel of countries and find strong evidence that greater trade openness is negatively related to violent crime.

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File URL: http://www.jstor.org/stable/pdfplus/10.1086/666487
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File URL: http://www.jstor.org/stable/full/10.1086/666487
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Article provided by University of Chicago Press in its journal The Journal of Law and Economics.

Volume (Year): 55 (2012)
Issue (Month): 4 ()
Pages: 925 - 948

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Handle: RePEc:ucp:jlawec:doi:10.1086/666487
Contact details of provider: Web page: http://www.journals.uchicago.edu/JLE/

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