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Predation, Protection and Productivity: A Firm-Level Perspective

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  • Timothy Besley
  • Hannes Mueller

Abstract

This paper studies the consequences of predation when firms deploy guard labor as a means of protecting themselves. We build a simple model and combine it with data for 142 countries from the World Bank enterprise surveys which ask about firm-level experiences with predation and spending on protection. We use the model to estimate the output loss caused by the misallocation of labor across firms and from production to protection. The loss due to protection effort is substantial and patterns of state protection at the micro level can have a profound impact on aggregate output losses. Various extensions are discussed.

Suggested Citation

  • Timothy Besley & Hannes Mueller, 2016. "Predation, Protection and Productivity: A Firm-Level Perspective," Working Papers 900, Barcelona School of Economics.
    • Handle: RePEc:bge:wpaper:900
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    Cited by:

    1. Timothy Besley & Hannes Mueller, 2018. "Predation, Protection, and Productivity: A Firm-Level Perspective," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(2), pages 184-221, April.
    2. Ross Hickey & Steeve Mongrain & Joanne Roberts & Tanguy van Ypersele, 2021. "Private protection and public policing," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 23(1), pages 5-28, February.
    3. Besley, T. & Roland, I. & Van Reenen, J., 2019. "The Aggregate Consequences of Default Risk: Evidence from Firm-level Data," Cambridge Working Papers in Economics 2061, Faculty of Economics, University of Cambridge.
    4. Islam,Asif Mohammed & Muzi,Silvia, 2020. "Mobile Money and Investment by Women Businesses in Sub-Saharan Africa," Policy Research Working Paper Series 9338, The World Bank.
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    7. Laurent WAGNER, 2020. "The allocation of resources of national development banks," Working Paper 9c3d4298-95e5-4561-a9cb-5, Agence française de développement.
    8. Lavinia Piemontese, 2021. "Uncovering Illegal and Underground Economies: The Case of Mafia Extortion Racketeering," Working Papers halshs-02928546, HAL.
    9. Diakonova, Marina & Ghirelli, Corinna & Molina, Luis & Pérez, Javier J., 2023. "The economic impact of conflict-related and policy uncertainty shocks: The case of Russia," International Economics, Elsevier, vol. 174(C), pages 69-90.
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    11. Dyer, Julian, 2023. "The fruits (and vegetables) of crime: Protection from theft and agricultural development," Journal of Development Economics, Elsevier, vol. 163(C).
    12. Ummad Mazhar & Fahd Rehman, 2019. "Diehard or delicate? Violence and young firm performance in a developing country," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 54(4), pages 236-247, October.
    13. Lavinia Piemontese, 2020. "Uncovering Illegal and Underground Economies: The Case of Mafia Extortion Racketeering," Working Papers 2025, Groupe d'Analyse et de Théorie Economique Lyon St-Étienne (GATE Lyon St-Étienne), Université de Lyon.
    14. Ummad Mazhar, 2021. "Women empowerment and insecurity: firm-level evidence," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 56(1), pages 43-53, January.
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    More about this item

    Keywords

    predation; firm data; labour misallocation; security; aggregate output loss; Property rights; law enforcement; enterprise surveys; cost of crime;
    All these keywords.

    JEL classification:

    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development

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