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An Unholy Alliance: The Relationship Between Organized Crime and Corruption in Italy

Author

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  • Valentina Chiariello
  • Oguzhan C. Dincer

Abstract

We investigate the long-run relationship between organized crime and corruption using data from 20 Italian regions over 30 years. As Rose-Ackerman and Palifka (2018) argue, corruption and organized crime often go together. Our study contributes to the literature in several ways in terms of empirical methodology and specification. We account for integration and cointegration properties of the data and estimate the cointegrating relationship between organized crime and corruption using Fully Modified Ordinary Least Squares (FMOLS), following Pedroni (2000). Our findings are twofold. First, according to our FMOLS estimates, organized crime increases corruption, and this effect becomes stronger as government spending increases. Second, there is bidirectional Granger causality between corruption and organized crime. Our results are robust to alternative specifications and different estimation methods. Overall, our findings point to a persistent and mutually reinforcing relationship between organized crime and corruption, which has significant consequences for implementing anti-corruption policies.

Suggested Citation

  • Valentina Chiariello & Oguzhan C. Dincer, 2026. "An Unholy Alliance: The Relationship Between Organized Crime and Corruption in Italy," CESifo Working Paper Series 12474, CESifo.
    • Handle: RePEc:ces:ceswps:_12474
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    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government

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