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Crime and growth convergence : evidence from Mexico

  • Enamorado, Ted
  • Lopez-Calva, Luis F.
  • Rodriguez-Castelan, Carlos

Scholars have often argued that crime deters growth, but the empirical literature assessing such effect is scarce. By exploiting cross-municipality income and crime data for Mexico -- a country that experienced a high increase in crime rates over the past decade -- this study circumvents two of the most common problems faced by researchers in this area. These are: (i) the lack of a homogenous, consistently comparable measure of crime and (ii) the small sample problem in the estimation. Combining income data from poverty maps, administrative records on crime and violence, and public expenditures data at the municipal level for Mexico (2005-2010), the analysis finds evidence indicating that drug-related crimes indeed deter growth. It also finds no evidence of a negative effect on growth from crimes unrelated to drug trafficking.

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Paper provided by The World Bank in its series Policy Research Working Paper Series with number 6730.

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Date of creation: 01 Dec 2013
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Handle: RePEc:wbk:wbrwps:6730
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  1. World Bank & International Finance Corporation, 2012. "Zimbabwe Country Profile 2011 : Enterprise Survey," World Bank Other Operational Studies 12591, The World Bank.
  2. Demombynes, Gabriel & Ozler, Berk, 2005. "Crime and local inequality in South Africa," Journal of Development Economics, Elsevier, vol. 76(2), pages 265-292, April.
  3. Barro, R.J. & Sala-I-Martin, X., 1991. "Convergence Across States and Regions," Papers 629, Yale - Economic Growth Center.
  4. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2007. "Bootstrap-Based Improvements for Inference with Clustered Errors," NBER Technical Working Papers 0344, National Bureau of Economic Research, Inc.
  5. Stone, Christopher, 2006. "Crime, Justice, and Growth in South Africa: Toward a Plausible Contribution from Criminal Justice to Economic Growth," Working Paper Series rwp06-038, Harvard University, John F. Kennedy School of Government.
  6. Gabriela Calderon & Gustavo Robles & Beatriz Magaloni, 2013. "Economic Consequences of Drug-Trafficking Violence in Mexico," Research Department Publications IDB-WP-426, Inter-American Development Bank, Research Department.
  7. Claudio Detotto & Edoardo Otranto, 2010. "Does Crime Affect Economic Growth?," Kyklos, Wiley Blackwell, vol. 63(3), pages 330-345, 08.
  8. Fajnzylber, Pablo & Lederman, Daniel & Loayza, Norman, 2002. "Inequality and Violent Crime," Journal of Law and Economics, University of Chicago Press, vol. 45(1), pages 1-40, April.
  9. Benjamin Powell & G.P. Manish & Malavika Nair, 2010. "Corruption, Crime and Economic Growth," Chapters, in: Handbook on the Economics of Crime, chapter 13 Edward Elgar.
  10. Harold Alderman & Miriam Babita & Gabriel Demombynes & Nthabiseng Makhatha & Berk �zler, 2002. "How Low Can You Go? Combining Census and Survey Data for Mapping Poverty in South Africa," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 11(2), pages 169-200, June.
  11. Chris Elbers & Jean O. Lanjouw & Peter Lanjouw, 2003. "Micro--Level Estimation of Poverty and Inequality," Econometrica, Econometric Society, vol. 71(1), pages 355-364, January.
  12. Fajnzylber, Pablo & Lederman, Daniel & Loayza, Norman, 2002. "What causes violent crime?," European Economic Review, Elsevier, vol. 46(7), pages 1323-1357, July.
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