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Plunder & Protection Inc

Author

Listed:
  • Halvor Mehlum

    (University of Oslo)

  • Karl Moene

    (University of Oslo)

  • Ragnar Torvik

    (NTNU, Trondheim)

Abstract

When the state fails to supply basic security and protection of property, violent entrepreneurs not only seize the opportunity of plundering, but some also enter the protection business and provide protection against plunderers. This uncoordinated division of labor is advantageous for the entire group of violent entrepreneurs. Hence, in weak states a situation may arise where a large number of violent entrepreneurs can operate side by side as plunderers and protectors squeezing the producers from both sides. The problem reached new levels at the end of the cold war. As military forces were demobilized without civilian jobs to go to, many countries got an oversupply of qualified violent people for crime, warfare and private protection. In this 'market for extortion' the entry of new violent entrepreneurs enhances the profitability of them all. The supply of violence creates its own demand; an externality of violence that is detrimental to the development in poor countries.

Suggested Citation

  • Halvor Mehlum & Karl Moene & Ragnar Torvik, 2002. "Plunder & Protection Inc," Development and Comp Systems 0210002, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwpdc:0210002
    Note: Type of Document - pdf; prepared on latex; pages: 16
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/dev/papers/0210/0210002.pdf
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    References listed on IDEAS

    as
    1. Herschel I. Grossman, 2001. "The Creation of Effective Property Rights," American Economic Review, American Economic Association, vol. 91(2), pages 347-352, May.
    2. Stergios Skaperdas, 2002. "Warlord Competition," Journal of Peace Research, Peace Research Institute Oslo, vol. 39(4), pages 435-446, July.
    3. Mehlum, Halvor & Moene, Karl & Torvik, Ragnar, 2003. "Predator or prey?: Parasitic enterprises in economic development," European Economic Review, Elsevier, vol. 47(2), pages 275-294, April.
    4. Lane, Frederic C., 1958. "Economic Consequences of Organized Violence," The Journal of Economic History, Cambridge University Press, vol. 18(04), pages 401-417, December.
    5. Azam, Jean-Paul & Bevan, David & Collier, Paul & Dercon, Stefan & Gunning, Jan & Pradhan, Sanjay, 1995. "Some economic consequences of the transition from civil war to peace," Policy Research Working Paper Series 1392, The World Bank.
    6. Kai A.Konrad & Stergios Skaperdas, 1997. "Backing up Words with Deeds: Information and punishment in organized crime," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 24, pages 51-63.
    7. Paul Collier, 1994. "Demobilization and insecurity: A study in the economics of the transition from war to peace," Journal of International Development, John Wiley & Sons, Ltd., vol. 6(3), pages 343-351, May.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Mehlum, Halvor & Moene, Karl O. & Torvik, Ragnar, 2003. "Parasites," Memorandum 16/2003, Oslo University, Department of Economics.
    2. Jean-Fran├žois Maystadt & Giacomo De Luca & Petros G. Sekeris & John Ulimwengu, 2014. "Mineral resources and conflicts in DRC: a case of ecological fallacy?," Oxford Economic Papers, Oxford University Press, vol. 66(3), pages 721-749.
    3. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Cursed by Resources or Institutions?," The World Economy, Wiley Blackwell, vol. 29(8), pages 1117-1131, August.
    4. Milante, Gary, 2007. "A kleptocrat's survival guide : autocratic longevity in the face of civil conflict," Policy Research Working Paper Series 4186, The World Bank.
    5. Gvozdeva, Margarita & Kazakova, M.V. & Kiblitskaya, T.R. & Lyubimov, I.L. & Nesterova, K.V., 2016. "Various Aspects of Natural Resource Wealth Effect on Economic Growth," Working Papers 2045, Russian Presidential Academy of National Economy and Public Administration.
    6. Murshed, S. Mansoob, 2004. "When Does Natural Resource Abundance Lead to a Resource Curse?," Discussion Papers 24137, International Institute for Environment and Development, Environmental Economics Programme.
    7. Thomas G. Weiss, 2016. "Ethical Quandaries in War Zones, When Mass Atrocity Prevention Fails," Global Policy, London School of Economics and Political Science, vol. 7(2), pages 135-145, May.

    More about this item

    Keywords

    crime; protection; extortion;

    JEL classification:

    • O - Economic Development, Innovation, Technological Change, and Growth
    • P - Economic Systems

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