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An Empirical Analysis of Organized Crime, Corruption and Economic Growth

Author: Keith Blackburn; Kyriakos C. Neanidis; Maria Paola Rana
Publication Date: June 2017

Summary: In a companion study, Blackburn et al. (Econ Theory Bull, 2017), developed a theoretical framework for studying interactions between organized crime and corruption, with the view of examining the combined effects of these phenomena on economic growth. The analysis therein illustrates that organized crime has a negative effect on growth, but that the magnitude of the effect may be either enhanced or mitigated in the presence of corruption. This paper tackles the ambiguity produced by the coexistence of the two illicit activities with an empirical investigation using a panel of Italian regions for the period 1983–2009. This paper finds that organized crime distorts growth less when it coexists with corruption and show our results to be robust to different specifications, measures of organized crime, and estimation techniques.

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